nomics and finance for decades to come, so there deserves to be the most careful consideration.

I would hope that once this consideration and interagency and interdepartmental discussion ends that we wind up with a positive constructive policy and one which recognizes that some change inevitably not only should be made but are overdue.

Senator PERCY. Thank you very much.

Senator Clark.

Senator CLARK. Thank you very much, Mr. Chairman.

I have only four or five questions. I would like to start out with a general question.

USING U.N. MORE AS A CENTRAL FORUM FOR CONDUCT OF U.S. POLICY

Do think that the United Nations can become a more central you forum for the conduct of American foreign policy and, if so, what can we do as a government to better utilize the United Nations?

Ambassador SCALI. Senator Clark, I do believe that it should become a more important vehicle for foreign policy. It requires a determination in advance that it be used more often and that its presence be a constant reminder that there is an international forum which can be of positive assistance to the United States in achieving its own foreign policy goals.

I do not believe that the U.N. can or should be the sole forum. I think that there are many, many international groups of a kind that provide more specific expertise than you can in a broad sweep forum of 138 members. But I would suggest that if we follow through with some of the economic streamlining and reforms which I think are fundamental to a more effective U.N., that the United States will of its own will decide that more of its aid, for example, could be channeled through multilateral sources.

I would also hope that as the Middle East crisis eases, and I believe it will ease one day, I think that there will be permanent peace in the Middle East and that the United Nations and United States will join in playing the central roles. But as this eases, the United States can then expect more objective judgments of third world countries to line themselves up with the United States in seeing the same way to the solution of economic and other problems.

I would suggest that the Middle East crisis right now is completely distorting the possibility of the kind of cooperation which we should have within the United Nations, but once that is substantially eased I can see the nations of Africa, for example, who then would no longer have to march in step automatically with all of the Arab countries and the developing countries of Asia, moving in parallel with us to achieve many of the same objectives that we both want. Most of the African countries, despite their current preoccupation about what is happening in South Africa and Namibia and Rhodesia, very well remember that the United States took the lead in promoting independence for the black African nations and they know that while some countries talk about aid, the United States is usually the one that produces it and provides more than words, it provides food for them. So there is a tremendous reservoir of good will and believe that we can work together.

And so I think maybe the longhand answer to our question, Senator, is that we must make considerably more progress in settling the Middle East crisis and in moving substantially further in the problem of what to do about Rhodesia, and Namibia and South Africa before we can expect the kind of cooperation which will come someday. But I think that we are also prisoners right now of international developments of long standing of tremendous complication and which U.N. itself cannot solve. Those are good recommendations. I am in particular agreement with the idea that each President or administration and Congress has to keep in mind that it is largely a question of attitude. Our willingness to go to that forum whenever possible to use it should be a priority rather than going to it as an afterthought.

TOUGHER ATTITUDE TOWARD THIRD WORLD

Senator CLARK. The other questions I have are somewhat more specific. First, some have now advocated that we should be taking a tougher attitude toward the third world in the U.N. What effect do you think that would have? Do you think that is good advice? What effect do you think it will have if we do that?

Ambassador SCALI. I thought that is what I did last December 6, at least that is what one or two people thought I had done. I made my criticism and warned the third world countries that they were rushing pellmell toward a result which would hurt all of us.

I think that many of the third world countries stopped and took a very serious look at whether this was true and concluded that perhaps it was. As a result there has been the first sign of a new and improving attitude, and additional readiness to conciliate and accommodate. And I think that to fail to take advantage of what appears to be a new third world mood, and to complicate this by additional criticism, would set back the prospects for the kind of accommodations and compromises which appear to be possible and on the horizon. I say this because there are also signs within our own Government, for example, that we are facing up to some very important decisions economically on, for example, whether to begin discussions toward possible commodity agreements for key raw materials. This represents a very important departure and if we do not have an opportunity to test the readiness of the third world in this present situation, in a calm and rational atmosphere, without grandstand debates, I think that we will miss a tremendous opportunity.

Senator CLARK. As I understand it, you would not feel that ongoing criticism of the third world at this time would be useful?

Ambassador SCALI. I think it would set back the prospects for cooperation with the third world.

POSITIVE ALTERNATIVES TO CHARTER OF ECONOMIC RIGHTS AND DUTIES

Senator CLARK. This question is a bit more complex in that it has two or three parts. I ask it, of you in your capacity as a private citizen, Many observers of the United Nations argue that, in recent times, we have taken an essentially defensive, inflexible position, particularly at the sixth special session when the Charter of Economic Rights and Duties was drafted, and some of these people contend that the United States failed to come forth with any positive alternatives on the very

touchy issues, such as nationalization, commodity agreements, and so forth.

Do you think that assessment has any accuracy? How would you respond to that criticism?

Ambassador SCALI. Well, I do not accept that criticism. I think that we could have been forthcoming, more forthcoming in one or two areas but, for example, on the Charter of Economic Rights and Duties, which Senator Percy had a major task in seeking to resolve, the fundamental hang up there was whether or not under this proposed rules of the game governments should provide for adequate compensation in the event that a country took over some private industry. Our position I thought was a completely reasonable one. If you confiscated why not compensate? And if we cannot agree directly on what the sum should be, let us turn it over to some third party for an impartial decision.

Basically, the possibility of agreement, and Senator Percy knows this better than I, broke down on the insistence of the developing countries that national law, not international law, should be the decisive factor in determining what compensation there was to be, if any.

Well, our experience has demonstrated that some American companies, for example, have been nationalized and have then been presented with a bill for alleged past injustices, and that instead of gaining any compensation they wind up owing the country where their properties have been nationalized. This is really confiscation in our view and such treatment is very fundamental to whether or not we can encourage private companies to move in and provide the economic know-how which I think is indispensable. As important as Government assistance is, I think that the amount of help that private companies can provide is not only greater, it is more affective, more efficient, and in the final analysis I think is going to be the dominant method of assistance for the next several generations.

ATTEMPT TO RESOLVE DIFFERENCES ON ECONOMIC CHARTER

Senator PERCY. I would like to say that I never in my life worked. harder trying to resolve a difference. I really began with the objective, as Ambassador Scali knows, of finding a way to come together with the third world countries in this charter. But I finally decided that this charter would do more harm to the third world because it would discourage the flow of private capital. Latin America needs a tremendous amount of capital. All the commissions and studies indicate that, no matter how much public investment you have, about 70 percent of Latin America's development has come from the private sector.

A private investor can bring technology, know-how, scientific experience, and everything else into a situation. How would we agree that he not only would be subject to expropriation, nationalization and seizure-no one contests the right of any sovereign nation to do that-but to also present him with the fact it would not even have to be an action of his company that led to its being taken over? Under this charter if the country from which he came engaged in racial discrimination, neocolonialism, colonialism, apartheid, or whatever it isall of which we condemn-then those factors would be taken into account in determining what would be paid to the owners of the expropriated firms.

Well, I can just see a company board of directors asking, "Are we to be held responsible for actions of our country a hundred years ago?" Because there is no time limit at all. I really felt a majority of the developing world felt that that was too onerous. There were just three or four representatives who were really adamant and who in my judgment had no desire to see private capital ever flow into the third world. They consider private capital from the World Bank just as bad; it is tainted; it comes from the developed world. This small minority just did not want foreign capital, and they do not want any influence of democratic societies in the developing countries. So the crucial point was that radical position they adopted on the right of expropriation. And it was plain that American businessmen would never invest in accordance with that philosophy. I finally realized that, in good conscience, we simply could not vote for it. But we hoped to the end to bring about certain modifications and changes. We had 73 rollcalls, I think, on the charter to demonstrate and prove that we actually subscribed to 95 percent of that charter. It was only the last few remaining issues on which we found there would be no yielding whatsoever. Three or four countries, I would say the radical fringe, simply said in effect they did not want a viable charter, and that is what caused the breakdown. We deeply regretted it.

Ambassador SCALI. I might add, Senator Percy, we have not yet given up hope that in improving atmosphere and easing of the confrontation will make it possible to write a charter that all can agree on so that there will be ground rules, that all corporations will know in advance they must follow, and which they can then rely on to protect their investment, and which the receiving countries will then know will protect them.

TIMELIER PROPOSALS AT SPECIAL SESSION

Senator CLARK. The other criticism of which you are aware with regard to the 6th Special Session dealt with the fact that the U.S. proposals were presented only 2 days before the close of the session, and that they really came awfully late in the session to be helpful. Would you assess that?

Ambassador SCALI. Senator Clark, this is a very big government and sometimes it takes us a little longer than is desirable to bring together diverging viewpoints and to wrap it all up into a single package. Despite the tardiness of the American proposal, it was made in good faith and I only regret that we could not have made it earlier, but I know something about the depth of the disagreements that had to be overcome and some of the traditional positions which had to be bent in order to have a proposal at all.

I would hope that in presenting proposals and initiative for the next special session that we put them on the table far sooner.

Senator CLARK. In other words, as we go into the 7th Special Session it is imperative that our Government be prepared in advance to make the proposals that it has in mind and to make them in a meaningful way-soon enough to have some effect?

Ambassador SCALI. I think it would be important and highly desirable and I have reason to believe that the administration recognizes that it had better move sooner rather than later.

PROPOSALS ON SOUTH AFRICA AND NAMIBIA

Senator CLARK. The last two questions, Mr. Ambassador, deal with the United States assuming the leadership position on the question of majority rule for Southern Africa. What could the United States propose, particularly on the pressing problem of Namibia, that would strengthen our position with black Africa?

Can you talk about any alternatives we might have? I am not asking you to recommend a specific policy, necessarily, but what are our alternatives of action that would be useful?

Ambassador SCALI. Senator Clark, I am afraid I cannot be as forthcoming in discussing this as I would like to be in public. Within a matter of a few days we are going to have a Security Council meeting on Namibia. I just think I can say generally, however, that the United States has made it known that it favors independence for Namibia, that it favors a principle of self-determination and that it believes that Namibia should be one country and not split up into a series of countries.

Having said that, I think that how this is to be achieved or in what period of time, and what the response of South Africa has been and will be as it is laid out in the Security Council is something I had better not go into less something I say_complicates achievement of the objective. But I think, as you know, I am very strongly dedicated to the principle of self-determination and I look forward to being of whatever assistance I can to help those who favor independence for Namibia. After all, it is a trusteeship South Africa had in hand for a specific purpose and I look forward to the day when there will be self-determination and a representative of a Namibia delegation.

Senator CLARK. Thank you very much. I think our position on South Africa very often has been a positive one, and particularly our position with regard to Namibia, and we, as I recall, exercised the sanction on military sales to South Africa. Am I wrong about that?

Ambassador SCALI. No, there are no existing military sanctions against shipment to South Africa. There is a possibility that such a resolution might be introduced in this forthcoming debate. We would not be affected by any such ban because we ship no military weapons of any kind to South Africa. But there is a principle involved here which we would have to take a very close look at, namely, should the United Nations get into the business of imposing military bans, in effect taking what is called chapter 7 action for a political purpose? Senator CLARK. The last question. The purpose of these questions is not to give you the most embarrassing questions to deal with but to bring out some facts.

"MAYAGUEZ" INCIDENT AND THE U.N.

Could you characterize the U.S. initiative at the U.N. during the Mayaguez incident? It seems to me that we may have approached the Secretary-General as an afterthought. Could a more serious effort in the U.N. have brought about a different solution, in your judgment? Ambassador SCALI. Senator Clark, I strongly doubt that because in my discussions with the Secretary-General when I did go to see him and when I had talked with him privately before, he acknowledged that he did not know where and/or how to contact the Cambodian

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