Mr. Chairman and members of the Subcommittee, thank you for inviting me to testify today on the Administration's policy towards South Asia. I want to start by echoing Secretary Christopher's statement before the full Committee on February 14 that the imperative of American leadership, sustained by a bipartisan consensus, is a central lesson of this century. This is as true for South Asia as any other part of the world. I look forward to working with you and members of the committee to advance our interests in this increasingly important region.

OVERVIEW All major categories of the International Affairs Budget submission for next fiscal year have applicability in South Asia. While the region's proportion of the overall request may be small, funding for these programs is important. --South Asia has great potential as an emerging market, and the United States is aggressively promoting trade and investment there. EXIM, OPIC, and TDA play an important role in supporting our rapidly expanding business ties.

--Over 200 million South Asians live in countries with revitalized or newly installed and still fragile democratic institutions. We are working to reinforce those institutions, particularly in Bangladesh and Nepal.

--Sustainable development is a critical need for South Asia, where the promise of prosperity through economic reform and expansion is threatened by widespread poverty, rapid population growth and environmental degradation. Our budget submission would support this through USAID programs, which my colleague Margaret Carpenter will describe in more detail, and through funding for international financial institutions, which play a very important role in the region

--Our funding request for promoting peace would support our goals in several important areas. Our official initiatives and support for the efforts of NGOs to deal with the threat of proliferation in South Asia are continuing. South Asia has become a major source of a broad range of illicit narcotics and we are cooperating closely with regional governments to stop production and trafficking. Combatting crime in general as well as terrorism remain important United States activities in South Asia.

--Our humanitarian assistance programs in South Asia have a major impact, for example, assisting large refugee populations from Afghanistan, Bhutan, Sri Lanka and Burma while repatriation proceeds. We cannot predict whether our disaster assistance will be needed in the coming year, but recent history has shown that natural catastrophe is all too frequent a visitor to the region.

BACKGROUND Mr. Chairman I'd now like to put our budget request in a policy context. As elsewhere in the world, South Asian countries are in a period of complex interaction between unresolved historical tensions and the rapid transformation facing us all at the threshold of the 21st century. Adding to and accelerating this transformation, a dramatic move towards market-based economies continues throughout the region. In India all major groups, including the principal opposition parties, now favor this fundamental shift in policy. In the face of continuing political crisis in Bangladesh, the government and the opposition tell foreign businessmen their capital and their presence are welcome. The new Government of Sri Lanka, elected last fall, affirms its commitment to market-oriented economic policies and interest in foreign investment. Political turmoil and three changes of government in 1993 have not reversed the reform process in Pakistan. Yet longstanding disagreements and entrenched domestic political concerns sustain tensions between India and Pakistan, both of which are nuclear capable states. The ongoing internal conflict in Afghanistan demands our immediate attention. We know rising illicit narcotics production and consumption, rapid population growth, and increasing environmental degradation are longer-term threats not just to the region, but to the rest of the world. Human rights principles are all too often ignored throughout South Asia. And the democratic institutions that are vital to ensuring stability and accountability remain fragile and struggling in some states in the region, including Bangladesh, Nepal, and Pakistan.

UNITED STATES GOALS Our top foreign policy goals in South Asia reflect the Administration's global priorities. Reducing tensions and helping to resolve conflicts peacefully No one takes lightly the dangers inherent in relations between India and Pakistan. They fought three wars between 1948 and 1972, and are still bitter rivals. Inflexible policies and attitudes on both sides aggravate serious tensions. These tensions are enhanced by the possession of a nuclear weapons capability by both countries. The Kashmir dispute polarizes the relationship between the two nations. We are continuing efforts to persuade them to begin a serious attempt to resolve this dispute. This must involve sustained, direct discussion between senior Indian and Pakistani officials. It requires the credible engagement of all the people of Jammu and Kashmir and the cessation of human rights abuses by security forces and militants. It also requires the end of outside assistance to the militancy against the Indian Government. The United States has offered to assist with this process, if India and Pakistan so request. We have no preferred outcome. But we recognize that a resolution is long overdue and essential for the long term stability of the region as a whole.

In Afghanistan, the United States actively supports the United Nations Special Mission to Afghanistan. The Chief of the UN Mission has conducted intensive and imaginative negotiations over the past months seeking to end the bloody conflict and establish an interim council. Reluctance of factional leaders to relinquish their personal power for the overall good of Afghanistan remains the major obstacle. While the intentions of the Taliban movement are unclear, its leadership has expressed support in principle for a peaceful political process, and the UN Mission is pressing ahead to establish an interim council to take power from faction leaders. Outside assistance to individual faction leaders has only strengthened their intransigence. We have worked hard with like-minded states to stop material support and funding for the belligerent factions, and to support the UN efforts to foster a return of peace and stability to Afghanistan. In the meantime, the U.S. has assisted refugees and those internally displaced due to the devastation of Kabul in 1994.

In Sri Lanka, the government has shown courage and vision in its moves to reopen a dialogue with the Liberation Tigers of Tamil Eelam (LTTE) in the North. We strongly support the continuation of these talks. Obtaining a lasting peace will be a long and arduous struggle. However, we are convinced that the Sri Lankan government is committed to this process and is acting in a spirit of openness and good faith. We urge the LTTE likewise to act in a manner that will further the prospects for a lasting and comprehensive peace, and to engage now on the substantive political agenda.

While confronting these serious problems in the region, we are also working closely with South Asian states in dealing with conflicts around the globe. We would not have imagined even five years ago that shared approaches to conflict resolution would have put South Asian and U.S. peacekeepers side-by-side in Cambodia, in Somalia, and in Haiti. Our combined efforts range in scale from a few dozen military observers aiding the conduct of elections to brigade-sized units in the most dangerous circumstances.

Preventing further development or deployment of weapons of mass destruction and ballistic missiles Both India and Pakistan could assemble a limited number of nuclear weapons in a relatively short period of time. Both seek to acquire or develop ballistic missiles that are capable of delivering nuclear warheads. South Asia is the one area of the world where a regional conflict has the potential to escalate to a nuclear exchange, with devastating consequences in the region and beyond.

I appreciate, Mr. Chairman, your recognition of the complexity of the issues of security and proliferation in South Asia, and your decision to devote a separate hearing the day after tomorrow to a discussion of their details. Encouraging free market economies and U.S. trade and investment with them South Asia is increasingly a region of intense economic growth and development. India's economic reform program has cleared the way for new levels of trade and investment between our two countries. This trend has been reinforced by recent high-level visits on both sides. India has been designated by the Commerce Department as one of the top ten "big emerging markets," giving it a special priority in our trade promotion efforts.

You have already heard about the tremendous success of visits by Secretary Brown and a business delegation to India, and by Secretary O'Leary and other delegations to India and Pakistan. The United States is already India's biggest foreign investor and biggest trading partner. We intend to make that relationship increasingly strong and mutually beneficial. We have upgraded the official structure of our growing economic ties with India to reflect their scope and scale. The U.S.-India Commercial Alliance established by Secretary Brown will promote interaction between the private sectors of our two countries. The alliance is expected to complement the work of the sub cabinet level Indo-U.S. Economic/Commercial Subcommission, which the President agreed to revive during the visit of Prime Minister Rao to the United States last May. We plan to hold a Subcommission meeting on April 10.

The growing economy of Pakistan has also increasingly attracted U.S. business interest. However, Pressler amendment restrictions have been interpreted to prevent support from OPIC and Trade and Development Assistance for U.S. business involvement in Pakistan, which is constraining the growth of our sales and investment there.

Nepal, Sri Lanka, and Bangladesh increasingly rely on market forces in their economic policies. Our embassies have actively developed trade promotion events. In Kathmandu, the Embassy sponsored the first-ever "USA Pavilion" at the Himalayan Expo '94 last May, and the success has encouraged plans to repeat it this year. In Colombo, the Embassy worked with the American Chamber of Commerce to mount an American Trade Fair last May 31 to June 2. More than 50 companies participated.

In Bangladesh, the Embassy co-sponsored the fourth annual "U.S. Business in Bangladesh" trade show January 12-14, which attracted 42 exhibitors representing 120 U.S. firms. These events and initiatives serve to increase interest in U.S. products throughout the region.

Promoting democracy and fostering protection of universally recognized human rights

Supporting and strengthening democracy remains a fundamental aim of the Clinton Administration in South Asia as around the world. With the exception of Afghanistan and Bhutan, parliamentary governments were in place throughout South Asia in 1994. Generally free and fair elections brought new governments to power in both Sri Lanka and Nepal. We note with concern that bitter political cleavages, such as in Bangladesh and Pakistan, retard the development of democratic institutions and weaken the ability of the political system to move ahead on needed economic and social reforms. Bangladesh's new democracy has ventured into uncharted waters with the late December mass resignation of the opposition from Parliament and the continued agitation for new elections. A political impasse continues there. The United States contributes both directly and indirectly to the process of strengthening democracy in the region. U.S. assistance still includes programs to build civil institutions, such as legislatures and judiciaries, but now emphasizes non-governmental sector activities. Exchange programs provide South Asians first-hand exposure to U.S. institutions. The State Department also has encouraged a number of major U.S. NGOs to carry out privately funded projects to enhance democratic structures.

Advancing universally-recognized human rights in South Asia is a key U.S. interest. America's commitment to social justice and respect for human rights will always be among our fundamental imperatives. We will continue to work both publicly and privately with foreign government leaders, non-governmental organizations, and private citizens to advance these goals. Our recently released Country Reports on Human Rights Practices contain our detailed assessments of the human rights situation in South Asian countries. In India, public awareness of human rights problems is growing. The issue is debated in parliament and the subject of frequent comment in a free press. The courts are now more active in human rights cases. Local human rights groups have continued their important efforts to catalogue and draw attention to human rights abuses throughout India.

Government efforts to improve human rights performance include creation of a National Human Rights Commission. At the one year mark the Commission has surprised the skeptics and begun to establish itself as an effective advocate for human rights. During its first year of operation, the NHRC heard nearly 3,000 complaints of human rights abuse and investigated cases in almost every state in India. Reportedly, the Chairman of the Commission has recommended that the Terrorism and Disruptive Activities Act (TADA), which has been subject to widespread abuse, be allowed to lapse. These are positive developments, but more needs to be done. Security forces and militants continue abuses in Kashmir. In the Punjab, incidents of terrorist violence virtually ended more than a year ago; however, police often do not respect normal criminal procedures. TADA detainees declined from approximately 13,000 to roughly 5,000 by the end of the year. We will continue to raise our concerns with the Government of India. In Sri Lanka, we have seen especially dramatic progress as the Government continued to take significant steps to protect human rights. Emergency regulations were allowed to lapse in all but war-affected areas, where they were modified in accordance with United Nations Human Rights Commission recommendations. Disappearances virtually ceased in government-controlled areas in 1994. The Government created three regional commissions to investigate disappearances. We have urged the Sri Lankan government to sustain, and to build upon, its commitment to human rights. They are eager to do so. The human rights picture in Pakistan and Bangladesh is mixed. In Pakistan, in two separate cases within the past few months, appeals courts overturned the death sentence of three Christians convicted of violating the blasphemy law. However, Christians and Ahmadis continued to be charged with blasphemy, often on flimsy evidence. Treatment of prisoners and women remains a serious problem. The government established several police stations staffed by women officers for women detainees and victims in an effort to end abuses. The government has also created a human rights unit to monitor abuses. In Bangladesh, the Government allowed the Anti-Terrorism Act, which established special tribunals for a wide range of crimes, to lapse. However, the Government has not repealed the 1974 Special Powers Act, which continued to be used to detain political opponents and other citizens without formal charges. In Nepal, the transition to a new government is helping to solidify democracy. The newly elected United Marxist-Leninist government has declared its continued support for democracy and human rights. Increasing respect for human rights remains a major priority in our relations with all of the countries in the region. Curbing narcotics production and flows South Asia is a major producer of licit and illicit opium. It is increasingly important as a production and transit area for heroin, methamphetamines, and other illegal substances. Narcotics production has been growing faster in South Asia than anywhere else in the world. In South Asia, as elsewhere, drug smuggling forms a major source of income for some criminal groups and also for some of those attempting to influence democratic political institutions through corruption and intimidation. Repeating another pattern seen before, production and transit of illicit narcotics have caused local addict populations to grow swiftly. There are now over four million addicts in South Asia. There are a million and a half Pakistani heroin addicts alone. An important goal for us in the region has been to work with governments and NGOs to heighten awareness of the magnitude and social cost of this trafficking. For 1994 Pakistan received a certification for narcotics cooperation based on vital national interest. This reflected both our concern that Pakistan give even more priority to counter narcotics efforts, and out recognition that it is a key partner on all issues of concern to us in the region. In 1995 Pakistan has begun to make potentially significant progress in eradication of poppy fields, seizure of drugs, and freezing of traffickers' assets. The Government has also consolidated Pakistan's Anti-Narcotics Force under solid, military leadership. While much remains to be done, these steps represent a real basis for future progress.

India is the major supplier to the U.S. of legal opium for vital pharmaceuticals. We have been working intensively with Indian authorities to eliminate diversion of opium to the illicit market. Reforms have been implemented in the cultivation and processing system, but key questions remain unanswered on the magnitude of the diversion problem. Illicit cultivation is an increasingly serious problem which needs to be addressed. The Afghan civil war has allowed Pakistan-based heroin labs and narcotics traffickers to benefit from enormously increased poppy cultivation in Afghanistan. The lack of a functioning government in Afghanistan has limited our ability to address the problem, although we are looking for ways to assist responsible regional leaders. This year, Afghanistan was denied certification on narcotics. We are working with Indian and Pakistani narcotics authorities to improve their cooperation in interdicting the narcotics trade across their borders. We have seen encouraging signs of progress in this area, including several rounds of Indo-Pakistani bilateral discussions. Significant progress on the overall situation will require far greater emphasis on enforcement and crop eradication and substitution throughout the region.

BROAD ENGAGEMENT As we work to advance fundamental U.S. interests in South Asia, we want our engagement to reflect the totality of our interests. It must be broad and complete. One core interest cannot be pursued to the exclusion of other key objectives. Some commentators have incorrectly argued that expanding U.S. economic objectives in South Asia should or will undercut our efforts to advance other key interests, such as nonproliferation or human rights. Others mistakenly believe our relationship with one country must come at the expense of another. The record I have described above amply demonstrates this is not the case. Our bilateral relationships need to be based on a realistic assessment of each other's interests, recognizing that it is normal and healthy for sovereign states to differ in some areas while agreeing in others. Expanding mutual interests will give us the incentives to overcome differences and build on areas of convergence. Expanding relationships and deeper engagement with the countries of South Asia are now a reality.

The end of the Cold War and economic opportunity have raised the profile of relations with this important region. New structures to ensure closer engagement with the region are being put in place. For example, in January Secretary Perry signed an Agreed Minute outlining plans for Indo-U.S. security cooperation. Likewise, the U.S.-Pakistan Consultative Group on security issues was revitalized during Secretary Perry's trip. The revived Indo-U.S. Economic/Commercial Subcommission and a new private sector Indo-U.S. Commercial Alliance will contribute to better understanding of economic and commercial issues. A reflection of this engagement is the wide range of senior visitors we've exchanged with South Asian states in the past year. Three cabinet secretaries visited the region. The new partnership launched by Prime Minister Rao and President Clinton just nine months ago is already paying major dividends for the United States and India. The Prime Minister of Pakistan will visit the United States in April. Her meeting with the President will help reinvigorate our relationship. Our hope and expectation is that the effort we put into closer relations will improve our prospects for finding ways to ease deep seated tensions and resolve complex disputes that threaten our broader interests.

CONCLUSION Mr. Chairman, thank you for this opportunity to discuss in brief the principal issues of concern to the United States in South Asia and our efforts to deal with them and how these are supported by our FY 1996 budget request. I would be happy to take questions from you and members of the committee, to allow us to explore these and other issues at greater length. (###)

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