NATIONALSECURITYSTRATEGYOF THEUNITED STATES

THE WHITE HOUSEMARCH 1990

Contents

PREFACE...v

I. THE FOUNDATIONS OFNATIONAL STRATEGY:GOALS AND INTERESTS...1

Enduring Elements of Our National Strategy... 1

Our Interests and Objectives in the 1990s ... 2

II. TRENDS IN THE WORLD TODAY:OPPORTUNITIES ANDUNCERTAINTIES...5

The Crisis in Communism ... 5

The Industrial Democracies... 5

The Global Economy... 6

Third World Conflicts... 6

Trends in Weaponry... 6

Illicit Drugs...7

Refugees... 7

Issues for the Future...7

III. REGIONAL CHALLENGES ANDRESPONSES...9

The Soviet Union ... 9

Western Europe... 10

Eastern Europe... 11

The Western Hemisphere ... 12

East Asia and the Pacific... 12

The Middle East and South Asia... 13

Africa... 13

IV. RELATING MEANS TO ENDS:OUR POLITICAL AGENDA...15

Alliance Relationships... 15

Arms Control ... 15

Strategic Arms Reduction Talks.. 16

Defense and Space... 16Conventional Armed Forces in Europe... 16

Chemical Weapons... 16

Open Skies... 17Confidence- and Security-Building Measures... 17

Nuclear Testing... 17

Proliferation... 17

Naval Forces... 17

The Contest of Ideas and the Nurturing of

Democracy... 18

Economic and Security Assistance...18

Military Openness... 19

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V. RELATING MEANS TO ENDS:OUR ECONOMIC AGENDA...21

Global Imbalances...21

Debt...21

Trade...21

Technology ...22

Energy...22

VI. RELATING MEANS TO ENDS:OUR DEFENSE AGENDA...23

Overall Priorities ... 23

Deterring Nuclear War...24

Strategic Offensive Forces...24Strategic Defenses... 24

Theater Nuclear Forces... 25Command, Control and Communications... 25

Deterring Conventional War...25

Forward Defense through Forward Presence...25Sharing the Responsibilities of Collective

Defense... 26

Forces for the Third World...26The Mobilization Base... 27

Chemical Warfare...27

Space...27

Low-Intensity Conflict...28

Drug Trafficking... 28

Intelligence Programs...29

Planning for the Future...29

VII. A PUBLIC TRUST...31

The Defense Management Review ... 31

Reducing Overhead Costs While MaintainingMilitary Strength... 31

Enhancing Program Performance... 31Reinvigorating Planning and Budgeting... 31Reducing Micromanagement... 31Strengthening the Defense Industrial Base... 32Improving the Observance of Ethical

Standards... 32

Congress and the American People...32

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Preface

In the aftermath of World War II, the United States took on an unaccustomed burden—the responsibility to lead andhelp defend the world's free nations. This country took bold and unprecedented steps to aid the recovery of both alliesand defeated foes, to provide a shield behind which democracy could flourish, and to extend its hand in aid of globaleconomic progress. The challenge of an aggressive, repressive Soviet Union was contained by a system of alliances,which we helped create, and led.

In this historic endeavor, America has succeeded—brilliantly. But it was inevitable that new conditions created by thissuccess would eventually call for a new kind of American leadership. It was inevitable that our overwhelmingeconomic predominance after the war would be reduced as our friends, with our help, grew stronger. And perhaps itwas inevitable that the Soviet Union, met by a strong coalition of free nations determined to resist its encroachments,would have to turn inward to face the internal contradictions of its own deeply flawed system—as our policy of contain-ment always envisioned.

Today, after four decades, the international landscape is marked by change that is breath-taking in its character,dimension, and pace. The familiar moorings of postwar security policy are being loosened by developments that werebarely imagined years or even months ago. Yet, our goals and interests remain constant. And, as we look toward—andhope for—a better tomorrow, we must also look to those elements of our past policy that have played a major role inbringing us to where we are today.

It is our steadfastness over four decades that has brought us to this moment of historic opportunity.

We will not let that opportunity pass, nor will we shrink from the challenges created by new conditions. Our responsewill require strategic vision—a clear perception of our goals, our interests, and the means available to achieve andprotect them. The essence of strategy is determining priorities. We will make the hard choices.

This Report outlines the direction we will take to protect the legacy of the postwar era while enabling the UnitedStates to help shape a new era, one that moves beyond containment and that will take us into the next century.

I invite the American people and Congress to join us in a dialogue that will inform and enlighten the difficultdecisions we will have to make in the months and years ahead.

March 1990

I. The Foundations of National Strategy:Goals and Interests

Enduring Elements of OurNational Strategy

Throughout our history, our national security strategyhas pursued broad, consistent goals. We have alwayssought to protect the safety of the nation, its citizens,and its way of life. We have also worked to advancethe welfare of our people by contributing to aninternational environment of peace, freedom, andprogress within which our democracy—and other freenations—can flourish.

These broad goals have guided American foreign anddefense policy throughout the life of the Republic.They were as much the driving force behind PresidentJefferson's decision to send the American Navy againstthe Pasha of Tripoli in 1804 as they were whenPresident Reagan directed American naval and airforces to return to that area in 1986. They animatedWoodrow Wilson's Fourteen Points, and my initiativesin support of democracy in Eastern Europe this pastyear.

In addition, this Nation has always felt a powerfulsense of community with those other nations thatshared our values. We have always believed that, al-though the flourishing of democracy in America didnot require a completely democratic world, it couldnot long survive in one largely totalitarian. It is acommon moral vision that holds together ouralliances in Europe, East Asia, and other parts of theworld—a vision shaped by the Magna Carta, ourDeclaration of Independence and Bill of Rights, theDeclaration of the Rights of Man, the United NationsCharter, the Universal Declaration of Human Rights,and the Helsinki Final Act. The Americancommitment to an alliance strategy, therefore, has a

more enduring basis than simply the perception of acommon enemy.

Another enduring element of our strategy has been acommitment to a free and open internationaleconomic system. America has championed liberaltrade to enhance world prosperity as well as to reducepolitical friction among nations. We must never forgetthe vicious cycle of protectionism that helped deepenthe Great Depression and indirectly fostered the Sec-ond World War. Like so many of its predecessors, myAdministration is committed to working with allnations to promote the prosperity of the free marketsystem and, to reduce barriers that unfairly inhibitinternational commerce. In particular, it would be atragedy of immense proportions if trade disputesweakened political ties that forty years of militarythreat could not undo.

Our location on the globe has also defined aconsistent element of our security strategy. We havebeen blessed with large oceans east and west andfriendly neighbors north and south. But many of ourclosest friends and allies and important economic andpolitical interests are great distances from the UnitedStates. Therefore, in the modern era we havemaintained the ability to project American power tohelp preserve the international equilibrium—globallyand regionally—in support of peace and security.

In particular, for most of this century, the United Stateshas deemed it a vital interest to prevent any hostilepower or group of powers from dominating the Eura-sian land mass. This interest remains. In the periodsince World War II, it has required a commitment toforward defense and forward military deployments,and a recognition of the lesson of the 1930s—thatpeace and security come only through vigilance and

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preparedness. This strategy was described as a strategyof containment of Soviet expansionism. Its purposewas not the division of the world into American andSoviet spheres of influence, but, on the contrary,fostering the reemergence of independent centers ofpower in Europe and Asia. Behind this shield, ourfriends built up their strength and created institutionsof unity (like the European Community), and oursystem demonstrated its political and economicvitality. It was our conviction that in these conditions,a steadfast policy of resistance to encroachmentswould, over time, in George Kennan's famous words,lead to "the breakup or the gradual mellowing ofSoviet power."

This we now see. The very success of containmenthas created new conditions and new opportunities fora new generation of Americans. We welcome thischange. Yet our basic values—and our basicgeopolitical necessities—remain. As the world's mostpowerful democracy, we are inescapably the leader,the connecting link in a global alliance ofdemocracies. The pivotal responsibility for ensuringthe stability of the international balance remains ours,even as its requirements change in a new era. As theworld enters a period of new hope for peace, itwould be foolhardy to neglect the basic conditions ofsecurity that are bringing it about.

Our Interests and Objectivesin the 1990s

Our broad national interests and objectives areenduring. They can be summed up as follows:

The survival of the United States as a free andindependent nation, with its fundamental valuesintact and its institutions and people secure.

The United States seeks, whenever possible in concertwith its allies, to:

• deter any aggression that could threaten its securityand, should deterrence fail, repel or defeat militaryattack and end conflict on terms favorable to theUnited States, its interests and allies;

• deal effectively with threats to the security of theUnited States and its citizens and interests short of

armed conflict, including the threat of internationalterrorism;

• improve strategic stability by pursuing equitableand verifiable arms, control agreements,modernizing our strategic deterrent, developingtechnologies for strategic defense, andstrengthening our conventional capabilities;

• encourage greater recognition of the principles ofhuman rights, market incentives, and free electionsin the Soviet Union while fostering restraint inSoviet military spending and discouraging Sovietadventurism;

• prevent the transfer of militarily criticaltechnologies and resources to hostile countries orgroups, especially the spread of weapons of massdestruction and associated high-technology meansof delivery; and

• reduce the flow of illegal drugs into the UnitedStates.

A healthy and growing U.S. economy to ensureopportunity for individual prosperity and a resourcebase for national endeavors at home and abroad.

National security and economic strength areindivisible. We seek to:

• promote a strong, prosperous, and competitive U.S.economy;

• ensure access to foreign markets, energy, mineralresources, the oceans, and space; and

• promote an open and expanding internationaleconomic system with minimal distortions to tradeand investment, stable currencies, and broadlyagreed and respected rules for managing andresolving economic disputes.

A stable and secure world, fostering politicalfreedom, human rights, and democratic institutions.

We seek to:

• promote the rule of law and diplomatic solutions toregional conflicts;

• maintain stable regional military balances to deterthose powers that might seek regional dominance;

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• support aid, trade, and investment policies thatpromote economic development and social andpolitical progress;

• promote the growth of free, democratic politicalinstitutions, as the surest guarantee of both humanrights and economic and social progress; and

• aid in combatting threats to democratic institutionsfrom aggression, coercion, insurgencies, subversion,terrorism, and illicit drug trafficking.

Healthy, cooperative and politically vigorousrelations with allies and friendly nations.

To build and nurture such relationships, we seek to:

• strengthen and enlarge the commonwealth of freenations that share a commitment to democracy andindividual rights;

• establish a more balanced partnership with ourallies and a greater sharing of global leadership andresponsibilities;

• support greater economic, political, and defenseintegration in Western Europe and a closerrelationship between the United States and theEuropean Community;

• work with our allies in the North Atlantic Allianceand fully utilize the processes of the Conference onSecurity and Cooperation in Europe to bring aboutreconciliation, security, and democracy in a Europewhole and free; and

• make international institutions more effective inpromoting peace, world order, and political,economic and social progress.

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II. Trends in the World Today:Opportunities and Uncertainties

Broadly and properly understood, our nationalsecurity strategy is shaped by the totality of thedomestic and international environment—anenvironment that is today dramatically changing.

The Crisis in Communism

Future historians may well conclude that the mostnotable strategic development of the present period isthe systemic crisis engulfing the Communist world.This crisis takes many forms and has many causes:

• After the Vietnam trauma of the 1970s, the West'spolitical recovery in the 1980s—including itsrearmament and such successes as the INFdeployment in Europe—undermined the Sovietleaders' assumptions that the global "correlation offorces" was shifting in their favor.

• While the industrial democracies surge headlonginto a post-industrial era of supercomputers,microelectronics, and telecommunications,Communist states have been mired in stagnation,paralyzed by outmoded statist dogmas that stifleinnovation and productivity. Poor economicperformance, especially in contrast with the West,has discredited a system that prided itself on itsmastery of economic forces. And the newInformation Revolution has posed for totalitarianregimes the particular challenge that clinging to oldpolicies of restricting information would lead topermanent technological paralysis.

• A new Soviet leadership in the mid-1980srecognized that its system was in crisis andundertook an ambitious program of reform. Abroad,

this leadership sought a calmer internationalenvironment in order to concentrate on its internalcrisis. This has led, for example, to a Soviet troopwithdrawal from Afghanistan and Soviet diplomaticinterest in compromise solutions to regionalconflicts, as Moscow sought gradually (andselectively) to scale back costly overseascommitments. These commitments had been madecostly by indigenous resistance—supported byreinvigorated Western policies of engagement.

• In 1989, in parallel with the negotiation onConventional Armed Forces in Europe (CFE), theSoviets began unilaterally reducing their heavymilitary burden and their presence in EasternEurope, while proclaiming (and thus fardemonstrating) a more tolerant policy toward theirEast bloc neighbors' internal affairs. We have seenpowerful pent-up democratic forces unleashed allacross Eastern Europe that have overturnedCommunist dictatorships and are reversing thepattern of Soviet dominance.

We are facing a strategic transformation born of thesuccess of our postwar policies. Yet, such fundamentalpolitical change will likely be turbulent. There may besetbacks and new sources of instability. Happyendings are never guaranteed. We can only bei mpressed by the uncertainties that remain as the So-viet Union and the states of Eastern . Europe, each inits own way, advance into historically unchartedwaters.

The Industrial DemocraciesThe industrial democracies also face strategicchallenges, some of them serious, but they too are

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largely the Products of our success. These include ashifting balance of economic power and the dangerthat trade disputes in an era of economic change andadjustment could strain political and security ties.Such strains would be especially damaging at amoment when we need to maintain strength andunity to take best advantage of new opportunities inEast-West relations which that strength and unity havehelped bring about.

The growing strength and self-reliance of our allies inWestern Europe and East Asia have already resulted ina greater sharing of leadership responsibility—as theEuropean Community (EC) has shown in policiestowards Eastern Europe and as Japan has shown ininternational economic assistance.

One of the dramatic strategic developments of the1990s will be the new role of Japan and Germany assuccessful democracies and economic and politicalleaders. U.S. policy has long encouraged such anevolution. It will provide powerful new reasons tomaintain the partnerships—the Atlantic Alliance, theEC, and the U.S.-Japan security alliance—that havefostered reconciliation, reassurance, democracy, andsecurity in Europe and Asia in the postwar period.

The Global Economy

In a new era of technological innovation and globalmarkets, the world economy will be more competitivethan ever before. The phenomenal growth in East Asiawill likely continue, and by early in the next centurythe combined output of Japan, the Republic of Korea,China, and Taiwan may exceed our own. WesternEurope—as it progressively removes barriers to thefree flow of labor, capital, and goods within the EC—will become an even stronger economic power. TheSoviet Union, even with a measure of success forperestroika, will likely slip further behind the UnitedStates, Japan, and Western Europe in output. In manyother areas of the world, economic expansion will notkeep pace with population growth or the debtburden, further squeezing resources and fomentingunrest and instability. All these developments carrysignificant security implications as well as theirobvious economic and social import.

The diffusion of economic power that will almostcertainly continue is, in part, a reflection of a wise

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and successful U.S. policy aimed at promotingworldwide economic growth. Provided that the worldeconomic system remains an open and expandingone, we ourselves will benefit from the growth ofothers. But American leadership will remain pivotal. Ahealthy American economy is essential to sustain thatleadership role, as well as to foster global economicdevelopment and ease dangerous pressures forunilateralism, regionalism, and protectionism.

Third World Conflicts

In a new era, some Third World conflicts may nolonger take place against the backdrop of superpowercompetition. Yet many will, for a variety of reasons,continue to threaten U.S. interests. The erosion ofU.S.-Soviet bipolarity could permit and in some waysencourage the growth of these challenges.

Highly destructive regional wars will remain a danger,made even greater by the expansion of the armedforces of regional powers and the proliferation ofadvanced weaponry. And it will be increasingly diffi-cult to slow the spread of chemical, biological, andnuclear weapons—along with long-range deliverysystems. Instability in areas troubled by poverty,injustice, racial, religious or ethnic tension willcontinue, whether or not exploited by the Soviets.Religious fanaticism may continue to endangerAmerican lives, or countries friendly to us in theMiddle East, on whose energy resources the freeworld continues to depend. The scourge of terrorism,and of states who sponsor it, likewise remains athreat.

Trends in Weaponry

Modern battlefields are characterized by anunprecedented lethality. The greater precision, range,and destructiveness of conventional weapons nowextend war across a wider geographic area, and makeit much more rapid and intense. As global weaponsproduction becomes more diffused, these weapons areincreasingly available to smaller powers, narrowingthe military gap between ourselves and regional statesand making some Third World battlefields in manyways as demanding as those we would expect inCentral Europe.

The United States has a competitive edge in mosttechnologies relevant to advanced weaponry, but wemust continue to translate this advantage into fieldedweapon systems supported by appropriate tacticaldoctrine and operational art. New conditions requirecontinuing innovation as we move to incorporatestealth technology, extremely accurate weapons,improved means of locating targets, and newoperational concepts into our combat forces.

Illicit Drugs

Traffic in illicit drugs imposes exceptional costs on theeconomy of the United States, undermines ournational values and institutions, and is directlyresponsible for the destruction and loss of manyAmerican lives. The international traffic in illicit drugsconstitutes a major threat to our national security andto the security of other nations.

We will increase our efforts to reduce both the supplyof and the demand for illicit drugs. Internationally, wewill attack the production of such drugs, and themultinational criminal organizations which enableillicit drugs to be processed, transported, anddistributed. A cornerstone of our international drugcontrol strategy is to work with and motivate othercountries to help defeat the illicit drug trade and re-duce the demand for drugs.

As we intensify our programs, we will increase ouractions aimed at controlling the flow of drugs acrossour borders. In this area, as in others, we will makeincreased use of the resources and expertise providedby the Department of Defense. We recognize thatmilitary involvement in this mission has costs, andthat in a world of finite resources increased effort hereis at the expense of other important defense activities.We accept these trade-offs, and we will do the job.

RefugeesThe dislocations of a turbulent world—famine,persecution, war, and tyranny—have swelled the waveof refugees across the planet to a total that nowexceeds 14 million. Many have literally been forcedfrom their homes by the heavy hand of tyranny.

Thousands of others have fled their homelands toescape oppression. Millions from Afghanistan,Ethiopia, and Mozambique have moved simply to stayalive. Others subsist in camps, from one generation tothe next, awaiting solutions to seemingly intractablepolitical and ethnic disputes. Beyond the deeppersonal tragedies these figures represent, such a vastrefugee population taxes the world community'sresources, denies to that community the manycontributions these peoples could make in morebenign circumstances, and fuels the hatreds that willignite future conflicts.

The United States has a proud tradition, as long asour history, of welcoming refugees to our shores. Wealso take pride in our work with internationalagencies to provide assistance and relief for refugees,even as we strive politically to resolve the conflictsthat provoked their flight. We have encouraged therestructuring of relief organizations to make themmore effective and efficient—to make certain thatscarce resources reach those who need them. Thisyear, through our budget and the generosity of privategroups, we will take in more refugees than last year.We will maintain a compassionate and generousprogram of resettlement in the United States andassistance for refugees worldwide.

Issues for the FutureThe security environment we face in the 1990s ismore hopeful, but in many ways also more uncertainthan at any time in the recent past. Some of thequestions before us are:

• How can we ensure continued internationalstability as U.S.-Soviet bipolarity gives way toglobal interdependence and multipolarity? Whatwill be America's continuing leadership role—andthe new roles of leadership assumed by our allies?

• What are the risks that today's positive strategictrends will be reversed, and how do we take dueaccount of them in our long-term planning? Howmuch risk can we prudently accept in an era ofstrategic change, fiscal austerity, and greatuncertainty?

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• While.maintaining a balance of power with theSoviet Union as an inescapable American priority,how do we adapt our forces for the continuingchallenge of contingencies elsewhere in the world?

• How do we maintain the cohesion among alliesand friends that remains indispensable to commonsecurity and prosperity, as the perceived threat of acommon danger weakens?

• What will be the structure of the new Europe—politically, economically, and militarily—as the

Eastern countries move toward democracy andGermany moves toward unification?

• If military factors loom less large in a world of amore secure East-West balance, how shall wemarshall the other instruments of policy to promoteour interests and objectives?

In shaping a national security strategy for the 1990s,we will need answers to these and other questions.Our preliminary assessments are reflected in thesections that follow.

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111. Regional Challenges and Responses

Although we are a global power, our interests are notequally engaged or threatened everywhere. In the faceof competing demands, budgetary stringency, and ani mproving East-West climate, we must review ourpriorities. Where our capabilities fall short of needs,we must assess the risks and employ the full panoplyof our policy instruments to minimize them.

Our relationship with the Soviet Union retains a stra-tegic priority because that country remains the onlyother military superpower. Even as tensions ease andmilitary forces are reduced on both sides, maintainingthe global strategic balance is inescapably anAmerican concern; there is no substitute for ourefforts.

Yet, the extraordinary changes taking place, if theirpromise is fulfilled, will permit important changes inour defense posture—and a greater possibility ofviewing other regions in their own right, independentof the East-West context.

The Soviet Union

Our goal is to move beyond containment, to seek theintegration of the Soviet Union into the internationalsystem as a constructive partner. For the first time inthe postwar period, this goal appears within reach.

The Soviet Union has taken major steps towardrapprochement with the international system, after sev-enty years of seeking to undermine it; it hasrepudiated its doctrines of class warfare and militarysuperiority and criticized major tenets of its ownpostwar policy. It has begun to move towarddemocracy. All this we can only applaud.

The United States will seek to engage the USSR in arelationship that is increasingly cooperative. Moscowwill find us a willing partner in creating theconditions that will permit the Soviet Union to join,and be welcome in, a peaceful, free, and prosperousinternational community. We will expand contacts formutual benefit, to promote the free flow of ideas anddemocratic values in the Soviet Union, and to lay afirmer foundation for a deeper relationship over thelong term. Our Open Lands proposal, for example,would abolish the "closed zones" that unnecessarilyi mpede contacts by diplomats, businessmen, tourists,students, and journalists. To support Soviet economicreform, I have proposed immediate negotiations on aU.S.-Soviet trade agreement so that—pending action bythe Supreme Soviet to codify emigration reform—wecould grant Most Favored Nation status to the SovietUnion at the June 1990 Summit. We have offered tosupport observer status for the Soviet Union in thestructures created by the General Agreement on Tariffsand Trade (GATT) after the Uruguay Round ofMultilateral Trade Negotiations is completed, and Ipersonally urged Chairman Gorbachev to use theintervening time to move more rapidly towards marketpractices in the Soviet economy. We are alsoexpanding technical economic cooperation and havebegun discussions on a bilateral investment treaty.

We strongly support today's dramatic process ofpolitical and economic reform, and have a significantstake in its success. Yet, U.S. policy does not andcannot depend on a particular leader or set of leadersin the USSR. We look for fundamental alterations inSoviet institutions and practices that can only bereversed at great economic and political costs. In thepolitical sphere, democracy is the best assurance ofirreversible change. In the military sphere, withagreements in place—and weapons destroyed,

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production lines converted, and forces demobilized—any future Soviet leadership would find it costly, time-consuming, and difficult to renew the pursuit ofmilitary supremacy and impossible to attempt withoutproviding ample strategic warning. These must be ourstandards.

Even if the U.S.-Soviet relationship remainscompetitive, it can be made less militarized and farsafer. We will seek effectively verifiable arms controlagreements with the Soviet Union and others as anintegral component of our security strategy.

But whatever course the Soviets take over the nextdecade, the Soviet Union will remain a formidablemilitary power. The United States must continue tomaintain modern defenses that strengthen deterrenceand enhance security. We cannot ignore continuingSoviet efforts to modernize qualitatively even as theycut back quantitatively. As Chairman Gorbachevdeclared last September 21st, "While reducingexpenditure for [defense] purposes, we are payingattention to the qualitative rearmament of the Army,and in this way we are not permitting the overalllevel of our defense capability to be weakened in anydegree." Our response thus represents prudentcaution, but the Soviet leadership and people shouldrealize that it is a caution based on uncertainty, noton hostility.

Restructuring the Soviet Union's relationship to theinternational community is as ambitious a task ascontainment was for its time. Responsibility forcreating the conditions for it lies first and foremostwith the Soviet Union itself. But the United States isdetermined, together with our allies, to challenge andtest Soviet intentions and—while maintaining ourguard—to work to put Soviet relations with the Weston a firmer, more constructive course than had everbeen thought possible in the postwar era.

Western Europe

The nations of the Atlantic Community, defined bytheir common values, are the founding members of alarger commonwealth of free nations—those states thatshare a commitment to freedom and individual rights.Ours is an alliance rooted in a shared history and

heritage. Even if the military confrontation in Europediminishes dramatically—as is our goal—the naturalpartnership of democratic allies will endure, groundedin its moral and political values.

The continued strength of the Alliance and ourleadership within it remain essential to peace. TheSoviet Union, even if its forces were pulled backentirely within its territory, would remain by virtue ofgeography a major military factor in Central Europe.Security and stability in Europe will therefore continueto depend on a substantial American presence,political and military. As I have repeatedly pledged,the United States will maintain significant militaryforces in Europe as long as our allies desire our pres-ence as part of a common security effort. Our nuclearpower remains the ultimate deterrent of aggression,even at lower force levels.

In Europe's emerging new political environment,moreover, the Atlantic Alliance remains a naturalassociation of free nations and the natural frameworkfor harmonizing Western policies on both securityand diplomacy. It embodies the continuing Americancommitment to Europe; it also sustains the overallstructure of stability that can assure the success ofthe democratic evolution of Central and EasternEurope.

Yet, within this framework, the "European pillar" ofthe Atlantic world is being strengthened before oureyes—another dramatic development of this period.The United States categorically supports greater West-ern European economic and political integration, as afulfillment of Europe's identity and destiny and as anecessary step toward a more balanced sharing ofleadership and responsibility within the broaderAtlantic Community. European unity and Alliancepartnership do not conflict; they reinforce each other.We support the European Community's efforts tocreate a single unified market by 1992. A strongEuropean Community will ensure more efficient useof European resources for common efforts, and willalso be a strategic magnet to the nations of EasternEurope. We also support increased Western Europeanmilitary cooperation and coordination, within theoverall framework of the Atlantic Alliance, includingboth bilateral efforts and those in the WesternEuropean Union. We strongly support theindependent British and French nuclear deterrentforces and their continued modernization.

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The unification of Germany is coming about—bypeaceful means, on the basis of democracy, and inthe framework of the Western relationships that havenurtured peace and freedom for four decades. This isa triumph for the West. We expect a unified Germanyto remain a member of both the North AtlanticAlliance and the European Community, as all of usseek to foster the conditions for wider reconciliationin Europe.

As the European-American relationship shifts, frictionscan arise. Statesmanship will be needed to ease them.The challenges that the Western democracies face inthis environment, however, are challenges to wisepolicy, not to the nature of their system. Assuming thedemocracies maintain discipline in their diplomatic,defense, and economic policies, we face anextraordinary opportunity to shape events inaccordance with our values and our vision of thefuture.

Eastern EuropeThe United States and its allies are dedicated toovercoming the division of Europe. All the countriesof Eastern Europe are entitled to become part of theworldwide commonwealth of free nations as, one byone, they reclaim the European cultural and politicaltradition that is their heritage. Overcoming thisdivision depends on their achievement of self-determination and independence. We will accept noarrangements with Moscow that would limit theserights, and we expect the Soviet Union to continue torepudiate in deeds as well as in words all right andpretext to intervene in the affairs of East Europeanstates. A free and prosperous Eastern Europe is not athreat to legitimate Soviet security interests, and everyday it becomes easier to envision the time when East-ern and Western states can freely associate in thesame social and economic organizations. The ColdWar began with the division of Europe. It can trulyend only when Europe is whole again.

We share with our allies a vision of Europe wholeand free:

• We believe democratic institutions and values willbe the core of the new Europe, as it is theseinstitutions and values that today stand vindicated.

• Even as fundamental political changes are stillevolving, we place high priority on moving rapidlyto a level of forces lower and more stabilizing, withgreater openness for military activities.

The United States intends to play a role in fosteringEastern Europe's economic development, supportingits democratic institutions, and ensuring the overallstructure of stability. It has become dramatically clearthat the American role is welcomed by the peoples ofEastern Europe, who—in the new Europe that isemerging—see our presence as reassuring. Naturally,our relations with East European countries will beaffected by their policies on matters of concern to us,such as espionage, illicit technology transfer,terrorism, and subversion in the Third World.

In November—as an investment in our own securityas well as in the freedom and well-being of thepeoples of Eastern Europe—I signed into lawlegislation authorizing $938 million in assistanceto support democracy in Poland and Hungary. In myFY 1991 budget I have proposed an additional$300 million as we begin to expand our program toencompass other new East European democracies.In addition, we have offered our best adviceand expertise in support of economic reform,trade liberalization, labor market reforms,private sector development, and environmentalprotection. This marks a major and positivestep in bipartisan foreign policy and underscoresthe strength of the American commitment to assistEastern Europe's historic march towardfreedom.

We will also look to the Conference on Security andCooperation in Europe (CSCE) to play a greater role,since the CSCE stands for the freedom of people tochoose their destiny under a rule of law with rulerswho are democratically accountable. We suggestedlast year that we expand the CSCE human rightsbasket to include standards for democraticpluralism and free elections, and that we breathe newlife into the economic dimension of CSCE byfocusing on the practical problems of the transitionfrom stagnant planned economies to free andcompetitive markets. The time is ripe for suchsteps.

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The Western Hemisphere

The Western Hemisphere has within reach the greatgoal of becoming history's first entirely democratichemisphere. The dramatic victory of the Nicaraguanopposition in the February 25th elections has given asignificant boost to the underlying trend towarddemocracy evident in the region over the past severalyears. The United States has long considered that itsown security is inextricably linked to the hemisphere'scollective security, social peace, and economicprogress. The resurgence of democracy supports theseobjectives, and strengthens our natural unity just asanother traditional stimulus to solidarity—fear of anextra-hemispheric threat—is receding. In a new era,our hemispheric policy seeks a new spirit of maturepartnership.

We must continue, however, to counter securitythreats. Improvement in our relations with Cubadepends upon political liberalization there and an endto its subversion of other governments and theundermining of the peace process in the region. InNicaragua, our goal is to assist the new governmentof Violeta Chamorro in its efforts to nurturedemocratic institutions, rebuild the economy, andscale back the Nicaraguan military. We support theSalvadoran government's military and political effortsto defeat the Communist insurgency.

Central America remains a disruptive factor in theU.S.-Soviet relationship. We hold the Soviet Unionaccountable for the behavior of its clients, and believethat Soviet cooperation in fostering democracy in theregion is an important test of the new thinking inSoviet policy.

We will find new ways to cooperate with our twoclosest neighbors, Canada and Mexico. We stronglysupport the new democratic government in Panama,which is also the best long-term guarantee of thesecurity and efficient operation of the Panama Canal.We will continue to seek a transition to democracy inHaiti, promoting international efforts in support of freeelections. The return to democracy in most of LatinAmerica will put new emphasis on our efforts tosupport professional, apolitical militaries. We will alsoconfront the challenge to democracy posed by thedrug trade and debt problems.

East Asia and the Pacific

Our network of alliances and our forces deployed inthe region have ensured the stability that has madethis area's striking progress possible.

In addition to our own deterrent strength, security inthe region has rested since the 1970s on anunprecedented structure of harmonious relationsamong the region's key states. Our alliance with Japanremains a centerpiece of our security policy and animportant anchor of stability. Japan's importance isnow global. Our relationship is one of the mostimportant bilateral relationships in the world and it isin our strategic interest to preserve it.

The relationship between the United States andChina, restored in the early 1970s after so many yearsof estrangement, has also contributed crucially toregional stability and the global balance of power.The United States strongly deplored the repression inChina last June and we have imposed sanctions todemonstrate our displeasure. At the same time, wehave sought to avoid a total cutoff of China's ties tothe outside world. Those ties not only have strategicimportance, both globally and regionally; they arecrucial to China's prospects for regaining the path ofeconomic reform and political liberalization. China'sangry isolation would harm all of these prospects.

The U.S. security commitment to the Republic ofKorea remains firm; we seek a reduction in tensionson the Korean peninsula and fully endorse Seoul'sefforts to open a fruitful South-North dialogue. Ourstrong and healthy ties with our ally Australiacontribute directly to regional and global stability. TheAssociation of Southeast Asian Nations (ASEAN)continues to play a major role in the region's securityand prosperity.

In Cambodia, the United States seeks a comprehen-sive settlement, one which will bring the Cambodianpeople true peace and a government they have freelychosen.

As we have amply demonstrated, we support thePhilippines' democratic institutions and its efforts toachieve prosperity, social progress, and internalsecurity. We will negotiate with the Philippines ingood faith on the status of our military facilities there.

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These facilities support a continued and neededAmerican forward presence that benefits us, thePhilippines, regional security, and global stability.

The Middle East andSouth AsiaThe free world's reliance on energy supplies from thispivotal region and our strong ties with many of theregion's countries continue to constitute importantinterests of the United States.

Soviet policies in the region show signs ofmoderating, but remain contradictory. The supply ofadvanced arms to Libya and Syria continues (as doesthe cultivation of Iran), though Soviet diplomacy hasmoved in other respects in more constructivedirections.

The Middle East is a vivid example, however, of aregion in which, even as East-West tensions diminish,American strategic concerns remain. Threats to ourinterests—including the security of Israel andmoderate Arab states as well as the free flow of oil—come from a variety of sources. In the 1980s, ourmilitary engagements—in Lebanon in 1983-84, Libyain 1986, and the Persian Gulf in 1987-88—were inresponse to threats to U.S. interests that could not belaid at the Kremlin's door. The necessity to defend ourinterests will continue.

Therefore, we will maintain a naval presence in theeastern Mediterranean Sea, the Persian Gulf, and theIndian Ocean. We will conduct periodic exercisesand pursue improved host-nation support andprepositioning of equipment throughout the region. Inaddition, we will discourage destabilizing arms salesto regional states, especially where there is thepotential for upsetting local balances of power oraccelerating wasteful arms races. We are especiallycommitted to working to curb the proliferation of nu-clear, chemical, and other weapons of mass destruc-tion, the means to produce them, and associated long-range delivery systems. We will confront and buildinternational pressure against those states that sponsorterrorism and subversion. And we will continue topromote a peace process designed to satisfy legitimatePalestinian political rights in a manner consonant withour enduring commitment to Israel's security.

In South Asia, Pakistan and India are both friends ofthe United States. We applaud the return ofdemocracy to Pakistan and the trends of economicliberalization in both countries. We will seek tomaintain our special relationship with our traditionalally Pakistan, steadily improve our relations withIndia, and encourage Indo-Pakistani rapprochementand a halt to nuclear proliferation. While wewelcome the withdrawal of Soviet military forces fromAfghanistan, the massive and continuing Soviet armssupply to the illegitimate regime in Kabul reinforcesthe need for continued U.S. support to theMujahiddin in their quest for self-determination forthe Afghan people. We remain firmly committed to acomprehensive political settlement as the best meansof achieving Afghan self-determination and regionalsecurity.

AfricaInstitution-building, economic development, andregional peace are the goals of our policy in Africa.The global trends of democracy must come to Africatoo. All these goals must be achieved if Africa is toplay its rightful role as an important factor in theinternational system. Africa is a major contributor tothe world supply of raw materials and minerals and aregion of enormous human potential.

In the strategic dimension, the United States haspressed hard throughout the 1980s for the liquidationof all the Soviet/Cuban military interventions in Africaleft over from the 1970s. The New York Accords ofDecember, 1988, were the culmination of an eight-year U.S. effort for peace in Angola, and independ-ence for Namibia. As a result, Cuban forces aredeparting Angola, and Namibia will becomeindependent on March 21st. In the Horn of Africa,the United States has encouraged negotiated solutionsto the region's conflicts.

In the economic dimension, the United States willcontinue to advocate reforms that eliminate wastefuland unproductive state-owned enterprises and thatliberate the productive private sector and individualinitiative. The United States has significantly increasedthe assistance it provides through our DevelopmentFund for Africa. We continue to be the biggest donorof humanitarian aid and have helped international

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organizations and voluntary associations to distributefood, medicines, and other assistance.

We continue to press for a rapid and complete end toSouth Africa's system of apartheid. We support negoti-ations leading to a democratic, non-racial South Africathat would enhance long-term stability in the country

and the region. We are encouraged by the progressthat has been made, particularly the release of NelsonMandela and the unbanning of political organizations.We look to all parties to continue to take the stepsnecessary to create a climate in which productivenegotiations can take place.

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IV. Relating Means to Ends:Our Political Agenda

The elements of our national power—diplomatic andpolitical, economic and military—remain formidable.Yet, the relative importance of these differentinstruments of policy will change in changingcircumstances. Our most difficult decisions willinclude not only which military forces or programs toadjust, increase, reduce or eliminate, but also whichrisks can be ameliorated by means other than militarycapability—means like negotiations, burdensharing,economic and security assistance, economic leverage,and political leadership.

In a new era, we foresee that our military power willremain an essential underpinning of the global bal-ance, but less prominently and in different ways. Wesee that the more likely demands for the use of ourmilitary forces may not involve the Soviet Union andmay be in the Third World, where new capabilitiesand approaches may be required. We see that wemust look to our economic well-being as thefoundation of our long-term strength. And we can seethat, especially in the new international environment,political will and effective diplomacy can be whattranslates national power into the achievement ofnational objectives. While this Report necessarilydescribes these different elements of policy separately,national strategy must integrate them and wield themaccording to a coherent vision.

Alliance Relationships

Our first priority in foreign policy remains solidaritywith our allies and friends. We have never been ableto "go it alone", even in the early days of the Cold Warwhen our major allies were still suffering from thedevastation and exhaustion of World War II. Even to

attempt to do so would alter our way of life andnational institutions and would jeopardize the veryvalues we are seeking to protect.

The rise of other centers of power in the free world istherefore welcome, consistent with America's values,and supportive of our national interests. We mustensure that free nations continue to recognize thefundamental moral, political, and security interests wehave in common and protect those interests againstboth the residual threat of Soviet military power andthe emerging threats of regional conflict and ofdivisive economic issues. We are prepared to sharemore fully with our allies and friends theresponsibilities of global leadership.

Arms Control

Arms control is a means, not an end; it is ani mportant component of a broader policy to enhancenational security. We will judge arms controlagreements according to several fundamental criteria:

• First, agreements must add to our security. Ourobjective is to reduce the incentives, even in crisis,to initiate an attack. Thus, we seek-not reductionsfor reductions' sake, but agreements that willpromote stability. We will work to reduce thecapabilities most suited for offensive action or pre-emptive strike.

• Second, to enhance stability, we favor agreementsthat lead to greater predictability in the size, nature,and evolution of military forces. Predictabilitythrough openness expands the traditional focus of .arms control beyond just military capabilities andaddresses the fear of aggressive intent.

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• Third, agreements are effective only if we canverify compliance. As we broaden our agenda toinclude issues like chemical and missileproliferation, verification will become anincreasingly difficult challenge, but effectiveverification will still be required. We wantagreements that can endure.

• Finally, since the security of the United States isindivisible from that of its friends and allies, wewill insist that any arms control agreements notcompromise allied security.

The arms control accomplishments of the past twelvemonths are impressive. We have already reached anumber of new agreements with the Soviet Union on:

• prevention of dangerous military activities;

• advance notification of strategic exercises;

• clarification of the rights of innocent passage interritorial seas;

• a memorandum of understanding implementingverification provisions of the INF Treaty;

• trial verification and stability measures for StrategicArms Reduction Talks (START);

• reciprocal demonstrations of each side's proposedprocedures for verifying re-entry vehicles onballistic missiles;

• reciprocal exhibitions of strategic bombers to aidverification; and

• demonstrations of proposed "unique identifiers" or"tags" for ballistic-missile verification.

These are but the beginning. Our arms control agendais now broader than ever—beyond the traditional East-West focus on nuclear weapons. We are dealing withpressing multilateral arms control issues. We are alsonegotiating for greater transparency and for limits onconventional arms. We will negotiate in good faith,patiently and seriously, but we will not seek agree-ment for agreement's sake, nor compromise the basicprinciples set forth above.

Strategic Arms Reduction Talks(START)

In START, our goals are not merely to reduce forcesbut to reduce the risk of nuclear war and create amore stable nuclear balance. Our proposals aredesigned to strengthen deterrence by reducing andconstraining in particular those strategic nuclear forceswhich pose the greatest threat—namely, ballisticmissiles, especially large ICBMs with multiplewarheads. We propose less strict limits on bombersand cruise missiles, which are not capable of carryingout a disarming first strike. Our goal is to resolve allsubstantive START issues by the June 1990 Summit.

Defense and Space

Our approach to this set of issues, as well, is toenhance strategic stability by facilitating a cooperativetransition to a stable balance of offensive anddefensive forces if effective defenses prove feasible.We also seek greater transparency and predictabilityin approaches to strategic defense, and have proposedregular exchanges of data, briefings, visits tolaboratories, and observations of tests.

Conventional Armed Forces in Europe(CFE)

The United States is firmly committed to reaching anagreement to reduce conventional armed forces inEurope to lower levels in order to enhance securityand stability and to reduce the ability to launch asurprise attack or sustain large-scale offensiveoperations. Our goal is to complete the CFE Treaty assoon as possible this year. In my State of the Unionspeech, in response to rapid changes in Europe, Iproposed to lower substantially the levels of U.S. andSoviet ground and air force personnel in Central andEastern Europe—to 195,000 troops. This proposal hasbeen accepted.

Chemical Weapons

The Conference on Disarmament in Geneva continuesto work toward a global ban of chemical weapons,using as the basis for its negotiations the draft textthat I personally presented for the United States in1984. It is one of my most important goals to see aneffective, truly global ban of chemical weapons—theirproduction and possession, as well as their use. At

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the United Nations and at Malta, I made severalsuggestions and challenges to speed this negotiationto a successful conclusion, including ways that theUnited States and Soviet Union can set an example tospur achievement of a global ban. In this connection,we and the Soviets have agreed to work together tosign a bilateral agreement at the June 1990 Summitthat would have each side destroy substantialquantities of its chemical weapons stocks. We mustnot only deal with those states that now possesschemical weapons, but also address the growingproliferation of these instruments of indiscriminatedestruction.

Open Skies

An important step in achieving predictability throughopenness is the Open Skies initiative I made last May,which would allow frequent unarmed observationflights over the territory of participating states. Thiswould institutionalize openness on a trulyunprecedented scale. It would achieve greatertransparency about military activities, lessen danger,and ease tension. The NATO allies agreed inDecember on a common approach for pursuing thisinitiative, and foreign ministers from NATO and theWarsaw Pact have met in Ottawa to begin negotiatingan agreement.

Confidence- and Security-BuildingMeasures

These negotiations in Vienna are another importantopportunity to enhance free world security through avariety of measures to codify openness andtransparency in military operations and forcestructures. The recently completed seminar on militarydoctrine is a powerful example of how this forum cangenerate valuable exchanges among high-rankingmilitary officers and open up new avenues ofunderstanding.

Nuclear Testing

The United States and the Soviet Union are on theverge of completing new verification protocols to the1974 Threshold Test Ban and the 1976 Peaceful Nu-clear Explosions Treaties that should open the way totheir ratification and entry into force. The protocols—which I expect to be signed at the June 1990

Summit—involve new, complex, and unprecedentedtechniques for effective verification, including direct,on-site measurement of explosive yield.

Proliferation

The spread of ever more sophisticated weaponry—including chemical, biological, and nuclearweapons—and of the missiles capable of carryingthem represents a growing danger to internationalsecurity. This proliferation exacerbates and fuelsregional tensions and complicates U.S. defenseplanning. It poses ever greater dangers to U.S. forcesand facilities abroad, and possibly even to the UnitedStates itself.

Our comprehensive approach to this problemincludes stringent controls and multilateralcooperation designed to stop the spread of thesetechnologies and components. We will work tostrengthen the International Atomic Energy Agency,the Nuclear Non-Proliferation Treaty, and the MissileTechnology Control Regime. We will also usediplomacy and economic and security assistance toaddress the underlying causes of tension or insecuritythat lead countries to seek advanced weaponry.

Naval Forces

The Soviet Union has urged that we negotiateli mitations on naval forces. We have rejected this pro-posal for reasons grounded in the fundamentalrealities of the free world's strategic interests.

The economies of the United States and its majorallies depend so vitally on trade, and on the securityof sea lines of communication, that we have alwaysdefined a vital interest in freedom of the seas for allnations. Our Navy protects that interest. Similarly,some of our most important security relations are withnations across the oceans. The Soviet Union, as apower on the Eurasian land mass not dependent onoverseas trade, with interior lines of communicationto its major allies and trading partners, has no suchstrategic stake. Its navy has served the purposes ofcoastal defense—or of denial of our ability to defendour vital interests. There is no symmetry here.

Nor is our naval power to be equated with the Sovietground-force superiority that we are determined toreduce—a superiority that in its very nature, scope,

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and composition has posed an offensive threat. Nonavy could pose such a threat to the Soviet Union.

The Contest of Ideas and theNurturing of Democracy

Since the end of World War II, the United States hasdeveloped and maintained an extensive program ofpublic information around the world—through U.S.Information Agency offices at our embassies, speakers,publications, exchange programs, cultural centers, andnumerous other activities.

A special effort has been made to reach into closedsocieties with information about their countries,factual news of the world, and insight into Americansociety. Primary tools for this effort are the Voice ofAmerica, Radio Liberty, and Radio Free Europe. Theirimpact has been invaluable, and has contributedsignificantly to the changes now taking place in theSoviet Union, Eastern Europe, and elsewhere.

The American message of democracy, respect forhuman rights, and the free flow of ideas is as crucialand inspiring today as it was forty-five years ago. Thetruth we provide remains a stimulus to openness. Inthe coming decade, we will have to project Americanvalues and protect American interests on issues ofgrowing global importance, such as the battle againstnarcotics trafficking and the search for solutions tointernational environmental problems.

An American initiative begun in the 1980s—theNational Endowment for Democracy—has broken newground, mobilizing the private efforts of our politicalparties, labor unions, businesses, educational andother organizations in fostering the development ofdemocratic institutions. As democratic changecontinues around the world—and is still denied inmany places—we must ensure that the message wesend and the means of delivery we use keep pace.

Economic and SecurityAssistance

Our foreign assistance has traditionally supported our

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security objectives by strengthening allies and friends,bolstering regional security, deterring conflict, andsecuring base rights and access.

As East-West tensions diminish, these political andeconomic instruments become more centrally relevantto an era of new challenges:

• A multipolar world, in which military factors mayrecede to the background, puts a new premium onthe instrumentalities of political relations—of whichforeign assistance has been one of the most cost-effective and valuable.

• In a new era, nurturing democracy and stabilityremains a basic goal, but one now freed from itstraditional Cold War context. Foreign assistance isan indispensable means toward this end.

• Economic and humanitarian goals—such aspromoting market-oriented structural reforms inEastern Europe and the developing world, or aidingrefugees and disaster victims —will also loom largerthan before. This is a responsibility we need toshare with international financial institutions andprosperous allies, but we need to do our part.

• As regional conflicts are resolved, United Nationspeacekeeping takes on additional tasks—and willhave a claim on our support. As for those conflictsthat continue to fester, security assistance can re-duce the level or likelihood of a direct U.S. role inbolstering regional security.

• On problems such as drugs, the environment,terrorism, or the proliferation of high-techweaponry, U.S. aid remains a valuable tool ofpolicy.

These policy instruments in our International Affairsbudget have always struggled for survival in thecongressional budget process. Low funding andexcessive earmarking and conditionality havehampered flexibility. In the 1990s, we will need to dojustice to the growing needs of the emerging EastEuropean democracies without validating the fears ofour Third World friends that they will be relegated tosecond place. A national security strategy that takes usbeyond containment needs these tools more thanever.

Military Openness

In addition to the confidence-building measuresdiscussed above, our policy seeks other ways ofchanging East-West military relations toward our goalof greater transparency. A prudent program ofmilitary-to-military contacts can demonstrate thecapabilities of our forces while allowing us greateraccess to and understanding of the militaryestablishments of potential adversaries. This can re-duce worst-case planning based on limitedinformation and reduce the likelihood ofmiscalculation or dangerous military incidents.

As the Soviet political system evolves, we hope thatSoviet military power will increasingly be subject to

detailed and searching public debate. In the longterm, a Soviet military that must justify its size,mission, and resource demands to the Soviet publicand legislature will find it more difficult to enhanceits capabilities beyond the legitimate needs of de-fense. Increased contact with the armed forces of theUnited States and other democracies can aid thisprocess as well as contribute to greater understanding.We will continue to pursue the kinds of contacts firstagreed to by Admiral Crowe and MarshalAkhromeyev in 1988. We will also pursue similarexchanges with the armed forces of Eastern Europeanstates. In addition to their obvious contributions totransparency, such contacts will support our overallapproach to Eastern Europe by helping the militaryofficers of these states establish a professional identityindependent of their roles in the Warsaw Pact.

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V. Relating Means to Ends:Our Economic Agenda

America's national power continues to rest on thestrength and resilience of our economy. To retain aposition of international leadership, we need not onlyskilled diplomacy and strong military forces, but alsoa dynamic economic base with competitiveagricultural and manufacturing sectors, an innovativeresearch establishment, solid infrastructure, securesupplies of energy, and vibrant financial and serviceindustries.

We will pursue a strategy that integrates domesticeconomic policies with a market-opening trade policy,enhanced cooperation among the major industrialcountries, and imaginative solutions to the problemsof the Third World.

Global Imbalances

Japan and Germany continue to run substantial tradeand current account surpluses; the United States haslarge deficits. Recent economic summits and meetingsof finance ministers of the Group of Seven (G-7) havegiven high priority to reducing these imbalances. Fordeficit countries like the United States, this requiresaction to reduce budget deficits and encourage privatesavings. The surplus countries like Germany and Japanshould, for their part, pursue macro-economic policiesand structural reforms to encourage non-inflationarygrowth. Through the G-7 and economic summits, wewill strengthen coordination and ensurei mplementation of appropriate policies for non-inflationary growth and expanded trade.

Debt

Aggregate Third World debt is over $1 trillion, anddebtor nations need some $70 billion just to meetannual interest payments. It is a tremendous burdenon struggling democracies and on the ability of manyfriendly countries to maintain their security. Relativelyslow world growth, growing inflation, risingunemployment, and the failure to implementnecessary economic reforms aggravate an already diffi-cult situation. We have advanced, in the Brady Plan,suggestions to revitalize the international debt strategythrough reductions in commercial bank debt and debtservice payments, as a complement to new lending.The International Monetary Fund and the World Bankwill provide financial support for these efforts. As anessential first step in obtaining this support, we areurging debtors to adopt medium-term economicprograms—including measures to strengthen domesticsavings, steps to attract foreign investment, andpolicies that promote the return of flight capital.

Trade

Support within the United States for free trade hasweakened as a result of persistently high trade deficits.Additional concern about the competitiveness of theU.S. economy has led to increased calls forgovernment intervention in support of key sectors.Current account and trade deficits are macroeconomic

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phenomena that primarily reflect domestic savingsand investment. The imbalance between the U.S.saving rate and the higher U.S. investment rate is,therefore, the fundamental source of the U.S. tradedeficit. The net capital inflow into the United States,which is necessary to finance the deficit, must bematched by a corresponding increase in imports tothe United States over exports to other countries. Thekey to reducing the deficit, therefore, is to increasedomestic saving, thus closing the savings-investmentgap and reducing import demand. We have proposeda comprehensive Savings and Economic Growth Actto raise household savings which will help to restorenecessary balance in the trade and current accounts.

While addressing the domestic causes for the tradedeficit, we must also ensure that market forces arefree to operate at home and abroad, and that tradeexpands—rather than closing our markets. In this re-gard, we will work with other members of GATT tobring to a successful conclusion this year the UruguayRound of Multilateral Trade Negotiations nowaddressing issues crucial to our interests, includingagricultural subsidies, services, the protection ofintellectual property, trade-related investmentmeasures, and market access. These are the tradeproblems of the 1990s that require solution if we areto maintain a domestic consensus in support of freeand open trade.

Given the continuing strategic importance of unityamong the industrial -democracies, it is essential thattrade disputes be resolved equitably, without tearingthe fabric of vital political and security partnerships.

Technology

Our economic and military strength rests on ourtechnological superiority, not sheer manufacturingmight. The United States remains in the forefront inthe development of new technologies, but Americanenterprises must respond more quickly in theirexploitation of new technologies if they are tomaintain their competitiveness in both domestic andforeign markets. The loss of advanced productioncapabilities in key industries could place ourmanufacturing base in jeopardy.

The dynamics of the technological revolutiontranscend national boundaries. The transfer oftechnology between allies and friends has benefittedthe United States in both national security andeconomic terms. Open markets and open investmentpolicies will best ensure that scarce resources areused efficiently and that benefits are widely shared.But the openness of the free market economy mustnot be exploited to threaten our security. With ourpartners in the Coordinating Committee forMultilateral Export Controls (COCOM), we mustcontinue to work to ensure that militarily sensitivetechnology does not flow to potential adversaries. Atthe same time, we must adapt the procedures andlists of COCOM-controlled goods to support rapidpolitical and economic change in Eastern Europe. Inthat regard, our task is threefold: (a) streamlineCOCOM controls on strategic goods andtechnologies; (b) harmonize and tighten nationallicensing and enforcement procedures; and (c)encourage greater cooperation with non-COCOMdeveloping countries. We have also initiated acomprehensive analysis of the changing strategicthreat, which will be instrumental in deciding onpossible further changes in the multilateral system ofstrategic export controls.

Energy

Secure supplies of energy are essential to ourprosperity and security. The concentration of 65

percent of the world's known oil reserves in thePersian Gulf means we must continue to ensurereliable access to competitively priced oil and aprompt, adequate response to any major oil supplydisruption. We must maintain our Strategic PetroleumReserve at a level adequate to protect our economyagainst a serious supply disruption. We will continueto promote energy conservation and diversification ofoil and gas sources, while expanding our total supplyof energy to meet the needs of a growing economy.We must intensify efforts to promote alternativesources of energy (nuclear, natural gas, coal, andrenewables), and devote greater attention to reducingfossil fuel emissions in light of growing environmentalconcerns.

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VI. Relating Means to Ends:Our Defense Agenda

One reason for the success of America's grand strategyof containment has been its consistency. The militarycomponent of that strategy has been adjusted tochanging threats and available military technology, butthere too substantial continuity remains:

• Deterrence: Throughout the postwar period we havedeterred aggression and coercion against the UnitedStates and its allies by persuading potential adver-saries that the costs of aggression, either nuclear orconventional, would exceed any possible gain."Flexible response" demands that we preserveoptions for direct defense, the threat of escalation,and the threat of retaliation.

• Strong Alliances: Shared values and commonsecurity interests form the basis of our system ofcollective security. Collective defense arrangementsallow us to combine our economic and militarystrength, thus lessening the burden on any onecountry.

• Forward Defense: In the postwar era, the defense ofthese shared values and common interests hasrequired the forward presence of significantAmerican military forces in Europe, in Asia and thePacific, and at sea. These forces provide thecapability, with our allies, for early, direct defenseagainst aggression and serve as a visible reminderof our commitment to the common effort.

• Force Projection: Because we have global securityinterests, we have maintained ready forces in theUnited States and the means to move them toreinforce our units forward deployed or to projectpower into areas where we have no permanentpresence. For the threat of protracted conflict wehave relied on the potential to mobilize themanpower and industrial resources of the country.

These elements have been underwritten by advancedweaponry, timely intelligence, effective and verifiablearms control, highly qualified and trained personnel,and a system for command and control that iseffective, survivable, and enduring. Together they haveformed the essence of our defense policy and militarystrategy during the postwar era.

The rebuilding of America's military strength duringthe past decade was an essential underpinning to thepositive change we now see in the internationalenvironment. Our challenge now is to adapt thisstrength to a grand strategy that looks beyondcontainment, and to ensure that our military power,and that of our allies and friends, is appropriate to thenew and more complex opportunities and challengesbefore us.

Overall PrioritiesFrom the weapons, forces, and technologies that willbe available, we will have to pick carefully those thatbest meet our needs and support our strategy in anew period. Our approach will include the followingelements:

• Deterrence of nuclear attack remains thecornerstone of U.S. national security. Regardless ofi mproved U.S.-Soviet relations and potential armscontrol agreements, the Soviets' physical ability toinitiate strategic nuclear warfare against the UnitedStates will persist and a crisis or political change inthe Soviet Union could occur faster than we couldrebuild neglected strategic forces. A STARTagreement will allow us to adjust how we respondto the requirements of deterrence, but tending tothose requirements remains the first priority of ourdefense strategy.

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• As we'and our allies adjust our military posture,each should emphasize retaining those roles it isuniquely or better able to fulfill. For the UnitedStates, these include nuclear and space forces,advanced technologies, strategic mobility, aworldwide presence, power projection, and asecure mobilization base.

• As a country separated from many of its allies andareas of interest by vast distances, we will ensurewe have those forces needed to control critical seaand air lines of communication in crisis and war.

• U.S. technological superiority has long been apowerful contributor to deterrence. To retain thisedge, we will sustain our investment in researchand development as an important hedge against anuncertain future.

• We remain committed to the doctrine ofcompetitive strategies. I reaffirm the wisdom ofexploiting American strengths in a systematic way,moving Soviet investment into areas that threatenus less or negating systems that threaten us most.

• Defense investment faces a dual challenge: tomaintain sufficient forces to deter general war whilealso giving us forces that are well suited for themore likely contingencies of the Third World.Many defense programs contribute significantly inboth environments but, where necessary, we willdevelop the weaponry and force structure neededfor the special demands of the Third World even ifit means that some forces are less optimal for aconflict on the European central front.

• As we make fundamental changes in our militaryforces, we will preserve a capacity for reversibility.This will affect decisions on a variety of issues andmay, in the short run, reduce the amount of savingswe might otherwise see. But it is a prudent hedgeagainst future uncertainty, which it is my moral andconstitutional duty to provide.

Deterring Nuclear War

Strategic Offensive ForcesThe Soviet Union continues to modernize its strategicforces across the board. Even as START promises toreduce numbers substantially, the qualitativecompetition has not ended.

Decisions on strategic modernization that I havealready made take advantage of the most promisingtechnologies in each leg of our Triad to increasestability. The B-2 bomber will ensure our ability topenetrate Soviet defenses and fulfill the role thebomber force has played so successfully for fortyyears. The D-5 missile in Trident submarines willexploit the traditionally high survivability of this legand add a significant ability to attack more hardenedtargets. In a two-phase program for our ICBM force,the deployment of the Rail Garrison System willenhance stability by removing Peacekeeper missilesfrom vulnerable silos and providing the mobilecapability we need for the near term. In the secondphase, deployment of the small ICBM road-mobilesystem will further strengthen stability and increaseforce flexibility.

While we will ensure that each leg of the Triad is assurvivable as possible, the existence of all threeprecludes the destruction of more than one bysurprise attack and guards against a technologicalsurprise that could undermine a single leg.

Strategic DefensesFlexible response and deterrence through the threat ofretaliation have preserved the security of the UnitedStates and its allies for decades. Looking to the future,the Strategic Defense Initiative offers an opportunity toshift deterrence to a safer and more stable basisthrough greater reliance on strategic defenses. In anew international environment, as ballistic-missilecapabilities proliferate, defense against third-countrythreats also becomes an increasingly importantbenefit.

The deterrent value of strategic defenses derives fromthe effect they would have on an adversary's calcula-tions. Even an initial deployment would influence anattacker's calculation by diminishing his confidence inhis ability to execute an effective attack. Initial strate-gic defenses would also offer the United States and itsallies some protection should deterrence fail or in theevent of an accidental launch. Follow-on deploymentsincorporating more advanced technologies couldprovide progressively more capable defenses, even inthe face of countermeasures.

We continue to seek with the Soviet Union acooperative transition to deployed defenses and

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reductions in strategic offensive arms. Strategicdefenses can protect our security against possibleviolations of agreements to reduce strategic offensiveweapons.

The Soviets have stated that they are no longermaking completion and implementation of a STARTtreaty contingent on a Defense and Space Agreementrestricting SDI. A START Treaty should stand on itsown merits and we will preserve our right to conductSDI activities consistent with the Anti-Ballistic Missile(ABM) Treaty and our option to deploy SDI when it isready. And we will use the Defense and Space Talksto explore a cooperative and stable transition to agreater reliance on stability-enhancing, cost-effectivestrategic defenses.

Theater Nuclear ForcesThe Atlantic Alliance has consistently followed theprinciple of maintaining survivable and credible thea-ter nuclear forces to ensure a robust deterrent, toexecute its agreed strategy of flexible response—andto "couple" European defense to the strategic nuclearguarantee of the United States. At the same time, wehave always pursued a nuclear force that is as smallas is consistent with its tasks and objectives. Indeed,NATO has unilaterally reduced its theater nuclearweapons by over one-third during the past decade—over and above the entire class of U.S. and Sovietnuclear weapons eliminated by the INF Treaty. Asrequirements change, we will continue to ensure thatour posture provides survivability and credibility atthe lowest possible levels. The United States believesthat for the foreseeable future, even in a newenvironment of reduced conventional forces andchanges in Eastern Europe, we will need to retainmodern nuclear forces in-theater.

Command, Control andCommunications

Another basic element of deterrence is the security ofour command and control, enhancing the certainty ofretaliation. In addition, we maintain programs toensure the continuity of constitutional government—another way of convincing a potential attacker thatany attempted "decapitating" strike against ourpolitical and military leadership will fail.

Deterring Conventional War

It is clear that the United States must retain the fullrange of conventional military capabilities,appropriately balanced among combat and supportelements, U.S.- and forward-based forces, active andreserve components. We must also maintain properlyequipped and well trained general purpose andspecial operations forces. Within these requirements,as we look to the future, we see our active forcesbeing smaller, more global in their orientation, andhaving a degree of agility, readiness and sustainabilityappropriate to the demands of likely conflicts.

Forward Defense through ForwardPresence

American leadership in the postwar world and ourcommitment to the forward defense of our interestsand those of our allies have been underwritten by theforward presence of U.S. military forces. We haveexerted this presence through forces permanentlystationed abroad; through a network of bases,facilities, and logistics arrangements; and through theoperational presence provided by periodic patrols,exercises, and visits of U.S. military units. Clearly, themix of these elements will change as our perceptionof the threat changes, as technology improves thecapabilities and reach of our military forces, and asallies assume greater responsibilities in our commonefforts. But our forward presence will remain a criticalpart of our defense posture for the foreseeable future.Our overseas bases serve as an integral part of ouralliances and foster cooperation against commonthreats. There is no better assurance of a U.S. securitycommitment than the presence of U.S. forces.

There are growing pressures for change in our globaldeployments, however. Some are caused by concernsat home over an inequitable sharing of the defenseburden, and others in host countries emanate fromnationalism, anti-nuclear sentiment, environmentaland social concerns and honestly divergent interests.Operational restrictions on our forces overseas arealso increasing, some of which we can accommodatewith new training and technologies, but others ofwhich may eventually reduce the readiness of ourdeployed units.

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In Europe:the overall level and specific contributionof U.S. forces are not etched in stone, but we willmaintain forces in Europe—ground, sea and air,conventional and nuclear—for as long as they areneeded and wanted, as I have pledged. Our forces inEurope contribute in many ways to stability andsecurity. They are not tied exclusively to the size ofthe Soviet presence in Eastern Europe, but to theoverall Alliance response to the needs of security. Forthe foreseeable future, we believe a level of 195,000U.S. troops in Central Europe is appropriate formaintaining stability after a CFE reduction.

We also recognize that the presence of our forcescreates burdens that are part of the overall sharing ofeffort within the Alliance. Consistent with thedemands of readiness, we will work to adjust ourtraining and other activities to ease the burden theyimpose.

Outside of Europe, we will maintain the ability to re-spond to regional crises, to support our commitments,and to pursue our security interests. Within thatpolicy, adjustments in our overseas presence will bemade. Yet—even as the total number of U.S. forward-deployed forces is reduced—we will work to preservea U.S. presence where needed. And, whereappropriate, we will work to ensure continued accessto facilities that will permit a prompt return of U.S.forces should they be required. As we negotiate forthe use of overseas bases, we will also proceed fromthe realistic premise that no base is irreplaceable.While some are preferred more than others, eachmakes a limited contribution to our strategy.

Sharing the Responsibilities ofCollective Defense

The success of our postwar strategy has enabled alliedand friendly nations' economies and societies toflourish. We now look to them to assume a greatershare in providing for our common security. Ourefforts in this regard will be integrated with our plansfor future force structure, weapons modernization, andarms control. Above all, they must not be—nor beperceived to be—a cover for "burden shedding".

Our deliberations will be less about different ways tocalculate defense burdens and more about increasingoverall capabilities. One promising approach is agreater commitment to national specialization, an

improved intra-alliance division of labor based on thecomparative advantages of different allies in differentdefense activities. Such an approach could reduce theimpact of budget constraints being felt by us all.Significant adjustments in missions and national forcestructures may be possible as part of major negotiatedforce reductions, such as those envisioned by CFE.The overall destruction of equipment and thepossibility of "cascading" newer items from oneAlliance member to another (while destroying older,less capable models) may give us opportunities forgreater efficiencies and new forms of Alliancecooperation. These are complex issues, however, andany steps will have to be sensitive to issues ofnational sovereignty and based on an Alliance-wideconsensus.

As a part of burdensharing, the United States willcontinue to ask our economically stronger allies toincrease aid to other Alliance members and tofriendly Third World countries. As another element ofburdensharing, the United States will work with alliesto broaden the regional role of our forward-deployedforces. This will help us deal with the challenge ofmaintaining sufficient forces for local defense and theforces for likely contingencies elsewhere—a challengethat will grow as defense resources become moreconstrained. In support of this objective, we will makeforward-deployed forces more mobile and flexible sothey can assume broader regional responsibilities inaddition to deterring attack in the country in whichthey are located.

Forces for the Third World

Since World War II, the threat posed by the SovietUnion has dominated much of our planning for theThird World. But we have also worked to preservepeace and build democracy and we have longidentified specific interests independent of a Sovietfactor. In the future, we expect that non-Soviet threatsto these interests will command even greater attention.

To the degree possible, we will support allied andfriendly efforts rather than introduce U.S. forces.Nonetheless, we must retain the capability to act ei-ther in concert with our allies or, if necessary,unilaterally where our vital interests are threatened.

The growing technological sophistication of ThirdWorld conflicts will place serious demands on ourforces. They must be able to respond quickly, and

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appropriately, as the application of even smallamounts of power early in a crisis usually payssignificant dividends. Some actions may requireconsiderable staying power, but there are likely to besituations where American forces will have to succeedrapidly and with a minimum of casualties. Forces willhave to accommodate to the austere environment,immature basing structure, and significant ranges oftenencountered in the Third World. The logistics "tail" ofdeployed forces will also have to be kept to aminimum, as an overly large American presencecould be self-defeating. These capabilities willsometimes be different from those of a forceoptimized for a conflict in Europe, and—as ourunderstanding of the threat there evolves—we willmake the necessary adjustments.

We will also try to involve other industrialdemocracies in preventing and resolving Third Worldconflicts. Some of our Atlantic allies have strongpolitical, economic, cultural, and military ties withThird World countries, and Japan providesconsiderable sums of aid. Their role will becomeeven more important in the future.

The Mobilization BaseThe United States has never maintained active forcesin peacetime adequate for all the possiblecontingencies we could face in war. We have insteadrelied on reserve forces and on a pool of manpowerand industrial strength that we could mobilize to dealwith emergencies beyond the capabilities of ouractive units.

For almost two decades, our Total Force policy hasplaced a significant portion of our total military powerin a well-equipped, well-trained, and early-mobilizingreserve component. Various elements of that policy—the balance between active and reserve forces, themix of units in the two components, the nature ofmissions given reserve forces—are likely to beadjusted as we respond to changes in the securityenvironment. Reserve forces are generally lessexpensive to maintain than their active counterpartsso, as we adjust force structures, retaining reserveunits is one alternative for reducing costs while stillhedging against uncertainties. It is an alternative wemust thoroughly explore, especially as we betterunderstand the amount of warning time we canexpect for a major conflict.

A credible industrial mobilization capabilitycontributes to deterrence and alliance solidarity bydemonstrating to adversaries and friends alike that weare able to meet our commitments. While importantprogress has been made in recent years, more can bedone to preserve our ability to produce the weaponsand equipment we need. Mobilization plans will alsohave to reflect our changing understanding of warningfor a global war and develop graduated responses thatwill themselves signal U.S resolve and thus contributeto deterrence.

Chemical Warfare

Our primary goal is to achieve an effective, trulyglobal ban on chemical weapons as soon as possible.Until such a ban is achieved, the United States willretain a small but effective chemical weaponsstockpile to deter the use of chemical weaponsagainst us and our allies. We will also continue ourinitiatives to protect our forces from chemical agentsthat could be used against them and to minimize theimpact of being forced to operate in a chemicalenvironment.

We will never use chemical weapons first, but only inretaliation for their use against us. For as long as weretain a chemical weapons deterrent, we will ensurethat it is as safe and effective as possible.

Space

The United States remains committed to theexploration and use of space for peaceful purposesand the benefit of all mankind, but international lawand this commitment allow for activities to protect ournational security. Our objectives for space mirrorthose which we have long held for the sea—to ensurefree access for all in time of peace, but to be able todeny access to our enemies in time of war.

Our space activities will help deter and, if necessary,defend against enemy attack. We will maintainassured access to space and negate, if necessary, hos-tile space systems. We will develop, acquire, anddeploy systems for communications, navigation,environmental monitoring, early warning, surveillance,and treaty verification.

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We will • also pursue scientific, technological, andeconomic benefit—including encouraging privatesector investment. We will promote internationalcooperative activities and work with others tomaintain freedom in space.

We remain dedicated to expanding human presenceand activity beyond earth orbit and into the solarsystem. In July I committed the United States to returnto the moon, this time to stay, and continue with ajourney to Mars. The first step in this bold program tostrengthen our position of space leadership will becompletion of Space Station Freedom in the 1990s.

I chartered the National Space Council, chaired byVice President Quayle, to develop national spacepolicy, advise me on space matters, and ensure thatpolicy guidance is carried out. I have also asked theVice President, as Chairman of the Council, to assessthe feasibility of international cooperation in humanexploration. Equally important, I announced ourcommitment to use space to address criticalenvironmental problems on earth. The new Mission toPlanet Earth program, a major part of acomprehensive research effort, will use spaceplatforms to gather the data we need to determinewhat changes are taking place in the globalenvironment.

The National Space Council also provides a high-levelfocus for commercial space issues. Consistent withnational security and safety, an expanding privatesector role in space can generate economic benefitsfor the nation.

Low-Intensity Conflict

Even as the threat of East-West conflict may bediminishing in a new era, lower-order threats liketerrorism, subversion, insurgency, and drug traffickingare menacing the United States, its citizenry, and itsinterests in new ways.

Low-intensity conflict involves the struggle ofcompeting principles and ideologies below the levelof conventional war. Poverty and the lack of politicalfreedoms contribute to the instability that breeds suchconflict. Our response must address these underlyingconditions—but we cannot accept violence against

our interests, or even less against innocent civilians,as a legitimate instrument of anyone's policy. Nor canthe ideals of democracy, freedom, or economicprogress be nurtured except in an environment ofsecurity.

It is the primary responsibility of friendly nations toprotect their own interests. Our security assistanceprograms are a crucial tool with which we can helpthem help themselves. In some cases, securityassistance ought to assume the same priority asresources devoted to our own forces.

It is not possible to prevent or deter conflict at thelower end of the conflict spectrum in the same wayor to the same degree as at the higher. Americanforces therefore must be capable of dealing effectivelywith the full range of threats, including insurgencyand terrorism. Special Operations Forces haveparticular utility in this environment, but we will alsopursue new and imaginative ways to apply flexiblegeneral purpose forces to these problems. We willi mprove the foreign language skills and culturalorientation of our armed forces and adjust ourintelligence activities to better serve our needs. Unitswith unique capabilities in this environment willreceive increased emphasis. Training and research anddevelopment will be better attuned to the needs oflow-intensity conflict.

Drug Trafficking

The Department of Defense, as noted earlier, has ani mportant role to play in our National Drug ControlStrategy in coordination with the Department of Stateand law enforcement agencies.

The first line of defense against the illegal flow ofdrugs is at the source—in those countries where illicitdrugs are produced and processed before being sentto the United States and other countries. Our policy isto strengthen the political will and institutionalcapability of host-country military, judicial, and lawenforcement agencies. Training and materialassistance help improve tactical intelligence and theability to conduct airmobile and riverine operations.Security assistance also provides host countries withthe resources needed to confront the insurgencythreats that often are endemic to narcotics-producingregions.

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A second line of defense involves the deployment ofappropriate elements of the U.S. Armed Forces withthe primary role of detecting and monitoring thetransportation of drugs to the U.S. border. TheSecretary of Defense has directed several regionalcommanders to support these objectives with theirown programs and operations. As a high priority, ourmilitary counter-narcotics deployments will focus onthe flow of drugs—especially cocaine—across theCaribbean, Central America, and Mexico toward thesouthern border of the United States. Thesedeployments will support U.S. law enforcementagencies in their efforts to apprehend traffickers andseize drug shipments.

Our military and foreign intelligence activities mustbe coordinated with our own and host-country lawenforcement agencies to identify air and maritimesmuggling vessels as well as the networks thatfacilitate and manage illicit drug trafficking. Thiscooperation and coordination must be extended tothe operational level to ensure timely and effectiveinterdiction.

Current efforts are already bearing fruit. Ourassistance to the Colombian government has aided itscourageous campaign to strike back at the drug lordsand to reestablish national sovereignty and the rule oflaw. The cocaine industry in the Andean region hasbeen disrupted, and sustained pressure andcooperation will erode the strength of the drugtrafficking organizations. The United States iscommitted to such a sustained international effort.

Intelligence Programs

The extraordinary changes taking place in the worldare posing an almost unprecedented challenge to ourintelligence assets and programs.

The changes in East-West relations point to a morepeaceful future. But—after four decades ofconfrontation—achieving mutual trust will be a diffi-cult task of confidence-building and verification. Ati me of transition can also be a time of turbulence. Itwill be critical that we be well informed of eventsand intentions in the Soviet Union, Eastern Europe,and elsewhere.

In a new period, intelligence must also focus on newissues. Within.the Communist world, for example,economic questions take on new importance. Aseconomic forces are the impetus for many of themilitary and political changes taking place there,economic change can be a valuable gauge of howmuch real change is occurring. The extent to whichSoviet leaders actually shift resources from militaryto civilian uses, for example, will be an importantstrategic indicator.

In contrast to the hopeful trends in the Soviet Unionand Eastern Europe, there are danger signselsewhere—as this Report has noted. The proliferationof nuclear, chemical, and other military technologiesraises the risks of conflict and crisis. Regional conflictscontinue to fester. U.S. intelligence must monitor suchdevelopments and provide policymakers with theinformation needed to protect American interests.

The twin scourges of international terrorism andnarcotics trafficking also pose very high-priority, butnon-traditional, intelligence requirements. We willalso have to adapt to a new emphasis on broaderglobal economic and trade issues. We must be morefully aware of such subjects as foreign trade policies,economic trends, and foreign debt.

U.S. counterintelligence must be responsive to achanging hostile intelligence threat. Historically,foreign governments—and to some extent foreignbusinesses—have tried to obtain our secrets andtechnologies. Hostile intelligence efforts are not likelyto decrease in the near term, and they may actuallyincrease as barriers to contact come down.

U.S. intelligence must still be the "alarm bell" to giveus early warning of new developments and newdangers even as requirements grow in number andcomplexity. Our intelligence capabilities must beready to meet new challenges, to adapt as necessary,and to support U.S. policy in the 1990s.

Planning for the Future

United States military planning in the postwar era hasbeen dominated by the need to deter and be able todefend against overwhelming Warsaw Pactconventional forces in Europe. As this Report hasdescribed, this heretofore dominant reality is

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undergoing significant change, both through Sovietand other Warsaw Pact unilateral reductions andthrough negotiated agreements. This prospect isclearly affecting our military planning.

Such planning need not and cannot await the entryinto force of arms reduction treaties. We will not actmerely on the promise of change in Warsaw Pact

forces, but neither will we delay developing ourresponses to those changes until their implementationis upon us. We will continually review importantissues like the future demands of nuclear deterrence,the proper role and mix of our general purposeforces, and an improved and more effective securityassistance program.

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VII. A Public Trust

As our defense efforts adapt to changing circum-stances, our people must be confident that theirdefense dollars are efficiently and effectivelysupporting the cause of peace.

The Defense ManagementReview

Shortly after I took office, I ordered a review ofdefense management structures and practices inorder to improve defense acquisition, to implementthe excellent recommendations of the PackardCommission, and to manage Department of Defenseresources more effectively. Secretary Cheneycompleted a preliminary report and forwarded it tome in July, along with a commitment to implement itsfindings. I subsequently forwarded the report to theCongressional leadership, giving its recommendationsmy strong personal endorsement and asking forCongressional support in implementation.

The implementation process now underway providesfor continuous improvement in several areas ofdefense management.

Reducing Overhead Costs WhileMaintaining Military Strength

The Department of Defense is building a significantlymore streamlined acquisition structure with clear linesof responsibility and authority. The Services' systemsand materiel commands are being reorganized tofocus largely on logistics and support services. Nearlyall contract administration services, currently dividedamong the Military Departments and the DefenseLogistics Agency (DLA), are being consolidated under

DLA. In addition, a Corporate InformationManagement initiative is underway to develop moreefficient data processing and information systems...

Enhancing Program PerformanceThe Under Secretary of Defense for Acquisition willhave an enhanced role and will discipline programsthrough a revised and strengthened acquisition proc-ess. Programs will have to achieve defined milestonesand satisfy specific criteria before moving to the nextphase of their development. The military departmentswill create a corps of officers who will makeacquisition a full-time career. These and additionalsteps will lead to a simplified acquisition structure,run by well-trained, dedicated professionals able toperform their work with a minimum of bureaucraticdistraction.

Reinvigorating Planning and BudgetingThe Secretary of Defense now chairs a new ExecutiveCommittee to review overall Department policies andpermit regular and confidential exchanges on keyissues among the Department's senior leadership. Inaddition, the Deputy Secretary manages a revitalizedplanning, programming, and budgeting system asChairman of the Defense Planning and ResourcesBoard. With steps such as these, the senior leadershipin the Department is now engaged in a dynamicplanning process that will improve the linkagebetween policy, strategy, programs, and budgets.

Reducing MicromanagementThe Department of Defense has begun to carve awaya bewildering maze of self-imposed regulations. Anew, streamlined set of directives will be issued thissummer in a form that permits action at the workinglevel, with little additional policy guidance. The

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Secretary of Defense, with my full indorsement, hascalled on Congress to work with the Administrationto review and overhaul the statutory framework fordefense acquisition and improve the process bywhich Congress oversees the Department.

Strengthening the Defense IndustrialBase

The defense industrial base must be strong, andinclude manufacturers that are highly flexible andtechnologically advanced. This will require that boththe Defense Department and industry maintain activeresearch programs in vital technologies. TheDepartment must also create incentives (and eliminatedisincentives) to invest in new facilities andequipment as well as in research and development.This will be especially important in an era whenoverall procurements are likely to decline.

Improving the Observance of EthicalStandards

Secretary Cheney has chartered a high-level EthicsCouncil to develop ethics programs for theDepartment. The Council has met and directed workon a model ethics program, a Department-wide EthicsConference, and a review of existing complianceprograms. The goal is to strengthen ethical standardswithin government and with industry and to create anenvironment where official standards of conduct arewell understood, broadly observed, and vigorouslyenforced.

The strength of this effort to improve defensemanagement is that it is largely a product of theDepartment itself, not something forced on it fromoutside. The dedicated people—both civilian andmilitary—who have developed the changes describedabove will be the same people called upon to makethese changes work. These are not quick fixes butfundamental shifts, "cultural" changes, that addressissues at the core of defense management. While weare proud of the accomplishments to date, fully

achieving these ambitious objectives will requireseveral years of significant effort.

Congress and the AmericanPeopleUnder our Constitution, responsibility for national de-fense is shared between the executive and legislativebranches of our federal government. The President,for example, is commander-in-chief, while Congresshas the power to raise and support armies anddeclare war. This system of shared and separatedpowers is well designed to guard against abuses ofpower, but it works best in the demandingenvironment of national security affairs only if there isa spirit of cooperation between the two branches and,indeed, a strong measure of national and bipartisanconsensus on basic policy.

I am proud of the successful examples of bipartisancooperation in the past year—on Central America, onaid to Eastern Europe, on Panama, to name a few. Yetother issues remain contentious, such as variousattempts to constrict Presidential discretion andauthority in fields ranging from covert actions to theexcessive earmarking of assistance funds. If we are tomake a successful transition to a new era, we need towork together.

We are now in an era of rapidly changing strategicconditions, new openings for peace, continuinguncertainties, and new varieties of danger. We thusface new opportunities and new problems, both ofwhich demand of us special qualities of leadership—boldness, vision, and constancy. It is my responsibilityto meet that challenge, and I am prepared to meet itin a spirit of close cooperation and consultation withCongress. I believe there is a national consensus insupport of a strong foreign and defense policy—perhaps broader and deeper than at any time in 25years. Congress and the President need, more thanever, to reflect that unity in their own cooperation.We owe the American people no less.

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