SEP 23 1987

September 21, 1987

MEMORANDUM

TO:      Members of the Board of Directors

FROM:    Carl Gershman C&A

RE:      Report on visit to London and Paris, Sept.
11-15, 1987, to monitor programs in Poland,
Hungary & Czechoslovakia

I. Solidarity Medical Fund

The primary purpose of this trip was to hold
discussions in Paris with a representative of
Solidarity regarding the use of the $1 million
appropriated by Congress for the Polish trade union. I
was accompanied in my discussions with the Solidarity
representative by Adrian Karatnycky of the AFL-CIO
Department of International Affairs.

As reported to the Endowment Board on Sept. 11,
Lech Walesa had written a letter to Congress in August
stating that the $1 million would not be used by
Solidarity for its trade union work but would be put
into a social fund established by the union to provide
medical help to workers and their families. The
individual we met with in Paris heads the Solidarity
Medical Committee which will supervise the expenditure
of the $1 million.

The Solidarity representative (SR) informed us that
the medical committee of Solidarity wants to work with
a parallel U.S. committee that would handle the funds
and receive instructions from Poland on their use. The
SR said that the U.S. committee should be composed of

medically knowledgeable people; it should be
bureaucratically efficient in the use and accounting of
the funds; and it should be uninvolved in political
assistance to the democratic movement in Poland.

Obviously, this rules out FTUI, and Adrian stated
at the meeting that Tom Kahn had already indicated a
readiness to step aside in favor of the kind of
independent committee proposed by Solidarity. Several
organizations were discussed which could establish such
a committee, including the International Rescue
Committee. During the new few weeks we will be
exploring with relevant people the most appropriate way
to establish a committee, as well as determine its
composition. It was felt that the committee should
consist of individuals who can help raise private
assistance to supplement the public funds.

The SR pointed out that Walesa would like the
Polish medical committee to function as an official
foundation. They realize, however, that the government
probably will not permit this and that the committee
will, therefore, have to function unofficially, as so
many other groups now do in Poland.

The SR still needs to hold discussions in Poland
regarding a specific budget, and promised to send
details and instructions by early October.
Nonetheless, a tenative budget was discussed which
should be helpful in signing the grant agreement with
AID. There are four parts to this budget: (1) 70-75%
of the funds would be used to purchase medical supplies
and equipment, including four or five ambulances (which
cost approximately $65,000 each with the necessary
equipment), ultrasonographs, and medicines for the
treatment of heart disease and cancer; (2) 10-15% would
be used by SOS Coordination Pologne, a Paris-based
committee that provides treatment for Poles who cannot
be attended to in Poland; (3) 10% would be used to
provide the children of workers (aged 10-16) with a
healthy social environment; and (4) 5% would be allowed
for the administrative overhead of the U.S.
organization. Only point 3 would involve the transfer
of funds to Poland. The dollar is very strong there at
this time and $100,000 would be a substantial fund for

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youth activities. All other funds would be spent in
the West. The ambulances and medical supplies would be
shipped legally through normal channels, an expense
that would have to come out of the grant unless
transport costs could be contributed.

II. <u>Other Polish Programs</u>

I met with a number of other individuals in Paris
who are involved in many NED-supported programs in
Poland, including a leading official of OKNO
(Committees for Independent Culture); Pyotra Lasota,
who represents OKNO in the West; Jan Novak of the
Polish American Congress which sponsors the Fund for
Polish Democracy (formerly material assistance to
political prisoners), the Foundation for Independent
Publishing, the Polish Helsinki Committee, Polish
Video, and Polcul (as well as several projects in the
West); and Irena Lasota, the Western representative of
the Foundation for Independent Publishing and also the
manager of a modest ($20,000) fund that makes about 50
grants a year to small independent publications.

All programs are working extremely well and are
immensely effective and appreciated in Poland. I
believe that the amount of work being carried out with
our limited funds (approximately $400,000 for the
above-mentioned projects, which does not include direct
help to Solidarity) would stagger the mind if it could
be comprehensively reported. The many articles that
have appeared in the Western press over the past year
on the growing movement for independent culture in
Poland suggest the scope of the work. I might add here
that the OKNO representative indicated that NED was
thought of in Poland as a "Freedom Fund" -- not a bad
designation.

A few specific points:

1) OKNO will prepare the detailed budget we
requested. Roughly speaking, the funds will be
divided as follows among the four committees:
Culture - 40%; Education - 30%; Science/Research -

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20%; and Health - 10%. No funds will be used for film production since this is already taken care of by our video project. Also, there is no duplication with the Foundation for Independent Publishing. It assists in the production of books, while the Cultural Committee of OKNO helps newspapers and magazines.

2) Polcul gets very high marks. According to the OKNO representative, the people who receive the $500 awards (a significant sum in Poland since the average monthly salary there is $20) are so dedicated that they will not take money in any other way for their work. The Polcul committee in the West received descriptions of about 100 anonymous candidates last year and voted 29 awards with our $15,000 grant.

3) The small grants program run by the Institute for Democracy in Eastern Europe ($20,000) helps small publishers who don't get any other support. They must show some accomplishment before the Consortium/Foundation for Independent Publishing will help them, so the $500 grants of the Institute gives them a chance.

4) I checked carefully about the Fund for Polish Democracy. Its work was described to me as essential and not duplicative of other support we are giving. The money, which pays for medicines, fines, and relief for families, is crucial to the political and organizational work of the democratic movement.

Jan Novak pointed out that there are three additional needs not presently being met: 1) the Freedom and Peace Movement which needs modest support for its activities (printing leaflets, etc.); 2) Rural Solidarity; and 3) funds for salaries and servicing equipment of the various Solidarity shop-floor and organizational publications. The last two points would probably have to come out of labor funds.

- 4 -

III. Hungary

I was not expecting much from my London visit with Gyorgy Krasso, given his poor reporting and the report of Barbara Futterman (of Freedom House, which administers his grant) on her visit to his flat this past July. However, I was completely and delightfully surprised. Though Krasso may not give the appearance of being an effective political worker, he has established far and away the most effective center anywhere for assisting the democratic cultural and political movement in Hungary. He seems to sleep about three hours a day and work the rest. But he's not just dedicated -- he's also competent.

He showed me a detailed report he drafted on the "democratic opposition" in Hungary describing a surprisingly active and promising movement. It's a remarkable document that could only be drafted by someone totally familiar with his subject matter.

Krasso's flat -- from which he works as well as where he resides -- is hardly tidy. It's like a tiny dissident flat filled with books, papers, etc. But it's more crowded than disorderly. Try to picture running the entire Endowment out of one or two offices and you will appreciate the problem.

Below is a summary of what Krasso has done with our $50,000 grant:

1. About half the grant is used for material assistance and phone calls to Hungary (roughly one third and one sixth respectively). He has some fifty people who can serve as couriers. They take in VCRs, tape recorders, mimeo machines, materials for printing, etc. He has purchased two typewriters that can set type. With these he is in the process of typesetting and publishing (in 1000 copies) six samizdat book manuscripts he has received. He said he pays authors $1,000 for a manuscript and may be able to earn some of that back from sales in the West. He publishes the books in both Hungarian and English. The English translations can be sent to other countries in Eastern Europe.

- 5 -

He also has an electronic scanner which can make an imprint on a "stencil" of a page. These can then be sent back to Hungary for reproduction. This is how he responds to the numerous requests he receives from Hungary for books, many of which are out of print.

2) He publishes almost daily information sheets on events in Hungary related to the democratic movement -- police raids on samizdat journals, actions by dissidents, human rights violations, etc. He showed me a letter from someone at the U.S. Embassy subscribing to the information sheets. I think Krasso, with his constant phone calls, may well be in better touch with dissident trends in Hungary than anyone else in the West.

3) He broadcasts over the BBC and RFE, and also provides both stations with information for their own reporting.

4) He keeps in contact with human rights organizations in Europe and the U.S. to organize protests where they are needed.

5) He assists in arranging and publicizing "common actions," e.g., protests in Warsaw and Krakow for Hungarian prisoners, telegrams from Hungary to assist Polish prisoners, etc.

6) He lectures widely at universities and forums. Recently, he has been invited to Switzerland and Italy.

7) He organizes public meetings on Hungary. For example, he arranged a lecture for Sandor Racz (who visited the U.S. over the summer and was returning to Hungary), a leading opposition figure who headed the Revolutionary Workers Council in Budapest in 1956.

8) He receives and sends to Hungary copies of journals, such as *Labor in Eastern Europe*, that are sent to him by various publishers in the West.

- 6 -

9) He helps edit and prepares the section on Hungary for Voice of Solidarity, a British monthly magazine about democratic movements in Eastern Europe.

10) He arranged for Western artists to send their work to an international art exhibit ("The Fighting City") organized by INCONNU, an independent artists group, to commemorate the 30th anniversary of the Hungarian Revolution. The same group has organized an "alternative cultural center" in a private house, and also publishes a samizdat paper called Inconnu Press. Krasso distributed copies of the exhibition catalogue in the West.

11) He maintains what is undoubtedly the most complete library of Hungarian samizdat literature in the West. It contains up-to-date files of Beszelo ("The Talker"), Inconnu Press, ÉgtáJak Között ("In-Between the Directions"), as well as the books of many independent publishing houses. Clearly, he keeps in regular touch by phone and post with all of these people.

Any decision on how to proceed in Hungary will await the visit of John and me to that country, which should take place in late October. Nonetheless, I am confident that Krasso's work must play an essential part in a more fully developed Hungarian program.

## IV. Other meetings, Jan Hus and Jan Palach Trusts

I also met with Roger Scruton and Jessica Douglas-Home of the Jan Hus Trust, which has been carrying out a program of assistance to independent groups in Czechoslovakia. They were pleased to learn that the Board had approved the grants for the Jazz Section and the East European samizdat writers conference. I encouraged them not to come to us with a Polish program (which they are doing through their Jagellonian Trust) but to emphasize Hungary, where their work is more needed. They already work with Krasso and I think that relationship could be expanded to the benefit of both sides.

- 7 -

I should point out here that Leo Labedz, whom I met with in the hospital where he is recovering from an operation, felt that the prospects for change were much more promising in Hungary than in Czechoslovakia. His argument: Hungary is more open, its people have historically had a close affinity with the Poles (and thus might be influenced by Polish developments), the country is experiencing a severe economic crisis, and the Kadar regime is stigmatized -- and thus made vulnerable -- by the fact that it was brought to power by the Soviet invasion. The situation bears close watching.

I met with Jan Kavan of the Jan Palach Trust, who was not very happy to learn that his proposal for cooperation among democratic groups in Czechoslovakia, Poland, Hungary, and East Germany was not presented to the Board. I explained the reluctance of the Czech Society of Arts and Sciences to sponsor the program. We then reviewed what he would do if he got a grant. He's already working on several joint campaigns. These consist of efforts to develop common statement on a variety of issues of democratic groups in the above-mentioned countries. For example, they're preparing a joint statement on freedom to travel within Eastern Europe which they hope to present at the Vienna review meeting as a violation of the Helsinki Accords. Other topics include conscientious objection (they're working also with Yugoslavs on this), and ecological problems.

Questions still remain about the priority that should be attached to this kind of "coordination" work and how effective Kavan is in carrying it out. The goal of developing increased political cooperation seems desirable if it can reinforce movements in particular countries, and especially if it can spread the impact of the remarkable developments taking place in Poland.

- 8 -

National Endowment for Democracy

September 22, 1987

The Honorable Henry Kissinger
CSIS
1800 K Street, N.W.
Suite 1021
Washington, D.C. 20006

SEP 22 1987A

Dear Dr. Kissinger:

Paul Volcker will be the first speaker at the newly established Congressional Seminar on Democracy, organized in cooperation with the National Endowment for Democracy. In order to encourage discussion of the issues that affect the future of democracy in the world and their bearing on U.S. foreign policy, we have established the seminar, which will hold regular dinner discussions on central issues related to the creation and sustenance of democracy.

Mr. Volcker, the distinguished former Chairman of the Federal Reserve Board, will address one of the most intractable issues which face the hemisphere -- how political instability and lack of democratic progress are affected by the Latin American debt. We are also honored to have Congressman Dante B. Fascell, the Chairman of the House Foreign Affairs Committee, as the commentator for this session, which will be off the record.

SPEAKER: The Honorable Paul A. Volcker

TOPIC: Democracy & the Latin American Debt

DATE: Wednesday, October 14th

TIME: 6:00 pm, cocktails
6:30 pm, dinner, presentation to follow

PLACE: Room B-340, Rayburn House Office Building

RSVP: By Oct. 7th to Jodie Longo at 293-9072

1101 Fifteenth Street, N.W., Suite 203, Washington, D.C. 20005

(202) 293-9072

BOARD OF
DIRECTORS

John Richardson
Chairman
Sally Shelton-Colby
Vice Chairman
Louis Martin
Secretary
Jay Van Andel
Treasurer

Polly Baca
William E. Brock III
LeGree Daniels
Frank J. Fahrenkopf, Jr.
Dante B. Fascell
Orrin G. Hatch
Lane Kirkland

Henry A. Kissinger
Charles T. Manatt
Edmund S. Muskie
Olin Robison
Albert Shanker
Charles H. Smith, Jr.

Carl Gershman
President

SEP - 4 1987

September 3, 1987

MEMORANDUM

FROM:    Carl Gershman

RE:      September 11th Board Meeting Materials

Enclosed are the materials for the Board meeting on Friday, September 11th. Included in the materials is a proposed bylaws change dealing with attendance.

Continental breakfast will be available at 8:30 a.m., and the meeting will start promptly at 9:00 a.m. and continue through luncheon. We will meet at the Hyatt Regency on Capitol Hill, 400 New Jersey Avenue, N.W., in the Capitol room on the lower level. I look forward to seeing you next Friday.

(202) 293-9072

BOARD OF
DIRECTORS

Carl Gershman
President

PROPOSED AGENDA

MEETING OF THE BOARD OF DIRECTORS

Friday, September 11, 1987

I. Approval of the Minutes of Board Actions
effective July 1, 1987

II. Remarks of the Chairman

III. Report of the President

IV. Report of the Budget & Audit Committee

V. Consideration of Proposals

VI. Other Business

(202) 293-9072

BOARD OF
DIRECTORS

John Richardson
Chairman

Louis Martin
Secretary

Jay Van Andel
Treasurer

Lane Kirkland

Edmund S. Muskie
Olin Robison

Carl Gershman
President

12) The Newspaper Trust of Botswana

13) Leslie Sawhny Programme

14) Afghanistan Basic Education Project

15) Afghan Publications Project

16) Conference on Women and Democracy in
the Philippines

17) ASIES

18) Youth Civic Development Project in Panama

19) Nicaraguan Mothers' of Political Prisoners

20) Dominican Association of Women Voters

21) Stabroek News

22) Caribbean Publishing and Broadcasting
Association

23) Movement for Free Elections in Chile

24) ISTRA

25) Radio Nanduti

26) Conciencia (Colombia)

27) Supplemental Funds for Conciencia's
(Argentina) Meeting on Civic Education
and Participation

28) USAID South Africa Package

AUG 28 1987

August 27, 1987

MEMORANDUM

FROM: Carl Gershman

RE: Informal Proposal Review Materials

Enclosed are the materials for the upcoming informal proposal review meeting. I look forward to seeing those of you able to attend on Tuesday, September 1st at 10:00 a.m. at the Endowment's office. Summaries of proposals received since our last mailing are also enclosed.

I would also like to formally confirm the arrangements for the Board meeting on Friday, September 11th. The meeting will be held at the Hyatt Regency on Capitol Hill, 400 New Jersey Avenue, N.W., in the Capitol room on the lower level. Continental breakfast will be available at 8:30 a.m.; the meeting will begin at 9:00 a.m. and continue through luncheon.

Enclosures: as stated

(202) 293-9072

BOARD OF
DIRECTORS

John Richardson
*Chairman*
Sally Shelton-Colby
*Vice Chairman*
Louis Martin
*Secretary*
Jay Van Andel
*Treasurer*

Carl Gershman
*President*

1. CENTER FOR INTERNATIONAL PRIVATE ENTERPRISE

2. FREE TRADE UNION INSTITUTE

3. NATIONAL DEMOCRATIC INSTITUTE FOR INTERNATIONAL AFFAIRS

4. NATIONAL REPUBLICAN INSTITUTE FOR INTERNATIONAL AFFAIRS

5. POLISH VIDEO FILMS

6. GLASNOST, AN INFORMATION BULLETIN

7. SYNTAXIS

8. JAN HUS EDUCATIONAL FOUNDATION

9. NASE SNAHY

10. INSTITUTE FOR DEMOCRACY IN EASTERN EUROPE

11. HUNGARIAN CULTURAL CENTRE

12. THE NEWSPAPER TRUST OF BOTSWANA

13. LESLIE SAWHNY PROGRAMME

14. AFGHANISTAN BASIC EDUCATION PROJECT

15. AFGHAN PUBLICATIONS PROJECT

16. CONFERENCE ON WOMEN AND DEMOCRACY IN THE PHILIPPINES

17. ASIES

18. YOUTH CIVIC DEVELOPMENT PROJECT IN PANAMA

19. NICARAGUAN MOTHERS' OF POLITICAL PRISONERS

20. DOMINICAN ASSOCIATION OF WOMEN VOTERS

21. STABROEK NEWS

22. CARIBBEAN PUBLISHING AND BROADCASTING ASSOCIATION

23. MOVEMENT FOR FREE ELECTIONS IN CHILE

24. ISTRA

25. RADIO NANDUTI

26. CONCIENCIA (COLOMBIA)

27. SUPPLEMENTAL FUNDS FOR CONCIENCIA'S (ARGENTINA) MEETING ON CIVIC EDUCATION AND PARTICIPATION

August 13, 1987

MEMORANDUM

AUG 17 1987

FROM: Carl Gershman

RE: "Education for Democracy" and Glasnost

I am enclosing two recent publications that I thought would interest you, "Education for Democracy: A Statement of Principles," a joint publication of the American Federation of Teachers, the Educational Excellence Network and Freedom House; and the English addition of the first issue of Glasnost. Glasnost is the first independent, above-ground publication published in the Soviet Union after years of silence. The English version was prepared by the Endowment's grantee, the Center for Democracy. I have also enclosed an article by Leonard Sussman on the publication.

Enclosures: as stated

(202) 293-9072

BOARD OF
DIRECTORS

Carl Gershman
President

August 3, 1987

MEMORANDUM

JUL 22 1987

FROM:    Carl Gershman 👋

RE:      Endowment Open House

On Friday, September 11 -- the day of our next Board meeting -- we plan to host a combination open house-farewell party at the Endowment. Unhappily, two long-time members of the staff will be leaving us at this time: Yale Richmond and Jeff Hunter. Both Jeff and Yale have been invaluable in the last three years, as we organized and began implementing our efforts, and they will be missed.

In honor of their contribution to the Endowment, we will host an open house on Friday, September 11, from 4:00 p.m. to 6:00 p.m. at the Endowment's offices. Invitations will follow, but I hope you can plan to attend.

I look forward to seeing you in September.

(202) 293-9072

BOARD OF
DIRECTORS

Carl Gershman
President

3. Political Activists Training Program II
150,000

4. Portugal: Associacao para a Cooperacao E
Desenvolvimento Social
98,000

5. Research and Program Development
80,000

D. Democracy in Developing Countries/Hoover
Institution, Stanford University
$ 13,200

E. Que Me 25,000

F. Haitian International Institute for Research
and Development (IHRED)/America's Development
Foundation (ADF) 110,000

G. Fundacion Universitaria del Rio de la Plata
(FURP)/American Council of Young Political
Leaders (ACYPL) 30,000**

H. Zeszty Literackie/Polish American Congress
Charitable Foundation 20,000

I. Interparliamentary Group for Human Rights in
the Soviet Union (IPG) 40,000

J. Keston College/Keston College USA
(NOTE: Endowment staff originally recommended
a grant of $25,000. However, it was the
unanimous view of the Directors present at the
June 5, 1987, meeting that the recommendation
be revised to $50,000.)
50,000

K. Center for Democracy 125,000

L. Afghanistan Basic Education Project/American
Friends of Afghanistan (AFA)
55,000

**NOTE: Messrs. Fahrenkopf, Manatt, and Robison noted that they would have to abstain on this proposal due to their service on the ACYPL Board.

[L]

June 8, 1987

'JUN - 8 1987

MEMORANDUM

FROM: Sally Shelton-Colby, Vice Chairman

RE: Request for Action Without Meeting

On June 5, 1987, the Endowment Board met in Washington for its scheduled quarterly Board meeting. Due to a number of unusual circumstances, many beyond the control of individual members, the only Directors able to attend the meeting were: Frank Fahrenkopf, Charles Manatt, Olin Robison, Al Shanker, and myself. Thus, the requisite number of Directors necessary to transact business was not present. Members fully reviewed and discussed all agenda items. Counsel advised that all actions should be submitted, as provided by District of Columbia law and the Endowment's bylaws, to all Directors for their consideration.

The matters considered at the meeting were contained in the Board book previously sent to you (another copy of which is enclosed for your convenience). Directors present were in unanimous agreement that we proceed with the mail ballot procedure, as there are many important Institute and discretionary programs which require timely action.

Since we must have the unanimous consent of all Directors for these actions, I urge anyone who has any questions or concerns to call Carl Gershman or any of the Directors present. Should you find it necessary not to consent to an action, or to abstain, you may so record yourself. An abstention will not prevent

(202) 293-9072

BOARD OF
DIRECTORS

Carl Gershman
*President*

implementation of an otherwise approved decision; a
refusal to consent will. If you wish to offer remarks
for the record in connection with these decisions, an
opportunity to do so will be given to all Directors
prior to the approval of the minutes of this meeting.
Those minutes will be circulated to Directors prior to
the September 11, 1987, Board meeting and will include
the written consents.

Given the time constraints, Federal Express return
labels are included for those of you who are out of
town. For those members in Washington, please call the
Endowment when you have responded to this request, so
that a messenger may be sent to pick up your consent
forms. We would appreciate receiving your response by
Monday, June 15. Thank you for your cooperation with
this procedure.

NED SUMMARY

PROJECT: Nase Snahy publication

SPONSOR: The Permanent Conference of Slovak Democratic Exile

ACTION: Yale Richmond

REC'D: March 30, 1987

The Permanent Conference of Slovak Democratic Exiles is requesting an Endowment grant for Nase Snahy (Our Trends), a Slovak-language bi-monthly publication whose particular focus is on political, economic, and cultural issues in Slovakia. The organization was founded in Toronto, Canada on December 8, 1963 with the dual purposes of promoting democratic traditions among Slovaks at home and abroad, and allowing for cooperation among like-minded Czechs with the intent of restoring a Masaryk-style democracy. In addition to Nase Snahy, the Permanent Conference publishes books with emphasis on democratic principles for readers in Czechoslovakia as well as in exile. Its representatives are also leading members of the Council of Free Czechoslovakia, the umbrella organization of Czechoslovak political exiles. Heading up the Permanent Conference are three former representatives of the Slovak Democratic Party, including one representative of the Czechoslovak National Council of America (Chicago, Ill.).

Nase Snahy presents articles describing the international status of communist Czechoslovakia, emphasizing the need for interaction between the Czech and Slovak nations in order to strengthen democratic foundations in Eastern Europe. It is published in the Slovak language but also accepts articles in Czech. Slovak dissidents have been published by and maintain contacts with the editorial board, which is now preparing to publish the works of Hana Ponicka, one of the leading Slovak writers blacklisted in Czechoslovakia. Chief editor of Nase Snahy is Dr. Martin Kvetko, a former leader of the Slovak Democratic Party, a coalition of democratic forces which received 63% of the vote in 1946 in the last free election in Slovakia. Kvetko is a U.S. citizen who resides in New York City, where the journal is published. Deputy editor is Jan Kucerak, a 1968 emigre from Slovakia.

With a circulation of 1,000 to 1,200 copies, the periodical is distributed to Slovaks visiting the West and through special channels in Western Europe. The growing volume of copy received from Slovakia and the journal's readership there necessitates extending the 16-page format to as much as 32 pages per issue, or publishing monthly.

DURATION: One year.

BUDGET: $10,000

PROJECT: Survey & Design of Programs for Young Parliamentarians
SPONSOR: Former Members of Congress
REC'D: May 4, 1987
ACTION: Marc Plattner

The United States Association of Former Members of Congress (USAFMC) is a nonprofit, bipartisan organization devoted to improving public understanding of Congress as a democratic institution among America's democratic partners. Established in 1970, the Association has developed special links with young legislators in the Congress and in parliaments abroad through its many activities that promote international exchange of ideas and experiences among current and former legislators. These activities include inter-parliamentary exchange programs, joint comparative studies with legislators abroad and in the U.S., domestic Congressional Fellows Programs, observation of U.S. elections by parliamentarians from abroad, international seminars, and assistance to counterpart groups of former parliamentarians abroad.

The Association is requesting Endowment funds for a survey and design of interparliamentary programs, which after being inventoried and systematically analyzed, would serve as a data base and general guide of interparliamentary activities worldwide. The study would compile information about the more effective and promising programs now under way, or well into the planning stage, that are calculated to reach significant numbers of younger members of democratic parliaments. The purpose of the study would be to identify the most promising methods of interchange, learn who is doing what and with whom, and expose any gaps that may exist, with respect either to groups of young parliamentarians or ways of reaching them, that might be filled by the Association or others. In particular, the study would also point out how programs could be broadened and prospective participants better identified. In addition to the survey and analysis, a design for new and/or strengthened programs in this area will be prepared and submitted as part of the final report.

The survey and design work will be carried out for the Association by its consultant, James R. Huntley, past president of the Atlantic Council of the U.S., former diplomat and foundation executive, and long-time student of transatlantic and transpacific relations.

BUDGET: $72,000.
DURATION: One year.

[ljp]

As you know, at the Board's request, Endowment staff prepares a listing of the upcoming year's meetings which is included in the Board books for our September meeting. In addition, this schedule is sent to members' offices. We can improve participation if members and their offices pay close attention to this document and inform Endowment staff in advance if members will be unable to attend a particular meeting. If members are always, for instance, unable to attend a certain meeting for one reason or another, that should be brought to our attention. We will, of course, do everything in our power to accommodate members.

Thank you for your attention to this matter. I hope we can discuss it more fully at our September meeting.

JOURNAL OF
ECONOMIC GROWTH

VOLUME 2 NUMBER 1

FIRST QUARTER 1987

THE SILENT REVOLUTION

Mario Vargas Llosa

<table><tr><td>Informal sectors, black markets and underground economies: These are the spontaneous, creative responses to an oppressive state.</td><td>3</td></tr></table>

THE ETHICS OF PRIVATE PROPERTY RIGHTS

Tom Bethell

<table><tr><td>Can well-defined property rights promote both economic efficiency and morally superior behavior? Bethell argues that they can.</td><td>8</td></tr></table>

FREE MARKETS AND POPULATION: TURNING PROBLEMS INTO ASSETS

Karl Zinsmeister

<table><tr><td>Why is it that some of the most prosperous countries are also the most populous? Zinsmeister debunks a pervasive myth about development.</td><td>18</td></tr></table>

THAILAND'S FREE ENTERPRISE: BURGEONING AND CONTAGIOUS

William Royster

<table><tr><td>Thailand's entrepreneurs and free markets could soon infect the statist failures that surround it.</td><td>26</td></tr></table>

JOURNAL BOOK REVIEWS

The Private Provision of Services in Developing Countries

By Gabriel Roth

Reviewed by Peter Young. 32

Taking the Voodoo Out of Economics

By Robert Genetski

Reviewed by John Weicher. 32

The *Journal of Economic Growth* is published by the National Chamber Foundation, 1615 H Street, N.W., Washington, D.C., 20062; Dr. Richard L. Lesher, President; Dr. Richard W. Rahn, Executive Vice President; Dr. John Volpe, Vice President. The *Journal*, published quarterly with support from the Center for International Private Enterprise, is devoted to free market/limited government solutions to economic growth, job creation and the alleviation of poverty in developing nations. Reprinting of articles in publications distributed exclusively outside the United States, in whole or in part, is permitted with proper attribution to the *Journal of Economic Growth*. Unsolicited manuscripts are encouraged and should be submitted in either English or Spanish. ©1987 National Chamber Foundation.

Editor: Ronald D. Utt

Associate Editor: Graciela Testa-Ortiz

Production: Lyn Maness, Joyce Herron

MAY 29 1987

May 28, 1987

MEMORANDUM

FROM: Carl Gershman

RE: Materials for the Board Meeting, Friday, June 5, 1987

Enclosed are the materials for consideration at our meeting next Friday, June 5. As you know, the meeting will be held at the Capitol Hilton Hotel, 16th and K Sts., N.W., in the Pan American Room. Breakfast will be available at 8:30 a.m., the meeting will convene at 9:00 a.m., and we should conclude with luncheon.

I was delighted that so many of you were able to participate in our conference and award luncheon last week. We have been hearing many good things from grantees and others about the value of such a gathering.

I look forward to seeing you on Friday.

Enclosures

(202) 293-9072

BOARD OF
DIRECTORS

Carl Gershman
President

14

TABLE OF CONTENTS

I. Draft minutes of the meeting of the Board of Directors of March 13, 1987

II. Report of the Budget & Audit Committee:

1. Draft Endowment response to the USIA audit

2. Copy of the USIA audit report

III. Proposals for consideration:

1. CIPE proposals

2. NDI proposals

3. NRI proposals

4. Support for <u>Democracy in Developing Nations</u>

5. <u>Que Me</u>

6. Haitian International Institute for Research and Development

7. Fundacion Universitaria del Rio de la Plata (ACYPL)

8. Literary Notebooks (Polish American Congress Charitable Foundation)

9. Interparliamentary Group for Human Rights in the Soviet Union

10. Keston College

11. Center for Democracy

12. Afghanistan Basic Education Project (American Friends of Afghanistan)

13. Centro de Estudios Politicos (CEDEP) Reprogramming

APR 23 1987

April 16, 1987

MEMORANDUM

FROM: Carl Gershman

RE: Informal Proposal Review Meeting

The informal proposal review meeting has been scheduled for Thursday, May 21st at 10 a.m. at the Endowment, 1101 15th Street, N.W., Suite 203. I look forward to seeing those of you able to attend. As you know, our next Board meeting is scheduled for Friday, June 5.

For your information I am enclosing a brief "For the Record" piece which appeared in yesterday's *Washington Post* and is an excerpt from my testimony to the House Appropriations Subcommittee on Commerce, Justice and State.

(202) 293-9072

BOARD OF
DIRECTORS

Polly Baca
William E. Brock III
LeGree Daniels
Frank J. Fahrenkopf, Jr.
Dante B. Fascell
Otrin G. Hatch
Lane Kirkland

Carl Gershman
President

APR 8 1987

April 3, 1987

MEMORANDUM

FROM: Carl Gershman

RE: House Mark-up, Regular Summary Mailing

I am pleased to report that the Endowment received a mark of $17.5 million for FY 88 in the House Foreign Affairs Committee mark-up last week. Although this is less than the Administration's request of $25 million for the Endowment, it still represents an increase over our present appropriation of $15 million. It is uncertain as to when the full House will vote on the State bill which authorizes the Endowment at this level, and as to when the Senate will act to mark up its own bill.

Our regular summary mailing is enclosed for your information.

Enclosure: as stated

(202) 293-9072

BOARD OF
DIRECTORS

Carl Gershman
President

THE NEW YORK TIMES

Sunday March 15, 1987

Women of 42 Nations Seek Leadership Roles

By ROBERT LINDSEY
Special to The New York Times

SAN FRANCISCO, March 14 — More than 60 women who are leaders in 42 countries are meeting here this weekend in an effort to enlarge the political roles of women in democratic countries.

At the meeting, the first Eleanor Roosevelt International Caucus of Women Political Leaders, politicians from a diversity of geographic, ethnic and political backgrounds are exchanging experiences and sharing advice. The caucus is sponsored by an arm of the Democratic Party in this country.

"Geraldine A. Ferraro, the 1984 Democratic Vice-Presidential candidate, who is chairman of the meeting, said, "We hope to find out how and why they reached positions of power, to share this information with each other, and when it is all over, I guess the word is to 'network,' to get more women to help each other."

The list of delegates at the conference indicates that, from Argentina to Zimbabwe, almost 30 are present or former members of their national parliaments; many are present or former cabinet ministers, and several are head of their political parties.

‘We Must Do Better’

But Mrs. Ferraro said that, on average, women hold only 5 percent of the political offices in democratic countries even though they represent more than half of the electorate.

"We must do better than that," she said, adding that she hoped the conference would produce not only practical lessons women can utilize but a strategic "global blueprint" to increase their political influence.

In interviews and a conference sessions, the delegates agreed that many problems they have experienced are

not unique to their own countries.

In virtually every country, they said, women politicians must cope with a deep-seated cultural resistance from men and even some women to gain acceptance of the notion that women are as capable of men in managing important jobs in government.

Maria de Lourdes Pintasilgo, a former Prime Minister of Portugal, said that when women are admitted to the corridors of power their assignments tend to involve "what I call the soft-

A conference
searches for a
‘global blueprint.’

ware" of government: heading departments such as social services, youth or tourism rather.

Additionally, the delegates agreed that their efforts to increase their political roles are made difficult by a scarcity of role models and mentors, inadequate access to campaign contributions from a male-dominated business world, sexual innuendos and inqueries into their personal lives by the press that holds women to stricter standards that male candidates.

"Our marital status is criticized, whatever it is," said Senator Barbara A. Mikulski, Democrat of Maryland. "If you're widowed, you killed him; if you're divorced, you couldn't hold on to him; if you're married, you're neglecting him; and if you're single, well, you're a little funny, aren't you?"

Although many men climb the political ladder with the assistance of mentors, Kathleen Staudt, a professor at the University of Texas, El Paso, said it

is difficult for women to find mentors, and when they do it is often perceived of as "sexually tinged."

‘Subtle Discrimination’

Kim Hyun-Ja, one of seven women in the 275-member South Korean National Assembly, said she had learned from talking with other delegates that women who are politicians face universal obstacles such as "subtle discrimination" and a patronizing attitude of many male politicians who accept a "token" number of women in government.

Many participants in the meeting said they believed that women were less likely to achieve real political power by participating in low-level committees of their political parties than they were by becoming active in local community organizations, environmental groups or other activities that give them political experience and allies and a visibility in their community, especially if their interest is a cause that attracts press coverage.

"There are problems and difficulties ahead," Victoria Garrón de Doryan, the second vice president of Costa Rica, said when asked if she was optimistic that women's political influence will grow. "It's not going to be easy, but it will come, step by step."

The caucus is sponsored by the National Democratic Institute for International Affairs, an arm of the Democratic Party. J. Brian Atwood, its president, said a Federal agency, the National Endowment for Democracy, is underwriting about 75 percent of the $200,000 cost and private donors are financing the balance.

News of Business People:
Tuesday through Friday,
Business Day.

HK:

Albert Shanker is forging ahead with some ideas he raised w/ the NED Board last summer to spread word of NED's work among the public and help generate Congressional support. "Friends of the NED" was to be a topic at the last Board meeting Mar 12th--and Shanker had phoned you that day to discuss your thoughts but it appears you never connected.

He's sent two papers for your review-- a concept paper outlining proposed make-up of Friends of the NED and tasks, and a statement of purpose. He asks:

--is this worth pursuing

--are there any changes you'd make in the papers

--can you suggest any people who might lend their name/support to Friends of the NED

The letter you wrote to him last summer indicated agreement in principle and offering support as time permitted (attached at back).

I'll handle by phone; put Shanker on phone list

Draft response (I need guidance)

Prefer

Jody

AMERICAN
FEDERATION OF
TEACHERS AFL CIO

555 NEW JERSEY AVENUE, NW
WASHINGTON, DC 20001
202/879-4400

ALBERT SHANKER
President

March 23, 1987

MAR 24 1987

The Honorable Henry A. Kissinger
The Center for Strategic and
International Studies
1800 K Street, N.W., Suite 1021
Washington, D.C. 20006

Dear Henry:

As you may remember, at previous NED Board meetings, I have raised the idea of organizing an outside group of respected Americans to support the purposes and ideals of the Endowment. I have formalized this idea in the enclosed concept paper, and I have also enclosed a draft "Statement of Purpose" for "Friends of NED."

Prior to our recent Board meeting, I sent this proposal to a few people, and the reaction was quite encouraging. However, I want every Board member to have a chance to review and respond to it. If you could take the time to look these materials over, I would appreciate your thoughts on the following questions: Is this concept worth pursuing? If so, are there any changes you would propose in the concept paper or in the Statement of Purpose? Finally, do you have any suggestions of individuals who might be interested in lending their names and support to the Friends of NED?

I hope you can send me your thoughts soon. Please forward a copy to Carl Gershman as well so that he can be apprised of Board sentiment.

AS/klm
opeiu#2
aflcio

Enclosures

28

Friends of the National Endowment For Democracy

**Structure:** The Friends of NED would be a private, bi-partisan association of prominent Americans from politics, diplomacy, labor, business etc. organized for the purpose of providing public and political support for the National Endowment for Democracy and its four core institutes.

The Friends of NED would be Co-Chaired by a prominent Democrat and Republican, widely respected for their foreign policy experience and expertise. It would seek to include members from a variety of sub-groups such as: former Secretaries of State and National Security Advisers; former U.S. Ambassadors and senior NSC, State Department, and diplomatic personnel; labor leaders; business leaders; a Senatorial and a Congressional Advisory group; University Presidents and Academics, etc. Each sub-group might be organized around Co-Chairs as well. Thus, two labor leaders would be co-chairs of the Labor Advisory Group, etc. The purpose of this would be to appoint leaders who could reach out and organize members of their respective fields into the Friends of NED and also act as Co-Signers of various Op-Ed pieces or letters to Congress. Thus, the co-chairs of the labor group would solicit labor members, co-chairs of the Ambassadorial group would solicit former members of the Foreign service, etc.

**Purpose:** The Friends of NED would help promote public awareness and support for the NED idea and help generate congressional support for appropriations and authorizations. Towards that end, the Co-Chairs of the Friends of NED, would script Op-Ed pieces in major newspapers, deliver testimony before relevant congressional committees, and organize signed advertisements in major periodicals.

**Location and Funding:** The Friends of NED would require a letterhead and mailing address. It could easily be located for letter-head purposes in the AFT or in another friendly institution. Since its activities would primarily consist of preparing testimony and OP-Ed pieces it could likely be "staffed" by detailing an existing staff person, to coordinate its activities on a very part-time basis. Indeed, the main impact of the group would be the signal it would send to Congress to have a significant, respected bi-partisan group of American leaders publicly "bless" the Endowment idea. A nominal budget, perhaps as little as $5,000 a year, would suffice for the groups activities, to defray the costs of preparing testimony, stationery, and travel for Co-Chairs to testify before Congress.

2.

**Implementation:** Friends of NED will only exist if a group of Board members, if not the entire Board, of NED and the four Institutes decide to make it happen. We need 8-12 prominent individuals to commit to network among their friends and associates to solicit the kinds of individuals needed to give Friends of NED credibility. This is especially true following the damage done by the New York Times article erroneously linking Ollie North's "Project Democracy" covert operations with the Endowment. Specifically, we need one or two individuals from each of the groups mentioned above to commit to solicit members by letter and phone. That might be done by circulating a brief "Statement of Purpose" which might also serve as a future newspaper ad. Enclosed is a first rough draft of such a statement, written under the assumption that the less detailed it is, the easier it will be to gain widespread endorsement for Friends of NED.

Statement of Purpose: Friends of NED

The surest guarantor of human rights in other nations is the
growth of indigenous democratic institutions. Competition among
a "multiplicity of interests" as the authors of the Federalist
argued, is the best security for the rights of individuals and
minorities. Exercise of the basic right of freedom of
association enables individuals with common interests to combine
into strong and independent organizations that can represent the
views and protect the rights of their members.

Wise U.S. government policy can help create the conditions
in other nations in which such democratic institutions may grow.
But the post-war experience of American trade unions, voluntary
organizations, business associations, agrarian cooperatives and
other groups and the successful example of publicly funded
foundations in the Federal Republic of Germany, now active in
over 60 countries, in nurturing democratic renewal in countries
such as Portugal, Spain, and Venezuela, teaches another lesson,
also: protecting and nurturing democratic institutions are also
a matter of private relations: unionist to unionist, business
group to business group, political party to political party.

The National Endowment For Democracy, a private, non-
partisan foundation, was founded on the belief that the expansion
of private sector initiatives to support democratic development
abroad fills a vital need that cannot be met through governmental
action alone. By its very nature, such support cannot be
dictated by the short-term policy considerations of a particular
U.S. administration or by the partisan political interests of any
single party or group. The Endowment will be effective only if
it represents a consistent, long-term approach to strengthening
democracy that will be supported through successive
Administrations and Congresses.

To be effective, the Endowment must embrace no particular
ideology. Instead, it must seek to support and strengthen the
democratic process, which inevitably will encompass competing
points of view and a pluralism of interest groups and independent
institutions. Its goal is not to steer other nations towards
adoption of any particular set of policies, but rather to help
them evolve into stable and vigorous democratic societies. Its
assistance must be responsive to local needs and seek to
encourage, not to control, indigenous efforts to build free and
independent institutions. The partnership envisaged between
private sector groups in the United States and in other nations
must be based upon mutual respect, shared values, and a common
commitment to work together to extend the frontiers of democracy
for present and future generations.

2.

We are encouraged by many of the early efforts of NED and its four core Institutes: the Free Trade Union Institute, the National Democratic Institute for International Affairs, the National Republican Institute for International Affairs, and the Center for International Private Enterprise. We note, to cite just one example, that Endowment-supported programs to train and assist independent election monitors in the Philippines played a crucial role in safeguarding the integrity of that historic election process.

We also believe that the continued success of the National Endowment ideas depends both on substantial congressional support and vigorous oversight. NED's activities can and must be conducted openly, after full debate, and with continual congressional oversight. As Friends of the Endowment, we pledge our cooperation in achieving those important goals.

Thomas Jefferson said: "The ground of liberty is to be gained by inches. It will not be won overnight." We believe a strong, vigorous private sector program of support for democratic institutions abroad, under the National Endowment For Democracy, will contribute importantly to that ongoing commitment of the United States to help the people of nations enlarge the ground of liberty.

**Structure:** The Friends of NED would be a private, bi-
partisan association of prominent Americans from politics,
diplomacy, labor, business etc. organized for the purpose of
providing public and political support for the National Endowment
for Democracy and its four core institutes.

2.

2.

HK:

Fellow Natl Endowment for Democracy Board member Albert Shanker outlines some ideas he raised at the June 6th Board meeting as to what the Board can do to promote NED and democracy abroad.

Activities he envisions for this PR effort (which will not use NED funds):

- having board members and others prepare articles/speeches on NED

- aid in launching seminars (perhaps under auspices of Carnegie Endowment, CSIS, World Affairs Council, etc) on promoting democracy abroad and NED's role

- developing a press strategy to garner positive attn for NED

- help in arranging visits by foreign individuals who can discuss their efforts in promoting democracy and US/NED support

Shanker seeks your comments on this and will forge ahead with fundraising/ implementation if there is general approval among the Board.

Attached draft response expresses agreement in principle and support, time permitting.

Sign attached draft
as amended

Prefer

Jody

AMERICAN
FEDERATION OF
TEACHERS AFL-CIO

ALBERT SHANKER
President

June 26, 1986

Dear Dr. Kissinger:

JUN 30 1986

At the recent meeting of the Board of Directors of
the National Endowment for Democracy, I promised to flesh
out in writing ideas I raised then. You will remember that I did
not make a specific proposal to the Board, nor is it my
intention to do so now. Rather, I hope to get your informal
responses to some thoughts on what a number of us might
do privately to promote a broader understanding here of
the Endowment and of democracy's cause abroad. We can
do this without taxing NED's limited resources at a time
when sound management and the selection of solid projects
are appropriately its first priority.

I appreciate the thoughtful comments many of you
offered at the meeting and the numerous positive reactions
I heard afterwards. I have tried to incorporate them all
in the brief paper enclosed. In my view most of them boil
down to three major concerns. We should be sure that the
effort:

* Supplements, but is complementary to, NED's existing agenda.

* Is defined as a public relations and communications effort supported with private funds and is therefore not dependent on NED resources or staff time.

* Presents a clear strategy that would be publicly understood.

The enclosed paper represents my attempt to address
these concerns. If the ideas in it meet with general approval,
hopefully some of us can move ahead quickly to begin
implementing them.

AFT 28

DRAFT

UNDERSTANDING DEMOCRACY'S CAUSE ABROAD -- A
PROSPECTUS FOR DRAMATIZING THE ROLE OF AMERICA'S
PRIVATE SECTOR

I. **Context and Rationale.** With the creation of the National Endowment for Democracy in 1983 a new idea was placed on the national agenda, namely that much could be done by major United States private sector groups, using public money, to assist like interests abroad who are trying to preserve or create democratic systems. While many American private groups historically maintained such contacts and offered such assistance, the thought that their work could be coordinated, or that they deserved public money, was quite new. The proposal generated considerable discussion and dissension. Many of the first programs were little understood, even in some instances by constituents of the very organizations who pressed forward with their sponsorship.

Inherent to the NED idea has been the central role of four major representative groups in American life -- labor, business and the two political parties. It is these groups that are among those defending pluralism most strongly in our democratic system. It is the projects of these groups, quite naturally, that have also occasioned the most concern among those who have been suspicious of this democracy-promoting undertaking from the outset.

In the past three years the National Endowment for Democracy has survived continuous embattlement in the press and in Congress. Slowly, but surely, it has been winning support as the programs it has funded have become more clearly understood and as its administrative set-up has ironed out the wrinkles associated with any organization's creation.

NED is an idea whose time is coming. Its efforts to openly foster the development of democratic institutions abroad through public means has the potential to unite a broad coalition of public and political support in the United States, from liberal to conservative. What is most important in building that coalition is that NED's story be told widely, effectively, and through many different forums.

II. **Agenda.** A public education effort of this kind coordinated with the Board and Staff of NED and the four Institutes might include the following kinds of activities:

* The generation and distribution of articles, speeches, and OP-ED essays by NED board members, prominent leaders in foreign policy, members of Congress, labor business, foreign leaders, and others aimed at telling the NED story, its positive accomplishments, its purposes and rationale, and its essential role in an American presence abroad.

* Seminars and discussions, perhaps enlisting various think tanks such as the Carnegie Endowment, CSIS, the World Affairs Council, and others, on the topic of promoting democracy abroad in which NED's role would play a prominent part. Such discussions could concentrate on countries whose prospects for a democratic future are particularly compelling.

* A coordinated press strategy to bring the NED story to the attention of prominent columnists, editorial writers, and writers for prominent, journals and periodicals.

* Assistance in scheduling the visits of foreign democratic leaders, trade unionists, business leaders, and party representatives with editorial boards, journalists, opinion makers, and others to assist them in telling the story of their efforts to build democratic institutions and the role of the U.S. private sector, through NED, in support of that development.

### III. Mechanics.
It is probably best to move quickly with a simple set-up. If additional mechanisms for decision-making are needed at some point, they can be established later. Since the main audience for these suggested activities is domestic, the funds should be private and separated from the Endowment.

For starters, labor will attempt to raise $15,000 to $20,000 toward a budget that should probably come to at least $40,000 eventually in order to support a meaningful effort. We propose to contract with Bernard Aronson, Director of The Policy Project, a private public-policy consulting firm in Washington, who has extensive experience and contacts in Washington. His activities would be carried out under the informal direction of the four core groups associated with the Endowment, and in close cooperation with the Endowment's own leadership. If the core groups seek to contract with additional individuals, additional funds could be used to do so.

MAR 20 1987

March 18, 1987

The Honorable Nancy Kassebaum
United States Senate
Washington, D.C. 20510

Dear Senator Kassebaum:

I want to thank you for the kind comments you made about the National Endowment for Democracy at yesterday's hearing of the Foreign Relations Committee.

I was not there because I have been asked to testify the morning of Tuesday, March 24. If I have the opportunity then to answer your questions about the requested increase for the Endowment, I will do so with pleasure. In the meantime, I wanted to provide you with the following written response.

The current request of $25 million is less than eighty percent of the start-up level of $31.3 million which the Committee approved four years ago. Because the Endowment got started precisely when budgets became so tight, we never had the chance to reach our potential or even to come close to the approved start-up figure. The highest appropriation was in FY 1985, $18.5 million, when we were prohibited from funding the National Democratic and Republican Institutes for International Affairs. Both are happily now eligible for funding, but the appropriation has been reduced to $15 million. This has caused a tremendous strain on our resources, stymied the development of new initiatives, and forced the abandonment of important programs. The Administration's request is simply a modest attempt to put the program on a solid foundation.

(202) 293-9072

BOARD OF
DIRECTORS

Polly Baca
William E. Brock III
LeGree Daniels
Frank J. Fahrenkopr. Jr.
Dante B. Fascell
Orrin G. Hatch
Lane Kirkland

Carl Gershman
President

I believe that doing so is important not only for the Endowment, but for the country. In creating the Endowment the United States raised the hopes of brave democrats in the Third World -- and in the communist world as well -- that our country was making an important new commitment to the democratic cause. A failure to provide the resources needed to support this effort in even a minimal fashion undermines this hopeful message and casts doubt on the seriousness of U.S. resolve to help our democratic friends abroad.

Moreover, as I pointed out in our meeting, I believe the Endowment is one of the most cost-effective programs imaginable. The dedicated people who receive our support, whether they are fighting for racial justice in South Africa or intellectual and trade union freedom in Poland, make the most out of whatever limited help we can offer. Would that it were more.

I am convinced that if we had had such a program underway in Nicaragua during the decades preceding 1979, there would have been a viable democratic alternative to Somoza. Think of how much we could have saved ourselves -- in money and in grief -- if we had pursued the path of timely democratic commitment instead of neglect and complacency. The conclusion of Shirley Christian's careful study of the Nicaraguan revolution is relevant here: "Only by promoting democratic political development on a long-term basis can the United States hope to avoid the hard choices between sending troops and accepting a regime that overtly opposes its interests."

We cannot guarantee that a sustained program of democratic political development will avoid future Nicaraguas. But I feel confident in saying that the likelihood of similar setbacks in the future is greater if we leave the job of political development entirely to those who are devoutly opposed to democracy.

March 13, 1987

MEMORANDUM

MAR 17 1987

FROM: Carl Gershman

RE: New York Times Editorial, 1986 Annual Reports

Enclosed is a copy of an editorial published in
today's *New York Times*. The *Times* still does not
understand the history of Project Democracy or that
the Endowment is not part of the Administration.

Also enclosed is a copy of our 1986 Annual Report,
which has just been printed in final form. We would be
happy to send additional copies to your offices and/or
to send reports to anyone you would like to receive
them.

Enclosures: as stated

(202) 293-9072

BOARD OF
DIRECTORS

Carl Gershman
President

# The Good Project Democracy

Lieut. Col. Oliver North borrowed the name of an overt, Congressionally mandated project to bless his own covert activities and thus created a good deal of confusion. In messages about his Iran-contra operations, he repeatedly boasted of their connection to "Project Democracy" or "Prodem," his grandiose term for the privatized war games in Central America. That is also the term used to describe the National Endowment for Democracy, a constructive public initiative to help democratic institutions abroad through private, non-governmental efforts.

What's the link between these Prodems? None, according to the Tower board, which could find no information connecting the covert "Project Democracy" to the above-board Endowment. That finding, alas, can be found only in a footnote.

The confusion has deepened because of similar roots. The so-called Reagan Doctrine, calling for providing aid to anti-Communist guerrilla movements, helped inspire both the Endowment and the covert crusade. Meantime, the confusion has widened because a right-wing outfit calling itself the National Endowment for the Preservation of Liberty is headed by one of Oliver North's chums. Thus

language is debased and useful purposes tarnished, to the dismay of serious proponents of open assistance to democratic forces abroad.

The Soviet Union has long provided backstage aid to foreign comrades, and West German political parties have openly helped their third-world counterparts. Created by Congress in 1983, the bona fide National Endowment for Democracy disburses U.S. grants to parties, newspapers, trade unionists and schools around the world. Money flows to four "core grantees": a trade union institute, a unit of the Chamber of Commerce and institutes managed by Republican and Democratic parties. That some foolish grants have slipped through is less noteworthy than the general success of the venture.

The endowment was meant to bury the bad old practice of using the C.I.A. to channel unaccounted-for funds to undisclosed recipients in the name of freedom. The lamentable result of the North confusions is to re-ignite suspicions of sinister American manipulation. The new White House staff can promptly put Project Democracy back on its proper tracks so that there is no confusion about its purposes and activities. What's in a name? Credibility, and this is one form of it well worth restoring.

The New York Times, Friday, March 13, 1987

March 10, 1987

MAR 11 1987

MEMORANDUM

FROM: Carl Gershman

RE: Grants to the Institute for North-South Issues

I have enclosed materials dealing with a matter that will come up at this Friday's Board meeting. It is an issue concerning which we have received a number of press inquiries, and it is possible that members of the press will attend our meeting.

The issue involves four grants which the Endowment has made to promote journalist training in the Caribbean, to help establish an independent newspaper in Guyana, and to support education and research activities in Haiti.

The U.S. organization which, in consultation with the Caribbean groups, was chosen to administer the grants is the Institute for North-South Issues (INSI). Two officers of INSI are also associated with a separate organization, IBC, which, according to press reports, has been involved in activities linked to the Iran-Contra controversy.

The Endowment is conducting a financial review which so far has turned up nothing to indicate that funds have been spent for purposes other than those specified in the grant agreements. Nonetheless, in order to ensure that this entirely unrelated controversy does not harm the important programs being supported in the Caribbean, the Endowment and INSI have agreed that it would be best to separate INSI from the grants. Accordingly, I have consulted with Chairman Richardson and counsel, and plan to recommend to the Board that this step be taken, and that the Endowment administer the remainder of the grants directly.

(202) 293-9072

BOARD OF
DIRECTORS

Carl Gershman
President

☎14

# FACT SHEET

## NATIONAL ENDOWMENT FOR DEMOCRACY

## Grants to the Institute for North-South Issues

### THE FACTS:

The implication that has appeared in the press that Endowment grants to the Institute for North-South Issues (INSI) were somehow connected to Lt. Col. North's public relations efforts on behalf of support to the contras is unfounded and entirely false.

The four grants in question had nothing whatsoever to do with the Central American conflict nor even with Central America:

- One grant enabled the *Caribbean Publishers and Broadcasters Association* to conduct a seminar for newsroom decisionmakers and a training program for *journalists of the smaller Caribbean islands*.

- Two grants supported educational and research activities in Haiti of the *Haitian International Institute for Research and Development*.

- The fourth grant made possible the *establishment of an independent newspaper in Guyana*.

The Endowment is conducting an examination of INSI's books to determine that NED funds have been used solely for the purposes described in the Endowment's grant agreements with INSI.

The Endowment will also take any additional steps that may be necessary including the disengagement from the grants of the U.S. administering organization INSI, to ensure that the important and highly praiseworthy work of the Caribbean organizations is not affected by the entirely extraneous controversy in this country over contra funding.

### BACKGROUND:

- The National Endowment for Democracy receives many proposals directly from foreign organizations. In funding such organizations, the Board of the Endowment has chosen to have the grant administered by U.S. based groups. This policy facilitates the establishment of ties between U.S. private sector groups and their foreign counterparts and can provide the foreign organization with substantive and technical expertise.

-- There are, of course, costs associated with the administration of a grant. For example, the Endowment requires quarterly program and financial reports and other documentation concerning the progress of the program. At the same time, the Endowment has insisted that administrative costs for its U.S. grantees be kept to an absolute minimum. Generally an administrative budget is less than twelve percent of the entire grant award. This is an extremely low overhead rate, as can be confirmed by comparison with other grantmaking organizations.

-- The Endowment received a proposal from the Caribbean Publishers and Broadcasters Association (CPBA) in June 1985. Following review of this proposal, the Endowment asked CPBA what U.S. organization would best be suited to administer the program and provide assistance. This is standard Endowment practice.

Harold Hoyte, the President of CPBA, in a letter of July 10, 1985, requested that INSI serve as the U.S. grantee since the CPBA had had previous contact with that organization. (The president of INSI, Frank Gomez, had been Director of the Foreign Press Centers in Washington, New York and Los Angeles for the U.S. Information Agency and, earlier, served as Deputy Assistant Secretary of State for Public Affairs. As a Foreign Service Officer, Gomez served in Latin America, the Caribbean and Africa.)

After reviewing standard organizational information which, as a matter of procedure, the Endowment requests from all potential grantees, INSI was found well suited to serve as the U.S. grantee, based on its extensive experience with Caribbean journalism. The Endowment Board approved this selection and awarded the grant in January 1986.

-- The Endowment also received proposals for an institute in Haiti and for the establishment of an independent newspaper in Guyana. In each case INSI was viewed as an appropriate partner by the foreign group and the Endowment.

-- The Endowment is currently conducting an examination of INSI's books to determine that all NED funds have been used solely for the purposes described in the Endowment's grant agreements with INSI.

## GRANTS AWARDED TO INSI:

-- Caribbean Publishers and Broadcasters Association, $108,463 (of which $11,500 covers INSI administrative costs). The two-part program enabled the CPBA to hold a seminar for newsroom decisionmakers in the Caribbean and establish a counseling program designed to provide on-site training and

advisory services for journalists of some of the smaller Caribbean islands. Of the program budget of $96,963, all funds have been disbursed. Of the administrative budget of $11,500, all funds have been disbursed.

The Haiti International Institute for Research and Development. A grant of $157,634 ($16,890 of which goes for INSI's administrative costs) was awarded in March 1986 to INSI for this program to assist a group of Haitian professionals, businessmen, intellectuals, and political, civic, and religious leaders to create a forum for dialogue, publish a magazine, perform research, and conduct training programs and seminars. Of the program budget of $140,744, NED has disbursed all funds. Of the administrative budget of $16,890, NED has disbursed all funds.

An additional grant of $100,247 ($10,000 of which goes for INSI's administrative costs) was awarded in September 1986 to assist the Haitian institute in the first part of a three-stage civic education program. Of the program budget of $90,247, NED has disbursed all funds. Of the administrative budget of $10,000, NED has disbursed all funds.

Independent newspaper in Guyana. In September 1986 a grant of $127,429 (of which $11,469 goes for INSI's administrative costs) was awarded to INSI to assist several Guyanese business and communications leaders to publish an independent newspaper for distribution in Guyana. This is the first independent paper to be published in that country since the imposition of stringent press restrictions in 1971. Of the program budget of $115,960, as of Feb. 28, 1987, $69,687 has been disbursed by NED. Of the administrative budget of $11,469, as of Feb. 28, 1987, $7,646 has been disbursed by NED.

The Institute for North-South Issues (INSI) was established in late 1983 in response to the challenges of American interdependency with the developing world. INSI specializes in programs for visitor exchanges (it has been a subcontractor for USIA's International Visitors program) and also, per INSI's description of the organization, "on vital and difficult issues which bear on U.S. relations with developing and developed nations. In essence, INSI serves as a clearinghouse and a planning center for foreign and American organizations wishing to establish or improve international ties." INSI is a non-profit corporation registered in the District of Columbia.

INSI was viewed as an appropriate grantee by the Endowment in part because of the extensive experience of its principals, particularly in the field of Caribbean journalism. Frank Gomez's experience is detailed above.

March 4, 1987

Summer 1986: Project
Democracy ⁸

In summer 1986, LtCol North informed
Rodney McDaniel, NSC Executive Secretary, of
his role in a "new contra management struc-
ture." LtCol North told Mr. McDaniel that Vin-
cent Cannestraro, NSC Director of Intelligence
Programs, was "not witting of Project Democ-
racy," a term LtCol North used to describe a
network of secret bank accounts and individuals
d deeply involved in Contra resupply activities—
including the building of a secret airstrip for
use by the Contras in northern Costa Rica.

Mr. McFarlane informed the Board that his
only recollection of terms similar to "Project
Democracy" occurred during a May trip to
Tehran:

Upon arrival in Tel Aviv, we were met by
Major General Richard Secord (USAF Ret).
I was told by LTC North that the aircraft
being used on the trip had been chartered
(I believed by the CIA) from a European
concern managed by General Secord. I had
known that General Secord had had a
prior association with the CIA while on
active duty, and this did not surprise me.
LTC North also mentioned in passing that
General Secord was also associated with
the democracy project. . . . At the time,
LtCol North's reference to "the democracy
project" did not register with me and I did
not pursue it with him thereafter.

LtCol North referred to "Project Democra-
cy" or "PD" in a July 24, 1986, internal mes-
sage from VADM Poindexter. In his note,
LtCol North proposed that the CIA buy out
"PD" assets when the Congressional ban on
CIA activities was officially lifted in October.
LtCol North listed "PD" assets totalling $4.5
million dollars. He wrote:

We have no information linking the activities described herein as "Project Democracy" with the National Endowment for Democracy. The latter was created in 1983 by Congress and is funded by legislation. Its purpose is to strengthen democratic institutions around the world through private, non-governmental efforts. NED grew out of an earlier Administration public initiative to promote democracy around the world, which came to be known as "Project Democracy." It appears that LtCol North later adopted the term to refer to his own covert operations network. We believe this is the only link between the NED and LtCol North's activities.

We are rapidly approaching the point
where the PROJECT DEMOCRACY assets
in CentAm need to be turned over to
CIA. . . . The total value of the assets (six
aircraft, warehouses, supplies, maintenance
[sic] facilities, ships, boats, leased houses,
vehicles, ordnance, munitions, communications
equipment, and a 6520' runway on
property owned by a PRODEM proprietary)
is over $4.5M. . . . All of the assets—
and the personnel—are owned/paid by
overseas companies with no U.S. connection.
. . . It would be ludicrous for this to
simply disappear just because CIA does
not want to be "tainted" with picking up
the assets and then have them spend
$8–$10M to replace it—weeks or months
later. . . . PRODEM currently has the only
assets available to support the DRF and
the CIA's most ambitious estimate is 30
days after a bill is signed before their own
assets will be available.

VADM Poindexter replied to LtCol North's
suggestion: "I did tell Gates that I thought the
private effort should be phased out. Please talk
to Casey about this. I agree with you."

In a note to VADM Poindexter several
months later, LtCol North once again proposed
the creation of a private, non-profit organization
to manage the Contra support effort. According
to LtCol North, this organization
would be involved in tasks the CIA could not
perform, including raising money, paying for
public relations, organizing UNO activities in
the U.S., and providing medical treatment for
wounded contras. LtCol North tells VADM
Poindexter that these activities were "now all
being done by Project Democracy," which he said
was supposed to be out of the Central America
business on or about October 1, when U.S.
funds were due to be appropriated.

The construction of a secret airstrip in north-
ern Costa Rica in summer 1985 was apparently
one of the operations undertaken by "Project
Democracy." In a September 30, 1986, memo-
randum to VADM Poindexter, LtCol North de-
scribed Project Democracy's role:

> The airfield at Santa Elena has been a vital
element in supporting the resistance. Built
by a Project Democracy proprietary, (Udall
Corporation S.A.—a Panamanian Compa-

C-11

HK:

Alfred Friendly brings to your attention
a grant request to the Natl Endowment
for Democracy, which will possibly be
brought up at the next meeting Sept. 12th.
It's from Russian-writer-in-exile Andrei
Sinyavsky to support continued publication
of a pro-Western journal he's been
issuing out of Paris since '78--[Syntaxis](https://www.example.com).
This is a personal effort by Friendly
to aid the Sinyavskys, as he's not a
member of the NED Board. His PS suggests
your making a call to Carl Gershman to
support approval of the grant.
YOU WILL MISS THE SEPT MEETING DUE TO
CONTINENTAL GRAIN.

I'll call Gershman in support __________

--Draft corresponding note to ✓
* Friendly

--No response to Friendly __________

Prefer to stay out of this __________

--Send staff note to Friendly
that I'm traveling, etc. __________

Prefer __________

Jody

HK: I think my options were sufficiently
confusing when I first raised this with
you as to render your response even more
confusing! The attached may therefore
not be quite what you had in mind: a draft
response to Friendly indicating your support
of the Sinyavsky grant request--and I also
include a draft note to Gershman in the
same vein, should you want to go to that
extent.

Jody

ALFRED FRIENDLY, JR.

3506 MACOMB STREET, N. W.
WASHINGTON, D. C. 20016

AUG 1 1986

August 1, 1986

Hon. Henry A. Kissinger
Center for Strategic and
International Studies
Georgetown University
1800 K Stret, N.W.
Washington, D.C. 20036

Dear Dr. Kissinger:

This letter is to alert you to a grant request recently made to the National Endowment for Democracy by the exiled Russian writer Andrei Sinyavsky for support of *Syntaxis*, the journal he has been publishing from Paris since 1978.

Sinyavsky and his wife and co-editor, Maria Rozanova, were most courteously received July 22 by Endowment President Carl Gershman and are hopeful that their request can be considered by the Endowment's board at its September meeting. They have left a detailed proposal with the Endowment, and I have summarized their work with *Syntaxis* on the enclosed page.

The journal is highly unusual among Soviet emigre publications in embracing Western values of political democracy and cultural pluralism. Its founder, having served nearly seven years in Soviet prison camps for daring to publish his writings in the West in the 1960's, is among the most eminent and most productive exiled Russian intellectuals. Its work -- prodding the Soviet intelligentsia to free and wide-ranging self-examination and debate -- is capable of exerting lasting influence.

But *Syntaxis* is published on a frayed shoestring. It needs steady support to survive and expand. Having been asked by the Sinyavskys to help acquaint Americans with their efforts and problems, I write in the hope you will take steps to insure that the Endowment gives their request prompt and favorable consideration.

P.S. I hope this appeal is not too great an imposition on our slight acquaintanceship and shared interest in the work of the Endowment. A call to Mr. Gershman is probably all that's needed to keep things on track.

Enclosure

[L.C.]

## Background Data on *Syntaxaxis*, a Russian-language Journal

Founded in 1978 by exiled Russian writer Andrei Sinyavsky and his wife, Maria Rozanova, in Paris, *Syntaxaxis* has since appeared 15 times in issues averaging almost 200 pages with a press run of about 1200 copies. With roughly half its production destined for circulation inside the Soviet Union, the journal devotes about 30 percent of its contents to "samizdat" writing that reaches it from the USSR -- thought to be the highest percentage of any emigre journal. It is also uniquely liberal in its willingness to publish views with which the editors disagree.

Having revived a title first used by Alexander Ginzburg for three numbers of his "samizdat" journal in 1959-60, the Sinyavskys have also pursued the original values of democratic dissent in the Soviet Union: an insistence on openness, diversity and the role of law in seeking to break down the rigid orthodoxies of the Communist regime. As a leading literary figure, critic and historian before his 1965 arrest and imprisonment, Andrei Sinyavsky embodies the humanist tradition of Western-looking Russian intellectuals. His journal is aimed at fellow spirits inside the Soviet Union and in exile, designed to stimulate the intelligentsia to pursue the course of individual and social liberation and the values of Western democracy.

Primarily a journal of criticism -- literary, cultural, sociopolitical -- *Syntaxaxis* aims at spurring free thought and debate within the milieu best fitted to generate a pluralist opposition to Soviet Communism. While it opposes both the militant nationalism of Solzhenitsyn and the reform Socialism of Medvedev, its major concern and target is the ideology and practice of Soviet Communist orthodoxy. Seeking to spur debate and free speech, its articles focus heavily on critiques of current and historical cultural distortions by the Soviet authorities.

*Syntaxaxis* has been published on a shoestring -- Sinyavsky's own limited resources as a writer and Sorbonne professor -- with no paid employees or stipends for contributors. Applying for the first time to the National Endowment for Democracy for a grant, the Sinyavskys have proposed a budget of some $73,000 to enable them to assure regular, quarterly publication with funds for honoraria to writers and salaries for professional help.

Their ambitions, including plans for a comprehensive, scholarly review of Soviet cultural publications, are broad. Their performance, so far, is impressive -- especially in the absence of outside support. But without steady, new resources the example and potential influence of *Syntaxaxis* will remain severely limited.

The New York Times

Monday, February 23, 1987

# An Innocent Victim Of the Iran Scandal

FEB 24 1987

By Walter F. Mondale and Frank J. Fahrenkopf Jr.

WASHINGTON — Because so much remains unknown about the Iran-contra scandal, information frequently comes out in the form of revelations that may contain only part of the truth and can be badly misleading. If we are not careful, many good and innocent people doing very worthwhile things could be harmed.

A case in point is the recent disclosure that the White House, under the direction of Lieut. Col. Oliver L. North, was carrying out secret activities under something called Project Democracy. According to the report, the project's "public arm" is the National Endowment for Democracy, a private, bipartisan organization established to strengthen democratic institutions in the world.

The allegation that the Endowment has any relationship whatsoever to Colonel North's activities, whatever they were, is entirely unfounded. Even the suggestion that the Endowment is an "arm" of Project Democracy is wrong and clearly at odds with legislative history.

In early 1983, Congress was pre-

## Democracy Endowment isn't a villain.

sented with two separate legislative proposals to foster democratic political and social institutions abroad. The first was Project Democracy, an Administration request for $65 million to fund a range of programs through the United States Information Agency, the Agency for International Development and the State Department. The second proposal was to authorize funding for the National Endowment for Democracy.

The Endowment idea was inspired by the success that private foundations associated with West Germany's political parties have had in strengthening democratic institutions in the developing world. As envisioned, the Endowment would be a private, nonprofit entity that would

openly fund democracy-building programs carried out by institutes associated with labor, business, our two major political parties and other private-sector organizations.

Believing that the work of promoting democracy could most effectively be carried out by the private sector, Congress authorized funding for the Endowment and not the package of programs called Project Democracy. This approach gained the Administration's full support.

This history is important because it shows that from the very beginning Congress placed a high value on the private, bipartisan character of the Endowment and its independence from the current or any future Administration.

Under the leadership of a broadly representative board of distinguished Americans, the Endowment has made great progress. It has developed strong oversight procedures pertaining to the selection, monitoring and evaluation of all grants. It reports fully to Congress on its activities and, as required by statute, keeps the State Department informed as well. The commitment to openness has always been fundamental to the concept and actual operation of the Endowment.

In all cases, the Endowment has been responsive to the democratic needs and initiatives of its partners abroad, in the belief that internally generated change is preferable to change that is artificially imposed from the outside.

The Endowment's work covers a wide range of countries. In the Philippines, Haiti, Taiwan, Guatemala, South Korea, Chile and Paraguay, its programs have supported or are helping to stimulate a process of democratic transition. In developing democracies such as Argentina, Peru and Colombia, as well as in the Caribbean and Central America, it provides aid to groups seeking to consolidate democratic institutions and procedures and to strengthen the commitment to democratic values.

The Endowment is also engaged in the difficult job of encouraging pluralist trends in the closed societies of the Communist world. Even in societies wracked by conflict, such as South Africa, Afghanistan, Northern Ireland and Nicaragua, it supports those who are working peacefully to sustain democratic possibilities and values.

The present controversy only heightens the importance of such open support for our friends abroad. We must not allow totally unrelated activities alleged to have been carried out under the rubric of an otherwise defunct "Project Democracy" to discredit the efforts of the National Endowment for Democracy. ☐

Walter F. Mondale has served on the board of directors of the National Endowment for Democracy. Frank J. Fahrenkopf Jr., chairman of the Republican National Committee, is a member of the Endowment's board.

February 18, 1987

MEMORANDUM

FROM: Carl Gershman

RE: Press Clips, Summary Mailing, Grant Status Reports, & Upcoming Meeting

As many of you already know, a controversy arose this past weekend with the publication of an article in the *New York Times* linking the Endowment to "Project Democracy." The controversy is detailed in the enclosed clips, and a copy of the "Fact Sheet" we have prepared in response to it is also included.

Our regular summary mailing is enclosed, as well as copies of bi-annual grant status reports which would have been available at the January 23rd meeting had it not been for the snow. The Free Trade Union Institute's report, which is not included, will be available at our March meeting. For your information, all of the proposals and other actions presented to the Board by mail ballot were approved, effective February 10th. I appreciate everyone's cooperation with the ballot procedure, and hope the weather will be more cooperative for our next meeting.

I would also like to formally reconfirm that meeting, scheduled for Friday, March 13th. As usual, we will have continental breakfast available at 8:30 a.m., the meeting will start at 9:00 a.m., and conclude

(202) 293-9072

BOARD OF
DIRECTORS

John Richardson
Chairman
Sally Shelton-Colby
Tee Chairman
Louis Martin
Secretary
Jay Van Andel
Treasurer

Polly Baca
William E. Brock III
LeGree Daniels
Frank J. Fahrenkopt, Jr.
Dante B. Fascell
Otrin G. Hatch
Lane Kirkland

Henry A. Kissinger
Charles T. Manatt
Edmund S. Muskie
Olin Robison
Albert Shanker
Charles H. Smith Jr.

Carl Gershman
President

FACT SHEET

- The "project democracy" described in the New York Times on Sunday, February 15, -- "a private, invisible second government to conduct foreign projects" -- is entirely unknown and unrelated to the National Endowment for Democracy. Indeed, it is the antithesis of the original idea out of which the Endowment grew.

- The National Endowment for Democracy is a private grantmaking organization funded by Congress and governed by an independent, bipartisan Board of Directors which operates _openly_ and is responsive to the needs of private groups abroad seeking assistance in their _nonviolent_ struggle for democracy.

- The idea of the Endowment was endorsed but not initiated by the Reagan Administration. As stated in a report by the U.S. General Accounting Office (GAO) which investigated the origins of the Endowment:

> "Two separate legislative proposals resulted from the President's June 1982 speech. First, in February 1983, the administration introduced legislation to authorize 'Project Democracy,' a program which would fund projects through the United States Information Agency (USIA), AID, and the State Department to support democratic institutions abroad. Second, in April 1983, a separate bill based on recommendations of the Democracy Program study was introduced to authorize

(202) 293-9072

BOARD OF
DIRECTORS

John Richardson

Chairman

Sally Shelton-Colby

Vice Chairman

Louis Martin

Secretary

Jay Van Andel

Polly Bace

William E. Brock III

LeGrec Daniels

Frank J. Fahrenkopf, Jr.

Dante B. Fascell

Orrin G. Hatch

Lane Kirkland

Henry A. Kissinger

Charles T. Manatt

Edmund S. Muskie

Olin Robison

Albert Shanker

Charles H. Smith, Jr.

Carl Gershman
President

funding for a National Endowment for
Democracy....

Because the names of these proposals were
similar and they were introduced at about the
same time, some confusion resulted."

GAO/NSIAD-84-121, July 1984 (emphasis added)

- Congress rejected the Administration's proposed "Project Democracy." Commenting on this, a report of the Congressional Research Service stated:

"Congressional committees drafted new enabling legislation for the plan to create a National Endowment for Democracy. Unlike the USIA portion of the proposal, the NED concept ... found general acceptance in both the House and the Senate."

"Although it was not part of the original Project Democracy proposal, NED subsequently gained the support of the Reagan Administration." (CRS Issue Brief, updated September 3, 1985)

February 17, 1987

York Times

New York: Today, sunny and cold. High 15-20. Tonight, clear, frigid. Low 12 city, 0-northwest suburbs. Tomorrow, sunny, cold. High 23-30. Yesterday: High 31, low 13. Details on page 45.

FEBRUARY 15, 1987

$1.50 beyond 75 miles from New York City, except on Long Island.

$1.25

Tass via Reuters

David D. Sakharov, right, talking to Jerome B. Weisner, American ice at an arms control conference was officially sanctioned. Page 8.

## IRAN SALES LINKED TO WIDE PROGRAM OF COVERT POLICIES

### ORIGINS IN '82 INITIATIVE

#### Secret Operations by N.S.C.
Staff Reportedly Began in
'Project Democracy'

By JOEL BRINKLEY
Special to The New York Times

WASHINGTON, Feb. 14 — The Reagan Administration's clandestine dealings with Iran and the Nicaraguan rebels grew out of a well-concealed program established in the White House at least four years ago to conduct covert foreign policy initiatives, according to many present and former Government officials.

The program, Project Democracy, began as the secret side of an otherwise open, well-publicized initiative that started life under the same name. Project Democracy's covert side was intended to carry out foreign policy tasks that other Government agencies were unable or unwilling to pursue, the officials said.

Although the public arm of Project Democracy, now known as the National Endowment for Democracy, openly gave Federal money to democratic institutions abroad and received wide bipartisan support, officials said the project's secret arm took an entirely different direction after Lieut. Col. Oliver L. North, then an obscure National Security Council aide, was appointed to head it about three years ago.

#### "Cultivating" Democracy

By 1986, Project Democracy had become "what Ollie referred to as the umbrella project for supporting things," a well-placed White House official said.

As a result, it now appears that it was President Reagan's vision of cultivating the "fragile flower of democracy," as he first described Project Democracy in a 1982 speech, that pulled the National Security Council into the business of running secret operations from the White House. It culminated in the scandal over the sale of arms to Iran and the diversion of profits to the Nicaraguan rebels.

Over the last four years, Project Democracy grew into a parallel foreign policy apparatus — complete with its own communications systems, secret envoys, leased ships and airplanes, offshore bank accounts and corporations.

### Outside the Established Process

It operated outside the established Government decision-making process and beyond the purview of Congress and was, officials said, an expression of the Administration's deep frustration that it could not push the foreign policy bureaucracy or Congress to embrace what Administration officials described as the "Reagan doctrine" of supporting anti-Communist insurgencies.

Congressional investigators studying

## 's Arrest, s Challenge

### Economic Crisis Erodes Support For Brazil Chief

By ALAN RIDING

Special to The New York Times

RIO DE JANEIRO, Feb. 14 — A subden souring of Brazil's economic situation has seriously eroded political and popular support for President José Sarney, tumbling the country into its worst crisis since civilian rule returned two years ago.

In recent weeks, the President has come under mounting criticism not only from opposition groups that want to cut short his mandate, but also from two pro-Government parties, which are pressing him to respond more assertively to the economic challenge.

"Sarney seems to have lost the will to govern," said a senior member of the Brazilian Democratic Movement Party, which controls Congress and formally backs the Government. "He has helped to create the crisis through indecision, and now we have a President without authority."

### Criticism From Cabinet

At the same time, just three months after a price freeze imposed by Mr. Sarney won his party a stunning victory in mid-term elections, the Government's failure to contain a dramatic resurgence of inflation has angered voters who feel they were deceived.

"Before the election, Sarney was incredibly popular," a foreign diplomat said. "Now he has to avoid crowds for fear of being heckled. He's become a President who has to hide out in the palace."

This week, the President even came under attack from inside his Cabinet

and, the mergers and acquisitions.

Whole thing raises a lot of very, very disturbing questions," said a member of the executive committee at the firm. "If they are guilty, you have to face up to the perversion of the problem."

Charged have been described government as cogs in networks finely broke laws by passing information about the secret for takeover bids.

The most basic securities laws that no investor can take account of others by using important information before it has passed publicly.

### Fundamental Issues Raised

sted into question is the very which the investment bank-ess has evolved in the past thus lucrative mergers become and more important as the international businesses — raising, trading in securities — ended. This is a prospect that Street's top executives last two of their colleagues were their desks Thursday by Feds — not like esteemed pro-business or criminals.

k's charges and the continuous investigation focus at-

ge maker, financier and the multibillion-dollar over companies that do bought out. This healthy environment has brought

THE NEW YORK TIMES, SUNDAY, FEBRUARY 15, 1987

# Iran Arms Sales Linked to Broad Covert F

Continued From Page 1

the Iran-contra affair say they are finding references to Project Democracy scattered throughout the N.S.C. documents they have acquired. And the special White House panel investigating the N.S.C. has questioned witnesses about Project Democracy and has found that it carried out a wide array of secret activities not yet known to the public, according to sources familiar with the commission's work.

Still, investigators say they do not know the full scope of the activities undertaken in the name of Project Democracy.

Although the project's open and secret parts were born as twins in 1982, the two grew up on such divergent tracks that today many officials do not remember they were ever related.

While the project's public arm, the National Endowment for Democracy, was openly granting Federal money to foreign book publishers, labor unions and other institutions last year, under Colonel North's direction the secret side was sending privately raised covert aid to the Nicaraguan rebels and carrying out a wide range of other activities, including the arms sales to Iran.

## Project's Covert Side:
A Well-Kept Secret

All the covert activities were carried out under such tight secrecy that most officials involved with Project Democracy's public side, and even some of Colonel North's colleagues at the N.S.C., said they were unaware of the secret program. When some N.S.C. officers heard or saw references to Project Democracy, they concluded it was only Colonel North's "pet code name for his activities," one official said.

A senior N.S.C. officer directly involved with Project Democracy's covert side said he did not know the program had a secret component. But whatever Colonel North was doing, he asserted, "it is wrong to characterize it as Project Democracy."

But another knowledgeable Government official who worked with Colonel North said he occasionally "heard North make reference" to Project Democracy and asked him what it meant. Colonel North normally volition. "It's a sort of grinned" at the question. "It clearly didn't want to talk about it."

## Project's Original Concept

Carl Gershman, president of the National Endowment for Democracy, said he did not know the project had a covert arm. But if it did, he added, it was a perversion of the original concept.

In fact, the debate about Project Democracy in 1982 centered on the concern that it would be used as a vehicle for covert activities. Congress agreed to fund it late in 1983 only after William J. Casey, the Director of Central Intelligence, promised that his agency would not be involved. As it turned out, the C.I.A. did not run the project because officials had decided to run the covert side from the N.S.C.

Representative Norman Y. Mineta, Democrat of California, who served on the Intelligence Committee until 1985, said "the phrase Project Democracy kept popping up" in inquiries involving the contras. But after checking, he added, "we were unable to find any C.I.A. connection, so we dropped it."

## Colonel North's Role:
A Clear Mandate?

Officials said the Tower Commission, named for its head, former Senator John Tower, has been unable to prove that President Reagan directly authorized the secret activities carried out under Project Democracy. But in

## The Progress of Project Democracy

**June 8, 1982** President Reagan announces Project Democracy in a speech to the British Parliament, saying its purpose is to foster democratic ideals in authoritarian regimes.

**Early August 1982** A White House memorandum calls for re-examination of the law in order to permit "covert action on a broad scale" by the National Security Council under the project.

**Late August 1982** The White House excludes the Central Intelligence Agency from the program for fear that C.I.A. participation would confirm suspicions that the project would be used as a cover for covert activities.

**January 1983** President Reagan signs National Security Decision Directive No. 77, permitting the N.S.C. to coordinate Project Democracy activities.

**March 1983** Wealthy business executives are invited to the White House for the purpose of soliciting money for Project Democracy.

**October 1983** Robert C. McFarlane is appointed national security council adviser, and he then names Lieut. Col. Oliver L. North to head Project Democracy's covert arm.

**November 1983** Congress approves the first financing for the National Endowment for Democracy after the Director of Central Intelligence, William J. Casey, pledges in public that the agency will not be involved.

**December 1984** The first known delivery of weapons to the Nicaraguan rebels, or contras, under Project Democracy leaves Lisbon for Honduras.

**Spring 1985** Lake Resources, the Dolmy Corporation and other Project Democracy companies are chartered.

**August 1985** The White House acknowledges that Colonel North has been aiding the contras.

**November 1985** A White House memorandum calls Lake Resources "our Swiss company" and says one of its airplanes had just delivered weapons to the contras.

**May 1986** At the request of the United States Government, a Texas businessman, H. Ross Perot, puts up $1 million as proposed ransom for United States hostages in Lebanon. A Project Democracy ship is used to ferry money to the Middle East, but the ransom is not accepted.

**October 1986** A Project Democracy ship is used in an unsuccessful attempt to trade United States weapons for a sophisticated Soviet tank held by Iran.

of offshore companies, secret bank accounts and private employees that kept the contra movement alive with money, equipment and other aid, all under the Project Democracy rubric, Congressional investigators say.

With that large, secret infrastructure already in place, in 1986 the N.S.C. used the "Project Democracy companies," as secret White House memos called them to run the covert program to ship arms to Iran.

Last fall, officials said, a Project Democracy ship was used to attempt a ransom, ultimately unsuccessful, of the American hostages in Lebanon, using $1 million donated by H. Ross Perot, the Texas billionaire.

Some of the White House computer memories that have been turned over to investigators note that when secret projects were proposed, officials often intended to get "one of our Project Democracy companies to pay for it," Congressional investigators said.

## Origins of the Project:
Fostering Democracy

Those activities are a far cry from the Project Democracy that President Reagan announced on June 8, 1982, in a speech to the British Parliament.

He described the program as a worldwide effort "to foster the infrastructure of democracy, the system of free press, unions, political parties, universities, which allows a people to choose their own way to develop their own culture, to reconcile their own differences through peaceful means."

Modeled after a similar program in

The directive makes no direct mention of the program's covert side, but does authorize "political action strategies" to counter moves by "the Soviet Union or Soviet surrogates."

The term "political action" can carry several meanings, but the earlier White House document on Project Democracy had used it almost interchangeably with the phrase "covert action." Funding was not discussed.

## Secret Financing:
Outside Sources

Although the National Endowment for Democracy, Project Democracy's

overturn side, he received Federal Congress, the early part of Project Democracy largely financing its sources. As side of Project was also final funds, and, vate individuals, the whole funding was the Adminis things," said security Council Project Democracy.

Already in dents.

Soon after Administration spend many cret to train Nicaraguan r. And when to sell Amer planes to Saui one secret par Saudi Govern money to an groups around the United

Senate in month that Sa $30 million to the United Sta was apparent White House Project Dem.

White

In 1982 and sion among volved convincing

In March of the U.S.I.A. dir House meeting several mil including Sir lisher of L'Ex- zine; W. Cler nevnesson, and owns newspa tions in the Un countries.

Mr. Wick, it been taping m in this period in strated that ho men asked to Project Dem but apparently although a fo r rectly involved there had been meetings later know if mon Project Democ

Speaking of ficial said, "I anyone ever sa meeting is to do activities." "B that was the

Mr. Wick is week saying "I asked to" rai democracy.

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Terms Sales Linked to Broad Covert Program

Page 1

say they are
Project Democ-
roul the N.S.C.
quired. And the
n the British Parliam-
tionary witness
and has a wide array of
not known to the
sources familiar
work.

ays open and se-
tainly twins in 1982,
such divergent
officials do not
work related.
public army, the
or Democracy,
mental money to
labor unions
last year, under
the secret
e raised cov-
ban rebels and
age of other ac-
tives sales to

Side:
cret

were carried
acy that most
project Democ-
ven some of
s at the
of the N.S.C. offi-
erences to
said, they
lon North's
"activities," one

directly in-
democracy's
now the pro-
cept. But
as doing, he
aracterize it

ble Govern-
with Colonel
ally "heard
to Project
what it
mally volu-
at the ques-
tant to talk

cept

of the Na-
, said
had a cov-
eracy to
said, they
to Project
m what it
mally volu-
at the ques-
tant to talk

Some of the White House computer memos that have been turned over to investigators note that when secret projects were proposed, officials often intended to get "one of our Project Democracy companies to pay for it," Congressional investigators said.

le:

Commi-
her Sena-
nable to
directly
carried
But in
new
York
Colony

of offshore companies, secret bank ac-
counts and private employees that kept
the contra movement alive with
money, equipment and other aid, all
under the Project Democracy rubric
Congressional investigators say.

With that large, secret infrastructure
already in place. in 1986 the N.S.C. used
the "Project Democracy companies,"
as secret White House memos called
them, to run the covert program to ship
arms to Iran.

Some of the White House computer
memos that have been turned over to
investigators note that when the
American hostages in Lebanon, using
$1 million donated by H. Ross Perot,
the Texas billionaire
Congressional investigators said.

He described the program as a
worldwide effort "to foster the infra-
structure of democracy, the system of
free press, unions, political parties, uni-
versities, which allows a people to
choose their own way to develop their
own culture, to reconcile their own dif-
ferences through peaceful means."

Modeled after a similar program in
West Germany in the early 1970's, the

ide from the beginning
ceived Federal funds appropriated by
Congress, many officials said that in
the early planning it was assumed
Project Democracy would be partly or
largely financed from non-Government
sources. As it turned out, the covert
side of Project Democracy apparently
was also financed by foreign govern-
ments and, perhaps, by wealthy pri-
timate individuals.

"The whole idea of getting private
funding was completely accepted as
the Administration way of doing
things," said a former National Se-
curity Council official involved in
Project Democracy planning.

Already in 1983 there were prece-
dents in 1984.

After taking office, the Reagan
Administration convinced Argentina
to spend many millions of dollars in se-
cret to train and equip the fledgling
Nicaraguan rebel army.

And when the United States agreed
to sell American-made Awacs radar
planes to Saudi Arabia late in 1981, in
one secret part of that agreement the
Saudi Government promised to give
money to anti-Communist resistance
groups around the world, at the behest
of the United States.

Senate investigators disclosed last
month that Saudi Arabia gave at least
$30 million to the Nicaraguan rebels, the
money was apparently deposited in what
White House memos refer to as
"Project Democracy accounts."

White House Meetings

In 1982 and 1983, much of the dis-
sion among government officials in-
volved convincing wealthy individuals
to contribute to Project Democracy.

In March of 1983, Charles Z. Wick,
the U.S.I.A. director, arranged a White
House meeting with the President for
several millionaires and billionaires,
including Sir James Goldsmith, pub-
lisher of L'Express, the French maga-
zine; W. Clement Stone, a Chicago busi-
nessman, and Rupert Murdoch, who
owns newspapers and other publica-
tions in the United States and other
countries.

Mr. Wick, it was later disclosed, had
been taping many of his telephone calls
in this period, and transcripts made
available in 1984 explicitly demon-
strated that he intended to have these
men asked to contribute to Project
Democracy. The meeting took place,
but apparently no money was raised,
although a former senior official di-
rectly involved in the matter said that
there had been similar White House
meetings later, and that he did not
know if money had been raised for
Project Democracy at those.

Speaking of the first meeting, the of-
ficial said, "I could never prove that
anyone ever said to the President, 'This
meeting is to raise money for covert
activities.'" But he said he believed
that was the purpose.

Mr. Wick issued a statement last
week saying "I did not, and I was never
asked to" raise money for Project
Democracy.

The directive makes no direct men-
dion of the program's covert side, but
does authorize "political action strate-
gies" to counter moves by "the Soviet
Union or Soviet surrogates."

The term "political action" can
carry several meanings, but the earlier
White House document on Project
Democracy had used it almost inter-
changably with the phrase "covert ac-
tion." Funding was not discussed.

JAN 16 1987

January 15, 1987

MEMORANDUM

To: Members of the Board of Directors

From: Carl Gershman

Re: Materials for Board Meeting

Enclosed are the materials for our upcoming Board meeting on Friday, January 23rd. We will begin with continental breakfast at 8:30 a.m., the meeting will start at 9:00 a.m., and we expect to conclude following luncheon. We will meet at the Sheraton Grand on Capitol Hill, 525 New Jersey Avenue, N.W., in the Ballroom Center.

Two proposed bylaws amendments are contained in the Board materials (see Book II, Bylaws). The first proposed change concerns removing the limitations on the tenure of the Board chairman and is being circulated for the first time in this mailing. The second proposed change, expanding Board membership, was previously circulated and is included for your information. Item #3 under the Bylaws tab is a copy of the current bylaws.

I look forward to seeing you on the 23rd.

Enclosures: as stated

1156 Fifteenth Street, N.W., Suite 304, Washington, D.C. 20005

(202) 293-9072

BOARD OF
DIRECTORS

John Richardson
Chairman
Frank J. Fahrenheit, Jr.
Vice Chairman
Louis Martin
Secretary
Sally Shelton-Colby
Treasurer

Polly Baca
William E. Brock III
LeGree Daniels
Dante B. Fascell
Orrin G. Hatch
Lane Kirkland
Henry A. Kissinger
Charles T. Manatt

Walter F. Mondale
Olin Robison
Albert Shanker
Charles H. Smith, Jr.
Jay Van Andel

Carl Gershman
President

14

[10]

# PROPOSED AGENDA

## ANNUAL MEETING
of the
BOARD OF DIRECTORS OF THE
NATIONAL ENDOWMENT FOR DEMOCRACY

Friday, January 23, 1987

Washington, D.C.

I. Approval of the draft minutes of Sept. 12, 1986

II. Remarks of the Chairman

III. President's Report

V. Review of the Draft Annual Report

VI. Election of Directors (Board Composition Committee Report)

VII. Other Business

(202) 293-9072

### BOARD OF DIRECTORS

John Richardson

Chairman

Frank J. Fahrenkopf, Jr.

Vice Chairman

Louis Martin

Secretary

Sally Shelton-Colby

Treasurer

Polly Baca

William E. Brock III

LeGree Daniels

Dante B. Fascell

Orrin G. Hatch

Lane Kirkland

Henry A. Kissinger

Charles T. Manatt

Walter F. Mondale

Olin Robison

Albert Shanker

Charles H. Smith, Jr.

Jay Van Andel

Carl Gershman
President

[w]

PROPOSED AGENDA

FIRST MEETING OF THE 1987 BOARD OF DIRECTORS

Friday, January 23, 1987

Washington, D.C.

I. Opening Remarks

II. Consideration of Proposed Bylaws Changes

III. Election of Officers

IV. Program Business

A. Discussion of Priorities & Budget Allocations

B. Consideration of Proposals

V. Other Business

(202) 293-9072

BOARD OF
DIRECTORS

John Richardson

Chairman

Frank J. Fahrenheit, Jr.

Vice Chairman

Louis Martin

Secretary

Sally Shelton-Colby

Treasurer

Polly Baca

William E. Brock III

LeGree Daniels

Dante B. Fascell

Orrin G. Hatch

Lane Kirkland

Henry A. Kissinger

Charles T. Manatt

Walter F. Mondale

Olin Robison

Albert Shanker

Charles H. Smith, Jr.

Jay Van Andel

Carl Gershman

President

14

3. National Democratic Institute for International Affairs

4. National Republican Institute for International Affairs

5. Polish American Congress Charitable Foundation, Inc.

A. Fund for Polish Democracy

B. OKNO

C. Poland Helsinki Watch Committee

D. POLCUL

6. Institute for Democracy in Eastern Europe - IDEE

7. Independent Polish Agency (The Solidarity Endowment)

8. ANEKS (Freedom House)

9. Uncensored Poland News Bulletin (Freedom House)

10. PAMIAT (Freedom House)

11. Czechoslovak Society of Arts & Sciences

A. Czech Documentation Center

B. Jan Hus Foundation

C. Jan Palach Trust

12. China Perspective

13. Preserving Independent Media in Paraguay
(Freedom House)

14. Strengthening Democratic Community Groups in Chile (DELPHI Research Associates)

15. Conciencia (Overseas Education Fund)

16. Instituto del Sur Para la Cooperación Democrática (Council of the Americas)

17. International Coalition for Human Rights in Cuba (Cuban American National Foundation)

18. Democratic Education Project in Dominica
(Caribbean/Central American Action)

19. EXCHANGE (Freedom House)

20. Committee for a Community of Democracies - CCD

21. Assistance to Philippine Cooperatives - Reprogramming (Overseas Cooperative Development Committee)

FPT

$18.95

Against All Hope is Armando Valladares' dramatic and harrowing account of his twenty-two years in Castro's prisons—from his arrest at the age of twenty-three (for being philosophically opposed to Communism) until his release in 1982, the result of an international campaign of protest.

His story opens with the classic arrest in the night: the house searched, the family terrorized, the man taken away...But what follows is shockingly unexpected, because nothing has prepared us for Valladares' eloquent and devastating testimony about the outrages committed by the Cuban government against its own people. From the very beginning, as he waits in his prison cell for the inevitable sentence, he makes us witness to the new Revolution's incessant brutality—the notorious firing squads are at work just outside his window. And when he is transferred to the infamous Isla de Pinos (where he will watch the failure of the Bay of Pigs invasion) and he begins the endless days of violence and harassment, putrid food and squalid living conditions, illness and forced labor, solitary confinement and the indifference of outside humanitarian agencies, we experience this life with him and his fellow prisoners, many of them former friends and allies of Castro.

We share, as well, his elaborate and hazardous attempt to escape, which fails and leaves him crippled...the hunger strikes that bolster his spirits and those of his companions, even as they provoke the authorities' desire to break the prisoners, to make them recant...his meeting with a fellow prisoner's daughter, the woman he will eventually marry...his poetry, which is smuggled out and published in Europe and America, winning him the attention of writers and public figures around the world...and, above all, the relentless enmity of the government, which tries to intimidate and discredit him until the very end, when France's President Mitterrand personally intervenes with Castro in Valladares' behalf.

An indictment of a cruel regime and the suffering it has imposed, this book is also an irrefutable, unforgettable revelation of one man's courageous efforts to survive "against all hope."

LUIS MELENDI

Armando Valladares was born in the Pinar del Río
region of Cuba in 1937. He now lives in Madrid.

With 8 pages of black-and-white photographs
Translated from the Spanish by Andrew Hurley

Front of jacket: Photograph by Luis Melendi
Illustration by Victoria Kann

Jacket design by Francine Kass

ALFRED A. KNOPF, PUBLISHER, NEW YORK

5/86

JUL 25 1986

July 23, 1986

MEMORANDUM

FROM: Carl Gershman

RE: House Floor Appropriations Passage

As you are probably already aware, on Thursday, July 17, the House considered and then passed HR 5161, the Commerce, Justice, and State, the Judiciary and Related Agencies Appropriations for Fiscal Year 1987. Final passage of the bill provided NED with $16.625 million for fiscal year 1987. The bill now goes to the Senate to await markup and consideration. The Senate Appropriations Subcommittee on Commerce, Justice, State, and the Judiciary may markup before the Labor Day recess that begins August 15.

In the House, Representative Conyers submitted an amendment to strike all language regarding the Endowment from the bill. The amendment was defeated by a vote of 121 yeas to 228 nays. The nearly two-to-one defeat and the absence of a Republican cosponsor of this amendment clearly shows that the momentum in the House is behind maintaining NED. Nonetheless, we still have a long way to go in building support for the Endowment.

As you can see by the roll call, NED held its own among the Democrats and made significant in-roads among Republicans. The margin of NED support has increased from 43% in May of 1984, to 57% in August of 1984, to 65% as of this vote. Interesting too, 88% of the new members who voted on the Endowment for their first time opposed the Conyers amendment.

The following is a summary of the House floor debate and the issues raised. I have attached a copy of the entire debate and roll call for your information, as well as program summaries by country and region which were made available to Members. I might also add that we are preparing a paper on "Myths and Facts" about NED in efforts to set the record straight on many of the issues that were brought up on the floor and through the course of the hearings.

(202) 293-9072

BOARD OF
DIRECTORS

John Richardson
Chairman
Frank J. Fahrenkopf, Jr.
Vice Chairman
Louis Martin
Secretary
Sally Shelton-Colby
Treasurer

Carl Gershman
President

The Opponents' Arguments

Rep. Conyers started off the NED debate by introducing his amendment and was joined by Reps. Frank, Obey, Leach in speaking against the Endowment. Rep. Conyers voiced objections to having NED take taxpayers money to make foreign policy; to NED interference in foreign political activities (particularly France); for running ads to tell Congress how to vote; and for being investigated by the General Accounting Office.

Rep. Frank argued that although it is not "government" monies that NED grants, there really is no way to separate this concept in the eyes of the American public and foreigners. Rep. Obey supported the Frank argument and went on to say that if the national interest is to be promoted the effort should be carried out by the government, either covertly or overtly. Rep. Leach also supported this argument and called NED an "extraconstitutional foreign policy making body," in that foreign policy decision-making powers are held by Congress and the Executive Branch.

The Supporters' Arguments

Speaking in favor of NED were Reps. Fascell, Mica, Gingrich, Edwards, Lagomarsino, John Miller and Gilman. Rep. Mica spoke on the relative size, cost and efficiency of the Endowment as compared to similar programs; on the evolution of congressional involvement in NED oversight; on the value of NED when competing with the Soviet bloc in the political arena. Rep. Gingrich added a historical perspective of U.S. initiatives to promote democracy and emphasized the importance of having a non-governmental private organization provide overt support to those struggling for democracy; and cited examples of NED programs in Poland, Afghanistan, Hungary, USSR, Czechoslovakia and South Africa.

Rep. Edwards spoke of the recent commitment of Congress to providing assistance to preserve the democracies of Central America and related this idea with support of NED. Rep. Lagomarsino spoke on the value of the collective experience of American business, labor and political parties in promoting pluralism. Rep. Gilman argued that NED should be supported because of its significant programs in Guatemala, Panama, Peru, Grenada, South Africa, Guinea, Zimbabwe, Poland and the USSR. Rep. Miller, noting the importance of going beyond economic or military pressures, spoke about the role of the Endowment in the struggle of ideas in countries like South Africa, Nicaragua, Afghanistan and Chile.

Representative Fascell concluded the debate with a discussion about the necessity for the U.S. as a democracy, regardless of politics or ideology, to educate, advance and promote the cause of democratic pluralism.

June 23, 1986

Mr. Walter Raymond, Jr.
Special Assistant to the President
National Security Council
Washington, D.C. 20506

JUN 26 1986

Dear Walt:

Thanks for sharing with me the study prepared by Eddie Mahe, Jr. and Associates for A.I.D. to develop a "democracy program/election assistance project." The study is strongest where it concentrates on nuts and bolts, e.g., poll workers, voting materials, transportation, counting, etc. It may help the U.S. improve its capacity to provide assistance in those areas.

It is weakest in dealing with the areas described as "fostering the environment that allows democracy to flourish by educating the citizens on voting processes and encouraging the continued commitment of the citizens and their leaders to maintaining a democracy," (emphasis added). The study is very unclear as to what this involves.

For example, on page 136 we read the following: "Establishing a democracy is a very tough process. Therefore, a commitment should be made to invest resources to maintain it at the same time the resources are being committed to establish it. By resources it is not meant the [normal] forms of aid that flow into a country but in fact help and assistance precisely designed to help keep a democracy in place."

But the closest we come to a program, or the suggestion of a program, that might advance this goal is (page 122): "Research programs that could assist in establishing and/or fostering the environment for democracy."

(202) 293-9072

BOARD OF
DIRECTORS

Carl Gershman
President

On pages 136-7 the report outlines the kind of research needed, distinguishing among countries with different histories and needs, and concluding that "the objective would be to identify and isolate factors that appear to always be present when a country makes democracy work and what factors seem to be missing from those that fail."

Later on (page 145) we learn that "the full research effort outlined in the optimum plan is not possible at this time," because of limited funding. Had the authors done only a minimum of checking, they would have discovered that precisely such a study is now underway under the supervision of Seymour Martin Lipset, Juan Linz, and Larry Diamond. They have recruited some of the most distinguished Western and Third World scholars to examine twenty-seven countries, with a view to determining precisely what factors have accounted for successful or failed democratic development over the past quarter of a century. I enclose materials on the study, which is funded by a two-year $100,625 grant from the National Endowment for Democracy.

The fact that the authors know nothing of the study is typical of the careless and confusing way they deal with the Endowment. (Of course we were never consulted in the preparation of the study.) On pages 24-25, we learn that the Endowment is not an appropriate organization to fulfill the democratic mission outlined in the study because of six factors:

(1) "Only five of its seventeen Board members are appointed by the President and thus might be directly responsive to the Administration's desires.

(2) "NED receives its own Congressional funding and thus is not dependent on A.I.D. for any of its funding.

Page 3

(3) "Because at least two and probably all four of its affiliated organizations are partisan in their involvement, it will be difficult for NED to sustain the perception necessary to be trusted by all parties in a Third World country.

(4) "The make-up of the organization is totally American and thus the strength that could be gained from international participation is denied.

(5) "NED has been most visible working on election observation projects and as will be noted in Assumption 9, that is not consistent with a highly visible role in assisting with the election process.

(6) "Since being established in 1983, NED has fairly well developed its agenda and it just does not include what is needed to provide election process assistance."

The study is wrong on every count:

(1) None -- not five -- of the Endowment's seventeen Board members are appointed by the President. The study suggests that this is a problem, because the Endowment is presumably not responsive to the administration's desires. But at a later point (page 150) we learn that the "sensitivity" of the work involved means "only an entity that provides some insulation from the United States Government can really gain the necessary access and influence to be able to make a significant contribution to the goal on a worldwide basis." That is precisely why the Endowment was created as a private organization "insulated" from the government.

(2) Again, the fact that NED is independent of the government is an advantage, not a drawback.

Page 4

(3) NED's affiliated institutes can engage in partisan activities, but [a] they are balanced when taken as a whole, e.g., labor and business, Democrats and Republicans; [b] NED's Board is vigorously, authentically nonpartisan; and [c] many NED-supported programs, especially the discretionary grants, are scrupulously nonpartisan. It is also noteworthy that this claim of partisanship on behalf of the Endowment seems to thoroughly contradict the criticism of NED contained in points one and two -- that NED is not partisan enough.

(4) The Endowment is American, but its partners are mainstream democratic forces from scores of countries around the world.

(5) NED has not been most visible working on election observer projects. As a matter of fact, out of some 225 grants made over the last two years, I can think of only one related to election observance, and that was the international observer delegation sponsored by NDI and NRI in the Philippines, a substantial portion of the costs of which, the report might have noted, were borne by A.I.D.

(6) NED has not excluded from its agenda programs that provide election process assistance. For example, on page 16 of the country report on Guatemala, the study speaks glowingly of the CEDEP media campaign to encourage citizen participation in the November 3rd election. This was a NED-supported program. Other NED-supported programs involving election assistance were carried out in Grenada by FTUI and NRI, in the Philippines by FTUI, and in the Dominican Republic by the Dominican Association of Women Voters in cooperation with Delphi Research Associates. The Endowment has also supported many civic education projects (Conciencia in Argentina is one example) which have contributed significantly, if sometimes indirectly, to an open and fair election process.

As inexplicable as all of these errors are, they
are not as troubling as the report's basic dismissal of
the Endowment as the institution established to provide
precisely what the report feels is most needed --
on-going assistance to encourage the social, political,
and psychological climate in which democracy can thrive
and, by extension, democratic elections can be held.

As you know quite well, the Endowment and its core
grantees have built up a wealth of experience over the
past few years which can be enormously beneficial to
those planning an expanded election assistance effort.
More importantly, the Endowment has growing
organizational and programmatic capabilities that
should be appreciated and welcomed by those who are
looking for ways to expand the overall
democracy-building program of the United States. I
cannot understand why these assets were overlooked in a
study of the scope and nature as the one prepared for
A.I.D.

If the problem is simply one of communication, then
I hope we can get it cleared up quickly. I fear that
the overall effort to advance democracy in the world
will suffer if we do not.

cc: M. Peter McPherson
    ✓ Members of the Board of Directors,
    National Endowment for Democracy