YOUR BREAKFAST MEETING ON 5 NOVEMBER WITH SENATOR BILL BRADLEY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90G00152R000400550017-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 41
• Document Creation Date: December 23, 2016
• Document Release Date: August 16, 2011
• Sequence Number: 17
• Publication Date: November 4, 1987
• Content Type: MEMO

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CRET Gr-_
OCA 87-5579
4 November 1987
MEMORANDUM FOR: The Director
FROM: David D. Gries
Director of Congressional Affairs
SUBJECT: Your Breakfast Meeting on 5 November with
Senator Bill Bradley
You are scheduled to meet with Senator Bill Bradley
(D., NJ) on 5 November at 8:15 a.m. for breakfast in the
Director's Dining Room. Accompanying the Senator will be
John Despres, his designee on the Senate Intelligence
Committee. Joinin ou will be Bob Gates, Dick Kerr,
Evan Hineman Doug MacEachin, and
myself.
In addition to service on the Senate Intelligence
Committee, Senator Bradley is Chairman of the Water and Power
Subcommittee of the Energy and Natural Resources Committee and
Chairman of the International Debt Subcommittee of the Finance
Committee. He also serves on the Special Committee on Aging.
Senator Bradley is a very active member of the Intelligence 25X1
Committee and has demonstrated a keen interest in a diverse
number of subjects, including Central America, Mexico, the
Third World debt, the Soviet Union, counterintelligence and
China. The Senator or Despres has received briefings from 25X1
the Agency on all of these subjects.
Principal Talking Points:
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COMMITTEES:
BILL PRADLEY
united *ates senate
WASHINGTON, DC 20510
ENERGY AND
NATURAL RESOURCES
SPECIAL COMMITTEE ON
AGING
SELECT COMMITTEE
ON INTELLIGENCE
SENATOR BILL BRADLEY'S ADDRESS
TO
THE INSTITUTE FOR EAST-WEST SECURITY STUDIES CONFERENCE
ON
THE IMPLICATIONS OF SOVIET NEW THINKING
OCTOBER 10, 1987
Today is a time of change in East-West relations.
Opportunity exists to lower tensions and to reduce the risk of a
confrontation that could lead us to nuclear war. The new
Gorbachev leadership in Moscow talks about "radical reforms" and
even a "historic restructuring" of the Soviet system; about the
need for "new thinking," "mutual security," a "constructive
direction in international relations," and the need to "exclude
the possibility of a surprise attack." These are hopeful
phrases describing a potentially historic process underway in
the Soviet Union.
Before Mikhail Gorbachev became General Secretary, all but
the most optimistic Americans would have given low odds to
significantly improved relations with the Soviet Union. We saw
a nation, sinking under the weight of rigid dogmas, economic
stagnation, and official corruption, while engaged in a massive
military buildup. The Soviet military spanned the globe with a
growing navy, a five million person military, and a nuclear
force anchored by the biggest, most destructive missiles in the
world.
Before Gorbachev, the Soviet leadership seemed paranoid,
unwilling to face its history -- a history that Europeans and
Americans cannot forget:
1939 -- the Nazi-Soviet pact and the invasion of Finland;
1948 -- the Berlin Blockade;
1953 -- the armed repression of East Germany;
1956 -- the invasion of Hungary;
1968 -- the invasion of Czechoslovakia;
1979 -- the invasion of Afghanistan;
1981 -- the imposition of martial law in Poland.
The Cold War gathered momentum when the Soviet Union
subverted friendly, but independent governments in Eastern
Europe. It intensified because of Western conviction that
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Stalin's pursuit of security would not stop until all Europe was
under his control. Today the division of Europe finds tangible
expression in the largest concentration of conventional military
power the world has ever seen in peacetime, and it endures
because of the differences in political values that are at the
core of this conflict.
A society governed by a centralized, one-party state that
insists on dictatorial control is inherently unstable. History
teaches that instability and great military power are a
dangerous combination.
Soviet officials have proposed a "new era" before, and we
have had previous episodes of summitry and detente.
Remember 1955. The ebullient reformer Nikita Khruschev is
firmly in command and actively engaged in diplomacy toward the
West -- a diplomacy that included disarmament negotiations,
unilateral Soviet troop reduction, and the famious denunciation
of Stalin. The world was eager to believe that the old Cold War
was finally thawing and the Soviet military threat to Europe had
passed. How rudely these illusions were shattered in 1956 by
the Soviet invasion of Hungary.
Salvador Madariaga, the Spanish Chairman of the Disarmament
Commission of the League of Nations, has observed in his
memoirs, "Nations don't distrust each other because they're
armed; they arm because they distrust each other. And,
therefore, to want disarmament before a minimum of common
agreement on fundamentals is as absurd as to want people to go
undressed in Winter. Let the weather be warm and people will
discard their clothes readily, and without committees to tell
them to undress."
Since Mikhail Gorbachev took office in 1985, we have felt
the warm winds of change again; is it too much to hope that the
metaphoric warm weather that Madariaga talked about will arrive
at last? Can we get more "agreement with the Soviet Union on
fundamentals?"
General Secretary Gorbachev's emphasis on domestic reform
is the single most important new fact in East-West relations.
When he became General Secretary, annual rates of economic
growth had fallen by more than half in 20 years. Of longer-term
industrial and military importance, Soviet high technology
lagged far behind the West. General Secretary Gorbachev saw
that without the successful implementation of perestroika, the
Soviet Union would continue to wane as an economic power in the
1990's and, eventually, begin to fade as a military superpower
in the 21st century.
Internationally, at a time of military strength and
domestic reform, the Gorbachev leadership proposes a stunning
array of diplomatic and arms control proposals -- including some
positions long advocated by the U.S. It says it favors American
proposals to cut strategic forces by 50% and to ban all
Intermediate-range Nuclear Forces. It calls for a nuclear-free
Europe, and indeed, the elimination of all nuclear weapons
within 15 years. It revives border talks with China, and
discusses withdrawal from Afghanistan. It tries to mediate the
Iran-Irac war at the same time it calls for better relations
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with Israel. And in 1988, General Secretary Gorbachev will be
the first Soviet leader ever to visit Latin America. All the
activity conveys an image of a decisive, flexible Soviet Union
-- that of a peacemaker and world citizen, worthy of
international respect.
So, here we are at the time when the West appears to be
weary of the burden of defense, when abhorrence of nuclear
weapons is growing, when European parochialism and American
isolationism are on the upswing, and when arms control is
increasingly perceived as the main means of ensuring NATO's
security. Given this climate, how do we respond to this diverse
and broad-based challenge from the Soviet Union?
Does Gorbachev's policy offer the West an opportunity? How
do we test him to see if constructive change is possible?
To begin, we have to know what we want. General Secretary
Gorbachev says he wants "mutual security," a "constructive
direction in international relations," and a foreign policy "to
a greater extent than ever before determined by domestic
policy." What about us? First, we want a more open Soviet
society with whom we have more agreement on fundamentals; one
which has faced its past candidly; one which accepts differences
in politics, culture, and religion as it shares more power with
its people, including minority nationalities. Second, we want
greater freedom for Soviet bloc nations, particularly in Eastern
Europe, to restructure their own systems and their relations
with the outside world. Third, we want more Soviet restraint in
the developing World. Fourth, and most of all, we want a
lessened prospect of war through a reduction in the conventional
offensive military threat against Europe and through a reducti_n
of nuclear arsenals, particularly Soviet counterforce
capability.
Many people see the proposed INF treaty to eliminate
hundreds of theater nuclear missiles on both sides of the
NATO-Warsaw Pact line as the harbinger of a new era in East-West
relations.
I, like all of you, hope for a future in which negotiation
and mutual agreement to destroy military forces displaces
confrontation and the arms race. I hope General Secretary
Gorbachev will succeed in finding a new source of authority for
the Soviet state -- one that doesn't derive from coercive
Stalinist campaigns, or a Cold War view of the outside world as
ever menacing and encircling; I hope the General Secretary will
persuade the Soviet bureaucracy that it no longer makes sense to
subordinate the people's desire for a better life to the
military's obsession with security; I hope he will convince his
elites that Soviet security and prestige depend on sustaining
growth and on unleasing popular initiatives.
But hope is not enough. For the West to be confident that
Gorbachev brings the prospect of a new day we will need to see
tangible progress in reducing military threats and political
repression. We can't let perestroika, glasnost, and summitry,
however encouraging, obscure the fact that the issues that have
troubled our relationship with the Soviets in the past, seem to
be unchanged. At the same time we must be flexible enough to
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seize new opportunities, and to have antennae sensitive enough
to hear the soft inner voice of the Soviet Union as well as to
pick up its threats.
We need an imaginative yet tough-minded Western strategy.
Without it, we will be divided and vulnerable, responding
piecemeal, unable to maximize the inherent strength of our
alliance. The core of such a strategy must deal seriously with
the disparity between weapon inventories and military
capabilities of opposing forces in Central Europe. It must
recognize and use our economic vitality as a strategic asset,
and it must see that our ultimate strength lies in what we
believe -- our values.
About the disparity in conventional forces General
Secretary Gorbachev said in mid-September, "...if an imbalance
or disproportion exist let us remove them." A Western strategy
toward the Soviet Union must reflect unity and be creative
enough to test this expressed willingness to redress the Soviet
imbalance in conventional forces in Europe, as we also reduce
our nuclear arsenals.
Based on the best information available the Soviets have
built up alarming advantages in their conventional forces over
the last two decades. In the mid-1960's, conventional weaponry
deployed with active units by NATO and the Warsaw Pact were
roughly comparable in the forward areas of Central Europe. It
would have taken the Soviets months to mobilize enough reserves
and reinforcements for a decisive offensive. This ensured clear
warning and ample time for NATO to respond effectively.
Since then, the Soviet Union and its partners in the Warsaw
Pact have added more than 40,000 tanks, artillery, anti-tank
missiles, attack helicopters and other conventional weapons
systems. This increase alone is more than all the weapons that
NATO had in Europe in 1965. Near NATO's borders the Warsaw Pact
has raised its superiority in tanks to over two-to-one, and in
artillery to about three-to-one. It has even gained numerical
superiority in anti-tank missile launchers and attack
helicopters.
Moreover, Soviet modernization of its weapons in Europe has
made them comparable in quality to most of those in the West and
by enlarging its inventories, it has cut the time required to
mobilize an offensive force from months to weeks.
In addition, Soviet military doctrine has reflected this
increasingly offensive focus. Not only do Soviet forces
outnumber the West in weaponry but they practice using it in a
profoundly threatening way.
Due to these trends in Soviet numbers, quality and
doctrine, NATO cannot rely as heavily as before on technological
superiority to offset numerical deficiencies in its conventional
defenses. Nor can it count on long, clear warning of an
offensive buildup on its eastern borders.
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To cope with these problems, NATO relies on a strategy of
"flexible response" based on its readiness and ability to use
nuclear weapons to resist aggression in Europe. Let's be honest
about the problem. As long as the Soviet Union deploys huge
offensive conventional forces, especially their modern tank
armies, in the center of Europe, the West must preserve the
option of a nuclear response.
NATO could minimize this dilemma by building up its
conventional defenses. But the economic burdens of
strengthening conventional defenses are enormous.
Reducing and reconfiguring Soviet offensive forces in
Central Europe is the only other way to decrease the risk of a
confrontation that could lead to nuclear war. By restructuring
Soviet offensive power in Europe the Soviets can demonstrate
that they are serious about "mutual security" and a
"constructive direction in international relations." It is also
a way for General Secretary Gorbachev to make good on his
admonition that "military doctrines must be purely of a
defensive nature." After all, if his emphasis is truly on
"domestic policy" in the Soviet Union, how can he see any
legitimate need for such potentially menacing forces within a
days' drive of Frankfurt, Paris, or Amsterdam?
How do we get the Soviet Union to reduce and reconfigure
their forces?
Let NATO and the Warsaw Pact begin by discussing our
respective military doctrines thoroughly and openly before our
citizens. Then, let us take some confidence-building measures
such as opening up our respective forces -- weapons as well as
manpower -- for mutual scrutiny. And let's count them and see
%hat the imbalances and disproportions are. Finally I would
challenge the General Secretary to make good on his offer to
zemove the excess.
Last February General Secretary Gorbachev said he was
prepared to go even further and he called for measures to "make
it possible to lessen, or better still, altogether exclude the
possibility of a surprise attack." The West should immediately
follow up this offer with an open mind, searching vigorously for
new ways to achieve longer and clearer warning of any Soviet
mobilization in Central Europe. Joint actions worth exploring
include monitoring and limiting troop movements, reviewing the
status of equipment stock piles, and providing notification of
impending military maneuvers and other exercises.
Asymmetries between us will continue, some of them inherent
in the fact that the Soviet Union is so much closer to Germany
than the U.S. and therefore more able to reinforce its forward
positions in Europe. Even with these asymmetries, there are
actions the Soviets could take to contribute to stability:
pulling units out of Central Europe and simultaneously cutting
the total size of its forces in Western Russia and Ukraine;
reducing the manning levels of units; reducing the armor
emphasis of Soviet forces; and giving NATO greater access to
information about the readiness of Soviet forces.
Progress on these fronts would make nuclear war less likely
by reducing the risk of any war in Europe. But, as long as NATO
is needed to protect freedom in a divided Europe, NATO security
will need the ultimate backing of nuclear deterrence.
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Lenin said "Words are deeds." In a nuclear world, however,
on a continent jammed with conventional weapons and competing
ideologies, only deeds can "exclude the possibility of a
surprise attack," and bring a genuine reduction in tension and a
new basis for U.S.-Soviet relations.
an effective Western strategy must have an economic as
But
,
well as a military component. The Soviet Union's precarious
economic circumstances and Gorbachev's domestic reform are the
source of two new ironies. The first is that Gorbachev cannot
accomplish his domestic priorities unless the West is doing well
economically. To import technology he must raise cash by
borrowing more from the West or by exporting more to the West.
Whether he relies on Western capital markets or Western export
markets, he will benefit from a healthy Western economy. So, a
serious economic downturn could doom Gorbachev's modernization
plans. This degree of economic interdependence is new. it
challenges the fundamental principle of autarchy upon which
Soviet security, military success, and political relations with
the outside world have been based since the revolution. It
gives the Soviets an unprecedented stake in Western growth.
The second irony stems from the dependence of Gorbachev's
reforms on a dramatic increase in domestic investment. He needs
to invest in intensive agricultural irrigation; in energy
development, especially after Chernobyl; and in machinery, to
offset a declining population and to raise labor productivity.
And he needs to produce consumer goods that his people can see
and want.
The needed investment capital must come either from a
reduction in Soviet military spending or from financial markets
in the West. He will probably need both. An international
environment with less tension could accelerate the reductions in
military spending that successful reform will require. There's
even an economic rationale for military cuts. The Soviet Union
will be most creditworthy if it frees resources from defense and
puts them to work increasing Soviet productivity and improving
living standards.
But Gorbachev appears to believe that without systemic
reform more resources, alone, cannot guarantee higher levels of
growth. But, implementation of his far-reaching program,
announced at the June plenum will be opposed at each step. In
the best of circumstances reform will take longer than expected;
in the worst of circumstances it will be killed. As opposition
grows, access to Western capital will become crucial. That is
why the West, while not overstating its importance, should treat
its capital as a strategic asset and develop a plan and set of
conditions for its flow Eastward. Absent such a plan, results
could be inconsistent with the West's strategic interest.
As a beginning, let me suggest that the flow of Western
capital to the Soviet Union should be limited and proportionate
with the degree of systemic reform. Perhaps by bringing the
Soviet Union into the international financial system we would be
able to establish some criteria for the provision of loans,
based on the progress of reform. In the present circumstance
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there is no discipline, and no accountability for bankers'
actions.
In 1985, for example, the Soviet Union owed about $29
billion, including $6 billion of new borrowing. They would like
to issue Euronotes, bonds, and other marketable securities. By
1990, their indebtedness is projected to increase substantially
with most of the new money coming from West European and
Japanese banks. The Soviets reportedly get these loans on very
favorable terms, even from U.S. banking institutions. Earlier
this year, a major American bank announced it was the lead bank
in a $200 million loan to the Soviet Union at a mere one-eighth
of a percent over LIBOR, the international lending rate.
Meanwhile, a new democracy in Latin America, such as Brazil, has
to pay 2-1/4 percent above LIBOR.
The banking community argues these rates reflect risk,
that it's sound commercial practice to lend cheap to the Soviets
and dear to Latin Americans democracies. The Soviets, it is
said, are likely to repay on time -- just like Chile's
authoritarian government. That might be true now. But to lend
without awareness of the strategic consequences and without
alliance conditionality is shortsighted. If we make reform a
vigorous criterion for lending, we then encourage General
Secretary Gorbachev to push ahead on his present course. It
should be tried.
At the very least, we need to recognize that General
Secretary Gorbachev's expressed objectives, and his strategy to
attain them, present us with a unique opportunity. Without
Western capital and technology, the Soviets can increase
domestic investment only by decreasing military spending. I
question the wisdom -- and the morality -- of helping the
Soviets avoid the choice between c__vilian investment and
military buildups. Especially while we force harsher decisions
on struggling democracies where people are starving.
Surely, if we demand economic reform as a condition for
interest rate relief or new loans in the Third World, it would
seem only prudent to insist on the same stringent reform
criteria before permitting the Soviet Union to borrow on more
favorable terms.
The West is under enormous pressure from our own
electorates to cut defense spending; part of that comes from the
economic pain of budget deficits caused by expensive defense
programs. It would be striking indeed to hold the Soviets to a
lesser standard or to help them cope with their economic
problems by bailing them out of the pressures on their military
budget.
in addition to economic and military components a
Finally
,
Western strategy must include a political and ideological
component as well. We must never shy away from comparing the
Soviet Union and the West in terms of freedom and quality of
life. We must be proud that we value not just the freedom of
nation but the liberty of each individual man and woman.
Western democratic culture derives from the Enlightenment belief
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that freedom is a universal aspiration and the essence of man.
It should not be bargained or yielded at any price.
We should never hesitate to point out the Soviet Union's
shortcomings on human rights, for they will never hesitate to
point out our shortcomings. But at the same time we have to be
attuned to the possibility of change even in the Soviet Union.
We will watch and applaud if the Soviets go beyond glasnost,
which is permission to speak, and establish freedom of speech
which is guaranteed under law. We will praise a Soviet Union in
which people have a bigger voice in what the economy produces.
We will cheer a Soviet Union that confronts its past and allows
its people to emigrate and families to reunite. Such a Soviet
Union would be a safer neighbor for Europe and a better
negotiating partner for the United States.
Exploiting opportunities and providing incentives to move
European security and U.S.-Soviet relations to a new ground will
be one of the most important challenges for the next
Administration, whether Democrat or Republican. U.S. leadership
should emphasize a combination of an unyielding adherence to the
ideals of political liberty and a receptivity to the possibility
of political reform in the Soviet Union. We are at the
beginning of a process that may hold great promise. But to
realize that promise, we must plan our approach carefully -- not
as a unilateral American exercise but in genuine consultation
with our allies. The challenge and opportunity of the next few
years is not just to improve U.S.-Soviet relations. It is to
work with our allies and with the Soviets to build a new
security framework for Europe and the world and to achieve what
has eluded us for so long -- a lasting peace.
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U.S. SENATOR
Democrat/New Jersey
731 Hart Senate Office Building ? Washington, D.C. 20510 ? 202/224-3224
STAT
SENATOR BILL FPFADLEY'S ADDRESS TO THE THIFD GENEPAL
CHAUTAUQUA CONFERENCE ON U. S.-SOVIET RELATION'S
AUGUST 27, 1987
It is a privilege to speak to you this morning. Today, in
Chautauqua, this uniquely American corn,:runit.y, I would like to
share with the Soviet delegates my sense of what Americans want
from our relationship with the Soviet Union and what I think
may be possible.
Like you, I have watched what is happening in the Soviet
Union. Like you, I have many questions on the future of
U.S.-Soviet relations. I have doubts and concerns, but above
all, I have hope. Today, I want to talk about my hopes.
This week Americans and Soviets meet at a threshold of
history: at one of those moments when a door long closed may
be opening to show us the path to new places, new vistas of
hope, and progress for the human race. Dostcyevsky told us
that of cry tin only man has no formula to tell him how to
act, or even what to be. So how we walk through that door --
or whether we let it close before us -- is our choice, the
human choice. And it is not arrogance but reality which tells
us that of all those who will determine the course of coming
events, our two nations will play the greatest roles: seeming
to fulfill de Toqueville's prophecy that America and Russia
were "by some secret design of Providence [each] one day to
hold in its hands the destinies of half the world."
Those in both our countries who see the seeds of a new
cold war inherent in our relationship believe the world is too
srr,ail for two superpowers. I reject the destiny that dooms us
to be endless enemies. We can create a different future.
Maintaining peace is fundar,ental. Ever since our
scientists unlocked the nuclear puz2le, Soviet and American
arsenals have hung heavy over the future of the world. This
knowledge ha:.- Liven our relationship its single categorical
r.,r a t i v e -- we rust never meet in war.
Yet this strong and simple conviction does not answer all
questions. Avoiding v.ar is not securing peace. Struggle,
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tension, and conflict between our nations persist. General
Secretary Gorbachev has urged us "not to evade urgent
problems." Still let us candidly examine what we have in
common as well as what divides us -- let us begin this process
as the first necessary step toward lasting peace.
One thing we share is our love of the land. For both
Soviets and Americans, the land is the wellspring of our
greatness. It has steeled and tempered our people. Its beauty
inspires our songs. Its cruelty is a source of our sorrows.
Early Americans were energized by the vastness of their
territory and emboldened to start anew on the frontier. They
extended America's boundaries, tamed her wilderness, and
cultivated her abundance. They revered the land as the source
of their strength and the root of their values. They derived
from their experience of the land a sense of independence,
tempered by a respect for life, liberty, and the pursuit of
happiness. These inalienable rights remain at the core of the
American character, defining our aspirations for democracy.
Unlike our brief American experience, Russian history goes
back a thousand years. A history of triumph and tragedy. Often
on an heroic scale. Always against the huge canvas that is the
Russian and Soviet land: a majestic, silent procession of
forests and lakes; the vast sweep of the steppes; the strong
currents of mighty rivers; the still, somber sands of the arid
zones; and the great Siberian wilderness of Taiga and Tundra.
Our peoples have been challenged and restrained by the
land. We have trusted its generosity; and too often taken its
replenishment for granted. Now from Chernobyl to Love Canal we
see its vulnerability to abuse and we recognize that its
potential for giving us rebirth may be slipping away.
Two years ago, I visited the deepest lake in the world,
Lake Baikal, in Siberia. I drove there in the afternoon after
an exhausting flight from Moscow. When I arrived, the lake
was obscured by dense mist. I could see nothing. My
disappointment was as heavy as the fog. Early next evening,
after a long visit with your great writer, Valentin Rasputin, I
went back. The sky was clear and luminous. The lake stretched
before us...deep, still, pure. In Nature's mysterious
quietness, I could hear the heartbeat of time. I could sense
the life-giving force that flows through all people, Soviet and
American, who know the land. I shall never forget it.
But, land is not all that we have in common. We share
cultural ties: poetry and music, basketball and hockey, and
most of all a love for literature -- Chekhov, Tolstoy,
Melville, Steinbeck. As a student traveler, I can remember
leaving the Soviet Union by car into Hungary and being detained
four hours until the Soviet border guard had his fill of
perusing my copy of Of Vice and Men.
We also share historical ties: we both endured the
traumatic experience of revolution and the satisfaction of
ration building. And, unusual among world powers, we have
never declared war on each other. To the contrary, we were
even allies in a war which we won, in large part, because of
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the heroic struggle of the Soviet people against the invasion
of Hitler's armies.
And, finally, we share a yearning for freedom.
Above all else, Americans cherish liberty. We fought a
war to claim it from a colonial power. We value not just the
freedom of the nation, but the liberty of each individual man
and woman. And in America, as de Toqueville said, "The spirit
of religion and the spirit of liberty are in fundamental
agreement." The idea of banning any kind of religious worship
is alien to us. For Americans, freedom is the essence of man.
It cannot be bargained away or yielded for any price.
More than this, we have always believed that individual
freedom is a universal aspiration. We borrowed our doctrines
from England and Greece and ancient Israel; we were helped in
our Revolution by Poles and Germans and French. We have often
tried to help others to find freedom in their turn.
These sentiments cannot be strange to the people of the
Soviet Union. How many times, at the limits of human
endurance, did the Russian people themselves, peasants and
poets, cossacks and party members, somehow rise and save their
country from the invader. How many times did a Pugachev with
his 80 men rise against serfdom or a Pestel, with a few
hundred, challenge all the might and cruelty of the czar? Or,
in our day, has not the most brilliant example of the
inextinguishable thirst for human liberty come from the
innermost heart of the Soviet Union -- come in the Akhmatovas
and Pasternaks, and all those nameless ones who have in their
matchless courage braved the winds of Kolyma, circulating
handwritten manuscripts in defiance of the censor just as their
ancestors evaded the censorship of Czar Nicholas The Flogger.
Despite these bonds -- of land, wartime alliance, culture
and a common yearning for freedom -- our countries remain far
apart. Our institutions and standards of conduct differ
profoundly.
Americans are mystified by Soviet denial of many basic
freedoms of expression. We do not understand why Mstislav
Rostropovitch could not conduct an orchestra or play his cello
in his motherland. Why pianist Vladimir Feltsman has to
emigrate to perform. Why Mikhail Baryshnikov felt he had to
leave in order for his artistry to grow. Why exile was the
price the writer Vassily Aksyonov paid to publish his novels.
Isle are grateful to have these artists among us. But why is
Soviet soil so inhospitable to such talent?
America, as perhaps the world's most open society, is
bewildered and threatened by Soviet preoccupation with
secrets. There is no profit for American leaders in dwelling
excessively on the sins of the Soviet past, but even General
Secretary Gorbachev has said the Soviet people roust "know
everything and consciously make judgments about everything."
Put simply, the Soviet Union itself must cone to terms With its
history. If the Soviet Union wishes to be trusted by others,
it must first show that it believes its own people can be
trusted with the truth. yore than this, Americans know that we
could never deal with our racial problems without squarely
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acknowledging that slavery was our greatest crime. So. the
Soviet people will not be free until, as Andrei Sakharov said
20 years ago, the whole nation can examine the historical
records and understand for themselves why terrible abuses of
power have occurred.
Finally, we Americans are also deeply suspicious of a
nation that keeps families divided, that denies loved ones the
right even to visit. This may seem minor compared to regional
conflicts and nuclear weapons. But to many Americans,
permitting Soviet-Western families to unite is a basic
requirement for membership in the international community.
Secrecy, repression, and insensitivity do not produce
greater understanding between the U.S. and the Soviet Union.
We want to reduce nuclear arsenals. But as one observer noted
"nations do not distrust each other because they are armed;
they are armed because they distrust each other."
So how do we improve relations in the face of all the
things that divide us?
First we must see each other clearly.
American views of the Soviet Union swing between wishful
thinking and hostile pessimism. We tend to think that the
tensions between us result only from superficial
misperceptions. Or, we believe that the Soviet state is our
implacable adversary -- the incarnation of evil.
These caricatures lead to errors in judgment. Either
they lull us into a false sense of security which, after events
such as Czechoslovakia or Afghanistan, degenerates into an
angry sense of betrayal. Or they obscure the significant
opportunities that appear from time to time to settle
grievances, reduce tensions, and advance mutual interests.
Soviet misperceptions of the United States are at least as
great and as dangerous. Soviets discredit our concern for
human rights and individual liberties; see our foreign policy
as the captive of rapacious capitalists; attribute our defense
policies to the "military-industrial-complex;" underestimate
the extent to which speech is truly free in a democratic
society; and ignore throughout our history the pride with which
we ave enfranchised ever larger segments of the American
people.
These assessments are sterile, even unreal. If Soviet
authorities indulge such illusions, they will be vulnerable to
surprise, disappointment, miscalculation, and bad policies.
And lurking behind our views of the Soviet Union and their
views of the us is the ultimate fear. The ultimate fear that
the other side will start a war that leads to the use of
nuclear weapons. If rationality prevails, it will never
happen. To make rationality prevail is a major challenge.
To see each other more clearly also means to admit that
neither of us is so devious or so naive as the other thinks.
But improving understanding, accepting differences, and
identifying mutual interests will not happen overnight.
Conflict stems from clashes of interest. Minimizing
confrontations and the danger of war means resolving conflicts
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of interest. We should proceed soberly but confidently one
step at a time, promising only what we can deliver.
And there is no better time than now. Before Mikhail
Gorbachev became General Secretary, all but the most optimistic
Americans would have given very low odds to significantly
improved relations. We saw a nation in the grip of a rigid
ideology, sinking under the weight of economic stagnation and
official corruption, while engaged in a massive military
buildup. It was as if the Soviet generals had been given a
blank check to indulge their ambitions and to indenture the
economic future of the Soviet Union.
But in 1985, we began to feel the winds of change.
General Secretary Gorbachev began to call for "revolutionary
change" and "historic restructuring" of the Soviet system.
Many Soviet participants at this conference are leading figures
in that reform effort. In February of this year, the General
Secretary said: "Our international policy is determined more
than ever before by our domestic policy, by our interest in
concentrating on creative work for the perfection of our
country. For that very reason we need a more stable peace,
predictability, and a constructive direction of international
relations."
Because of the General Secretary's words and his actions,
Americans have begun to question their old views. Were we
wrong? Is Soviet change possible after all? Are such radical
new possibilities practical? Should we rethink our policies
toward the Soviet Union?
We know our influence over the internal affairs of the
Soviet rion s-I Yee ut at the same time, we are all
ciizens of Fie carne-Furnan community, and we Americans believe
that stable peace and increasing freedom go hand in hand. So
we would share with you the views and the questions on American
minds as we watch what is happening in the Soviet Union.
First, some of General Secretary Gorbachev's proposed
reforms promise a more productive society. But they also
threaten the Soviet status quo and political establishment.
Americans recognize that the Soviets face a strategic choice:
either cling to the established ways, with military power and
internal repression as the major sources of authority. Or seek
through a more open expression a broader mandate to govern and
permit the political economy to be transformed. Americans
doubt that there is any middle way.
We Americans also ponder how fully the General Secretary
and his supporters have foreseen the challenges of transforrr,ino
the Soviet state. We watch how far or fast they will proceed
and if the Soviet people are with them.
We ask:
Wi11 the Party and State bureaucracy, about which
Gorbachev has often complained, share more power with the
Soviet people?
Will workers have a bigger voice and trade unions a
s~tronGer role, even as "restructuring" creates hardships for
V :?.e wlir Y:E r~ h:,'o 1. cst thei r jobs?
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Will Soviet citizens make their own choices about what to
read, see, hear, buy, and sell?
Will Soviet authorities accept differences in politics,
culture, and religion?
Will freedom to travel no longer be confined to the
privileged few?
Will Soviet history, including the record of Stalin's
purges, Ukrainian famine, and collectivization, be taught by
people concerned with discovering the truth?
Will fewer resources go to a military buildup at home and
abroad?
Will Gorbachev's call for Democratization bring greater
autonomy to minority nationalities who have lived under Russian
dominance for decades?
Will the Soviet leadership let the people of Eastern
Europe restructure their own systems and their relations with
the outside world?
Will Soviet youth be permitted to repudiate the war in
Afghanistan with the same decisive vehemence that young
Americans rejected Vietnam?
---- ---- ----
Will all this happen or will only some of it? How broad a
swathe does Gorbachev want to cut through Soviet history?
Some Americans say real reform cannot happen in the Soviet
Union; that reform will be stalled by the system's inertia or
be subverted or even overthrown by the opponents of change.
Other Americans worry that if reform succeeds, the Soviet Union
will emerge as a stronger and more dangerous adversary, able to
make new demands on the West.
11"-he reformer," said Machiavelli, "has enemies in all
those tho profit by the older order, and only lukewarm
defenders in all those who would profit by the new order."
Even so, most Americans are rooting for the reformers. Most
Americans agree with Andrei Sakharov that... a firmly based
peace requires a more open Soviet society.
And now, as the door long closed may be opening, we
Americans must be flexible enough to allow for our own
rethinking in order to seize new opportunities for a lasting
peace. We know the importance of dialogue and negotiations --
to dispel the specter of nuclear catastrophe, to avoid the
horror of any war, and to resolve conflicts of interest.
reform continues in the Soviet Union I believe we can cut U.S.
and Soviet conventional forces in Central Europe and indeed
nuclear weaponst rr,ore than ar,yor,e has been prepared to .k
about up to now. Why should Soviet families sacrifice and the
Soviet economy suffer to maintain vast, offensive armies in the
center of Europe when there is no threat to them? They should
r,ot. It is within our power to create a different future, for
as Soizhenitsyn said, "history is us...
Neetings like this one in Chautauqua, that bring together
politics, religion, and art, are important. We need powerful
voices that. express direct human feelirs in wavs
cT -7 2n ne~can/oviet corcpetition that
ce! r! es a`-ri3 preserves humanity, not endangers it; one that
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enables us to solve our nations' domestic problems instead of
threatening the world with destruction. We need prophets and
dreamers, as well as generals and bureaucrats. In the words of
Valentin Rasputin..., we need "to establish a different plan --
one measured not just in cubic meters, but in souls."
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U.S. SENATOR
Democrat/New Jersey
731 Hart Senate Office Building Washington, D. C. 20510 ? 202/224-3224
For Immediate Release: Saturday, April 12, 1986
Contact: Lisbeth Pettengill, John Steele
SENATOR BILL BRADLEY SPEECH ON
NATIONAL SECURITY AND ECONOMIC POWER
Democratic National Committee Policy Roundtable
April 12, 1986
Today I'd like to talk about America's role in the world and
about American leadership. In doing so, I want to focus on two,
new strategic opportunities for advancing our national security,
not by military might, but through the positive use of our
economic power.
America welcomes the challenges of leadership offered by an
interdependent world. As the largest, strongest democracy, we
have long tried to promote democratic values and to champion human
rights and personal freedom.
And, the Democratic party has a unique opportunity to lead
the nation in the pursuit of those goals. There are two strategic
opportunities that we cannot afford to miss. One is the chance to
influence the Soviet Union towards reduced defense spending
through economic pressure. The other is to offer Mexico and
fledgling democracies of South and Central America a partnership
to attack poverty, to promote democracy, and to generate economic
growth. Both will require a party that is prepared to think in a
new way about the Soviet Union and about the opportunities offered
by genuine inter-American cooperation.
Let us start with the Soviet Union. The Reagan
Administration has based its strategy for restraining Soviet
expansion on outspending them in military programs. Perhaps the
most serious shortcoming of the Reagan approach to contain Soviet
power is its failure to capitalize on our ability to advance our
national security, not through our military, but through our
economic power. This opportunity comes from the waning of the
Soviet economy. Last summer, I spent two weeks in Siberia and
Moscow meeting with officials involved in economic development and
planning. And as part of the Senate Intelligence Committee, I
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have examined the Soviet economy and its prospects for reform
under Gorbachev. I believe it is highly unlikely that the Soviets
will make sweeping and enduring changes in their economic
structure and social organization. And in the absence of such
reforms, it will be virtually impossible for the Soviet economy to
achieve, let alone sustain, the significant growth they have
projected.
Why do I say this? Because the USSR faces the prospect of
continued, if not worsened, economic stagnation. Overcoming this
condition requires a major increase in the productivity of capital
and labor. Yet Gorbachev is trying to raise productivity by
tinkering and exhortation: appointing new managers; intensifying
discipline and banishing alcohol to get more work; conserving
available resources, rather than expanding production of new ones;
and renovating the nation's equipment and machinery.
At best, the Gorbachev program can compensate for some of the
gross inefficiencies in the existing system. But the sustained
high growth the new leadership pledges to achieve would require an
unprecedented relaxation of political, as well as economic,
controls. And a reduction in control that is essential for growth
would threaten the Soviet regime. For example, it would alter the
distribution of income and power on which the elite party
patronage is based. It would also give people more money to spend
on an inadequate supply of goods-thus generating inflation. This,
in turn, would generate labor strife which the system would have
trouble containing. Most important, of course, it would diminish
party authority and influence.
I have seen no evidence that the new leaders have any
inclination to relinquish control or that they have any confidence
in the institutions and values on which a more open society would
be based. Nor do I see any willingness to accept the discipline
of a market economy, with all that implies for potential
unemployment and destruction of inefficient enterprises. Yet
without making some radical changes, the country seems fated to
remain economically backward compared to the West. In time, this
will jeopardize its ability to compete militarily as well.
Moreover, the system's inherent shortcomings are aggravated by
other problems.
For example, there are grave social ills:
-- the birthrate has dropped from 31.2 per 1,000 in 1940
to only 18.7 per 1,000 in 1981.
-- infant mortality rates are about 35 per 1,000 births
compared with 11.2 per 1,000 for the U.S.
-- The mortality rate for the whole country rose 57% (6.9 per
1,000 to 10.8 per 1,000) in the 20 years 1964-84 and it rose
even more among young males of prime working and military
age--an unprecedented peace time event in any developed
country.
-- Since 1970, the average lifespan for adults has declined
from 64 years (men) and 76 years (women) to 62 and 73
years in 1980.
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-- Over the last 15 years, about 30 million people entered
the Soviet labor force. In the next 15 years, there will
only be 6 million entrants and half will be in the Southern,
largely Muslim, states.
These statistics are appalling. No other industrialized
nation has ever experienced a long term decline in adult lifespans
accompanied by an increase in infant mortality. The causes of
these extraordinarily high infant mortality rates are
instructive: alcohol, infectious disease (13% of the illness in
the U.S.S.R. is due to unsafe drinking water) and the decreased
share of the budget committed to medical care, which declined 14
percent (from 6% to 5.2%) between 1965 and 1978. And the effects
of these facts spell serious trouble for the Soviet economy
because they mean increased labor shortages aggravated by poor
health, low productivity and a high rate of retirement. To
complicate matters, the birthrate for Muslim Republics is about 5
times higher than for the Slavic republics. Yet 60 percent of the
Soviet Union's industrial production is in the Slavic regions and
the Muslims do not want to leave their homelands. This
potentially explosive situation is exacerbated by the fact that
most of the skilled workers are Slavs. So their declining
birthrate signals a shortage of skilled workers at the very time
the demand for such skills will be highest.
There are also severe economic constraints. The new 5 year
plan (which I believe has less of a chance for implementation
than the proposed Reagan budget) calls for 5 percent a year growth
through the year 2000. Since this is to be achieved with minimal
increases in labor and investment, the key has to be increased
productivity. Yet productivity has been steadily declining by
about 1 percent a year since 1975 and there is no reason to expect
it will turn around any time soon.
The trade outlook is also grim. In the 1970s, one-third of
Soviet growth came from trade. Nowadays, that growth source has
virtually dried up. And falling oil prices have only made matters
worse. Until recently, oil and gas exports amounted to about 75
percent of total Soviet hard currency earnings. By 1985, the
volume of petroleum exports to the West had fallen by about 30
percent and this year the value of Soviet oil and gas has fallen
still further. (A side effect of falling oil prices is that
Soviet weapons sales to oil rich nations, which recently earned
them as much as $6 billion a year, are also shrinking fast.)
The Soviets badly need hard currency to meet their own
goals. They want it in order to:
--import technology,
--buy grain,
--subsidize Marxist revolutions,
--underwrite anti-Western and terrorist regimes, and
--invade their neighbors such as Afghanistan.
But the oil price decline has cut Soviet hard currency
earnings in half over the past two years and threatens to reduce
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it even further if oil stays at $10-12/barrel. Something has to
give. Gorbachev has a real dilemma: will he limit meat
production which depends on foreign grain, or will he cut back on
the machinery imports that are central to his modernization
plans? A very tough choice for a newly-installed leader.
Disquieting as these developments must be to the Kremlin,
they may offer the United States a strategic opportunity, provided
we play our cards right. Gorbachev's way out of this dilemma will
probably be to import needed equipment and technology from the
West and to import it on credit. Yet it is not in our interest to
bail out the Soviet Union when that only translates into more
spending on defense and more Third World adventures. On the
contrary, it is in the West's interest to see Soviet military
spending drop so that we can remove some of the military
advantages that the Soviets have acquired over the last 20 years
and cut back on our own defense buildup.
To give you some idea of just what is at stake, let's take
one example. There is general agreement that if the West wants to
reduce its reliance on nuclear weapons to deter a Soviet attack on
Europe, we have to build up our conventional forces to more
closely approximate those of the Warsaw pact. Naturally the
Europeans resist such increases on political and economic
grounds. So the other alternative is to conclude an agreement on
mutual and balanced force reductions, a process that has been
limping along for a decade and a half, so far without results.
What if there were a third alternative? What if it simply became
too expensive for the USSR to maintain its conventional forces at
their current level? If they cut back, that would result in a
significant reduction in the Soviet advantage in conventional
forces at no new cost to the West.
I don't want to oversell the possibilities. I know we cannot
squeeze the Soviets into unilateral disarmament but we may force
some unilateral cutbacks and, at the very least, make them more
interested in truly mutual arms control. And by restricting the
economic help Moscow gets from the West, we may even persuade them
to face the full costs of their military operations in such places
as Afghanistan and elsewhere.
The West has a choice and an opportunity: we can help the
Soviet Union ride out its economic difficulties--or we can
withhold that help unless the terms are right. I have no
illusions that the U.S. can control the flow of credit and loans
to the Soviet Union with any great precision. I also know that
private bankers and industrialists (particularly Republicans) will
tend to resist. Nevertheless, with U.S. leadership and concerted
action, Western governments do have a means of persuading the
Soviets to accept a balance of power that is at once more
favorable and less costly to the West.
This prospect suggests that the U.S. should be working with
our allies:
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--to develop a common understanding of the Soviet Union's
internal political and economic situation,
--to win acceptance for a tougher line on the Soviet
Union's credit worthiness given declining energy
prices and the resulting worsening of the Soviets'
capacity to service their debt;
--to discuss the strategic goals the West might seek, in
exchange for granting a better economic relationship to the
Soviets -- e.g. withdrawal from Afghanistan, nuclear arms
limitations, conventional force reductions, discontinuing
support for Marxist revolution, abatement of the Soviet
Union's own human rights abuses.
There will be some who will say that our European allies will
never support such an approach, that their interests lie in closer
relations with the East, especially where trade is concerned. I
believe it would be a mistake to write the Europeans off so
quickly. The reality is that they are much more exposed to Soviet
military power than we are. So they have an even bigger stake
than we do in the decline of that power. In any event, we should
take the lead by demonstrating the large advantages that would
accrue from implementing such a strategy.
Others will argue that putting economic pressure on the
Soviets will back them into a corner and make them mad. Frankly,
I think they have too much on their hands at home, so I don't
think that danger is very great. Moreover, by increasing the
costs of Soviet foreign military adventures, the West can decrease
the likelihood that these adventures will occur.
Unlike the Reagan approach, the strategy I am proposing puts
a premium, not on outspending the Soviets militarily, but on
applying the West's superior economic power. In this way we can
improve the terms and lower the costs of our competition with the
Soviet Union, and increase the burden on them of Third World
adventurism.
Now let us turn to the second strategic opportunity: the
emergence of democratic forces in Latin America.
The U.S. has a large stake in Latin America's economic growth
and political stability. Threats to Latin peace and prosperity
jeopardize the Americas' collective security and would have to be
countered through collective action. So North, Central and South
Americans share a common interest in the success of democracy in
places like Peru, Argentina, Brazil, Guatemala and El Salvador.
But we know that democracy cannot take root and flourish without
the tangible promise of a better life. That means economic
growth. It means attacking poverty, saving lives, fulfilling
hopes.
The biggest obstacle to realizing this dream of a better life
is the burden of debt that casts a long shadow over the future of
many of these nations. Yet Latin America not only has a debt
problem but also has a growth crisis and the two are related.
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With a $274 billion debt, requiring $30 billion in annual interest
payments, and interest/export ratios approaching 50% in some Latin
American countries, it is no surprise that there is little
growth. Solving Latin America's growth crisis will take a formula
for debt management. But more importantly it will take a
partnership between our two regions built on mutual respect,
democratic values and a determination to assure adequate food,
health care and education, as well as human rights and personal
freedoms. It is in this partnership for growth that our new
strategic opportunity lies.
In order to make the most of this opportunity, we need to be
clear about the U.S.' stakes in making such a partnership work.
The stakes boil down to two issues: American jobs and Latin
democracy.
The simple truth is that the unacknowledged victims of the
Latin debt crisis are American workers who have lost over one
million jobs in the last few years. The reason is that the only
way Latin Americans have been able to meet their new debt
schedules imposed by the IMF and the banks has been to promote
exports and restrict imports. This has meant the collapse of
Latin markets for U.S. products. A few statistics make some
telling points:
-- in 1983, we lost one-third of our exports to Latin America;
-- in the two year period, 1981-1983, exports of U.S. machinery
fell by 38%, steel and motor vehicles fell by 50%,
construction equipment dropped by almost 80%, and
agricultural machinery was cut by over 85%;
-- between 1981-85, 80% of the markets lost by American soybean
growers were attributable to an Argentine export drive
required by its creditors;
-- in the last three years the debt crisis has added half a
percentage point to our unemployment and billions to our
budget deficit;
-- and between 1981-84, the annual U.S. trade deficit with Latin
America increased by $23 billion, compared with an $18
billion increase for Japan and at most a $15 billion increase
from unfair trade practices worldwide--the two factors that
usually get blamed for our huge trade deficit.
So American workers and farmers have lost jobs and markets
while banks have continued to profit from Latin loans. The
economic security of millions of Americans demands a better
deal.
But partnership with our Latin neighbors embraces more than
the job security of U.S. workers. We also care about the
consolidation of democracy in Latin America and we recognize that
democracy is premised on growth. Yet poverty increases as
resources drain from the region. Nor is all of this draining due
to debt repayments. In the last 3 years, capital flight has
siphoned off over $30 billion that should have been invested in
fueling Latin American growth. Some bankers claim that as much as
50 cents on every dollar of new loans to a country like Mexico
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will find its way into Miami real estate or Swiss bank accounts.
Any effective policy to manage these countries' debt will have to
deal with capital flight. It must require that a nation's
domestic investors vote with their savings if foreign creditors
are to participate in new loans. This will require, not only
sound economic policies, but political will as well.
Sadly, capital flight, together with Latin America's efforts
to stay current on debt payments, have created a recession in most
Latin countries by depriving them of the investment they need to
keep growing. Living standards have fallen as a direct result of
austerity conditions imposed by foreign lenders. From their peaks
in 1980 through 1985, real standards of living fell 8% in Mexico,
14% in Peru, 17% in Argentina, and 19% in Venezuela. In Mexico,
non-oil public investment is at the 1964 level even though the
population has increased by 30 million. There is an increasingly
volatile political climate in Mexico in which plummeting living
standards can easily become an issue custom-made for demagogues.
Argentina's Peronists are trying to make President Alfonsin pay
for his pragmatic stand toward debt repayment. Even President
Garcia of Peru is finding that his hard line position on foreign
debt has not isolated him from terrorist attacks. And looking
beyond the impact of the debt crisis on present leaders, we must
worry about the future of democracy throughout the region.
Unless the U.S. helps present leaders counter poverty
successfully, we shouldn't be surprised when their successors
choose a non-capitalist model to deal with poverty. We cannot
complain when their present good will turns into hostility toward
the U.S. Our debt policy hurts our neighbors to the South today,
and makes political turmoil more probable tomorrow.
We, as a partner in the Inter-American community, can no
longer allow the debt crisis to foreclose Latin America's chance
for democracy and growth and mortgage their future to debt
service. The so-called Baker plan is not an answer. It is an
admission by the Reagan administration that the approach it had
been pursuing had reached a dead end. It is a repudiation of the
international economic policy of Reagan's first five years. And
as a blueprint for the future, it is one the one hand too
ambitious in calling for drastic internal changes from Latin
countries, and, on the other hand not ambitious enough in showing
debtors and creditors alike a way out of the debt crisis which
puts a premium on the well-being of the Latin American people.
We need to recognize that the debt issue offers the
political opportunity of a generation. We need to think in terms
of partnership instead of conditionality, growth instead of
austerity. We need to break the stand-off between the banks,
debtors and multilateral agencies that threatens to bog down debt
management. And we need to make Latin American initiative, not
supply-side dogmatism, the basis of a strategy for long-term
growth.
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The core of an idea on how to deal with Third World debt is
to establish a seven member council representing and coordinating
the actions of commercial creditors, creditor governments and
multi-lateral lending agencies. This coordinating council would
evaluate debtor country growth proposals and offer a package of
debt relief options that are appropriate to a specific growth
plan.
Finally, the Reagan Administration has also been remiss in
focusing unduly on the military conflict in Central America. The
$100 million in aid to the Contras would barely cover the cost of
a single day's debt service for the region. It is high time the
Administration acknowledged that political turmoil is a product of
economic stagnation and that a failure to assist economic
development can change all too easily into strategic losses for
the U.S. It will not be enough to have aided the Contras if
Mexico is engulfed in political chaos because the U.S. attached
less value to Mexican prosperity than to the convenience of
foreign bankers. Yet were Mexico to collapse, the controversy
over Nicaragua would be only a sideshow and U.S. leadership in
Latin America only a fiction.
After World War II, the U.S. stepped boldly into the role of
international economic leader and pathbreaker. Recognizing the
need to rebuild Europe, the U.S. challenged Europe to propose
plans for growth which we supplemented with aid.
Once again, America has the opportunity to lead effectively,
to challenge a region to develop plans for growth. Let us not
wait for wars or earthquakes to take bold initiatives for our
common good. Democrats believe that leadership means seizing
opportunities, not just reacting to threats. In South and Central
America, and yes in the Philippines, we have the opportunity to
champion the forces of democracy, not merely to pit our military
strength against democracy's foes. The choices are clear:
--dictatorship or democracy;
--debt or growth;
--confrontation or partnership.
I hope Democrats want partnership, democracy and growth. Let
us put our economic power to help these new democracies and, in
doing so, advance our own national security as well.
In conlusion, Democrats recognize that even for a nation as
rich as America, security lies in making realistic and intelligent
choices. No nation can afford to pay any price or bear any burden
to prevent tyranny. We must use our resources intelligently. By
deploying our economic power against democracy's adversaries, we
increase the costs to those who oppose democratic revolution. And
by lending our economic strength to those who aspire to freedom,
we help make democratic revolution a reality.
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U.S. SENATOR
Democrat/New Jersey
731 Hart Senate Office Building ? Washington, D. C. 20510 ? 202/224-3224
The Debt Crisis as a U.S. Job Crisis
Senator Bill Bradley
Thursday, July 24, 1986
The National Press Club, Washington, D.C.
Let's say you run a hardware store in Fairmont,
Minnesota. Most of your customers are farmers. What will
happen to your business as the farm credit crisis deepens?
If your customers use more and more of their earnings just to
pay the interest on their loans, they are going to cut
purchases in your store. You'll be lucky to stay in
business.
The farm credit crisis hurts both farmers and their
suppliers. But at least Congress and the Administration
recognize it as a national problem. Today I want to talk
about a problem that poses as big a threat to our national
well being. Today I want to outline the impact of the Latin
American debt crisis on Americans.
The U.S. is like the hardware store in Fairmont. And
Latin America is the customer in deep trouble. But this is
no small customer. Its buying power is the same size as that
of the United States seaboard - from Maine to Florida. The
nations of Latin America are our natural growth partners;
they are our neighbors. One of the hopes we have for our
children to enjoy the economic growth we had after World War
II is to help those neighbors prosper. Prosperous customers
make for a prosperous store.
Like our farmers, Latin American neighbors are in a
recession caused by debt. It started in the 1970's when oil
prices skyrocketed and the governments of industrialized
countries encouraged private banks to lend petro dollars to
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Sen. Bradley / National Press Club / Page 2
third world countries so they could buy oil and prevent their
economies from collapsing. It worsened dramatically when
interest payments shot up in 1981, bursting the inflationary
bubble. And it peaked when Mexico nearly defaulted in 1982.
What has that meant here at home?
In just two years, sales of U.S. construction equipment
to Latin America plummeted. One company alone can trace the
loss of 4,360 U.S. jobs to the effects of the Latin American
debt crisis.
A New Jersey pharmaceutical company told me that its
Ecuador branch can no longer buy materials from its New
Jersey plants. Ecuador uses all the dollars it accumulates
every year just to pay interest on its debt and to buy
absolute necessities. And the American Soybean Association
says there is no question that Mexico's debt crisis has cut
our soybean exports to that country.
The numbers have the dry ring of an obituary. In two
years, between 1981 and 1983, machinery exports to Latin
America dropped 38%, steel and motor vehicles dropped 50%,
construction equipment dropped 80%, and agricultural
machinery dropped 86%. U.S. exports have never recovered.
No exports mean no sales. No sales mean no jobs. In
fact, 400,000 Americans have lost their jobs because the
Latin American export market dried up and another 400,000
Americans didn't get jobs because Latin American economies
stopped growing.
If the debt crisis has hit us this hard, what has
happened to our customers? In Bolivia, inflation hit 50,000%
in 1985 with per capita income down 30% since 1980.
Inflation was so high that Bolivian currency printed in
Brazil was the nation's third largest import. Fighting in
Peru has cost 8000 lives in six years, as an antidemocratic
insurgency stirs rural hunger into violence.
The debtor nations owe so much money to U.S. banks that
in order to pay it back, they are siphoning off funds that
they need to improve their own living standards. During the
1980's, living standards have dropped 8% in Mexico, 14% in
Peru, 17% in Argentina, and 19% in Venezuela. At the same
time, the region has transferred $100 billion to foreign
banks in the last four years. People are out of work and
losing hope.
High debt and high debtor inflation are an explosive
combination. They create on atmosphere where democracy can
not take hold. As the debtor nations cut back on their
domestic budgets they hurt the poor. The tangible promise of
a better life disappears. Discontent grows and provides a
breeding ground for instability and revolution.
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Sen. Bradley / National Press*Club / Page 3
The architects of the Marshall plan remembered this
lesson from Germany in the 1930's when they responded to
Communist strikes in France and Italy after World War II.
The Marshall Plan to rebuild Europe amounted to $14.6
billion. This was about the level of U.S. defense
expenditures in 1950. Now, U.S. defense expenditures are
$300 billion per year, almost as high as Latin America's
total debt. But Congress nearly failed to provide $8 billion
for the International Monetary Fund in 1983 after Mexico's
near default. Any solution must attack poverty and address
the distinctive nature of the problem.
Latin American debt is different from other debt such as
farm debt or commercial debt because there are no bankruptcy
proceedings for nations that cannot pay. And there are no
support programs to stave off depression. For a country to
keep paying past its means ultimately leaves only default or
political upheaval as options.
The one hope for attacking poverty - economic growth -
cannot be generated under a burden of debt. Growth requires
investment not just in infrastructure but also in education,
in health, and in social welfare. If a country doesn't make
what it needs for these investments, it must rely on imports.
But debt service also demands dollars. Dollars are earned by
exporting. So Latin Americans must export at any price. As
they flood America with their exports, even more Americans
lose their jobs - about 600,000 since 1982.
For example, between 1980 and 1984, Brazil expanded
textile and apparel exports by a factor of 11. Yet these
exports are destroying the U.S. textile and apparel industry
in the process and the Brazils of the world aren't using the
money they earn to buy American goods. They're using that
money to pay off the banks.
Desperation exports from deeply indebted countries drove
commodity prices down across the board last year. Latin
American exporters were willing to sell at any price to earn
dollars for debt payments. Sugar prices fell 27%, wheat fell
10%, and corn and soybeans fell 19%. Argentina, for example,
needs 50 cents out of every dollar of export earnings for
debt service. Since 1981, Argentina's soybean drive has
claimed 80% of the worldwide markets lost by U.S. soybean
growers. The American Soybean Association puts it like
this. Creditors have asked their Third World debtors to
"maximize exports by hook or crook, cut imports to the bone,
and use the resulting trade surplus to repay debt." The
Association says: "U.S. farmers are not experts on
international banking and the problem of debtor countries.
But they are beginning to realize they have a stake in how
the current debt crisis is handled." That stake is jobs in
farming communities, and, for some, the very tradition of
generations of family farming.
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Sen. Bradley / National Pres'seClub / Page 4
The question for the U.S. is not whether to enter a
closer partnership with Latin America. The question for the
U.S. is what the terms of that partnership will be.
We have had since 1982 a history of piecemeal,
incremental management of the debt crisis. Against this
background, Secretary Baker made an important contribution
last year. He said debtor countries should grow, not run
austerity programs. This was a breakthrough primarily
because it reversed the Administration's debt policy of
hopeful neglect.
Now we must go forward and ask how the Baker debt policy
actually affects growth in debtor countries. I believe the
formula could be improved. I believe that incremental,
forced loans from banks that are already overexposed will not
rekindle debtor growth. Emergency loan packages that just go
to cover a portion of Latin American debt service payments
will not recapture any of those 800,000 lost American jobs.
Forced lending will not make banks more sound. I believe
that new lending alone leads nowhere. Lending is no
substitute for leading.
So what are the next steps. How do we take the Baker
plan's goal - economic growth - and convert it into a
strategic opportunity to advance American interests and
demonstrate American commitment to values shared by many of
our neighbors to the South.
First, we must convince Latin America that our principal
goal is not trying to overthrow a particular regime or siding
with a particular political party or promoting a particular
economic ideology. Nor is it even saving American banks, or
advancing U.S. multinationals, or fighting communism.
Rather, our target is poverty. Our goals are more hope, less
desperation; more stability, less turmoil for the people of
Latin America. These goals serve the long term, best
interest of both the United States and Latin America.
Second, the plan we propose must be big enough to be
seen by Latin America as a cure, not simply a Band-Aid -- a
destination, not just a signpost on the road to the next
crisis. The plan must be bold enough to challenge the
imaginations of Latin American leaders. If it is not, they
will once again find a reason to avoid taking bold steps for
growth within their own countries and they will have no
political stake in taking a risk. The plan must offer the
potential, if they develop it, of a fresh start for growth
and a reinvigoration of democracy.
Third, the initiative must come from the debtor
countries. After we express a willingness to help them,
Latin American countries must assume a full role in our
partnership for growth. The U.S. cannot, and it would be
foolhardy to try to, impose a solution or economic agenda on
Latin America. Each country must define what it needs and
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.Sen. Bradley / National Preas Club / Page 5
then ask the U.S. for support. Debtors, not unlike banks,
have become marginalists, which leads from one crisis to
another and in the process breeds resentment, cynicism and
corruption of the very values we should be championing.
With these criteria in mind, several weeks ago I
proposed a plan which I think meets these criteria. I
suggested that representatives of commercial banks worldwide
and the major creditor countries should meet annually for the
first three years of the new round of multilateral trade
talks. Creditors should offer debt and interest rate relief
and increased multilateral aid in exchange for debtor reforms
which will generate growth.
As a target and only a target for the total value of
yearly trade debt relief packages that the summit would offer
to eligible countries, I suggest:
-- 3 points of interest rate relief for one year on all
outstanding commercial and bilateral loans to
eligible countries;
-- 3% write-down and forgiveness of principal on all
outstanding commercial and bilateral loans to
eligible countries; and
-- 3 billion dollars of new multilateral project and
structural adjustment loans for eligible countries.
These relief packages should be carefully tailored to
the needs and commitments of each country. The actual value
and mix of each yearly trade/debt relief package should
depend on the uses that each debtor has made of a previous
year's package. The relief should vary from year to year,
and from country to country, depending on results. Although
reforms coming from within will differ from country to
country, they should generally liberalize trade, reverse
capital flight, increase internal investment, promote
economic growth, and enjoy broad internal political support.
Such a plan is big enough, bold enough and flexible
enough to rekindle economic growth, to encourage Latin.
leaders to take the political risk of reforming their
economies and to put U.S. workers and farmers back to work.
I am hopeful that we'll seize this opportunity for a
growth partnership with Latin America. Frankly, the Mexico
package announced yesterday by the Treasury Department is
encouraging, even though insufficient without some debt
relief. Its reasonablness on the Mexican deficit recognizes
that from 1982-1985, Mexico has already slashed its federal
budget deficit on a comparable basis farther than
Gramm-Rudman would cut ours and in three-fifths the time.
Tying an increase in future loans to the price of oil and to
future Mexican growth also is realistic. I hope it signals a
new mood and a new spirit that we're all in this together and
that helping Mexico restore growth is not a problem but an
opportunity for America.
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Sen. Bradley / National Press Club / Page 6
In particular, I was pleased by the size of the package
-- $12 billion over 18 months, double what anyone expected
-- and by the suggestion that interest rate relief may be
forthcoming. As I read the proposal, there is no reason why
all the new $6-7 billion of new commercial debt and any
restructured debt would have interest rates any higher than
LIBOR (London Interbank Offered Rate.)
If that approach were applied to all debtors, it would
be extremely significant. Brazil, for example, pays nearly
two and one-half percent above LIBOR on the bulk of its $100
billion debt. To get the LIBOR rate would reduce Brazil's
interest payments by almost 25%. While that is not the 3%
interest rate reduction envisioned in my proposal, it's
close. Such interest rate relief would be the next logical
step in our attempt to challenge Latin America to a
partnership for growth.
In conclusion, Third World debt relief must be about
something more than numbers and protecting fragile financial
systems, although those are critical concerns. And it must
be about more than achieving political stability in volatile
parts of our increasingly interdependent world, although
political stability is also crucial for all industrialized
countries. Ultimately, it must be about what we owe one
another as human beings, and, in this case, what we owe one
another as neighbors. It is well within our means to provide
the opportunity for our neighbors' growth and develoment, and
to help their governments combat poverty and establish
democratic institutions. It is an opportunity we must seize
if we take seriously the values on which our civilization is
built.
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BILL BRADLEY
NEW JERSEY
COMMITTEES
FINANCE
ENERGY AND
NATURAL RESOURCES
SELECT COMMITTEE
ON INTELLIGENCE
SPECIAL COMMITTEE ON
AGING
united ostetes senate
THE DEBT CRISIS AND INTER-AMERICAN PARTNERSHIP
HOUSE FOREIGN AFFAIRS COMMITTEE HEARING
By Senator Bill Bradley
Wednesday, July 30, 1986
Our Latin American neighbors are in a recession caused
by debt. It started in the 1970's when oil prices skyrocketed
and the governments of industrialized countries encouraged
private banks to lend petro dollars to Third World countries
so they could buy oil and prevent their economies from
collapsing. It worsened dramatically when interest payments
shot up in 1981, bursting the inflationary bubble. And it
peaked when Mexico nearly defaulted in 1982. What has that
meant here at home?
In just two years, sales of U.S. construction equipment
to Latin America plummeted. One company alone can trace the
loss of 4,360 U.S. jobs to the effects of the Latin American
debt crisis. The numbers have the dry ring of an obituary. Between
1981 and 1983, machinery exports to Latin America dropped
38%, steel and motor vehicles dropped 50%, construction
equipment dropped 80%, and agricultural machinery dropped
86%. U.S. exports have never recovered.
No exports means no sales. No sales means no jobs. In
fact, 400,000 Americans have lost their jobs because the
Latin American export market dried up and another 400,000
Americans didn't get jobs because Latin American economies
stopped growing.
If the debt crisis has hit us this hard, what has
happened to our customers? In Bolivia, inflation hit 50,000%
in 1985 with per capita income down 30% since 1980.
Inflation was so high that Bolivian currency printed in
Brazil was the nation's third largest import. Fighting in
Peru has cost 8000 lives in six years, as an antidemocratic
insurgency stirs rural poverty and hopelessness into
violence.
The debtor nations owe so much money to U.S. banks that
in order to pay it back, they are siphoning off funds that
they need to maintain their own living standards. During the
1980's, living standards have dropped 8% in Mexico, 14% in
Peru, 17% in Argentina, and 19% in Venezuela. At the same
time, the region has transferred $100 billion to foreign
banks in the last four years. People are out of work and
losing hope.
1 GREENTREE CENTRE
731 HART BUILDING P.O. BOX 1720 SUITE 303
WASHINGTON. DC 20510 UNION, NJ 07083 ROUTE 73
[phone] {201) 688-060 MARLTON, NJ 08053
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Sen. Bradley / Foreign Affairs Test./ Page 2
Latin American debt is different from other debt such as
farm debt or commercial debt because there are no bankruptcy
proceedings for nations that cannot pay. And there are no
support programs to stave off depression. For a country to
keep paying past its means ultimately leaves only default or
political upheaval as options.
The one hope for attacking poverty - economic growth -
cannot be generated under a burden of debt. Growth requires
investment not just in infrastructure but also in education,
in health, and in social welfare. If a country doesn't make
what it needs for these investments, it must rely on imports.
But debt service also demands dollars. Dollars are earned by
exporting. So Latin Americans must export at any price. As
they flood America with their exports, even more Americans
lose their jobs - about 600,000 since 1982.
For example, between 1980 and 1984, Brazil expanded
textile and apparel exports by a factor of 11. Yet these
exports are destroying the U.S. textile and apparel industry
in the process and the Brazils of the world aren't using the
money they earn to buy American goods. The #:,re using that
money to pay off the banks.
Argentina, needs 50 cents out of every dollar of export
earnings for debt service. Since 1981, Argentina's soybean
drive has claimed 80% of the worldwide markets lost by U.S.
soybean growers.
The question for the U.S. is not whether to enter a
closer partnership with Latin America. The question for the
U.S. is what the terms of that partnership will be.
We have had since 1982 a history of piecemeal,
incremental management of the debt crisis. Against this
background, Secretary Baker made an important contribution
last year. He said debtor countries should grow, not run
austerity programs. This was a breakthrough primarily
because it reversed the Administration's debt policy of
hopeful neglect.
Now we must go forward and ask how the Baker debt policy
actually affects growth in debtor countries. I believe the
formula could be improved. I believe that incremental,
forced loans from banks that are already overexposed will not
rekindle debtor growth. Emergency loan packages that just go
to cover a portion of Latin American debt service payments
will not recapture any of those 800,000 lost American jobs.
Forced lending will not make banks more sound. I believe
that new lending alone leads nowhere. Lending is no
substitute for leading.
So what are the next steps. How do we take the Baker
plan's goal - economic growth - and convert it into a
strategic opportunity to advance American interests and
demonstrate American commitment to values shared by many of
our neighbors to the South.
First, we must convince Latin America that our principal
target is poverty.
Second, the plan we propose must be big enough to be
seen by Latin America as a cure, not simply a Band-Aid -- and
it must be bold enough to challenge the imaginations of Latin
American leaders.
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Sen. Bradley / Foreign Affairs Test./ Page 3
Third, the initiative must come from the debtor
countries. The U.S. cannot, and it would be foolhardy to try
to, impose a solution or economic agenda on Latin America.
With these criteria in mind, several weeks ago I
proposed a plan which I think meets these criteria. I
suggested that representatives of commercial banks worldwide
and the major creditor countries should meet annually for the
first three years of the new round of multilateral trade
talks. Creditors should offer debt and interest rate relief
and increased multilateral aid in exchange for debtor reforms
which will generate growth.
As a target and only a target for the total value of
yearly trade debt relief packages that the summit would offer
to eligible countries, I suggest:
-- 3 points of interest rate relief for one year on all
outstanding commercial and bilateral loans to
eligible countries;
-- 3% write-down and forgiveness of principal on all
outstanding commercial and bilateral loans to
eligible countries; and
-- 3 billion dollars of new multilateral project and
structural adjustment loans for eligible countries.
These relief packages should be carefully tailored to
the needs and commitments of each country. The actual value
and mix of each yearly trade/debt relief package should
depend on the uses that each debtor has made of a previous
year's package. The relief should vary from year to year,
and from country to country, depending on results. Although
reforms coming from within will differ from country to
country, they should generally liberalize trade, reverse
capital flight, increase internal investment, promote
economic growth, and enjoy broad internal political support.
Such a plan is big enough, bold enough and flexible
enough to rekindle economic growth, to encourage Latin
leaders to take the political risk of reforming their
economies and to put U.S. workers and farmers back to work.
I am hopeful that we'll seize this opportunity for a
growth partnership with Latin America. Frankly, the Mexico
package announced last week by the Treasury Department is
encouraging, even though insufficient without some debt
relief. Its reasonableness on the Mexican deficit recognizes
that from 1982-1985, Mexico has already slashed its federal
budget deficit on a comparable basis farther than
Gramm-Rudman would cut ours and in three-fifths the time.
Tying an increase in future loans to the price of oil and to
future Mexican growth also is realistic. I hope it signals a
new mood and a new spirit that we're all in this together and
that helping Mexico restore growth is not a problem but an
opportunity for America.
In particular, I was pleased by the size of the package
-- $12 billion over 18 months, double what anyone expected
-- and by the suggestion that interest rate relief may be
forthcoming. As I read the proposal, there is no reason why
all the new $6-7 billion of new commercial debt and any
restructured debt would have interest rates any higher than
the rate at which banks borrow from each other
internationally.
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Sen. Bradley / Foreign Affairs Test./ Page 4
But let us not forget that debt relief ultimately goes
beyond the numbers. Sure, it is encouraging that a modest
coordinated cut in interest rates and the level of debt could
revive failing Latin American economies. Sure, it is
important that we can structure such a relief program to
provide meaningful incentives for leaders of Latin nations to
design and implement promising reform programs. But the real
issue is what we owe one another as human beings, what kind
of partnership we seek with our neighbors, and what kind of
stake we have in a civilization that shares our democratic
values.
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100TH CONGRESS
1ST SESSION
.1474
To require that any United States Government support for military or
paramilitary operations in Angola be openly acknowledged and publicly debated.
IN THE SENATE OF THE UNITED STATES
JULY 8 (legislative day, JUNE 23), 1987
Mr. BRADLEY (for himself, Mr. LEAHY, Mr. SIMON, Mr. DURENBERGER, Mr.
HATFIELD, Mr. HARKIN, Mr. BIDEN, Mrs. KASSEBAUM, and Mr. DODD) in-
troduced the following bill; which was read twice and referred to the Com-
mittee on Foreign Relations
A BILL
To require that any United States Government support for
military or paramilitary operations in Angola be openly
acknowledged and publicly debated.
1 Be it enacted by the Senate and House of Representa-
2 fives of the United States of America in Congress assembled,
3 SECTION 1. DECLARATION THAT ANY SUPPORT FOR MILI-
4 TARY OR PARAMILITARY OPERATIONS IN
5 ANGOLA SHOULD BE OPENLY ACKNOWLEDGED
6 AND PUBLICLY DEBATED.
7 The Congress finds that the United States Government
8 should support military or paramilitary operations in Angola
9 only if the provision of that support is the openly acknowl-
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2
1 edged policy of the United States. It is, therefore, the sense
2 of the Congress that the United States Government should
3 not provide any such support until the President has publicly
4 informed the Congress and the American people that United
5 States Government support for military or paramilitary oper-
6 ations in Angola is important to the national security and the
7 Congress has approved such support.
8 SEC. 2. ENSURING THAT SUPPORT IS OPENLY ACKNOWL-
9 EDGED.
10 (a) ANY SUPPORT MUST BE OPENLY ACKNOWL-
11 EDGED.-During fiscal years 1987 and 1988, a department,
12 agency, official, or other instrumentality of the United States
13 Government may obligate or expend funds-
14 (1) to conduct, directly or indirectly, military or
15 paramilitary operations in Angola, or
16 (2) to provide any financial, material, or other as-
17 sistance, directly or indirectly, to any group engaged in
18 military or paramilitary operations in Angola,
19 only if the use of funds for that purpose is the openly ac-
20 knowledged policy of the United States Government, as de-
21 termined in accordance with subsection (b).
22 (b) PRESIDENTIAL REQUEST AND CONGRESSIONAL
23 APPROVAL.-In order to ensure that any United States Gov-
24 ernment support for military or paramilitary operations in
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3
1 Angola is openly acknowledged, funds may be used for the
2 purposes described in subsection (a) only if-
3 (1) the President determines that United States
4 Government support for military or paramilitary oper-
5 ations in Angola is important to the national security
6 and submits to the Speaker of the House of Represent-
7 atives and the President of the Senate a request that
8 the Congress approve openly acknowledged United
9 States Government support for those operations; and
10 (2) the Congress enacts a joint resolution approv-
11 ing United States Government support for military or
12 paramilitary operations in Angola.
13 Any such support may be provided only to the extent permit-
14 ted by that joint resolution.
15 (C) INTERPRETATION OF LIMITATION.-Nothing in
16 this section should be construed to prohibit the obligation or
17 expenditure of funds for-
18 (1) United States diplomatic activities;
19 (2) activities of the United States Armed Forces
20 which are reported to the Congress pursuant to section
21 4(a) of the War Powers Resolution; or
22 (3) assistance provided through the United Na-
23 tions High Commissioner for Refugees or the Interna-
24 tional Committee of the Red Cross.
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4
1 (d) RELATIONSHIP WITH OTHER LAws.-The re-
2 quirements of this section may not be waived under the au-
3 thority of any other provision of law. This section supercedes
4 any provision of law which might otherwise be construed to
5 allow funds to be used for the purposes described in subsec-
6 tion (a).
0
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 Sanitized Copy Approved for Release 2011/08/17: CIA-RDP90GO0152R000400550017-8
STAT
Sanitized Copy Approved for Release 2011/08/17: CIA-RDP90GO0152R000400550017-8