U.S. Religious Freedom Commission Challenges President Clinton On Upcoming China Sovereign Bond Offering

(Washington, D.C.): The next major development in the escalating controversy
over Chinese
efforts to finance odious activities on the U.S. capital markets occurred on 1 November. On that
date, the congressionally-mandated U.S. Commission on International Religious Freedom
(USCIRF) wrote President Clinton calling upon Mr. Clinton to acknowledge that provisions of
the International Religious Freedom Act of 1998 authorize him to bar government sponsors of
religious persecution — like China — from issuing bonds in the United States.

More important still is the fact that the Commission served notice on the White House that it
is
actively considering a recommendation to the President to prohibit China’s next $1-2
billion
sovereign bond offering in the U.S. debt market — reportedly scheduled for later this
month —
unless Beijing provides credible guarantees that “the proceeds are never be used to support
religious persecution.” As the USCIRF’s spokesman, Lawrence Goodrich, told the
Washington
Times: “We can’t bar China from offering the bonds on the international market, but we
can, in
our interpretation, bar U.S. organizations from buying the offering.”

The Commission’s intervention is the latest in a series of visionary actions taken by that
bipartisan body to leverage access to the globally dominant U.S. debt and equity markets by
governments and/or foreign entities that are either directly responsible for suppressing religious
freedoms or that are aiding and abetting those who are. This leadership role is being facilitated
by the Commission’s establishment of the first taxpayer-financed Capital Markets Task
Force — a model for every state to consider in connection with the administration of its
public
pension funds.

U.S. COMMISSION ON INTERNATIONAL RELIGIOUS FREEDOM

November 1, 2000

Dear Mr. President:

I am writing on behalf of the U.S. Commission on International Religious Freedom to ask for
your views on a matter of some urgency.

According to recent press reports, the government of the People’s Republic of China will
soon
offer sovereign bonds in the total amount of $1 billion on international markets, including
possibly the U.S. market. The Commission is considering whether to recommend that you
immediately bar any such offering until China meets two conditions: (1) it makes substantial
improvements in respect for religious freedom, and (2) it provides sufficient assurances to
guarantee that the proceeds are never used to support religious persecution.

The Secretary of State formally determined last year and again this year that the government
of
China has been engaging in systematic, ongoing and egregious violations of religious freedom
within the meaning of the International Religious Freedom Act of 1998 (IRFA), 22 U.S.C.
6401 et seq. Consequently, in the Commission’s view, section 405(a)(14) of IRFA, 22 U.S.C.
6445(a)(14), gives you power now to raise such a barrier in the form of a prohibition against the
purchase of China bonds by U.S. financial institutions such as underwriters, pension plans or
mutual funds.

Section 405(a)(14), read in conjunction with sections 401 and 402 of IRFA, authorizes you
to
prohibit “any United States financial institution from making loans or providing credits totaling
more than $10,000,000 in any 12-month period to the specific foreign government, agency,
instrumentality, or official” determined to be responsible for such violations.

The Commission, however, wishes to have the benefit of your thoughts before it makes a
final
decision. We therefore respectfully ask (1) whether you agree that IRFA vests your office with
power to bar U.S. financial institutions from purchasing China bonds and 2) if so, whether you
plan to exercise that power so as to prevent China from offering bonds on the U.S. market until it
meets the two conditions listed above.

Attached is a background paper reflecting our thinking on this matter. Given the immediacy
of
China’s reported plans, we would be grateful for a prompt reply. Thank you very much for your
time and attention.

Respectfully yours,

Elliott Abrams

Chairman