ACCESSION NUMBER:320991 FILE ID:POL404 DATE:01/13/94 TITLE:LUGAR SAYS RUSSIA, NORTH KOREA FACE SEVERE ECONOMIC WOES (01/13/94) TEXT:*94011304.POL LUGAR SAYS RUSSIA, NORTH KOREA FACE SEVERE ECONOMIC WOES (Reports on ten-day fact-finding trip) (680) By Wendy S. Ross USIA Congressional Affairs Writer Washington -- The people of Russia are undergoing problems worse than those experienced by Americans during the Great Depression of the 1930s, but nonetheless they are better off than the people of North Korea, says Senator Richard Lugar. Lugar, an influential Republican on the Senate Foreign Relations Committee, made the statement at a January 13 news conference reporting on a January 2-11 fact-finding trip he and Senate Armed Services Committee Chairman Sam Nunn took to Moscow, Tokyo and Seoul. While the people of Russia are hurting, Lugar said, "starvation and abject malnutrition" do not seem to be a problem, although "pharmaceutical products are in short supply in the hinterland in particular." But, he added, "this is not a society that is really dying on its feet in the same way that North Korea is, for example." Nonetheless, Lugar said, "very substantial reform" is essential in Russia "if there is to be any hope of that economy moving on to growth and stability." He urged the Russian government not to continue credit flows to state enterprises that are inefficient and non-productive simply as a way to provide people with jobs. Rather, he said, the government should eliminate or privatize inefficient enterprises and create incentives for capital to be productive, and it should find a way to create a social safety net for the population. Further government-to-government assistance to Russia "is very dubious," he said. He pointed out that much of the money Congress and the international financial institutions approved earlier for Russia has not yet been disbursed, because Russia has not yet implemented International Monetary Fund-required economic reforms. Foreign investment in Russia, he said, is "small presently" and "will remain very small without there being sizable incentives for that capital to be productive." Lugar also urged compliance with provisions of the START-One and START-Two treaties. The provisions call for dismantling and destruction of sizable 1umbers of intercontinental ballistic missiles. Lugar said that many of those weapons continue to be aimed at the United States and that "very few have been dismantled" as yet. Lugar said he and Nunn had also discussed with Russian military leaders "potential revisions" in the anti-ballistic missile (ABM) treaty. The same subject, he said, also came up in talks with Japanese leaders. South Korea, he said, is a nation which has "transformed itself beyond recognition" in the last 40 years, and "now represents a vital national interest" to the United States. "It plays a key role in the realization of United States goals at home and abroad, for reasons of geography, history, security and politics, including (serving) as a model to the Third World showing the harmony between economic and democratic developments," Lugar said. In contrast, the policies of North Korean dictator Kim Il-song have brought that country near the "brink of oblivion" in a 20-year period, he said. North Korea is masking its intrinsic weakness with military strength, intransigence and bluster, Lugar added. He said the possibility of unifying the two Koreas "has gone from a pastoral pipe dream to a virtual inevitability." South Korea is confident, as is the United States, that over time, the democratic way of life will prevail, he said. But in the meantime, he said, the United States must continue to help defend South Korea against possible attack and continue its diplomatic efforts to persuade North Korea to abandon the "nuclear card." "Our aim is to bring the North to abandon its nuclear program in a way that preserves and enhances peace in East Asia," Lugar said. "We must avoid at all cost a miscalculation that could have catastrophic consequences for our allies, our interests, and our world leadership. Our task is to persuade the North that abandoning the nuclear card will serve its best interests, whereas pursuing it would jeopardize the regime's prospects for survival." NNNN .
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