Europe, secured by expanding US-Soviet cooperation in resolving the continent's outstanding political and military problems. The possibility, even the idea, of this terrible conflict in the Gulf was beyond anyone's imagination. Yet now we face the challenges of hot war in the Gulf and growing uncertainty about the course of Soviet reform.

        There can be different views of how to handle these situations. I look forward to your counsel and good words on both issues. Yet on one point I believe we are in very basic agreement: the need for American leadership. If we do not do our part, then Churchill's broad path pursued by many states in common will not be possible. And as Churchill warned, "the middle path adopted from desires for safety and a quiet life may be found to lead direct to the bull's eye of disaster." More clearly than we could have ever imagined a year or even six months ago, the world emerging from the end of the post-war era will be shaped by the United States and its international allies. Our constant purpose must be to make of that world a fitting place for free peoples to live.

        Let me turn to our foreign affairs funding request. For FY 1992, we seek $21,900 million in discretionary budget authorize for International Affairs Budget Function 150, an increase of $1800 million over levels appropriated for FY 1991. In addition, we are requesting a one-time appropriation of $12,200 million as the US share of global quota increase for the International Monetary Fund.

        In accordance with the terms of the Budget Enforcement Act, our request provides for specific, stringent limits on our spending levens, in spite of unprecedented demands for US leadership across the globe.

        In order to achieve our worldwide objectives within these resource constraints, additional flexibility is needed. Last year, I appealed to this Committee to make constructive consultation - not earmarking - the primary vehicle for achieving consensus on program objectives. I am pleased to note that we made some progress towards that goal last session.

        Earmarking in our Economic Support Fund (ESF) declined from 82 per cent in FY 1990 to just over 68 per cent in FY 1991. In our Foreign Military Financing (FMF) account, the decline was less dramatic but still significant, from 92 per cent to 87 per cent. This is a welcome trend, one that we want to encourage promote.

        But we still have a long way to go.To support our request this year, let me express the Administration's willingness to work in partnership with Congress to develop greater flexibility in our state operations and foreign assistance legislation.To guide this effort, let me suggest five broad objectives for our international cooperation programs, built around the five foreign policy challenges which I presented in my testimony before this Committee last year.

        First, promoting and consolidating democratic values, including free and fair elections and respect for human rights.As the President noted in his State of the Union address, this fundamental American principle has stood as a beacon to peoples across the globe for more than two centuries.

        Transitions toward democracy, however difficult, cannot be accomplished in isolation from the rest of the world. The essential ingredients of democracy - respect for human rights, the rule of law, free and fair elections, and political and economic opportunity - are also the basic building blocks of the New World order.

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