4

dependence, and of building a sound and beneficial relationship between developed and developing nations, are brightest and most promising here in this hemisphere.

Let me turn briefly now to Europe.

## Europe

In late May I attended the North Atlantic Treaty Organization [NATO] Ministers' meeting in Oslo and held a series of meetings with European leaders.

I do not need to rehearse at length to this committee why the countries of Western Europe are important to the United States and to all our international endeavors. Throughout the postwar period we have recognized that the security of Western Europe is inseparable from our own. Our economies are inextricably linked; we have had repeated demonstrations that economic performance on one side of the Atlantic will in time affect both. Most of all, these are the peoples who share our most fundamental cultural and political heritage and its values, and they share our vision of the kind of world we want to live in.

While cooperating in a defensive alliance which for durability and vitality is probably unique in the history of sovereign states, the Atlantic nations also have been coordinating efforts gradually to improve relations with regimes in Eastern Europe whose values and aims are very different from our own. We have recognized from the outset that this difficult undertaking could only proceed from a basis of Western strength and cohesion.

Now with the growth of Soviet military power; with a proliferation of potentially explosive regional tensions; with the emergence of new power centers based on control of vital economic resources; with growing demands for redistribution of the world's wealth; and with common economic and social problems ahead, it is more important than ever that our consultations with our closest allies be constant and our cooperation constant. This does not mean that the Atlantic states will see all problems in identical ways or always adopt identical policies. It does mean that only by understanding one another's interests and perspectives can we maintain that essential harmony in our policies which will enable us to deal constructively both with the Communist world and with the demands of the developing states.

Three years ago the United States called for a reaffirmation of European-American solidarity. We believed that it was imperative to reaffirm the central place of Western unity in all that we were about to do.

Over the course of these last few years I believe that the West has achieved an extraordinary cohesion and resolve. It is a sign of strength that doctrinal disputes over redefining our relationship or the modes of our consultation have given way to concerted attacks on the actual problems before us. Economic, security, and political issues have crowded upon us, and we have responded together in the solidarity displayed by the Western countries:

* In the declaration at the NATO summit in May 1975;

* In improving cooperation on defense issues;

* In unified positions before and during the Helsinki summit in July 1975;

* In the Vienna negotiations on mutual and balanced force reductions;

* In continuing allied consultations on SALT;

* In intensified political consultations in refusing to bow to the temptation of protectionism in trade;

* In the network of common energy institutions created rapidly in response to the challenge of the oil cartel;

* In the Rambouillet economic summit of last November; and

* In the continuing series of multilateral negotiations with the developing countries in both new and old international forums.

At the NATO meeting last month there was firm agreement that our common security rests on the foundation of Western solidarity and strength, and that continuing defense efforts will be necessary to counter Soviet assertiveness and induce restraint in Soviet behavior. There was broad agreement that efforts to seek stability and improvements in East-West relations should continue, but that such efforts too must be based on a clear foundation of military strength and resolve. I was, in addition, struck by the growing appreciation among all NATO members that military, economic, and political developments around the globe can have the most direct impact on the security and

5

prosperity of the North Atlantic states.

At the May meeting we discussed and found
basic agreement on a wide range of issues: the im-
portance of peaceful evolution in Africa; the cen-
trality of our commitment to the security of
Europe; the importance we attach to implementa-
tion of the Helsinki final act; the need for close
consultations on Strategic Arms Limitation Talks
[SALT]; the necessity to continue efforts toward
mutual and balanced force reductions; the situa-
tion in the Mediterranean; the high-level attention
we should give to the question of military stand-
ardization; and most important, our continuing
commitment to shared values, the basic cement
that has held our alliance together for nearly 30
years.

My bilateral visits to Norway, the Federal Re-
public of Germany, Sweden, and Luxembourg, and
the London meeting of the Central Treaty Organi-
zation [CENTO] Foreign Ministers considerably
furthered, I believe, the process of strengthened
ties between America and Western Europe. In Nor-
way we discussed that country's growing role as a
major oil producer and the importance of close
consultations on the complicated question of inter-
national exploitation of the considerable resources
of the Svalbard, or Spitsbergen, Archipelago.

In Germany we reaffirmed our shared views
on East-West relations and the need to approach
this subject from a foundation of strength. I be-
lieve that U.S.-German relations have never been
better.

Swedish-American relations over the past
decade have not always been friendly. While we
cannot hope to wholly reconcile all our different
perspectives, I believe that our talks helped each
side better understand the conditions under which
the other must conduct its foreign policy. Our rela-
tions with Sweden have improved significantly over
the past year, and I expressed the hope in Stock-
holm that this process will continue.

The importance and prestige of Luxembourg
in Europe far exceed its size. My discussions with
Prime Minister Thorn dealt primarily with interna-
tional issues, on which I found it valuable to hear
the views of an ally that presents a European point
of view in an impartial, effective manner. And at
CENTO I conveyed our continued support for the
alliance and for peace and stability in the treaty
region.

Today Europe's role on global issues is strong
and effective. Europe's interest in the Far East, in
the Middle East, and in Africa is growing and wel-
come to us. Prime Minister Callaghan's initiatives
for a negotiated settlement in Rhodesia based on
majority rule, President Giscard's proposal for a
Western fund for coordinated assistance to African
economic development, and Chancellor Schmidt's
initiatives in the economic field are examples of
creative European statesmanship which the United
States welcomes and respects. We gain, and the
world gains, from Europe's counsel and long ex-
perience in a global framework.

At the NATO meeting in Oslo we took up
issues of security; next week I will return to
Europe to attend the Organization for Economic
Cooperation and Development [OECD] meeting
where we will work to strengthen cooperation
among the industrialized countries of the West and
on our approach to the developing nations.

In a few days' time, President Ford will meet
at Puerto Rico with his colleagues, the heads of
government of Britain, Canada, France, the Federal
Republic of Germany, Italy, and Japan, in what is
now becoming a regular process of economic dis-
cussions at the highest political level. These meet-
ings are symbolic of how far we have come in the
last few years in consolidating cooperation among
the industrial democracies and extending it into
new spheres of common endeavor. They also
demonstrate the understanding we share that the
complexities of modern global management require
above all a determined effort by our governments
to prove that we have the ability to meet new chal-
lenges.

This kind of cooperation is the cornerstone of
American foreign policy. It has been so for 30
years. It will continue to be so.

Africa

Finally, let me discuss briefly what we are
trying to do in our African policy.

Our aims are:

* To avoid a race war which would have inevitably tragic consequences for all concerned;

* To do all we can to prevent foreign intervention in what must remain an African problem;

* To promote peaceful cooperation among the communities in southern Africa; and

6

* To prevent the radicalization of Africa.

In 1974 President Ford ordered a review of our policy toward Africa. As part of this effort I announced one year ago that I would visit Africa in the spring of 1976. Last September I set forth the fundamental elements of our policy toward Africa to members of the Organization of African Unity assembled in New York for the United Nations.

I said then that America had three major concerns:

* That the African continent be free of great-power rivalry or conflict;

* That all of the continent should have the right of self-determination; and

* That Africa attain prosperity for its people and become a strong participant in the global economic order—an economic partner with a growing stake in the international system.

Late last year the situation in Africa took on a new and serious dimension. For the first time since the colonial era was largely brought to an end in the early 1960's, external interventions had begun to control and direct an essentially African problem.

In the hope of halting a dangerously escalating situation in Angola, we undertook—until halted by the impact of our domestic debate—a wide range of diplomatic and other activity pointing toward a cessation of foreign intervention and a negotiated African solution.

By the first months of this year Soviet-Cuban intervention had contributed to an increasingly dangerous situation turning the political evolution away from African aspirations and toward great-power confrontation.

* The Soviets and Cubans had imposed their solution on Angola. Their forces were entrenched there. The danger was real that African states seeing the Soviet and Cuban presence on the scene might be driven in a radical direction.

* With the end of the Portuguese era in Africa, pressure was building on Rhodesia, regarded by Africans as the last major vestige of colonialism. Events in Angola encouraged radicals to press for a military solution in Rhodesia.

* With radical influence on the rise, and with immense outside military strength apparently behind the radicals, even moderate and responsible African leaders—firm proponents of peaceful change—began to conclude there was no alternative but to embrace the cause of violence. By March of this year, guerrilla actions took on ever larger dimensions.

* We saw ahead the prospect of war, fed and perhaps conducted by outside forces; we were concerned about a continent politically embittered and economically estranged from the West; and we saw ahead a process of radicalization which would place severe strains on our allies in Europe and Japan.

* There was no prospect of successfully shaping events in the absence of positive programs of our own for Africa.

It was for these reasons that President Ford determined that an African trip which had long been planned as part of an unfolding process of policy development had a compelling focus and urgency. We had these aims:

* To provide moderate African leaders with an enlightened alternative to the grim prospects so rapidly taking shape before them—prospects which threatened African unity and independence, indicated growing violence, and widening economic distress;

* To work for a solution that would permit all of the communities in Africa, black or white, to coexist on the basis of justice and dignity;

* To give friendly and moderate African governments the perception that their aspirations could be achieved without resort to massive violence or bloodshed; and that their hopes for prosperity and opportunity can best be realized through association with the West; and

* To promote solutions based on majority rule and minority rights which would enable diverse communities to live side by side.

In short we sought to show that there was a moderate and peaceful road open to fulfill African aspirations and that America could be counted on to cooperate constructively in the attainment of these objectives.

7

My trip addressed the three major issues facing Africa: Whether the urgent problems of southern Africa will be solved by negotiation or by war; whether Africa's economic development will take place on the basis of self-respect and open opportunity, or through perpetual relief or the radical regimentation of societies; and whether the course of African unity and self-determination will once again be distorted by massive extracontinental interference.

I believe that the 10-point policy we set forth in Lusaka, Zambia, in late April and the other proposals we made in Africa to enhance self-sustaining economic growth make up a platform which moderate Africans can support and which serves interests we share—for peace, justice, and progress and for an Africa free from outside interests:

* The possibility for a negotiated settlement in Rhodesia and Namibia has been enhanced. Time is running out and formidable barriers remain. But if continued responsible efforts are made by all sides, the burning questions of southern Africa still can be solved without immense loss of life, suffering, and bitterness and with giving each community an opportunity for a dignified life.

* African hopes for independence and the integrity of their continent have been raised. Big-power intervention can only undermine unity, set African against African and heighten the risk of conflict. Our policy on this clearly accords with African concerns as reflected in the suspicion and apprehension with which influential African leaders have regarded the large Cuban presence in Angola. We may now be seeing the results of that concern, and our clear position, as we receive an

increasing number of reports that Cuban troops may begin to leave. However, we do not yet have clear evidence that this process is underway in any meaningful fashion. We will be carefully watching the pace and extent of any Cuban withdrawals.

* Our African policy is thus an important element in our overall international effort to help build a structure of relations which fosters peace, widening prosperity, and fundamental human dignity.

Mr. Chairman, Africa is of immense size, strategically located, with governments of substantial significance in numbers and growing in influence in the councils of the world. The interdependence of America and our allies with Africa is increasingly obvious. In the past months we have seen a major international crisis develop in this important area of the world and we have moved to deal with it. We have taken the initiative to offer a peaceful road to the future. We have told much of the world that America continues to have a positive vision and will play a crucial and responsible role in the world.

I believe that our policy initiatives were necessary; that they can be effective; that they are beneficial to the interests of the United States; and I believe that they are right.

But the new beginning in our African policy will require dedication and effort on our part if it is to come to a positive fruition. The Administration is determined to follow through on our initiatives and the promising beginnings that have been made. We look to the Congress for encouragement and for active support in this crucial enterprise.

The Secretary
of State

DEPARTMENT OF STATE
UNITED STATES OF AMERICA

Statement

June 17, 1976

Washington, D.C.

Bureau of Public Affairs

Office of Media Services

LATIN AMERICA, EUROPE, AND AFRICA

*Secretary Henry A. Kissinger before the House International Relations Committee.*

I am happy to be able to report to this committee on our foreign policy with regard to three important areas which I have recently visited—in America, Western Europe, and Africa.

I believe that our relations with Latin America and with Western Europe are stronger and more promising than they have been in a decade. In Africa we have responded to a dangerously deteriorating situation with a policy that offers hope for southern Africa to undergo peaceful change with justice without submitting to external intervention, and opportunities for progress in the rest of Africa without following radical doctrines.

Let me take up with you our policy toward each of these areas.

Latin America

In March I reported to you on the vast changes evident to me during my trip to Latin America in February. These changes are opening the way to a new constructive relationship between the United States and Latin America. The quality of that relationship was evident at the meeting of the Organization of American States [OAS] General Assembly in Santiago, from which I have just returned. The atmosphere—of mutual respect and received common interest—was better at the 1976 S General Assembly than at any other inter-American meeting I have ever attended.

Ours is a special relationship in this hemisphere. The unique experience we share in the Americas—the finding and opening of new continents, the forging of nations free from colonial domination, the shared human and moral principles of the New World—creates special ties for the United States and Latin America.

As in all families there are periods of creativity and times of stress. Ours is no exception. The United States has passed through a variety of phases in its relationship to Latin America. Not all have been productive in recent years. Sometimes when we were active, when we attempted to organize massive transfers of resources to meet Latin American development needs directly, we were seen as attempting to dominate the hemisphere. When our policies were otherwise, when we were less involved in Latin American problems and more inclined to let Latin American nations work out their own solutions alone, we were looked upon as neglecting our obligations.

The 1930's, the 1940's, and even the 1950's were decades in which this nation indulged in the pretense of tutelage. In the 1960's the Alliance for Progress rallied the energies and enthusiasms of people throughout the Americas to the development effort. But by 1969 its promises had begun to fade. Thus even as Latin America began to realize its own maturity and experience a period of massive growth, and with it greater self-respect, the United States moved into a period of lower profile, which we maintained until the inauguration of the new dialogue in 1974.

PR 506

2

That period drew to a close with the meeting at Tlatelolco, in Mexico, in which we began a process of dialogue with the hemisphere once again. At the outset, admittedly, the dialogue had a character of inquiring into what the United States could do for Latin America. But it became obvious that, as a result of the major changes and considerable progress in Latin America during the 1960's and early 1970's, we were now able to deal with the major nations of Latin America with a new mutuality of respect and equality of sovereignty quite impossible 20 years ago or even 10.

In the last two years we have built steadily on this new relationship. We have taken advantage of it to put forward new initiatives, in the political and the economic area, which we could not have considered a decade or more ago. The culmination of this new policy effort was the meeting at Santiago last week.

The constructive attitude in Santiago and the remarkably good tone to our relationships throughout the hemisphere are attributable in great part to three factors:

* The United States, since the inauguration of the new dialogue early in 1974, is again active as an equal partner in inter-American councils;

* We have a coherent policy that addresses the entire catalogue of hemispheric issues; and

* We have a vision of the future of our relationship.

It is that, I believe, which has reassured Latin America that the political relationship with the United States—the basic solidarity of the Western Hemisphere—is again increasingly vital.

With our political and moral relationship once again sound, we have a basis for cooperation with Latin America in the area of most pressing concern—that of economic development. The countries of Latin America are among the most developed of the developing nations, and have been growing rapidly. Latin America has quintupled its collective gross product since 1950. At this rate, in 10 years Latin America will have attained the economic strength which Europe had in 1960. Its economies, furthermore, are increasingly important in world commodity, mineral, and energy markets and in trade in manufactured goods. Success in the struggle for development of the poorer countries of

the world, when it comes, will come first in America. For this reason we must focus our attention and our energies there.

To address the changing nature of our relationship with Latin America and to deal with the expanding range of our common concerns, I set forth in Latin America last February six elements of our policy. I said the United States would:

* Take special cognizance of the distinctive requirements of the more industrialized economies of Latin America and of the region as a whole, in the context of our efforts to help shape a more equitable international order;

* Assist directly the neediest nations in the hemisphere afflicted by poverty and natural disaster;

* Support Latin American regional and subregional efforts to organize for cooperation and integration;

* Negotiate on the basis of parity and dignity our specific differences with each and every state, to solve problems before they become conflicts;

* Enforce our commitment to collective stability and to maintain regional integrity against attempts to undermine solidarity, threaten independence, or export violence; and

* Work to modernize the inter-American system to respond to the needs of our times and give direction to our common action.

Since February, in furtherance of these objectives, the United States has introduced trade, investment, and technology proposals of special relevance to this hemisphere at the Conference on International Economic Cooperation [CIEC] in Paris and at the fourth U.N. Conference on Trade and Development [UNCTAD IV] in Nairobi. We responded to the efforts of the Guatemalan people to recover from the earthquake that devastated their land. We have provided fresh support to subregional cooperation in Central America and are exploring ways of relating more effectively to the Andean Pact. And at last week's General Assembly of the Organization of American States at Santiago we advanced our common interests in three important areas: cooperation for development; reform of the inter-American system; and human rights.

To speed cooperation for development in America, we stressed three major topics for

on: commodities, trade, and technology.

The economic aspirations of most countries in Latin America depend upon stable conditions for the production and marketing of primary commodities. At Santiago we proposed a three-point program designed to: improve regional consultations on commodities markets; derive greater hemispheric benefits from global commodity arrangements; and improve resource financing, either on a global or regional basis.

To expand trade opportunities and capabilities we offered proposals to help developing nations expand and diversify exports of manufactured and semiprocessed goods; promote the hemisphere's trade position through the Geneva negotiations; and support needed regional and subregional economic integration.

And we proposed a number of new ideas to stimulate the development, acquisition, and utilization of technology in the modernization of the hemisphere.

To improve the inter-American system, we circulated proposals—the most far-reaching the United States has ever put forward—which would simplify the organization by strengthening the foreign ministers' meetings in the periodic General Assemblies; eliminate the standing councils; open the OAS to wider membership in the hemisphere, particularly the new states of the Caribbean; and increase the Latins' share of the budget. Such steps, we believe, could lead to a leaner, more flexible and responsive organization which could better promote the mutual security, economic progress, and human rights of the Americas.

And on the centrally important issue of human rights, I addressed the special responsibility of our nations to preserve, cherish, and defend fundamental human values—for if such values cannot be preserved, cherished, and defended in this hemisphere, where the rights and the promise of the individual have played such a historic role, then they are in jeopardy everywhere. At Santiago, the United States reaffirmed our unequivocal commitment to the American Declaration of the Rights and Duties of Man. We endorsed the reports presented there by the Inter-American Human Rights Commission: its annual report which cites the rise violence and terror in many nations of Latin America; its report on Chile; and its report, submitted too late for official consideration by the

OAS Assembly, concerning the inhuman treatment of political prisoners in Cuba and the refusal of Cuba to cooperate with the Commission.

The United States emphasized our belief that the protection of human rights in the hemisphere is an obligation of every nation and not simply of particular nations whose practices have come to public attention or whose ideology, on whichever side of the political spectrum, is unpopular. The contrast between the respective treatment of the human rights commission's work by the Governments of Chile and Cuba demonstrates the importance of this principle. The Government of Chile cooperated with the Commission; the Government of Cuba did not. The Government of Chile did nothing to prevent widespread publication in that country of information about the Commission's report and about the OAS discussion of the issue. Needless to say, there has been nothing comparable in the government-controlled media in Cuba. Most important, the Commission noted a quantitative improvement in the situation in Chile since its last report.

For these reasons, I believe we can best enhance the prospects for further human rights progress in Chile by continuing a balanced policy by working in the area of human rights and by assisting that government to meet the economic problems before it. We have made it clear to the Government of Chile that the condition of human rights in that country impairs our relationship. Actions which would further undermine our relationship could eliminate the practical possibilities for betterment of economic conditions.

Mr. Chairman, our efforts in Latin America over the past several months have considerably advanced our practical progress and provided a firm foundation of policy for the years ahead. We have moved into a new phase of profound interest, active initiatives, and comprehensive proposals for altering the inter-American relationship, a phase which is more compatible with the new cooperative spirit in the hemisphere. We have come to the end of a critical era and are marking the beginning of a new one. The United States can now deal with Latin America in a new spirit. We need not hold back on major initiatives for fear of inspiring old notions of paternalism. With consultation and cooperation, our hopes of meeting the challenges of economic and social progress in an age of inter-

## Europe

Three years ago the United States called for reaffirmation of European-American solidarity. We believed that it was imperative to reaffirm the central place of Western unity in all that we were about to do.

* In intensified political consultations in-fusing to bow to the temptation of protectionism in trade;

At the NATO meeting last month there was firm agreement that our common security rests on the foundation of Western solidarity and strength, and that continuing defense efforts will be necessary to counter Soviet assertiveness and induce restraint in Soviet behavior. There was broad agreement that efforts to seek stability and improvements in East-West relations should continue, but that such efforts too must be based on a clear foundation of military strength and resolve. I was, in addition, struck by the growing appreciation among all NATO members that military, economic and political developments around the globe can have the most direct impact on the security and

UNOFFICIAL TRANSCRIPT

TESTIMONY OF SECRETARY OF STATE HENRY A. KISSINGER
BEFORE THE HOUSE INTERNATIONAL RELATIONS COMMITTEE

JUNE 17, 1976

CHAIRMAN: The Committee will please come to order.

Mr. Secretary, we welcome you here today. We have not had an opportunity to hear your testimony since you were here at the end of March. We look forward to your briefing us on events since then, particularly your visit to Africa and Latin America; and of course at this time I wish to express the shock and sorrow of this Committee over the tragedy which took place in Lebanon yesterday.

Ambassador Meloy and Counselor Waring were serving their country in the highest tradition when their lives were so senselessly taken, and that of the chauffeur.

We express our deepest sympathy to their loved ones, and we will want you to know -- I hope you can tell us something of what has been done about the safety of some other Americans in that part of the world.

Mr. Secretary, I understand you just returned to Washington from Mexico last weekend and you'll be able to be going abroad again shortly on another very important mission. Your first stop will be in Germany. You'll confer with the South African Prime Minister.

The members will have many questions and the Chair suggests that if any question involves classified information, these questions be postponed until we can have another session with you, Mr. Secretary.

Mr. Secretary, I understand you have a time problem this morning; that you are going to have to leave at twelve o'clock because of a very important meeting concerning the situation in Lebanon and we will try to meet your schedule.

Mr. Secretary, you have a prepared statement; if you wish to summarize the statement, then we will open the meeting for questions and answers. Mr. Secretary.

SECRETARY KISSINGER: Mr. Chairman, members of the committee, before I begin I would like to express my own grief and that of all of my colleagues about the murder of Ambassador Meloy and Mr. Waring. They are the fourth and fifth foreign service officers to have been killed in the Middle East in the last four years.

Ambassador Meloy went to Lebanon knowing the dangers that he would face; recognizing that he would live in a city in which there was no police protection. When he was asked by the President and me to go, he asked no questions; left a post that was very pleasant and absolute.

safe and went on very short notice to Beirut because he
thought he was serving his country and contributing to
peace in the area, peace in Lebanon and, therefore,
peace for the American people.

He performed with great distinction, as did his
predecessor Ambassador Brown, who left private life after
he retired from the foreign service and on 12 hours notice went to Lebanon
in March and contributed greatly to easing the situation.

I think it is a tribute to the kind of men who are
in the foreign service that Ambassador Brown yesterday
volunteered to go back there within half of an hour of
Mr. Meloy's assassination, an offer which we will not accept
because I think we should send somebody else.

And I mention this only in tribute to a very brave
man. So all of us who have served with these officers
are very privileged to have had that opportunity.

Now, it goes without saying that the United States
will not be driven off its course by violence. An
ambassador will be sent next week. The United States
will pursue its mission for peace in the Middle East
for the benefit of the peoples of the area and of the
American people and of mankind.

With respect to my statement, Mr. Chairman, I
have distributed copies, I believe, to the members of

the committee and, given the fact that we have had three trips -- we are going off next week again, I thought it might be more useful to the members of the committee if I did not read the statement and went as rapidly as possible to your questions.

I will simply say that it is my conviction that in the Western Hemisphere since the inauguration of the New Dialogue in 1974, we have created a new atmosphere and a new impetus to Western Hemisphere relations.

With Western Europe our relations are extremely strong. The consultations that are going on between us and Western Europe cover every range of activity: political, economic, military; and the forthcoming summit meeting in Puerto Rico will underline again that the industrial democracies that have the resources for being the engines of world progress and the key elements of world security can plan a common future.

In Africa, we faced a situation of growing complexity and danger -- from a position in which a clear cut American policy did not exist. Our effort on the trip to Africa was to develop a policy with which moderate and enlightened people in African nations could identify themselves; to develop a program in which African -- the future of Africa would be settled

4

in Africa and not by the intervention of outside powers;
to put forward proposals that permitted justice and equity
to be done and at the same time enabled both communities,
black and white, to exist with respect for the dignity and
rights of both.

No one trip can bring a solution to problems of
such complexity. But I believe we have laid the basis which,
if we pursue it as a united people and with unity between the
Executive and the Legislative, further progress can be made
in the months and years ahead. And for the first
time in a long while we are engaged in a fruitful dialogue
with all of the parties in Africa, black and white, and
we intend that the role of the United States be exercised
in its traditional manner for peace, for progress and for
justice.

And I think with this, if you will permit, Mr.
Chairman, I will respond to your questions.

CHAIRMAN: Thank you, Mr. Secretary.

I just want to tell the committee we have
approximately 67 minutes and we have 24 members here.
I would like to allocate the time at this time and give
everybody approximately a little more than two minutes a-
piece.

Mr. Secretary, I mentioned Lebanon in my opening
statement. Do we know any more about the

5

assassination than was mentioned in the press this morning?
I see by the latest press reports that the PLO has denied
any participation in this. Is there anything you could tell
the committee as to the real culprits in this terrible
tragedy?

SECRETARY KISSINGER: Perhaps the committee might
be interested -- I brought a map of what happened yesterday and
then I will answer your questions.

There really isn't all that much to say.
Ambassador Meloy left the American Embassy at 10:40 for
a meeting with President-elect Sarkis. His instructions
were to discuss with him the evolution of the last week,
that is to say, Syrian moves, the idea of the introduction
of an Arab force and to get the reaction of the Syrian leaders
to these developments. Second was to see what the United
States might do to bring the various groups together
since we were and remain the only party in Lebanon that is in
contact with all the significant factions.

And, thirdly, to discuss the plans that some
other embassies had for the evacuation of their personnel
and to see what the judgment of the Lebanese authorities
was about the safety of American personnel.

He left here. He was accompanied by a follow-up
car and a driver who also acted as a security guard; the

crossing point into the Christian area is here; the follow-up car last saw him at this intersection and then for reasons we have not yet determined the follow-up car seems to have turned off at this point and let it go the last 500 yards without a follow-up car through the crossing zone and in these last 500 yards, Ambassador Meloy's car was apparently ambushed and he, Mr. Waring, his deputy chief of mission and the driver were kidnapped and seem to have immediately been assassinated.

There was a call to the wife of the driver saying that her husband had been kidnapped and he would not be harmed, but that turned out to be wrong. The bodies were found here at the site where we are building a new chancery.

So, it was an act not only of extreme brutality but of extraordinary maliciousness.

We have no conclusive information as to who did it. To the best judgment that we have up to now been able to make, it seems to have been a splinter group of the Palestinian Movement, of the so-called Rejectionist Front that is trying to prevent a moderate evolution in the area and is opposed to the efforts of almost all of the parties, probably even of the PLO.

The PLO has apparently condemned the action. We

7

have received telegrams from all Arab governments --
from many Arab governments, I can't say from all of them --
expressing their condemnation and their offer to cooperate
in finding the murderers.

We have had some reports this morning, which we
have not been able to confirm, that the murders have been
found and will be turned over to the Arab force when it
appears, but this is not a confirmed report. And we will
have to confirm it later.

We are now discussing with governments in the area
and our embassy and other governments, the safety of
Americans that are there and possible plans for evacuation
and we will make decisions about that within the next 36
hours, I would expect.

CHAIRMAN: Thank you, Mr. Secretary. Mr.
Broomfield.

Mr. Broomfield: Thank you, Mr. Chairman.

Mr. Secretary, in your recent Lusaka speech you
committed the Administration to the repeal of the so-called
Byrd Amendment.

My question is this: to what extent is the
success of our newly stated policy toward the nations of
southern Africa contingent on the repeal of the

8

[LC]

Byrd amendment and how do you assess this attitude of
Congress?

SECRETARY KISSINGER: How do I assess the
attitude of the Congress?

Well, I do not think that I will go down in
history for my ability to assess the attitude of the Congress.
So I will leave that to the experts.

With respect to the Byrd amendment, I think a
number of issues have to be understood. One is that,
to the black African nations, the Byrd amendment has become
a symbol of United States support for the Rhodesian
regime.

Secondly, all the experts that I have been able
to consult -- military experts on the subject -- believe
that within a measurable time the situation in Rhodesia
will become so insecure that normal economic life will in
any event be substantially more difficult, at a minimum,
than it is today.

This is a view that I found universally stated
by our own experts and by experts of other countries
who one would normally think are sympathetic to Rhodesia
including some South African experts.

That being the case, the issue is not the simple
one of indefinite import of chrome from Rhodesia or the

cut-off of chrome. The issue is under what conditions
the United States can best preserve its interests and
cooperate in an orderly evolution of the Rhodesian
question.

If the issue of Rhodesia is settled as we propose, by
negotiation, with an outcome in which the rights of the
white minority are guaranteed, then you will have orderly
economic processes and then the long term supply of chrome
would be better assured than under conditions in which,
maybe for a year or so or two, the present situation is
preserved. But after that -- both because of the insecurity
within the country and the increasing radicalization of
the movement within the country -- our interests will be
threatened.

So we believe that the repeal of the Byrd
Amendment is important and we will make a formal proposal
to the Congress to that effect. What its chances are, I
cannot judge.

MR. BROOMFIELD: But in your judgment, if the
Congress does not act affirmatively on the repeal of the
Byrd amendment, it certainly is not going to help the new
stated policy that you have enunciated in Lusaka.

SECRETARY KISSINGER: It is not going to help
that policy and it is not going to help what we want, which

[LC]

10

is a peaceful evolution at the end of which both communities
can co-exist in a new relationship.

MR. BROOMFIELD: Well, certainly, it would be
my judgment that you can't look very favorable on the
chances of the repeal of the Byrd amendment in this
Congress.

SECRETARY KISSINGER: I have had these reports.
It is my duty to tell the Congress what I think the
right policy is. The Congress then must make its own
judgment.

MR. __________: Mr. Secretary, I understand
that you will be meeting with Prime Minister Vörster
of South Africa in the very near future. The meeting will
take place in Germany. What can you tell us about this
proposed meeting that you are going to have with the
Prime Minister?

SECRETARY KISSINGER: We have had no high
level contact with the South African government, certainly
for all the time that I have been in Washington. And,
therefore, I have no clear idea of the attitudes of the
South African leaders. When I planned my trip and
discussed it with this Committee, Mr. Diggs
suggested that I include the stop in South Africa. At

11

that time I did not feel I knew enough about African conditions to have a meaningful discussion with the South African leaders. And also I thought it would confuse the purpose of the trip if I did it on that occasion.

Since then, however, several of the black African leaders have told me that in their view the role of South Africa is -- can be -- decisive as to whether the future of -- the future evolution in Southern Africa will be peaceful or whether it will lead to racial conflicts.

So the question that I want to explore with Prime Minister Vorster, without having any idea as to his answer, is whether South Africa is prepared to separate its own future from that of Rhodesia and Namibia.

[L.C]

12

Secretary Kissinger (Continuing). If it does, I believe that will contribute to the belief that South Africa is, whatever its internal aberrations, an African country, and that the solution of its problems can occur over a longer period of time and by different methods than in areas that are not recognized by any country in the world as independent states.

There is reason to believe that at least some of the elements in South Africa share this view. And after all, South Africa has never recognized Rhodesia and has announced that it would not give military support to Rhodesia.

I do not know what can be achieved, and I do not expect that any great announcements can come out of this meeting. It will be an exploratory meeting, and we will have to determine our own policy after we have analyzed the results of this meeting, and no doubt, the Prime Minister will have to report to his colleagues before he makes any final decision.

But this is the direction in which we would like to move.

Mr. __________. Thank you, Mr. Secretary.

The Chairman. Mr. Zablocki.

Mr. Zablocki. Thank you, Mr. Chairman.

13

Mr. Secretary, you have stated that evacuation
of U.S. nationals in Lebanon is under consideration.

Secretary Kissinger. That is right.

Mr. Zablocki. Such an evacuation would involve
the U.S. Armed Forces, I presume. This would implement
the provisions of the War Powers Resolution.

My question is, has there been any consultation
with Congress on this issue?

Secretary Kissinger. There are several methods
of evacuation being considered, not all of which involve
the possible use of American military personnel.

Once the President has decided-- and I repeat,
first of all, he has not yet made a final decision on
whether evacuation is necessary.

Secondly, once that decision has been made, we
will have to decide whether to do it by methods that do not
involve American military personnel, in which case no
consultation would be needed; or whether it will.

If American military personnel is used, it will
be a very short operation. And in that case, of course,
there would be consultation with the Congress to inform
the Congress of the nature of the operation.

Mr. Zablocki. Consultation or informing?

Secretary Kissinger. Well, it would be both.

14

But realistically, the time period would have to be very short because one would not want too much opportunity for opposition to develop.

Mr. Zablocki. Mr. Secretary, do you think the United States might have usefully intervened in Lebanon several years ago before the situation had deteriorated, for example, as President Eisenhower did in 1958?

Secretary Kissinger. Well, several years ago the situation had not yet deteriorated to a point --

Mr. Zablocki. Several months ago, I meant.

Secretary Kissinger. Well several months ago, if the United States -- if you remember the reaction to the idea that the French might introduce forces.

This is not the same situation as in 1958 because we have seen that the Syrian army with the most modern equipment introducing over two divisions has had massive problems in advancing. There are over 20,000 armed Palestinians. There are close to 10,000 radicals under Jumblatt.

So we would be facing a substantial force that would require a significant American force and substantial fighting if we wanted to separate the contending forces. And then we would be stuck there for a substantial period of time because it requires a security force that can

15

impose its will on all of the factions.

Our judgment was, and that was the judgment of all
of the parties involved, that American military interven-
tion would unify all of the elements against the United
States, with the exception, of course, of the Christians,
and would involve heavy casualties and open-ended commit-
ment.

Mr. Zablocki. Thank you, Mr. Secretary.

The Chairman. Mr. Findley.

Mr. Findley. Mr. Secretary, you are well into
the eighth year of the very highest foreign policy
responsibility. When you entered upon these duties, I am
sure you set some goals for yourself, and I would like
to have you reflect on how events have matched your goals.

But before you do, Mr. Secretary, I would like
to say a word about yourself and our Chairman. This is
a political season, and I know you have had some criticism,
not from me.

I think I speak for members of this committee
on both sides of the aisle in expressing our profound
gratitude to you for the stewardship that you have given
in the foreign policy field. And I think at the same time
that the Executive Branch ought to recognize the very

16

profound debt to Chairman Morgan, who is completing his
Congressional career this year.

I have been here 15 years now, and I can't
imagine anyone who could have served the vital interests
of our nation's foreign policy more consistently than
Chairman Morgan. I hope at some time the Executive Branch
can find a way to recognize that great service.

Now would you comment on how events have matched
your goals ?

Does that come out of my time, Mr. Chairman?

(Laughter)

Secretary Kissinger. May I first join in your
tribute to the Chairman. I am sure the Executive Branch
will find a more formal way of expressing its conviction.

The Chairman has been one of the great patriots,
one of the men without whom the conduct of foreign policy
would have been very hard to conceive in recent years,
one of the great examples of what Executive and Legisla-
tive cooperation can achieve.

He has never hesitated to express his dissenting
opinion when he had it, but it has always been in a
constructive framework, and we have always benefited from
listening to it.

17

I think the Chairman -- I am not betraying a secret when I say that within five minutes of reading his announcement, I was on the phone to him and said that this was one of the saddest things that I had heard since I came here and hoped that perhaps he could be induced to change his mind.

So I join your sentiment, but I know we will find a more appropriate and formal way of registering the Executive's view of the Chairman.

With respect to your question, the difficulty of serving in high office is that one's performance after a while takes on a slightly athletic quality; that is, you wouldn't think that looking at me, but one reacts to events and one doesn't always have the time to reflect about the significance of what one has done. I think the time for that will not really be until I retire from this office.

I think the goals that I was hoping to contribute to when I came to Washington were to help end the Vietnam War; to try to create a basis for foreign policy which reflected the permanent interests and values of the United States in a more conceptual way than perhaps had been done previously; and to recognize that the United

18

States was now engaged in a permanent foreign policy to
which one could not set a terminal date and which required
our constant engagement,

I don't think I am the best judge as to how
well it has succeeded. I tend to believe that when the
debates of this year and the pageants of this year die
down, that we will emerge with a unified foreign policy
that one will not feel one has to change or throw up for
grabs every four to eight years, because our interests
and values do not change with the political season.

The Chairman. Mr. Fountain.

Mr. Fountain. Thank you, Mr. Chairman.

I don't know whether you can answer this in
public or not, Mr. Secretary, but if you can, to whatever
extent you can, I wonder if you would tell us what you
think Syria's intentions, basic intentions, are in
Lebanon now.

Secretary Kissinger. I would prefer to answer
in greater detail sometime in executive session. But
its immediate intentions in Lebanon seem to me to be to
bring about a solution along the lines of the so-called
Damascus Compromise at the end of January, which was a
slight shift in the balance between the Christians and

19

Moslems in favor of the Moslems from 51-49 in favor of
the Christians to something closer to 50-50, but at the
same time to prevent the radical invasion of all of
Lebanon, which is what the radical groups want and that have
a tendency to want to abolish the communities.

I think Syria is concerned between being caught
between Iraq and a radical Lebanon. And this seems to
me to be the primary objective of Syrian policy in
Lebanon at this moment.

The Chairman. Mr. Burke.

Mr. Burke. Thank you, Mr. Chairman.

Mr. Secretary, according to press releases,
Mr. Rumsfeld has just concluded negotiations with Kenya
for the sale of military planes. If these reports are
true, do you know, first the extent of these negotiations;
secondly, what type of planes are involved; and third,
why is this action necessary to the peace of Africa?

Secretary Kissinger. The Government of Kenya
has felt extremely threatened by the substantial influx
of Soviet arms into Somalia, and to a lesser extent into
Uganda. Both of these countries have claimed portions of
Kenyan territory.

[LC]

20

Therefore, last year the Kenyan Government approached us for some F-5Es. I forget how many are involved, but it is not a huge number; that, at any rate, was their request.

We agreed to it in principle, and the negotiations have been going on for nearly a year and have now been concluded on the occasion of Secretary Rumsfeld's visit to Kenya.

Mr. McCloskey tells me we are talking about 12 planes.

Mr. Burke. What about other military materiel which might be included in any arrangement that Mr. Rumsfeld agreed to?

Secretary Kissinger. That is the only equipment with which I am familiar. It is the only significant item with which I am familiar.

Mr. Burke. Thank you, Mr. Secretary.

The Chairman. Mr. Fascell.

Mr. Fascell. Thank you, Mr. Chairman.

Mr. Secretary, let me first commend you on a very strong initiative on raising the level of awareness on the question of human rights in all of the recent initiatives which you have undertaken; in Latin America,

21

as a cornerstone and an important factor in our relation-
ships, in Europe for the determination and the awareness
of the implementation, the necessity of the implementation
of the Helsinki Accord, and in Africa for new sensitivity
to the black problems in Africa.

I think this is a very important cornerstone
for all of these initiatives, and I commend you for that.

Secretary Kissinger. Thank you.

Mr. Fascell. Mr. Secretary, in Latin America,
is the number one political problem still Panama?

Secretary Kissinger. In Latin America, Panama
is, I would say, a principal problem, and at the OAS
meeting all of our sister republics expressed their concern
on this subject.

Mr. Fascell. Is another important problem the
question of trade, and particularly the trade exclusions
for Venezuela and Ecuador?

Secretary Kissinger. The big concerns of
Latin America are Panama, and the relationship between the
United States and them and our sister republics in the
economic field. In this, the exclusion of Venezuela and
Ecuador are very grating, and in fact, they are now debating
a resolution in Santiago to that effect.

22

[LC]

Another concern they have is to make sure that we take their special concerns into account in the administration of the Trade Act.

Mr. Fascell. Mr. Secretary, since we don't know and everybody seems to be waiting to find out what the Castro government will do in Africa and what effect the Angola invasion will have actually politically and otherwise in Latin America, does it seem reasonable that efforts by American businessmen to seek to do business with Cuba through foreign subsidiaries runs counter to our present national policy?

Secretary Kissinger. Certainly the attitude that our government has taken towards Cuba has been drastically affected by Cuban adventures in Angola, and we are discouraging American businesses from dealing with Cuba. Of course, they are prohibited from dealing with it when they are based in the United States.

We felt we had no alternative but to permit them to comply with the law of the country in which they were domiciled, and if the law of the country in which they were domiciled in the Western Hemisphere required trade with Cuba, we did not feel that we could legislate in that foreign country.

23

However, the other Latin American countries
have now become so concerned with Cuba themselves that
the pressures portrayed with Cuba which were nearly
overwhelming two years ago are much less and are being
sharply reduced.

Mr. Fascell. Do we have any evidence that
Castro is pulling any troops out of Angola?

Secretary Kissinger. Of course, we have
Castro's statements, and we have these assurances that
have come to us from various sources. There is some
evidence the troops are being withdrawn.

What we are not clear about yet, and what we are
still analyzing, is whether there is a net flowout or
whether the troops that are being withdrawn are being
replaced, either by other troops or by civilians. Therefore, we cannot yet make a clear finding the troops have
been withdrawn.

Secondly, even if there should be a net flow
out of Angola, until the organized Cuban combat troops
are substantially withdrawn or totally withdrawn, it
may not really make a decisive difference whether they
have 18,000 or 13,000 or 8,000. And therefore, we will
not change our policy towards Cuba until all organized

24

combat troops have been withdrawn from Angola, and we will
not be taken in by assurances passed through third parties
that may or may not come true and that in any event will
take a long time before they are implemented if they are
true.

Mr. Fascell. Thank you very much.

The Chairman. Mr. Whalen.

Mr. Whalen. Mr. Secretary, can you foresee
any circumstances under which American troops would be
used in Rhodesia?

Secretary Kissinger. I can foresee no circumstances in which American troops will be used in Rhodesia.

Mr. Whalen. Thank you, Mr. Chairman.

The Chairman. Mr. Diggs.

Mr. Diggs. Thank you, Mr. Chairman.

Mr. Secretary, I want to join Mr. Fascell in
commending you for raising the level of consciousness
about the whole question of human rights as he has so
well indicated, including our particular interest in
Africa.

I think that the nature of the questions thus
far is an indication of how you have raised the level,
because I can remember being a rather lonely voice on
questions of Africa and I would say that three-fourths
of the questions thus far today have been in that area.

Mr. Secretary, you are going to be meeting with
Prime Minister Vorster under different circumstances
then because of events that have just happened in the
last 24 hours. This wanton killing of
unarmed, peaceful demonstrators in Soweto by South
African police is certainly going to raise a lot of
sensitivities about the nature of your meeting with
him and so I am very much concerned about the results
of this meeting, regardless of the substantive issue
of not indicating that there is some kind of quid pro
quo.

Mr. Vorster has a proclivity to view all
encounters anyway with him as a demonstration of
acceptance of his government and his policies and we
have got to be very cautious that we don't appear to be
caught in that kind of a trap that we generally accept
to give the impression that we are embracing them,
particularly under these kinds of circumstances. And

26

there are all sorts of quid pro quos that come into
people's minds -- the relaxing of the arms embargo
and the recognition of Transkei and things like that.

And so I wish you could hopefully give us
some assurance that you will be entering into these
discussions without an attitude of conceding anything
to them except an exploration of their policy in realistic
terms.

SECRETARY KISSINGER: First of all, we
regret the events that transpired in South Africa yes-
terday and we have expressed our opposition to the
institutionalized separation of the races and to a legal
system that erects barriers between human beings based
on race.

We expressed this opposition in Lusaka and it
remains the basis of our policy.

I am not meeting with Prime Minister Vorster
in order to make concessions, much less to express any
approval of his system of government.

I am meeting with him in order to see whether
South Africa would be willing to contribute to a moderate
and peaceful evolution of events in southern Africa. But
it is not a cooperation for which we will pay in terms of

27

our principles.

I do not expect that any decisions will be made
at this meeting at all. I expect it to be an exploration
of basic attitudes and willingness to move in certain
directions. After that, there will undoubtedly be an
opportunity to meet with this committee and other interested
members of Congress and the Senate. But there will be
no decisions taken next week and I see no possibility in
any of the categories that you have described next week
or in any immediate future.

MR. DIGGS: Thank you, Mr. Secretary.

CHAIRMAN: Mr. Hamilton.

MR. HAMILTON: Thank you, Mr. Chairman.

Mr. Secretary, I have some concerns -- I know
you do -- about the possibility of sense of drift in the
Middle East. There doesn't seem to be any focal point
for the diplomatic activity at the present time and I
think that most of us understand that we must keep a
diplomatic option going.

Do you see, as a result of a crisis in Lebanon
any change in the situation that gives a new focus to the
diplomatic activity? Or where is the diplomatic focus
now in the Middle East?

[LJ]

28

SECRETARY KISSINGER: Well, the fact of the matter is that we have put forward a proposal which was to be the subject of the diplomatic effort during this year in consultation with the Israeli government.

This proposal has not been accepted by any of the Arab governments, but it has not been conclusively rejected by any of them either. In fact, some of them have not given any answer to it yet and are still studying it.

Now, the reason for the delay in achieving a conclusive answer seems to me primarily the situation in Lebanon, which has made it very difficult for the governments in the area to focus on the process of peace with Israel and we have not given any position to move along their considerations more rapidly, precisely because they have been so absorbed with the situation in Lebanon.

Now, it is quite possible that as the situation in Lebanon is being resolved -- and I believe that in the next months a substantial stabilization of the situation in Lebanon could occur -- if it doesn't blow up. But I would say the odds are more in the direction of stabilization than in the direction of an eruption.

Then we can go back to the peace process and I believe it could be that the events in Lebanon may have

29

crystallized forces that may make the return to the peace
negotiations more hopeful.

CHAIRMAN: Mr. Wolff.

MR. WOLFF: Thank you, Mr. Chairman.

Mr. Secretary, I want to continue on with
Lebanon for just a moment.

What are you or the Department going to do
about bringing to justice these people that murdered our
ambassador? Are we going to permit the same type of
situation to occur or to reoccur relative to the apprehen-
sion of those who killed our ambassador in the Sudan?

SECRETARY KISSINGER: You have to realize, of
course, Mr. Wolff, that right now there are still 1400
Americans in Beirut, so that any inflammatory statement
by me would be a rather reckless action.

We have appealed to all (sic) of the Arab governments
to cooperate with us and bring in to justice the murderers
of our ambassador and we shall certainly judge governments
by their willingness to cooperate with us in bringing to
justice people who have engaged in an act, no matter
what the passions, which is unjustifiable, inexcusable and
cannot be tolerated.

MR. WOLFF: Will you be satisfied with a result

30

as we did obtain in Sudan?

SECRETARY KISSINGER: No, we would not be satisfied with a result as was attained in Sudan. We would hope that the punishment -- we would expect that the punishment be severe and drastic.

MR. WOLFF: Thank you, Mr. Secretary.

CHAIRMAN: Mr. Guyer.

MR. GUYER: Mr. Chairman, I am going to defer my time. The Secretary has been most gracious.

I want to say this -- that in turbulent times -- as I understand, for example, some thirty countries of the emerging countries of Africa have sought and found independence since 1960. We know that the world is throwing off the shackles of colonialism. We understand that there are birth pains thereby attached and any man who can be useful in a humanitarian way is serving our country well and I hope you will make that your goal. Thank you.

SECRETARY KISSINGER: Thank you.

CHAIRMAN: Mr. Bingham.

MR. BINGHAM: Thank you, Mr. Chairman.

Mr. Secretary, as you know, some of us attended the UNCTAD Conference, during the final stages of that

[LQ]

31

conference. First of all, I would like to commend you for the statements you made there which I think was an extraordinarily comprehensive and on the whole entirely constructive statement.

I would like to ask you generally your assessment of the UNCTAD Conference -- and rather specifically for your comment on the rejection by the Conference of any further immediate consideration of the International Resources Bank proposal. And in that connection I might say that some of the comment that I had from various sources was to the effect that one of the difficulties was that that proposal had come as something of a surprise and that the delegates there not having very good communications with their home governments and home governments not having had a chance to study the proposal in advance -- the reaction to it was more negative than it would otherwise have been if there had been advance consultation.

SECRETARY KISSINGER: First, on the general problem of development. The problem of development will be one of the key issues of the remainder of the century, because if we are going to have a stable world, it must have the willing participation of the majority of nations.

[Lc]

32

And they must feel they have a stake in it.

And the majority of the new nations are primarily concerned with the problem of development. Now, the issue is whether the process of development will take place through a series of political confrontations where a technical majority is seeking to impose its will by parliamentary maneuvers on those that are alone in the position to bring about development, namely the industrial democracies. Or whether it is going to proceed on a cooperative basis.

It is my strong conviction that the attempt to impose solutions by technical majorities is bound to fail. Without the willing support of the United States and other industrial democracies, development simply cannot succeed over a long enough period of time to make it meaningful.

And this is why our policy has been to put forward concrete proposals, rather than rhetorical answers and to seek to engage the other nations in detailed discussions about their actual problems.

It was in this spirit that we put forward the comprehensive speech at the UNCTAD Conference, including the International Resources Bank proposal.

That proposal was of primary benefit to the
developing countries. It was not of principal benefit
to the United States. It was a means to enable them to
develop their resources and to enable private capital, which
is the principal source of investment funds, to flow
into these countries.

This proposal was defeated by, in effect, a
technical majority -- a vote of 33 to 31. Among these
33 votes there were 15 countries from the socialist world
that do not participate in the process of development at
all.

Another group of countries voted against it
for a parliamentary reason -- that they wanted to register
a protest against the selection of the member of their
group speaking for them in the planning committee.

So that out of these 33 countries, we can
identify only eight that voted against the proposal on
its merits. With respect to consultation -- after all,
the speech was made three weeks before the vote -- there
was substantial consultation before the speech was made,
obviously not with 160 countries, but with what we considered
to be the key countries.

I have the impression that after the vote which

[L.C.]

34

occurred at four o'clock in the morning and in which apparently several of the delegations didn't know what they were voting for and others were confused and others were in bed, that many countries felt rather sheepish and since admitting mistakes is not the specialty of any government, including our own, they looked for somebody else to blame, and therefore focussed on the lack of consultation.

CHAIRMAN: The time of the gentleman has expired.
Mr. Lagomarsino.

MR. LAGOMARSINO: Thank you, Mr. Chairman.

Mr. Secretary, in a hearing before one of the subcommittees of this committee earlier this week, it was alleged by a Mr. Landou -- who had just spent, he said, spent five weeks in Jamacia -- that there was a feeling down there -- and he seemed to share it -- that the American government and perhaps the CIA -- was the way he put it -- was trying to destabilize the Manley government.

A representative from your department was present and very strongly denounced that allegation.
I would like to have your comments on our relationship with Jamaica at the present time.

SECRETARY KISSINGER: The assumptions that are

[1c]

being made around the world about the ability of the
United States to destabilize other governments are not
in accord with my assessment of our capabilities.

With respect to Jamaica, I am not aware of --
and I would be aware if it were going on -- of any
CIA activity or any other United States governmental
activity designed to weaken the Manley government.

I don't know whether there are any Jamaican
exiles that may be doing things. I had a talk at the
OAS with the Jamaican foreign minister and I asked him
to produce any evidence of any kind, of people, organizations,
activities in which Americans were engaged and I promised
him that if he could identify either a person or an
organization, we would remove them from the island.

We are not engaged in such a campaign in
Jamaica. We are not doing anything of this kind. It
is an unstable situation in which I believe we are being
blamed for things that are indigenous to the island.

We are, however, as a result of my talks with
the Jamaican Foreign Minister, looking into the allegations
he made in order to determine not whether the government
is doing it -- we know the government is not doing it --
but whether there might be some campaign by some private

36

groups in the country. And those investigations we have
not yet completed.

I don't know who Mr. Landou is, to tell you the
truth.

MR. LAGOMARSINO: Mr. Secretary, this may have
been touched on while we were gone on the quorum call,
but have you discussed today your conversations

(inaudible)

about American prisoners in Mexican jails?

SECRETARYKISSINGER: No. I have not discussed
it. We had a good and constructive talk. I think both our
sides recognized that there is a problem. There are, in
fact, more Mexicans in American jails than there are
Americans in Mexican jails.

The Mexican government has made the suggestion
that the nationals of each country serve their sentences
in the prisons of the other. This does not yet take into
account what happens in the pre-sentencing period.

We are studying this proposal from the point of
view of what happens if our parole procedures were then
applied to people that they sentence; how this would

37

be effected by the rights ofhabas corpus and other rights
that American prisoners enjoy and how it would effect our
relations with other countries, whether we would then be
obliged to make similar arrangements with any other countries
that hold American prisoners.

So we are studying this proposal, but I have the
impression that the Government of Mexico -- if this
proposal turns out to be impractical -- is prepared to
look at other solutions to the problem.

CHAIRMAN: The time of the gentleman has
expired. Mr. Taylor.

MR. TAYLOR: Thank you, Mr. Chairman.

Mr. Secretary, is the non-aggression agreement
between Israel and Egypt holding up satisfactorily and
to what extent is it threatened by the troubles in Lebanon?

SECRETARY KISSINGER: Well, technically, you
cannot call it a non-aggression agreement, but the
renunciation of force. The Sinai agreement of last year
has worked satisfactorily. There is a joint commission of
Israelis and Egyptians which settle most of the current
problems that develop.

Occasionally, we are asked to straighten things
out between the parties, but considering the complexity

38

of the issues and the fact that in some areas there is a
parallel use of facilities, it has worked extremely well.

Our big concern in Lebanon has been to prevent that
situation from escalating to a point where all of the
countries in the area would be drawn in.

39

Secretary Kissinger (continuing). One of our
big concerns was that if war would develop between Israel
and any of its neighbors, that then the other Arab
neighbors would be drawn into it by the logic of the
emotions in the area. And so far we have been successful
in containing the crisis in Lebanon within the borders of
Lebanon, which has of course been a great tragedy for
the people of Lebanon. But at least we have so far
contributed to averting a greater crisis.

The Chairman. Mr. Buchanan.

Mr. Buchanan. Thank you, Mr. Chairman.

Mr. Secretary, on page 7 of your prepared
statement you referred to the six elements of our policy
in Latin America which you enunciated last February.

One of these was to negotiate on the basis
of parity and dignity (inaudible).

40

Mr. Buchanan (continuing). -- cutting off funds to be used in carrying out any negotiations on the Panama Canal. I wonder if you would care to comment on the impact of such an amendment should it be adopted by the Congress.

Secretary Kissinger. We would strongly oppose such an amendment on both constitutional and substantive grounds.

The constitutional argument is that the Executive has the right to engage in negotiations, and that the Congress then will have an opportunity to advise and consent, and any negotiation on Panama would have to be approved by two-thirds of the Senate, so that one-third plus one vote in the Senate could refuse to ratify any agreement.

But to pass a bill that prohibits the Administration from even finding out what terms are available would be an unprecedented decision, leaving aside now the impact.

Secondly, our concern in negotiating about Panama is the impact of the failure of such negotiations on our relations throughout the Western Hemisphere as well as on the ultimate security of the Panama Canal.

41

We believe that we can achieve secure and
neutral passage through the Panama Canal in perpetuity
through the negotiations that we are now conducting.
We believe that failure to conduct such negotiations
would undermine, not our relations with Panama alone, but
our relations with every country in the Western Hemisphere,
and would mortgage our policy in the Western Hemisphere
and throughout the rest of the world in a serious way,
and in time would raise severe security problems in
Panama itself.

Now if our passage through the Canal were
threatened, or if we could not achieve the terms which we
consider essential, then indeed we will have to defend
our rights in Panama. But when we do, and before we
launch the American people on such a course, we want to
be able to look (inaudible)

[lc]

42

MR. HARRINGTON: What, if you would, are the substantial American interests being served in the issue we have of involvement in the Italian elections which are occurring this weekend. I am talking about John Connally as a member of the oversight board for the intelligence community forming a group, that maybe if it were done by someone essentially in the private sector, would not have the significance attendant to the role he plays as a part of the Administration -- stories which have been rampant of support directly to people within the framework of the Christian Democratic coalition -- in the light of what we have seen by way of the discredited standing the Christian Democrats have in the sense of their own people.

And the broader question is, looking at it in reverse, what is the basis at all of even countenancing the belief, whether it is accurate or not, of intrusion into that kind of process?

Secretary Kissinger. There are two separate problems. One is, is the United States intervening in the election? The second, what is the United States view about the possible results of the election?

With respect to the former, the activities of

43

former Secretary Connally are not Administration activities
He is operating entirely on his own.

Mr. HARRINGTON: The title I was using,
Mr. Secretary, runs to his membership on the reconstituted Intelligence Oversight Board, or the connotation one
can draw from that, not former Secretary of the Treasury.

Secretary Kissinger. Well, there is no connection between Secretary Connally's activities as part of his committee, and whatever activities he may be engaging in in relation to the Italian election.

No intelligence money is involved in his
activities, and therefore, this is not an American
governmental action.

With respect to our basic view, I have repeatedly
explained almost always in response to questions why we
believe that a victory for the Communist party in the
Italian election, or a significant participation of the
Communist party in the government of Italy would have
long-term consequences in Western Europe and in the
relation of Europe to the United States that we consider
extremely serious.

Given the imminence of the election, I do not
want to elaborate on this and be accused of making a

44

statement that intervenes, but I stand by everything that
I have said in the past on that subject.

Mr. HARRINGTON: Well, let me say, if I could,
in conclusion that I am not trying to do it on the eve
of the elections, but I have been unsuccessful in attempting
to raise the broader question of the scope and extent of
American participation in a process that I think is the
internal political process of the country involved. And
I wasn't suggesting for a moment that it was designed
to (inaudible) you at the last moment or that I suspected --

Secretary Kissinger. No, no. I didn't say
you did. I just want to explain why I don't elaborate
on my answer.

Mr. HARRINGTON: -- that the CIA was using
the Connally group as the front for participation. I
think that it is a much more direct involvement than that.

My point was only to ask you to address the
reverse, the concern that has been engendered here with
some belief that the Korean government has even peri-
pheralized interfered with the American/process and apply
that
that on the broader sense of what/would do if we had
West European Christian Democratic parties attempting to
support one or the other of the American political parties

45

[Lc]

in the context of this election.

Does it serve our purposes, does it really
strengthen the Christian Democrats to revert to the
thinking of a generation and a half ago?

Secretary Kissinger. It may not strengthen
the Christian Democrats, but we can only point out that
the -- and I would be glad after the election, the
Italian election, to give you a longer explanation of our
views.

We do believe that the significant participation
of the Communist party in the government of Italy would
lead to consequences that are very serious for Western
cohesion and for the future evolution of the internal
situation in Europe.

We, of course, cannot tell the Italian govern-
ment or the Italian voters what to do. All we can say
is what we believe the impact on the international situa-
tion would be.

The Chairman. The time of the gentleman has
expired.

Mr. duPont.

Mr. du Pont. Thank you, Mr. Chairman.

Mr. Secretary, I would like to return for a

[LC]

46

moment to your African trip about which you have received
a number of questions this morning.

During that trip you proposed some significant
foreign aid to at least one African nation that is
involved in supporting and perhaps conducting guerrilla
military action in a neighboring country.

It also seemed to me in your remarks there that
you suggested our aid was at least condoning that action,
perhaps even encouraging it. If that was your intention,
I of course would strongly disagree, and what I would
like to hear you say this morning is to reaffirm the
basic principle of American foreign policy that we are
against encouraging the overthrow of foreign governments
by force and we are opposed to guerrilla action by one
nation against another.

Secretary Kissinger. We are opposed to
guerrilla action by one nation against another; we are
opposed to the overthrow of governments by force.

The peculiar difficulty of the Rhodesian situa-
tion is that the authorities in Rhodesia are not recognized
as a government by any nation in the world, including
South Africa. There is not one nation in the world that
has diplomatic relations with Rhodesia or has recognized

47

it as a government.

Secondly, nothing that I said in Lusaka was
designed to encourage guerrilla warfare. On the contrary,
everything that I said in Lusaka was designed to find a
new basis of negotiation between the black African
governments and the white settlers in Rhodesia.

All our efforts are directed to give the
moderates in that part of the world an opportunity to
express themselves. And our efforts in Mozambique are
directed to enable Mozambique to align itself more closely
with governments like Tanzania and Botswana and Zambia
that have on the whole favored a moderate evolution and
had favored negotiations until they came to the conclusion
that it was not possible with the authorities in Rhodesia.

Our constant urging has been to return to the
conference table on the basis that would permit the
black majority and the white minority to co-exist.

To let matters drift, which would have been the
easy thing for us to do, would guarantee that the most
radical elements take over the struggle, that the nego-
tiations become more and more impossible, and that after
a temporary period of quiet the end result would be one
that would be achieved by violence and in which nobody's

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48

rights could be protected.

This is our overwhelming concern.

Mrs. Collins.

Ms. Collins. Mr. Secretary, in the last several weeks we have heard a great deal of talk about the sale of computers by a Massachusetts company to South Africa and that with these computers it enables the South Africans to enrich their own uranium fuel for nuclear use.

In addition to that, we have heard a lot of talk about the General Electric effort to pursue an export license so they can send, or sell enriched uranium fuel that could be used for military purposes to South Africa.

I would like to know how the State Department views both of these situations.

Secretary Kissinger. I, frankly, am not familiar with the computer case and I have to look into that and let you know.

With respect to the nuclear plan, there was a project of a consortium of General Electric's Swiss and

Dutch companies, and that was before us. And what we at that point had to decide was whether we should authorize the American participation and thereby gain the right for some control over the nuclear materials, or whether we should prohibit it on other grounds.

Before we could make a final decision, the South African government decided that they would rather purchase their nuclear installations in France. And this is no longer before us, and we will not have to make a decision on that point.

The Chairman. Mr. Gilman.

Mr. Gilman. Thank you, Mr. Chairman.

Mr. Secretary, in your visits and conferences in Latin America, did you have the opportunity to discuss with any of the Latin American leaders our initiatives for interdiction and eradication of narcotic trafficking, particularly Mexico and Colombia?

[L0]

50

SECRETARY KISSINGER: Yes, I had an opportunity to discuss it and I should have paid tribute while Mr. Wolff was here to the work of the committee. I think the work has been extremely helpful. I believe that as a result of it the Mexican authorities have adopted a much more active program for the eradication of drug traffic and the planting of poopy seeds.

One of the issues that we are now studying -- not so much in relation to Mexico, but in relation to Bolivia where that issue also came up -- was whether more American funds could be made available to some of the governments, such as in Bolivia and Columbia to help them with their eradication programs.

But I do want to compliment the committee -- the subcommittee for the work that it has done.

Mr. Solarz.

MR. SOLARZ: Thank you, Mr. Chairman.

Mr. Secretary, as you know, the Russian and the Chinese and the Cubans are now engaged in providing military assistance to the various liberation movements in Rhodesia.

I would be very interested in knowing what the view of the African leaders with whom you met during your

[10]

51

recent trip to Africa was with respect both to the military
assistance these countries are providing the ZAPU and the
ZANU, as well as their view with respect to the possibility
or desirability of our providing military assistance to the
liberation movements in Rhodesia as well.

SECRETARY KISSINGER: Well, one of the constant
themes of my trip was that I believe that African problems
should be settled by Africans. And most of the
(audible) leaders with whom I spoke agreed with this
proposition and, therefore, the four so-called front
line states have agreed among themselves that no equipment
could go to any of these so-called liberation
movements except through them in order to prevent any direct
contact between any foreign country and the liberation
movement.

This is designed to prevent a situation such as
Angola where various liberation movements fight against
each other as the surrogates of foreign powers. We
consider that, on the whole, considerable progress.

Now, the argument that the Africans, of course,
make is that since the United States refuses to supply
arms to liberation movements, they have to get arms where
they can get them. And this accounts for the fact that
most of them come from communist countries.

52

But I would not favor the sale of American arms or the provision of American arms to movements of this kind. But we will do everything we can and we are making some progress in this direction to prevent the Rhodesian struggle from becoming a conflict between the great powers; because it would create impossible issues for us if we were forced to take sides inside Rhodesia and if in Rhodesia we repeated the Angolan experience, but this time be forced to back a white minority against all of black Africa.

This is why we would like to have the issue settled by negotiation and without the intervention of outside power.

CHAIRMAN: Ms. Meyner.

MS. MEYNER: Thank you, Mr. Chairman.

Mr. Secretary, you touched briefly on the role the United States is playing in the Middle East. Has our government played any part in facilitating communications between Israel and Syria concerning the situation in Lebanon? Do you believe Israel and Syria have any sort of understanding about each other's actions in regard to Lebanon? Has there been any communication between those two countries?

53

SECRETARY KISSINGER: To the best of my knowledge, there has been no communication as such between these two countries. One of the functions we perform is to give the best of our own judgment, our impression as to what various parties are likely to do and to try to suggest directions within which they might find a common position.

We don't consider this passing messages from one side to the other. It is sometimes acting as an honest broker. I do not believe that there is an understanding between Israel and Syria. I think there is an understanding in both Israel and Syria of the limit beyond which the dangers of escalation may become unmanagable.

But there is no agreement between them with which I am familiar. And we have always warned the parties to limit their activities because once the situation starts escalating, it may be impossible to prevent a Middle East war.

MS. MEYNER: Thank you.

CHAIRMAN: Mr. Fraser. Mr. Fraser, you have three minutes because we promised the Secretary he could have at 12 o'clock.

MR. FRASER: Thank you, Mr. Chairman.

Mr. Secretary, when you meet with Mr. Vorsteren,

[10]

54

would it be possible for you to raise with him the sentence which has been imposed on foreign Namibians, a sentence of death for violating the terroism act?

My understanding is that these four people were sentenced for assisting SWAPO leaders in relatively innocuous ways. But the issue of Namibia and the South African control over it, of course, raises further issues in which, I think, our government has been noticeably reluctant to support the United Nations.

But would it be possible to raise with Mr. Vorster the prospect of commutation of these sentences so that they would not be executed?

SECRETARY KISSINGER: Well, I frankly am not familiar with those four cases and if you could get the facts to me or I will find them out for myself, I certainly would be favorably disposed to raising it.

The more fundamental question is whether we will raise the issue of Namibia. Now, I believe that in Namibia where the South African Government is in a position not just to advise but to act -- that would be an unusually good opportunity for South Africa to contribute to the tranquilization or to a more moderate evolution in the area. It is one of the subjects on our

55

agenda.

MR. FRASER: Mr. Secretary, just one last question. I wanted to compliment you and the Department, as well as the Pentagon, on your success in restoring the large increases in aid to South Korea. I think the government there apparently got the signal because I noticed in the newspaper that a minister who had criticized Park was sentenced to seven and a half years in prison. So I think your policies are working very well.

SECRETARY KISSINGER: You don't expect an answer to this question.

MR. FRASER: I just would hope you would think about it sometime.

SECRETARY KISSINGER: Well, but I hope you would think, Mr. Fraser, on the question that nobody has a monopoly on concern for human rights, but that we in the conduct of our foreign policy also have to think of other values and other concerns and try to bring them into balance with each other.

The hearing stands adjourned until further notice.

55

agenda.

Mr. President, Mr. Meloy, Mrs. Waring, members of the Waring family:

More than 100 years ago President Lincoln spoke for all of us here today when he said:

"I feel how weak and fruitless must be any words of mine which should attempt to beguile you from the grief of a loss so overwhelming."

You have lost a husband, a father, a brother. We have lost close and valued friends and colleagues. We share your sadness, and hope that by sharing it we will help you find the strength to bear your loss. We know that there is little we can meaningfully say to the Waring and Meloy families at a moment so quintessentially solitary. But I ask that you let me make a

[y]

- 2 -

few personal observations of what I know of my two colleagues.

Frank Meloy and Bob Waring died as they lived -- in the service of their country and in the search for peace. I knew one man well, but only professionally, and the other not at all.

And yet I feel the loss of both deeply.

Frank Meloy was our Ambassador in Guatemala when I visited there last February shortly after the earthquake. I shall not soon forget the sight of Frank, immaculately dressed, completely unruffled, personally directing a group of hardboiled engineers and helicopter pilots involved in 24-hour a day rescue work. His single-minded devotion to the people struck down by tragedy, his masterful and calm handling of the relief effort, his success in helping tens of thousands of homeless and destitute

-3-

with understated compassion, will remain in the hearts of
Guatemalans forever. What he did there was a great source of
pride for all his countrymen.

On that occasion, too, Frank did not hesitate to overrule
an order I had given. He turned out to be right, and I am grateful
that I was able to tell him so before his death. I came away from
that experience with enormous respect for Frank's judgment, for his
courage, and his dedication. He was of the stuff of which great Ambassadors
are made.

When the situation in Lebanon this spring required a cool,
dedicated professional to lead our efforts to restore peace
I remembered Frank Meloy's actions in Guatemala and asked
him to go. He knew, as we all did, of the danger.

- 4 -

He accepted, without hesitation, or qualification. He did his duty without question and he demonstrated the strength, the excellence and dedication that is the hallmark of the Foreign Service of the United States.

I never had the privilege of meeting Bob Waring personally. But he was such a critical part of our efforts in Lebanon over recent months that I came to know his character, if not his person. Every day I saw and read his reports of what was going on in that tormented country. I saw his perception, his humanity, his sense of outrage at the violence, his passion for bringing it to an end, and his practical day-to-day valor in ceaseless mortal danger.

- 5 -

For months we have read in the newspapers and seen
on television that people in Beirut were being killed going to market,
or sleeping, or driving in the city. And almost daily in our
State Department cables there were reports that began, "Today
Waring met with Mr. X., then crossed town to see Mr. Y., then
went to the suburbs to see Mr. Z." Without bothering to refer
to it in his own reports, he was crossing the lines, back and
forth, in one of the most vicious urban battlefields of recent times.
For many weeks he was, in effect, the key man in our
search for peace in Lebanon.

I feel saddened that I have lost a valued colleague that I
felt I knew although I had never met him.

- 6 -

We are brought together by our common grief for
two brave and dedicated men. And yet we all feel privileged to
be here. There is no one here today who is not better for having
known these men, worked with them, or been part of the nation
they served.

In the last four years the Foreign Service has lost five
men in the search for peace in the Middle East. We owe it
to their sacrifice to finish their work.

I am today awarding to Ambassador Meloy and Mr. Waring
the Department's highest honor, the Secretary's Award.

Ambassador Meloy's Lebanese chauffeur will receive the
same Award, for he, too, served America with honor and died
for his country.

-7-

Mr. President, you honor not only these men but the
larger community of those who serve this country abroad
by your presence here today.

Ladies and gentlemen, the President of the United States.

PRESS
DEPARTMENT OF STATE

June 21, 1976

NO. 313

As prepared for delivery

REMARKS BY
THE HONORABLE PHILIP C. HABIB
UNDER SECRETARY OF STATE-DESIGNATE
IN TRIBUTE OF
FRANCIS E. MELOY, JR.
AMERICAN AMBASSADOR
AND
ROBERT O. WARING
COUNSELOR OF EMBASSY
MURDERED IN BEIRUT, LEBANON

JUNE 16, 1976

THE NATIONAL CATHEDRAL

JUNE 21, 1976

Mr. Vice President, Mrs. Waring, Mr. Meloy, Members of the Families and friends:

I am here today to speak for the Foreign Service of the United States of America -- to pay, as best we can, a small measure of the debt of gratitude, pride and love that we owe our colleagues and our friends, Frank Meloy and Bob Waring. And to offer to their families the sympathy, understanding and the solidarity which all of us in the Foreign Service hold for our loved ones who give up so much -- both those who share foreign duty with us, and those who remain at home to bind us even more closely to the country we serve.

Service -- to the nation; and to the higher values of humanity. That is the symbol and the legacy of these two Americans. Theirs will be the new names added to the long list of Foreign Service men and women who gave their lives in tragic or heroic circumstances -- names engraved in marble at the Diplomatic Entrance of the Department of State. That list runs back 200 years. For some 175 of those years it is largely a record of those who lost their lives to disease and natural disaster. But for the last quarter-century it tells a story of the widening violence which mankind inflicts upon itself.

The forces of change in our century have brought vast material benefit and widening horizons of the human spirit. But they have spawned as well new plagues of terror and war which can touch the lives of every citizen. Thus, more than ever before, peace is the profession of the diplomat. And the roll of honor in the Department of State tragically records the sacrifice exacted by this new meaning of foreign service.

Indeed, the names of foreign posts where Frank Meloy and Bob Waring served their country can make up a catalogue of political crisis and human suffering in our time: from Athens in 1947 through Berlin, Saigon, Santo Domingo,

For further information contact:

- 2 -

PR 313

Guatemala, to Beirut in 1976. Their careers represent the diversity and the challenges characteristic of their time.

Frank Meloy's career brought him a short time ago to serve as Ambassador to Lebanon. He moved from working to help a nation battered by nature to one ravaged by man.

This year -- as for the past four years -- found Robert Waring pursuing his career in Beirut. There, through two tours of duty, he had unswervingly committed himself -- under ever-worsening conditions -- to offer his deep understanding of the economic and political forces at work in Lebanon in the service of the United States.

The fate these men shared saddens us. Their paths crossed as paths so often cross in a wandering profession. Like all of us their lives touched thousands of others and finally touched each other.

Over the past few days I have asked some of their friends to tell me what they remember. To those who knew them and worked with them, no matter how long ago, the memories were sharp. These were not men who blend and fade.

Frank's friends remember him as cool and collected. Courtly in bearing and manner, but tough underneath. When I saw him last a few weeks ago, he was the veteran diplomat off to meet a new challenge with that certain panache. A man of conviction not afraid to dissent, well before it was a popular mark of individuality. A man with an affinity for service, and a lifetime to demonstrate it.

Bob's colleagues recall his gentility. In the sweetest tribute of all, one described him as somebody who tried to live a saintly life. He liked people from all walks of life and they responded. He had more good friends in Beirut than any other member of the staff. He cared about others, and is remembered by those younger officers whom he welcomed within his circle with warmth and consideration. Full of rectitude and decency, he was sometimes reserved but passionately outspoken if he thought something was wrong.

These were men of great personal courage. Within days of his arrival, Frank Meloy died seeking to carry his negotiations into the most dangerous areas of the city -- areas into which Bob Waring had repeatedly and valiantly ventured time and again to carry out his official missions.

And these were men of great principle. Their lives tell us they knew that freedom is precious for its own sake; that truth is infinitely valuable; and that only when people are prepared to devote their very being, are the forces set in motion by which peace may prevail.

And let us pay tribute to another brave man -- one whose dedication and loyalty lost him his life with Frank Meloy and Bob Waring. I speak of Zohair Moghrabi. His long and committed service to our Embassy in Beirut, and his ultimate sacrifice, stand as a symbol of the thousands of Foreign Service local employees who have helped America in their native lands and for whom the Foreign Service feels a special gratitude and affection.

PR 313

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Secretary of State Kissinger has awarded to Francis Meloy, to Robert Waring, and to Zohair Moghrabi the Department of State's highest honor, the Secretary's Award -- for the courage, the dedication, and the loyalty which led them to give their lives in the cause of peace.

The memory of these men will live in the love of their families; in the pride of the Foreign Service; in the gratitude of the United States; and in the hearts of people everywhere who care for peace.

Colleagues and friends:

The event that has assembled us here was brutal, and tragic. But the legacy to which we have come to pay tribute is enduring, and good.

What these men leave behind strengthens us in our commitment: to our country, and to peace.

There are cynics in this beloved land of ours who see only the tarnishing of government service. In these men we honor today the burnished shield of the Republic is held on high.

Not long ago the generation of Americans to which these men belong was called upon, "to pay any price, bear any burden, meet any hardship." They met hardship, they bore their burden, and they paid the ultimate price.

* * * * *

PRESS
DEPARTMENT OF STATE

[cc]

June 21, 1976

No. 314

EXCHANGE OF REMARKS
BETWEEN THE HONORABLE HENRY A. KISSINGER
SECRETARY OF STATE
AND THE PRESS
FOLLOWING MEETING WITH
FRENCH PRESIDENT VALERY GISCARD D'ESTAING

JUNE 21, 1976

PARIS, FRANCE

**QUESTION:** Can you tell us, what were your talks with President Giscard d'Estaing?

**SECRETARY KISSINGER:** As you know, we consider President Giscard d'Estaing a good friend and we just had an opportunity during his most successful visit to the U.S. to review the situation. We reviewed the world situation, events that have happened in the interval in Lebanon, the Middle East, and we discussed the forthcoming summit in Puerto Rico in a very cordial and constructive atmosphere.

**QUESTION:** What do you think about the peace conference between Lebanese in Paris?

**SECRETARY KISSINGER:** We favor any method that will bring about peace in Lebanon and if the various factions could meet in Paris -- and could agree to meet in Paris -- we would certainly welcome it, especially in the light of France's historic role in that part of the world.

**QUESTION:** (Inaudible).

**SECRETARY KISSINGER:** I told the President about my forthcoming meeting with the Prime Minister and we discussed the African situation, not just with respect to South Africa, but to all of Africa in some detail, and as you know, the United States strongly supports the initiative of President Giscard with respect to African development.

**QUESTION:** Dr. Kissinger, would you agree that the French send troops to Lebanon?

**SECRETARY KISSINGER:** Whether France sends troops to Lebanon is a decision that must be taken by France, and if all of the parties

PR#314

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were to ask for it under conditions of ceasefire, the United States
would certainly have no reason to oppose it.

**QUESTION:** Does the American government plan to send troops over there?

**SECRETARY KISSINGER:** The United States Government has no plan to send troops to Lebanon.

**QUESTION:** Did you talk about the South African situation?

**SECRETARY KISSINGER:** We discussed the South African situation and the situation in all of Africa.

**QUESTION:** The intervention of Syria in Lebanon -- could it pave the way for peace in the Middle East or complicate the possibility for settlement?

**SECRETARY KISSINGER:** We have stated that the solution worked out under Syrian sponsorship at the end of January for a new political solution in Lebanon in general accords with our own views as to the proper situation -- as to the proper outcome. We will continue to make an effort for peace in the Middle East, in which, of course, all of the parties will have to be involved.

**QUESTION:** Dr. Kissinger, are you confident that stability can return soon to Lebanon?

**SECRETARY KISSINGER:** We strongly support any efforts to bring about peace in Lebanon and we hope that stability can be returned very soon. The parties should get together and negotiate, and find a solution that respects the rights of both communities and the integrity and sovereignty of Lebanon.

**QUESTION:** Did you talk about the solution to the South African situation?

**SECRETARY KISSINGER:** We discussed the situation in southern Africa and a possible solution.

* * * * *

The Secretary
of State

Speech

June 21, 1976

Paris, France

Bureau of Public Affairs

Office of Media Services

COHESION OF INDUSTRIAL DEMOCRACIES:
PRECONDITION FOR GLOBAL PROGRESS

Secretary Henry A. Kissinger before the Organiza-
tion for Economic Cooperation and Development
(OECD).

The purposeful cooperation of our nations
has been at the heart of the world's progress for
three decades. Today we are challenged to deepen
and advance that common effort. The cooperation
of the industrial democracies is decisive for world
peace, prosperity, and the cause of justice and
human dignity.

No group of nations is better equipped to
master these challenges. Ours are the societies that
launched the two great events that gave birth to
the modern age—the political revolutions of the
18th and 19th centuries that shaped today's com-
munity of nation-states and the Industrial Revolu-
tion that produced the contemporary world econ-
omy. We share a heritage of pioneering effort in all
the modern forms of commercial, social, and
governmental organization. And we have been able
to perceive and respond to new challenges, es-
pecially in giving effect to our recognition of the
imperatives of interdependence.

Our democratic systems have disproved the
doctrine that only repression and authoritarianism
could advance human well-being. On the contrary,
the industrial democracies assembled here have
demonstrated conclusively that it is in freedom
that men achieve the economic advance of which
ages have dreamed. There is some irony in the fact

that after years of disparaging our economic sys-
tem, both the Socialist countries and the develop-
ing countries have turned to us to help them ad-
vance more rapidly. Today it is the industrial
democracies which primarily have the resources,
the managerial genius, the advanced technology,
and the dedication which is needed for sustained
economic development under any political system.

The advanced industrial nations have con-
ducted themselves of late with vigor, determina-
tion, and a sense of shared purpose. Most of the
OECD countries are now entering a period of
economic expansion. We have worked together in
the process of recovery, averting protectionist
tendencies in trade and the selfish pursuit of oil
and raw materials at each other's expense. Largely
due to this, we are recovering quickly and with
excellent prospects for continued progress.

We have acted together because we recognize
that the world economy has become global. Na-
tional interests cannot prosper or endure in isola-
tion. And the nations assembled here are the
engines of the world economy. Our performance is
the pivot around which international trade and
finance revolve. Our technology and investment are
the catalysts of development and economic prog-
ress in developing nations.

Today the world economy faces new and
demanding challenges. Our past cooperation must
be given fresh impetus in our twofold tasks: to
improve our performance in areas where we have

PR 311

2

already begun to work together and to create
mechanisms of cooperation to deal with new issues
and opportunities.

This organization is well suited to this task. Its history and durability are a demonstration of the unity and cooperation of the industrial democracies. It has provided a unique forum and necessary focus for dealing with the critical link between national aspiration and global opportunity. This is no accident; it reflects our fundamental moral and political fraternity. Our traditions of freedom give moral meaning and political purpose to our technical achievements.

This is why I wish to stress the importance of furthering our unity and progress through the OECD. The objective is not to forge a bloc for our own advantage or for purposes of confrontation. It is to shape a new international environment based on the consciousness that in an age of interdependence national interests can best be served by advancing the aspirations of all mankind through cooperative efforts.

Let me discuss three areas of challenge and opportunity:

* Strengthening the cohesion and prosperity of the industrialized democracies.

* The new issues we face in economic relations with the Communist world.

* The ongoing international effort to promote economic development and a constructive long-term relationship between the industrial and developing worlds.

## Industrial Democracies Relationship

Our first and fundamental concern must be economic cooperation and progress among the industrialized democracies of North America, Western Europe, and Asia. Tomorrow, finance and economic ministers will discuss these economic questions in detail. Today I want to sketch in broad terms four essential areas of our cooperation which have the greatest significance for world order and the future of the international system:

* Noninflationary economic growth;

* Strengthening our open international trade and monetary system;

* The encouragement of transnational investment; and

* Greater cooperation in energy.

I shall discuss each of these in turn.

First, as our nations move to recovery and expansion, we must insure steady, noninflationary economic growth. Only in this manner can we resolve conflicting claims on resources, reinforce the political vitality of our institutions, enhance our freedom of action in world affairs, and enlarge the economic horizons of all societies.

We must overcome cycles of boom and stag nation, which, in the past, have impaired produc tivity, constricted investment, and choked off our full economic potential. We can achieve sustained growth by containing inflation. The investment needed to create jobs for our growing labor forces will dry up in an environment of rapidly and con stantly rising prices. Inflation erodes the progress made in raising the standard of living of our peoples; it strains the social fabric of our demo cratic societies.

The responsibility for noninflationary growth rests with national governments. But close consult ation and collaboration are essential to insure that national policies are complementary and rein forcing-to contribute to exchange rate stability among us; to give special attention to members that are in difficulty; and to collaborate on policies of trade, energy, and relations with the developing countries. The summit meeting at Rambouillet last November made a major contribution to general recovery and promotion of these goals. The sum mit next week at Puerto Rico will assess the prog ress we have made and use it as a point of depar ture for future advance.

This meeting provides an opportunity for the nations assembled here to reaffirm our joint com mitment to an open economic system, to national responsibility, and to international cooperation. With sound and concerted policies among us, and with efforts to coordinate our strategies for expan sion, the potential for the world's sustained eco nomic growth can be realized.

At last year's OECD ministerial meeting, at the U.S. recommendation, a group of distin guished economists was set up chaired by Professor [Paul W.] McCracken. It was assigned the task of examining the medium- and long-term and struc tural problems of sustained economic growth. It is exploring the problems of inflation, investment,

3

structural imbalances, and adequate supplies of raw materials. We look forward to their conclusions and recommendations.

Strengthening our trade and monetary systems also requires enhanced collaboration. In recent years, high unemployment and economic uncertainty have revived protectionist pressures in many countries; inflation and drastic differences in the performance of member nations have produced major payments imbalances, exchange rate pressures, and financial strains.

The Rambouillet summit and the IMF [International Monetary Fund] meeting in Jamaica last January were milestones in adapting the international monetary system to a new era. We have agreed to new IMF rules to avoid the shocks and disequilibrium which plagued the Bretton Woods system, and insure a smoother functioning of our trade and investment.

Today and tomorrow the OECD nations are continuing close and detailed consultations. We will examine both current problems and the long-term future; both the existing institutions as well as institutional reform. A recent example of our capacity for innovation was the agreement on the OECD Financial Support Fund, designed to help us deal cooperatively with serious economic dislocations aggravated by the oil price rises. The United States is seeking swift ratification of this agreement so that the Fund may come into being soon.

In trade, two years ago the OECD nations jointly undertook an extraordinary political commitment to preserve an open economic system despite a period of general economic difficulty. On May 30, 1974, we pledged to avoid new restrictions on trade. We rejected policies which would tend to shift one nation's difficulties onto others. That declaration strengthened our successful efforts to resist protectionist pressures and thus benefit countries with particularly acute balance-of-payments problems. The declaration was renewed last year. We should now renew it for an additional year.

Our economic recovery provides significant opportunities for further progress:

First, the political commitment represented by our trade pledge should be the basis for wider cooperation among us. The United States proposes that this organization recommend further areas for

common action, not only on current trade problems and negotiations, but on the long-term operation of our open trading system.

Second, all nations assembled here should make a political commitment to accelerate the multilateral trade negotiations in Geneva. We are at the point where we must move forward at a more rapid pace if the negotiations are to reach a successful conclusion in 1977. To this end, the United States strongly recommends that we reach agreement this fall in Geneva on a tariff-cutting formula.

Third, it is our shared obligation to improve the conditions of trade for developing countries. The postwar trading system was built on a consensus among industrial countries in which the developing countries did not participate and which they now challenge in several important respects. We need to reexamine the trading system, prepared to change or strengthen it where necessary. In the multilateral trade negotiations we will be negotiating new provisions in such areas as nontariff barriers, supply access, the settlement of disputes, and trade restrictions that are justified for balance-of-payments purposes. This organization and its members can play a crucial role in building a new global consensus on these issues.

Transnational investment is the third area calling for close collaboration among the industrial nations. Investment is the lifeblood of our economies and vital to worldwide development. It has been a principal source of the economic growth and security and prosperity which the nations represented here enjoy. It has been the single largest source of development capital for Third World nations and a powerful force marshaling management and technology for their benefit. It has developed resources; it has increased income; it has provided jobs. Since the mid-sixties, foreign direct investment has been growing faster than international trade and global gross national product.

The increasing importance of transnational investment to the global economy has been accompanied by no little concern over the activities of private investors, particularly the multinational corporations. Questions have been raised as to how the international firms can serve the national interests of their hosts as well as their own. A few notorious cases of illicit payments have stirred apprehension and cast a cloud over the overwhelm-

4

ing majority of international firms whose behavior
has been beyond reproach.

Governments, too, have impeded the flow of
capital through inconsistent policies or discrimina-
tory treatment of international firms. And most
industrial countries have been under pressure at
home to take increasingly nationalist positions
toward international investment. If this trend is
not halted, we shall face a gradual deterioration in
the international investment climate, with serious
consequences for economic development and the
global economy.

It is highly significant, therefore, that this
organization undertook two related tasks: to nego-
tiate voluntary guidelines for multinational firms
and to clarify governmental responsibilities to pre-
serve and promote a liberal investment climate. We
are able to announce today the acceptance by
OECD member governments of a declaration on in-
vestment. This declaration extends the cooperation
which has characterized our trade and monetary
relations into the area of investment. It includes:

* Recommended guidelines for the activities of multinational corporations;

* An agreed statement of the basic responsibili-
ties of our governments with respect to transna-
tional investment;

* Strengthened cooperation on the questions of incentives and disincentives to foreign direct investment; and

* Increased consultations between our govern-
ments on all these matters.

The United States strongly endorses this dec-
laration and urges its widest possible adoption and
observance.

A framework for investment is now emerging.
We must encourage its development. Therefore in
addition to our full support for the OECD declara-
tion, the United States urges the following policies
for our nations:

First, we should support the work of the U.N.
Commission on Transnational Corporations, and
the related U.N. Information and Research Center
within the Secretariat, which will develop a com-
prehensive information system on issues relating to
transnational corporations. This will contribute to

a fuller understanding of investment issues among
all nations.

Second, we should review the proposal of the
International Resources Bank which the United
States put forward at the U.N. Conference on
Trade and Development [UNCTAD] at Nairobi
last month. While the Bank will focus on energy
and raw materials, its principal features—as a multi-
lateral guarantor against noncommercial risk and as
a facilitator of production-sharing and technology
transfer—have important implications for develop-
ment generally.

Third, we should take strong collective
measures to eliminate corrupt payments. Bribery
and extortion are a burden on international trade
and investment. We reiterate our proposal that
negotiation of a binding International Agreement
on Corrupt Practices begin at next month's session
of the U.N. Economic and Social Council.

Fourth, we should cooperate to restrain anti-
competitive practices of firms which undermine
the benefits of our open economic system. The
United States proposes a dual effort: to reduce in-
ternational procedural obstacles to the enforce-
ment of laws against international restrictive
business practices and to pursue bilateral and mul-
tilateral agreements for international antitrust
cooperation similar to that about to be concluded
between the United States and the Federal Re-
public of Germany.

Fifth, we should strengthen the work of
specialized OECD committees which deal with in-
vestment problems, such as harmonizing statistical
systems, cataloguing restrictive business practices,
improving the exchange of tax information, dealing
with tax haven problems, as well as their work now
underway on the general topics of technology
transfer and short-term capital movements.

The fourth crucial sphere of cooperation
among the industrial nations is energy. The co-
operation of energy-consuming nations has become
an imperative, for the last few years have demon-
strated the economic and political costs of loss of
control over this critical component of industrial
growth.

For the next several years, our nations' heavy
dependence on imported oil will contribute to our
political and economic vulnerability. The outlook

5

for reducing our dependence in the next decade is not encouraging. Forecasts based on existing energy programs in the industrial countries indicate that our imports of OPEC [Organization of Petroleum Exporting Countries] oil will increase from 27 million barrels a day in 1975 to as much as 37 million barrels per day by 1985. At the same time it has become clear that oil reserves, while still large, are finite. Thus we must reduce our immediate dependence on imported oil side by side with beginning a long-term transition to alternative energy systems through the most rapid possible development of new and alternative sources of energy.

The industrial countries have begun to respond to the energy challenge. The difficult process of reorienting energy priorities and establishing new energy policies has been started. When the energy crisis became apparent, we moved rapidly to set up the new International Energy Agency [IEA], within the framework of the OECD. Through its impetus a comprehensive structure of technical cooperation and policy coordination among industrial countries has grown up. At the same time a dialogue with the OPEC countries has been started in the Conference on International Economic Cooperation. And the importance of helping the poorer developing countries—especially those with limited energy resources—to survive the energy crisis has been recognized.

Despite these accomplishments, our efforts have fallen far short of our needs. They will neither adequately reduce our immediate energy vulnerability nor achieve a satisfactory global balance of energy supply and demand over the longer term.

The United States therefore proposes that OECD members take the following cooperative steps:

First, that we establish on an urgent basis joint energy production projects to pool technical know-how and financing in areas such as coal extraction and utilization, uranium enrichment, and synthetic fuels. Such actions would accord with the commitments we undertook in the IEA Long-Term Program. They will contribute to the early availability of commercially attractive additional energy sources.

Second, that we establish collective and individual goals for substantially reduced dependence

on imported oil by 1985. This will require agreed targets for additional energy production, particularly in the coal and nuclear sectors. These represent our best hope for substantially reducing our energy dependence in the next decade.

Third, that we agree to intensify our national efforts to reduce the growth in demand for energy.

The United States urges that the Governing Board of the IEA launch these efforts on a priority basis. Member governments should endorse these goals for reduced dependence and also make the essential political commitment to specific and concrete actions to achieve them. We should aim for a ministerial meeting in six to nine months to accomplish these objectives. The ministerial meeting should also look beyond the next decade to the post-oil era, and seek ways to build on cooperative research and development efforts in such areas as solar power and nuclear fusion. OECD countries not members of the IEA should be given an opportunity to participate fully in this process.

This agenda—of action for growth, trade and monetary affairs, investment, and energy—suggests an expanding role and responsibility for the OECD. Working together, the nations of the OECD face an unprecedented opportunity to advance their common welfare and prosperity. And on this foundation of cooperation we can more effectively deal with the issues which involve us with nations outside the OECD region.

Let me now turn to these relations with the rest of the world.

## East-West Economic Relations

Our relations with the nations of the East turn primarily upon political and security issues. In the past trade and economic relations with the Soviet Union and Eastern Europe have not been among our central concerns. But a new dimension of economic interaction between East and West has begun to take shape. It is time to act cooperatively so that this new economic factor becomes an increasingly positive element in the world economy.

The Soviet Union has the second largest economy in the world. Together with all COMECON [Council of Mutual Economic Assistance] countries it accounts for about 20 percent of world output. But despite the size of its economy, the Soviet Union is not a major factor in the world

6

economic system. Its trade is relatively small; it has
made little contribution to economic development.

In recent years, however, the Soviet Union
and the countries of Eastern Europe have moved
toward greater economic contact with the West.
The basic reason is plain. These countries have
come to realize that they cannot provide for
growing consumer demand or meet the technologi-
cal imperatives of the more sophisticated economy
they seek solely from their own economic re-
sources. Further, many of the countries of Eastern
Europe wish to diversify trading patterns that were
established in the aftermath of World War II.

As a result, in the last four years trade be-
tween the COMECON countries and the OECD
countries has increased nearly fourfold. Most East
European countries now depend on and prefer
Western machinery, technology, and material im-
ports for the dynamic element of their economic
growth. And in matters of finance, the sudden in-
crease in the external debt of the Soviet Union and
the countries of Eastern Europe has been striking.
Their net debt to private Western banks doubled in
1975 to $15 billion, and their total hard currency
debt has reached nearly twice that amount.

The most familiar example of the impact of
Communist countries on the international econo-
my has been Soviet shortfalls in the production of
grain, which has become the single most volatile
element in the world food picture. In addition the
Socialist countries can become an important ele-
ment in the global energy balance. And in an era
where adequate supply of many other industrial
raw materials can no longer be taken for granted,
the extensive mineral reserves of the East can ex-
pand resource availability worldwide. It is there-
fore clear that in our miltilateral effort to build a
strengthened international economic system we
will have to take account of the potential needs
and contributions of the centrally planned
economies.

For us, the industrial democracies in the
OECD, the growing economic interaction between
East and West and the Eastern influence on the
global economy are realities that if arranged wisely
can be positive developments, stabilizing
relationships and broadening contacts. At the same
time, managing relations between free economies
and state trading systems has inevitable complica-
tions. Dealing with a centrally planned economy

under strict political direction can never be treated
simply as a commercial enterprise alone.

Certain principles stand out:

* All our nations have been engaged in this
process.

* State trading countries must not be per-
mitted to use their centrally directed systems for
unfair advantage; nor should they be permitted to
play off the industrial democracies against each
other through selective political pressure.

* Growing East-West trade also presents hopeful prospects, both economic and political, if approached with understanding, skill, and foresight.

* In short, it is up to the industrial democracies to consult closely and to manage this process cooperatively.

Therefore, the United States proposes that
the OECD nations adopt a systematic work pro-
gram for developing objectives and approaches for
our economic relations with the Communist coun-
tries. To this end some progress has already been
made; for example, in aligning national export
credit policies among the industrial countries. If we
are to face this issue in an intelligent and har-
monious fashion many additional areas should be
examined. Specifically our nations should seek
answers to the following questions:

* How can we insure effective reciprocity in trade between market and nonmarket countries?

* How do we deal with the problem of dumping and other unfair trade practices by countries in which prices need not bear a relation to costs or market forces?

* What are the implications of the growing ex-
ternal debt of the Communist countries?

* How can the industrial democracies deal with
possible efforts to misuse economic relations for
political purposes inimical to their interests?

* What should be the relationship between the nations of the East and the multilateral bodies dealing with economic affairs?

* How do we take account of the diversity of interests and needs that has already appeared among Eastern countries?

* And finally, is it possible to bring the Soviet Union and the Eastern European countries into the

7

process of responsibly assisting development in the
Third World?

The United States will elaborate its views on
these issues at the next meeting of the executive
committee in special session. The results of our
examinations of these questions could be em-
bodied in a report to the next ministerial meeting
of this organization.

Growing East-West trade presents problems
together with great opportunities. It is up to the
countries assembled here to understand the process
and its complexities and to manage it cooperative-
ly. In that case it can contribute to the vitality of
our economies and to the stability of the interna-
tional order.

## Relations Between North and South

One of the most urgent and compelling chal-
lenges that summons our cooperation is the rela-
tionship between the industrial and the developing
nations. The new era of international cooperation
we seek must include economic relations that offer
mutual prosperity and widening opportunity for all
the peoples of the world. Every nation has a stake
in global stability and world peace. But the ulti-
mate good must be to look beyond the mainte-
nance of peace to a world which offers its children
a hope of a better future.

The United States has made its commitment.
We have demonstrated our determination at the
Seventh Special Session of the U.N. General As-
sembly; at the Conference on International Eco-
nomic Cooperation [CIEC] in Paris; at Kingston,
Jamaica, in January; and at the UNCTAD Confer-
ence in Nairobi last month.

Our efforts begin from the conviction that an
effective international system must be founded
upon a consensus among all nations and peoples.
The world community which is our ultimate aspira-
tion can only be realized if all nations and peoples
can pursue their goals with a sense of participation
and an awareness that their concerns are heeded. If
we are to live in a stable world, the preponderant
number of nations must be persuaded that their
legitimate concerns are taken seriously.

The poor nations cry out for development.
Their objectives are clear: economic progress; a
role in international decisions that affect them; and
an equitable share of global economic benefits. The

objectives of the industrialized nations are equally
clear: widening prosperity for all peoples produced
by an open world system of trade and investment
with expanding markets for North and South. We
want to see stable and equitable development of
the world's resources of food, energy, and raw
materials as the fundamental basis for a prosperous
world economy.

Thus the objectives of the industrial democracies and those of the developing nations should be complementary. The process of building a world community must therefore be shared by nations of both North and South and must address the issue of economic development in the context of growing global prosperity.

But this is not inevitable. Effective cooperation presupposes that both sides face certain realities without illusion.

The most critical of these realities is that de-
velopment is a long-term process. Sustained eco-
nomic development cannot possibly result from
any one conference or any one set of proposals. It
will depend primarily upon the internal effort, the
domestic policy, and the national will of the de-
veloping countries themselves. In most cases the
effort will extend over decades. Often this will
require painful short-term sacrifices for longer term
gains. Development cannot be created by rhetoric
or by parliamentary victories in international
forums.

Development further requires the sustained
and collective effort of the industrial countries.
The role of the industrial democracies is critical,
for we possess the largest markets and most of the
world's capital and technology. Thus real develop-
ment presupposes a serious, unemotional,
constructive North-South dialogue.

In such a dialogue it is futile for one party to
seek to impose solutions to the problems of de-
velopment on another. An atmosphere of extortion
or pressure, unworkable proposals or excessive
reliance on parliamentary maneuvers will ulti-
mately undermine public support in the only coun-
tries capable of contributing effectively to develop-
ment.

We of the industrial democracies have a
special responsibility. What we do—or fail to do—is
critical to the future of the countries of the Third
World. If we substitute competition among our-
selves for a dispassionate analysis of the issues, the

8

development process will falter. Our resources will be inefficiently scattered or misallocated; projects will too often prove fruitless for lack of careful analysis or want of wider support. We do no one a favor when we substitute rhetorical concessions for intelligent and realistic proposals that link the interest and concerns of both sides in a prospering global economy. Those who curry short-term favor may mortgage the long-term future.

It is imperative that the North-South dialogue advance in a way which benefits both sides. In the long run progress, stability, and peace depend upon it.

The United States has done its utmost to be forthcoming in the dialogue. We have strained our domestic processes to develop pragmatic proposals to meet real problems in our relations with the developing world. As our economies improve and as we, together with the developing world, identify new areas for cooperation, we can look forward to widening global cooperation which can serve the interests of all.

The spirit of cooperation necessary between North and South requires first a commitment to cooperation among the industrial nations. This is not a call for confrontation with the Third World. It is an indispensable step we must take if we are not to fragment our efforts and fail in our objectives.

The United States believes that this organization should focus on three areas where our cooperation is most necessary and would be most effective:

* We must improve our ability to concert our development efforts in international forums, for it is in these meetings that ideas are launched, compromises are made, and political directions are set;

* We must enhance our collaboration in our bilateral and multilateral aid programs, for our resources are limited, and closer alignment of programs is essential for their effectiveness; and

* We must develop a longer term strategy for development which integrates the diverse strands of North-South policy, including foreign aid, technology transfer, financial policy, and trade. For development is a comprehensive and never-ending process with implications for every area of the international economic system.

Let me discuss each area in turn.

First, we must improve the coordination of our positions at major international conferences. Recent unfavorable experiences at UNCTAD in Nairobi and at other international forums should make clear the importance of this step. We in this organization have supporting mechanisms for coordination of positions on energy, commodities, finance, and development, but their effectiveness has been frequently less than adequate. For the remainder of this year we will be relying on these bodies to continue to support our work in the Conference on International Economic Cooperation. It is therefore imperative that we review now our recent experience, with the objective of strengthening the coordinating role of each OECD support mechanism as well as the relationship among them.

The United States recommends that the Secretary General undertake an immediate examination of the issues and present recommendations to the executive committee in special session on ways in which we may more closely align our positions.

We suggest as well that this organization take a more active role in developing views on key North-South issues than it has in the past. We believe this could most fruitfully be done by identifying in advance of international meetings specific issues of major concern to industrialized countries and arranging for consultations to develop mutually supporting positions. It makes no sense to work out our differences under the pressure of deadlines and of other participants at international conferences.

The next several months will be a test of our ability to work together in a variety of international settings. The agenda of conferences is full. We will be considering on a case-by-case basis measures to improve the functioning of individual commodity markets, including the reduction of excessive price fluctuations and methods of buffer stock financing. We will also be translating the analysis of the first six months of the year into concrete results in CIEC. In this forum, the United States looks forward to visible and concrete achievements in energy, raw materials, investment, trade, and measures to address the problems of the poorest countries. We will want:

[LC]

9

* To explore possibilities for further consultations on energy, including ways to assist developing nations that have no energy resources;

* To facilitate progress on commodity discussions, including ways to improve the functioning of individual commodity markets; and

* To begin work on the International Resources Bank proposal, which we see as relating to the work of all the CIEC commissions, particularly those dealing with energy and raw materials.

Second, we must increase the effectiveness of our bilateral and multilateral aid efforts in addressing specific problems in the developing world. The OECD Development Assistance Committee has done important work to improve and coordinate development assistance policies. There are, as well, over 20 consultative groups working with regard to specific developing nations. We should review our coordination in all these areas. We may consider streamlining some of those mechanisms and eliminating duplication. We must seek to enhance the coordination of assistance policies and programs which have a regional or even continental focus. The Club des Amis du Sahel is a recent successful effort to concert our resources to combat the problems of that African subregion. We should explore whether there are other regions, in Africa or elsewhere, where similar approaches are needed. The recent initiative by the President of France for focusing joint attention on specific problems on the African continent is an example of the kind of effort we must make together in the future.

Third, we must devote a major portion of our efforts to longer range planning for global development. The problem of growth will not go away. No one policy will be decisive; no one conference will devise permanent solutions. We must begin to focus honestly and carefully on the development challenge through the distant future.

A high priority in this effort must be to consider together the various development issues we have been addressing separately. Development policies can be either mutually reinforcing or they can undermine one another. We must find a way to look at development as a comprehensive and integrated whole harmonizing our long-range planning efforts in trade, aid, investment, and technology. These individual policies need to be placed into a larger coherent plan so that the industrial nations'

development efforts can more efficiently respond to the most pressing issues in the developing world.

To achieve a more effective integrated development strategy, the United States proposes that OECD countries decide now to review the entire range of North-South issues which we will be addressing over the remainder of this decade and beyond. Over the next year we should develop a consistent and comprehensive set of objectives and strategies.

At the same time, we should now move to strengthen the institutional arrangements within this organization for handling North-South issues. There should be a central focal point in the OECD for consideration of all such activities. This will give a greater political impetus to our efforts. And it should also stimulate greater consideration for the needs and interests of developing nations in the ongoing work of specialized OECD committees.

The kind of coordination which I have suggested will require attention at the highest levels of our governments. It will, of course, also require compromises on policies and priorities which each of us has developed in the past. But it is our best, perhaps our sole, chance to accelerate the pace of constructive progress in our relations with the Third World while not undermining our relations with each other.

## The Imperative of Cooperative Action

The nations assembled in this room proceed from two main premises: the interdependence among the OECD nations and our common desire to help shape a new era of global economic cooperation among all nations.

The central task before the industrialized democracies of the OECD is to give new focus and purpose to our own cooperative economic action. Economics is only part of that enterprise. The choices before us and the decisions we take will above all reflect our perception of ourselves as peoples and as nations. The tasks are long term, and they demand that we extend our line of sight beyond immediate technical issues or political controversies to more distant horizons.

Ours is a time when the centers of global power and influence are many and diverse. And ours, therefore, is a choice between cooperation or chaos. Today more than ever the industrial democracies require leadership determined not to

- 1 -

The purposeful cooperation of our nations has been at the heart of the world's progress for three decades. Today, we are challenged to deepen and advance that common effort. The cooperation of the industrial democracies is decisive for world peace, prosperity and the cause of justice and human dignity.

No group of nations is better equipped to master these challenges. Ours are the societies that launched the two great events that gave birth to the modern age - the political revolutions of the Eighteenth and Nineteenth Centuries that shaped today's community of nation-states and the Industrial Revolution that produced the contemporary world economy. We share a heritage of pioneering effort in all the modern forms of commercial, social and governmental organization. And we have been able to perceive and respond to new challenges especially in giving effect to our recognition of the imperatives of interdependence.

Our democratic systems have disproved the doctrine that only repression and authoritarianism could advance human well-being. On the contrary, the industrial democracies assembled here have demonstrated conclusively that it is in freedom that men achieve the economic advance of which ages have dreamed. There is some irony in the fact that after years of disparaging our economic system both the socialist countries and the developing countries have turned to us to help them advance more rapidly. Today it is the industrial democracies which primarily have the resources, the managerial genius, the advanced technology, and the dedication which is needed for sustained economic development under any political system.

The advanced industrial nations have conducted themselves of late with vigor, determination and a sense of shared purpose. Most of the OECD countries are now entering a period of economic expansion. We have worked together in the process of recovery, averting protectionist tendencies in trade and the selfish pursuit of oil and raw materials at each other's expense. Largely due to this, we are recovering quickly and with excellent prospects for continued progress.

We have acted together because we recognize that the world economy has become global. National interests cannot prosper or endure in isolation. And the nations assembled here are the engines of the world economy. Our performance is the pivot around which international trade and finance revolve. Our technology and investment are the catalysts of development and economic progress in developing nations.

Today, the world economy faces new and demanding challenges. Our past cooperation must be given fresh impetus in our twofold tasks to improve our performance in areas where we have already begun to work together; and to create mechanisms of cooperation to deal with new issues and opportunities.

-2-

This Organization is well suited to this task. Its history and durability
are a demonstration of the unity and cooperation of the industrial democracies.
It has provided a unique forum and necessary focus for dealing with the
critical link between national aspiration and global opportunity. This is
no accident; it reflects our fundamental moral and political fraternity. Our
traditions of freedom give moral meaning and political purpose to our technical
achievements.

This is why I wish to stress the importance of furthering our unity and
progress through the OECD. The objective is not to forge a bloc for our own
advantage or for purposes of confrontation. It is to shape a new inter-
national environment based on the consciousness that in an age of inter-
dependence national interests can best be served by advancing the aspirations
of all mankind through cooperative efforts.

- Strengthening the cohesion and prosperity of the industrialized democracies.

- The new issues we face in economic relations with the Communist world.

- The ongoing international effort to promote economic development and a constructive long-term relationship between the industrial and developing worlds.

## Strengthening the Cohesion and Prosperity of the Industrial Democracies

- non-inflationary economic growth,

- strengthening our open international trade and monetary system,

- The encouragement of transnational investment, and

- greater cooperation in energy.

- 3 -

First, as our nations move to recovery and expansion we must ensure steady, non-inflationary economic growth. Only in this manner can we resolve conflicting claims on resources, reinforce the political vitality of our institutions, enhance our freedom of action in world affairs and enlarge the economic horizons of all societies.

We must overcome cycles of boom and stagnation which, in the past, have impaired productivity, constricted investment and choked off our full economic potential. We can achieve sustained growth by containing inflation. The investment needed to create jobs for our growing labor forces will dry up in an environment of rapidly and constantly rising prices. Inflation erodes the progress made in raising the standard of living of our peoples; it strains the social fabric of our democratic societies.

The responsibility for non-inflationary growth rests with national governments. But close consultation and collaboration are essential to ensure that national policies are complementary and reinforcing - to contribute to exchange rate stability among us; to give special attention to members that are in difficulty; and to collaborate on policies on trade, energy, and relations with developing countries. The summit meeting at Rambouillet last November made a major contribution to general recovery and promotion of these goals. The summit next week at Puerto Rico will assess the progress we have made and use it as a point of departure for future advance.

This meeting provides an opportunity for the nations assembled here to reaffirm our joint commitment to an open economic system, to national responsibility, and to international cooperation. With sound and concerted policies among us, and with efforts to coordinate our strategies for expansion, the potential for the world's sustained economic growth can be realized.

At last year's OECD Ministerial meeting, at the United States' recommendation, a Group of Distinguished Economists was set up chaired by Professor McCracken. It was assigned the task of examining the medium-and long-term and structural problems of sustained economic growth. It is exploring the problems of inflation, investment, structural imbalances and adequate supplies of raw materials. We look forward to their conclusions and recommendations.

- Strengthening our trade and monetary systems also requires enhanced collaboration. In recent years, high unemployment and economic uncertainty have revived protectionist pressures in many countries; inflation and drastic differences in the performance of member nations have produced major payments imbalances, exchange rate pressures and financial strains.

The Rambouillet summit and the IMF meeting in Jamaica last January were milestones in adapting the international monetary system to a new era. We have agreed to new IMF rules to avoid the shocks and disequilibrium which plagued the Bretton Woods system, and ensure a smoother functioning of trade and investment.

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(LC)

In *trade*, two years ago the OECD nations jointly undertook an extra-
ordinary political commitment to preserve an open economic system despite a
period of general economic difficulty. On May 30, 1974 we pledged to avoid
new restrictions on trade. We rejected policies which would tend to shift
one nation's difficulties onto others. That declaration strengthened our
successful efforts to resist protectionist pressures and this benefits
countries with particularly acute balance of payments problems. The
declaration was renewed last year. We should now renew it for an additional
year.

Our economic recovery provides significant opportunities for further
progress.

- First, the political commitment represented by our trade pledge should be the basis for wider cooperation among us. The United States proposes that this Organization recommend further areas for common action, not only on current trade problems and negotiations, but on the long-term operation of our open trading system.

- Secondly, all nations assembled here should make a political commitment to accelerate the Multilateral Trade Negotiations in Geneva. We are at the point where we must move forward at a more rapid pace if the negotiations are to reach a successful conclusion in 1977. To this end, the United States strongly recommends that we reach agreement this Fall in Geneva on a tariff cutting formula.

- Third, it is our shared obligation to improve the conditions of trade for developing countries. The postwar trading system was built on a consensus among industrial countries in which the developing countries did not participate and which they now challenge in several important respects. We need to re-examine the trading system, prepared to change or strengthen it where necessary. In the Multilateral Trade Negotiations we will be negotiating new provisions in such areas as non-tariff barriers, supply access, the settlement of disputes, and trade restrictions that are justified for balance of payments purposes. This Organization and its members can play a crucial role in building a new global consensus on these issues.

*Transnational investment* is the third area calling for close collaboration
among the industrial nations.

Investment is the lifeblood of our economies and vital to worldwide
development. It has been a principal source of the economic growth and
security and prosperity which the nations represented here enjoy. It has been
the single largest source of development capital for Third World nations and a
powerful force marshalling management and technology for their benefit. It
has developed resources; it has increased income; it has provided jobs. Since
the mid-sixties, foreign direct investment has been growing faster than
international trade and global GNP.

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have been raised as to how the international firms can serve the national interests of their hosts as well as their own. A few notorious cases of illicit payments have stirred apprehension that cast a cloud over the overwhelming majority of international firms whose behavior has been beyond reproach.

Governments, too, have impeded the flow of capital through inconsistent policies or discriminatory treatment of international firms. And most industrial countries have been under pressure at home to take increasingly nationalist positions toward international investment.

It is highly significant, therefore, that this Organization undertook two related tasks: to negotiate voluntary guidelines for multinational firms and to clarify governmental responsibilities to preserve and promote a liberal investment climate. We are able to announce today the acceptance by OECD member governments of a Declaration on investment. This Declaration extends the cooperation which has characterized our trade and monetary relations into the area of investment. It includes:

- recommended guidelines for the activities of multinational corporations;

- an agreed statement of the basic responsibilities of our governments with respect to transnational investment;

- strengthened cooperation on the questions of incentives and disincentives to foreign direct investment; and

- increased consultations between our governments on all these matters.

the United States strongly endorses this Declaration and urges its widest possible adoption and observance.

A framework for investment is now emerging. We must encourage its development. Therefore in addition to our full support for the OECD Declaration, the United States urges the following policies for our nations:

- First, we should support the work of the UN Commission on Transnational Corporations, and the related UN Information and Research Center within the Secretariat, which will develop a comprehensive information system on issues relating to transnational corporations. This will contribute to a fuller understanding of investment issues among all nations.

- Second, we should review the proposal of the International Resources Bank which the United States put forward at UNCTAD at Nairobi last month. While the Bank will focus on energy and raw materials, its principal features - as a multilateral guarantor against non-commercial risk and as a facilitator of production-sharing and technology transfer - have important implications for development generally.

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- Third, we should take strong collective measures to eliminate corrupt payments. Bribery and extortion are a burden on international trade and investment. We reiterate our proposal that negotiation of a binding International Agreement on Corrupt Practices begin at next month's session of the UN Economic and Social Council.

- Fourth, we should cooperate to restrain anti-competitive practices of firms which undermine the benefits of our open economic system. The United States proposes a dual effort: to reduce international procedural obstacles to the enforcement of laws against international restrictive business practices; and to pursue bilateral and multilateral agreements for international antitrust cooperation similar to that about to be concluded between the United States and the Federal Republic of Germany.

- Fifth, we should strengthen the work of specialized OECD committees which deal with investment problems, such as harmonizing statistical systems, cataloguing restrictive business practices, improving the exchange of tax information, dealing with tax haven problems - as well as their work now underway on the general topics of technology transfer and short-term capital movements.

The fourth crucial sphere of cooperation among the industrial nations is energy. The cooperation of energy-consuming nations has become an imperative, for the last few years have demonstrated the economic and political costs of loss of control over this critical component of industrial growth.

For the next several years, our nations' heavy dependence on imported oil will contribute to our political and economic vulnerability. The outlook for reducing our dependence in the next decade is not encouraging. Forecasts based on existing energy programs in the industrial countries indicate that our imports of OPEC oil will increase from 27 million barrels a day in 1975 to as much as 37 million barrels per day by 1985. At the same time, it has become clear that oil reserves, while still large, are finite. Thus we must reduce our immediate dependence on imported oil side by side with beginning a long-term transition to alternative energy systems through the most rapid possible development of new and alternative sources of energy.

The industrial countries have begun to respond to the energy challenge. The difficult process of reorienting energy priorities and establishing new energy policies has been started. When the energy crisis became apparent, we moved rapidly to set up the new International Energy Agency, within the framework of the OECD. Through its impetus, a comprehensive structure of technical cooperation and policy coordination among industrial countries has grown up. At the same time, a dialogue with the OPEC countries has been started in the Conference on International Economic Cooperation. And the importance of helping the poorer developing countries - especially those with limited energy resources - to survive the energy crisis has been recognized.

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- First, that we establish on an urgent basis joint energy production projects to pool technical knowhow and financing in areas such as coal extraction and utilization, uranium enrichment and synthetic fuels. Such actions would accord with the commitments we undertook in the IEA Long Term Program. They will contribute to the early availability of commercially attractive additional energy sources.

- Second, that we establish collective and individual goals for substantially reduced dependence on imported oil by 1985. This will require agreed targets for additional energy production particularly in the coal and nuclear sectors; these represent our best hope for substantially reducing our energy dependence in the next decade.

- Third, that we agree to intensify our national efforts to reduce the growth in demand for energy.

The United States urges that the Governing Board of the IEA launch these efforts on a priority basis. Member governments should endorse these goals for reduced dependence, and also make the essential political commitment to specific and concrete actions to achieve them. We should aim for a Ministerial meeting in six to nine months to accomplish these objectives. The Ministerial meeting should also look beyond the next decade to the post-oil era, and seek ways to build on cooperative research and development efforts in such areas as solar power and nuclear fusion. OECD countries, not members of the IEA, should be given an opportunity to participate fully in this process.

This agenda - of action for growth, trade and monetary affairs, investment, and energy - suggests an expanding role and responsibility for the OECD. Working together, the nations of the OECD face an unprecedented opportunity to advance their common welfare and prosperity. And on this foundation of cooperation we can more effectively deal with the issues which involve us with nations outside the OECD region.

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Our relations with the nations of the East turn primarily upon political and security issues. In the past, trade and economic relations with the Soviet Union and Eastern Europe have not been among our central concerns. But a new dimension of economic interaction between East and West has begun to take shape. It is time to act cooperatively so that this new economic factor becomes an increasingly positive element in the world economy.

The Soviet Union has the second largest economy in the world. Together with all COMECON countries it accounts for about 20 percent of world output. But despite the size of its economy, the Soviet Union is not a major factor in the world economic system. Its trade is relatively small; it has made little contribution to economic development.

In recent years, however, the Soviet Union and the countries of Eastern Europe have moved toward greater economic contact with the West. The basic reason is plain. These countries have come to realize that they cannot provide for growing consumer demand or meet the technological imperatives of the more sophisticated economy they seek solely from their own economic resources. Further, many of the countries of Eastern Europe wish to diversify trading patterns that were established in the aftermath of World War II.

As a result, in the last four years, trade between the COMECON countries and the OECD countries has increased nearly four-fold. Most East European countries now depend on and prefer Western machinery, technology and material imports for the dynamic element of their economic growth. And in matters of finance, the sudden increase in the external debt of the Soviet Union and the countries of Eastern Europe has been striking. Their net debt to private western banks doubled in 1975 to $15 billion, and their total hard currency debt has reached nearly twice that amount.

The most familiar example of the impact of Communist countries on the international economy has been Soviet shortfalls in the production of grain, which has become the single most volatile element in the world food picture. In addition the socialist countries can become an important element in the global energy balance. And in an era where adequate supply of many other industrial raw materials can no longer be taken for granted, the extensive mineral reserves of the East can expand resource availability worldwide. It is therefore clear that in our multilateral effort to build a strengthened international economic system we will have to take account of the potential needs and contributions of the centrally planned economics.

For us, the industrial democracies in the OECD, the growing economic interaction between East and West and the Eastern influence on the global economy are realities that if arranged wisely can be positive developments, stabilizing relationships and broadening contacts. At the same time, managing relations between free economies and state trading systems has inevitable complications. Dealing with a centrally planned economy under strict political direction can never be treated simply as a commercial enterprise alone.

Certain principles stand out:

- All our nations have been engaged in this process.

- State trading countries must not be permitted to use their centrally-

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- Growing East-West trade also presents hopeful prospects, both economic and political, if approached with understanding, skill and foresight.

- In short, it is up to the industrial democracies to consult closely and to manage this process cooperatively.

Therefore, the United States proposes that the OECD nations adopt a systematic work program for developing objectives and approaches for our economic relations with the Communist countries. To this end some progress has already been made, for example, in aligning national export credit policies among the industrial countries. If we are to face this issue in an intelligent and harmonious fashion many additional areas should be examined: specifically our nations should seek answers to the following questions:

- How can we ensure effective reciprocity in trade between market and non-market countries?

- How do we deal with the problem of dumping and other unfair trade practices by countries in which prices need not bear a relation to costs or market forces?

- What are the implications of the growing external debt of the Communist countries?

- How can the industrial democracies deal with possible efforts to misuse economic relations for political purposes inimical to their interests?

- What should be the relationship between the nations of the East and the multilateral bodies dealing with economic affairs?

- How do we take account of the diversity of interests and needs that has clearly appeared among Eastern countries?

- And finally, is it possible to bring the Soviet Union and the Eastern European countries into the process of responsibly assisting development in the Third World?

The United States will elaborate its views of these issues at the next meeting of the Executive Committee in Special Session. The results of our examination of these questions could be embodied in a report to the next ministerial meeting of this organization.

Growing East-West trade presents problems together with great opportunities. It is up to the countries assembled here to understand the process and its complexities and to manage it cooperatively. In that case, it can contribute to the vitality of our economies and to the stability of the international order.

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The Relationship between North and South

One of the most urgent and compelling challenges that summons
our cooperation is the relationship between the industrial
and the developing nations. The new era of international cooperation
we seek must include economic relations that offer mutual prosperity
and widening opportunity for all the peoples of the world.

Every nation has a stake in global stability and world peace.
But the ultimate goal must be to look beyond the maintenance
of peace to a world which offers its children a hope of a better
future.

The United States has made its commitment. We have demonstrated
our determination at the Seventh Special Session of the UN General
Assembly, at the Conference on International Economic Cooperation
in Paris; at Kingston in January; and at the UNCTAD conference
in Nairobi last month.

Our efforts begin from the conviction that an effective inter-
national system must be founded upon a consensus among all nations
and peoples. The world community which is our ultimate aspiration
can only be realized if all nations and peoples can pursue their
goals with a sense of participation and an awareness that their
concerns are heeded. If we are to live in a stable world, the
preponderant number of nations must be persuaded that their legitimate
concerns are taken seriously.

Thus, the objectives of the industrial democracies and those
of the developing nations should be complementary. The process of
building a world community must therefore be shared by nations of both
North and South, and must address the issue of economic development
in the context of growing global prosperity.

But this is not inevitable. Effective cooperation pre-
supposes that both sides face certain realities without illusion.

The most critical of these realities is that development is
a long-term process. Sustained economic development cannot possibly
result from any one conference or any one set of proposals. It will
depend primarily upon the internal effort, the domestic policy and

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the national will of the developing countries themselves. In most cases the effort will extend over decades. Often this will require painful short-term sacrifices for longer-term gains. Development cannot be created by rhetoric or by parliamentary victories in international forums.

Development further requires the sustained and collective effort of the industrial countries. The role of the industrial democracies is critical, for we possess the largest markets and most of the world's capital and technology. Thus real development presupposes a serious, unemotional, constructive North-South dialogue.

In such a dialogue it is futile for one party to seek to impose solutions to the problems of development on another. An atmosphere of extortion or pressure, unworkable proposals or excessive reliance on parliamentary maneuvers will ultimately undermine public support in the only countries capable of contributing effectively to development.

We of the industrial democracies have a special responsibility. What we do -- or fail to do -- is critical to the future of the countries of the Third World. If we substitute competition among ourselves for a dispassionate analysis of the issues, the development process will falter. Our resources will be inefficiently scattered or misallocated; projects will too often prove fruitless for lack of careful analysis or want of wider support. We do no one a favor when we substitute rhetorical concessions for intelligent and realistic proposals that link the interest and concerns of both sides in a prospering global economy. Those who curry short-term favor may mortgage the long-term future.

It is imperative that the North-South dialogue advance in a way which benefits both sides. In the long run progress, stability and peace depend upon it.

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The United States believes that this Organization should focus
on three areas where our cooperation is most necessary and would
be most effective:

-- We must improve our ability to concert our development efforts in international forums, for it is in these meetings that ideas are launched, compromises are made, and political directions are set;

-- We must enhance our collaboration in our bilateral and multi-lateral aid programs, for our resources are limited, and closer alignment of programs is essential for their effectiveness;

-- We must develop a longer-term strategy for development which integrates the diverse strands of North-South policy, including foreign aid, technology transfer, financial policy and trade. For development is a comprehensive and never-ending process with implications for every area of the international economic system.

First, we must improve the coordination of our positions at
major international conferences. Recent unfavorable experiences
at UNCTAD in Nairobi and at other international forums
should make clear the importance of this step. We in this
Organization have supporting mechanisms for coordination of positions
on energy, commodities, finance and development, but their effective-
ness has been frequently less than adequate. For the remainder of
this year we will be relying on these bodies to continue to support
our work in the Conference on International Economic Cooperation.
It is therefore imperative that we review now our recent experience,
with the objective of strengthening the coordinating role of each
OECD support mechanism as well as the relationship among them.

The United States recommends that the Secretary General under-
take an immediate examination of the issues and present recommendations
to the Executive Committee in Special Session on ways in which we may
more closely align our positions.

We suggest as well that this Organization take a more active
role in developing views on key North-South issues than it has in
the past. We believe this could most fruitfully be done by
identifying in advance of international meetings specific issues of
major concern to industrialized countries, and arranging for
consultations to develop mutually supporting positions. It makes no
sense to work out our differences under the pressure of deadlines and
of other participants at international conferences.

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The next several months will be a test of our ability to work together in a variety of international settings. The agenda of conferences is full. We will be considering on a case-by-case basis measures to improve the functioning of individual commodity markets, including the reduction of excessive price fluctuations and methods of buffer stock financing. We will also be translating the analysis of the first six months of the year into concrete results in CIEC. In this forum, the United States looks forward to visibly and concrete achievements in energy, raw materials, investment, trade, and measures to address the problems of the poorest countries. We will want:

- to explore possibilities for further consultations on energy, including ways to assist developing nations that have no energy resources;

- to facilitate progress on commodity discussions, including ways to improve the functioning of individual commodity markets; and

- to begin work on the International Resources Bank proposal, which we see as relating to the work of all the CIEC commissions, particularly those dealing with energy and raw materials.

Second, we must increase the effectiveness of our bilateral and multilateral aid efforts in addressing specific problems in the developing world. The OECD Development Assistance Committee has done important work to improve and coordinate development assistance policies. There are, as well, over twenty consultative groups working with regard to specific developing nations. We should review our coordination in all these areas. We may consider streamlining some of those mechanisms and eliminating duplication. We must seek to enhance the coordination of assistance policies and programs which have a regional or even continental focus. The Club des Amis du Sahel is a recent successful effort to concert our resources to combat the problems of the Africa sub-region. We should explore whether there are other regions, in Africa or elsewhere, where similar approaches are needed. The recent initiative by the President of France for focussing joint attention on specific problems on the African continent is an example of the kind of effort we must make together in the future.

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A high priority in this effort must be to consider together the various development issues we have been addressing separately. Development policies can be either mutually reinforcing or they can undermine one another. We must find a way to look at development as a comprehensive and integrated whole harmonizing our long range planning efforts in trade, aid, investment and technology. These individual policies need to be placed into a larger coherent plan so that the industrial nations' development efforts can more efficiently respond to the most pressing issues in the developing world.

To achieve a more effective integrated development strategy, the United States proposes that OECD countries decide now to review the entire range of North/South issues which we will be addressing over the remainder of this decade and beyond. Over the next year we should develop a consistent and comprehensive set of objectives and strategies.

At the same time, we should now move to strengthen the institutional arrangements within this organization for handling North/South issues. There should be a central focal point in the OECD for consideration of all such activities. This will give a greater political impetus to our efforts. And it should also stimulate greater consideration for the needs and interests of developing nations in the ongoing work of specialized OECD committees.