Matching foreign policy resources with goals. (George Shultz's statement to the Subcommittee on Foreign Operations of the Senate Appropriations Committee, Aug. 7, 1987) (transcript)

Matching Foreign Policy Resources With Goals

Secretary Shultz's prepared statement to the Subcommittee on Foreign Operations of the Senate Appropriations Committee on August 7, 1987.(1)

I am here today to talk about our foreign assistance requirements for fiscal year (FY) 1988. I want to convey to you my deep concern about the major foreign policy crisis we are creating for ourselves. There is a serious mismatch between our foreign policy goals, interest, and commitments on the one hand, and, on the other, the resources at our command with which to pursue those goals and interests and honor our commitments.

The United States is--by necessity as much as by choice--a world leader with wide-ranging global concerns. Dealing with these concerns requires a mix of diplomatic, economic, and military tools and the resources to employ them effectively. We cannot remain a first-class world power by committing fewer resources to our foreign relations than our adversaries do. Nor can we maintain our political, economic, and humanitarian values in a dynamic and threatening world environment through the strength of our military power alone.

Since 1981, we have made substantial progress toward reinvigorating our economy, restoring our military capabilities, and strengthening our ties with friends and allies the world over. As a result of our effrots:

Our NATO alliance is strong and vital. Its steadfastness has convinced the Soviet Union to endorse the INF [intermediate-range nuclear forces] position we laid out nearly 6 years ago. For the first time in history, we now have good prospects for eliminating an entire class of nuclear weapons.

We and our NATO allies have been able to engage the Soviet Union in a new high-level dialogue--not just on arms control but on all the issues that divide us. Few of these issues have been fully resolved. On the other hand, there is evidence that the Soviets, however grudgingly, have come to better appreciate the strengths and promise of more open political and economic systems.

We have supported a remarkable resurgence of democracy, most notably in Latin America, where the percentage of the population living under freely elected governments has grown from 30% in 1979 to more than 90% today. Democracy has also made great strides in the Philippines, in the Caribbean, in South Korea, and throughout the developing world.

With our support and that of other donors, the developing countries are also making impressive progress in their efforts to achieve a better standard of living for their people. Obviously, the development process is far from complete. Much remains to be done by the developing countries themselves, by donor and creditor countries, and by private financial, industrial, and agricultural interests in the developing and developed countries alike. But we should not overlook the fact that solid progress has been made.

We have also seen an encouraging trend toward greater confidence in free market-oriented solutions to the problems of economic growth. We now find, almost everywhere in the world-- including the communist world-- movements to decentralize, deregulate, and denationalize. The economic and social achievements of many developing countries are in no small measure a result of their growing appreciation of the dynamic role which the private sector can play and their willingness to develop and environment in which it can flourish.

All of this represents important, dramatic progress. But there is still much to be done. The world remains a dangerous place. Precisely because foreign affairs issues do not lend themselves to quick fixes, Americans have to be prepared to tackle them on a steady, long-term basis and to support consistently the professional foreign affairs infrastructure to do so.

Are we prepared for this? Unhappily, what has been happening to the foreign affairs budget seems to indicate the answer is "no." The foreign affairs budget has taken two consecutive years of major cuts. And the budget resolution for FY 1988 threatens further serious cuts.

Let's look at the foreign operations appropriations legislation since FY 1981. In that year and the next, you appropriated $15.5 billion, including FMS [foreign military sales] guaranties and Eximbank direct loans but excluding IMF [International Monetary Fund] replenishments. In FY 1983, the figure jumped to $17.2 billion and then to $17.9 billion in FY 1984. In FY 1985, we hit our high-water mark--$20.9 billion. That figure included a large supplemental of over $2 billion for the Middle East countries as well as a major food aid supplemental for Ethiopian famine relief. Even if we exclude these one-time special cases, our baseline appropriation for this bill hovered around $18 billion.

What has happened since then? In FY 1986, the first year of Gramm-Rudman-Hollings, we dropped to $14.4 billion. In the current year, FY 1987, we were operating with a billion dollars less than that, before the supplemental was enacted. I might pause at this point, Mr. Chairman [Daniel Inouye], to thank you and Senator Kasten for your efforts in making the supplemental possible.

So we are now working with FY 1987 resources totaling just under $13.9 billion. Yet what is the effect of the FY 1988 congressional budget resolution? To reduce that …