NEA TESTIMONY TO HAC ON SOUTH ASIA FOREIGN ASSISTANCE PROGRAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90B01370R000801040026-1
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 7
• Document Creation Date: December 21, 2016
• Document Release Date: December 4, 2008
• Sequence Number: 26
• Publication Date: April 14, 1984
• Content Type: CABLE

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RR RUEAIIB
ZNR UUUUU ZOC STATE ZZH
RR RUEHC
DE RUEHC #0076 1050644
2NR UUUUU ZZH
R 1406302 APR 84
FM SECSTATE WASHDC
TO RUMJGM/AMEMBASSY COLOMBO 0000
RUMJDK/AMEMBASSY DHAKA 0000
RUEHIL/AMEMBASSY ISLAMABAD 0000
RUMJHT/AMEMBASSY KATHMANDU 0000
RUEHNE/AMEMBASSY NEW DELHI 0000
BT
UNCLAS STATE 110076
E.O. 12356: N/A
TAGS: EAID, MASS
SUBJECT: NEA TESTIMONY
ASSISTANCE PROGRAM
1. FYI. FOLLOWING IS THE TEXT OF THE PREPARED STATEMENT
BY NEA DEPUTY ASST SECY HOWARD SCRAPPER TO THE (LONG)
SUBCOMMITTEE ON FOREIGN OPERATIONS, M~JLJSE APPROPRIATIONS
COMMITTEE, ON APRIL 12, 1984.
2. STATEMENT COVERS ESSENTIALLY THE SAME GROUND, IN
ABBREVIATED FORM, AS THE FEB. 6 TESTIMONY TO SOLARZ
SUBCOMMITTEE OF THE HFAC (REFTEL). ONLY TWO CONGRESSMEN
-- CLARENCE "DOC" LONG AND MATT MCHUGH -- WERE PRESENT,
AND THERE WAS LITTLE OR NO PRESS COVERAGE APART FROM AN
AP REPORTER. ROCKY STAPLES AND JOHN STEMPEL ALSO
TESTIFIED ON BEHALF OF AID AND DOD RESPECTIVELY.
3. QUESTIONS FROM LONG AND MCHUGH COVERED: SOVIET AIO TO
PAKISTAN; PAKISTAN ECONOMY; ZIA ELECTION PLANS; IMPACT OF
ISLAMIC FUNDAMENTALISM IN PAKISTAN; UN MEDIATION EFFORTS
IN AFGHANISTAN; LOAN/GRANT RATIO OF AID TO INDIA;
INDO-SOVIET ARMS SUPPLY RELATIONSHIP; DISTURBANCES IN THE
PUNJAB; AID PARTICIPANT TRAINING IN NEPAL; INDO-PAKISTAN
RELATIONS; AND THE ECONOMIC AND COMMUNAL SITUATION IN SRI
LANKA.
-- I APPRECIATE THIS OPPORTUNITY TO TESTIFY BEFORE THE
SUBCOMMITTEE ON THE ADMINISTRATION'S PROPOSED FOREIGN
ASSISTANCE PROGRAM FOR SOUTH ASIA IN FY 1985. I WILL DO
MY BEST TO ADDRESS YOUR CONCERNS, AND TO ANSWER ANY
pUESTIONS THAT YOU MAY HAVE.
UNCLASSIFIED
OLL/LD
INCOMING
STAT
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-- PERHAPS THE SIMPLEST WAY TO PROCEED WOULD BE FIRST TO
PRESENT YOU WITH THE LEVELS THAT WE ARE REQUESTING, THEN
TO EXPLAIN HOW THE AMOUNTS, MIX, AND DESIGN OF OUR
PROPOSED PROGRAMS SERVE U.S. INTERESTS AND OBJECTIVES IN
THE REGION.
-- THE FY 1985 APPROPRIATIONS REQUEST FOR SOUTH ASIA IS
SUMMARIZED IN THE FOLLOWING TABLE, WITH THE LEVELS OF
PREVIOUS YEARS INCLUDED FOR PURPOSES OF COMPARISON:
-- LET ME PUT THESE NUMBERS IN PERSPECTIVE. THE GRAND
TOTAL OF $1.1 BILLION REPRESENTS ABOUT 7 PERCENT OF THE
ADMINISTRATION'S TOTAL FY 1985 BUDGET REQUEST FOR
ASSISTANCE WORLDWIDE, ABOUT THE SAME SHARE GOING TO SOUTH
ASIA AS IN FY 1984. TAKING ACCOUNT OF ALL COUNTRIES
EXCEPT PAKISTAN, WE ARE PROPOSING A TOTAL BUDGET
APPROPRIATION OF $483.1 MILLION, OR ABOUT 1 PERCENT OVER
THE PREVIOUS YEAR. OF THAT AMOUNT, $225.5 MILLION IS
EARMARKED FOR DEVELOPMENT ASSISTANCE, $256.7 MILLION FOR
PL 480 FOOD AID, ANO $825 THOUSAND FOR INTERNATIONAL
MILITARY EDUCATION AND TRAINING (IMET). CHANGES IN
INDIVIDUAL COUNTRY TOTALS ARE LIMITED, WITH THE EXCEPTION
OF A 10 PERCENT INCREASE FOR BANGLADESH, WHICH
COMPENSATES FOR THE PREVIOUS YEAR'S DECLINE AND IS
JUSTIFIED, WE BELIEVE, BY THE POSITIVE SELF-HELP REFORMS
RECENTLY UNDERTAKEN BY THE BANGLADESHI GOVERNMENT.
CONSIDERATIONS, WHICH I WILL COVER IN SOME DETAIL LATER
IN THIS TESTIMONY. WE ARE REQUESTING $325 MILLION IN FMS
CREDITS AND $304 MILLION IN A MIX OF ECONOMIC ASSISTANCE
PROGRAMS. THESE TOTALS, WHICH REFLECT AN 8.5 PERCENT
INCREASE OVER THE FY 1984 ESTIMATES, ARE IN ACCORDANCE
WITH THE MULTIYEAR PAKISTAN ASSISTANCE PROGRAM AGREED TO
WITH THE PAKISTAN GOVERNMENT IN LATE 1981. WE ARE ALSO
REQUESTING ONE MILLION DOLLARS IN IMET FOR PAKISTAN,
COMPARED TO $800,000 FOR FY 1984.
-- IT IS RELEVANT TO ASK HOW THE SIZE OF OUR ASSISTANCE
EFFORT COMPARES WITH THAT OF OTHER BILATERAL AND
MULTILATERAL DONORS, AND WITH THE MAGNITUDE OF CAPITAL
SPENDING BY THE RECIPIENT COUNTRIES THEMSELVES. THE
FOLLOWING TABLE, BASED ON .1982-83 DISBURSEMENT DATA,
GIVES AN IDEA OF THE RELATIVE MAGNITUDES:
BANGLADESH
INDIA
NEPAL
PAKISTAN
SRI LANKA
U.S. OTHER INTERNATIONAL DOMESTIC
BILATERAL BILATERAL AGENCIES INVESTMENT~#
193.0
138.0
19.0
150.0
53.0
SHARE OF
TOTAL (PERCENT)
87.7
639.8 598.5 1,570.8
633.2 2,286.8 36,309.1
94.6 11L.7 427.7
363.4 555.6 4,921.8
268.1 169.9 1.461.6
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-- DURING THE PERIOD 1978-82, THE UNITED STATES WAS THE
SECOND-LARGEST BILATERAL AID DONOR TO BANGLADESH, INDIA,
PAKISTAN AND SRI LANKA. WE WERE THE FOURTH LARGEST DONOR
TO NEPAL. IN ALL COUNTRIES, THE UNITED STATES HAS PLAYED
AN IMPORTANT ROLE IN ECONOMIC DEVELOPMENT, ESPECIALLI' IF
OUR CONTRIBUTIONS THROUGH MULTILATERAL AGENCIES ARE TAKEN
INTO ACCOUNT. HOWEVER, IN TERMS OF DOLLARS AND CENTS OUR
EFFORT IS ONLY ONE STRAND AMONG MANY, AND IS IN FACT
DWARFED BY THE INVESTMENT UNDERTAKEN BY RECIPIENT
GOVERNMENTS AND PRIVATE CITIZENS IN EACH COUNTRY.
U.S. INTERESTS AND OBJECTIVES IN SOUTH ASIA
-- U.S. OBJECTIVES IN SOUTH ASIA REMAIN ESSENTIALLY
UNCHANGED FROM PREVIOUS YEARS. WE WANT TO ENCOURAGE THE
GROWTH OF STABLE, STRONG, INDEPENDENT STATES LIVING IN
PEACE WITH EACH OTHER, FREE OF OUTSIDE INTERFERENCE. WE
SUPPORT THE DEVELOPMENT OF SOUND POLITICAL INSTITUTIONS,
RESPONSIVE TO THE POPULAR WILL. WE SEEK TO CONTRIBUTE TO
THE EFFORTS THE GOVERNMENTS OF THE SOUTH ASIAN COUNTRIES
ARE MAKING TO DEVELOP THEMSELVES ECONOMICALLY AND TO BRING
ABOUT HIGHER LIVING STANDARDS FOR THEIR PEOPLE IN A REGION
WHICH IS AMONG THE WORLD'S POOREST AND MOST POPULOUS. WE
WANT TO DETER SOVIET EXPANSIONISM, ESPECIALLY IN LIGHT OF
THE STRATEGIC IMPORTANCE OF THE AREA. THESE REGIONAL
POLICY GOALS MESH WITH, AND REINFORCE WIDER U.S.
OBJECTIVES SUCH AS THE PREVENTION OF THE PROLIFERATION OF
NUCLEAR WEAPONS, THE EXTENSION OF HUMAN RIGHTS AND
DEMOCRACY, THE RESOLUTION OF REGIONAL CONFLICTS, THE
REDUCTION OF NARCOTICS TRAFFIC, AND THE EXPANSION OF
OPPORTUNITIES FOR AMERICAN TRADE AND INVESTMENT. IN ORDER
TO PURSUE THESE GOALS WITH ANY EFFECTIVENESS, IT IS
IMPORTANT TO MAINTAIN AN ATMOSPHERE OF TRUST AND GOODWILL
WITH ALL COUNTRIES IN THE REGION, THROUGH COOPERATIVE
INTERACTION IN THE FULL RANGE OF ECONOMIC, CULTURAL,
EDUCATIONAL AND SCIENTIFIC ACTIVITIES.
HOW OUR PROGRAMS SERVE U.S. INTERESTS AND OBJECTIVES
-- OUR COUNTRY PROGRAMS HAVE BEEN CAREFULLY DESIGNED,
WITHIN BUDGETARY CONSTRAINTS, TO SERVE U.S. OBJECTIVES IN
THE REGION WHILE ADDRESSING SPECIFIC NEEDS IN EACH
COUNTRY. IN PAKISTAN, FOR EXAMPLE, THE EMPHASIS IS ON
SECURITY, FOR OBVIOUS REASONS INVOLVING SOVIET
EXPANSIONISM IN AFGHANISTAN. IN BANGLADESH, SRI LANKA,
AND NEPAL, THE FOCUS IS ON MEETING HUMANITARIAN AND BASIC
DEVELOPMENT NEEDS, WHILE IN INDIA THE PROGRAM IS GRADUALLY
EVOLVING TO INCORPORATE A GREATER DEGREE OF TECHNOLOGICAL
AND INSTITUTIONAL DEVELOPMENT -- REFLECTING A MORE
COLLABORATIVE RELATIONSHIP, CLOSELY ATTUNED TO CHANGING
NEEDS AND RICH IN PROMISE FOR FUTURE COOPERATION IN A WIDE
RANGE OF SCIENTIFIC AND COMMERCIAL APPLICATIONS. IN ALL
MAJOR COUNTRIES WE HAVE A MODEST INTERNATIONAL MILITARY
EDUCATION AND TRAINING (IMET) PROGRAM, OFFERING AN
EXTREMELY COST-EFFECTIVE MEANS OF DEVELOPING TIES OF
FRIENDSHIP AND PROFESSIONAL COOPERATION BETWEEN THE U.S.
ARMED SERVICES AND THEIR COUNTERPARTS OVERSEAS. WE HAVE
FOUND, GENERALLY, THAT OUR PROGRAMS NOT ONLY SERVE BROAD
POLITICAL AND DEVELOPMENT GOALS, BUT ALSO OPEN UP AN
AVENUE FOR WIDER DIALOGUE AND BETTER OVERALL RELATIONS
WITH THE COUNTRIES OF THE REGION.
-- LET ME NOW BRIEFLY REVIEW INDIVIDUAL COUNTRY PROGRAMS
WITHIN THE CONTEXT OF U.S. INTERESTS AND OBJECTIVES.
-- ILIA. OUR GOALS IN INDIA FALL INTO TWO BROAD
CATEGORIES: FIRST, TO ADDRESS THE VAST HUMANITARIAN AND
DEVELOPMENT NEEDS IN THAT COUNTRY, PARTICULARLY AMONG THE
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45 PERCENT OF INDIA'S 730 MILLION POPULATION REMAINING
BELOW THE NUTRITION-BASED POVERTY LINE; AND SECOND, TO
BUILD BRIDGES IN THE AREAS OF SCIENCE AND TECHNOLOGY,
TRADE AND INVESTMENT, EDUCATION AND CULTURE WITH THE
LARGEST AND MOST POWERFUL COUNTRY IN THE REGION. OUR
DEVELOPMENT ASSISTANCE AND PL 480 PROGRAMS, FOCUSSING ON
IRRIGATION, AGRICULTURAL RESEARCH, FORESTRY, FAMILY
PLANNING, HEALTH, AND NUTRITION, ARE WELL-TARGETTED, WE
THINK, IN MATCHING UP AMERICAN EXPERTISE WITH INDIAN
DEVELOPMENT NEEDS. ALTHOUGH THE PER CAPITA LEVELS ARE
QUITE MODEST, WE TRY TO USE AS MUCH LEVERAGE AS POSSIBLE
TO ACHIEVE THE MAXIMUM IMPACT.
-- IN THE RECENT PAST AND IN FUTURE YEARS, WE SEE A
GRADUAL EVOLUTION OF THE INDIA PROGRAM TOWARDS A MORE
COLLABORATIVE RELATIONSHIP, REFLECTING THE SECOND GOAL
DESCRIBED ABOVE. THIS WILL INVOLVE FURTHER STRENGTHENING
OF LINKS BETWEEN SCIENTIFIC RESEARCH INSTITUTIONS, AND A
MORE INTENSIVE APPLICATION OF TECHNOLOGY TO THE
DEVELOPMENT PROCESS -- WITH SPIN-OFF EFFECTS, WE HOPE, ON
PRIVATE TRADE AND INVESTMENT TIES WHICH ARE ALREADY ON A
STRONG GROWTH PATH.
-- BEYOND THE SCDPE OF THE ECONOMIC ASSISTANCE PROGRAM,
BUT SERVING A SIMILAR "BRIDGE-BUILDING" GOAL, IS A
PROPOSED $110 MILLION EQUIVALENT BINATIONAL ENDOWMENT,
WHICH IS DESIGNED TO CONSERVE OUR DWINDLING SUPPLY OF
U.S.-HELD EXCESS RUPEES IN INDIA, THROUGH THE
ESTABLISHMENT OF AN INTEREST-BEARING FACILITY TO FUND
VALUABLE JOINT STUDY ANO EXCHANGE PROGRAMS FOR THE NEXT
TWO DECADES IN THE AREAS OF SCIENCE, TECHNOLOGY,
EDUCATION, AND CULTURE.
-- BANGLADESH. OUR GOALS IN BANGLADESH ARE ESSENTIALLY
HUMANITARIAN, AND THIS IS REFLECTED IN THE DESIGN OF OUR
ECONOMIC ASSISTANCE PROGRAM. MAJOR AREAS OF EMPHASIS
INCLUDE FAMILY PLANNING, AGRICULTURE AND RURAL EMPLOYMENT,
AND NUTRITION. IN KEEPING WITH BANGLADESH'S FINANCIAL
NEEDS, OUR ENTIRE FY 1985 PROGRAM -- DEVELOPMENT
ASSISTANCE AND PL 480 FOOD AID, AS WELL AS IMET -- WILL BE
ON A GRANT BASIS.
-- ANTHER OBJECTIVE OF OUR ECONOMIC ASSISTANCE PROGRAM
I5 TO CONTRIBUTE, INSOFAR AS POSSIBLE, TO THE MOVEMENT
TOWARDS LONG TERM POLITICAL STABILITY IN BANGLADESH.
SINCE GAINING INDEPENDENCE IN A 1971 WAR WHICH THREATENED
THE SECURITY AND STABILITY OF THE ENTIRE SUBCONTINENT,
BANGLADESH HAS EXPERIENCED PERIODS OF BOTH POLITICAL CALM
AND VIOLENT UPHEAVAL. KEY TO LONG-TERM STABILITY IS THE
GOVERNMENT'S PEACEFUL TRANSITION FROM MARTIAL LAW TO
REPRESENTATIVE POLITICAL INSTITUTIONS. THE GOVERNMENT HAS
RECENTLY LIFTED ITS PARTIAL BAN ON POLITICAL ACTIVITY
WHICH WAS IN EFFECT DURING MOST OF 1983, AND HOPES TO
PROCEED WITH A SERIES OF LOCAL, PRESIDENTIAL, AND
PARLIAMENTARY ELECTIONS LATER THIS YEAR. OUR ASSISTANCE
PROGRAM CONTRIBUTES TO THIS PROCESS, AT LEAST INDIRECTLY,
BY HELPING TO PROVIDE THE KIND OF ECONOMIC CLIMATE
NECESSARY FOR POLITICAL LIBERALIZATION.
-- NEPAL. AS IN BANGLADESH, THE AIM OF U.S. ASSISTANCE
TO NEPAL IS TO PROMOTE ECONOMIC AND POLITICAL DEVELOPMENT
WITH A VIEW TO CONTRIBUTING TO STABILITY IN NEPAL AND
THEREBY IN THE REGION AS A WHOLE. NEPAL'S GEOGRAPHICAL
POSITION BETWEEN CHINA AND INDIA MAKES THE MAINTENANCE OF
ITS DOMESTIC STABILITY PARTICULARLY IMPORTANT IN A
REGIONAL CONTEXT. LAST YEAR, THE NEPALESE POLITICAL
SYSTEM CONTINUED TO ADAPT TO THE 1980 CONSTITUTIONAL
REFORMS, WHICH BROADENED POPULAR PARTICIPATION. AND
INCREASED THE ROLE OF THE NATIONAL LEGISLATURE. FOR THE
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FIRST TIME, AN INCUMBENT PRIME MINISTER WAS DISMISSED BY
THAT BODY IN A NO-CONFIDENCE MOTION, AND A NEW LEADER AND
COUNCIL OF MINISTERS WERE INSTALLED IN AN ORDERLY AND
RAPID TRANSITION.
-- THE AID PROGRAM IN NEPAL WORKS IN DIRECT SUPPORT OF
OUR POLICY GOALS THROUGH COOPERATION WITH THE NEPALESE
GOVERNMENT IN THE PRIORITY AREAS OF RURAL DEVELOPMENT,
RESOURCE CONSERVATION, AND HEALTH AND FAMILY PLANNING.
THE $1.5 MILLION INCREASE FROM FY 1984 WILL PERMIT
CONTINUATION OF PRESENT PROGRAMS AS WELL AS NEW PROGRAMS
IN AGRICULTURAL RESEARCH AND TRAINING, AN AREA WHICH IS
PARTICULARLY IMPORTANT TO NEPAL WHERE 90 PERCENT OF THE
WORKFORCE I5 ENGAGED IN AGRICULTURE. AS IN BANGLADESH,
OUR PROPOSED NEPAL PROGRAM IS ON A 100 PERCENT GRANT BASIS.
-- SRI LANKA. AS A DEVELOPING COUNTRY, SRI LANKA IS
NOTABLE FOR ITS UNUSUALLY HIGH "QUALITY OF LIFE"
INDICATORS, ITS STRONG DEMOCRATIC TRADITIONS, AND SINCE
1977, ITS MOVEMENT TOWARDS ECONOMIC LIBERALIZATION, WHICH
HAS HAD THE EFFECT OF EXPANDING TRADE AND INVESTMENT TIES
WITH THE UNITED STATES AND OTHER OVERSEAS PARTNERS. SRI
LANKA IS CURRENTLY EMBARKED UPON AN AMBITIOUS PROGRAM OF
CAPITAL DEVELOPMENT INCLUDING MOST NOTABLY THE MAHAWELI
HYDROELECTRIC/IRRIGATION/RESETTLEMENT SCHEME WHICH, WE
BELIEVE, SERVES A VARIETY OF USEFUL PURPOSES AND WILL
REMOVE A NUMBER OF KEY CONSTRAINTS TO FURTHER ECONOMIC
GROWTH.
OUR PROPOSED ASSISTANCE PROGRAM FOR FV 1985
CONCENTRATES HEAVILY ON DOWNSTREAM DEVELOPMENT OF THE
MAHAWELI RIVER, PRINCIPALLY IRRIGATION WORKS. OTHER AREAS
OF EMPHASIS ARE WATER SUPPLY, HEALTH, AND SANITATION. THE
PL 480, TITLE I PROGRAM HELPS TO FILL THE NUTRITION GAP
AND PROVIDES VERY IMPORTANT BALANCE OF PAYMENTS SUPPORT.
-- AS IN OTHER COUNTRIES, OUR SRI LANKA PROGRAM ALSO
SERVES A USEFUL PURPOSE IN CONTRIBUTING TO POLITICAL
STABILITY -- A PARTICULARLY IMPORTANT CONSIDERATION THIS
YEAR AS SRI LANKA'S LEADERSHIP GRAPPLES IN THE AFTERMATH
OF LAST JULY'S VIOLENCE--WITH THE NEED FOR LASTING
RECONCILIATION BETWEEN THE COUNTRY'S MAJOR ETHNIC
COMMUNITIES. CONTINUED SUPPORT FROM THE UNITED STATES AND
OTHER DONORS IS ESSENTIAL IN MAINTAINING A CLIMATE OF
CONFIDENCE DURING THIS DIFFICULT PERIOD, AND IN KEEPING UP
THE MOMENTUM OF ECONOMIC DEVELOPMENT.
-- PAKISTAN. MR. CHAIRMAN, AS I NOTED EARLIER, THE
PAKISTAN PROGRAM INVOLVES A NUMBER OF SPECIAL
CONSIDERATIONS. LET ME NOW REVIEW THOSE CONSIDERATIONS IN
SOME DETAIL.
-- THE DRIVING FORCE BEHIND THE DESIGN AND MIX OF OUR
ASSISTANCE PROGRAM IS OUR PERCEPTION THAT A STABLE
PAKISTAN, ONE OF THE WORLD'S LARGEST ISLAMIC STATES, CAN
SERVE AS AN ANCHOR FOR THE ENTIRE REGION -- LENDING ITS
CONSIDERABLE WEIGHT AND INFLUENCE TO THE CAUSE OF REGIONAL
PEACE AND HARMONY. CONVERSELY, AN UNSTABLE, INSECURE
PAKISTAN ADDS TO REGIONAL TENSIONS AND INVITES OUTSIDE
INTERFERENCE.
-- THE SOVIET INVASION OF AFGHANISTAN IN DECEMBER, 1979,
BROUGHT THE ISSUE IMO SHARP RELIEF. UPON ENTERING INTO
OFFICE, THIS ADMINISTRATION IN 1981 SOUGHT, AND RECEIVED,
THE SUPPORT OF CONGRESS FOR A REVITALIZATION OF OUR
SECURITY AND ECONOMIC RELATIONSHIP WITH PAKISTAN. THAT
SUPPORT HAS BEEN VITAL IN MAKING IT POSSIBLE FOR US TO
IMPLEMENT, AT VERY CLOSE TO FULL FUNDING, THE INITIAL
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THREE YEARS OF OUR 5-6 YEAR PROGRAM OF MILITARY AND
ECONOMIC ASSISTANCE. WHAT WE ARE SEEKING IN FY 1985 IS
-- THE MOST URGENT GOAL OF OUR ASSISTANCE PROGRAM IN
PAKISTAN AT THIS TIME IS TO HELP THAT COUNTRY DEAL WITH
THE MULTIFACETED CHALLENGE OF SOVIET EXPANSIONISM IN
AFGHANISTAN. FIRST, THERE IS THE IMMEDIATE NEED TO
STRENGTHEN PAKISTAN'S MILITARY OFFENSES, AND TO PERSUADE
THE SOVIETS THAT FURTHER AGGRESSION WOULD ENTAIL AN
UNACCEPTABLE COST. SECOND, OUR ASSISTANCE MAKES IT
POSSIBLE FOR PAKISTAN TO CONTINUE ITS PRINCIPLED
OPPOSITION TO WHAT THE SOVIETS ARE DOING IN AFGHANISTAN;
WITHOUT PAKISTAN'S LEADERSHIP ON THIS ISSUE IN
INTERNATIONAL FORUMS, THE POLITICAL COST TO THE SOVIETS
WOULD BE MUCH LOWER. THIRD, OUR ASSISTANCE MAKES IT
EASIER FOR PAKISTAN TO BEAR THE BURDEN OF SOME 2-3 MILLION
AFGHAN REFUGEES WHO HAVE FLED ACROSS THE BORDER. FOR ALL
OF THESE REASONS, THE U.S. ASSISTANCE PROGRAM IS VITAL TO
STABILITY IN PAKISTAN AND HENCE, WE BELIEVE, IN THE REGION
AS A WHOLE.
-- APART FROM IMMEDIATE SECURITY CONSIDERATIONS, OUR
PROGRAM ADDRESSES OTHER NEEDS IMPORTANT TO PAKISTAN'S
ECONOMIC DEVELOPMENT AND TO U.S. INTERESTS. DESPITE THE
HEALTHY ECONOMIC GROWTH RATES OF RECENT YEARS, FUNDAMENTAL
WEAKNESSES REMAIN, PARTICULARLY IN THE AGRICULTURAL SECTOR
AND IN THE TRADE BALANCE. WITH THESE WLNERABIIITIES IN
VIEW, OUR $304 MILLION ECONOMIC ASSISTANCE PACKAGE
PROVIDES PAKISTAN WITH SHORT-TERM BALANCE OF PAYMENTS
SUPPORT AND HELPS STIMULATE LONG-TERM ECONOMIC AND SOCIAL
DEVELOPMENT. OUR 20 ONGOING AND PLANNED DEVELOPMENT
PROJECTS ARE HEAVILY CONCENTRATED IN THE AGRICULTURE,
POPULATION. HEALTH AND ENERGY SECTORS WITH A SPECIAL
INITIATIVE IN PRIVATE SECTOR DEVELOPMENT.
-- OUR ECONOMIC ASSISTANCE PROGRAM ALSO SUPPORTS
PAKISTANI EFFORTS TO SUPPRESS OPIUM PRODUCTION AND TO
INTERDICT THE TRAFFIC IN ILLICIT NARCOTICS, MUCH OF WHICH
ORIGINATES IN PAKISTAN. MINDFUL OF ITS OBLIGATIONS TO THE
INTERNATIONAL COMMUNITY, THE PAKISTANI GOVERMENT HAS
TAKEN SIGNIFICANT STEPS TO DEAL WITH THE PROBLEM --
INCLUDING: (A) A BAN ON OPIUM PRODUCTION IN AREAS UNDER
CENTRAL GOVERMENT CONTROL, AND IN AREAS WHERE IT RECEIVES
ECONOMIC ASSISTANCE FROM THE UNITED STATES AND OTHER
DONORS; (B)YRE DESTRUCTION OF OVER 40 LABS LAST YEAR; AND
(C) THE PROMULGATION OF TOUGH NEW LAWS. WE ARE
PARTICULARLY PLEASED THAT, AS A MEASURE OF THE INCREASING
COOPERATION BETWEEN OUR TWO GOVERMENTS IN NARCOTICS
CONTROL, THE PAKISTANIS HAVE JOINED US IN FORMING A
SPECIAL NARCOTICS WORKING GROUP. WHILE MUCH MORE NEEDS TO
BE DONE, WE ARE SATISFIED THAT THE GOVERMENT OF PAKISTAN
IS FIRMLY COMMITTED TO CONTROLLING THE PRODUCTION AND
TRAFFICKING OF NARCOTICS.
-- THE ASSISTANCE PROGRAM ALSO CONTRIBUTES TO U.S.
NUCLEAR NON-PROLIFERATION GOALS. WE BELIEVE STRONGLY THAT
A PROGRAM OF SUPPORT WHICH ENHANCES PAKISTAN'S SENSE OF
SECURITY HELPS REMOVE THE PRINCIPAL UNDERLYING INCENTIVE
FOR THE ACQUISITION OF A NUCLEAR WEAPONS CAPABILITY. THE
GOVERNMENT OF PAKISTAN UNDERSTANDS OUR DEEP CONCERN OVER
THIS ISSUE. WE HAVE MADE CLEAR THAT THE RELATIONSHIP
BETWEEN OUR TWO COUNTRIES. AND THE PROGRAM OF MILITARY AND
ECONOMIC ASSISTANCE ON WHICH IT RESTS. ARE ULTIMATELY
INCONSISTENT WITH PAKISTAN'S DEVELOPMENT OF A NUCLEAR
EXPLOSIVES DEVICE. PRESIDENT ZIA HAS STATED PUBLICL`I THAT
PAKISTAN WILL NOT MANUFACTURE OR TEST A NUCLEAR EXPLOSIVE
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-- WE ARE AWARE, OF COURSE, OF CONCERNS ABOUT THE IMPACT
UPON INDO-U.S. AND INDO-PAKISTAN TIES OF OUR DEFENSE
SUPPLY RELATIONSHIP WITH PAKISTAN. THE INDIAN GOVERNMENT
HAS AT TIMES EXPRESSED APPREHENSION ABOUT THAT
RELATIONSHIP. OUR SUPPLY OF ECONOMIC AND MILITARY
ASSISTANCE TO PAKISTAN IS NOT AIMED AGAINST INDIA.
DESPITE SOME MISINFORMED PUBLIC SPECULATION, THE MODERATE
NUMBER OF WEAPONS WE ARE PROVIDING PAKISTAN WILL NOT UPSET
THE CURRENT BALANCE OF MILITARY POWER IN THE REGION, WHICH
HEAVILY FAVORS INDIA.
-- IN SUMMARY, THE ADMINISTRATION AND THE CONGRESS CAN
TAKE SATISFACTION FROM THE CONSIDERABLE PROGRESS THAT WE
HAVE SEEN IN SOUTH ASIA, AND FROM OUR OWN CONTRIBUTION TO
THAT PROGRESS. WE BELIEVE ECONOMIC DEVELOPMENT IN THE
REGION BENEFITS THE PEOPLE OF THE UNITED STATES AS MUCH AS
IT DOES THE PEOPLE OF SOUTH ASIA. THERE ARE, OF COURSE,
LIMITS TO THE CONTRIBUTION WE CAN MAKE. BUT TO THE EXTENT
POSSIBLE, WE SHOULD STAND READY TO ASSIST THIS REGION --
WHICH CONTAINS ABOUT ONE-FOURTH OF THE WORLD'S POPULATION
-- IN ITS SEARCH FOR PEACE, PROSPERITY AND STABILITY. IT
IS IMPORTANT FOR BOTH THE ADMINISTRATION AND THE CONGRESS
TO CONTINUE PROVIDING WHAT SUPPORT WE CAN TO THIS PROCESS.
5. KABUL WILL RECEIVE COPY VIA POUCH.
SHULTZ
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