The Implementation of the Humanitarian Assistance Package for Central America

THE IMPLEMENTATION OF THE HUMANITARIAN ASSISTANCE PACKAGE FOR CENTRAL AMERICA

HEARING BEFORE THE SUBCOMMITTEE ON WESTERN HEMISPHERE AFFAIRS OF THE COMMITTEE ON FOREIGN AFFAIRS HOUSE OF REPRESENTATIVES ONE HUNDREDTH CONGRESS. SECOND SESSION

THURSDAY, JUNE 2, 1988

Printed for the use of the Committee on Foreign Affairs

U.S. GOVERNMENT PRINTING OFFICE 88-526 WASHINGTON ':1988

For sale by the Superintendent of Documents, Congressional Sales Office U.S. Government Printing Office, Washington, DC 20402 COMMITTEE ON FOREIGN AFFAIRS DANTE B. FASCELL, Florida, Chairman LEE If. HAMILTON, Indiana WILLIAM S. BROOMFIELD, Michigan GUS YATRON, Pennsylvania BENJAMIN A. GILMAN, New York STEPHEN J. SOLARZ, New York ROBERT J. LAOOMARSINO, California DON BONKER, Washington JIM LEACH, Iowa GERRY E. STUDDS, Massachusetts TOBY ROTH, Wisconsin DAN MICA, Florida OLYMPIA J. SNOWE, Maine HOWARD WOLPE, Michigan HENRY J. HYDE, Illinois GEO. W. CROCKETT. JR., Michigan GERALD B.H. SOLOMON, New York SAM GEJDENSON, Connecticut DOUG BEREUTER, Nebraska MERVYN M DYMALLY, California ROBERT K. DORNAN, California TOM LANTOS, California CHRISTOPHER H. SMITH, New Jersey PETER H. KOSTMAYER, Pennsylvania CONNIE MACK, Florida ROBERT G. TORRICELLI, New Jersey MICHAEL DEWINE, Ohio LAWRENCE J. SMITH, Florida DAN BURTON, Indiana HOWARD L. BERMAN, California JAN MEYERS, Kansas MEL LEVINE, California JOHN MILLER, Washington EDWARD F. FEIGHAN, Ohio DONALD E. "BUZ" LUKENS, Ohio TED WEISS, New York BEN BLAZ, Guam GARY L. ACKERMAN, New York MORRIS K. UDALL, Arizona CHESTER G. ATKINS, Massachusetts JAMES McCLURE CLARKE, North Carolina- JAIME B. FUSTER, Puerto Rico JAMES H. BILBRAY, Nevada WAYNE OWENS, Utah FOFO I.F. SUNIA, American Samoa JOHN J. BRADY, Jr,, Chief of Staff PATRICIA A. WEIR, Staff Assistant

SUBCOMMITTEE ON WESTERN HEMISPHERE AFFAIRS

GEO. W. CROCKETT, JR. Michigan, Chairman GERRY E. STUDDS, Massachusetts ROBERT J. LAGOMARSINO, California SAM GETDENSON, Connecticut HENRY J. HYDE, Illinois PETER H. KOSTMAYER, Pennsylvania ROBERT K. DORNAN, California TED WEISS, New York CONNIE MACK, Florida JAIME B. FUSTER, Puerto Rico MICHAEL DEWINE, Ohio STEPHEN J. SOLARZ, New York DON BONKER, Washington VICTOR C. JOHNSON, Subcommittee Staff Director TABOR E. DUNMAN, Jr., Minority Staff Consultant NANCY A. AGRIS, Subcommittee Staff Consultant LORNA E. WATSON, Subcommittee Staff Consultant

(II) OWN a I 1 0

CONTENTS

WITNESSES of Michigan; Page Hon. David E. Bonior, Representative in Congress from the State Deputy Majority Whip; chairman, Leadership's Task Force on Nicaragua ..... 4 Hon. Richard Cheney, Representative in Congress from the State of Wyo- ming; Chairman, Republican Conference ...... 8 Ted D. Morse, Director, Task Force on Humanitarian Assistance in Central America, Agency for International Development ...... 26 MATERIAL SUBMITTED FOR THE RECORD Statement by Nicaraguan Cardinal Obando y Bravo endorsing A.I.D.'s Cash- for-Food Program ...... 34 APPENDIXES 1. Correspondence from Ted D. Morse, Director, Task Force on Humanitarian Assistance to Central America, Agency for International Development to Hon. Geo. W. Crockett, Jr., Chairman, Subcommittee on Western Hemi- sp here A ffa irs ...... 49 2. Correspondence frow ('arolyn R. Eldridge, Grant Office, Management Serv- ices Branch, Offic( (f&''ocurement, Agency for International Development to Dr. Donald C. Kamiinsky, MPH, Vice President, International Division, The People-to-People Health Foundation, Inc ...... 50

(ID THE IMPLEMENTATION OF THE HUMANITARIAN ASSISTANCE PACKAGE FOR CENTRAL AMERICA

THURSDAY, JUNE 2, 1988 HOUSE OF REPRESENTATIVES, COMMITTEE ON FOREIGN AFFAIRS, SUBCOMMITTEE ON WESTERN HEMISPHERE.AFFAIRS, Washington, DC. The Subcommittee met, at 1:30 p.m., in room 2200, Rayburn House Office Building, Hon. Geo. W. Crockett, Jr. (Chairman of the Subcommittee) presiding. Mr. CROCKETT. The Subcommittee on Western Hemisphere Af- fairs will come to order. We meet today to examine the implementation of House Joint Resolution 523, a humanitarian assistance package adopted by the Congress to support the Central American peace process, and in particular to support the Sapoa Accord signed by the Nicaraguan Government and its armed opposition. HOUSE JOINT RESOLUTION 523 The assistance provided in that resolution was intended to sus- tain the Contra forces while the negotiations on a permanent cease fire continued; to provide medical assistance to Nicaraguan children on both sides of the conflict; and to support the work of the Verification Commission which had been created by the Sapoa agreement. The aid package directs the Agency for International Develop- ment to oversee the program, but specifies that the actual delivery of the assistance would be handled by a neutral organization agreed upon by the Nicaraguan Government and the Contras. The delivery of the assistance was to be monitored by a Verification Commission headed by Cardinal Obando y Bravo and the Secretary General of the Organization of American States. CONCERNS ABOUT IMPLEMENTATION Since the law was enacted, several concerns have been raised with regard to the implementation of this package by the-Agency for International Development. I will enumerate a few of these concerns with the expectation that they will be addressed by the witnesses: First, that AID may be violating the intent of the legislation and of the Sapoa Agreement by providing assistance to the Contras outside of Nicaragua, through organizations which are not neutral and which have not been agreed upon by both parties, and without (1) i

2 the verification procedures required by both the Sapoa agreement and the legislation. Secondly, that cash payments are being made to the Contras inside Nicaragua with no verification whatsoever that the assistance is in fact reaching the intended beneficiaries, or that it is being spent for the intended purposes: food, medicine, clothing and shelter. And, thirdly, that a credible and neutral organization-the Pan American Development Foundation-has been proposed by the Sec- retary General of the Organization of American States and has been accepted by the Nicaraguan Government, but the Contras continue to stall on reaching agreement on any delivery mechanism so that they continue to receive cash payments. Finally, we are concerned about the decision by the Contras last weekend to break off the negotiations with the Nicaraguan Govern- ment after the government had accepted-and even gone beyond- their proposal. We need to assess the relationship between these extended negotiations and the justification for continued U.S. assistance to the Contras. We hope that the hearing today will address these concerns and others that the Subcommittee Members have with regard to the implementation of this program. It is the Chair's intention to conduct as much of this hearing as possible in open session. However, at such time as a quorum is present, the Chair will entertain a motion to proceed into executive session either at the discretion of the Chair, in case that should be necessary for the discussion of sensitive matters. At this point, I would like to recognize our distinguished Rank- ing Minority Member of this Subcommittee, the gentleman from California, Mr. Lagomarsino. Mr. LAGOMARSINO. Thank you, Mr. Chairman. Mr. Chairman, while I can understand the importance of the Subcommittee exercising its oversight responsibilities on the implementation of the humanitarian aid package to Central America, I find it hard to understand why the House Democratic leadership is so intent on intimidating and brow beating AID on this issue. I only wish the same vigor and energy would be applied to encourag- ing Sandinista compliance with the Sapoa agreement for "unrestricted freedom of expression" and release of political prisoners. AID FOLLOWED THE LAW AID has tried scrupulously to follow the law in implementing the legislation to provide humanitarian assistance to the contras and aid for the Nicaraguan children. It has followed the legislation, taken into account the legislative history of the law, and it has consulted with all the appropriate congressional committees and leadership offices. It has done everything appropriate to implementing a program of aid which had the specific purpose of keeping the Democratic Resistance in Nicaragua from-starving to death. No one has yet been able to make a legitimate claim that something other than humanitarian aid has been provided. Yet every effort on the part of some in the House Leadership has appeared to 3 be directed at stopping humanitarian aid for the Contras in spite of an overwhelming vote March 30 of 345 to 70 to authorize that aid. Apparently, elements of the House Leadership are trying to over- turn that decision through intimidation of AID with messages from the Democratic Caucus and the Democratic Study Group, none of which have the force of law. If the House Leadership is so con- vinced of the legitimacy of its case, then it should bring the matter to a vote on the House Floor and let the Full House express its will on the matter. I think the previous vote of 345 to 70 is a good indi- cation that Members of this body had no intention of allowing the Contras to starve to death. The Democratic Leadership has pressed its case against the implementation of humanitarian aid based on the Sapoa Agreemefit. But it has placed the entire burden of compliance on the Contras without similar requirements for good faith compliance by the San- dinistas. After the Sapoa agreement was negotiated, the Sandinis- tas changed their interpretation of what it meant: to them it required the Democratic Resistance to surrender before it could receive food under this humanitarian aid package. Where is the indignation of the Democratic Leadership for the Sandinistas reneging on their earlier agreement? Where is the outrage for the Sandinistas' declaration of resumed military action against the Democratic Resistance if they do not surrender? Where is the pressure on the Sandinistas for democratic reforms, protections of human rights, release of political prisoners and unrestricted freedom of expression? I am only too happy to have a review of how U.S. taxpayers' dollars are being spent tQ support the forces of freedom in Nicaragua, I only wish there were equal concern for implementation of all elements of the Sapoa Agreement and fulfillment of the principles of the Esquipulas II Accord. Thank you, Mr. Chairman. Mr. CROCKET. We are pleased to welcome the two non-members of our committee, Congressman Edwards from Oklahoma and Con- gressman Levine from California. Congressman Gejdenson, have you any opening remarks? Mr. GEJDENSON. I would make some brief remarks to try to edify my friend and colleague from California who seems to have forgot- ten some of the history regarding American funding of the programs in Central America.

RESPONSIBILITY OF CONGRESS Only several years ago this Congress authorized and passed $27 million in humanitarian aid and in discussions with the chairman of the Select Committee on Intelligence, this administration has not yet given the Congress an accounting of how those funds were expended and where those funds were. We have been assured by a number of people from the administration they are going to get around to doing it. They haven't done it. The I'can/Contra affair doesn't need to be re-hashed, but it is not unreasonable that people be concerned how funds the Congress ap- proved are expended, and I think it is to the Chairman's credit he 4 is holding the hearing to make sure we do the kind of oversight that Congress has a responsibility to fulfill. We don't just pass legislation and go home and hope it works. We are here on a full-time basis to make sure the actions the Congress takes, as they are intended to be taken, are carried out. Mr. CROCKETT. Well, it looks like we are off to a good start. Con- gressman Hyde. Mr. HYDE. I certainly don't want to delay Mr. Bonior's statement, but I do just want to respond very briefly to Mr. Gejdenson's remark that ie spoke to the chairman of the Select Committee on Intelligence, who told him the $27 million that was previously expended in Central America was not accounted for. That is just not so. Now, I don't know what went on between him and Mr. Stokes-- Mr. GEJDENSON. I can get you in writing-- Mr. HYDE. I have two people from the staff here, one of whom was involved in the accounting, and you don't know what you are talking about, and I yield back. - Mr. CROCKETT. We are going to have peace and good order, don't worry about that. That is the first bell for a vote. I suggest we go and vote, gentlemen, and come back and begin the testimony. The subcommittee will recess. [Recess.] Mr. CROCKETT. The Subcommittee will be in order. STATEMENTS OF HON. DAVID BONIOR, A REPRESENTATIVE IN CONGRESS FROM THE STATE, OF MICHIGAN; HON. RICHARD CHENEY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WYOMING; AND TED D. MORSE, DIRECTOR, TASK FORCE ON HUMANITARIAN AID IN CENTRAL AMERICA, AGENCY FOR INTERNATIONAL DEVELOPMENT Mr. CROCKEMT. We are pleased to welcome as our first witness our distinguished colleague from Michigan, the Deputy Majority Whip in the House of Representatives, and the Chairman of the Leadership's Task Force on Nicaragua, Congressman David Bonior. Congressman Bonior, welcome to the subcommittee. We appreciate your appearing and we expect that-you will give us the leadership's views on the subject under consideration. STATEMENT OF HON. DAVID BONIOR Mr. BONIOR. I would like to thank you, Mr. Chairman, for inviting me here today. I commend you for holding these hearings to ensure that legislation to support the peace process is carried out in the manner intended. As you know, on March 30, 1988, the House of Representatives adopted H.J. Res. 523, a package of assistance to support the cease- fire agreement signed between the Nicaraguan Government and the Contras on March 23 in Sapoa. 5

BIPARTISAN CONSENSUS ON SAPOA ACCORD This legislation passed by a margin of 345-70, reflecting overwhelming bipartisan consensus that this agreement offers the best hope for peace and democracy in Nicaragua. The legislation c ,arly states that the funds provided must be "administered consistent with the Sapoa Accord." No funds were to be spent in "any manner determined by the Verification Commission to be inconsistent with that agreement or any subsequent agreement reached between the Nicaraguan Gov- ernment and the Contras." As you know, this legislation contained three elements: $17.7 million in food, medicine, and clothing for the contras; $17.7 million for children victims of the war; and $10 million for the Verification Commission set up under the Sapoa Accord. The Agency for International Development was given responsibility for administering this program. I recognize that this has been a difficult task for AID, one that the agency has not sought on its own. As one of the drafters of the legislation I have tried to avoid micro-managing this program. The legislation was intended to encourage the parties in the region to resolve conflicts and discrepancies in interpreting the Sapoa Accord, not Congress and not AID. Under the conditions established, AID did not necessarily have to seek advance approval for actions they wanted to undertake, but if either party objected, the Verification Commission was charged with resolving the issue. AID ) S MANAGEMENT OF ASSISTANCE PROGRAM Yet several aspects of AID's management of this program have caused concern. First, it was the intention of Congress that funds for the Verifi- catio6i Commission begin to flow immediately and at periodic inter- vals. There was a strong desire that we avoid any impression that political strings were attached to these funds. The Secretary General of the Organization of American States (OAS) was given responsibility for the technical aspects of verification under the Sapoa Accord. It was assumed that management of funds would be through him in consultation with Cardinal Obando Y. Bravo, the other member of the Verification Commission. Yet it took AID more than six weeks to give the Verification Commission funds that Members of Congress on both sides of the aisle had agreed should go immediately and without interruption. Though detailed budgets were submitted regularly by the Secre- tary General of the Organization of American States (OAS) an agreement was not finally concluded between AID and the OAS until late May. Second, it was the intent of Congress that neutral organizations be used to deliver assistance to the Contras. That assistance was to be strictly limited to food, clothing, medicine and shelter. The assistance and the means of delivery were to be verified by the Veri- fication Commission and accounted for by the General Accounting Office (GAO) and the committees of Congress. 6 As stated during debate, it was assumed that the Contras would choose a delivery agent and that if the Nicaraguan Government objected, the matter would be resolved by the Verification Commis- sion. At the time, it appeared that an agreement on the ceasefire zones and a delivery agent could be resolved rather quickly. KEY ISSUE OF CONTROVERSY Yet delivery of the $17.7 million in assistance to the Contras has been the key issue of controversy which the parties have not been able to agree on. While delaying funds for the Verification Com- mission, AID has quickly stepped into that vacuum to give goods to the Contras in Honduras. AID chose a former Contra supplier to airdrop assistance to Contra camps on the border. Circle G provided assistance to the Contras as recently as February 1988 and could hardly be judged a "neutral" carrier as specified by the legislation. The shipments in Honduras were firmly opposed by the OAS Sec- retary General on April 25 in a letter to Secretary of State George Shultz. The Secretary General cited their inconsistency with the Sapoa Accord, the Esquipulas II agreement signed by the five presi- dents of Central America on August 7, 1987, and the aid package adopted by Congress. Now in addition, AID has announced plans for cash payments to Contras inside Nicaragua. These funds will be impossible to account for and they are not consistent with the legislation adopted by Congress. No one in Congress is opposed to feeding hungry Contras. Let me repeat that. No one is opposed to feeding hungry Contras. But ob- jections must be raised if the means of distributing are unaccount- able and outside the peace agreement. And that is clearly the case with the cash payment scheme that AID has come up with. The options are clearly, clearly available. OPTIONS ARE CLEARLY AVAILABLE The Nicaraguan Government initially proposed delivery through the International Committee of the Red Cross outside the ceasefire zones and without-without I want to stress-preconditions. The Contras rejected it and made no counter offer. The Secretary Gen- eral of the OAS then suggested the Pan American Development Foundation as a neutral delivery agent. The Nicaraguan Govern- ment publicly accepted the offer and agreed to let the Foundation subcontract to private U.S. commercial organizations as the Con- tras have requested. The Contras in a private meeting with the House Leadership and in a public statement on May 24 also accepted the Pan American Development Foundation. I hope that AID will cease all other forms of delivery and make immediate arrangements for delivery of aid through the Pan American Development Foundation. Third, it was our intention that aid be given to child victims on both sides to help bind the wounds of war. In order to address the concerns of some Members of Congress who feared that the Nicara- guan Government might profit from such assistance inside the 7 country, the legislation prohibited any funds going to or through the Nicaraguan Government. This was not intended, however, to deny assistance to children who may be in Nicaraguan Govern- ment health facilities. It was also our preference to give assistance to non-political private voluntary and international relief organizations already working in the area, especially those organizations listed specifically in the legislation. To date, ten organizations have been chosen by AID to receive up to $13 million in grants for medicine and prosthetics to treat children injured in the war. It would be my hope that AID would distance itself from organizations such as the Dooley Foundation which was involved in the North-Singlaub network and instead focus grants on the international organizations listed in the legislation. PEACE PROCESS ASSISTANCE PACKAGE In summary, I would like to reiterate that the legislation adopted by Congress on March 30 was not a Contra assistance package solely, but rather assistance to support the peace process. That negotiating process is still alive and viable. Last weekend, the Contras and the Nicaraguan Government met for three days and came very close to a final agreement. Six of nine points in the Contras' proposal for democratization were adopted word-for-word by the Nicaraguan Government. The other three were essentially the same points but more broadly defined. The Government agreed to go further than ever before in opening up the political system of Nicaragua. Another round of talks has been scheduled for June 7-9. Let us hope that a permanent ceasefire agreement can be signed by that time. We in Congress must continue to do everything we can to bring the full weight of the U.S. Government behind the Central Ameri- can peace agreements. It is important that this Subcommittee continue its work of help- ing to ensure that this legislation is carried out in a manner that will enhance prospects for peace and democracy. Thank you, Mr. Chairman, for inviting me to appear here this afternoon to share with the Subcommittee our goals in writing this legislation. Mr. CROCKETT. Thank you, very much, Congressman Bonior. Mr. LAGOMARSINO. I wonder if this would be an appropriate time or I would say it is an appropriate time for Mr. Cheney who is here to testify inasmuch as he was involved in these negotiations and is well familiar with them. Then we can ask both of them questions. Mr. CROCKETT. Of course Mr. Cheney was not listed as a witness. Mr. LAGOMARSINO. Neither was Mr. Bonior. Mr. CROCKETT. Mr. Bonior's name was submitted to you and your staff representative fully a week ago. Mr. LAGOMARSINO. That is not what my staff-on Tuesday I was told. Staff was told on Tuesday. Mr. CROCKETT. The Chair has no objection to Congressman Cheney testifying. Where is he? You may begin Congressman. 8 STATEMENT OF HON. RICHARD CHENEY Mr. CHENEY. I thank the Chairman for the courtesy he has extended to me on short notice to discuss this important subject. I am always pleased to share the witness table with my colleague from Michigan, Mr. Bonior. Mr. Chairman, this is an extremely important and difficult set of issues the Congress and this committee and the the committee I serve on, the Intelligence Committee, has wrestled with now for several years. There is an alternative point of view in terms of what Congress intended in the legislation that was drafted providing for humanitarian assistance.

NONMILITARY AID TO CONTRAS At the time that that package was put together we were representing the Republican side of the House, Mr. Michel the Republi- can leader, myself as Chairman-of the Republican Conference and a Member of the Intelligence Committee and also Mr. Edwards of Oklahoma, who was head of the Republican Task Force on Central America. The debate focused specifically from our perspective r n the question of whether or not we were going to be able to provide non-military humanitarian assistance to the Contras. The package that was put together in our view provided that assistance. There were decisions to that, two basic additions, one was the assistance to the Verification Commission and the second was the addition that had been in the original Democratic package offered previously of assistance to the children, the victims of the conflict i-n Cen- tral America. As that package was put together, Mr. Chairman, a couple of -points stand out I think in those discussions. One was the sense of urgency in getting assistance to the Contras. We made arrangements as the package was negotiated to front load the medical supplies that would flow because there was a special shortage in that area and it was agreed to as we sat around the table that the material would flow as quickly as possible. ROLE OF THE VERIFICATION COMMISSION Another area of concern had to do with the role of the Verifica- tion Commission. It was suggested at one point, indeed the legislation was drafted at one point in such a fashion that the Verifica- tion Commission would have to provide an affirmative finding prior to the movement of any aid to the Contras. Those of us on the Republican side objected to that provision and after extensive debate the provision was dropped and revised and subsequently it was clearly understood, and I will paraphrase the Speaker himself because he participated on the Democratic side, that the assistance would begin to flow immediately, that we would not wait for the Verification Commission to sign off on or approve those arrangements, that if there were to be problems developed, controversy were to arise down the road, then those controversies would be referred to the Commission for resolution but the assistance to the Contras was to begin to flow immediately. That you feel has not happened. I think the other point I would make with respect to the Verification Commission is that, while 9 indeed it is true that the Secretary General has objected to certain of the arrangements, he is not the Verification Commission. The Verification Commission requires two individuals to participate as well as the Secretary General, of course, Cardinal Obando Y. Bravo has to be involved and the finding by the Verification Commission to have any standing or authority under the statute or the Sapoa Agreement must be a finding agreed to by both gentlemen and to date it is my understanding that has not happened.

DELIVERY INSIDE HONDURAS With respect to the question of delivery inside Honduras, AID I think has found themselves unable to provide assistance inside Nicaragua. In the view of those on our side providing food and assistance inside the Hondkran border for the Contras who have withdrawn from Nicaragua because in some cases they face starvation, lack of medical supplies, is perfectly appropriate and within the broad guidelines of what we intended in the legislation. On the question of cash payments, this is not a new matter. We have previously provided cash payments when the assistance program for the Contras was handled through another agency. It has always been a natural part of the program. In many instances it is much easier to provide cash payments than it is to airlift food supplies themselves. It is much simpler to carry. Cash is easy to deal with. The question of accountability of those funds is a matter that has been dealt with by that other agency. We have, through the-- Intelligence Committee, provided very careful and very elaborate accounting controls so that we were able to track those funds. I think it is important to point out the cash payments that are to be disbursed are in Cordobas. Cordobas is not a convertible currency. It can't be spent outside of Nicaragua because it is virtually worthless in any other economy and the amounts to be distributed are small, as I understand it, roughly a dollar a day per individual and can only be used inside Nicaragua to purchase what is available inside Nicaragua, specifically food supplies. There is not enough money involved nor does the opportunity exist inside Nicaragua for those funds to be spent for other purposes, like, for example, acquiring weapons. Cordobas is basically a worthless piece of paper except in the shattered Nicaraguan economy.

IMPLEMENTATION CONSISTENT WITH THE LAW I think for the charge to be made somehow AID is operating in a manner inconsistent with the understanding we had when the package was drafted is a charge I would dispute. After the legislation was on the books, controversy did arise with respect to AID's activities and whether or not they were carrying out the intent of the Congress, a subsequent meeting was held under the auspices of the Speaker in his conference room, attended by the Speaker, Mr. Wright, by Mr. Bonior, Mr. Coehlo and on the Republican side by Mr. Michel and myself. Also present was Alan Woods, the director, the administrator of AID and Mr. Morse responsible for running the program and, I believe, is here today. 10 Some of those same issues were discussed then, including cash payments, and it was ultimately agreed that AID could, in fact, go forward with cash payments, that that would not be inconsistent with the statute. It was also at that time that Mr. Bonior, I believe, asked Mr. Woods if it would be possible to defer, I want to emphasize this point, to defer any delivery of assistance to the Contras until the next round of negotiations. I mention that for two reasons. First of all, I think it shows clearly that there was no question but what AID had the authority to deliver. The question of delay in the timing was a request, not a statement that was somehow consistent with the statute and secondly I think it reveals what I find to be a very disturbing trend on the part of some of my colleagues in terms of their interpretation of this legislation, which is the continuation of a pattern that, in my opinion, obviously I am sure they see it differently, but in my opinion constitutes an effort to unilaterally shut down the Contra operation, to destroy the Nicaraguan Democratic resistance. That exercise unfortunately is close to fruition. And what we have here today and in the complaints about how the program is being administered by AID is just one more mile- stone on the road towards the ultimate establishment in Nicaragua of a consolidated Communist regime under the Ortega brothers that will result, just as sure as we are here today, from the effects of taking action to deny the Contras humanitarian assistance they have to have in order to stay in the field and remain a viable force in Nicaragua. I thank the Chairman and the Committee for their courtesy. Mr. CROCKETT. Thank you, Mr. Cheney. At the time this package was worked out, Mr. Cheney, wouldn't you agree it was the expectation of all Members of Congress that an accord setting aside these peace zones within Nicaragua was im- minent and would come into existence in a few days? Mr. CHENEY. Mr. Chairman, it certainly was, I think, the expectation at that time they were making progress. Mr. CROCKETT. And wasn't that the reason that the accord provided for delivery to the Contras within those peace zones? Mr. CHENEY. Certainly our expectation was that they would be able to reach agreement which had not yet been finalized at that point. All they had was the Sapoa Agreement, which was preliminary, and what we were crafting was legislation that would main- tain the Contras on an interim basis until some final peace agreement could be reached. CONTRAS IN HONDURAS Mr. CROCKETT. At the time of the legislation wasn't it the official position of the Honduras Government that there were no Contras in Honduras and didn't the United States Government, support that position, because in none of our communications did we recognize officially the existence of Contras in Honduras. Aren't we in effect going contrary to that understanding when we argue, as you have argued here today, that it is all right for the United States Government to make deliveries of humanitarian aid to the Contras inside Honduras by any method available? 11

Mr. CHENEY. You want a response, Mr. Chairman? I can't speak for the Honduran Government, obviously. It seems to me the problem we are faced with here is that by virtue of the inability of AID for reasons beyond their control to be able to deliver assistance inside Nicaragua to the Contras, the Contras have been forced, many of them, to flee into Honduras. If I were representing the Honduran Government, which I emphasize I am not, I would much rather have the Contras supported inside Nicaragua. My second choice would be if they are going to be in Honduras to have them supplied with the necessary requirements there in terms of food and medical supplies, et cetera. The worst option would be to have the Contras armed inside Honduras without support and supplies, and I would think the Honduran Government would be much happier with AID delivering aid to those Contras inside Honduras than not delivering aid to those Contras inside Honduras.

CASH FOR CONTRAS Mr. CROCKETT. Let me ask you a final question.-This package passed by something like more than 300 votes to 70. Do you think it would have passed or would have had anything approximating that kind of support had it said in so many words, AID is authorized to make cash payments of one dollar a day to each Contra, AID is authorized to pay the salaries to the leadership of the Contra forces, AID is authorized to make deliveries through the same medium that the formerly made deliveries to the Contras and to do this inside Honduras? Do you think the legislation would have passed? Mr. CHENEY. Well, I would point, direct the Chairman's attention to the statute itself, Section 3, Purpose of Additional Assistance for the Nicaraguan Democratic Resistance, subparagraph (c), Descrip- tion of Assistance Allowed. "As used in this section, assistance means only food, clothing, shelter, medical services, medical supplies", and I quote, "payment for such items or services." Now, there has never been any doubt in the minds of those who have been involved in the program that cash payments was a perfectly acceptable alternative, that, in fact, it was the kind of activity that we had been engaged in previously in providing food, medical supplies, and support to the Contras because frequently from time to time we have given them cash payments for those exact services. There was never any dispute as the statute was drafted about that report. Mr. CROCKETT. Mr. Lagomarsino. Mr. LAGOMARSINO. Thank you. At this time I would like to yield to Mr. Edwards who has a few things he would like to add to the testimony. Mr. EDWARDS. Thank you for your indulgence. I know this isn't exactly the way the testimony was planned, and I appreciate your doing that. I would add these thoughts to what the gentleman from Wyoming has said. 12 As he pointed out, Mr. Cheney and Mr. Michel and I were the ones who sat through the negotiations that led to the development of the package, and I wanted to emphasize these points. THE DEVELOPMENT OF THE PACKAGE Number one, there was agreement in that room when we put this package together that aid was to flow immediately. The principal purpose of our agreementandthe principal result of our agreement, was that we were talking about the immediate delivery of aid to keep the Contras a viable force. Second, the choice of a delivery agent was to be a choice solely left to the Contras, not to the Contras and the Sandinistas, not to the Contras and the Congress, but to the Contras. And the Verifica- tion Commission had the authority to step in and disapprove, but it did not require the prior approval of the Verification Commission. I think that is an important point, because the Contras did make that selection, and that was under the agreement in their right to do. Finally, I would emphasize that the agreement was for a package that called for both a peace process and democratization both oc- curring simultaneously. It is quite clear that the democratization process has not taken place. I think Mr. Cheney has summed up very well what our understanding was of what took place during those negotiations, and it is important to-recognize that the principal overriding factor expressed by the Speaker of the House as well as the rest of us was that we were talking about aid being delivered immediately. I thank the Chairman for allowing me to participate. Mr. LAGOMARSINO. Mr. Chairman, with respect to the question you asked Congressman Cheney about whether in fact the House would have voted the way it did on the AID package we are talking about, I would suggest, I think it would have, even had it been specifically stated that money could be delivered in the circumstances where AID has seen fit to do so. We will all recall, I think, that the vote on the measure that included the possibility of military assistance was very, very close, so I don't think there would be much doubt of that, although I guess there is no way we can test that because the situation will never be the same. I would like to ask both of the witnesses this question: Do you believe the Sandinista_.haye acted in accordance with the Sapoa Agreement in allowing unrestricted freedom of suppression? Mr. Bonior? SANDINISTASY COMPLIANCE WITH ACCORD Mr. BONIOR. I think you have to view the whole question of democratization process in Nicaragua and take it from last August and trace it and see where it has come from that the point when there, in fact, was a state of siege. There was no Reconciliation Commission, the Cardinal wasn't involved, the Contras weren't recognized and the Contras weren't invited home to participate. There was, at that point of course, complete restrictions on press. La Prensa wasn't printing, radio stations weren't broadcasting, political parties couldn't organize. If you start from that point in 13 August and you trace the history of what has happened up until a week ago, I think you would have to say on the whole, and I will caveat this, but on the whole, -there has been tremendous progress in the democratization process within Nicaragua; the state of siege was lifted, political parties were opened up, a dialogue with political parties was opened up, La Prensa was able to print, you had radio stations going back on the air, you had the Cardinal named to the Reconciliation Commission, you had a variety of other things take place. Now, there have been interruptions with free expression in the press, i.e., the problem with paper for La Prensa. Of course, the other side of that story or that issue is there was a shortage of newspaper print in Nicaragua and the three newspaper there were given a quantity and one newspaper decided to print more than the others, and the government finally relented and allowed La Prensa to have additional stocks. There have been some other restrictions on freedom that I am not going to defend the Nicaraguan Government on and we have, in fact, those of us who have met with their leaders taken them to task for them. I think to some extent the fact that we have raised our voices in meetings with them strongly has attributed to the fact or can be attributed to the fact that they have made progress along the way, and most recently, a week ago, they agreed, as I pointed out in my statement earlier, to accept six of the nine Contra demands that were put forward a week and a half ago in Managua word-for-word and then basically accepted the three demands in principal with some changes. So to answer your question in total, I think there has been progress made in the area of democratization within Nicaragua. It is not perfect, it has a long way to go yet, but it has been on the upward climb and it has been positive I think. Mr. LAGOMARSINO. Mr. Cheney. Mr. CHENEY. Well, I have a different perspective than my friend, Mr. Bonior, on the degree of compliance. My own view is that the Contras, the Democratic Resistance, have done much more by way of compliance or have failed to violate to a much lesser extent than is the case with respect to the Sandinistas in Nicaragua. CONTINUED SANDINISTA INTRANSIGENCE If we go back, of course, to August when Esquipulas was signed, we had the subsequent defection of Roger Miranda, senior military aide to Humberto Ortega, the Nicaraguan defense minister, who basically confirmed the view that the Nicaraguan compliance with the accords was an effort to destroy the Contras, if you will, to buy enough time so that the Contras would have their water shut off by the Congress of the United States and while at the same time they made plans in Nicaragua for continued military build up. Since the Sapoa Agreement we have seen continued evidence of Sandinista intransigence. We had radio stations shut down, criticized for covering labor strikes inside Nicaragua, opposition political leaders were arrested, subsequently released. We had the threat offered by one of the Ortega brothers if the Contras didn't immediately agree to lay down their arms and come into agreement with

88-526 0 - 88 - 2 14 the Sandinistas that the military action that would be taken against them would be far more severe than anything yet seen inside Nicaragua. My own view is that the activities of the Sandinista government have consistently been those of a group seeking to use the peace process, not to establish democracy in Nicaragua, but rather to buy enough time so that the Contras wither on the vine. The Democrat- ic Resistance is stamped out and they will be able to return to busi- ness as usual. Mr. CROCKETT. Mr. Gejdenson. Mr. GEJDENSON. Thank you, Mr. Chairman. I ACCOUNTABILITY OF FUNDS Let me just go over a couple things quickly because I would like to get some of the ideas of the officials today. The debate apparently seems to be whether or not anything was proven it was actually misused. The information is, however, GAO held 63 percent of the money and they were not able to account how it was expended, therefore they apparently couldn't prove that it was in any way spent illegally, but they haven't been able to account for 63 percent of it. The whole Iran/Contra affair has left us very nervous about how this Administration runs funds. I guess what I would ask Mr. Bonior is have there been some references made by my colleagues on the other side that even if all these things were known the bill probably still would have passed as shown by the large margin. I think to a large degree this legislation passed because of Mr. Bonior's leadership on the Democratic side. People gave him the benefit of the doubt when they were fearful the money would be misused. I would ask my friend and colleague, if he knew the Thomas Dooley Foundation was going to be dispersing as much as $750,000, the Contras leadership salaries were going to be paid with this money, and the cash payments were going to be made to the Contras, would he have supported this legislation? Mr. BONIOR. No. And I-to answer my friend from Connecticut, the fact that we were delivering and are delivering food to Hondu- ras and the supplier was an organization who had former ties to the Contras and not a neutral organization as the Sapoa accords call for, I think clearly was outside the spirit of not only Sapoa, but the legislation that we passed. The cash payments are certainly a problem and had than been known at the time obviously we would not have generated the support necessary to pass the legislation. On that point I would like to emphasize some positive things, and I don't want to come here and just quarrel, because I think there is some real hope alive in this process. A lot of nice things, I use the word "nice" advisedly because it is one of the few times you can talk about something positive in the world, a lot of good things have happened recently with the recent visit by the Presi- dent to the Soviet Union, talks about withdrawing troops and the conflict in Angola, Cambodia, and perhaps, Central America was discussed between the President and Mr. Gorbachev, and the close- ness at which both parties came a week and a half ago to reaching 15 .an accord in Managua, the Contras and the Nicaraguan government. I would like to build upon that hope and that promise and those possibilities. In line with that, I just want to emphasize that when the Pan American Development Foundation, and I speak as much to Mr. Morse as I do to my friends and colleague and my colleague on my right here this afternoon, has offered under th6 aegis of the OAS to deliver these supplies to the contra forces. The Nicaraguan Government has accepted without restriction. They have accepted. In meeting on the 24th of May, the Contras agreed that the Pan American Development Foundation would be acceptable. I want to encourage every one to push that alternative because it does fit under the rubric of the Sapoa accords, it does fit under the spirit of the legislation that we pass and it is a means to move us forward to resolve the delivery system that was intended in the legislation that we passed six or seven weeks ago. Mr. CROCKETT. Thank you. We have been joined by two other Members of our Subcommittee, Congressman DeWine from Ohio, and Congressman Dornan of California. We also have been joined by Congressman Hamilton, the ranking majority Member on the full Foreign Affairs Committee. Congressman Hyde, any questions? Mr. HYDE. I don't want to spend a great deal of time dueling with Mr. Gejdenson about the accountability of the $27 million except to note that it was a GAO accounting and that they did not get access to the records they needed, which is strange because those records were available, and I have someone here from the In- telligence Committee who is on top of that situation. I think it might be useful to compare notes with Mr. Gejdenson later, but I don't think it would be useful to use our time now while we have two witnesses in the box so to speak. NO PROGRESS TOWARD DEMOCRATIZATION I want to ask Mr. Cheney something now. You heard Mr. Bonior say that progress in the area of democratization is on an upward trend. And I just want to see if this meets with your definition of progress. On March 28th the independent daily La Prensa was forced to suspend publication when it exhausted its government al- location of news print and the Sandinistas refused to let it buy foreign news print. On April 12th a U.S. charity attempted to donate news print to La Prensa but the Sandinistas refused to let the news print into the country. Only after international pressure was brought to bear did the Sandinistas provide additional news print to La Prensa. A hunger strike launched by the Permanent Congress of Workers on April 25th was met with repression. On April 27th a special police unit, the Black Berets, attempted to occupy the union hall where the strike was taking place and prevented cars passing by the building from stopping to make donations to the strike fund. In addition, about 100 police beat and arrested four workers who were carrying signs in support of the strike. On April 29th more strike sympathizers were arrested including union leaders Antonio Vartwin, Horatio Sanchez. On May 3rd there were still more ar- 16 rests and police blocked all entrances to the building. Water, elec- tricity, and telephone service to the building was shut off. Repression of labor activity has not been limited to events sur- rounding the hunger strike. Eight members of a confederation of labor unification Peasant Cooperati Ve were arrested and beaten on May 15th in San Jacinto, Leon Province, the following day after refusing to renounce their union affiliation. They were summarily sentenced by the police. They don't have trials. They have the police sentence them to six months in prison. On May 30th, three striking construction workers were arrested in Managua while collecting donations from the public to support their strike. Radio stations reporting on events associated with the hunger strike have been harshly sanctioned, vandals broke into Radio Mundial destroying its control console. Press restrictions, additional directors of eight independent radio stations were summoned to the Interior Ministry, which by the way has taken over from the Justice Ministry, which is no more, and ordered not to report on Nicaraguan economic crisis or public opposition to the draft. Opposition political parties routinely denied the right to engage in ordinary political activity and on, and on, and on, and on. So it is a strange understanding of democratization that is taking place in Nicaragua Would that be your opinion, or is that just mine? Mr. CHENEY. It is also my opinion, Mr. Hyde. PAN AMERICAN DEVELOPMENT FOUNDATION Mr. CROCKEr. I notice this organization the Pan American De- velopment Foundation has been selected by the Democratic caucus and they have adopted a resolution AID should turn it over to the Pan American Development Foundation, and that organization-do you know who first suggested that organization be used? Mr. CHENEY. I do not know. Mr. HYDE. Do you know, Mr. Bonior? Mr. BONIOR. The Secretary General, I think-- Mr. HYDE. Mr. Baena Soares. Mr. BONIOR. Yes. The process, if you will indulge me for 30 seconds, sir, I think the process went something like this, the Nicara- guan government offered the International Red Cross, the Contras rejected it. Mr. HYDE. Do you know why they rejected it? Mr. BONIOR. Yes, I know why. Mr. HYDE. Do you want to tell us? Mr. BONIOR. They felt I think in their own words to us, it would have treated them as a refugee status and they didn't want that connotation. Mr. HYDE. And they also were supposed to visit prisoners and came back with such a low number of prisoners they felt they were biased towards the Sandinistas. There is about 9,000 political prisoners there and the International Red Cross had no idea of any number like that. Isn't that so? Mr. BONIOR. I am not aware of that although I do know the International Red Cross does engage in this kind of activity around 17 the world and with some degree of success and respect. But none- theless, it was rejected. You feel, as I understand it, there was nothing put on the table at that point once the International Red Cross was rejected, so we were left with a vacuum. At that point, the Secretary General of the OAS threw out the Pan American Development Foundation because PADF was the only common organization that both the Nicaraguan government and the Contra forces submitted to AID as possible organizations to fund money to the children's organization. Mr. HYDE. Did you and the Speaker have any role in persuading the Contras to accept the Pan American Development Foundation as an agency to deliver this aid? Mr. BONIOR. Well, we suggested that since the Nicaraguan government and the OAS were in agreement, we suggested they look at it and that they might be a responsible organization. Mr. HYDE. They joined in with the OAS and the Nicaraguan government? Mr. BONIOR. It was a neutral organization. Mr. HYDE. You are aware Mr. Soares, the General Secretary of the OAS, is a director of the Pan American Development Founda- tion, are you? Mr. BONIOR. I assume he has something to do with it since he is the Secretary General of the OAS, yes. Mr. HYDE. And this foundation that he is so anxious to have used to deliver this is something that he is on the board of directors-in fact, he is the chairman of the board of directors? Mr. BONIOR. It wasn't his first choice. He offered some other sug- gestions and it eventually came down to this one because it does represent the spectrum of Latin American nations. Mr. CHENEY. If the gentleman would allow me to respond. Mr. BONIOR. Yes. SELECTION OF DELIVERY MECHANISM Mr. CHENEY. We spent a lot of time discussing this when the bill was first put together and it was clear after we talked with members of the Contra board of directors that the negotiations over the International Red Cross and the delivery mechanism had taken a lot of time in the negotiations and it was left the Contra forces would decide upon a delivery vehicle, that it had to be a neutral organization, that it could be a commercial organization, and that if the Sandinistas objected, then-it would be referred to the verification panel. But the verification panel was not charged with selecting the delivery mechanism. That was to be left up to the Contra leadership. Mr. BONIOR. It was left up to both. Mr. CHENEY. I beg to differ with my colleague. Mr. HYDE. That is important. You mean that the Sandinistas had a voice in what-how the food would get into the Contras and unless they both mutually agreed, nobody could get food into them. Is that your understanding of the law? Mr. BONIOR. Obviously, the Government of Nicaragua was not interested in having a former supplier in the war provide aid to the Contra forces, which is what is happening. Circle G had provided 18 previously supplies to the Contras, and they agreed to "a neutral organization". They did say, the Nicaraguan government that is, that the Pan American Development Foundation could contract with whomever they wanted to, even U.S. companies. Mr. HYDE. They wanted food to be sequestered in Managua and to be distributed to the Contras wherever they are from Managua; isn't that so? Mr. BONIOR. Not necessarily. They could be air dropped into the seven zones. Mr. HYDE. From Managua? Mr. BONIoR. Not necessarily so. Mr. HYDE. Than I have different information than you. Just one more question, Mr. Chairman. You disagree then, Mr. Bonior, with the opinion of the general counsel for AID on the use of money, cordobas, in lieu of the food where he says in his opinion dated May 10, 1988, and delivering food to the Honduran border because they can't get it into Nicara- gua and if they don't get it to the Honduran border, nobody eats- and I quote that, "not all resistance units were located inside Nica- ragua was known to all Members of Congress before and during their vote. Had Congress intended to limit assistance to a specific gec-'raphic area, such lack could have easily been added to the legislation. As to humanitarian assistance, Congress intended it to be provided to a particular group of individuals rather than in a specific geographic area." Do you disagree with that? Mr. BONIOR. I don't disagree with it, but let me add one caveat, and that is section 2 of the legislation which says in effect that the delivery of this food, clothing, medicine has to be in keeping with the Sapoa accords, and the Sapoa accords did not foresee the United States sending food to the Contra forces in Honduras. The presumption in which we all were operating, and I think my friends, Mr. Cheney and Mr. Gejdenson, alluded to this earlier, was in fact there would be an agreement on zones and in fact food would be delivered into those seven zones. That has not in fact happened. I am hopeful it will happen next week. Mr. HYDE. Well, I am too. CASH PAYMENTS TO CONTRAS Lastly, payment for such items or services, which is part of- sec- tion 3 (c)-you don't have any problem with that word "payment" meaning cordobas, do you? Mr. BONIOR. Well, I do have problems with the definition of that. I don't think it has been reported in the press, let me say this, that the families of some of the Contra leadership were getting payments, sustenance outside of Central America in some instances, and that I was aware of and I had no problem with that. I did not, and I don't think any of my colleagues take that language to include the payment of cordobas directly to Contra forces. That is an extension of the understanding that I had, and I am sure my other colleagues had with regard to payment. Cash payments were not something we foresaw at all to those fighting in the field. 19

Mr. HYDE. We just disagree on the English language then. It seems to me, quoting from the law as used in this section, "assistance means only food, clothing, shelter, medical services, medical supplies, and payment for such items or services". If you can't get food into the mountains of Nicaragua where the Contras are hud- dling, you get cordobas in to them; they are much more portable, and get them in where they can buy food from local farmers rather than be forced to steal it. It just seems to me that it is what the words say, but-- Mr. BONIOR. That was not our understanding when we sat down, at least my understanding. I can speak for myself and I think some others in our leadership, it was not our understanding they were going to us,., cash-for obvious reasons. There was concern about accountability. Mr. Gejdenson has alluded to the fact roughly half of the $27 million hasn't been accounted for. A lot of the Members of our caucus feel very strongly that the missing $13 million, or un- accounted for $13 million, is a serious problem. There was concern about cash being used by Bermudez to keep in line the rebel commanders within the Contra organization, and, of course, he is one of the people who is reported anyway to be one of the main obstacles to achieving peace. Other Contras want to go further in achieving the final agreement. There are those two major problems with cash, and, of course, there is the third and most important problem is the per- ceptual problem of what most Members of Congress felt when they voted. They certainly weren't voting to drop cordobas throughout the countryside. Mr. CROCKETT. Mr. Cheney. Mr. CHENEY. If I may elaborate on that. There is a major differ- ence between Mr. Bonior and myself on that point. Cash payments were discussed in a subsequent meeting with the Speaker present and while obviously there were some, such as Mr. Bonior, who were not happy with the arrangement, I left the meeting with the very clear impression that the Speaker understood very well that AID was going to use cordobas to provide the Contras some support on an interim basis. That was no doubt about it. DELIVERY OF ASSISTANCE The question about Circle G, I think Mr. Morse will make this clear, I think that is a one-airplane firm. It is not part of the mas- sive delivery effort of aid to the Contras in recent years. It has, in fact, had minimal contact with them. It is a commercial enterprise in Central America. I think he will be able to satisfy people what we have not done here is gone out and hired that delivery mechanism. My reaction during discussion over the legislation was some Members of the opposite political faith suggested that what AID should do is simply contract with those people delivering the materials when the other agency was in charge of delivering those materials. So I find it a little amazing now we are going to complain about Circle G. Final point, Mr. Chairman, on the $27 million in humanitarian aid authorized back in 1985, many of us objected at the time to set- 20 ting up a special agency within the State Department to handle that program because we felt the agency was the best place to go to deliver it. We objected this time around on the grounds our friends who were demanding the CIA be taken out of the delivery loop would insist that somebody else handle it and they would, subsequent to that, criticize the way it was handled and criticize that the new agency, whoever it might be, for not being able to account for all the funds and do an effective job. Sure enough, that is what happened. They refused to allow us to use the agency qualified to deal with it and, having forced the new arrangement on us, they attack the new arrangement. Mr. CROCKETT. We are-going to have to go back to the five- minute rule or we are not going to get to the next witness. Mr. DeWine. MISSING FUNDS Mr. DEWINE. Thank you very much, Mr. Chairman. I would like to follow up on what Mr. Cheney just said. It seems we have fought this battle before.-But it just seems rather strange we are still talking about the so-called missing money when it was this Congress who made the decision, against the advice of the Administration, against the advice of experts in the field, frankly, that what we ought to do is have the State Department do it. They had to set up-to administer this money, to administer this humanitarian aid-they had to set up an entirely brand new office to do it. They didn't have the capability of doing it. They admitted it at the time, they said we don't want to have that responsibility. Con- gress turned around and said no, we don't care whether you want it or not, you are going to do it. Then Congress turned around and said, you are not doing a good job tracking the money. The basic facts, what our committee found is that the supplies were, in fact, bought. The evidence of GAO is very clear the supplies were bought. The problem was trying to scrupulously trace those supplies all the way down into the field. I think it was an impossible task. Congress set up a straw man and it was just impossible to do it all. You create a situation that couldn't be done. So the basic facts are not that the money is missing, there is no evidence the money is missing at all. The facts are there was hard evidence that the supplies were bought. Just like, you know, you buy supplies from, or you buy a particular item and you don't ask the person you buy it from what he does with the money or what she does with the money. So I just think that it is again, Mr. Chairman, just setting up a straw man here. I do have several questions. Mr. Bonior, I wonder, do you think the Verification Commission has some responsibility for monitoring the steps towards democracy in Nicaragua? Is that part of what they should be doing? VERIFICATION COMMISSION'S RESPONSIBILITIES Mr. BONIOR. Yes. I think they have two main functional responsibilities, and that is, number one, to check on the release of political 21 prisoners, mostly in Managua and elsewhere being held by the government, but also the Contras, also political prisoners. The second main function they have is to patrol the forthcoming seven cease fire zones, and, of course, I am sure that the Secretary General and the Cardinal will be speaking out once there is a final agreement if they are included in that final agreement as partici- pants and verifiers to the democratization process which hopefully will be agreed upon. Mr. DEWINE. We have read recently repeated Sandinista statements they will resort to military force to crush the Contras if the Contras don't accept the peace terms they propose. That has been in the press several different times. Does that bother you at all? Mr. BONIOR. I am hopeful there is patience and we can resolve this thing peacefully without resorting to actual physical force or the use of rhetoric that intimates physical force. It bothers me, although I as a politician and someone who deals with these things, I understand that sometimes you do these things for internal consumption, you do it to prompt people to come to the table and negotiate in good faith. You do it for a variety of reasons. President Nixon unloaded in Hanoi. While he was very open about the fact one of the reasons he did that was to move the negotiations forward in Paris. Those things happen. I am hopeful that we can avoid that type of a rhetoric and move on. ENLARGEMENT OF NICARAGUAN MILITARY Mr. DEWINE. What credence or significance do you give to the reports that the Sandinistas intend to enlarge their military to 600,000 further agreements that have been reached between the Soviets and the Sandinistas in Cuba? Mr. BONIOR. Not much credence. I think they have embarked upon a process to wind this war down, to reintegrate the Contras back into their society, to move to more openness. I don't know that it will ever measure up to the openness that we expect from a country by our own values, but I think it will incorporate more openness, and I don't think it is in their own economic interest to be increasing the size of their military or their rhetoric. As you know, they have had tremendous problems with the draft. They have had problems quite frankly with the Soviets and receiving or continued to receive the promises on aid, although they have been receiving a good amount of aid from the Soviets. The Soviets are now in a position of pulling back all over the world in terms of their military strength, at least they have begun to do that, and my guess is that that would apply to some extent to Nicaragua. Mr. DEWINE. It just strikes me that one of the reasons some of us have differences of opinion about this in the Congress is because we read the history since 1979 of what the Sandinistas have done just differently. You know, Mr. Hyde's recitation, and it is a partial recitation, of what has happened in the last few months, to me is very good evidence the Sandinistas are consolidating their revolution. Mr. BONIOR. Were you here when I mentioned the other things that were done in a more positive vein you and I would agree on, 22 the opening up of some things? You have to weigh those things, the negative, the positive, the things they have done to open up their society with the occasional lapses, serious as they may be. And there are lapses. When we had the Vietnam War there were draft riots, when we had our own civil war there were draft riots. When we had our own civil war, President Lincoln, as you recall vividly, locked up members of the press, lifted their rights of habeas corpus. I don't agree with that type of activity, but those things happen when you have a civil war. What we have to do is concentrate on ending the civil war and expanding the openness. Mr. DEWINE. Thank you, Mr. Chairman. Mr. CROCKETT. Mr. Dornan. Mr. DORNAN. Thank you, Mr. Chairman. At least you and I agree, Mr. Bonior, that it is a civil war. It always gets me on the House Floor when people refer to the contras as mercenaries while there are Nicaraguan young men and young women fighting for Nicaraguan freedom on Nicaraguan soil. If anybody is a merce- nary, even though they are mercenaries by command, it would be the Cubans, the Bulgarians, East Germans, and the whole scene that have made that place like the watering hole in Star Wars for every Communist movement in the world to send their people there for a little training and R&R in a Latin country. You are a forceful voice for the disbanding of the Democratic Re- sistance. Mr. Clieney and those of us on the Republican side of this panel are forceful voices for maintaining their existence. We think that all of us are interested in peace there. But I don't think their fate is in your hands, as forceful a voice as you are, or in our hands, as forceful a voice as Mr. Hyde, DeWine, Cheney, and myself are. The fate of the Nicaraguan resistance is in the hands of that swing vote in the House, about 12 Republicans, and about 20-30 people in your party. In other words their fate lies in the hands of those members who are indecisive on this issue. Now, we had a key vote on February 3rd, all the intelligence people tell us that the huge build up began the morning after that vote in the United States Congress, House of Representatives. And then we had another vote coincidently on the same day of the month, March 3rd. We might have had a vote on April 3, but that was Easter Sunday, so we had it a few days early. We had the May vote a little bit late, May 26th. I have a feeling that given the track record of the Communist leadership of Managua we will have a vote in June, sometimes towards the end of this month. MONTHLY VOTE ON ASSISTANCE Do you foresee almost a monthly vote on this until there is some definitive peace treaty down there that both sides can live with? Is there going to be a monthly vote, do you think, Mr. Bonior? Mr. BONIOR. I hope not. I thought we had an agreement on that when we did the last peace proposal that we would wait until the peace process worked its will, until the negotiation process worked 23 its will between the Nicaraguans and the-the head of the contras and the Nicaraguan government. And, as I recall, there was agreement between the Speaker and the President of the United States in written form on just how we would proceed. I regret the fact that-oh, well, I will use the word, that that agreement, from my perspective anyway, I can only speak for myself, was somewhat violated by the vote that we had on the defense authorization bill the other day. Clearly, it was the right of the minority to offer an amendment, it was an open fule, but it was my understanding that we weren't going to do anything until we let this process work its will, and it has been working its will and it has been moving despite some set- backs in a positive direction. Now I hope we can all be patient and wait and see what happens and see what transpires in the next two weeks on this issue. Mr. DORNAN. You have alluded to President Nixon unloading on Hanoi. I ask this rhetorically, you don't have to answer it. Do you think for a minute that the Communists in Paris would have said anything on January 27th of 1973 if Mr. Nixon hadn't unloaded just four weeks before? I don't. Do you think anything would have happened in Pan Mun Join if Eisenhower hadn't come into office saying seven simple words, "No restrictions as to territory or weapons"? NEVER-ENDING CONFLICT That statement got their attention and six months later, in July 1953, that conflict ended. I think, however, that this Nicaraguan conflict will be a never-ending story. It will go on and on and on until we starve-until we see the Resistance starve to death. If you read General Giap's book, he says very clearly that there wouldn't have been any Paris peace accords lacking credible military pressure by the United States. My colleague may be interested to know that Le Duc Thou didn't even accept the Nobel Peace Prize. In my view his silence inferred that they were not through with the kill- ing yet. They were still intent on arming. That is the way they are using the peace process in Managua. Going through the airport, in Managua, you must have bumped into the PLO delegations as I have, as well as the North Vietnam- ese delegation, and the North Korean delegations. They are all going to Nicaragua to advise them on how to manipulate the United States of America through its Congress; on how to buy time, and more tim-e, and more time. I was supportive of the INF Treaty before I knew what Vice- President Bush was going to do. I have been supportive of this sum- mitry. I am glad Reagan has had four meetings with Gorbachev. I don't like some of the things he says that seem naive. I do think the Soviets willfully beat up on the internal resistance and arrest the dissidents whether they are Jewish, Pentecostal, or just political people like Zakharov. I don't like to see my President making excuses for them. So far, we have only heard talk of the Soviets withdrawing support for Communists in Angola and Nicaragua. The truth is we have aerial photography of Soviet weaponry outside warehouses. 24 This can only mean one thing, the warehouses are stuffed like a Christmas goose. Yet, Nicaraguans are starving; you see it when you go down there. Managua is a basket case. The only world cap- ital it reminds me of is Hanoi, which is interesting. So I don't know. The never-ending story is going to go on. I am not going to ask you what I asked Steve Solarz. I said, "Steve, is there anything that would get you to vote for aid for "nothing". the Resistance?" He said, On second thought, I think I will ask you. Is there anything that would be your breaking point where you would say, as the 24 who signed the letter; "that you would now support the Contras"? Is there anything the Sandinistas could do short of torturing prisoners at high noon in front of the world press in Managua which would make you support the Nicaraguan resistance? Mr. BONIOR. I am almost embarrassed to admit this, but I have voted for support for the contras five times in the last six votes. Mr. DORNAN. Would you answer that question? Mr. GEJDENSON. I would be happy to discuss this issue with you at length at any time after we get-through our panel of witnesses. You have used a ton of time already. - Mr. CROCKETT. Mr. Dornan, can you conclude in one minute? SOVIET It4VOLVEMENT Mr. DORNAN. The Soviets pulling out of Afghanistan may be a shell game, Mr. Bonior. They may be replacing one for three these young fuzzy-cheeked boys that we see with their little blue and white striped shirts and their little boy scout campaign hats, they may be replacing them with tough, mature, highly-trained Spetz- hauts, commandos. This may be a big charade, and as far as I can see the Russian ships are still unloading military equipment in Nicaragua. I think the peace process is going to wind down here in another month or two with more Communist chicanery. I hope you will continue to vote for humanitarian aid to keep the peace process going so maybe something good does come out. I will end with Mr. Cheney: Do you see the patience of our Con- gress, that swing vote, wearing thin and yet a fifth or sixth extension? Do you see something happening in July when the Democrats are about to head to Atlanta to convene their convention? Mr. CROCKETT. I think he has 30 seconds left on that minute. Mr. CHENEY. I am, you feel, a peace mission from the standpoint of the resistance. I hope they can survive long enough for us to see the light in the Congress, but I am fearful they will not. Mr. DORNAN. I yield back the balance of my time. Mr. CROCKETT. Mr. Hamilton. Mr. HAMILTON. Mr. Chairman, I appreciate your letting me participate. I must say I wandered into this room a few minutes ago with the expectation of hearing from AID. I am not disappointed from hearing from Mr. Cheney and Mr. Bonior because they both do an excellent, even superior job of presenting their points of view. I want to say to my friends in AID because of other commitments I will have to leave before they testify. 25

ROLE OF AID I do have a great deal of sympathy for the position in which AID finds itself. It is in a tough spot in administering this law. AID, I am sure, is under great pressure to get help to the Contras from several angles, and it is caught in the middle of formidable political pressures, as intense, I suppose, as on any issue that has come before us this year. But I think that AID would agree with me whatever it should do, it should do pursuant to the law. And the law says, if I read it cor- rectly, that the assistance here shall be provided-and I am skip- ping a few words, but I think giving it accurately-shall be provided consistent with the Sapoa agreement. But then it goes on and says something else. It says that no authority is intended to be ex- ercised here in the view of the Verification Commission that is inconsistent with that agreement. In other words, AID is not to take any step here that is inconsistent with the Sapoa agreement. Whether or not it is inconsistent is to be determined by the Verification agreement, and I think Mr. Cheney is correct, only one member of the Verification Commis- sion, has spoken. So the question becomes, it seems to me: Has AID here acted as it is authorized by the law to do so? In reading AID's statement, I am struck by one sentence on page 2 after AID discusses the problems that it has confronted here in providing aid. AID says clearly this is not what the Sapoa Agreement or the U.S. legislature intended. Now, that is an interesting sentence and it would suggest to me that even AID has concerns here about whether or not what it is doing is consistent with what it is authorized to do under the law. There have been a good many statements made by members of the panel here and some of us, I guess, who are not members -of the panel, about what was intended and what we thought was intended in this legislation. But that is not, if I may respectfully say so, terribly important. What is more important, at least, is what the law provides, and the law here frankly, given the fact that the Sapoa Agreement apparently intended these zones to be created, creates a difficult law for AID to administer. And yet AID was under great pressure to act. Now, what does AID do in that kind of a situation? That is the problem I think AID is confronted with, and I don't think I have a clear answer to that. But I am interested in knowing what AID considers not to be its authority, legal authority, to do what it did, and does AID have any doubts about that, and to what extent when AID found itself in that kind of a box did AID come back to the authors of the legislation and the leadership of the Congress and say, look, you have given us a law here that doesn't work? Which is what AID did, quite frankly. We gave AID a law that doesn't work under the circumstance that unfolded. That is quite a dilemma for AID and for us it seems to me. So I just set that out, Mr. Chairman, as how I analyze this thing at this point, and we will let AID come forward now and ex- plain the reasons why it acted as it did. 26 But I say to AID as I began, I think we in the Congress put them in a difficult spot with this piece of legislation. Mr. CROCKETT. Thank you, Mr. Bonior and thank you Mr. Cheney. The Subcorpmittee now welcomed Mr. Ted Morse. Mr. Morse is the Director of the Task Force on Humanitarian Aid in Central America of the Agency for International Development. I should say by way of introduction had I been the judge that I was before I came to the Congress, you would have been on long ago because I would have ruled out of order all of this political discussion. This hearing was called specifically to inquire into the implementation of the humanitarian assistance package for Central America. As I read that page, there is nothing in there about political complications, democratization and so forth, those terms are not to be found in that resolution. But since I didn't want to rule my colleagues out of order, I let them go on and that is what de- layed your presentation. We are prepared to hear you. Mr. HYDE. Mr. Chairman, a point of order before we proceed, I want to thank you for your saintly patience, I am most grateful. Secondly, since Mr. Hamilton asked some very trenchant questions and proceeded to leave as Mr. Morse was about to testify, I ask unanimous consent that a copy of the transcript of Mr. Morse's transcript be made available to Mr. Hamilton so he may get the answers. Mr. CROCKETT. That is very generous, but the transcript is available to all Members of Congress. Let's go ahead, Mr. Morse. STATEMENT OF TED D. MORSE. Mr. MORSE. Thank you, Mr. Chairman. Let me say that the discussion that just took place is the real world in which we are trying to implement this legislation, and it in no way detracts from our commitment to do that. I think it is useful that people on the Hill have an opportunity to hear the different sides that we hear. I will not take more of this committee's time by reading my prepared statement, Mr. Chairman, but with your permission, I would like to submit it for the record. Mr. CROCKETT. Without objection. Mr. MORSE. I wish to make just a couple of opening remarks if I could. I think it is amply clear from the discussion that just took place that the conditions envisioned in this legislation do not completely exist. We were faced with a situation of either waiting until those conditions existed or trying to carry out the intent of Con- gress in that legislation as we were mandated to do. AID'S LEGAL AUTHORITY In response to Congressman Hamilton's question concerning AID's legal authority, we consulted our general counsel, we consulted with the Justice Department, we consulted with seven different committees, all of which have a burning, intense interest in this issue, and it was our conclusion that we had not only the legal authority but the moral obligation to proceed to implement that legislation. That we have done, sir. 27 As we briefed you and other Members of this subcommittee, we did begin on April 19th. We began to truck the food into Honduras, because that is where we could get it to the Nicaraguan Democrat- ic Resistance. Similarly, on the 28th we started to air drop to those Contras we could not reach by truck. Today, eight weeks later, we have delivered 600 tons of food to the Resistance inside Honduras. That was with the concurrence of the Honduran government and, I must say for the record, Mr. Chairman, with the concurrence of Cardinal Inigvel Obandoy Bravo; he has stated in public that from his point of view, he doesn't want Nicaraguans to die by bullets nor by starvation, and he felt if the only way we could get food to them was to deliver it in Honduras by the cash delivery of the cordobas, then he endorsed that program. In terms of the cordoba program, we have stated before that from our point of view, it is a last resort. If we had been allowed by the Nicaraguan government, we would have preferred, to deliver inside the cease-fire zones. The zones don't officially exist. The modus operandi to operate in those zones still do not exist. The Re- sistance people do exist. Those people needed food, and this was the best alternative that we could come up with. There are other options. We made hard choices, and we decided to go ahead with the cash-for-food program. As you know, we have also delivered clothing and medical supplies. It was mentioned here earlier that this was front-end loaded with a lot of cooperation from the Veterans Administration and the private medical suppliers here in America. We have moved almost $700,000 worth of medical supplies down to the Resistance, as authorized by the legislation. FAMILY ASSISTANCE PROGRAM I am sure there are some questions about the family assistance payments. We are prepared to address those. The payments have been made on time and have been consistent with what we think is a proper amount of money and a proper process. We have also tried to reach the Miskito Indians wherever we have found them. At this place and time, we can reach them only in Honduras. We have started to air drop food and clothing to them, and we are prepared to provide cash to them if necessary to support the Indians on the inside. We have carefully tried not to become embroiled in the political problems of Yatama and do what the legislation asks, which is to deliver the food, clothing, medicine and medical services directly to the Indians themselves. In all of this we have built in certain principies by which we operate. We believe it was the intent of Congress in giving AID this legislation to implement that this be an open program. And above all else, we have tried to implement it with as much openness as possible. There are only two things that, as I have briefed the seven different committees, we consider classified: The family assistance payments list and the strength and the location of troops, which we think would be tactically quite in error. Everything else we have tried to operate in the open. We have built it in with verification of the operation-when we started, before the Verification Commis- 28 sion was established. We have tried to build it in with the General Accounting Office. We have hired Price Waterhouse for accountability. We have involved AID's with our own Inspector General. We have been criticized openly because we have too much accountability, and it may be slowing us down. If we had to err, we erred on openness, verifiable, accountable delivery of this assistance because of the kind of history that was behind this program. But that doesn't relieve us of the responsibility of moving forward-and that we felt we have done within the law-in delivering, totally non-lethal aid to those who needed it and need it now. I think you know where we are with the private voluntary organizations; (POVs). A little over $12 million has been obligated for nine POVs. We are getting a mixed reaction from the Nicaraguan government in terms of their reception (to the children's survival assistance program). Our hope is that the Nicaraguan government will allow all of the PVOs that were chosen to operate to administer to both Sandinistas' and Contras' children that have been caught in this civil strife. I would close, Mr. Chairman, by saying, on the subject of the Pan American Development Foundation, that we know that this organization has been recommended to both of the parties. It has not been officially accepted by them. I think there is still a discussion going on in the negotiations about that. We were asked by the Pan American Development Foundation, knowing that they are under consideration, to brief them. We have briefed them on the planning that we had done to select an American contractor to do air drops to the Resistance inside. But, we can't go any further until the two parties themselves decide that (PADF) is an appropriate neutral delivery agent for them. I hope that in my answers today, Mr. Chairman, there will be no surprises. In the briefings that we have done every week to one committee or another that what we will cover are things that already have been discussed. But I stand ready to respond to any questions that you and the committee have, sir. [The prepared statement of Mr. Ted D. Morse follows:] 29

PREPARED STATEMENT OF TED D. MORSE, DIRECTOR, TASK FORCE ON HUMANITARIAN ASSISTANCE IN CENTRAL AMERICA

Mr. Chairman and members of the Committee, I appreciate the invitation to discuss the status of A.I.D.'s efforts to fulfill Congress' mandate to provide humanitarian aid to the Nicaraguan Resistance and to support a process for peace and reconciliation. I will outline for you today the progress of our efforts to implement the various components of this legislation (P.L. 100-276).

Humanitarian Aid to the Nicaraguan Resistance When Congress passed this legislation, it was assumed that a modus operandi in the cease-fire zones would be negotiated promptly and that the Nicaraguan Government would allow food to be delivered to the Resistance inside Nicaragua as called for in the Sapoa Agreement. But, eight weeks later, this is not the case. And, the ongoing talks between the Resistance and the Government have yet to resolve this issue. Putting aside the ongoing political differences between these parties, A.I.D. is confronted by three compelling facts as we fulfill our humanitarian mandate: o The Sapoa Agreement said the Resistance would get food. o The U.S. Congress said the Resistance should get food. o But, over two months after Sapoa, Resistance units inside Nicaragua have not received food. They are either going hungry or going to Honduras. Given these simple facts, and guided by the Congressional mandate to keep the Resistance together as a viable organization able to negotiate with the Nicaraguan Government on a firm footing, we have taken the following steps: On April 19, with the understanding of the Honduran Government, the first truckload of food was delivered to Resistance combatants and their families in southern Honduras. These shipments were inspected by nuns, priests and lay people appointed by the Honduran Catholic Church, and the deliveries were made by independent Honduran truckers on contract to A.I.D. 30

-2- Routine ground operations -- supplemented by air drops that began on April 28 -- continue today, having delivered over 600 metric tons of food, clothing, and other supplies in Honduras. Today, we are meeting the need for food supplies of the Resistance troops and their families in Honduras. However, there is a different picture inside Nicaragua. We have been unable to deliver food or any supplies to Resistance units inside their country. Press and intelligence reports paint a desperate picture. The Resistance is relying on donations, bartering, or credit for the food needed to survive. Many are leaving that country to reach the food supplies in Honduras. Some have gone without food for days during their trek through the thick jungles of Nicaragua. Clearly, this is not what the Sapoa Agreement or the U.S. legislation intended. To meet the needs of those inside Nicaragua, we announced on May 13 that we must begin providing measured amounts of food or cash-for-food to the Resistance for delivery to units inside that country. The first food payments are expected today. The cash-for-food will be in the form of Nicaraguan currency -- cordobas -- amounting to about $1 per person, per day. The Resistance will sign for the currency and be responsible for its delivery. We are confident that the units inside will use these small sums to meet their basic needs. Anyone wanting to buy anything other than food will have a difficult time spending even these small amounts of cordobas outside of Nicaragua. Let me emphasize that we are taking this particular step as a last resort. Until the Nicaraguan Government agrees to allow routine delivery of food, as called for in the Sapoa Agreement and expected by Congress, we must use other means of getting aid to the Resistance inside Nicaragua. In the meantime, we are also delivering clothing (fatigues) and medical supplies to the Resistance in Honduras. Family assistance payments are being made. Regarding authorized communications equipment, we have distributed batteries needed to operate communications equipment. On the issue of aid to the Indian organization knc'wn as Yatama, we have found it be an increasingly complex question. We have met with Brooklyn Rivera and his representatives several times to discuss the delivery of aid to Yatama units. We also have met in Honduras with Orsonio Coleman, chief of staff of the Yatama military. In these meetings, we have tried to identify the location and needs of Yatama forces, 31

-3- without getting embroiled in the political differences between the groups. A third group calling itself Yatama, and unknown to us, recently signed a new accord with the Government of Nicaragua. Information available to us suggests that these people are not the recognized leaders of Yatama. We have reached some Yatama troops in the Mosquitia region of eastern Honduras. Through several air drops in the last week, we have delivered all of the food supplies they requested for a 30-day period. In addition, we have provided tents and other supplies as requested. We hope to have our Yatama supply operation fairly routine in the days ahead. In addition to material deliveries, Yatama units also are eligible for family assistance payments, medical services, and cash-for-food. Let me summarize by saying that we have stressed accountability in all of our operations. This is essential, given the concerns that have accompanied this issue in the past. A.I.D.'s Inspector General's Office, Price-Waterhouse, and the General Accounting Office have been on the ground in Honduras monitoring every aspect of our program. In fact, the ratio of auditors to workers in this program is 4.75 to 1. While some have suggested that this has slowed deliveries, we believe that moving 600 metric tons speaks for itself. And, we know that you will agree that there is no substitute for accountability. That concludes the summary of our efforts on aid to the Nicaraguan Resistance.

Children's Survival Assistance Another component of this legislation is $17.7 million for medical care to Nicaraguan children affected by the civil strife in their country. To date, we have signed grants with nine private voluntary organizations that intend to provide a wide range of services to Nicaraguan children throughout that country and in Honduras and Costa Rica.

These groups were selected for their experience in Central America and their proven track records in delivering those services called for in the legislation. The over $5 million remaining in this fund will be used to "fill in the gaps" in services performed, and people and regions served; we would expect this remaining money to be obligated in the next couple of months. 32

4- Most of the eight groups wanting to work in Nicaragua already have programs in that country. Not only are they familiar with the territory, many of them are operating today under agreements with the Nicaraguan Government. We hope this will enable them to expand their services to Nicaraguan children with the understanding of that Government.

Verification Commission The third component of the legislation is support for the Verification Commission consisting of Joao Baena Soares, Secretary General of the O.A.S., and.Cardinal Miguel Obando y Bravo, leader of the Nicaraguan Catholic Church. In meetings with the Secretary General and his staff immediately after the legislation was passed, we requested a plan of operation and a budget from the members of the Commission. We invested countless hours attempting to forge a simple, clear agreement to support all activities of the Commission related to verifying compliance with Sapoa, Esquipulas, and any subsequent agreements. Quite frankly, these talks were difficult. Our first challenge was getting the two Commission members to work together so that the activities of both are supported, as Congress intended. There were disagreements between the O.A.S. and the Cardinal's representatives regarding Obando's role in the verification process. There also was reluctance or inability on the part of the O.A.S. to provide us with an operational program or an estimated budget for ten million U.S. tax dollars. In drafting an agreement, there were contentions over what seem to be very straightforward matters regarding democratization and respect for human rights. For example, we have had difficulty convincing the O.A.S. representatives of the need for a simple, declarative statement that the Commission "will" verify compliance with Sapoa and key sections of Esquipulas II. The position of the O.A.S. is that the Commission*may* perform what we consider fundamental functions of veriication. After extensive consultation with both parties, we have signed an agreement that meets our minimum requirements and satisfies the intent of Congress. The document was signed on May 18 under which the $10 million will be disbursed in periodic payments; the first disbursement of $3.2 million has already been made. 33

-5 Conclusion Let me close by saying that there should be no surprises in my testimony this afternoon because of our ongoing consultations with Congress. We have Ppent literally dozens of hours on Capitol Hill briefing interested parties on the details of this effort. We have made every effort to keep you informed as we strive to fulfill the assignment we have been given. 34

Mr. CROCKErr. You spoke about Cardinal Obando having publicly endorsed what AID is doing with respect to delivery of aid. Can you furnish the committee with a copy of any written or oral statement the Cardinal has issued to that effect? Mr. MORSE. I would be very happy to, sir. It was in a sermon that he delivered about three weeks ago. That sermon was repeated by one of the international news agencies; I think it was the French news agency. It has been repeated in English, and I would be happy to provide you with a copy. [The information follows:]

OBANDO APPROVES CASH-FOR-FoOD (Agence-France-Press Wire Story in Spanish, May 15) San Rafael del Sur, Nicaragua-Cardinal Miguel Obando y Bravo today came out in favor of cash payments by the United States to Contras in Nicaragua for the purchase of food. At the Mass at which he officiated today in this town 45 km south of Managua, the prelate said that monetary aid should be delivered to the rebels so that they do not suffer hunger, even though such a procedure may not be in accordance with the Sapoa Agreement. * * The spirit of the Agreement is that no one should die, whether from hunger or from bullets, Obando argued. * Both Managua and Baena are opposed to the delivery of money to the anti-Sandi- nistas by the Agency for International Development (AID), an agency of the U.S. Government, because they consider that that would violate the Sapoa Agreement. With regard to the next high level meeting to continue the discussion of achieving a definitive cease-fire, Obando was of the opinion that ideally they should be held in Managua, but that the RN delegation should be given ease of movement. * * San Rafael Del Sur, Nicaragua, Mayo 15 (AFP)-El Carbenal Miguel Obando y Bravo se declar6 hoy partidario de que el Gobierno de Estados Unidos entregue binero a los Contras que se encuentran en Nicaragur para la compra de alimentos. Eh la misa que ofici6 hoy en este poblabo, 45 km al sur de Managua, el prelado dijo que bebe entregarse ayuda monetaria a los rebeldes para que no sufran hambre, aun cuando este procedimiento no se ajuste a los acuerdos de Sapoa, firmabos el 23 de marzo por el Gobierno Sandinista y la Resistencia Nicaraguense (RN). El espiritu de ese acuerdo es que nadie muera ni de hambre ni por las balas, argu- ment6Obando quine, junto al Secretario General de la oea, Joao Brena Soares, act6r como testigo en las conversaciones de paz. Obando y soares forman tambien la comisi6n verificabora bel acuerdo de Sapoai, poblado fronterizo Nicaraguense donde los Sandinistas y Contras suscribieron el cese de hostilidades por 60 dias. Tanto Managua como baena se oponen a que la agencia para el desarrollo inter- nacional (AID), organismo del gobierno Norteanericano, entregue dinero a los anti- Sandinistas, porque consideran que con ello se viola el acuerdo de Sapo6. En cuanto a la pr6xima reuni6n de alto nivel para continuar las plhticas sobre la concertaci6n del cese del fuego definitivo, Obando opin6 que lo ideal serila realizarlas en Managua, pero debe barse facilidad de movimientos a la delegacion de la rn. Los Sandinistas proponen que la siguiente Ronda de Negociaciones se lleve a cabo en Managur los dlas 25, 26, 27, y 28 de Mayo y rechazan la propuesta Contra de se efectden fuera de Nicaragua. Los birigentes de la rn sostienen que el pr6ximo encuentro bebe celebrarse en M6xico, Costa Rica, Guatemala or Repdiblica Dominicana, Porque en Nicaragua sus delegados carecen de libertad de movimientos. El Vicecanciller Victor Hugo Tinoco se reunirA este lunes en Estados Unidos con Roberto Ferrey, Secretario del Directorio de la RN para afinar los detalles de la pr6xima cita. Mtfjla/gl. AFP 152208 gmt May 88. Mr. CROCKETT. You spoke about conditions changing subsequent to the time we passed this AID agreement and that you felt the necessity for consultation. You then spoke to the attorney for AID, the Department of Justice, and the Executive Branch of the Gov- 35

ernment although you were asking for an interpretation of what Congress meant. This Subcommittee, as well as the full Committee on Foreign Af- fairs, had oversight jurisdiction. Why didn't you come back to us and ask us what we thought, Congressman? Mr. MORSE. We were summoned to the office of the Speaker of the House and he had representation from both the Democratic and Republican parties there. We felt at that point the Speaker was addressing this issue on behalf of all committees, on behalf of both parties. Before that, we had spoken with staff members from this committee. I don't say that there is unanimity on this point, Mr. Chairman. I think it is fair to say we have rarely found, on implementing any of this legislation, unanimity. But it was clear that the intent of Congress, in talking to the committees and then to the Speaker, that we were to proceed. Mr. CROCKETT. I am told that the subcommittee now has a quorum, and the motion before us is to go into executive session. Mr. GEJDENSON. So moved. Mr. CROCKETT. Those in favor will say aye. Mr. LAGOMARSINO. Let's have a roll call. Mr. CROCKETT. The Clerk will call the role. Mr. DEWINE. Mr. Chairman, could I ask a question at this point? Is the motion to go into executive session immediately? Mr. GEJDENSON. No. The motion I am making is to go into executive session at the discretion of the Chair at such time as it is appropriate, after everybody has had a chance to add to the public record. Mr. HYDE. Could I have an explanation of what in the world we would talk about that would have to be in executive session? Mr. GEJDENSON. The gentleman from AID suggested the number of Contras, et cetera, may be sensitive in some areas and he may not want to discuss them in public. Mr. HYDE. It is his request, then. Mr. GEJDENSON. It is not his request-- Mr. MORSE. May I clarify that? It is certainly not my request. The first principle we are implementing this legislation under is openness. I mentioned there are only two things in all the universe that we do that we must pro- tect. Everything else I am prepared to address in open committee hearings. Mr. CROCKETT. I understand the motion leaves it to the discretion of the Chair. So why don't we proceed with the roll call. Mr. HYDE. It is all right with me. The CLERK. Mr. Crockett. Mr. CROCKETT. Yes, aye. The CLERK. Mr. Studds. Mr. STUDDS. Aye. The CLERK. Mr. Gejdenson. Mr. GEJDENSON. Aye. The CLERK. Mr. Kostmayer. [No response.] The CLERK. Mr. Weiss. [No response.] 36

The CLERK. Mr. Fuster. [No response.] The CLERK. Mr. Solarz. [No response.] The CLERK. Mr. Bonker. [No response.] The CLERK. Mr. Lagomarsino. Mr. LAGOMARSINO. No. The CLERK. Mr. Hyde. Mr. HYDE. No. The CLERK. Mr. Dornan. Mr. DORNAN. NO. The CLERK. Mr. DeWine. Mr. DEWINE. No. Mr. CROCKE'r. The motion is defeated. Had you finished your answer to the last question? Mr. MORSE. I had, sir. PAYMENT OF CONTRA SALARIES Mr. CROCKETr. I read in the press that the United States, in its Contra aid, is paying the salaries of Contra political and military leaders under this program. Is there any truth to that? Mr. MORSE. Half truth. Mr. CROCKETT. Half truth? Mr. MORSE. You mentioned political and military leaders. Mr. CROCKETT. You said political and military leaders, that we are paying their salaries. Mr. MORSE. There are no political leaders that are being paid under this program. We are paying military and technical special-' ists in the Resistance movement subsistence in terms of their rank and their responsibilities. There are- doctors, pilots, people and technical specialists that have these levels of specialties as well. But there are no political leaders receiving money under this program. Mr. CROCKETT. Who pays for the Miami villas occupied by leaders of the resistance? Mr. MORSE. I do not know. We do not. Mr. CROCKETT. What accounting and monitoring provisions apply to these payments you admittedly make? Mr. MORSE. We have extensive accountability built into this, sir. In terms of the list of people, we screen that very carefully ourselves. The Inspector General of AID goes over that. And, I believe there were as many as five GAO people there to participate as to the payments that were made for this last month. In addition, we have hired the Price Waterhouse firm to do the accounting. There are individuals with amounts of money and they sign for these as beneficiaries. I would keep in mind these are not payments that are going directly to the Resistance fighters who are inside Nicaragua; they are designating beneficiaries. 37

You mentioned Miami and the office there. I think there are about 32 out of a much larger number who are receiving their payments for their families in Miami. CASH PAYMENT PROGRAM Mr. CROCKETT. Regarding this one dollar a day that you actually pay to each of the Contras, am I correct that you give a lump sum to the paymaster for the particular military division and then he, in turn, pays it out on a per diem basis to his men? Is that the way it is done? Mr. MORSE. Partially. Payment also is delivered directly to each individual if he is in Honduras on the basis of a dollar a day for the next 30 days. The distinction between the individual or his commander receiving it is left up to each unit: whether or not they run a consolidated mess where they might consolidate funds and buy a whole cow when they are inside or are working in small units with each of them using the money to buy food individually for themselves. Mr. CROCKETT. What accounting method do you have to make sure that the individual soldier gets all the money and is not required to kick it back for the leaders to use for some purpose other than that set forth in the congressional resolution? Mr. MORSE. I believe that the best accountability for that each individual soldier knows what he is entitled to and, quite frankly, if that armed soldier doesn't get what he is entitled to, you are going to find he isn't going to follow the leadership very long or he is going to cause problems for that leadership. Mr. CROCKETT. Tell me this. Under this program, aren't you free to pick and choose which leaders or consultants and so forth you will pay? Mr. MORSE. I don't understand the question, sir. Mr. CROCKETT. You say there are some military leaders, some political leaders, that do receive some payments. Mr. MORSE. I would stress again, sir, that there are no political leaders in the Nicaraguan Democratic Resistance receiving payments from us under either the Cash-for-Food Program or the Family Assistance Program, which are the two cash programs we are operating. Mr. CROCKETT. They are military leaders, is that the point you are making? Mr. MORSE. Plus doctors, pilots, technical specialists. Mr. CROCKETT. Now, could you make available to the subcommittee a list of all of those who are paid, together with the amount that they are paid and the total amount they have received under this program? Mr. MORSE. Mr. Chairman, as I mentioned, one of the two things out of all that we do that we treat on a classified basis is the Family Assistance list because we don't want it to become a hit list for assassinations. We certainly can submit that to Congress on a classified basis and will do so. Mr. CROCKETT. Very well. [Classified.] 38

Mr. CROCKETT. Mr. Lagomarsino. Mr. LAGOMARSINO. Thank you, Mr. Chairman. ESTABLISHMENT OF CEASE-FIRE ZONES According to the May 7, 1988, Congressional Quarterly, Speaker Wright rejected the Sandinistas' position that the U.S. should not give food aid to the contras until the guerrillas and Sandinistas have agreed officially on a cease-fire zone. Speaker Wright, it was reported, stated withholding aid until the zones are established- and I quote him-"places the pressure entirely upon the contras" and reduces the Sandinistas' incentive to negotiate. Contrary to those explicit remarks of the Speaker, if accurate- and I assume they are-as well as the understanding of the Repub- lican leadership, which we heard this afternoon, which was involved in the drafting of the current aid package, critics from the Democratic leadership claim the delivery of assistance to contra forces violates the intent of Congress and the Sapoa agreement because cease fire zones have not been agreed upon. As you know, the Democratic Caucus delivered a resolution to AID essentially taking over, I guess you could call it, the negotiation process from the Sandinistas and Contras and ordering AID to deliver humanitarian aid according to the demands of that caucus. Are you aware of any provision in the public law that you are administering-aind I understand you were doing that not at the request of AID, it was at the request of Congress in the first place, isn't that correct? Mr. MORSE. Yes, sir. Mr. LAGOMARSINO. Are you aware of any provision in that law authorizing the Democratic Caucus to instruct you on the implementation of the humanitarian assistance package? Mr. MORSE. This bill was passed by a bipartisan vote and we feel we must follow the dictates of a bipartisan Congress on it, sir. I don't think that we are legally bound to only one point of view on this. We must listen to both. Mr. LAGOMARSINO. Is it true or not that staff members from the Speaker's office have accused AID of not following the law? Mr. MORSE. On this point, I don't believe that they have faulted us on following the law in terms of the Democratic Caucus. They have faulted us in terms of going ahead with the program in Hon- duras, but I think that was prior to the Speaker hosting a meeting in his own office, and we have not heard that. Mr. LAGOMARSINO. You have not heard that? Mr. MORSE. Not since. HUMANITARIAN ASSISTANCE ASSURANCES Mr. LAGOMARSINO. What measures have been taken to assure the humanitarian assistance-that is clearly-and I think everyone agrees-what the bill provided. What measures have been taken to insure that humanitarian assistance is only humanitarian assistance? Mr. MORSE. We have been criticized because we have so many layers verifying that. We are a humanitarian assistance agency ourselves. We have the General Accounting Office. We have tried 39

to build in representation from the Catholic Church in Honduras, at our request. Nobody asked us to do this; we felt it was in the spirit of the verification and the independence Congress wanted, and we called in the Church, and they have had volunteers who have been there when we have loaded and unloaded these goods to go out to the Contras. I think there has been extensive verification, sir. Mr. LAGOMARSINO. In fact, I have heard some criticism it may have gone too far, such as examining the bananas going in. I don't know what you hide in a banana. Mr. MORSE. If I may be allowed, that has been in the press. I would just say the Price Waterhouse people are charged with counting the goods to make sure we are accountable, that we get the goods the American taxpayer is paying for. They weren't checking to see if something lethal was hidden inside the bananas. They were making sure we got all the bananas we were paying for. Mr. LAGOMARSINO. Has any Member or staff implied to you or your organization, to your knowledge, that something other than humanitarian aid has gone to the Contras? Mr. MORSE. I think that there is an implication time after time that we may be trying to hide something. That is why I stress the openness. I appreciate this being an open hearing because there have been those implications in some questions. We reject them, and we think we built in the checks to show that we are open. There is nothing but humanitarian, non-lethal assistance being delivered.

AID'S SLOW DELIVFRY OF FUNDS Mr. LAGOMARSINO. Some Members, including some here today, have criticized AID for moving slowly in delivering funds for the Verification Commission. Number one, I would like you to tell your version of what happened, why it has taken so long fer that to occur; and, second, have any Members expressed concern or interest in seeing that the Veri- fication Commission monitors steps toward democratization in Nicaragua? That is somewhat out of your li but have they talked to you about that? Mr. MORSE. In terms of why it took so long, we certainly had the impression that the accountability requirements built into this law applied to every aspect of this law. From our point of view, we were not in the position just to turn this over as grant money. There were Members of Congress or their staff who had given the OAS the impression we would do a budget support transfer as we do with international organizations. But, quite frankly, the law doesn't hold us accountable the way this law does when we do budget transfers like that. We did insist on a budget and a program verification agreement because we are interested in making sure that they were going to verify what we were doing in the scope and in the depth that we needed to have that covered-that openness covered, that verification. We had offered an immediate start-up grant. I met with the Sec- retary General of the OAS four days after this legislation was 40

signed by the President. We offered that start-up grant and it seemed as though they were going to accept it, and there was a feeling, that if they held out, they could get budget transfer. I understand their position, Mr. Lagomarsino. They wanted not to have any second-guessing by the Administration on this. We felt that the law required us not just to have the accounting right, but the accountability that the funds were used in an accountable way. We signed the Cooperative Agreement six weeks later. In terms of your question on the democratization, that did hold things up because, as we tried to identify what they would verify as part of the Sapoa agreement, we wanted the democratization detail that was in the Esquipulas agreement. It was in there by reference, but we wanted it spelled out in detail. The OAS Secretary Gener- al's part of the Verification Commission did not want that; the Car- dinal's part of it was ready to have that kind of detail in there, sir. Mr. CROCKE'T. Mr. Hyde. Mr. GEJDENSON. Mr. Chairman. Mr. CROCKETT. I am sorry. Mr. GEJDENSON. Thank you, Mr. Chairman. Let me ask a couple of quick questions. How many adults are you feeding? BREAKDOWN OF CASH PAYMENTS Mr. MORSE. I am concerned about getting into numbers. If we have the Resistance itself plus their families inside Honduras, I think we are probably at the moment feeding close to 15,000 people. Mr. GEJDENSON. Adults, children, soldiers is 15,000 people; is that correct? You don't want to break that down in public session, is that it? We can make another effort later to go into a private session. Let me ask you is any of that money going to bank accounts in Miami? Mr. MORSE. There are 32 people who are listed on the family assistance payments list who have elected to receive their money in Miami versus any other place. Mr. GEJDENSON. What is the most any one of those individuals gets per week, per month, however you want to break it down? Mr. MORSE. Ninety-five percent of the people make between $25 and $300 a month. Five percent of the people get between $300 and about $2,000. Mr. GEJDENSON. Can we have you submit to the committee the grant agreements that AID signed with Project Hope and the Thomas A. Dooley Foundation? Project Hope, I think, has a million dollars and the Dooley Foun- dation has $750,000. Mr. MORSE. We can submit the one to you on Hope, the one with Dooley is not yet signed. Mr. GEJDENSON. Can we see the basic draft agreement? - Mr. MORSE. With? Mr. GEJDENSON. With Dooley. Mr. MORSE. They are all the same pretty much except for the target groups and locations where they are working. 41

ASSISTANCE TO THE YATAMA INDIANS Mr. GEJDENSON. Some questions have been raised about whether there are any political considerations in assistance to the Yatama Indians. In particular, Brooklyn Rivera, probably the most well- known of the Miskito Indians, apparently feels he is being excluded from the food distribution and assistance. Can you enlighten us on that problem? Mr. MORSE. In my opening remarks, Congressman, I did say we were trying very hard to avoid getting embroiled and bogged down in the political fights within the Yatama organization. There are at least three different competing groups, one that has already signed a truce with the Nicaraguan Government and has approached the Pan Americah Development Foundation to solicit aid on their behalf. Another one-Brooklyn Rivera-signed an agreement, as you know, back in February. There is another group that is over toward the border with Honduras. We have tried to avoid that. There is some substance to say we have avoided that. We have tried to avoid all the political leaders and get above that and deal directly with the Indian people themselves. Mr. GEJDENSON. Apparently they have had the same problem I have had. That is that apparently AID has not responded to any of five letters that the Yatama Indian organization has sent to you between April 14 and May 2nd. I also have a letter of mine I sent April 8 that we haven't gotten an answer to. I think that may be leading to some of the confusion. I don't have copies of their letters. I do have copies of mine. I now have copies of theirs as well. So maybe staff can give you these and you can get back to us in some form. Mr. MORSE. May I please comment on that? I am surprised you do not have a reply. I am familiar with your letter and the spirit in which you addressed the point that we be very careful in implementing this and get enough accountability into this to be sure that our worldwide mandate not be under- mined. I know that that letter was replied to, signed, and if you have not received it, we will certainly get yiu another copy of it, sir. Mr. HYDE. Mr. Chairman, the second bells have rung. I certainly want to take time to ask questions. May we temporarily adjourn, vote, and come back? Mr. CROCKETT. Sure. We will. [Recess.] Mr. CROCKETT. The committee will come to order. Mr. Hyde. Mr. HYDE. Thank you, Mr. Chairman. Thank you for coming, Mr. Morse. I really have a sense of deja vu. You were here just a short while ago. That must have been a dress rehearsal. I guess we are going to continue to do this. By the way, you mentioned a hit list, the people, the families of some of these Contras who money is going to. You said that is a classified list but that you would make it available. 42

I hope you mean you will make it available through the normal channels, namely, the Intelligence Committee, and, of course, the Chairman wants to see it I suppose it could be made available to him under proper security measures because that is a list that certainly might subject people to harassment, if not worse. Is that correct? Mr. MORSE. It is correct, sir. Mr. HYDE. Tell me this, Mr. Morse-by the way, you had experience in delivering food to people who are in dire straits, have you not? Did you not manage the program in Ethiopia? Mr. MORSE. I have directed the United States aid to the African drought and famine. I directed our aid to the Sudan and Ethiopia. I assisted in the Indo-Pakistani war, where we were trying to feed ten million people in the middle of a war. I have been through this before, yes, sir. CEASE-FIRE ZONES Mr. HYDE. Isn't it true-and correct me if I am wrong-that the essential problem in Nicaragua right now between the communist Sandinistas and the Democratic Resistance, or-Contras, is that in the negotiations, which seem to be endless and getting nowhere, the essential demand of the Sandinistas is that the contras move into these cease-fire areas that they have designated, which are very inhospitable and near Sandinista camps of soldiers and that they disarm, and then when they disarm in these zones where they are accessible to the Sandinista soldiers, then the Sandinistas will start to talk about democratizing and that this proposal has been unacceptable to the contras, isn't that essentially what is the problem? Mr. MORSE. It is. Mr. HYDE. You really have to be crazy to move into where they tell you and lay your arms down and trust the Sandino-communists, to give away power because Arias got a Nobel Prize. You don't have to answer that. You are a diplomat, I am not. Those are the thoughts that race through my mind. This Mr. Baena Soares, who is the Secretary General of the Or- ganization of American States, he, it seems to me, is somewhat hos- tile to the notion of-in fact, he has complained it is illegal that you are giving food to hungry Contras on the Honduran border and that you are going to disburse some cordobas in-country so they can purchase food, medicine and shelter. Baena Soares has opposed that, has he not? Mr. MORSE. He has opposed that in letters to the Secretary of State. He has opposed it in meetings with us. You used the term, Mr. Hyde, that he has declared it illegal. He has stopped short of that and said that it is inconsistent with Sapoa, but, he has not said it is illegal. FOOD FOR THE CONTRAS Mr. HYDE. There are two members of the Verification Commis- sion. He is one, Cardinal Obandoy Bravo is another. The Cardinal 43 has said "I don't want to see Nicaraguans dying by bullets or starvation." If they are hungry, feed them. So you have Baena Soares saying, don't feed them on the border, and as long as you can't get the food in-country, and you shouldn't get the money in. Why, starvation becomes a very useful weapon then for the Sandino-communists to slowly but surely squeeze the Contras to extinction. That is a logical scenario. Does that seem to you the way it is going? Mr. MORSE. We felt it was inconsistent with the Sapoa process that you had hungry people either inside or outside who became so desperate they would turn to desperate acts. This is what was happening. We had reports that they had run up their credit to the point where people would no longer support them. We had reports that they were desperately eating roots. We had reports in a few instances they were forcing people to give them food at gunpoint. There is not a lot of that. I don't want to overstress it. But it was getting desperate. We thought it was inconsistent with the intent of Congress that as others have testified before me today, was immediate delivery of the aid. Mr. HYDE. You see the Democratic Study Group, in analyzing this from a totally different perspective than mine, says one of the problems with giving cordobas to contras in-country is they would purchase food and, therefore, generate good will for their cause. Now the opposite of that, of course, is that if they are starving to death, they are going to take what-they may get tired of the roots or run out of roots from the ground and berries and leaves and bark and may have to take some food and thus engender ill will. Starvation and ill will is preferable to people getting fed, I suppose, which I thought, too, was the purpose of this legislation. The Chairman in his opening remarks made three charges against your operation. One of them was that cash payments are made to the Contras inside Nicaragua with no verification whatsoever, that the assistance is, in fact, reaching the intended beneficiaries or that it is being spent for the intended purposes: food, medicine, clothing, and shelter. ACCOUNTABILITY OF ASSISTANCE I think you answered that several times, that you have-your own Inspector General, you have Price Waterhouse, you have even x-rayed bananas to make sure there was-were no bullets in them. You have done everything humanly possible and somewhat beyond that, is that not so? Mr. MORSE. We have built in every accountability that is consistent with the original legislation as well as what we can build into it now. We think that satisfies even the General Accounting Office, which is out there and has looked at the system of where the accountability stops. Mr. HYDE. One of the other charges made by the Chairman, my dear friend, for whom my admiration is boundless and endless, that a credible neutral organization, the Pan American Development 44

Foundation, has been proposed by the Secretary General of the OAS who parenthetically is a Director of this foundation. We would call that a conflict up there but not down there. And accepted by the Nicaraguan Government but the contras continue to stall on reaching an agreement on the delivery mechanism so they can continue to receive cash payments. In other words, I guess the implication is this: they would rather have cordobas with which you may make good confetti out of, that is about the best you can do with them, rather than eat. PAN AMERICA DEVELOPMENT FOUNDATION IN MANAGUA I don't understand that. In any event, isn't it factual that the Pan American Development Foundation wants to operate out of Managua. They want the food they are going to disburse to be brought to Managua and disbursed from there, is that not a fact? Mr. MORSE. In the information exchange we had last Friday, the Pan America Development Foundation was indicating that it didn't know exactly what would be asked of it by the two parties if the negotiations over the weekend had concluded; but they had a very strong sense that the Nicaraguan Government felt the U.S. Gov- ernment Agency for International Development could not be trust- ed, was not one-organization that they could leave to turn it over to PADF; and, therefore, they would want this to run through Ma- nagua, either flown over and opened up and looked at or put on trucks. I must stress this is something PADF is speculating about because they do not yet have a mandate from either the Sandinistas nor the contras to do this. Mr. HYDE. Have you been pressured by staff from the House Per- manent Select Committee on Intelligence to stop dispensing cordobas in Nicaragua? Mr. MORSE. We had a call last week and asked that they wanted a briefing on where we were in the program. They said they felt it was important that we be informed that the House leadership felt that it would be wrong to move ahead with the Cash-For-Food Pro- gram right before or during these negotiations. Mr. CROCKETT. Would you yield, Mr. Hyde? Mr. HYDE. Surely. Mr. CROCKETT. Your question was whether or not there was pressure. Is that what you call being pressured, you get a call from the staff? Mr. MORSE. Mr. Chairman, the way the call came I have to interpret it as there was a point to this. It was not seeking information. Mr. HYDE. You were getting a message that the Democratic leadership wanted you to stop sending food into the Contras so they could eat inside Nicaragua; was that-- Mr. MORSE. They wanted us to stop sending the cash to buy the food. Mr. HYDE. Of course, you couldn't get the food in. Of course, you couldn't get the cash in, they are back to whatever roots are available in the neighborhood; right? Mr. MORSE. Right. 45

Mr. HYDE. Isn't it a fact, however-and that was a call from a staff member of the House Permanent Select Committee on Intelli- gence who sent you that message; right? Mr. MORSE. I must admit, and this goes back to the Chairman's point, that message was delivered to me by three different people, through five different channels to make good and sure I understood what they were after. Mr. HYDE. Were they all from the Intelligence Committee? Mr. MORSE. No, sir. Mr. HYDE. One of them was? Mr. MORSE. Yes, sir. Mr. HYDE. This was from a high ranking member of the staff, wasn't it? Mr. MORSE. Yes, sir. I think that he was doing what he had been asked to do, because it was consistent with the other two messages that were coming to me. Mr. HYDE. But the speaker, as I take it, the Speaker of the House, thinks that delivering the cordobas inside Nicaragua is con- sonant with the law and that you are doing the right thing; is that correct? Mr. MORSE. In a meeting where I was present, the Speaker said go ahead. Mr. HYDE. My heart goes out to you. You have messages from high ranking staff, from powerful committees dominated by the majority party saying don't do it. You have the Speaker saying do it. Then you have the law which says, in my judgment, it is legal. You are someone to be prayed for and admired. I thank you. I yield back my time. Mr. MORSE. We accept your praise. Mr. HYDE. And my prayers, too. Mr. CROCKETT. Mr. DeWine? Mr. DEWINE. Thank you, Mr. Chairman. - Mr. Morse, you testified I believe that you had been contacted or reported to six or seven different committees up here on Capitol Hill; is that correct? Mr. MORSE. There are seven different committees-The food hunger committee, the two Foreign Affairs Committees, the Appro- priations Committees and the Intelligence Committees in both Houses-that have a keen interest in this. We have consulted with them or their staffs, yes, sir, continuously. Mr. DEWINE. Have you found the message that you are getting back from the staffs of those different committees, the staffs of these different committees to be consistent? Are you getting the same message? NO UNANIMOUS SUPPORT Mr. MORSE. Congressman, in all honesty, as we saw before I took the witness chair, there are differences. That the-the most difficult part of our job is that there is not unanimous support for the way that this is to be done and the way we are doing it. 46 There are differences that come from the staff. There are differences that come from different committees. We are trying to find the overall intent of Congress and comply with that; and as we do it, to do it with as much openness so that all seven different groups know what we are doing, when we are doing it, and how we are doing it. Mr. DEWINE. Have you received any specific instructions from the staff of this committee? Mr. MORSE. I don't believe "instructions," no sir. Of this subcommittee here? Mr. DEWINE. Let me rephrase it. Any particular requests as far as the way this aid should be administered? Mr. MORSE. No, sir. Mr. CROCKETT. Will you yield? Mr. DEWINE. Yes. Mr. CROCKETT. Let's put it in language that Congressman Hyde used. Have you been pressured in any way by this subcommittee? Mr. MORSE. No, sir. This committee has attended several of my briefings up here. They don't always agree with what we are doing or how we are doing it. They make those differences known; but I don't interpret that as pressure. Mr. HYDE. You can always count on his support. ABILITY OF PADF TO DELIVER AID Mr. DEWINE. As far as the Pan-American Development Founda- tion, do you have any opinion as to whether or not it can fulfill the mandate of the legislation, beyond what you have already said, as- - suming other things can be worked out? Assuming they are acceptable? Mr. MORSE. If we accept that the mandate of the legislation and Sapoa and Esquipulas is to have a delivery agent that is mutually acceptable to both parties, then I think that they could do this if there is an agreement on what they will deliver, how they will deliver it, and where they will deliver it. It is not the organization per se that is in dispute. AID has worked with PADF in several instances. The question now is, are they able with the way they are structured and with the existing pressures that are on them to deliver what, where, and when consistent with the legislation, Sapoa, and Esquipulas? If they can do that, then we think they are able to play the role of the neutral delivery agent. In terms of, do they have aircraft, are they skilled in doing airdrops? No, they are not. Would they be the first choice? No. I think there is something that hasn't come out here, in due respect, Congressman. We seem to have overlooked the first step in this process. The first step was the contras were allowed to pick the neutral delivery agent. They asked for a private contactor. The articles of negotiation in Sapoa will show that both parties agreed to a private company. It was after that that the ICRC was introduced and rejected; then PADF was introduced. That is where we are. 47 - There was a first step. We are not quite sure why the independent private company, whomever it was contracted, was not acceptable and ICRC came on the table. Mr. DEWINE. Let me in the brief time I have get back again to the question of the number, unbelievable number of mixed signals that you have testified that you were receiving from the Congress. You participated in a meeting in the Speaker's office, as you have already testified. When you left that meeting, was it clear in your mind what you were to do as far as the delivery? Mr. MORSE. It was. Mr. DEWINE. What was that? Mr. MORSE. Deliver the cordobas, the food, the clothing, the medicine to wherever we could find the people and do it with enough sensitivity that we did not distract from the negotiating in the Sapoa process. Mr. DEWINE. This is a meeting involving the Speaker of the House of Representatives? Mr. MORSE. It did. Mr. DEWINE. Democratic leadership besides the Speaker? Repub- lican leadership? Mr. MORSE. Yes, sir. Mr. DEWINE. There was no doubt in your mind that was what you were to do when you left there? Mr. MORSE. Yes. No doubt. Mr. DEWINE. Thank you. Nothing further. Mr. CROCKETT. Thank you very much, Mr. Morse. The subcommittee will adjourn. [Whereupon, at 4:30 p.m., the hearing adjourned.] N-

N APPENDIX 1 AGENCY FOR INTERNATIONAL DEVELOPMENT WASHINGTON 0DC 20523

June 6, 1988

The Honorable George W. Crockett, Jr. Chairman Subcommittee on Western Hemisphere Affairs Committee on Foreign Affairs U.S. House of Representatives Washington, D.C. 20515

Dear Chairman Crockett:

Enclosed is information you requested at the June 2, 1988 subcommittee hearing on the humanitarian assistance package to Central America at which I testified.

T wish to apologize for any misunderstandings that occured regarding the hearing moving into Executive or "closed" session. While I have from the beginning attempted to Implement the program in a completely open manner, there are aspects to the program that lends extreme caution. In fact, during the hearing, I outlined the two areas that would require moving into Executive session; the list of recipients of the family assistance program and the actual number and location of the Nicaragua Resistance forces.

During your opening remarks you stated your intent regarding Executive session and your staff had previously notified my staff of your intent. I understand that you were simply trying to accommodate the Task Force and again am sorry for any misunderstandings.

Also, during the hearing questions were raised concerning the conduct of Congressional staff. I want to assure you that your staff, while raising genuine concerns regarding certain aspects of the program, has from the outset conducted themselves in a completely professional, forthright and courteous manner.

Thank you for allowing me the opportunity to appear before your subcommittee and I look forward to working with you and your staff in the future.

Sincerely,

Ted D. Morse Director Task Force on Humanitarian Assistance to Central America (49) APPENDIX 2

AGENCY FOR INTERNATIONAL DEVELOPMENT WASHINGTON DC 20523

Dr. Donald C. Kaminsky, MPH Vice President, International The People-to-People Health Foundation, Inc. (Project HOPE) Health Sciences and Education Center Millwood, Virginia 22646 Subject: Cooperative Agreement No.: OTR-0000-A-O0-8125-00

Dear Dr. Kaminsky:

Pursuant to the authority contained in the Foreign Assistance Act of 1961, as amended, and Public Law 100-276, which is to provide assistance and support for peace, democracy, and reconciliation in Central America, the Agency for International Development (hereinafter referred to as "A.I.D." or "Grantor") hereby grants to The People-to-People Health Foundation, Inc., (hereinafter referred to as "Grantee" or "Project HOPE") the sum of $1,000,000 to provide medical care and other relief for children who are victims of the Nicaraguan civil strife. This is more fully described in Enclosure 2 entitled, "Program Description."

This Agreement is effective, anl obligation is made as of the date of the Grant Officer'ssignature, and shall apply to commitments made by the Recipient in furtherance of program objectives, through the estimated completion date of December 31, 1988.

The total estimated amount of the program is $1,000,000. The amount of $1,000,000 is obligated herein.

This Agreement is made to the Recipient on condition that the funds will be administered in accordance with the terms and conditions as set forth in this Cover Letter, Enclosure I entitled "Schedule," Enclosure 2 entitled "Program Description," and Enclosure 3 entitled "Standard Provisions,' which together constitute the complete Agreement document and have been agreed to by your organization. (50) 51

Please acknowledge receipt of this Cooperative Agreement by signing all copies of this Cover Letter, retaining one set for your files, and returning the remaining copies to the undersigned.

Sincerely,

Carolyn R. Eldridge Grant Officer Management Services Branch Office of Procurement

Enclosures: 1. Schedule 2. Program Description 3. Standard Provisions

ACCEPTED BY: THE EP~uPLE-T&-PEOPLE HEALTH FOUNDATION, INC. Typed"ame;'i Title.,_~j~~i1~ Date:

Fiscal Data

PIOT NO: 594-003-3-80004 APPROPRIATION NO: 72-11XI038 ALL, TENT NO: VRRX88 29594 KG13 BVLDGET PLAN CODE: N/A TAIS OBLIGATION: $1,000,000 TOTAL OBLIGATION: $1,000,000 DUNS NO: 098-661-135 A.I.D. PROJECT OFFICER: Regina Coleman, FVA/PVC DOC #: 54240 52

Enclosure No. 1

SCHEDULE

A. Purpose of Agreement

The purpose of this Agreement is to provide support for HOPE to provide medical care and other relief for children who are victims of the Nicaraguan civil strife (as per attached Joint Resolution H.J. Res. 523, Section 8. Children's Survival Assistance). Such assistance shall be used to make available prosthetic devices and rehabilitation, provide medicines and immunizations, assist burn victims, and help children who have been displaced by the Nicaraguan civil strife. Priority shall be given to those children with the greatest needs for assistance. The above is more specifically described in Enclosure 2 "Program Description," and HOPE's proposal dated April 18, 1988, and amendment thereto, which are incorporated herein by reference into the Cooperative Agreement. In the event of an inconsistency between the Recipient's proposal, the program description, and this schedule; the schedule and then the program description shall take precedence. B. Period of Agreement 511/

The effective date of this Agreement is the da to t 6 .r ificr'c signatur.. The expiration date of this Agreement is December 31, 1988. C. Amount of Agreement and Payment

1. A.I.D. hereby obligates the amount of $1,000,000 for the purposes of this Agreement.

2. Payment shall be made to the Recipient in accordance with procedures set forth in Attachment 4 - Standard Provision entitled "Payment - Letter of Credit." D. Budget

The following is the Budget. Revisions to this Budget shall be made in accordance with the Standard Provision of this Agreement entitled "Revision of Budget." 53

PROJECT HOPE'S BUDGET

Cost Element Amount Procurement $329,286

Other Program Costs 594,999

Indirect Costs 75,715 TOTAL ESTIMATED AMOUNT $1,000,000

Notes to Budget:

1. In reference to OMB Circular A-122, Attachment B, Selected Items of Cost, the requirement for advance approval of expenditures for general purpose equipment and special purpose equipment is hereby waived.

2. The Recipient is allowed 25% flexibility among all cost elements in the budget. The Recipient must obtain written authorization from the Grant Officer to exceed the percentage of flexibility among line items.

E. Substantial Involvement

1. No funds can be committed for this program without written approval of the Grant Officer. Approval is based on acceptable written evidence that HOPE can in fact operate in Nicaragua, either directly or through CSAP acceptable intermediary.

2. The Recipient must notify the A.I.D. Project Officer prior to initiating the drawdown of funds for program components attributable to use inside Nicaragua.

3. Given the eMergency relief nature of the Children's Survival Assistance Program, recipients are to limit commitments of technical assistance and commodity procurement to that amount that can be reasonably delivered and utilized during a 60-day period. These 60 day periods should be approximately May-June, July-August, September-October, and November-December 1988.

4. The Recipient is expected to coordinate and cooperate with other Children's Survival Assistance Program organizations through CARE-organized coordination activities, and as specifically stated in your Program Description, to avoid duplication and ensure maximum coverage of intended beneficiaries. 54

5. With regard to program activities relating to the provision of medical services through clinics serving the general populati-on, the recipient shall voucher A.I.D. for only those costs related to treating patients who are eligible under the Children's Survival Assistance Program, i.e., children under 17 years of age wh6 have been affected by the Nicaraguan civil strife.

F. ReportingZMonitoring 1. Monthly/Quarterly Reports

Reports on project implementation are due monthly for the first three months of program activity and quarterly thereafter. Ten copies of the "Monthly/Quarterly Report on Program Implementation," sample format attached, should be submitted to the A.I.D. Project Officer not later than five working days after the last day of the month on which they are due.

2. Final Report

A final, end-of-project report will be required via a format to be provided to the Recipient at a later date. 3. Interim Reportin

Prior to the required final performance reporting date, events may occur that have significant impact upon the project. In such instances, the Recipient shall inform the Grant and Project Officer as soon as the following types of conditions become known:

a. Problems, delays, or adverse conditions that will materially affect the ability to attain program objectives, prevent the meeting of time schedules and goals, or preclude the attainment of project work activities by the established time period. This disclosure shall be accompanied by a statement of the action taken, or contemplated, and any assistance needed to resolve the situation.

b. Favorable developments or events that enable time schedules to be met sooner than anticipated or more work activities to be performed than originally projected.

4. Site Monitoring

From time-to-time A.I.D. officers and/or their representatives will, with prior notification to HOPE, visit selected project sites. 55

G. Indirect Cost Rates

Pursuant to the Standard Provision of this Cooperative Agreement entitled "Negotiated Indirect Cost Rates-Provisional," a rate shall be established for each of the Recipient's accounting periods which apply to this Cooperative Agreement. Pending the establishment of revised provisional or final indirect cost rates, provisional payments on account of allowable indirect costs shall be made on the basis of the following negotiated provisional rate applied to the base set forth below:

Type of Rate Rate Base Period

Provisional 55% ($118,983)* 7/1/87 - Until Amended Provisional 4% ($256,850)** " " of

* Salaries and Wages excluding all fringe benefits. ** Materials handling on supplies shipped from USA. H. Title to Property

Title to all property purchased under this Cooperative Agreement shall be vested in the Recipient and subject to the Standard Provision entitled "Title to and Use of Property (Grantee Title) ."

I. Authorized Geographic Code Refer to the Standard Provision entitled "AID Eligibility Rules for Goods and Services." I 56

Project Hope Program Description I. Definition and Scope: Provide primary health care to children in the Nicaragua cease-fire zones being established under the Sapoa Agreement. II. Purpose: 1) Establish and staff HOPE health stations to dispense primary health care services (including temporary prothesis) in two, with the expansion to at least four, of the seven cease-fire zones. 2) Supply additional medicines and medical supplies to other PVOs working through other private clinics in these zone areas. 3) Refer children with war-related burns, amputations and other acute medical conditions to those Children's Survival Assistance Program organizations specifically charged with these interventions within Nicaragua, second priority to other Central American countries and last priority to USA centers for definitive treatment. III. Principal Activities: 1) Needs assessment conducted in first 3 weeks to identify facilities and local staff for health care centers in at least four of the cease fire zones. 2) Coordinate plans with Catholic Relief Services, Partners of the'Americas and other Children's Survival Assistance Program organizations to avoid duplication of beneficiary targt clinics. 3) Linkage in place with PVO coordinating mechanism to help compile medical needs information within the targeted zones: medicines, cold storage and other equipment and medical supplies. 4) Distribution system for the above in place and functioning at 6 weeks. for two facilities and at eight weeks for at least four facilities. 5) By 6 months 2000 children under age 17 provided for in HOPE health stations in each zone, up to 70 temporary prostheses fitted; HOPE-provided medicines and basic medical supplies reaching an additional 15,000 children through health stations and other private voluntary and relief organizations; identification and referral of up to 70 children with severe medical conditions needing advanced treatment services. IV. Program Management: Mr. Don G. Weaver, Director of Programs in People to People Health Foundation (Project Hope), will be principally responsible for the overall management and implementation of the Children's Survival Assistance Program. 57

AGENCY FOR INTERNATIONAL DEVELOPMENT WASNINGTON. 0 C20923

Dr. Donald C. Kamlnsky, MPH Vice President, International The People-to-People Health Foundation, Inc. (Project HOPE) Health Sciences and Education Center Millwood, Virginia 22646 SUBJECT: Cooperative Agreement No. OTR-0000-A-00-8125-00 Amendment No. 01 Dear Dr. Kaminsky: Pursuant to the authority contained in the Foreign Assistance Act of 1961, as amended, and Public Law 100-276, which is to provide assistance and support for peace, democracy, and reconciliation in Central America, the Agency for International Development, hereinafter referred to as "A.I.D."-or "Grantor", hereby amends the subject Agreement. The purpose of this amendment is to add language to the substantial involvement section, and to revise the Program Description. The specific changes are as follows: 1. Under section E. Substantil Involvement, in paragraph 1, add the following sentence, "Preliminary costs incurred obtaining this approval are authorized up to $10,000."

2. Delete the Program Description in its entirety, and in lieu thereof substitute th3 attached Program Description, which is Enclosure 1 to this amendment. Except as expressly amended herein, all other terms and conditions remain unchanged. 58

Please acknowledge your receipt of this amendment by having an authorized official sign all copies of this amendment, keep one copy, and return the original and the remaining copies to this office. Sincerely,

Franci( J. Moncada Grant Officer Deputy Director, Office of Procurement Enclosure : Program Description

ACCEPTED BY: Project HOPE

TffPED NAM4: __.... / TITLE: DATE: Ai f U FISCAL DATA: 7107T NO.: N/A APPROPRIATION NO.: N/A ALLOTMENT NO.: N/A BUDGET PLAN CODE: N/A THIS OBLIGATION: N/A TOTAL OBLIGATION: $1,000,000 TECHNICAL OFFICE: FVA/PVC, Regina Coleman DUNS NO.: 098-661-135 DOC 1: 5537o 59

Encloeure Ho. 1 People-to-People Health (PROJECT HOPE) Project Description A.Definition and Scope: Provide primary health care to child n who are victims of the Nicaragua civil strife. Area of activities will include at least four of the following: Region I; Region 5; Region 6; Special Autonomous Zone 1, Puerto Cabezas; Special Autonomous Zone 2, Bluefields; Special Autonomous Zone 3, San Carlos. 8. Purpose: 1) Establish and staff HOPE health stations to dispense primary health care services (including temporary prothesis) In two, with the expansion to at least four, of the seven defined -regions. 2) Work with other PVOs through private clinics in these defined regions in identifying deficiencies in the type and quantity of existing ano needed medicines and medical supplies, and undertake to obtain these items according to available resources. 3) Refer children with war-related burns, amputations and other acute medical conditions to those Children's Survi val Assistance Program organizations specifically charged with these interventions within Nicaragua, second priority to other Central American countries and last priority to USA centers for definitive treatment. C. Principal Activities: 1) Needs assessment conducted in first 3 weeks from date of permission to operate in Nicaragua to identify facilities and local staff for health care centers in at least four of the defined regions. 2) Coordinate plans with CARE, Catholic Relief Services, Partners of the Americas and other Children's Survival Assistance Program organizations to avoid duplication of beneficiary target clinics. 3) Linkage in place with PVO coordinating mechanism to help compile medical needs information within the targeted regions: medicines, cold storage and other equipment and medical supplies. 4) Distribution system for the above in place and functioning at 6 weeks; for two facilities and at eight weeks for at least four facilities. 5) By 6 months 2000 children under age 17 provided for in IPE health stations in each region, up to 70 temporary prostheses fitted; HOPE-provided medicines and basic medical supplies reaching an additional 15,000 children through health stations and other private voluntary and relief organizations; identification and referral of up to 70 children with severe medical conditions needing advanced treatment services. 60

1. Program Manageno t: Mr. Donald C. Kamin.y MU, Vice President International Division, assisted by G)avid E. Edwards, PhDCountry Manager in People to Peoplc Health Foundation (Project Hope), will be principally responsible for the overall management and implementation of the Program. 0

88-526 (64)