smugglers and fraudulent documents vendors.

These initiatives are not exhaustive but representativ to combat alien smuggling within source and transit cou

MICROCREDIT

Question. What are your thoughts on microcredit gen State Department have to expand the microcredit progra Answer. Microcredit programs can help low-income self-reliant through market-driven, productive activit preneurs and encourages microenterprises and small bu Women will benefit particularly from microcredit prog example, women-owned businesses are one of the faste microenterprise sector.

Economic reform measures such as the lifting of inte tion of the banking sector are key to the success of m urging the governments of developing countries to move USAID has an active microenterprise initiative, dev with Congress, which provides training and technical a rowers, and capital for non-banking institutions providin provides more than $120 million annually and has just years.

We are encouraging multilateral development insti Bank, to expand funds and programs available to suppo business.

Support for microenterprises was an initiative of the Americas. We will be reviewing the progress on this ini next Summit of the Americas to be held in Santiago, Ch

BULGARIA

Question. What action is the State Department taki Bulgaria? What additional steps does the Department Answer. Through the Support for East European Dem have allocated $2.5 million to provide humanitarian as ing of $2.1 million in pharmaceutical supplies and $400, from the International Red Cross. We have also offered cultural credit guarantees to help them import vital food ploring the possibility of providing additional food aid

program.

CURRENT POSITION ON THE PROPOSED 62

Question. Last year, the Administration opposed th Senate version of the Commerce, Justice, and State A the importation of "curios and relics". (Section 621) Doe have concerns outlined in this position paper?

Answer. The Department continues to have the same legislation modifying Section 38 of the Arms Export Co restricting the President's authority to control the imp and services, including curio and relic firearms, into the -Currently, the AECA generally prohibits the return origin defense items furnished under the AECA o sales programs. Although there's an exemption per ports of curio and relics, for important policy conce controls and other legal concerns, the State Depart import-licenses be denied. The legislation originall cluded such considerations and the Department bel appropriate than a legislative mandate to approve a -Furthermore, in most cases, these firearms, now were originally provided to foreign governments by national defense, usually free-of-charge. In most of lowed to receive the net proceeds of any sales mad defense articles provided on a grant basis by the U. permit the importation of all curios and relics woul quiring foreign governments to return such proceeds ments, rather than U.S. taxpayers, would reap a wir -Approval for all curios and relic importation would a to approve the importation of curio and relics from p

cated in the September position paper, Vietnam holds a significant quantity of U.S. origin M-1 firearms, but is considered a proscribed country and prohibited from exporting military items to the United States under the International Traffic in Arms Regulation.

We continue to believe that such a measure would limit the Department of State's lity to provide advice relating to foreign policy and national security considerons related to such transfers.

QUESTIONS SUBMITTED BY SENATOR ERNEST F. HOLLINGS

ICASS REFORM

Question. Dick Moose, Pat Kennedy and Rich Greene have worked for years to deop a system so that overseas administrative costs are more fairly and accurately tributed. It is called ICASS-International Cooperative Administrative Services. It is not reflected in the President's budget in State, Commerce, Justice or any er agency. Why? When are we going to receive a budget amendment?

CASS does not distribute telecommunications and facilities costs. Why don't we tribute those costs too?

Answer. When the President's budget was released on February 6, we had not yet alized the ICASS budget estimates. This task is now complete. I am pleased to port that on March 17, President Clinton transmitted to Congress an fiscal year 98 budget amendment that will provide the legislative authority to make a onehe transfer of $113 million from the Department of State to the 23 other United ates Government agencies and departments operating abroad in order to impleent the ICASS system.

We consider ICASS a work in progress. The fiscal year 1998 ICASS budget endment includes such items that are now currently being fully funded by State building operating expenses, non-residential local guard costs, and posts' commuy liaison offices. For fiscal year 1998, these were the only additions to the pool shared administrative expenses that the participating agencies would agree to inde in ICASS. In future years, however, the Department would like the participatg agencies to consider adding such items as non-Diplomatic Telecommunications rvice (DTS) communications expenses (e.g., the distribution of classified and nonssified cable traffic at posts) and Diplomatic Security costs. DTS costs are already stributed through a separate cost sharing program. With respect to our overseas cilities, the Department made a conscious decision to initially exclude long-term sed and government owned properties from the pool of shared ICASS costs due the magnitude of the value of these capital investments and the complexity of anaging these facilities.

CAPITAL IMPROVEMENT FUNDING

Question. Your budget includes no funding for new capital construction. Instead states that the Department of State will rely on real property sales for Embassy nstruction and renovation. In fiscal year 1998, it is estimated that the State Dertment will yield $137 million from such sales.

Are such estimates realistic?

For which embassy projects are you proposing to use these funds?

Answer. The Security and Maintenance of U.S. Missions Fiscal Year 1998 Budget cument cited two sales figures: $180 million for fiscal year 1997 and $137 million r fiscal year 1998. Both of these are based on the total dollar amounts to be realed if all properties projected for possible sale in those years are in fact sold and sales take place at or near estimated values.

In fiscal year 1997 to date, 15 sales have been completed from which approxiately $38 million in sale proceeds will be realized. In addition, offers have been cepted for another 19 properties, but sales have yet to be completed. The dollar lue of these latter transactions is approximately $69 million.

The ability to realize the full $180 million in fiscal year 1997 and $137 million fiscal year 1998 is dependent on multiple factors, many of which are beyond the epartment's control. Changes in local real estate market conditions, delayed reipt of host government approval for sale and/or USG tax exempt status, unexected financial difficulties encountered by purchasers, political upheavals and/or tastrophic events, and unanticipated legal issues requiring resolution, frequently tervene and disrupt sale timeliness.

The Department intends to use fiscal year 1997 proceeds of sale for residential

using acquisition to buy down the lease bold ccount and acquire now office and

Germany to help finance the new embassy office buildi Bangkok to finance needed construction in Bangkok an quisitions in China; and the proceeds from Beirut to Luanda, Kampala, and Abidjan.

Not all of the requirements in the above posts can b sales. A further concern is that some of these scarce fun other high priority, unbudgeted needs elsewhere (e.g., B Dubai, Dushanbe, Istanbul, Kingston, Rabat, Seoul, Ta Nigeria and Pakistan).

CAPITAL IMPROVEMENT FUNDING GE

Question. What is the situation in Germany? As I un the early 1990's is to sell property in Bonn to build a that plan on schedule? Will our Berlin Embassy be “selfAnswer. We plan to relocate the American Embassy 1999.

The staff will continue to utilize two existing buildin new embassy is built. One building is the former chance to East Germany, and the second is located at Clayallee, sion to Berlin. Renovation of these facilities (security ready work) in preparation for the relocation will be c 1998 and cost approximately $6 million.

Through negotiations with the German government, th housing units in Berlin in exchange for housing units i evaluating the condition of these properties to determin cause of possible high renovation costs, the Department cluding disposal of some current housing to finance cons tion of more cost effective housing.

Because appropriations are not available, the Depart ment to finance to the extent possible, the construction the proceeds of sale of various properties in Germany when the Embassy relocates to Berlin.

Short term plans call for the sale of six properties. T approximately $12.5 million from the sale of propertie gart, and anticipates proceeds of $4 million from the sal We anticipate the majority of required funds for const to come from proceeds generated from the sales of the E (RIAS) Site and Bonn Plittersdorf Housing Compoun properties cannot be made completely available to a pu erties are closed in the summer of 1999.

An Architectural and Engineering firm has been selec cery building. As soon as sufficient funds from the sal available, the Department will proceed with the desig completed in 15 months once the notice to proceed is giv

NEW POST IN VIETNAM

Question. I've understood that for some time the Depa a new consulate in Saigon, or Ho Chi Minh City as it is is where the business opportunities are for U.S. indus an extremely high consular workload. It would be the post in Asia. Where does the Department stand on ope going to see this proposal? How big a consulate do you c

Answer. I agree with your assessment. A consulate be very important in addressing a very large consular our commercial and other interests in southern Vietna monitor more closely human rights and social conditio the Department has conducted consultations with Cong its plan to open a post in Ho Chi Minh City. The Dej whether to submit a formal reprogramming notification mit an opening of this post in the current fiscal year.

Our most conservative estimates are that the con 16,000 to 20,000 immigrant visa applications and 75,00 cations per year. The new post will also provide citiz resident Americans and roughly 75,000 American citiz Department's plan, if approved by the Congress, would hire American employees to Ho Chi Minh City, not ir

quired for oversight of any facilities construction/renovation projects. Among these mployees would be eight consular officers.

Three other USG agencies have expressed interest in being represented at the st: the Department of Commerce (Commercial Service), the U.S. Information gency and the U.S. Immigration and Naturalization Service.

FEES

Question. In the name of "government reform" it looks like Franklin Raines at MB has really screwed up the State Department's budget.

As I understand the budget proposal, $140 million in visa fees now collected and tained by the Department would now go "on budget” and be scored by CBO. So is Subcommittee would have to add $140 million to the State Department approiation 4 and take up room in our allocation 4 just to provide the funds you now ve for free.

How does that provide an incentive? It seems to me that OMB may feel good out this proposal that is theoretically sound, but in the real world the State Dertment loses.

Answer. There are several good reasons for implementing the fee proposal. It is od government to establish a closer link between the fees charged to service users d the financing of the Government operations that provide the service. The fee oposal will give the Department greater flexibility to meet mandatory passport d visa issuance workload. As workload increases, the Department's revenue will crease to match the rising cost of providing increased services. The fee proposal ows the Department to adequately budget for inflation and investment in the fure. The fee funded portion of the Department's diplomatic and consular functions ll be insulated from the impact of world-wide inflation. The Department can inst in the tools required to provide more effective service and the Department can tter ensure that our core diplomatic functions are adequately funded. In addition to specific authorization and appropriation language, the Administran is proposing a change to the scoring rules under the Budget Enforcement Act EA) of 1990 to make this proposal work. This scoring change will address the conms raised concerning the impact of this proposal on Congressional Budget Office ring and budget subcommittee allocations. If the Administration and Congress ork together to put these legislative pieces in place, we can make the transition greater application of user fees to provide more efficient and effective Department rvices at less cost to the general taxpayer.

FUNCTION 150 PRIORITIES

Question. Why is the Administration so committed to putting a priority on giving oney to others rather than supporting our own men and women? Does this reflect ur priorities, or is this OMB again?

Answer. The President's fiscal year 1998 International Affairs budget request of 9.45 billion seeks to sustain and support America's leadership. I urge you to suprt full funding for this request. American leadership is the cornerstone of efforts ound the world to advance American prosperity; ensure the emergence and mainhance of free markets and democracy; confront the problems of environmental degdation, runaway population growth, and endemic poverty; achieve regional peace d stability; and help others cope with humanitarian crises. The request reflects e fact that these objectives cannot be achieved without strong and proactive diploicy.

The Foreign Operations component of the President's request seeks increased nding to support transition to democracy and free markets in the New Independt States, including the Partnership for Freedom trade, investment, and anti-crime tiative. The Administration is also requesting additional funding to combat narics and deal with unanticipated crises by drawing on Economic Support Funds d funds for voluntary Peacekeeping Operations. The request also includes a down yment on U.S. arrears to the Multilateral Development Banks. All of these activis advance American interests.

I appreciate your continued support of sufficient funding for State Department erations. Maintaining America's strength requires world-class diplomacy. Given ɔad, bipartisan support for reducing the Federal deficit, this request increases nding for Department of State operations by a modest four percent. This increase uld cover inflation and provide the funding the Department must make to mod

DUPLICATION BETWEEN STATE A

Question. Our House Chairman, Hal Rogers,_believ cers often duplicate the function served by our Foreig overseas. It has always seemed to me that they are d different missions. FCS officers often have backgrou hustle to help American businesses get market access Officers are more traditional Foreign Service officers ments with foreign ministries and who provide econom sition on this issue Madam Secretary?

Answer. I agree with your assessment. We need bot Officers and State Economic Officers working togethe different responsibilities and skills.

State Economic Officers seek to influence foreign g environment on economic issues affecting the United forms to provide a more predictable environment for U cers promote exports by helping individual U.S. firms business environment. In major markets we need both the playing field and to help U.S. companies challen markets the State Department Economic Officers do bo

We know the House Subcommittee is concerned abo there is any overlap, there is always room for improv Stu Eizenstat, when he becomes Under Secretary for cultural Affairs at the State Department, to continue Under Secretary Spero at dealing with concerns raised regarding an effective division of labor between State

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INTERNATIONAL ORGANIZATIONS SUPE

Question. If we give the U.N. the $658 million you h ing arrearages, how do we know we won't be right b two?

Answer. Effective in fiscal year 1996, the Adminis gress of its intention to vote for a new or expanded operation 15 days in advance of the Security Council of reprogramming of existing appropriated funds.

In addition, the critical, examinations which the Ad isting peacekeeping operations is reflected in a genera keeping operations at the U.N. in recent years.

Question. Isn't most of the arrearage request for m we owe them for Bosnia?

Answer. The attached table shows the operations an requested funding to pay arrearages. The UNPROFO gle line item. However, we do not have information f ments from the United States might be spent, such as to receive reimbursement for their participation in asse and which countries would not be reimbursed.

Fiscal year 1997 arrears to U.N. peacekee [Dollars in thousands]