Statement to the House Foreign Affairs Subcommittee on International Operations

September 28, 1989

Carl Gershman, President, National Endowment for Democracy

Mr. Chairman and Members of the Subcommittee:

I am delighted to have this opportunity to review with you the program of the National Endowment for Democracy for the coming year.

Since the time our chairman, Senator Brock, last addressed this panel, the Endowment has continued its far-reaching program of addressing the needs of those throughout the world who look to the United States for support in building free democratic institutions.

During its brief existence, the Endowment and its core grantees, the Center for International Private Enterprise, the Free Trade Union Institute, the National Democratic Institute for International Affairs, and the National Republican Institute for International Affairs, have developed ingenious and effective programs in scores of countries from Eastern Europe to the Far East; from the islands of the caribbean to the islands of the Pacific; from Central and South America to Africa.

As you, Mr. Chairman, and the other members of this panel are aware, the Endowment has held firm to its commitment that all grants are open to public scrutiny. This openness has been a source of the Endowment’s strength and credibility both here and abroad.

I would like to take advantage of this hearing today, Mr. Chairman, to brief the subcommittee on the Endowment’s plans and priorities for the coming year.

The Endowment funds programs primarily in three major substantive areas: pluralism; democratic governance and political processes; and education, culture and communications.

Some areas of Endowment programming are better suited to some countries or regions than to others. A broad, multi-faceted program is feasible in Latin America, for example, because numerous opportunities exist to work with independent unions, business associations, parties and other private institutions. There are also possibilities for conducting programs in the area of education and culture. But in closed societies, such as those in much of the Communist world, the absence of legal independent private institutions has inevitably restricted work in the areas of pluralism and democratic governance. Here the preponderance of programs has been in the area of education, culture and communications. With the dramatic openings currently taking place in Poland and Hungary, however, it may become possible to support programs promoting pluralism and democratic governance in these countries. Wherever there is the possibility for broad Endowment support involving all of its core grantees as well as other grantees, the Endowment aims to coordinate the various programs so as to avoid duplication and to maximize the impact of the overall effort.

I. Latin America and the Caribbean

Despite persisting economic difficulties, Mr. Chairman, democracy continues to maintain its advances in Latin America and the Caribbean. Just a decade ago, the region was dominated by authoritarian military governments which claimed to be the best guarantors of peace, stability and prosperity. Now, such regimes have given way to democratically elected civilian governments in no fewer than nine countries: Argentina, Bolivia, Brazil, Ecuador, El Salvador, Guatemala, Honduras, Peru and Uruguay. Over the same period, democracy advanced in the Dominican Republic, Belize attained independence as a democratic state, Mexico moved toward greater pluralism, and entrenched dictatorships were ousted in Grenada and Haiti. During the past year, Chile and Paraguay, which had been exceptions to the general democratic trend, made remarkable advances toward greater democracy. Even in Nicaragua, the elections scheduled for February 1990 offer some hope of movement in a positive direction. But not all the trends are favorable. In Panama and Haiti, clearly expressed popular aspirations for democracy remain unfulfilled, and Cuba continues to be the most repressive country in the Hemisphere.

Endowment programs in this region have two basic objectives:

  1. In the new democracies, the objective is to assist in the consolidation of democratic gains. Activities, primarily in the areas of pluralism and democratic governance, will include programs that advance market-oriented thinking as a significant factor in the promotion of democracy, programs in political development with parties and legislators, union-building efforts, support for women’s and youth organizations, and civic education efforts designed to encourage popular understanding of and participation in the democratic process.
  2. In the non-democratic states, the objective will be to assist those groups working to promote greater pluralism and, where possible, a successful transition to a stable democratic government. The highest priority country for the Endowment during the coming year will be Nicaragua, where elections in February 1990 provide a critical opportunity for democratic forces. During FY 1989, the Congress of the United States appropriated a total of $3.5 million in special funds for the promotion of democracy in Nicaragua. These funds will enable the Endowment to strengthen the prospects for a democratic electoral process in Nicaragua and continue its efforts to promote democratic institution-building during the post-electoral period.

At its recent meeting, NED’s Board of Directors reaffirmed the commitment to help insure that the electoral process is both free and fair as promised by the regime. Should new funds become available for this purpose, the Endowment is prepared to support non-campaign assistance to the 14-party opposition and other groups for the purpose of strengthening democratic institutions, processes and participation in a manner consistent with NED’s mandate and authorizing legislation. These funds may be used for non-partisan purposes, including infrastructure development and training, and for such activities as voter registration and education, get-out-the-vote drives, election monitoring, and international observer delegations. The overriding objective of this support is to strengthen democratic organizations and processes so that they will endure well beyond the February election date.

Chile and Paraguay have long been countries of special interest to the Endowment. NED played a key role in the 1988 Chilean plebiscite and the 1989 Paraguayan elections by supporting civic education and other programs designed to increase fairness and enhance voter participation. The Endowment will be closely studying the ongoing transition process in these two countries in an effort to determine the most suitable approach for future programming.

In Panama the Endowment will continue to provide modest assistance to the democratic opposition, while being prepared to shift additional resources if new opportunities develop. Similarly, the Endowment will seek to increase its support for programs in Haiti if the prospects for a transition to democracy become more promising. In totalitarian Cuba, where significant assistance to independent groups has not been possible until now, the Endowment will continue its highly successful support for international efforts to exert pressure for greater respect for human rights. It will also be alert to opportunities to assist democratic efforts inside Cuba.

The Endowment will actively explore the possibility of expanding its programs in the key country of Brazil. It will also closely follow events in Mexico to consider whether more extensive cooperation with democratic groups there might be welcomed at this time. Finally, the island states of the English-speaking Caribbean, whose fragile economies and small size make them vulnerable to attempts to reverse the democratic trend, will remain an important area of Endowment programming.

II. Asia

Democracy has also made significant advances in Asia, exemplified most dramatically by the transitions to democracy in the Philippines in 1986 and in Korea and Pakistan in 1988. Other positive developments in the region include the continuation of democratic development in Thailand and the trend toward greater liberalization in Taiwan. On the other hand, the process of reform in China suffered a dramatic setback with the crushing of the pro-democracy movement in June 1989. Endowment programs in Asia seek to encourage democratic development in all these countries and others as well.

The Philippine government has made progress toward consolidating a stable, pluralist democracy, but it continues to face serious difficulties in achieving broadly based economic growth and combating the challenges posed both by the Communist guerilla insurgency and by dissident elements within the military. A key priority for the Endowment is to encourage the process of democratic consolidation through assistance to democratic unions, business associations, legislators, women’s organizations and other groups in the Philippines. Korea, too, faces the challenge of maintaining a stable and functioning democratic order, and the Endowment will be responsive to requests from democratic groups working toward this goal.

The recent tragic events in China undoubtedly constituted a severe defeat for democratic forces in that country, but they also vividly demonstrated the breadth and depth of the desire for democratic freedoms on the part of the Chinese people. The Endowment will carefully monitor developments in China with an eye to finding ways of supporting groups peacefully working for democracy, both among exiles and within the country itself. A not entirely dissimilar situation exists in Burma, where a student-led democracy movement was also repressed by a dictatorial government. During the coming year the Endowment hopes to initiate a modest program of support for democratic forces in Burma.

In South Asia and the Near East, Pakistan will remain a primary focus of Endowment attention, with programs continuing cooperation with democratic unions, business associations, journalists and political parties. The Endowment will be closely following the evolving political situation in Afghanistan, and if sufficient resources become available it will be prepared to increase its assistance for the efforts of pro-democratic Afghan intellectuals. Support for democratic educational activities will continue in India. And building upon the success of ongoing publishing and seminar programs in Turkey, the Endowment hopes to step up its efforts to reach out the democratically oriented groups elsewhere in the Islamic world.  

III. Eastern Europe and the Soviet Union

Perhaps the most remarkable political development during the past year has been the democratic opening in Poland and Hungary. The roundtable agreements between Solidarity and the Polish government led not only to the legalization of the independent trade union, but also to a limited free election in which Solidarity-backed candidates swept virtually all the parliamentary seats they were allowed to contest. The new situation in Poland has also made possible the founding of a legal opposition newspaper and the emergence above ground of a variety of independent economic, social and cultural institutions. In Hungary, too, the government has permitted the creation of a wide range of legal independent organizations, and has promised genuinely free multiparty elections in the near future. These unprecedented changes provide some hope that we will see the first peaceful, internally generated transitions to democracy within the Communist world.

Poland remains the country of highest priority for the Endowment in this region, given the opportunities for democratic activity that are now possible and the longstanding relationships the Endowment has developed with the Polish opposition. The Endowment’s capacity to assist democratic forces in Poland continues to be markedly enhanced by special Congressional appropriations of $1 million for general support of Solidarity and $1 million for its medical fund. Within the limits of available resources, the Endowment will seek to increase as much as possible its support for Hungarian democrats during this critical period. It will also maintain its substantial level of programing in Czechoslovakia, which hold some promise of eventually following the path of Poland and Hungary. Much more modest support for democratic efforts will be continued in Yugoslavia and Romania.

In the Soviet Union, there has been some further progress during the past year toward greater pluralism and democratization. The Endowment will continue to support two principal categories of programs there: 1) assistance to Russian-language journals and other programs to encourage independent intellectual, cultural and political expression; and 2) assistance to peaceful democratic movements among the non-Russian nationalities of the Soviet Union.

Events in Poland, Hungary and the Soviet Union over the past year indicate that we are entering a period that may mark a turning point in the history of the Communist world. The opportunities for the Endowment to assist democratic forces are great, and we will seek to devote as many of our resources as we can to meeting this historic challenge.

IV. Africa

Democracy remains weak in Africa, but there is cause for hope. Across the continent there is a trend toward more liberal economic policies and greater concern about human rights. As Soviet involvement has diminished, regional conflicts are being resolved. If all goes well, Namibia will soon gain independence and a democratic government in free elections. The cease-fire in Angola could lead to a democratic settlement of that conflict, and Mozambique has abandoned Marxist doctrine and turned to the West. Algeria has joined Tunisia in moving toward a more liberalized government and economy. Nigeria’s military government seems to be adhering to its pledge to restore democratic government to 100 million Nigerian citizens — one-quarter of the population of the continent — by October 1, 1992; political parties are now competing there, and the press and other independent organizations are flourishing. Press restrictions have been lifted in Sierra Leone. Despite the odds, Uganda’s military regime continues its tenuous democratization and reconstruction of the economy. Although Sudan has suffered a setback, democrats there remain committed to peaceful change. Multi-party democracy remains intact in Botswana, the Gambia, and Mauritius, and appears to have survived in Senegal.

Democrats in Liberia see opportunities for forthcoming elections. I believe, Mr. Chairman, that you had a chance to observe personally the situation in Liberia when you attended an NDI-sponsored conference there last May. This and other NDI conferences there, which have been organized in cooperation with leading democrats, have proved to be a vital forum for the creation of greater democratic space as that country prepares for national elections.

Other Endowment programs in Africa will continue to stress such pluralist institutions as free trade unions, business associations, independent press organizations, human rights groups, democratic policy and research institutes, and independent women’s and civic organizations as a basis for the eventual development of democratic political institutions. Labor programs will concentrate on strengthening regional African labor organizations and independent unions in many countries. Business programs will be concentrated in countries with established business associations and a receptiveness to private enterprise. Party programs will seek to build on the range of contacts already established.

South Africa remains the country of greatest priority for the Endowment in Africa. Keeping in mind both the risks and opportunities afforded by the increasing level of dialogue and the new international context, the Endowment will continue its efforts to strengthen groups committed to the peaceful dismantling of apartheid and its replacement by a nonracial democracy. The Endowment will support programs that strengthen grassroots community organizations, promote dialogue and an understanding of democracy, and contribute to an open and democratic exchange of views and information.

V. Multiregional Programs

A number of Endowment programs are multiregional. These include the promotion of contacts among democratic advocates from different regions, publications that reach beyond a single region, research on democratic development, support for an international women’s organization, or efforts to assess the political and economic significance of the informal sector in various regions of the world. The Endowment’s own new quarterly publication, the Journal of Democracy (which is supported by private funds), will also be multiregional in scope and distribution. Such programs represent an important means to encourage international cooperation in the building and strengthening of democracy. Through such efforts, the Endowment hopes to foster a sense of common identity and purpose among democrats around the world.

VI. Budgtary Constraints: Effect on Programs

Mr. Chairman, this subcommittee has shown exceptional sensitivity to our needs. Your vote to increase the authorized level last spring was just one measure of the confidence you have displayed in our global program. Increasingly, however, budgetary constraints are stifling new initiatives, forcing a concentration on immediate crisis situations, to the detriment of long-term political development, and causing severe cutbacks in already reduced programs.

The number of grants awarded by the Endowment increased dramatically fro 75 in 1984 to 179 in 1988; the number countries in which the Endowment supported programs rose from 34 in 1984 to 74 in 1988. However, the average size of Endowment grants decreased significantly.

The Endowment is making more grants and spreading less money over a broader surface. This has hindered its ability to adequately support new initiatives. Many potential Endowment and Institute programs never reach the proposal stage because the lack of funds discourages program development.

As I have noted, there is now a possibility that the Endowment will receive special funding for non-campaign support in Nicaragua in preparation for the February 1990 elections. Understandably, there is a great desire to provide non-campaign assistance to Nicaraguan democratic parties and civic organizations to strengthen their participation in the democratic process. But there are many other countries in Latin America holding elections in the coming months — among them Brazil. the Dominican Republic, Guatemala, Peru and Uruguay — here democratic parties and civic organizations also need assistance. Similar assistance is also needed in Hungary, as well as in other countries that may be emerging from communist autocracy. But the resources available to meet these needs are egregiously inadequate.

Without additional funding, the Endowment is not in a position to address the democratic needs of these regions. Programs in Brazil and Mexico, two countries of great importance in Latin America, have been kept to a minimum due to budget constraints. The Endowment’s programs in Africa and the Islamic world — two vital areas — have also been minimal. To expand programs in these regions, the Endowment would have to undertake a major program development effort for which it does not have the funds.

At a time of rapidly expanding opportunities for programs in Eastern Europe and the Soviet Union, the Endowment has had to cut its discretionary allocations for projects in this region. Every week there are new organizations emerging in the region which look to NED for support that it is unable to provide, even by stretching existing resources as tautly as possible through a multiplicity of small grants. For example, a multi-faceted program to support independent groups and publications in the Soviet Union is being funded at less than ten percent of the amount needed to carry out the full program.

The Free Trade Union Institute’s (FTUI) work of assisting democratic labor movements throughout the world–the sectoral model I upon which the full Endowment program was built–has suffered dramatically as a result of budgetary limitations. The Institute’s FY 89 grant from the Endowment, $5,039,685, represents more than a 50% cut from its FY84 grant.

The National Democratic Institute for International Affairs (NDI) recently had to reject proposals in Bolivia and Bangladesh because of a lack of funds. Other programs by NDI for the democratic opposition in Panama following the elections had to be curtailed because of funding difficulties.

FTUI and NDI, as well as the National Republican Institute for International Affairs and the Center for International Private Enterprise, are seeking to expand their activities in the East Bloc at this opportune time. However, funding constraints are impeding their efforts to provide more than token assistance to democratic movements.

VII: Budgetary Constraints: Effect on Administration

To maximize the funds available for grant awards in support of the Endowment’s democratic objectives, NED has always functioned with a small staff and minimal administrative costs. However, the need to spread less money over a broader surface — awarding a larger number of grants of smaller dollar value per grant — is actually increasing pressure on our administrative budget. The increased number of grants expands the volume of work in preparing and negotiating grant agreements, amending them when required, and monitoring grantee compliance with Endowment reporting and audit requirements.

The Endowment received $5.5 million in special congressional appropriations during FY 1989 for which no additional administrative funds were provided. Such special appropriations are earmarked for certain uses in specified countries, and do not increase the Endowment’s ability to respond to new proposals from other countries. They do, however, further increase the number of grants for which proposals must be evaluated and grants awarded and monitored, requiring additional staff time.

During the last six months of FY 1989 the number and complexity of Freedom of Information Act (FOIA) requests has increased dramatically; many of these requests are associated with projects funded through the special congressional appropriations. Responding to FOIA requests consumes already scarce staff time and has increased substantially the Endowment’s legal fees.

NED’s FY 1990 administrative budget includes provision for additional staff to assist with financial monitoring, proposal evaluation, and FOIA requests, necessitated by the larger number of grants awarded from the annual budget and from the special appropriations. The Endowment is mandated to provide primary funding for program and administrative costs for four core grantees (FTUI, CIPE, NDIIA, and NRIIA), and as the amount of funding they receive from NED decreases each year, they experience the same phenomenon of limited capability to respond to new initiatives, more grants to manage, and higher administrative costs.

Despite constant efforts by NED and its core grantees to keep administrative costs to a bare minimum, administrative costs increase from year to year due solely to inflation, particularly in items such as salaries and benefits, supplies and equipment, and communications. Given the magnitude of responsibilities and competing demands placed upon the Endowment and its institutes, an increase in the FY 1990 appropriation is necessary simply to provide additional administrative funds to ensure sound programming, accountability for public funds, and open access to information regarding NED’s activities.

VII. NED’s Role in the Years Ahead

With its unique institutional capabilities and proven ability to provide vitally needed democratic assistance openly and consistently, the Endowment can make an essential contribution to addressing these and other critical policy issues. But its real value should be viewed in the long term and on a broad scale. As political competition becomes an increasingly salient feature of international relations in an age of receding Cold War tensions, the Endowment offers a politically attractive way to advance U.S. interests and values. In a period of tight budgets, it is also exceedingly cost-effective. The funds needed to allow this vital initiative to fulfill its potential are meager compared to the enormous scope and importance of the issues and the stakes involved. (In this connection it is important to take note of the fact that the West German party foundations together spend more than eight times as much as the NED for democracy abroad.) Funds for NED represent a prudent investment in a safer and more democratic world.

In the face of accelerating change, we need to interact creatively with developing nations and with emerging movements in the Communist world. The scientific and technological revolution is creating an international community that is at once more integrated and competitive. In addition, the revolution in communications and information has brought us into closer contact than ever before with foreign cultures and distant countries. Such developments require us to reexamine the means by which we try to influence trends and events abroad, and to ask how we can best advance our national interest and democratic values in a world of heightened political consciousness.

Mr. Chairman, the Endowment is attuned to this new era. After five years of effective performance, it enjoys broad bipartisan support in Congress. Its work not only advances democracy in the world, but also puts the United States publicly and effectively on the side of those struggling to advance democratic goals. The Endowment has been through its period of testing and has proven its worth. Commentators who have followed the Endowment’s programs closely have recommended funding levels far beyond the current budget. It is now time to give it the resources to become the truly global force for freedom that its founders envisioned.