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THE WHITE HOUSE

Office of the Press Secretary


For Immediate Release February 16, 1999
                           PRESS BRIEFING BY 
                ASSISTANT SECRETARY OF STATE PETER ROMERO;
       AMBASSADOR WENDY SHERMAN, COUNSELOR OF THE STATE DEPARTMENT;
             ASSISTANT DIRECTOR OF AID FOR LATIN AMERICA AND
                      THE CARIBBEAN MARK SCHNEIDER;
          AND EXECUTIVE ASSOCIATE DIRECTOR OF OMB JOSH GOTBAUM  

The Briefing Room

3:15 P.M. EST

MR. TOIV: Good afternoon, everybody. We have a number of briefers for you today to talk about the package of aid to Central America that the First Lady and Mrs. Gore just announced. We have Josh Gotbaum, who is the Executive Associate Director of OMB. And Josh will try to summarize the package of assistance for you. And also here to answer questions are Ambassador Wendy Sherman who is the Counselor of the State Department and also the coordinate of the reconstruction effort over at State; Mark Schneider, who is the Assistant Director of AID for Latin America and the Caribbean. And also here is Peter Romero, who is the Assistant Secretary of State for Western Hemisphere Affairs.

So, Josh.

MR. GOTBAUM: What the President is proposing today is a package of $956 million. The bulk of the package is directed to reconstruction assistance in Central America for a variety of activities -- public health; economic reactivation -- getting the economy started again; refurbishing and reinstalling housing in schools; some assistance to local governments to help them deal with the disasters; and to make sure they can handle the additional inflows that the disaster flows involve.

And in addition, we're requesting additional funds for an exercise by the Department of Defense New Horizons, which will involve reservists and National Guard units to help rebuild health clinics and schools in the four countries most affected by Hurricane Mitch and in the Dominican Republic.

The President has also requested an addition $50 million to deal with the Dominican Republic and other Caribbean nations affected by Hurricane Georges, and $10 million to begin to deal with the effects of the earthquake in Colombia. The total new resources for reconstruction in this, and we've put out a factsheet that we hope explains this in better detail than I do -- is about $613 million.

In addition, we've asked for substantial sums to help do advance planning and do disaster mitigation for the future. So in order to help these nations, we've proposed to fund technical assistance to provide terraced agriculture, to switch to crops that are more resistant, to do land use planning in river basin areas, et cetera, so as to plan for the next issue.

In addition, the supplemental would fund the debt relief package that the President announced in December, a combination of deferral, of immediate debt service to Honduras and Nicaragua, a debt reduction of part of the outstanding debt and a contribution by the U.S. to a fund being established by the World Bank to deal with debt service issues.

In addition, the supplemental will repay some of the accounts that have already been used or exhausted by the relief that was already sent. The Department of Defense has spent at this point almost $150 million to provide immediate relief. And so what we're proposing in this supplemental is to repay those accounts so that they can be available to provide humanitarian assistance the next time and so that they can fund readiness.

In addition, we've proposed funds to deal with the additional cost to the Department of Justice for our immigration policies. The package in total is $956 million, as I said. When you take it with the resources that we've done before and net out the repayments we plan, this would bring total U.S. assistance to the region to more than $1.2 billion.

I'm joined here today by Ambassador Sherman and by Mark Schneider, and so we really thought that this was an opportunity to really answer your questions. And so without further ado.

Q Secretary Albright also mentioned legislation that would propose an enhancement of the Caribbean Basin Initiative. Would you amplify on that, please.

AMBASSADOR SHERMAN: As the President announced and the Secretary reaffirmed today, an enhanced CBI is quite critical and an important tool to furthering the economic development of the region and to helping people feel that they have reasons to stay at home and build their own economies and their own futures with their families.

What Mr. Gotbaum has described to you is a supplemental appropriation package that we're working with the United States Congress. The President will shortly send to Congress an enhanced CBI, again, working very closely with Congress to try to get that done as well.

Q There is a pending bill in the Senate that links aid as well as trade. Can you tell us why they're being separated? What's the logistical or political expediency of that?

AMBASSADOR SHERMAN: It's not a matter of expedience, it's a matter that an appropriations bill goes to the Appropriations Committee and CBI at least begins as an authorizing piece of legislation with potential revenue offsets. So it's a different vehicle with a different set of committees and a different set of purposes.

MR. GOTBAUM: And if I can add, when we consulted with the Congress, as we have done, frankly, we were given the advice, "we know you are going to propose a multipart package; propose your appropriations supplemental separately so that it can go to the Appropriations Committees directly."

Q If I could follow up on enhancement, in what way would it be enhanced? What is it you're actually going to be proposing? Would it be NAFTA parity or --

AMBASSADOR SHERMAN: I think we'll wait until the President's ready to make that announcement.

Q Josh, on the debt relief and connected, how much of the debt service does that represent for Nicaragua and Honduras for two years?

MR. GOTBAUM: What the President announced was that all bilateral concessionary debt by the U.S. government, owed to the U.S. government, would be deferred for two years.

Q So that's $54 million, is that right?

MR. GOTBAUM: Yes, principal and interest of $54 million.

Q What would the service payments be over those two years?

MR. GOTBAUM: That's $54 million. That is that number. And if I may just close the point -- and we are assuming that we will, working with other nations through the Paris Club, in that time period negotiate substantial reductions in the outstanding principal as well.

Q Under normal conditions, the African communities in Latin America, especially in Central America, find it difficult to have access to capital. Now, would the $1.2 billion that is being sent to Central America, has there been any safeguards put in place so these communities of African decent in Central America have access to these funds --

MR. GOTBAUM: Actually, the governments have -- actually, Mark, do you want to talk about transparency and accountability?

MR. SCHNEIDER: Two things. One is that what we're doing with both the governments in Honduras and Nicaragua is to provide support to their Controller Generals through financing through AID to expand their capacity to audit and monitor all aid that comes in, not just through our own aid; and at the same time working with them to have concurrent monitoring, if you will, the quality of their procurements. And so that's one way that we're doing it. The other way is to provide a significant amount of this aid through local governments and local levels directly so that it's clear at the local level where aid is going for whom.

You mentioned some of those communities. On the north coast of Honduras, we're working with them closely in the design of what we're going to do.

Q You said it's a supplemental -- does that mean there's no offsets for this spending? And then the second question would be, is it the administration's contention that even the future planning funds are emergency in nature.

MR. GOTBAUM: We have proposed this as an emergency supplemental, which in budget jargon means that, yes, it is being handled without proposing offsets under the terms of the Budget Enforcement Act of 1990.

So, yes, it is our view and it is a view that we have discussed with the appropriations committees, both House and Senate on both sides of the aisle that the disaster in Central America, Hurricanes Mitch and Georges, were so large and so unforeseen that they could not have been taken into account in normal budgeting process.

Furthermore, the reason it is a supplemental is because we need to get funds there now. We could have waited and proposed funds in the 2000 budget, but if we waited until October 1 to get money to Mark and his colleagues, and I should mention almost a dozen other Cabinet agencies that have offered their assistance, we would miss the spring planting season; we would not be able to provide temporary schools for school children as the school year begins this week actually. And so that is the reason why this is, in our view, clearly an emergency.

Q What has happened to the displaced people?

Q -- and are there other countries involved in a broader effort here?

AMBASSADOR SHERMAN: Why don't you talk about the huge number of other donors.

MR. SCHNEIDER: We met early in December with -- at the IDB with probably the largest group of countries responding to a natural disaster, at least in my experience, and also the IDB's experience. The European Community provided its indication of significant response. Countries, really -- Japan, all of the Nordic countries -- there's going to be a very significant, in fact, pledges were made at that time for reconstruction of about $4 billion in the international community, and an agreement was reached to go to Stockholm in late May to have a formal consultative group on the reconstruction plans.

Since December, we've been working with the countries in Honduras, Nicaragua and the other countries to develop projects and plans for what is clearly going to be a long-term reconstruction effort. And there are a significant number of other countries that are working with us on the ground to make those plans.

Q What's the estimate -- I know the Secretary mentioned a number -- what is the estimate of the damage that's done?

MR. SCHNEIDER: $8.5 billion.

MR. GOTBAUM: Well, there are a number of estimates. One is, the Army Corps of Engineers estimated that the cost of rebuilding infrastructure -- just rebuilding -- is $8.5 billion. In addition, there is the cost of the crops that have been lost, the incomes that have been lost, et cetera, which runs into the billions of dollars. No one has an exact bill, but I think we can safely say that the cost of this disaster is well north of $10 billion.

AMBASSADOR SHERMAN: One thing I do want to add, because I think it's incredibly important, we have all been to Central America. Mark and I went a few weeks ago. And one of the things that is really quite telling is that the people of Central America, of these countries, are determined to rebuild their future, incredibly determined. And one of the best examples I can give you of that is there is a foundation that AID provides funding to, called Covelo, in Honduras, and they help to fund small, very small, entrepreneurs in a market system -- largely women, but men as well -- who really are the supports for their families.

Not one of the clients of Covelo asked for their loan to be forgiven -- not one. They asked for some of their loans to be refinanced, to be extended. But they were all committed to get their business up and running again under regular commercial terms within this microenterprise effort. And I think it was just emblematic of the commitment of the people in Central America to build the future that the First Lady and Mrs. Gore spoke of. And I think what we're seeing from our Congress, in our consultations, is their commitment to help people move ahead to do the rebuilding that they are so committed to.

MR. GOTBAUM: You had a question, I'm sorry.

Q Yes, what has happened to the people who are displaced now? Are they living in tents, and --

MR. GOTBAUM: Oh, all over. You want to -- you've been there most recently, Mark.

Q How are they surviving?

MR. SCHNEIDER: You've got about, somewhere in each Nicaragua and Honduras, perhaps 30,000 each who are still in shelters, temporary shelters. We're working to move them, in a sense, initially from the schools that some of them have been in, into temporary shelters so the schools can open, and then into permanent housing. But you have several hundred thousand families that either lost their homes or they were so damaged that they moved in with relatives, and are in temporary situations. And the reality is, is that we have a major relief effort that is going to continue with respect to food during the next several months in order to provide some relief to those families.

AMBASSADOR SHERMAN: I was just going to say, there is still a staggering housing problem, as well as a food problem. The schools, fortunately, are up and running, and obviously economic development and jobs sets of issues.

Q I'd like to ask Mark, since he was just there recently -- you must know, Mark, the tremendous accident that happened in El Cajon, which is Honduras' largest power-generating plant. The damage seems to be very difficult. I think the country is going to be in power shortages for the next three or four months. That's going to affect the recovery in a tremendous way. What can be done, as far as the country has a tremendous problem per se, and now this is added?

MR. SCHNEIDER: We immediately responded -- President Flores called the Ambassador, and talked to us. We brought in people from AFTA; we brought in the Army Corps of Engineers, Coast Guard -- this is a very specialized engineering problem, when a fire occurs in a major hydroelectric power plant. And so we brought in some engineers that are linked to Bechtel. And they, in fact, also were part of the effort to put the fire out. But you have to remember, El Cajon generally provides -- when there's no emergency power going on -- around 65 percent of all Honduras' electricity. So when that goes out, it's a major impact.

We were able to reduce that reduction to 35 percent, as the result of temporary measures, and now we'll be working with them to try and bring back El Cajon. And you're right: this is an added burden, and an added hurdle.

Q Josh, the $1.5 billion that you're attempting to defer of loans, how much will that free up for Central -- or Honduras and Nicaragua, to apply to open development? How much would those interest payments --

MR. GOTBAUM: We're proposing to do two things at once. One is to relieve those countries of all current debt service, and to encourage other nations and other sovereigns to do likewise -- which they are in the process of doing. And secondly, to provide room, and time, to allow a renegotiation of -- a reduction of most of the rest, and a renegotiation thereby.

The effect of that is not something that you can immediately convert to a dollars-and-cents issue, because what we're doing is, we're saying, we understand that there need to be new resources brought in, and that commitments will need to be made, and that the countries involved need to be capable of making those new commitments.

Q So you don't have a figure on how much they might be able to save in debt service repayments that they could use toward development? There's no --

MR. SCHNEIDER: There's several hundred million dollars, but without being specific. But when you talk about a $10 billion cost, clearly that's not enough.

Q Of the $54 billion that will be saved --

MR. GOTBAUM: Actually, if I could make one further point on Mark's. It is precisely for this reason that the Inter-American Development Bank, the World Bank and others have said, we will step forward and we will provide new loans -- to provide additional resources in that term.

Q Earlier, on the $54 million, if that represents the debt service that won't be repaid to the U.S., what is the total outstanding bilateral debt of Honduras and Nicaragua to the United States?

MR. GOTBAUM: Why don't we get the answer back to you.

Q Is this a package, something the President would have announced if he was in Central America at this point, and why did you decide to go ahead and announce it today and have the First Lady in particular do it?

MR. GOTBAUM: It was very important, in our view -- it was very important that, having consulted with the Congress on this and having said, this is an emergency, that we needed to get the bill up to the Hill as quickly as possible, to give the Congress time to do their own review and analysis, et cetera. The letter of transmission from the President specifically says, this is an emergency, there is bipartisan recognition this is important, and we hope Congress will act expeditiously by the end of March. And so our view was that that meant we had to get it up there even now, to permit them time to review it adequately.

Q And why -- if I could just follow up, why did you decide to have the First Lady make the announcement today?

MR. GOTBAUM: The First Lady has visited Central America, has been intimately involved in Central American policy, as has Mrs. Gore. And, frankly, she wanted to.

Q Has the Republican leadership signed off on the size and scope of this relief package, and second, how does this jibe with the $700 million, roughly, legislation that was introduced last week by about five or six senators? I assume there's a great deal of overlap.

MR. GOTBAUM: We have consulted with both Republican and Democratic leaders of the Appropriations Committees in detail and at length. And they have permitted us to say that this package ref