26 February 1998

TEXT: U.S. AMBASSADOR LYNDON OLSON ON U.S. POLICY IN BALTIC REGION

(At 2/26 conference on NATO, security in Baltic Sea region) (3030)



Stockholm -- U.S. Ambassador to Sweden Lyndon L. Olson, Jr. quoted
President Clinton in his opening words to the conference on NATO
Enlargement and Security in the Baltic Sea Region here February 26,
saying, "America's security is tied to Europe, and Europe will never
be fully secure if Baltic security is in doubt."


Olson said U.S. national interests in the Baltic Sea region are
focused on building security, democracy and prosperity, including
"constructing an enduring security system which works; one that
promotes stability and is anchored in a set of common values." He
noted that "democracy reinforces security and stability.... Likewise,
flourishing free markets and prosperity in the region are crucial to
securing democracy and constructing an inclusive security structure."


NATO "will remain the principal vehicle for American engagement in
Europe," Olson said, discussing the U.S. interest in NATO enlargement,
the broadening of the Alliance's mission, and NATO's partnership
program with non-member nations. He said the United States welcomes
Sweden's decision to appoint an ambassador to NATO, and "likewise, we
commend the three PFP [Partnership for Peace] exercises Sweden hosted
last year, bringing together many NATO allies, Russia, and the Baltic
states. We regard Sweden as a valuable partner in the security field."


One common effort for NATO and Sweden, Olson said, "is the security
and sovereignty of the Baltic states. This is a litmus test for the
new European security architecture. NATO has made clear that
membership will remain open to all of those willing and able to assume
the responsibilities of Alliance membership."


Acknowledging Russia's concern with this policy, Olson said, "our aim
... must be to win converts in Russia through engagement.... Russia
can have no justifiable fear of the Baltic states as a security
threat. The new security model in the Baltic region is win-win, not
zero-sum. The integration of the Baltic states into cornerstone
institutions of the transatlantic community contribute to improved
relations between Russia and the Baltics, individually and
collectively."


He discussed the Northeastern European Initiative, which seeks to
strengthen U.S. ties to the Nordic countries, help the new democracies
in the region become better candidates for membership in European
institutions, and increase cooperation with Russia aimed at fostering
its integration into Europe.


Commenting on the vital role of the European Union in promoting
economic and political integration in the region, Olson stated, "Its
enlargment to the countries of Central Europe and the Baltic states is
a priority."


He stressed the United States' "real, profound, and enduring interest"
in the Baltic region and said that "We are working through a number of
different organizations, transatlantic as well as subregional, to
advance these interests and make the Baltic Sea region a model for the
new Europe."


Following is the text of the remarks:



(Begin text)



AMERICAN ENGAGEMENT IN THE BALTIC SEA REGION

By Lyndon L. Olson, Jr.

U.S. Ambassador to Sweden



To the conference: "NATO Enlargement and Security in the Baltic Sea
Region"
Sponsored by the Swedish Atlantic Council

Stockholm, February 26, 1998



"America's security is tied to Europe, and Europe will never be fully
secure if Baltic security is in doubt. NATO's door is and will remain
open to every partner nation, and America is determined to create the
conditions under which Estonia, Lithuania, and Latvia can one day walk
through that door."


These words, spoken by President Clinton at the signing of the
U.S.-Baltic Partnership Charter at the White House last month,
underscore the deep commitment my country has to ensuring the
integration of the Baltic states into the great institutions of
Europe. This makes our partnership with Sweden in constructing a
prosperous and peaceful Baltic Sea region of paramount importance.


The Baltic Sea region and the U.S. relationship to this region has
undergone momentous change during the course of this decade. Just
contemplate how important these changes are: the Baltic states and
Poland have become sovereign democracies and free market economies;
Sweden and Finland have joined the EU and are active partners with
NATO; Russia is cooperating closely with the Alliance; Poland is on
the verge of joining the Alliance, and Estonia and Poland will likely
join the EU early in the next century.


American diplomatic activity and economic interest in the region has
increased also. The signing of the Baltic Charter, our Northeastern
Europe Initiative, the visit of President Clinton to Helsinki and
Copenhagen last year and Strobe Talbott to Lulea in January for the
Barents Council meeting, as well as increasing American trade and
commercial investment, indicate a growing American presence in the
Baltic Sea region.


A number of innovative and effective institutions are present here,
transatlantic and subregional, and are working in harmony to make the
Baltic Sea region a model of cooperation for the rest of Europe. We
are pleased to be a part of this work. As I speak, however, another
institution, which my government and yours have invested a great deal
of energies in over the years, stands before a decisive moment. I mean
the United Nations. It is vital for the continued effectiveness and
credibility of the Security Council that Iraq comply fully with the
agreement it signed on Monday with the UN Secretary General. We cannot
rest until Iraq has accounted for and destroyed all of its chemical
and biological weapons. This must be a paramount national interest of
not only my government and Sweden's, but of all UN member states.


U.S. NATIONAL INTERESTS



In the words of the Baltic Charter: "The United States has a real,
profound, and enduring interest in the independence, sovereignty, and
territorial integrity, and security of Estonia, Latvia, and
Lithuania." These words could equally apply to all of the Baltic Sea
states. What are the national interests of the United States here? Let
me discuss three which I think best justify our engagement: security,
democracy, and prosperity.


Central to our engagement in Europe and the Baltic Sea region is
constructing an enduring security system which works; one that
promotes stability and is anchored in a set of common values.
Similarly, democracy reinforces security and stability. Democratic
nations are more peaceful and more reliable as partners. Anchoring the
democratic and free market reforms in the Baltic states, Poland, and
Russia is a vital national interest. Likewise, flourishing free
markets and prosperity in the region are crucial to securing democracy
and constructing an inclusive security structure. It will be much more
difficult for these other goals to gain widespread public support
without the solid base of economic growth and widely-shared
prosperity. Let me elaborate on how we are trying to advance these
varied but coherent interests.


SECURITY



NATO will remain the principal vehicle for American engagement in
Europe. It has proven its continued relevance by its performance in
Bosnia. Its health and survival is a paramount national interest for
the United States. Our former ambassador to NATO, Robert Hunter, used
to say this is one four-letter word to which my country is deeply
attached. He is right. We believe NATO has an important role to play
in projecting peace and stability in the Baltic Sea region,
capitalizing on cooperation that is already ongoing in various
subregional institutions.


The new NATO is forging a European security architecture which is
credible, flexible, and inclusive. It is pursuing these objectives in
three ways: enlargement, internal adaptation, and partnership.


First, enlargement. NATO's decision to enlarge its membership
demonstrates that it is serious about "doing for the East of Europe
what we did for Western Europe after World War II." NATO is leading
the charge for European integration. I have high hopes that the U.S.
Senate will ratify the accession to the Alliance of Poland, the Czech
Republic, and Hungary by early spring. These new members will enhance
NATO's capabilities and make the Alliance stronger. Enlargement
ensures that NATO and the transatlantic relationship will remain
strong.


The new NATO means, however, something more than just new members.
NATO is recreating itself. NATO's mission and structure has evolved to
meet the new security challenges. NATO has broadened its mission to
include stability projection in areas of Europe plagued by
instability. Our NATO ambassador, Sandy Vershbow, has stated that
rather than planning to fight for survival, NATO is now fighting for
stability.


Third, and crucial to building an inclusive security structure in
Europe, is NATO's partnership program with non-member nations: the
Founding Act with Russia, the Charter with Ukraine, the Partnership
for Peace (PFP), and the Euro-Atlantic Partnership Council (EAPC). The
agreement NATO reached with Russia in the establishment of a Permanent
Joint Council with regular consultations between high level Russian
representatives and NATO was a watershed. This will give Russia a
voice, but not a veto, in European security matters and marks a
turning point in Russia's gradual integration into Europe. The EAPC
and the PFP are the other pillars of Europe's inclusive security
structure. The EAPC provides the overarching framework for
consultations among its members on a broad range of political and
security-related issues, as part of a process that will develop
through practice. It will enable the 43 members to direct the course
of PFP and to bring their security concerns to the heart of the
Alliance. The PFP will also be enhanced. This remarkable program is
building habits of operational cooperation in the field through its
exercises between former Cold War adversaries.


BALTIC SECURITY



What does this mean for the Baltic Sea region? The Alliance is active
in the region, working to bridge decades of mistrust. Sweden is
helping in this effort. We applaud the Swedish government's decision
to forge a deeper relationship with NATO through the PFP and the EAPC.
We welcome its decision to appoint an Ambassador to NATO. Likewise, we
commend the three PFP exercises Sweden hosted last year, bringing
together many NATO allies, Russia, and the Baltic states. We regard
Sweden as a valuable partner in the security field. We are all aligned
today in the same effort of uniting the European continent and the
Baltic Sea region in such a way that war becomes unthinkable.


One such common effort for NATO and Sweden is the security and
sovereignty of the Baltic states. This is a litmus test for the new
European security architecture. NATO has made clear that membership
will remain open to all of those willing and able to assume the
responsibilities of Alliance membership. The "open door" policy is
fundamental to NATO's credibility as an alliance dedicated to
inclusiveness. We are working with our Nordic partners, including
Sweden, to help the Baltic states upgrade their defense capabilities.
We take this commitment very seriously.


I know that this is a policy about which Moscow has its doubts. Our
aim, though, must be to win converts in Russia through engagement. We
cannot compromise on a core principle of the new security architecture
-- the right of all countries to select their own alliance
commitments. On this issue the best diplomatic tactic is: "tell it
like it is." Russia can have no justifiable fear of the Baltic states
as a security threat. The new security model in the Baltic region is
win-win, not zero-sum. The integration of the Baltic states into
cornerstone institutions of the transatlantic community contribute to
improved relations between Russia and the Baltics, individually and
collectively.


NORTHEASTERN EUROPE INITIATIVE



This is where the Northeastern European Initiative (NEI) seeks to make
a difference. The initiative has three purposes: 1) strengthen U.S.
ties to the Nordic countries and better leverage our engagement to
achieve common objectives; 2) help the new democracies and market
economies in the region become better candidates for membership in
European institutions; and 3) increase cooperation with Russia in a
broad network of areas (economic, political, environmental) that leads
to its integration into Europe.


We are working with the Nordic countries to give substance to the NEI
and make plain our commitment to engage Russia. The United States
Overseas Private Investment Corporation (OPIC), in partnership with
Finland's Guarantee Board, is helping to reduce the risks for American
and Finnish companies that want to invest in Northwest Russia.
Likewise, we are investing an additional $500,000 toward the
construction of a prototype containment vessel in Murmansk for the
interim storage of damaged fuel from nuclear naval and civilian
vessels. American law enforcement officials are also prepared to
provide technical assistance in combating cross border illegal
activities in the region and our Center for Disease Control is
actively engaged in a Swedish-led effort to combat drug-resistant
tuberculosis in Northwest Russia.


DEMOCRACY



Planting the firm foundations of democracy in the Baltic states and
Russia is also a vital U.S. goal. This will, over time, help improve
relations between Russia and the Baltic states and make them more
attractive candidates for trade and investment. We are also matching
resources with our strategic vision. We have provided the Baltic
states with over $136 million under the Support for East European
Democracy Program to advance fundamental economic and political
reforms. Moreover, the President recently announced the establishment
of a $15 million Baltic-American Partnership Fund. The Fund will help
promote the further development of non-governmental organizations and
civic society in the Baltic states.


We are also actively engaged in Russia and Poland in helping those
countries firmly anchor democratic reforms in their political systems.
We have devoted hundreds of millions of dollars in both countries to
strengthen independent institutions. Other institutions are making
valuable contributions. The OSCE and its missions to Estonia and
Latvia have helped in advancing the integration of Russian ethnic
minorities into Estonian and Latvian society.


PROSPERITY



Creating a prosperous and high growth Baltic region is essential to
achieve our other goals here. Continued public support for a
cooperative and inclusive security structure and for democratic
principles will depend upon prosperous economies. This region is
unique in many respects: it has some of the most advanced and
prosperous countries in the world in the Scandinavian countries; the
major economy of Europe in Germany; some of the fastest growing
post-communist market economies in Poland and the Baltic states; and
the great, if not fully realized, potential of the Russian market.
Indeed, with a consumer market of over 50 million and fast growing
economies, this region has tremendous economic significance for the
United States.


Again, my government has invested a lot of economic and political
capital in advancing free market reforms and economic integration in
the Baltic region:


-- We established the Baltic-American Enterprise Fund, capitalized at
$50 million, to promote the growth of small and medium-sized
businesses in these countries. Similar funds operate in Poland and
Russia.


-- The U.S. has treaties on taxation with all three Baltic states and
Poland. These treaties help foster trade and investment by removing
significant tax barriers for U.S. firms doing business in the region.


-- The U.S. has signed bilateral investment treaties with all the
Baltic states and Poland. This guarantees the right to invest on terms
no less favorable than those accorded to domestic or third-country
investors. These accords provide a strong basis for trade and
investment relations.


-- My government strongly supports accession of the Baltic states to
the World Trade Organization. In the end, it is private investors and
corporations which will make the decisive difference in integrating
economically the Baltic region.


Governments can help to boost economic cooperation and trade between
Northern Europe and Northern Russia. The effort recalls the Hanseatic
period of the Baltic region when Northern Europe and Russia were
integrated into a single commercial space. One of our highest
priorities in this work must be assisting Northern Russia and the
Baltic states in creating the legal and political infrastructure for
trade and commerce. Much work is already being done in this area
through private and public institutions from Nordic countries, the EU,
and the U.S.


Some common problems that we hear about from Swedish and American
firms doing business in the Baltics and Russia include border crossing
and customs problems as well as finding local financing. In addition,
inconsistent applications of local laws, the lack of transparency and
predictability, and corruption constitute serious obstacles to
economic development. These continuing problems make clear that more
must be done to create the proper conditions for trade and investment.
The U.S. will be addressing these issues through an Economic Working
Group created by the Baltic Charter, just as the Trade Ministers from
the Council of Baltic Sea States are doing at a spring meeting.


The European Union has a vital role to play in promoting economic and
political integration. Its enlargement to the countries of Central
Europe and the Baltic states is a priority. We welcome the decision of
the EU in December to begin accession negotiations with six applicant
countries, including Poland and Estonia, later this year. Moreover,
the EU's annual review process for other applicant countries,
especially Lithuania and Latvia, is essential and holds out the real
prospect that those two nations will be given their rightful
opportunity to join Europe. The importance of this prospect should not
be underestimated. This will lock in democratic and market reforms in
the Baltic states and Central Europe.


Let me return to the words I began with: "The United States of America
has a real, profound, and enduring interest in this region." We are
working through a number of different organizations, transatlantic as
well as subregional, to advance these interests and make the Baltic
Sea region a model for the new Europe -- an example of how a variety
of institutions and actors can be brought into unison to achieve our
loftiest objectives. It is a work in progress and will necessarily be
too slow for some and too fast for others, but it is moving steadily
ahead toward a goal that was unimaginable only a decade ago: an
economically and politically integrated Baltic Sea region strongly
linked to European and transatlantic institutions.


Thank you.



(End text)