May 12, 1987
Persian Gulf Conflict
Q. Mr. President, you are determined to protect the flow of oil through the Strait of Hormuz. Yet some say your administration is not doing anything about bringing to an end the major cause of the threat, namely the Gulf war. There is a conviction in the area that your administration is taking advantage of that war in order to secure military facilities. Do you think that this reflects the reality of the American attitude?
The President. For more than 6 years, the war between Iran and Iraq has gone on, resulting in tremendous suffering and cost to Iran and Iraq as well as bringing instability to the Gulf region. As I have said many times, the United States is deeply concerned over the war's continuation. We are strongly interested in seeing it brought to a speedy conclusion through negotiations which will preserve the sovereignty and territorial integrity of both Iran and Iraq. Through our campaign to slow down and shut off the military supply pipelines to Iran, through our support of mediation efforts by the appropriate international organizations, we are working with many other governments in seeking to create a situation where the parties will sit down and negotiate.
At the same time, we also have a well-known policy regarding the Gulf. We are firmly committed to assisting our friends there with their collective and individual self-defense efforts. We are also strongly committed to ensuring the free flow of oil through the Strait of Hormuz and hold as a very important tenet the principle of freedom of navigation in international waters. In brief, we want to see this long, costly, destabilizing, and tragic war brought to a negotiated end in the quickest time possible.
Q. You acknowledged your mistake in the secret dealings with Iran, and you said that the Arab countries understand the implications behind this. The consequences of the deal are still reverberating within your administration and on the battleground of this war; therefore, may we frankly know from your exact policy towards both Iran and Iraq?
The President. The United States is neutral in the Iran-Iraq war. We do not now ship weapons to Iran or Iraq, nor do we intend to do so. This policy is firm. Through Operation Staunch we try to persuade third countries not to supply Iran with arms, munitions, and dual-use items it needs to continue fighting. Operation Staunch is not directed towards Iraq; that country for some time has agreed to negotiate a settlement to the war. Iran remains the intransigent party and is occupying Iraqi territory and trying to take more.
The United States has taken an active role in searching for a peaceful solution to this tragic war. We want neither victor nor vanquished and continue to work for a settlement that will preserve the sovereignty and territorial integrity of both Iran and Iraq. I have urged the international community, in the appropriate fora and through the appropriate mechanisms, to work for an immediate cease-fire, negotiations, and withdrawal to borders.
In line with this general policy, we have been actively consulting with other interested governments regarding efforts to bring the war to a negotiated end. I have asked Assistant Secretary [of State for Near Eastern and South Asian Affairs] Murphy to visit the Gulf to consult on this and other important issues of mutual interest. We believe the U.N. Security Council has an important role to play in the effort to end the Gulf war and would strongly support effective action by the United Nations to end this conflict. We have been consulting closely with the Arab League in efforts to gain support from other members of the Security Council. We welcome the effort by the Arab League in this regard.
Arab-Israeli Conflict
Q. A lot of talk is being heard about adopting the idea of holding an international conference attended by all of the parties concerned to solve the Arab-Israeli conflict. Nevertheless, the American attitude is not clear. Would the U.S. agree to participate in such a conference if it is going to lead to the formation of two independent states, Israel and Palestine, and what would Arafat's role be?
The President. We remain committed to a negotiated peace between Israel and all of its Arab neighbors. To this end, we have stated our willingness to explore all possibilities, including an international conference, that might lead to direct negotiations and a peaceful settlement. Such a conference must lead promptly to direct negotiations and must not interfere with those negotiations. In recent weeks, this process of exploration has produced what we believe to be significant progress toward negotiations which would offer serious prospects of reaching agreements between the parties on peace. Much remains to be done before one can safely express optimism on further developments, but we are encouraged and will continue our efforts.
As I stated in my September 1, 1982, peace proposal, we firmly believe that self-government by the Palestinians of the West Bank and Gaza in association with Jordan offers the best chance for a durable, just, and lasting peace. We have always recognized that Palestinians should participate at every stage of the peace process. The form that Palestinian representation takes is a question that must be resolved by the parties to the conflict. The actions of the recent Palestine National Congress in Algiers indicate a negative, unrealistic attitude toward the peace process.
Egypt
Q. The U.S.S.R. gave Egypt the means for settling her debts and granted her easy loans, although the relations between the two countries are relatively poor. But even though you consider Egypt as a friendly state, you refuse to reschedule her military debts and you impose stringent conditions on financial aid. Is this in your opinion friendship, or are you aiming at some other objectives with this ambivalent attitude?
The President. There is nothing ambivalent about our friendship for Egypt or our commitment to help meet Egypt's security requirements and development needs. We have a record unmatched by any other country. Since 1974 the United States has provided Egypt over $22 billion in economic and military assistance. Despite sharp reductions in our global foreign assistance budget, we have maintained funding for our Egypt program at $2.3 billion this year. We work closely with the Egyptian Government to ensure that our economic aid contributes effectively to Egypt's development goals. Our assistance has brought improvements in health, education, housing, and other basic needs, while also providing crucial balance of payments support to counter the effects of declining oil revenues and other external events.
I have been concerned about the burden placed on key friends like Egypt by military loans extended in past years with interest rates higher than current levels. We have taken a number of important steps during my administration to provide relief:
-- Since 1985 Egypt has been one of only two countries to receive large amounts of U.S. military assistance on all-grant terms.
-- In December 1986 I authorized a restructuring of our military loan program, which would offer Egypt immediate relief on its military debt by allowing deferral of a substantial part of interest payments falling due in coming years. The terms of this restructuring are limited by legislation and guidelines which apply to all foreign military loans and all other borrowings from the Federal Financing Bank.
-- We have expressed our intention to support a generous multilateral rescheduling of Egypt's military and other official debt in the context of the program the Egyptian Government is negotiating with the International Monetary Fund.
Our assistance to Egypt is just one aspect of the special relationship that exists between our two countries. I am committed to working with President Mubarak to see our relationship expand and flourish.
Lebanon
Q. Your bitter experience in Lebanon pushed America to refrain from interfering in Lebanese affairs. Have you now entered into a new deal, a part of which contains a solution to the Lebanese problem, or will you leave local parties to solve it, and what could such a proposal be after 13 years of civil war?
The President. United States policy in Lebanon has for many years been based on support for Lebanon's unity, sovereignty and independence, and the withdrawal of all foreign forces. The United States continues to support an end to fighting in Lebanon, the restoration of a political dialog that could lead to national reconciliation and political reform, the strengthening of Lebanon's legally constituted central government, dissolution of illegal militias, and the extension of its effective authority throughout the country.
The lessons of Lebanon's 11 years of strife are clear, however; no outside power, however well-intentioned, can be a substitute for efforts by the Lebanese themselves, nor can Lebanon's political problems be solved by force. We and others are ready to help, but without initiative and effort by the Lebanese themselves, the assistance of foreign powers will be fruitless.
Palestinian Affairs
Q. Every people in the world has its own state -- the British have Britain and Americans have America. Where is the state of the Palestinian people?
The President. We believe that any negotiations designed to lead to a Middle East peace must address the legitimate rights of the Palestinian people, together with the security of all states in the region. We have always recognized that Palestinians should participate at every stage of the peace process. Any agreement on the final status of the West Bank and Gaza should receive the prior consent of the inhabitants of those territories.
We will not support the establishment of an independent Palestinian state in the West Bank and Gaza, nor will we support annexation or permanent control by Israel. As I stated in my September 1, 1982, peace proposal, it is the firm view of the United States that self-government by the Palestinians of the West Bank and Gaza in association with Jordan offers the best chance for a durable, just, and lasting peace.
Soviet-U.S. Relations
Q. Gorbachev rejected your invitation to visit Washington, DC, on the grounds that he does not want to waste his time. Does your administration feel that, as a result of the Iran-contra affair, it has lost the international stature it needs to carry on strategic debates with Moscow?
The President. The U.S.-Soviet relationship is fundamentally competitive and will likely remain that way. At the same time, the U.S. seeks to ensure that this competition remains peaceful and as stable and predictable as possible. We have established a framework, based on realism and political and military strength, that provides the basis for a productive U.S.-Soviet dialog in all areas of concern to us: arms control, bilateral exchanges, human rights, and regional issues. Through this dialog, including two meetings between myself and General Secretary Gorbachev, the U.S. has made progress in a number of areas, including arms control. But in other areas, such as regional conflicts, we remain very far apart. My invitation to General Secretary Gorbachev remains open. We're ready for hard and fruitful work ahead; I hope the Soviets are, as well.
Kuwait-U.S. Relations
Q. The state of Kuwait is a firm believer in neutrality and maintains a policy of balance between East and West in her international relations. Her position on the battlefield between Iran and Iraq has exposed her to further difficulties and dangers. What is your evaluation of Kuwait's role in that conflict within the overall relationship between our two countries?
The President. We have had long and harmonious relations with Kuwait and all the Gulf States. With Kuwait, our relationship goes back to the early days of its independence some 26 years ago. We admire Kuwait's many achievements.
Because of our strong ties with Kuwait and the other Gulf Cooperation Council (GCC) States, and the common interests we share in stability in the region, we have been in close discussions for some time with all the GCC States on the war and the dangers it poses. I have made clear on numerous occasions that the United States would regard an expansion of the war as a major threat to its interests as well as to that of its friends in the region. We understand the difficult situation in which Kuwait has been placed by the pressures stemming from the Iran-Iraq conflict. We admire the courage and diplomatic skill with which Kuwait has met these pressures.
International Oil Prices
Q. Mr. President, capitalism and free enterprise are well-established principles in the West. You are an advocate of nonintervention by states in the functions of the private sector. Aren't Western governments denying these principles in their efforts to keep the price of oil low?
The President. The United States and other Western governments represented in the International Energy Agency continue to emphasize the importance of market forces and sound energy policy in achieving supply-demand balance. We do not work toward maintaining oil prices at any level, whether high or low. We have no preconceived notion of where world or individual countries production or pricing levels should be. We continue to believe these should be determined by the free market, operating without government interference or any other form of market manipulation.
Foreign Investments in the United States
Q. Recent events have proven that foreign investments in the U.S.A. are not immune from political considerations, although the free market economy of the U.S. is supposed to be free of state intervention -- investments by Iran, Argentina, and Libya are examples. Mr. President, do we, as Arabs with some of our surpluses invested in the U.S.A., have to think twice about whether our investments are safe and not subject to being frozen?
The President. The United States remains the most open and flexible capital market in the world, and the United States Government remains committed to the preservation of this openness. Responsible foreign governments, and investors from their countries, need not fear that their assets will be affected by U.S. political goals. Statistics clearly show that we continue to hold the confidence of foreign investors. Total foreign investment in the United States -- including direct investment, portfolio investment, and foreign government holdings -- more than doubled from just over $500 billion in 1980 to $1.3 trillion by the end of 1986.
With respect to the three countries you mention, let me clarify a few points:
-- The United States did not freeze Argentine assets; we merely suspended programs of the Export-Import Bank with regard to that country for a limited period.
-- The Iranian case was extraordinary in that it involved a government which had committed flagrant violations of well-established principles of international law. Iran was holding U.S. diplomats hostage.
-- Libya directly supports international criminals who perpetuate senseless acts of terror, not only against Western and African countries but also against countries in the Gulf and other Moslem States. As a direct response to Libyan terrorist attacks against the United States, Libyan Government assets in the U.S. were frozen. Interest on those assets continues to accrue to the accounts of the Libyan Government. Investments by private Libyan citizens have not been affected.
No responsible nation should feel threatened by sanctions taken in such circumstances; in fact, we believe they should support them.
Note: The questions and answers were released by the Office of the Press Secretary on May 19.