34 



providing. However, as we've heard this morning, the Russian au- 

 thorities have a bit of a suspicion of monetization. In point of fact, 

 they find it very difficult to understand why commodities that are 

 donated to their country should be sold for cash as opposed to dis- 

 tributed directly to needy persons. We're working with them to try 

 to overcome that resistance. I think more than anything else it un- 

 derscores that reform is as much a matter of mindset as it is any- 

 thing else. 



Let me turn, if I may, to the history of United States grain sales 

 to the former Soviet Union. As you know, since the early 1970's, 

 the Soviet Union, and Russia and the other countries more re- 

 cently, have been a very strong market for United States agricul- 

 tural commodities, particularly grains. In the period of the late 

 1980's and 1990, US. exports averaged roughly 4.5 million tons of 

 wheat and over 10 million tons of feed grains annually. I think that 

 underscores the importance to United States agriculture. In these 

 years, the FSU was indeed often our second or third largest mar- 

 ket. 



If I may get to the other question you asked about changes in 

 our overall approach, I believe that the overall approach, two-point- 

 ed, as I outlined, remains valid, but that as we look at cir- 

 cumstances that change with breathtaking speed over there, we 

 may indeed need to change the various mechanisms that we use to 

 achieve those approaches. I don't think that we have all of the an- 

 swers. I don't think, given the unprecedented nature of change, 

 anyone can expect to have all the answers. 



In looking, for example, at the mechanism that should continue 

 U.S. agricultural exports, we are examining a very wide range of 

 options, and we recognize that what may be the best short term is 

 not necessarily the best longer term option. We're looking at food 

 aid. We're looking at barter, which was mentioned. We're looking 

 at how we might continue to use our commercial programs. We're 

 considering whether or not it would be advisable to develop a new 

 legislative approach entirely. Again, none of these are ideal, and all 

 of these options have costs. 



I see the time has expired. I will, therefore, stop at this point and 

 offer to answer any particular questions you ana the others of the 

 committee may have. 



[The prepared statement of Mr. Goldthwait appears at the con- 

 clusion of the hearing.] 



Mr. Penny. Can you discuss, first off, the grains offered but not 

 shipped and elaborate a bit as to the various factors that are at 

 play? 



Mr. Goldthwait. Yes. There are roughly 250 million dollars' 

 worth of commodities which had been registered under the GSM- 

 102 program before the arrears that accumulated led to the sus- 

 pension of that program. After that point, the various U.S. banks 

 that were involved in the process became reluctant to process the 

 letters of credit that would have resulted in the shipment of those 

 commodities. There were questions, I think, also on the part of the 

 U.S. exporters. 



We have worked very closely with these various parties to indi- 

 cate that we stand ready to amend the pending credit guarantees 

 so that those transactions can go forward. In fact, in recent days. 



