Perhaps the world's first deliberate use of an environmental disaster as a wartime weapon, with unknown consequences for the entire region for years to come; and

         A worldwide call for terrorist actions sometimes supported by embassies abroad in flagrant violation of the basic principles of diplomacy.

         These challenges to international order can all be defeated by a committed world community, supported by firm US leadership and appropriate resources as needed.

         Finally, meeting urgent humanitarian needs will continue to reflect deep and abiding concerns of the American people. America's record for responding quickly and substantially to alleviate severe suffering caused by natural and man-made disasters is unequalled. We salute the role played by American private voluntary agencies and private American citizens in this regard. Meeting the most pressing humanitarian needs with food aid, disaster relief, and refugee assistance will always be an essential component of US assistance policies.

         We are prepared to work with Congress on legislation that builds on these basic objectives to provide more flexibility and simplicity to our economic cooperation efforts. Working with our global partners, we envision the use of five principal mechanisms to advance this agenda worldwide:

         One, more flexible and integrated bilateral assistance authorities. We seek more flexible account structures and greater ability to transfer funds both within and among accounts to meet pressing, unexpected needs. We hope to move toward an assistance program unified around a single set of core objectives, along the lines of those outlined above.

         As a first step toward this goal, we have proposed a modest $20 million Presidential Contingency Fund in our FY 1992 budget request.

         The need for flexibility is especially urgent at a moment when developments in the world are moving so quickly and unpredictably, while our ability to respond with additional resources is severely constrained by budgetary realities. The Gulf crisis, the restoration of democratic rule in Nicaragua and Panama, and the dramatic developments in Eastern Europe, the Soviet Union, and South Africa over the past year illustrate that when unprecedented demands for American leadership are combined with limited resources, our need for flexibility becomes all the more urgent.

         Two, we see scope for more creative use of multilateral mechanisms to advance our objectives, through both the international financial institutions and the UN system.

         The Bretton Woods institutions have now admitted all the Eastern European countries, and are playing a central role in structuring sound, adequately financed programs to ease their transition to market economies based on private initiative. Should the Soviet Union move further along the path of structural economic and political reform, we would expect the IMF and the World Bank to play a role in facilitating its transformation as well. The European Bank for Reconstruction and Development will promote the development of infrastructure, environmental programs, and private sector development in the reforming countries of Central and Eastern Europe. Meanwhile, through our Enterprise for the Americas Initiative, the

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