NATIONALSECURITYSTRATEGYOF TH EUNITED STATES

THE WHITE HOUSEMARCH 1990

Contents

PREFACE . . . v

I. THE FOUNDATIONS O FNATIONAL 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 AN DUNCERTAINTIES . . . 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 AN DRESPONSES . . . 9

The Soviet Union . . . 9

Western Europe . . . 1 0

Eastern Europe . . . 1 1

The Western Hemisphere . . . 1 2

East Asia and the Pacific . . . 1 2

The Middle East and South Asia . . . 1 3

Africa . . . 1 3

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

Alliance Relationships . . . 1 5

Arms Control . . . 1 5

Strategic Arms Reduction Talks . . 16

Defense and Space . . . 1 6Conventional Armed Forces in Europe . . . 16Chemical Weapons . . . 1 6Open Skies . . . 1 7Confidence- and Security-Building Measures . . . 17Nuclear Testing . . . 1 7

Proliferation . . . 1 7Naval Forces . . . 17

The Contest of Ideas and the Nurturing ofDemocracy . . . 18

Economic and Security Assistance . . . 1 8

Military Openness . . . 19

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V. RELATING MEANS TO ENDS :OUR ECONOMIC AGENDA . . .2 1

Global Imbalances . . . 2 1

Debt . . . 2 1

Trade . . .2 1

Technology . . . 22

Energy . . .22

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

Overall Priorities . . . 2 3

Deterring Nuclear War . . .24

Strategic Offensive Forces . . . 24Strategic Defenses . . . 24Theater Nuclear Forces . . . 25Command, Control and Communications . . .. 2 5

Deterring Conventional War . . .25

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

Defense . . . 26

Forces for the Third World . . . 26The Mobilization Base . . . 2 7

Chemical Warfare . . . 27

Space . . .27

Low-Intensity Conflict . . . 2 8

Drug Trafficking . . . 2 8

Intelligence Programs . . . 2 9

Planning for the Future . . . 29

VII. A PUBLIC TRUST . . .3 1

The Defense Management Review . . . 3 1

Reducing Overhead Costs While MaintainingMilitary Strength . . . 3 1

Enhancing Program Performance . . . 3 1Reinvigorating Planning and Budgeting . . . 31Reducing Micromanagement . 3 1Strengthening the Defense Industrial Base . . . 32Improving the Observance of Ethica l

Standards . . . 32

Congress and the American People . . . 32

Iv

Preface

In the aftermath of World War II, the United States took on an unaccustomed burden—the responsibility to lead an dhelp defend the world's free nations . This country took bold and unprecedented steps to aid the recovery of both allie sand defeated foes, to provide a shield behind which democracy could flourish, and to extend its hand in aid of globa leconomic 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 thi ssuccess would eventually call for a new kind of American leadership . It was inevitable that our overwhelmin geconomic predominance after the war would be reduced as our friends, with our help, grew stronger . And perhaps i twas 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 i nbringing 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 respons ewill require strategic vision—a clear perception of our goals, our interests, and the means available to achieve an dprotect 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 Unite dStates 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 difficul tdecisions we will have to make in the months and years ahead .

March 1990

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I . The Foundations of National Strategy :Goals and Interests

Enduring Elements of Ou rNational 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 a ninternational environment of peace, freedom, an dprogress within which our democracy—and other fre enations—can flourish .

These broad goals have guided American foreign an ddefense policy throughout the life of the Republic .They were as much the driving force behind Presiden tJefferson's decision to send the American Navy agains tthe Pasha of Tripoli in 1804 as they were whe nPresident Reagan directed American naval and ai rforces to return to that area in 1986 . They animatedWoodrow Wilson's Fourteen Points, and my initiative sin support of democracy in Eastern Europe this pas tyear.

In addition, this Nation has always felt a powerfu lsense of community with those other nations thatshared our values. We have always believed that, al-though the flourishing of democracy in America di dnot require a completely democratic world, it coul dnot long survive in one largely totalitarian . It is acommon moral vision that holds together ou ralliances in Europe, East Asia, and other parts of th eworld—a vision shaped by the Magna Carta, ou rDeclaration of Independence and Bill of Rights, th eDeclaration of the Rights of Man, the United Nation sCharter, the Universal Declaration of Human Rights ,and the Helsinki Final Act. The America ncommitment 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 internationa leconomic system . America has championed libera ltrade to enhance world prosperity as well as to reduc epolitical 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 al lnations to promote the prosperity of the free marketsystem and, to reduce barriers that unfairly inhibi tinternational commerce. In particular, it would be atragedy of immense proportions if trade dispute sweakened political ties that forty years of militar ythreat 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 an dfriendly neighbors north and south. But many of ou rclosest friends and allies and important economic an dpolitical 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—globall yand regionally—in support of peace and security.

In particular, for most of this century, the United State shas deemed it a vital interest to prevent any hostil epower 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 t oforward defense and forward military deployments,and a recognition of the lesson of the 1930s—tha tpeace and security come only through vigilance and

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preparedness. This strategy was described as a strategyof containment of Soviet expansionism . Its purpos ewas not the division of the world into American an dSoviet spheres of influence, but, on the contrary ,fostering the reemergence of independent centers o fpower in Europe and Asia . Behind this shield, ou rfriends built up their strength and created institution sof unity (like the European Community), and ou rsystem demonstrated its political and economi cvitality . It was our conviction that in these conditions ,a steadfast policy of resistance to encroachment swould, over time, in George Kennan's famous words ,lead to "the breakup or the gradual mellowing o fSoviet power . "

This we now see . The very success of containmen thas created new conditions and new opportunities fo ra new generation of Americans . We welcome thi s

change. Yet our basic values—and our basi cgeopolitical 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 ensurin gthe stability of the international balance remains ours ,even as its requirements change in a new era . As th eworld enters a period of new hope for peace, i twould be foolhardy to neglect the basic conditions ofsecurity that are bringing it about .

Our Interests and Objective sin the 1990 s

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

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

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

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

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

armed conflict, including the threat of internationa lterrorism ;

• improve strategic stability by pursuing equitabl eand verifiable arms, control agreements ,modernizing our strategic deterrent, developin gtechnologies for strategic defense, andstrengthening our conventional capabilities ;

• encourage greater recognition of the principles ofhuman rights, market incentives, and free election sin the Soviet Union while fostering restraint i nSoviet military spending and discouraging Sovie tadventurism ;

• prevent the transfer of militarily critica ltechnologies and resources to hostile countries o rgroups, especially the spread of weapons of massdestruction and associated high-technology mean sof delivery; and

• reduce the flow of illegal drugs into the Unite dStates .

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 ar eindivisible. We seek to :

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

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

• promote an open and expanding internationa leconomic system with minimal distortions to tradeand investment, stable currencies, and broadl yagreed and respected rules for managing an dresolving economic disputes .

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

We seek to :

• promote the rule of law and diplomatic solutions t oregional conflicts ;

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

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• support aid, trade, and investment policies tha tpromote economic development and social an dpolitical progress ;

• promote the growth of free, democratic politica linstitutions, as the surest guarantee of both huma nrights and economic and social progress ; and

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

Healthy, cooperative and politically vigorou srelations with allies and friendly nations.

To build and nurture such relationships, we seek to :

• strengthen and enlarge the commonwealth of fre enations that share a commitment to democracy an dindividual rights;

• establish a more balanced partnership with ou rallies and a greater sharing of global leadership an dresponsibilities ;

• support greater economic, political, and defens eintegration in Western Europe and a close rrelationship between the United States and th eEuropean Community;

• work with our allies in the North Atlantic Allianc eand fully utilize the processes of the Conference onSecurity and Cooperation in' Europe to bring abou treconciliation, security, and democracy in a Europ ewhole and free ; and

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

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11 . Trends in the World Today:Opportunities and Uncertaintie s

Broadly and properly understood, our nationa lsecurity strategy is shaped by the totality of th edomestic and international environment—a nenvironment that is today dramatically changing .

The Crisis in Communis m

Future historians may well conclude that the mostnotable strategic development of the present period i sthe 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 it srearmament and such successes as the IN Fdeployment in Europe—undermined the Sovie tleaders' assumptions that the global "correlation o fforces" was shifting in their favor .

• While the industrial democracies surge headlon ginto a post-industrial era of supercomputers ,microelectronics, and telecommunications,Communist states have been mired in stagnation ,paralyzed by outmoded statist dogmas that stifl einnovation and productivity. Poor economicperformance, especially in contrast with the West,has discredited a system that prided itself on it smastery of economic forces. And the newInformation Revolution has posed for totalitaria nregimes the particular challenge that clinging to ol dpolicies of restricting information would lead t opermanent technological paralysis.

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

this leadership sought a calmer internationa lenvironment in order to concentrate on its interna lcrisis . This has led, for example, to a Soviet troo pwithdrawal from Afghanistan and Soviet diplomati cinterest in compromise solutions to regiona lconflicts, as Moscow sought gradually (an dselectively) to scale back costly overseascommitments . These commitments had been mad ecostly by indigenous resistance—supported byreinvigorated Western policies of engagement .

• In 1989, in parallel with the negotiation o nConventional Armed Forces in Europe (CFE), th eSoviets began unilaterally reducing their heav ymilitary burden and their presence in Easter nEurope, while proclaiming (and thus fa rdemonstrating) a more tolerant policy toward thei rEast bloc neighbors' internal affairs . We have see npowerful pent-up democratic forces unleashed al lacross Eastern Europe that have overturne dCommunist dictatorships and are reversing th epattern of Soviet dominance .

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

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 dange rthat trade disputes in an era of economic change an dadjustment could strain political and security ties .Such strains would be especially damaging at amoment when we need to maintain strength an dunity to take best advantage of new opportunities i nEast-West relations which that strength and unity hav ehelped bring about .

The growing strength and self-reliance of our allies i nWestern Europe and East Asia have already resulted i na greater sharing of leadership responsibility—as th eEuropean Community (EC) has shown in policie stowards Eastern Europe and as Japan has shown i ninternational economic assistance .

One of the dramatic strategic developments of th e1990s will be the new role of Japan and Germany a ssuccessful democracies and economic and politica lleaders . U .S . policy has long encouraged such a nevolution . It will provide powerful new reasons tomaintain the partnerships—the Atlantic Alliance, th eEC, and the U .S .-Japan security alliance—that hav efostered reconciliation, reassurance, democracy, an dsecurity in Europe and Asia in the postwar period .

The Global Econom yIn a new era of technological innovation and globa lmarkets, the world economy will be more competitiv ethan ever before . The phenomenal growth in East Asi awill 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 th efree flow of labor, capital, and goods within the EC-will become an even stronger economic power. TheSoviet Union, even with a measure of success fo rperestroika, will likely slip further behind the Unite dStates, Japan, and Western Europe in output . In manyother areas of the world, economic expansion will notkeep pace with population growth or the deb tburden, further squeezing resources and fomentin gunrest and instability. All these developments carrysignificant security implications as well as thei robvious economic and social import.

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

and successful U .S . policy aimed at promotin gworldwide economic growth . Provided that the worl deconomic system remains an open and expandin gone, we ourselves will benefit from the growth ofothers . But American leadership will remain pivotal . Ahealthy American economy is essential to sustain tha tleadership role, as well as to foster global economi cdevelopment and ease dangerous pressures fo runilateralism, regionalism, and protectionism .

Third World ConflictsIn a new era, some Third World conflicts may n olonger take place against the backdrop of superpowe rcompetition . 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 way sencourage the growth of these challenges .

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

Trends in Weaponr yModern battlefields are characterized by a nunprecedented lethality . The greater precision, range ,and destructiveness of conventional weapons no wextend war across a wider geographic area, and makeit much more rapid and intense . As global weaponsproduction becomes more diffused, these weapons ar eincreasingly available to smaller powers, narrowin gthe military gap between ourselves and regional state sand making some Third World battlefields in man yways as demanding as those we would expect i nCentral Europe .

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The United States has a competitive edge in mos ttechnologies relevant to advanced weaponry, but w emust continue to translate this advantage into fielde dweapon systems supported by appropriate tactica ldoctrine and operational art . New conditions requirecontinuing innovation as we move to incorporat estealth technology, extremely accurate weapons ,improved means of locating targets, and ne woperational concepts into our combat forces .

Illicit Drugs

Traffic in illicit drugs imposes exceptional costs on th eeconomy of the United States, undermines ou rnational values and institutions, and is directl yresponsible for the destruction and loss of man yAmerican lives . The international traffic in illicit drugsconstitutes a major threat . to our national security an dto the security of other nations .

We will increase our efforts to reduce both the suppl yof and the demand for illicit drugs . Internationally, wewill attack the production of such drugs, and th emultinational criminal organizations which enabl eillicit drugs to be processed, transported, an ddistributed . A cornerstone of our international dru gcontrol strategy is to work with and motivate othe rcountries to help defeat the illicit drug trade and re-duce the demand for drugs .

As we intensify our programs, we will increase ou ractions aimed at controlling the flow of drugs acros sour borders . In this area, as in others, we will mak eincreased use of the resources and expertise provide dby the Department of Defense . We recognize thatmilitary involvement in this mission has costs, an dthat 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 .

Refugees

The dislocations of a turbulent world—famine ,persecution, war, and tyranny—have swelled the wav eof refugees across the planet to a total that no wexceeds 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 t othe next, awaiting solutions to seemingly intractabl epolitical and ethnic disputes . Beyond the dee ppersonal tragedies these figures represent, such a vas trefugee population taxes the world community'sresources, denies to that community the man ycontributions these peoples could make in mor ebenign circumstances, and fuels the hatreds that wil lignite future conflicts .

The United States has a proud tradition, as long asour history, of welcoming refugees to our shores . We

also take pride in our work with internationa lagencies to provide assistance and relief for refugees ,even as we strive politically to resolve the conflict sthat provoked their flight . We have encouraged th erestructuring of relief organizations to make themmore effective and efficient—to make certain tha tscarce resources reach those who need them . Thi syear, through our budget and the generosity of privategroups, we will take in more refugees than last year .We will maintain a compassionate and generou sprogram of resettlement in the United States an dassistance for refugees worldwide .

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

• How can we ensure continued internationa l

stability as U .S .-Soviet bipolarity gives way to

global 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 du eaccount of them in our long-term planning? Ho w

much risk can we prudently accept in an era of

strategic change, fiscal austerity, and grea tuncertainty?

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

• How do we maintain the cohesion among allie sand friends that remains indispensable to commo nsecurity 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 an dGermany moves toward unification ?

• If military factors loom less large in a world of amore secure East-West balance, how shall w emarshall 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 th esections that follow .

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111 .Regional Challenges and Response s

Although we are a global power, our interests are no tequally engaged or threatened everywhere . In the faceof competing demands, budgetary stringency, and animproving East-West climate, we must review ou rpriorities . Where our capabilities fall short of needs ,we must assess the risks and employ the full panopl yof 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 an dmilitary forces are reduced on both sides, maintainin gthe global strategic balance is inescapably a nAmerican concern ; there is no substitute for ou refforts.

Yet, the extraordinary changes taking place, if thei rpromise is fulfilled, will permit important changes i nour defense posture—and a greater possibility ofviewing other regions in their own right, independen tof the East-West context .

The Soviet Unio n

Our goal is to move beyond containment, to seek th eintegration of the Soviet Union into the internationa lsystem as a constructive partner. For the first time i nthe 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 ow npostwar 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 th econditions that will permit the Soviet Union to join ,and be welcome in, a peaceful, free, and prosperousinternational community. We will expand contacts fo rmutual benefit, to promote the free flow of ideas an ddemocratic values in the Soviet Union, and to lay afirmer foundation for a deeper relationship over th elong term . Our Open Lands proposal, for example ,would abolish the "closed zones" that unnecessaril yimpede contacts by diplomats, businessmen, tourists,students, and journalists . To support Soviet economi creform, I have proposed immediate negotiations on aU.S.-Soviet trade agreement so that—pending action b ythe Supreme Soviet to codify emigration reform—wecould grant Most Favored Nation status to the SovietUnion at the June 1990 Summit . We have offered t osupport observer status for the Soviet Union in th estructures created by the General Agreement on Tariff sand Trade (GATT) after the Uruguay Round o fMultilateral Trade Negotiations is completed, and Ipersonally urged Chairman Gorbachev to use th eintervening time to move more rapidly towards marke tpractices in the Soviet economy. We are als oexpanding technical economic cooperation and havebegun discussions on a bilateral investment treaty.

We strongly support today's dramatic process o fpolitical and economic reform, and have a significan tstake in its success. Yet, U .S . policy does not an dcannot depend on a particular leader or set of leadersin the USSR. We look for fundamental alterations i nSoviet institutions and practices that can only b ereversed at great economic and political costs . In thepolitical sphere, democracy is the best assurance o firreversible 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 o fmilitary supremacy and impossible to attempt withoutproviding ample strategic warning. These must be ou rstandards .

Even if the U.S .-Soviet relationship remain scompetitive, it can be made less militarized and fa rsafer. We will seek effectively verifiable arms contro lagreements with the Soviet Union and others as a nintegral component of our security strategy .

But whatever course the Soviets take over the nex tdecade, the Soviet Union will remain a formidabl emilitary power. The United States must continue tomaintain modern defenses that strengthen deterrenc eand enhance security. We cannot ignore continuin gSoviet efforts to modernize qualitatively even as the ycut back quantitatively. As Chairman Gorbachevdeclared last September 21st, "While reducin gexpenditure for [defense] purposes, we are payin gattention to the qualitative rearmament of the Army ,and in this way we are not permitting the overal llevel of our defense capability to be weakened in anydegree ." Our response thus represents pruden tcaution, but the Soviet leadership and people shoul drealize that it is a caution based on uncertainty, no ton hostility .

Restructuring the Soviet Union's relationship to th einternational community is as ambitious a task a scontainment was for its time . Responsibility fo rcreating the conditions for it lies first and foremostwith the Soviet Union itself. But the United States i sdetermined, together with our allies, to challenge an dtest Soviet intentions and—while maintaining ou rguard—to work to put Soviet relations with the Wes ton a firmer, more constructive course than had eve rbeen 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 tha tshare 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 natura lpartnership 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 bac kentirely within its territory, would remain by virtue o fgeography 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 nuclea rpower remains the ultimate deterrent of aggression ,even at lower force levels .

In Europe's emerging new political environment,moreover, the Atlantic Alliance remains a natura lassociation of free nations and the natural frameworkfor harmonizing Western policies on both securityand diplomacy. It embodies the continuing America ncommitment to Europe; it also sustains the overal lstructure of stability that can assure the success ofthe democratic evolution of Central and Easter nEurope .

Yet, within this framework, the "European pillar" o fthe 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 broade rAtlantic Community . European unity and Alliancepartnership do not conflict; they reinforce each other.We support the European Community's efforts t ocreate a single unified market by 1992 . A strongEuropean Community will ensure more efficient us eof European resources . for common efforts, and wil lalso be a strategic magnet to the nations of Easter nEurope . We also support increased Western Europea nmilitary cooperation and coordination, within th eoverall framework of the Atlantic Alliance, includin gboth bilateral efforts and those in the WesternEuropean Union. We strongly support th eindependent British and French nuclear deterren tforces and their continued modernization .

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The unification of Germany is coming about—b ypeaceful means, on the basis of democracy, and i nthe framework of the Western relationships that hav enurtured peace and freedom for four decades. This i sa triumph for the West . We expect a unified German yto remain a member of both the North Atlanti cAlliance and the European Community, as all of usseek to foster the conditions for wider reconciliatio nin Europe .

As the European-American relationship shifts, friction scan arise. Statesmanship will be needed to ease them .The challenges that the Western democracies face i nthis environment, however, are challenges to wis epolicy, not to the nature of their system . Assuming th edemocracies maintain discipline in their diplomatic ,defense, and economic policies, we face a nextraordinary opportunity to shape events i naccordance with our values and our vision of thefuture .

Eastern EuropeThe United States and its allies are dedicated t oovercoming the division of Europe . All the countriesof Eastern Europe are entitled to become part of th eworldwide commonwealth of free nations as, one b yone, they reclaim the European cultural and politica ltradition that is their heritage . Overcoming thisdivision depends on their achievement of self-determination and independence . We will accept n oarrangements with Moscow that would limit thes erights, and we expect the Soviet Union to continue t orepudiate 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 th esame social and economic organizations . The Col dWar began with the division of Europe . It can trul yend only when Europe is whole again .

We share with our allies a vision of Europe whol eand free :

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

• Even as fundamental political changes are stil levolving, we place high priority on moving rapidl yto a level of forces lower and more stabilizing, wit hgreater openness for military activities .

The United States intends to play a role in fosterin gEastern Europe's economic development, supportin gits democratic institutions, and ensuring the overal lstructure of stability . It has become dramatically clea rthat the American role is welcomed by the peoples ofEastern Europe, who—in the new Europe that i semerging—see our presence as reassuring . Naturally ,our relations with East European countries will b eaffected 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 th epeoples of Eastern Europe—I signed into la wlegislation authorizing $938 million in assistanc eto support democracy in Poland and Hungary . In myFY 1991 budget I have proposed an additiona l$300 million as we begin to expand our program toencompass other new East European democracies .In addition, we have offered our best advic eand expertise in support of economic reform ,trade liberalization, labor market reforms ,private sector development, and environmenta lprotection . This marks a major and positivestep in bipartisan foreign policy and underscore sthe strength of the American commitment to assistEastern Europe's historic march towardfreedom.

We will also look to the Conference on Security an dCooperation in Europe (CSCE) to play a greater role,since the CSCE stands for the freedom of people t ochoose their destiny under a rule of law with ruler swho are democratically accountable . We suggeste dlast year that we expand the CSCE human right sbasket to include standards for democrati cpluralism and free elections, and that we breathe newlife into the economic dimension of CSCE b yfocusing on the practical problems of the transitio nfrom stagnant planned economies to free an dcompetitive markets . The time is ripe for suc hsteps .

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The Western Hemisphere

The Western Hemisphere has within reach the grea tgoal of becoming history's first entirely democrati chemisphere. The dramatic victory of the Nicaragua nopposition in the February 25th elections has given asignificant boost to the underlying trend towarddemocracy evident in the region over the past severa lyears . 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 securit ythreats . Improvement in our relations with Cub adepends upon political liberalization there and an en dto its subversion of other governments and th eundermining of the peace process in the region . I nNicaragua, our goal is to assist the new governmen tof Violeta Chamorro in its efforts to nurtur edemocratic institutions, rebuild the economy, an dscale 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 believ ethat Soviet cooperation in fostering democracy in th eregion is an important test of the new thinking i nSoviet policy .

We will find new ways to cooperate with our twoclosest neighbors, Canada and Mexico . We strongl ysupport the new democratic government in Panama ,which is also the best long-term guarantee of th esecurity and efficient operation of the Panama Canal .We will continue to seek a transition to democracy i nHaiti, promoting international efforts in support of fre eelections . The return to democracy in most of Lati nAmerica will put new emphasis on our efforts tosupport professional, apolitical militaries . We will alsoconfront the challenge to democracy posed by th edrug trade and debt problems .

East Asia and the Pacifi c

Our network of alliances and our forces deployed i nthe region have ensured the stability that has mad ethis area's striking progress possible .

In addition to our own deterrent strength, security i nthe region has rested since the 1970s on a nunprecedented structure of harmonious relation samong the region's key states . Our alliance with Japanremains a centerpiece of our security policy and a nimportant anchor of stability . Japan's importance i snow global . Our relationship is one of the mostimportant bilateral relationships in the world and it i sin our strategic interest to preserve it .

The relationship between the United States an dChina, restored in the early 1970s after so many year sof estrangement, has also contributed crucially toregional stability and the global balance of power .The United States strongly deplored the repression i nChina last June and we have imposed sanctions t odemonstrate our displeasure . At the same time, w ehave sought to avoid a total cutoff of China's ties tothe outside world . Those ties not only have strategi cimportance,, both globally and regionally; they arecrucial to China's prospects for regaining the path o feconomic 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 tension son the Korean peninsula and fully endorse Seoul' sefforts to open a fruitful South-North dialogue . Ourstrong and healthy ties with our ally Australi acontribute directly to regional and global stability . TheAssociation of Southeast Asian Nations (ASEAN)continues to play a major role in the region's securit yand prosperity .

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

As we have amply demonstrated, we support th ePhilippines' democratic institutions and its efforts t oachieve prosperity, social progress, and interna lsecurity . We will negotiate with the Philippines i ngood faith on the status of our military facilities there.

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These facilities support a continued and neede dAmerican forward presence that benefits us, th ePhilippines, regional security, and global stability .

The Middle East andSouth AsiaThe free world's reliance on energy supplies from thi spivotal region and our strong ties with many of th eregion's countries continue to constitute importan tinterests of the United States .

Soviet policies in the region show signs o fmoderating, but remain contradictory . The supply o fadvanced arms to Libya and Syria continues (as doe sthe cultivation of Iran), though Soviet diplomacy ha smoved in other respects in more constructiv edirections .

The Middle East is a vivid example, however, of aregion in which, even as East-West tensions diminish ,American strategic concerns remain . Threats to ou rinterests—including the security of Israel an dmoderate 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, Liby ain 1986, and the Persian Gulf in 1987-88—were i nresponse to threats to U .S . interests that could not b elaid at the Kremlin's door. The necessity to defend ou rinterests will continue .

Therefore, we will maintain a naval presence in th eeastern Mediterranean Sea, the Persian Gulf, and theIndian Ocean . We will conduct periodic exercisesand pursue improved host-nation support an dprepositioning of equipment throughout the region . I naddition, we will discourage destabilizing arms sale sto regional states, especially where there is th epotential 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 buil dinternational pressure against those states that sponso rterrorism and subversion . And we will continue topromote a peace process designed to satisfy legitimatePalestinian political rights in a manner consonant wit hour enduring commitment to Israel's security .

In South Asia, Pakistan and India are both friends o fthe United States . We applaud the return o fdemocracy to Pakistan and the trends of economicliberalization in both countries . We will seek tomaintain our special relationship with our traditiona lally Pakistan, steadily improve our relations wit hIndia, and encourage Indo-Pakistani rapprochemen tand a halt to nuclear proliferation . While wewelcome the withdrawal of Soviet military forces fro mAfghanistan, the massive and continuing Soviet arm ssupply to the illegitimate regime in Kabul reinforce sthe need for continued U .S . support to theMujahiddin in their quest for self-determination fo rthe Afghan people . We remain firmly committed to acomprehensive political settlement as the best mean sof achieving Afghan self-determination and regiona lsecurity.

AfricaInstitution-building, economic development, an dregional 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 th einternational system . Africa is a major contributor t othe 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 liquidatio nof all the Soviet/Cuban military interventions in Afric aleft 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 becom eindependent on March 21st. In the Horn of Africa ,the United States has encouraged negotiated solution sto the region's conflicts .

In the economic dimension, the United States wil lcontinue to advocate reforms that eliminate wastefu land unproductive state-owned enterprises and tha tliberate the productive private sector and individua linitiative . The United States has significantly increasedthe assistance it provides through our Developmen tFund for Africa. We continue to be the biggest dono rof humanitarian aid and have helped international

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organizations and voluntary associations to distribut efood, 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 Afric athat would enhance long-term stability in the country

and the region . We are encouraged by the progres sthat has been made, particularly the release of Nelso nMandela 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 an dpolitical, economic and military—remain formidable .Yet, the relative importance of these differen tinstruments of policy will change in changin gcircumstances. Our most difficult decisions wil linclude not only which military forces or programs toadjust, increase, reduce or eliminate, but also whic hrisks can be ameliorated by means other than militar ycapability—means like negotiations, burdensharing ,economic and security assistance, economic leverage ,and political leadership.

In a new era, we foresee that our military power wil lremain 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 ou rmilitary forces may not involve the Soviet Union an dmay be in the Third World, where new capabilitie sand approaches may be required . We see that wemust look to our economic well-being as th efoundation of our long-term strength . And we can seethat, especially in the new international environment ,political will and effective diplomacy can be wha ttranslates national power into the achievement ofnational objectives . While this Report necessaril ydescribes these different elements of policy separately ,national strategy must integrate them and wield the maccording to a coherent vision .

Alliance Relationship s

Our first priority in foreign policy remains solidaritywith our allies and friends . We have never been abl eto "go it alone"; even in the early days of the Cold Wa rwhen our major allies were still suffering from th edevastation and exhaustion of World War II . Even to

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

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

Arms Control

Arms control is a means, not an end ; it is animportant component of a broader policy to enhancenational security. We will judge arms contro lagreements 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 reduction sfor reductions' sake, but agreements that wil lpromote stability. We will work to reduce th ecapabilities most suited for offensive action or pre-emptive strike .

• Second, to enhance stability, we favor agreement sthat lead to greater predictability in the size, nature ,and evolution of military forces . Predictabilitythrough openness expands the traditional focus o farms control beyond just military capabilities an daddresses the fear of aggressive intent .

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• Third, agreements are effective only if we canverify compliance . As we broaden our agenda t oinclude issues like chemical and missil eproliferation, verification will become a nincreasingly difficult challenge, but effectiv everification will still be required. We wantagreements that can endure .

• Finally, since the security of the United States i sindivisible from that of its friends and allies, wewill insist that any arms control agreements no tcompromise allied security .

The arms control accomplishments of the past twelv emonths 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 i nterritorial seas ;

• a memorandum of understanding implementin gverification provisions of the INF Treaty ;

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

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

• reciprocal exhibitions of strategic bombers to ai dverification; and

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

These are but the beginning . Our arms control agend ais now broader than ever—beyond the traditional East-West focus on nuclear weapons . We are dealing wit hpressing multilateral arms control issues . We are als onegotiating for greater transparency and for limits o nconventional arms . We will negotiate in good faith ,patiently and seriously, but we will not seek agree-ment for agreement's sake, nor compromise the basi cprinciples set forth above .

Strategic Arms Reduction Talks(START)

In START, our goals are not merely to reduce force sbut to reduce the risk of nuclear war and create amore stable nuclear balance . Our proposals aredesigned to strengthen deterrence by reducing an dconstraining in particular those strategic nuclear force swhich pose the greatest threat—namely, ballisticmissiles, especially large ICBMs with multipl ewarheads . We propose less strict limits on bomber sand cruise missiles, which are not capable of carryin gout a disarming first strike . Our goal is to resolve al lsubstantive 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 cooperativ etransition to a stable balance of offensive an ddefensive forces if effective defenses prove feasible .We also seek greater transparency and predictabilit yin approaches to strategic defense, and have propose dregular exchanges of data, briefings, visits tolaboratories, and observations of tests .

Conventional Armed Forces in Europ e(CFE)

The United States is firmly committed to reaching a nagreement to reduce conventional armed forces i nEurope to lower levels in order to enhance securityand stability and to reduce the ability to launch asurprise attack or sustain large-scale offensiv eoperations. Our goal is to complete the CFE Treaty a ssoon as possible this year . In my State of the Unio nspeech, in response to rapid changes in Europe, Iproposed to lower substantially the levels of U .S . andSoviet ground and air force personnel in Central an dEastern Europe—to 195,000 troops . This proposal ha sbeen accepted .

Chemical Weapons

The Conference on Disarmament in Geneva continue sto work toward a global ban of chemical weapons ,using as the basis for its negotiations the draft tex tthat I personally presented for the United States i n1984 . It is one of my most important goals to see a neffective, truly global ban of chemical weapons—thei rproduction and possession, as well as their use . At

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the United Nations and at Malta, I made severa lsuggestions and challenges to speed this negotiatio nto a successful conclusion, including ways that th eUnited States and Soviet Union can set an example t ospur 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 Summi tthat would have each side destroy substantia lquantities of its chemical weapons stocks . We mustnot only deal with those states that now posses schemical weapons, but also address the growingproliferation of these instruments of indiscriminat edestruction .

Open Skies

An important step in achieving predictability throughopenness is the Open Skies initiative I made last May,which would allow frequent unarmed observatio nflights over the territory of participating states . Thi swould institutionalize openness on a trulyunprecedented scale . It would achieve greate rtransparency about military activities, lessen danger,and ease tension . The NATO allies agreed i nDecember on a common approach for pursuing thi sinitiative, and foreign ministers from NATO and th eWarsaw Pact have met in Ottawa to begin negotiatin gan agreement .

Confidence- and Security-Buildin gMeasures

These negotiations in Vienna are another importantopportunity to enhance free world security through avariety of measures to codify openness an dtransparency in military operations and forc estructures . The recently completed seminar on militarydoctrine is a powerful example of how this forum ca ngenerate valuable exchanges among high-rankin gmilitary officers and open up new avenues o funderstanding.

Nuclear Testing

The United States and the Soviet Union are on theverge of completing new verification protocols to th e1974 Threshold Test Ban and the 1976 Peaceful Nu-clear Explosions Treaties that should open the way t otheir ratification and entry into force . The protocols-which I expect to be signed at the June 1990

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

Proliferation

The spread of ever more sophisticated weaponry-including chemical, biological, and nuclea rweapons—and of the missiles capable of carryingthem represents a growing danger to internationa lsecurity. This proliferation exacerbates and fuel sregional tensions and complicates U .S . defenseplanning . It poses ever greater dangers to U .S . force sand facilities abroad, and possibly even to the Unite dStates itself.

Our comprehensive approach to this proble mincludes stringent controls and multilatera lcooperation designed to stop the spread of thes etechnologies 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 t oaddress the underlying causes of tension or insecuritythat lead countries to seek advanced weaponry .

Naval Forces

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

The economies of the United States and its majo rallies depend so vitally on trade, and on the securityof sea lines of communication, that we have alway sdefined a vital interest in freedom of the seas for al lnations . Our Navy protects that interest . Similarly,some of our most important security relations are wit hnations across the oceans . The Soviet Union, as apower on the Eurasian land mass not dependent o noverseas trade, with interior lines of communicatio nto its major allies and trading partners, has no suc hstrategic stake . Its navy has served the purposes o fcoastal defense—or of denial of our ability to defen dour 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 th eNurturing of DemocracySince the end of World War II, the United States ha sdeveloped and maintained an extensive program o fpublic 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 close dsocieties with information about their countries ,factual news of the world, and insight into America nsociety . Primary tools for this effort are the Voice o fAmerica, Radio Liberty, and Radio Free Europe . Theirimpact has been invaluable, and has contribute dsignificantly to the changes now taking place in th eSoviet Union, Eastern Europe, and elsewhere .

The American message of democracy, respect fo rhuman rights, and the free flow of ideas is as crucia land inspiring today as it was forty-five years ago . Thetruth we provide remains a stimulus to openness . I nthe coming decade, we will have to project America nvalues and protect American interests on issues ofgrowing global importance, such as the battle againstnarcotics trafficking and the search for solutions t ointernational environmental problems .

An American initiative begun in the 1980s—th eNational Endowment for Democracy—has broken ne wground, mobilizing the private efforts of our politica lparties, labor unions, businesses, educational an dother organizations in fostering the development o fdemocratic institutions . As democratic changecontinues around the world—and is still denied i nmany places—we must ensure that the message w esend and the means of delivery we use keep pace .

Economic and SecurityAssistanc eOur foreign assistance has traditionally supported ou r

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

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

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

• In a new era, nurturing democracy and stabilit yremains a basic goal, but one now freed from it straditional Cold War context . Foreign assistance i san indispensable means toward this end .

• Economic and humanitarian goals—such aspromoting market-oriented structural reforms i nEastern Europe and the developing world, or aidin grefugees and disaster victims —will also loom large rthan before . This is a responsibility we need toshare with international financial institutions an dprosperous allies, but we need to do our part .

• As regional conflicts are resolved, United Nation speacekeeping takes on additional tasks—and wil lhave 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 i nbolstering regional security .

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

These policy instruments in our International Affair sbudget have always struggled for survival in th econgressional budget process. Low funding an dexcessive earmarking and conditionality hav ehampered flexibility . In the 1990s, we will need to dojustice to the growing needs of the emerging Eas tEuropean democracies without validating the fears ofour Third World friends that they will be relegated tosecond place . A national security strategy that takes u sbeyond containment needs these tools more tha never .

Military Openness

In addition to the confidence-building measure sdiscussed above, our policy seeks other ways ofchanging East-West military relations toward our goa lof greater transparency. A prudent program ofmilitary-to-military contacts can demonstrate th ecapabilities of our forces while allowing us greate raccess to and understanding of the militaryestablishments of potential adversaries . This can re-duce worst-case planning based on limitedinformation and reduce the likelihood o fmiscalculation 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 enhanc eits capabilities beyond the legitimate needs of de-fense. Increased contact with the armed forces of th eUnited States and other democracies can aid thi sprocess as well as contribute to greater understanding .We will continue to pursue the kinds of contacts firstagreed to by Admiral Crowe and Marsha lAkhromeyev in 1988. We will also pursue simila rexchanges with the armed forces of Eastern Europea nstates . In addition to their obvious contributions totransparency, such contacts will support our overal lapproach 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 Agend a

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

We will pursue a strategy that integrates domesti ceconomic policies with a market-opening trade policy,enhanced cooperation among the major industria lcountries, and imaginative solutions to the problem sof the Third World .

Global Imbalance s

Japan and Germany continue to run substantial trad eand current account surpluses; the United States haslarge deficits. Recent economic summits and meeting sof finance ministers of the Group of Seven (G-7) hav egiven high priority to reducing these imbalances. Fo rdeficit countries like the United States, this require saction to reduce budget deficits and encourage privat esavings . The surplus countries like Germany and Japa nshould, for their part, pursue macro-economic policie sand structural reforms to encourage non-inflationar ygrowth . Through the G-7 and economic summits, wewill strengthen coordination and ensureimplementation 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 mee tannual interest payments. It is a tremendous burde non struggling democracies and on the ability of manyfriendly countries to maintain their security. Relativelyslow world growth, growing inflation, risin gunemployment, and the failure to implemen tnecessary 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 deb tservice payments, as a complement to new lending .The International Monetary Fund and the World Ban kwill provide financial support for these efforts . As anessential first step in obtaining this support, we areurging debtors to adopt medium-term economi cprograms—including measures to strengthen domesti csavings, steps to attract foreign investment, an dpolicies 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 th eU .S . economy has led to increased calls fo rgovernment intervention in support of key sectors .Current account and trade deficits are macroeconomi c

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phenomena that primarily reflect domestic saving sand 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 b ematched by a corresponding increase in imports t othe United States over exports to other countries . Thekey to reducing the deficit, therefore, is to increas edomestic saving, thus closing the savings-investmen tgap and reducing import demand . We have propose da 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 trad edeficit, we must also ensure that market forces arefree to operate at home and abroad, and that trad eexpands—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 no waddressing issues crucial to our interests, includin gagricultural subsidies, services, the protection o fintellectual property, trade-related investmen tmeasures, and market access . These are the tradeproblems of the 1990s that require solution if we areto maintain a domestic consensus in support of fre eand open trade .

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

Technology

Our economic and military strength rests on ou rtechnological superiority, not sheer manufacturingmight . The United States remains in the forefront i nthe development of new technologies, but America nenterprises must respond more quickly in thei rexploitation of new technologies if they are tomaintain their competitiveness in both domestic an dforeign markets . The loss of advanced productio ncapabilities in key industries could place ou rmanufacturing base in jeopardy .

The dynamics of the technological revolutio ntranscend national boundaries . The transfer oftechnology between allies and friends has benefittedthe United States in both national security andeconomic terms . Open markets and open investmen tpolicies will best ensure that scarce resources ar eused efficiently and that benefits are widely shared .But the openness of the free market economy mus tnot be exploited to threaten our security . With ourpartners in the Coordinating Committee fo rMultilateral Export Controls (COCOM), we mustcontinue to work to ensure that militarily sensitiv etechnology does not flow to potential adversaries . Atthe same time, we must adapt the procedures andlists of COCOM-controlled goods to support rapi dpolitical and economic change in Eastern Europe . I n

that regard, our task is threefold : (a) streamlin eCOCOM controls on strategic goods an dtechnologies; (b) harmonize and tighten nationa llicensing and enforcement procedures ; and (c)encourage greater cooperation with non-COCO Mdeveloping countries . We have also initiated acomprehensive analysis of the changing strategi cthreat, which will be instrumental in deciding o n

possible further changes in the multilateral system o fstrategic export controls .

Energy

Secure supplies of energy are essential to ou r

prosperity and security. The concentration of 65percent of the world's known oil reserves in th ePersian 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 Petroleu mReserve at a level adequate to protect our economyagainst a serious supply disruption . We will continu eto promote energy conservation and diversification of

oil and gas sources, while expanding our total supply

of energy to meet the needs of a growing economy .We must intensify efforts to promote alternativesources of energy (nuclear, natural gas, coal, an drenewables), and devote greater attention to reducin g

fossil fuel emissions in light of growing environmenta l

concerns .

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VI. . Relating Means to Ends:Our Defense Agenda

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

• Deterrence : Throughout the postwar period we havedeterred aggression and coercion against the Unite dStates and its allies by persuading potential adver-saries that the costs of aggression, either nuclear o rconventional, 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 commo nsecurity interests form the basis of our system ofcollective security. Collective defense arrangement sallow us to combine our economic and militar ystrength, thus lessening the burden on any on ecountry.

• Forward Defense : In the postwar era, the defense o fthese shared values and common interests ha srequired the forward presence of significantAmerican military forces in Europe, in Asia and th ePacific, and at sea . These forces provide th ecapability, 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 securit yinterests, we have maintained ready forces in th eUnited States and the means to move them t oreinforce our units forward deployed or to projec tpower into areas where we have no permanen tpresence . For the threat of protracted conflict wehave relied on the potential to mobilize th emanpower and industrial resources of the country .

These elements have been underwritten by advancedweaponry, timely intelligence, effective and verifiabl earms control, highly qualified and trained personnel ,and a system for command and control that i seffective, 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 durin gthe past decade was an essential underpinning to thepositive change we now see in the internationa lenvironment . Our challenge now is to adapt thi sstrength to a grand strategy that looks beyon dcontainment, and to ensure that our military power,and that of our allies and friends, is appropriate to th enew and more complex opportunities and challenge sbefore us .

Overall Prioritie s

From the weapons, forces, and technologies that wil lbe available, we will have to pick carefully those tha tbest meet our needs and support our strategy in anew period . Our approach will include the followin gelements :

• Deterrence of nuclear attack remains thecornerstone of U .S . national security. Regardless ofimproved U.S .-Soviet relations and potential arm scontrol agreements, the Soviets' physical ability t oinitiate strategic nuclear warfare against the UnitedStates will persist and a crisis or political change i nthe Soviet Union could occur faster than we coul drebuild neglected strategic forces . A STARTagreement will allow us to adjust how we respon dto the requirements of deterrence, but tending t othose requirements remains the first priority of ou rdefense strategy.

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• As we' and our allies adjust our military posture ,each should emphasize retaining those roles it i suniquely 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 an dareas of interest by vast distances, we will ensur ewe have those forces needed to control critical se aand air lines of communication in crisis and war .

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

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

• Defense investment faces a dual challenge : tomaintain sufficient forces to deter general war whil ealso giving us forces that are well suited for th emore likely contingencies of the Third World .Many defense programs contribute significantly i nboth environments but, where necessary, we wil ldevelop the weaponry and force structure neede dfor the special demands of the Third World even i fit 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 an dmay, 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 an dconstitutional duty to provide .

Deterring Nuclear Wa r

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

Decisions on strategic modernization that I hav ealready made take advantage of the most promisin gtechnologies in each leg of our Triad to increasestability. The B-2 bomber will ensure our ability topenetrate Soviet defenses and fulfill the role th ebomber force has played so successfully for fortyyears . The D-5 missile in Trident submarines wil lexploit the traditionally high survivability of this le gand add a significant ability to attack more hardenedtargets . In a two-phase program for our ICBM force ,the deployment of the Rail Garrison System wil lenhance stability by removing Peacekeeper missile sfrom vulnerable silos and providing the mobil ecapability we need for the near term . In the secondphase, deployment of the small ICBM road-mobil esystem will further strengthen stability and increas eforce flexibility .

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

Strategic DefensesFlexible response and deterrence through the threat o fretaliation have preserved the security of the Unite dStates and its allies for decades . Looking to the future,the Strategic Defense Initiative offers an opportunity toshift deterrence to a safer and more stable basi sthrough greater reliance on strategic defenses . In anew international environment, as ballistic-missil ecapabilities 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 a nattacker's calculation by diminishing his confidence i nhis ability to execute an effective attack . Initial strate-gic defenses would also offer the United States and it sallies some protection should deterrence fail or in th eevent of an accidental launch. Follow-on deployment sincorporating more advanced technologies coul dprovide progressively more capable defenses, even inthe face of countermeasures .

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

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reductions in strategic offensive arms . Strategi cdefenses can protect our security against possibl eviolations of agreements to reduce strategic offensiveweapons .

The Soviets have stated that they are no longe rmaking completion and implementation of a STARTtreaty contingent on a Defense and Space Agreemen trestricting SDI . A START Treaty should stand on it sown merits and we will preserve our right to conductSDI activities consistent with the Anti-Ballistic Missil e(ABM) Treaty and our option to deploy SDI when it i sready . And we will use the Defense and Space Talk sto explore a cooperative and stable transition to agreater reliance on stability-enhancing, cost-effectiv estrategic defenses .

Theater Nuclear Forces

The Atlantic Alliance has consistently followed th eprinciple of maintaining survivable and credible thea-ter nuclear forces to ensure a robust deterrent, t oexecute its agreed strategy of flexible response—an dto "couple" European defense to the strategic nuclea rguarantee of the United States . At the same time, w ehave always pursued a nuclear force that is as smal las is consistent with its tasks and objectives . Indeed ,NATO has unilaterally reduced its theater nuclea rweapons 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 an dchanges in Eastern Europe, we will need to retai nmodern nuclear forces in-theater .

Command, Control andCommunication s

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

Deterring Conventional Wa r

It is clear that the United States must retain the ful lrange of conventional military capabilities ,appropriately balanced among combat and suppor telements, U .S .- and forward-based forces, active an dreserve components . We must also maintain properl yequipped and well trained general purpose an dspecial operations forces . Within these requirements ,as we look to the future, we see our active forcesbeing smaller, more global in their orientation, an dhaving a degree of agility, readiness and sustainabilit yappropriate to the demands of likely conflicts .

Forward Defense through Forwar dPresence

American leadership in the postwar world and ou rcommitment to the forward defense of our interest sand those of our allies have been underwritten by th eforward presence of U .S . military forces . We haveexerted this presence through forces permanentl ystationed abroad; through a network of bases ,facilities, and logistics arrangements ; and through th eoperational presence provided by periodic patrols ,exercises, and visits of U .S . military units . Clearly, themix of these elements will change as our perceptio nof the threat changes, as technology improves th ecapabilities and reach of our military forces, and a sallies assume greater responsibilities in our commo nefforts . But our forward presence will remain a critica lpart of our defense posture for the foreseeable future .Our overseas bases serve as an integral part of ou ralliances and foster cooperation against commo nthreats . There is no better assurance of a U .S . securit ycommitment than the presence of U .S . forces .

There are growing pressures for change in our globa ldeployments, however. Some are caused by concern sat home over an inequitable sharing of the defens eburden, and others in host countries emanate fro mnationalism, anti-nuclear sentiment, environmenta land social concerns and honestly divergent interests .Operational restrictions on our forces overseas arealso increasing, some of which we can accommodat ewith new training and technologies, but others o fwhich may eventually reduce the readiness of ou rdeployed units .

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In Europe, ' the overall level and specific contributio nof U.S . forces are not etched in stone, but we wil lmaintain forces in Europe—ground, sea and air,conventional and nuclear—for as long as they areneeded and wanted, as I have pledged . Our forces i nEurope contribute in many ways to stability an dsecurity. They are not tied exclusively to the size o fthe Soviet presence in Eastern Europe, but to th eoverall Alliance response to the needs of security . Forthe foreseeable future, we believe a level of 195,00 0U .S . troops in Central Europe is appropriate fo rmaintaining stability after a CFE reduction .

We also recognize that the presence of our force screates burdens that are part of the overall sharing o feffort within the Alliance . Consistent with th edemands 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 acces sto facilities that will permit a prompt return of U .S .forces should they be required . As we negotiate fo rthe use of overseas bases, we will also proceed fromthe realistic premise that no base is irreplaceable .While some are preferred more than others, eac hmakes a limited contribution to our strategy .

Sharing the Responsibilities o fCollective Defens eThe success of our postwar strategy has enabled allie dand friendly nations' economies and societies toflourish . We now look to them to assume a greate rshare in providing for our common security . Ou refforts in this regard will be integrated with our plan sfor future force structure, weapons modernization, andarms control . Above all, they must not be—nor b eperceived 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 th ecomparative advantages of different allies in differen tdefense activities . Such an approach could reduce th eimpact of budget constraints being felt by us all .Significant adjustments in missions and national forcestructures may be possible as part of major negotiate dforce reductions, such as those envisioned by CFE .The overall destruction of equipment and th epossibility of "cascading" newer items from on eAlliance member to another (while destroying older,less capable models) may give us opportunities fo rgreater efficiencies and new forms of Allianc ecooperation . 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 wil lcontinue to ask our economically stronger allies t oincrease aid to other Alliance members and tofriendly Third World countries . As another element ofburdensharing, the United States will work with allie sto broaden the regional role of our forward-deployedforces . This will help us deal with the challenge ofmaintaining sufficient forces for local defense and th eforces 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 i naddition to deterring attack in the country in whic hthey are located .

Forces for the Third Worl d

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

To the degree possible, we will support allied an dfriendly 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 Thir dWorld conflicts will place serious demands on ou rforces. They must be able to respond quickly, an d

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appropriately, as the application of even smal lamounts of power early in a crisis usually payssignificant dividends. Some actions may requireconsiderable staying power, but there are likely to b esituations where American forces will have to succee drapidly and with a minimum of casualties . Forces wil lhave to accommodate to the austere environment ,immature basing structure, and significant ranges ofte nencountered in the Third World . The logistics "tail" ofdeployed forces will also have to be kept to aminimum, as an overly large American presenc ecould be self-defeating . These capabilities wil lsometimes be different from those of a forceoptimized for a conflict in Europe, and—as ou runderstanding of the threat there evolves—we wil lmake the necessary adjustments .

We will also try to involve other industria ldemocracies in preventing and resolving Third Worl dconflicts . Some of our Atlantic allies have strongpolitical, economic, cultural, and military ties wit hThird World countries, and Japan providesconsiderable sums of aid . Their role will becom eeven more important in the future .

The Mobilization Bas e

The United States has never maintained active force sin peacetime adequate for all the possibl econtingencies we could face in war . We have instea drelied on reserve forces and on a pool of manpowe rand industrial strength that we could mobilize to dea lwith emergencies beyond the capabilities of ou ractive units .

For almost two decades, our Total Force policy ha splaced a significant portion of our total military powe rin a well-equipped, well-trained, and early-mobilizin greserve component . Various elements of that policy-the balance between active and reserve forces, th emix of units in the two components, the nature o fmissions given reserve forces—are likely to beadjusted as we respond to changes in the securityenvironment. Reserve forces are generally les sexpensive to maintain than their active counterpart sso, as we adjust force structures, retaining reserveunits is one alternative for reducing costs while stil lhedging against uncertainties . It is an alternative wemust thoroughly explore, especially as we bette runderstand the amount of warning time we ca nexpect for a major conflict .

A credible industrial mobilization capabilit ycontributes to deterrence and alliance solidarity b ydemonstrating to adversaries and friends alike that w eare able to meet our commitments . While importantprogress has been made in recent years, more can b edone to preserve our ability to produce the weapon sand equipment we need . Mobilization plans will alsohave to reflect our changing understanding of warnin gfor a global war and develop graduated responses thatwill themselves signal U .S resolve and thus contributeto deterrence .

Chemical Warfar e

Our primary goal is to achieve an effective, trul yglobal ban on chemical weapons as soon as possible.Until such a ban is achieved, the United States wil lretain a small but effective chemical weapon sstockpile to deter the use of chemical weapon sagainst us and our allies . We will also continue ou rinitiatives to protect our forces from chemical agentsthat could be used against them and to minimize th eimpact of being forced to operate in a chemica lenvironment .

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

Space

The United States remains committed to th eexploration and use of space for peaceful purpose sand the benefit of all mankind, but international lawand this commitment allow for activities to protect ou rnational security. Our objectives for space mirro rthose 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 maintai nassured 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, an deconomic benefit—including encouraging privatesector investment. We will promote internationa lcooperative activities and work with others tomaintain freedom in space .

We remain dedicated to expanding human presenc eand activity beyond earth orbit and into the sola rsystem . 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 t ostrengthen our position of space leadership will b ecompletion of Space Station Freedom in the 1990s.

I chartered the National Space Council, chaired b yVice President Quayle, to develop national spac epolicy, advise me on space matters, and ensure thatpolicy guidance is carried out . I have also asked theVice President, as Chairman of the Council, to asses sthe feasibility of international cooperation in huma nexploration . Equally important, I announced ou rcommitment to use space to address critica lenvironmental problems on earth . The new Mission t oPlanet Earth program, a major part of acomprehensive research effort, will use spac eplatforms to gather the data we need to determin ewhat changes are taking place in the globa lenvironment.

The National Space Council also provides a high-leve lfocus for commercial space issues . Consistent wit hnational security and safety, an expanding privatesector role in space can generate economic benefit sfor the nation .

Low-Intensity Conflic t

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

Low-intensity conflict involves the struggle o fcompeting principles and ideologies below the leve lof conventional war. Poverty and the lack of politica lfreedoms contribute to the instability that breeds suc hconflict . Our response must address these underlyin gconditions—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 economi cprogress 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 hel pthem help themselves. In some cases, securityassistance ought to assume the same priority a sresources devoted to our own forces .

It is not possible to prevent or deter conflict at th elower end of the conflict spectrum in the same wayor to the same degree as at the higher . America nforces therefore must be capable of dealing effectivel ywith the full range of threats, including insurgencyand terrorism . Special Operations Forces haveparticular utility in this environment, but we will als opursue new and imaginative ways to apply flexibl egeneral purpose forces to these problems . We wil limprove the foreign language skills and cultura lorientation of our armed forces and adjust ou rintelligence activities to better serve our needs . Unitswith unique capabilities in this environment wil lreceive increased emphasis . Training and research an ddevelopment will be better attuned to the needs o flow-intensity conflict.

Drug TraffickingThe Department of Defense, as noted earlier, has a nimportant role to play in our National Drug Contro lStrategy in coordination with the Department of Stat eand law enforcement agencies .

The first line of defense against the illegal flow o fdrugs is at the source—in those countries where illici tdrugs are produced and processed before being sen tto the United States and other countries . Our policy i sto strengthen the political will and institutiona lcapability of host-country military, judicial, and la wenforcement agencies . Training and materia lassistance help improve tactical intelligence and theability to conduct airmobile and riverine operations.Security assistance also provides host countries wit hthe resources needed to confront the insurgencythreats that often are endemic to narcotics-producin gregions .

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A second line of defense involves the deployment o fappropriate elements of the U .S . Armed Forces withthe primary role of detecting and monitoring th etransportation of drugs to the U .S . border . TheSecretary of Defense has directed several regiona lcommanders to support these objectives with thei rown programs and operations . As a high priority, ou rmilitary counter-narcotics deployments will focus o nthe flow of drugs—especially cocaine—across th eCaribbean, Central America, and Mexico toward th esouthern border of the United States . Thesedeployments will support U .S . law enforcementagencies in their efforts to apprehend traffickers an dseize drug shipments .

Our military and foreign intelligence activities mustbe coordinated with our own and host-country la wenforcement agencies to identify air and maritim esmuggling vessels as well as the networks tha tfacilitate and manage illicit drug trafficking. Thiscooperation and coordination must be extended tothe operational level to ensure timely and effectiv einterdiction .

Current efforts are already bearing fruit . Ourassistance to the Colombian government has aided it scourageous campaign to strike back at the drug lord sand to reestablish national sovereignty and the rule o flaw. The cocaine industry in the Andean region hasbeen disrupted, and sustained pressure an dcooperation will erode the strength of the dru gtrafficking organizations . The United States i scommitted to such a sustained international effort.

Intelligence Program s

The extraordinary changes taking place in the worldare posing an almost unprecedented challenge to ou rintelligence 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 . Atime of _transition can also be a time of turbulence . I twill 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 th emilitary and political changes taking place there ,economic change can be a valuable gauge of ho wmuch real change is occurring. The extent to whic hSoviet leaders actually shift resources from militaryto civilian uses, for example, will be an importan tstrategic indicator .

In contrast to the hopeful trends in the Soviet Unio nand Eastern Europe, there are danger sign selsewhere—as this Report has noted . The proliferatio nof 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 th einformation needed to protect American interests .

The twin scourges of international terrorism an dnarcotics trafficking also pose very high-priority, bu tnon-traditional, intelligence requirements . We wil lalso have to adapt to a new emphasis on broade rglobal economic and trade issues . We must be mor efully 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 foreig nbusinesses—have tried to obtain our secrets an dtechnologies . Hostile intelligence efforts are not likel yto decrease in the near term, and they may actuall yincrease as barriers to contact come down .

U .S . intelligence must still be the "alarm bell" to giv eus early warning of new developments and newdangers even as requirements grow in number an dcomplexity . 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 Futur e

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

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undergoing significant change, both through Sovie tand other Warsaw Pact unilateral reductions an dthrough negotiated agreements . This prospect i sclearly 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 ou rresponses to those changes until their implementatio nis upon us . We will continually review importan tissues like the future demands of nuclear deterrence ,the proper role and mix of our general purpos eforces, and an improved and more effective securit yassistance program .

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VII . A Public Trust

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

The Defense Management

Review

Shortly after I took office, I ordered a review o fdefense management structures and practices i norder to improve defense acquisition, to implementthe excellent recommendations of the Packar dCommission, 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 it sfindings. I subsequently forwarded the report to th eCongressional leadership, giving its recommendation smy strong personal endorsement and asking fo rCongressional support in implementation .

The implementation process now underway provide sfor continuous improvement in several areas o fdefense management .

Reducing Overhead Costs Whil eMaintaining Military Strengt hThe Department of Defense is building a significantl ymore streamlined acquisition structure with clear line sof responsibility and authority. The Services' system sand materiel commands are being reorganized tofocus largely on logistics and support services . Nearlyall contract administration services, currently divide damong the Military Departments and the DefenseLogistics Agency (DLA), are being consolidated under

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

Enhancing. . Program Performanc eThe Under Secretary of Defense for Acquisition wil lhave an enhanced role and will discipline program sthrough a revised and strengthened acquisition proc-ess . Programs will have to achieve defined milestone sand satisfy specific criteria before moving to the nextphase of their development . The military department swill create a corps of officers who will makeacquisition a full-time career. These and additiona lsteps will lead to a simplified acquisition structure ,run by well-trained, dedicated professionals able t operform their work with a minimum of bureaucrati cdistraction .

Reinvigorating Planning and BudgetingThe Secretary of Defense now chairs a new ExecutiveCommittee to review overall Department policies andpermit regular and confidential exchanges on ke yissues among the Department's senior leadership . I naddition, the Deputy Secretary manages a revitalizedplanning, programming, and budgeting system a sChairman of the Defense Planning and Resource sBoard . With steps such as these, the senior leadershi pin the Department is now engaged in a dynami cplanning process that will improve the linkag ebetween policy, strategy, programs, and budgets.

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

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Secretary of Defense, with my full indorsement, ha scalled on Congress to work with the Administratio nto review and overhaul the statutory framework fo rdefense acquisition and improve the process bywhich Congress oversees the Department .

Strengthening the Defense Industria lBas eThe defense industrial base must be strong, andinclude manufacturers that are highly flexible an dtechnologically advanced . This will require that bot hthe Defense Department and industry maintain activ eresearch programs in vital technologies . Th eDepartment must also create incentives (and eliminat edisincentives) to invest in new facilities an dequipment as well as in research and development .This will be especially important in an era whe noverall procurements are likely to decline .

Improving the Observance of Ethica lStandardsSecretary Cheney has chartered a high-level Ethic sCouncil to develop ethics programs for theDepartment. The Council has met and directed wor kon a model ethics program, a Department-wide EthicsConference, and a review of existing complianceprograms . The goal is to strengthen ethical standard swithin government and with industry and to create a nenvironment where official standards of conduct arewell understood, broadly observed, and vigorousl yenforced .

The strength of this effort to improve defens emanagement is that it is largely a product of th eDepartment itself, not something forced on it fromoutside. The dedicated people—both civilian an dmilitary—who have developed the changes describe dabove will be the same people called upon to makethese changes work . These are not quick fixes bu tfundamental shifts, "cultural" changes, that addres sissues 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 America nPeopleUnder our Constitution, responsibility for national de-fense is shared between the executive and legislativ ebranches of our federal government . The President,for example, is commander-in-chief, while Congres shas the power to raise and support armies an ddeclare war. This system of shared and separatedpowers is well designed to guard against abuses ofpower, but it works best in the demandin genvironment of national security affairs only if there i sa spirit of cooperation between the two branches and ,indeed, a strong measure of national and bipartisa nconsensus on basic policy.

I am proud of the successful examples of bipartisancooperation in the past year—on Central America, o naid to Eastern Europe, on Panama, to name a few. Ye tother issues remain contentious, such as variou sattempts to constrict Presidential discretion an dauthority in fields ranging from covert actions to th eexcessive earmarking of assistance funds . If we are tomake a successful transition to a new era, we need t owork together.

We are now in an era of rapidly changing strategi cconditions, new openings for peace, continuin guncertainties, 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 i tin a spirit of close cooperation and consultation wit hCongress . I believe there is a national consensus i nsupport of a strong foreign and defense policy-perhaps broader and deeper than at any time in 2 5years . Congress and the President need, more tha never, to reflect that unity in their own cooperation .We owe the American people no less .

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