States and in Asia and the Pacific. We have made progress on this front, and our goal is to raise at least 50% of our funds from these other sources. However, these efforts will not produce the needed results overnight, and we must continue to rely on Congress for our core infrastructure and overhead expenses, since external sources are not likely to provide for these costs. Today, the Center needs more time to fully develop its fund raising capacities to achieve its goal of raising at least $10-$12 million annually to supplement our core Congressional appropriation. Another immediate and drastic reduction in our appropriation for fiscal year 1997 would result in the forced layoff of staff and researchers who are critical to our fund raising efforts and will seriously threaten our ability to continue to effectively meet our Congressional mandate.

It is for these reasons that we make a special plea to this Subcommittee to assist us in maintaining our Congressional funding at the current level of $11.75 million. This will allow us to retain the critical mass of staff and core support needed to initiate and conduct projects and programs that can successfully generate the needed external funds. In this way, the Center will be able to continue to serve America's long-term interests in the region by promoting understanding and relationships between and among the peoples of the United States, Asia and the Pacific; by continuing to produce information and analyses that deepen understanding of the dynamic changes occurring in the region; and by maintaining its programs to better educate Americans and prepare them for constructive engagement in Asia and the Pacific.

Again, thank you for your past support and the opportunity to submit this written testimony for your consideration. If you have any questions or desire additional information, we would be pleased to respond.

THE ASIA FOUNDATION

PREPARED STATEMENT OF WILLIAM P. FULLER, PRESIDENT

Thank you for the opportunity to submit testimony on behalf of The Asia Foundation's Fiscal Year 1997 budget request. The Foundation is grateful for the support that Congress and this Committee have provided over the years.

The past year has been challenging for the Foundation. We have faced severe budget cuts following a two-thirds cut in our Congressional funding, forcing difficult decisions about priorities. In response to a declining budget, and in view of the many country and regional changes occurring in Asia, the Foundation undertook a six-month strategic planning exercise to review its mission, programs, organizational structure, and funding. We come away from this exercise convinced that our basic three programming priorities--1) democratic governance and the rule of law, 2) open trade and investment, and 3) productive U.S.-Asian relations--are of enduring value and a high priority both in Asia and the United States.

Further, because of its network of small field offices, long-term experience with the region and performance, The Asia Foundation is the best positioned private U.S. organization to advance each of these priorities in Asia. The Asia Pacific remains a region of tremendous potential and significant challenge. There is a growing movement in Asia toward more democratic systems and increased pluralism, though not in all countries. At the same time, complex problems of security, ethnic tension and economic dislocation continue to plague the region and some of its new democratic regimes. Active American participation in the region is critical and the Foundation's enduring presence and activities in Asia are a key component of U.S. commitment and engagement in the region.

This uncertain, post-Cold War period is not the time to pull low-cost, efficient operations like The Asia Foundation out of Asia. The Asia Foundation is an irreplaceable American asset that is already positioned in Asia. It has developed over a forty year period and it is doubtful it could be cheaply reconstructed once it is dismantled.

The democratic institutions that we nurture today will provide the underpinnings that ensure level playing fields with our future trading partners. Economic growth is opening opportunities. but there are challenges that must be met. Asians are building regional institutions and looking at new forms of regional cooperation. New Asian realities require a flexible, adaptable American presence in the region. The Asia Foundation is uniquely positioned to build on these dialogues and institutional relationships.

I want to state frankly to the Committee that the survival of the Foundation as a unique American asset in Asia is at stake. If the general appropriation continues at the FY96 level, it will force a further retrenchment of The Asia Foundation's presence in Asia and will nearly eliminate its ability to operate as an important grantmaker, identifying and supporting the private individuals and organizations in Asia which the U.S. wants to nurture. That grantmaker role is one which has consistently received Congressional support.

It is the role which does the most to support the development of democratic institutions and legal systems, further the development of open market policies and institutions, foster good will toward the United States, and it is the role which is directly dependent upon sufficient appropriated funding.

There will be changes in the Foundation over the next few years. In our programming, for example, we will be placing greater attention on improving business environments and resolving economic issues, as well as strengthening American understanding and interaction

with Asia. On the organizational side, we are expanding our efforts to diversify funding sources, while maintaining our link to the U.S. government--a link that has added significantly to influence, access, and impact in Asia both for us and the government.

Congressionally appropriated federal funding is vital for The Asia Foundation--it gives us leverage and clout, the imprimatur of U.S. government funding when the Foundation deals with sensitive issues like democratization and trade, speed and flexibility to respond quickly to new problems and priorities, and funding to operate in countries, such as China, for which there is almost no other sources of support for the Foundation's programs. It is this federal funding which is the subject of my testimony.

I would like to focus on three questions that we are often asked by Congress as it evaluates The Asia Foundation's account in relation to U.S. priorities: 1) how does the Foundation contribute to U.S. interests in Asia? 2) how is the Foundation different from other organizations? 3) what is the impact on the Foundation of reduced Congressional funding?

HOW DOES THE FOUNDATION CONTRIBUTE TO U.S. INTERESTS IN ASIA?

The Asia Foundation was called into existence by the U.S. Government to serve broad foreign policy interests in Asia. This was true in 1954 when the Foundation was established, and it is true today.

Promoting U.S. Business Interests and Economic Reform

The Foundation encourages policies which serve and support U.S. business interests through open markets and increased trade; supports organizations, such as APEC, that are committed to open trade; promotes legal systems that provide a stable environment where U.S. business can flourish; and facilitates direct engagement between U.S. business leaders and Asian decision makers.

In China, for example, the Foundation recently gave a small, strategic grant to the Shanghai Municipal Economic Research Center to advance a proposal to open Shanghai to joint venture general foreign trading companies. Historically, foreign companies had to use Chinese intermediaries. As a result, General Electric has been given the opportunity to be the first U.S. company to discuss formation of such a joint venture.

Other examples of Asia Foundation work at the policy level include the protection of intellectual property rights in Thailand, and Indonesia; the establishment of private commercial dispute organizations in the Philippines and Nepal; the development of securities exchanges in Thailand, Bangladesh, and Indonesia; the deregulation of Malaysia's insurance industry; and small enterprise development in the Philippines, Cambodia, Vietnam, Indonesia and Bangladesh. All of these programs are in the medium and long term interests of American business, and consistent with our values as a society.

The Foundation's support for open trade, particularly through APEC, has also been extensive. In 1994, at the request of Indonesian President Suharto's chief economic advisor, the Foundation designed and implemented a study program to the United States for senior Indonesian officials to visit with U.S. business and government and help them prepare to host the November 1994 APEC meeting. This year, the Foundation is involved in helping the Philippines advance a strong vision of the APEC process during its chairmanship. In March, the Foundation brought the key Filipino officials responsible for the Philippines' APEC strategy to meet with counterparts in San Francisco, Seattle, and Washington, including the business community, U.S. Trade Representative, the Undersecretary of State for Economic, Business and Agricultural Affairs, and the State Department's Coordinator for APEC. At the request of the Philippine government, the Foundation will continue to be involved in preparatory activities for the APEC meeting in November, a meeting of great importance to our trade interests in Asia.

In addition to influencing policy and legal frameworks that affect U.S. businesses in Asia, the Foundation utilizes its contacts to facilitate direct engagement between U.S. business leaders and Asia's decision makers. For example, on 19 May, the Foundation hosted a meeting between Prime Minister Mahathir of Malaysia and a select group of CEOs from Bay Area high-tech companies to discuss opportunities for U.S. businesses in Malaysia.

Expanding Democracy and the Rule of Law

The Foundation promotes U.S. interests and values by expanding democracy and the rule of law. We strengthen parliamentary processes, support democratic elections, foster accountability within governments, and assist legal and judicial reform processes.

In the past year the Foundation has supported pledon programs in Bangladesh, Cambodia, China, Mongolia, and the Russian Far East by educating voters, providing non-partisan

candidate training, developing training materials on how to implement fair elections, and computerizing voter identification to reduce fraud. In Cambodia, for example, the Foundation sponsored what the Embassy has called a "watershed event" that convened 300 parliamentarians, governors, and leaders of non-governmental organizations to prepare a blueprint for national elections in 1998. The seminar resulted in an action plan presented to Cambodia's Co-Interior Ministers, that outlines the tasks the government must complete to have free, fair, and efficient elections.

The Foundation has also provided substantial assistance for the development of legislative systems in 16 countries. In 1995, the Foundation became the first international organization to develop an in-country training program for Vietnam's National Assembly.

In Indonesia, where the Foundation has been supporting the National Parliament since 1990, a Foundation-supported workshop, organized on behalf of the Parliament's security and public affairs committee, questioned the necessity for and legality of police action related to public gatherings. The results of the workshop received front-page press coverage the next day. Subsequently the government lifted the regulation that police permits were required for conferences, seminars, and public meetings.

In the area of law, the Foundation supports judicial and legal training, assists in legal drafting, supports alternative dispute resolution, provides access to justice to thousands of individuals through legal aid programs, and supports court administration programs to reduce case backlog.

Building New Mechanisms to Address Controversial Issues

The Foundation is trusted in Asia and able to work effectively on sensitive issues, owing to its non-governmental nature and to its long history in the region. For example, the Foundation sponsored a first-of-its-kind meeting that brought together staff from defense universities in 12 Asia Pacific countries to address regional defense issues. The Foundation has also convened a Human Rights Working Group with representation from 14 Asia Pacific nations to address in practical, nonconfrontational terms the best methods to promote human rights.

The Foundation is in a good position to contribute positively to harmonious bilateral relations between the United States and countries of Asia. For example, as part of the Common