watching with keen interest, what response, if any, the West makes to a crackdown that one can very easily imagine taking place when strikers get out of control in the Soviet Union or in Poland, or in Hungary or elsewhere in the Soviet Bloc—the costs of doing so. There are several points I would make in conclusion, Mr. Chairman, that stand out as lessons for us, both in the Chinese context and in the larger context with which this committee ultimately must be concerned. I think it is incumbent upon us to have no illusions about certain fundamental characteristics of Communist regimes. One clearly is that, despite commercial bridge-building, despite cults of personality which we might readily indulge in-when push comes to shove-it is a fact of life that these regimes will usually, if not always, opt to retain control rather than to indulge in experiments with greater liberalization and reform. The question before us now is. Can they do so with impunity? I believe that the role that we have played up to this point in providing a model for reform, encouraging it where it is genuinely taking place, can only be a productive course of action for us, if we are also willing, where it is not taking place—or where it is being reversed, especially with the brutality that we've just had so graphically described-where those kinds of reverses are taking place, that we take the appropriate steps. I have a great respect for Mike Oksenberg, whose knowledge of this subject is vastly greater than my own. But I believe-particularly under the circumstances of a world influx, of countries from Havana to Hanoi looking at a very uncertain future and possibly choosing to go with greater liberalization, or possibly choosing to simply take our money and retain power, if they can get away with it-that it is incumbent upon us not to speak softly to the People's Republic of China and to these other audiences. I commend you, Mr. Chairman, in particular, for your work, and that of this committee, in speaking very forcefully and I think loudly. Thank you. [The statement of Frank J. Gaffney, Jr., with attachments, follows:] questions you posed will draw upon these analyses; I request that they both be included in full in the record at the conclusion of my remarks. Let me respond to each in turn: The Adequacy of the Bush Administration's Sanctions Against China Mr. Chairman, you asked that I assess the ability of the sanctions already announced by President Bush to promote freedom and democracy in China. Put simply, I believe the sanctions taken by the Bush Administration are worse than inadequate for that purpose; they are an insult to the intelligence of the American people and the Congress. I need not tell this Committee of the outrage felt by the American people at the brutal disregard by Chinese authorities of basic human rights and the bloody suppression of popular aspirations for democratic institutions with which the United States has long been associated. The public demanded and had from the U.S. Instead it got a - a right under our democratic system to expect Indeed, the sanctions applied thus far by the President basically amount to a matter of taking credit for conditions imposed by circumstance. Consider the following: Most of the munitions destined for China under previously signed arms contracts whose transfer the President temporarily suspended are not scheduled for delivery until at least 1991, according to the Office of Technology Assessment. Similarly, the World Bank had already suspended consideration of its loans to China when the President announced his intention to seek such a suspension. Under such circumstances, had he wanted to impose a meaningful sanction with respect to Chinese access to new money for development purposes, he should have announced that he was suspending U.8. loan programs (Eximbank) to China. With respect to the Overseas Private Investment Corporation (OPIC), it prudently acted to suspended its programs in China and to halt its underwriting of additional political risk insurance policies for that country before the President "asked" it to do so. After all, doing otherwise would have been like selling hurricane insurance in the midst of the tempest! Parenthetically on that point, Mr. Chairman, we believe that the China case illustrates the dangers of extending OPIC coverage to communist countries. In its history, OPIC has been granted two specific exceptions to its congressional mandate to limit its programs to free world countries: Romania and China. With hindsight, it is evident that encouraging U.S. investments in such nations by obliging the taxpayer to assume the risks of doing business there has not necessarily led to either structural economic or political reform. I urge the Committee to bear this painful history in mind as new proposals are advanced to provide OPIC coverage to other Soviet bloc nations. The Effectiveness of Sanctions in Pending Legislation We at the Center for Security Policy support fully the sorts of sanctions being considered in legislation now before the Congress. Such sanctions, in contrast to those adopted by the Administration, will get the attention of those who govern the PRC who fully appreciate the indispensability of Western economic, financial and technology assistance to China's future viability. I believe it is also very helpful for the stipulation of specific conditions which must be satisfied by the Chinese government prior to any termination of sanctions. At a minimum, these must include: lifting of martial law; halting of executions and other reprisals against individuals for the non-violent expression of their political beliefs; the release of political prisoners; increased respect for human rights; and a freer flow of information. In addition to obvious policy grounds for postponing a return to the status quo ante (i.e., business-as-usual pre-4 June 1989), there are also sound business reasons for doing so. (A number of these are detailed in the Center's paper on "Western Corporations' 'Short March' Back to China"). And yet, many Western businesses are poised to resume operations there; some already have, notably Japanese firms who scarcely allowed the Tiananmen massacre to cause a hiccup in their activities in China. It is also rumored that that the suspensions on World Bank loans will be lifted in a few months with or without a change in the PRC's policy of repression. Only by enacting legislation that stipulates the conditions under which a return to business-as-usual can occur is Congress likely to be able prevent the thrust of U.S. sanctions from being undercut. - Consequently, we believe it is appropriate and important for Congress to enact legislation imposing meaningful economic financial and technology sanctions on China unless and until conditions like those mentioned above are realized. One area that should be addressed in such legislation is export controls. China has enjoyed a more favored status than the Soviet Union or other Warsaw Pact countries and has, thereby, been given access to vastly more sophisticated and militarily relevant technology. While China is in a category separate from the Warsaw Pact, we believe it appropriate for the United States, together with its COCOM partners to freeze (if not down-grade), the level of Western dual-use technology currently available to the Chinese government. The In May of this year, COCOM was set to begin a major liberalization of export controls on dual-use technology for China. That effort has, for the moment, been suspended. next opportunity for a review of the situation will be at COCOM's high-level meetings in October. We believe that absence of tangible amelioration of Beijing's policies toward its people no such liberalization should be contemplated. - - in the Such a freeze would represent a body-blow to the Chinese government's efforts to close the "technology gap" between Western capabilities and their own. If sustained over time (i.e., at least 2-3 years), this gap would grow enormously as the West's technological base continues to advance. For this reason, we believe that the 6-month delay in further liberalizing of these controls envisioned by the Senate resolution is simply too short a period to be a significant factor in PRC decision-making. What is more, even though some of our COCOM partners have balked at reversing past decisions on Chinese access to high technology lest sales contracts already in place be jeopardized, we believe it important that some downgrading occur. We would propose, for example, that contracts signed prior to the June 4th massacre could go forward with higher levels of technology than would be possible for contracts signed after the tragedy. At a minimum, Congress should obtain an assessment by the security community of the impact that recent liberalizations of dual-use technologies have had on the Chinese military. Secondly, an evaluation should be made as to whether or not it is possible to maintain necessary safeguards contained in the conditions of certain approved export licenses. For example, in light of current conditions in China and travel advisories, are U.S. firms or U.S. government personnel able to conduct postshipment, on-site inspections? Additional Measures that Warrant Congressional Consideration An appropriate U.S. foreign policy towards China calls for a melding of promises of improved economic ties in exchange for the demonstrated expansion of democratic institutions and free enterprise on the one hand and powerful disincentives to further totalitarian control and denial of popular aspirations for |