In other words, that within its borders, Bangladesh contains a tropical forest that is globally outstanding in terms of its biological diversity. The region in Bangladesh known as Chihagong and the Chihagong Hills tracts contains much of Bangladesh's tropical rain forest.

Over the years, however, this area has suffered greatly from the effects of constant soil erosion and deforestation due to Bangladesh's ever expanding human population, as well as the effects of natural disaster.

It remains, however, the home of biodiversity as well as a variety of wild animals, to include the world-famous and endangered royal Bengal tiger.

As of the 31st of January, 1998, Bangladesh's P.L. 480 debt amounted to $501.7 million. The interest on that debt is impossible for them to pay and still provide for other necessary activities. I have looked at this situation for several years now, looking for a solution. This legislation can be part of it.

This debt accumulated over more than a decade and now requires substantial payments from Bangladesh, one of the world's poorest nations, and one it can ill afford.

My colleagues may recall that an oversight prevented this matter from being addressed in 1993 when debt forgiveness legislation was approved for many other significant debtor countries. Any financial assistance given to Bangladesh is negated by the payments it is now required to make on its P.L. 480 debt rather than being directed toward worthwhile projects designed to stabilize population growth, establish health programs, and build democracy.

Despite these difficulties, Bangladesh is making progress on structural reforms within its economy. According to a recent edition of "Trends in Developing Countries" published by the World Bank, these reforms include governmental efforts to open new sectors to private entry, deregulate private investment, relax exchange controls, reform business law, and downsize the state-owned enterprises.

I understand that private investment is now being encouraged in the energy, telecommunications and domestic air transport services within Bangladesh. I bring this up to show you the efforts they are making.

Mr. Chairman, I have a couple of very brief, direct questions to put to the Treasury and the State Department representatives here today, if I could ask them to be brought to the table.

Chairman GILMAN. Without objection.

Mr. BEREUTER. I need to establish a legislative record here. Perhaps you could, for the record, introduce yourself if you have not already done so.

Mr. KLOSSON. Yes, sir. My name is Michael Klosson. I am a Deputy Assistant Secretary of State in the Bureau of Legislative Affairs.

Ms. CHAVES. My name is Mary Chaves. I am the Director of International Debt Policy at the U.S. Treasury Department. Mr. BEREUTER. Thank you very much.

Under the environmental standards established in H.R. 2870 as you read them, do your respective agencies believe Bangladesh eligible for debt relief? I would ask each of you.

Ms. CHAVES. There are two basic questions here. One is whether this country has tropical forests and that is an issue I will leave to USAID or the State Department to respond to.

With regard to the economic and political criteria for debt reduction, that is a process which we go through interagency. There is an interagency committee that meets and reviews the specific criteria. We do not have a decision at this point because we have not reviewed Bangladesh on that criteria. But we will go through the specific criteria in the legislation.

Mr. BEREUTER. Ms. Chaves, that is not very satisfying to a Member who has this opportunity to ask for definitive answers.

Ms. CHAVES. I am sorry that I cannot give you a definitive answer at this point. We are required to go through the interagency process in determining eligibility.

Mr. BEREUTER. I would not have asked you this question if I did not have different assurances about your response.

Ms. CHAVES. Perhaps we can address the tropical forest issue. That may help you and you may find that a more attractive response.

Mr. BEREUTER. It is only part of the response, and having relied to some extent on the cooperation and goodwill and good judgment of Treasury from time to time in the Banking Committee, I have been disappointed from time to time, so I am not complacent with your answer.

Would the gentleman from the State Department respond to that part of the question that he feels his agency can respond to?

Mr. KLOSSON. Mr. Bereuter, let me ask a member of USAID to come to the table, since he is specifically working on this issue.

Chairman GILMAN. Would the gentleman please identify himself? Mr. HESTER. My name is James Hester. I am the Agency Environmental Coordinator for the U.S. Agency for International Development.

With regard to the forest resources of Bangladesh, Bangladesh was once 95 percent forested. Now it is 93 percent deforested. Of the 7 percent that is left, about half of it is degraded scrub forest.

However, there are three large areas of forest still, even within that small amount left, that are important biologically, and that are important economically to the country. One is in the southwest called the Sundarbans. This is a mangrove forest maintaining about 350 to 600 Bengal tigers. In addition to this area which is about 2,000 square miles-we have forest in the Chihagong Hills area which is in the southeast of the country. That is about 1,600 square miles of important forest with the largest population of elephants left in the country.

We feel these forests are important and they do need assistance. The Chihagong Hills Forest might be difficult at this point in time to do much in because this is the area where there is a certain amount of insurgency. But certainly we feel that there is enough there to make this an important site.

On a technical basis, concerning the criterion of having valuable tropical forests, we feel that this country is one that would qualify under the terms of this particular bill.

Mr. BEREUTER. Thank you. As you know, this is the country that perhaps other than a city state, has the largest population density

in the world: 120 million people in a country the size of Wisconsin. So the pressure on the forests there, it seems to me, ought to be a factor in giving favorable consideration to it.

I am told that there are about 1.9 million acres. Does that roughly match your understanding?

Mr. HESTER. That depends what numbers one uses and what year. The most reliable numbers we have are about 5 years old. These numbers show approximately 3,600 square miles of forest left in the country, of which about half is degraded. But again that was 5 years ago.

As you say, the population is enormous which means the pressure is enormous. Of that land, perhaps only one-third, maybe slightly less, is actually in a protected status. And of that protected status, not all of it is real protected status. It may just be on a piece of paper.

So we feel the urgency to protect what is left is extremely high. There is not much time left to save what they do have.

Mr. BEREUTER. I would ask Ms. Chaves, I will try another chance with you. Do you know anything in the legislation which would lead you to believe at this point that Bangladesh does not qualify as an eligible recipient?

Ms. CHAVES. No, I have nothing in particular that would lead me to believe that Bangladesh would not qualify. In fact, based on USAID's testimony here we would look at Bangladesh as one of the countries that would be reviewed for specific action under this legislation in reviewing the eligibility criteria of the legislation.

Mr. BEREUTER. Thank you. I would ask the State Department representative if he believes that Bangladesh is eligible under the requirements, under the criteria of this legislation?

Mr. KLOSSON. Mr. Bereuter, my understanding of the facts, based on our State Department experts, is along the lines of what the representative from USAID testified to with regard to the tropical forest. Let me check on one additional point, if I might, sir. Chairman GILMAN. Will the gentleman yield?

Mr. BEREUTER. I would be pleased to yield to the gentleman. Chairman GILMAN. When we report out this bill, the report language will strongly reflect our interest in doing something about Bangladesh.

Mr. BEREUTER. Thank you very much, Mr. Chairman. I might say, while they are conferring, to you and Mr. Hamilton, I am told that there may be a problem. That when we give debt forgiveness, the following year a country is not eligible for P.L. 480. If that is the case, I believe that we will need to consider amendatory language on the floor. Otherwise, for the countries that need assistance the most, those that have received and continue necessarily, like Bangladesh, to receive P.L. 480 funds, there would be a disincentive for them to accept debt relief.

Chairman GILMAN. That gentleman is correct. If the gentleman will yield?

Mr. BEREUTER. I would be pleased to yield.

Chairman GILMAN. The gentleman is correct. We will be seeking an open rule so the gentleman would then have an opportunity to present the appropriate amendment.

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Mr. BEREUTER. Thank you, Mr. Chairman. I appreciate your support.

Chairman GILMAN. And I would be inclined to support your amendment.

Mr. BEREUTER. Thank you very much. I would appreciate the support of the Committee.

I would return to the State Department, if they have a response to my final question.

Mr. KLOSSON. Mr. Bereuter, this is not something that has gotten, I think, a full vetting within the department. What I can say at this point is that, based on our initial look, we do not see any up front problems with doing that. But it has not gone through a full process within the department, nor through the interagency process yet.

Mr. BEREUTER. Thank you. I would ask both State and Treasury if they will focus on this as soon as possible and make a determination so that we will have an understanding before we go to final action on the floor.

Mr. KLOSSON. Certainly.

Mr. BEREUTER. I thank you for your assistance, and I thank my colleagues for their patience and indulgence.

Chairman GILMAN. If the gentleman would further yield?

Mr. BEREUTER. I would be pleased to yield to the Chairman. Chairman GILMAN. We anticipate being on the floor with this measure next week, so whatever report you get back should be expeditious to be of help to us.

Mr. BEREUTER. Thank you. I yield back the balance of my time. Chairman GILMAN. I thank the gentleman.

Mr. Rohrabacher.

Mr. ROHRABACHER. Just a couple questions. Would this bill in any way provide debt forgiveness to the Governments of Cambodia and Burma, for example?

Chairman GILMAN. These countries are not specifically included nor excluded by this legislation.

Mr. ROHRABACHER. I am a little bit concerned, Mr. Chairman. I do not want to give any debt forgiveness to those bums over in Burma. That is a pretty bad regime. In both Cambodia and in Burma, they have been deforesting their countries in a very bad way.

Chairman GILMAN. I think the gentleman raises an important question and we will ask the Treasury to report to us whether there is any indebtedness of those countries.

Mr. ROHRABACHER. Thank you.

Chairman GILMAN. Would the witnesses have any record with regard to any indebtedness with relation to those two countries?

Ms. CHAVES. I do not have any specific information with me on the amount of debt outstanding and owed to the U.S. Government by those countries. Both countries, Cameroon is one country that is receiving debt reduction through the Paris Club of creditor governments on a multilateral basis at this point. That is debt reduction of up to 67 percent of its outstanding debt. Burma, to my knowledge we would have to review and give you specific information on Burma, on the debt outstanding.

Chairman GILMAN. I think the gentleman also asked about Cambodia, if I am not mistaken. Ms. Chaves, the gentleman also asked about Cambodia.

Ms. CHAVES. Thank you. I erred in my response. Cambodia is not a country that we are treating currently in the Paris Club for debt reduction purposes.

Mr. HESTER. If I may just mention, USAID has a loan balance for Burma of $2.466 million outstanding. We have no balances showing for Cambodia.

Mr. ROHRABACHER. Thank you.

Chairman GILMAN. Thank you, Mr. Rohrabacher.

Mr. Chabot.

Mr. CHABOT. Thank you, Mr. Chairman. I will be very brief. I just want to compliment my colleague, Mr. Portman, for his excellent work on this matter.

I also want to compliment his able staff who I know has done tremendous work and been very much involved in this, particularly his chief of staff who happens to be in the room today. I know they have done a lot of the background and groundwork to make this day possible. It is very thoughtful legislation. It is environmentally friendly, obviously. And it is market driven, which I think is very positive.

And I think Mr. Kasich and Mr. Hamilton are also to be complimented. I yield back the balance of my time.

Chairman GILMAN. Thank you, Mr. Chabot.

Any other Members seeking recognition? Mr. Campbell.

Mr. CAMPBELL. Thank you, Mr. Chairman.

Chairman GILMAN. This is not War Powers, is it?

Mr. CAMPBELL. I wanted to amend it to add in a concurrent resolution.

[Laughter.]

Mr. CAMPBELL. My question is on page 14, if I might ask both Treasury and State's representatives, Ms. Chaves and Mr. Klosson. I am having trouble following this math. It is line 10. My colleagues might find this of interest.

There is a minimum as to how much has to be devoted by the host country to the intended purposes of the act. That is good. I understand you have got to show that they are going to ante up. But that formula, it seems to me, is unclear in the extreme.

It says, "equal to not less than 40 percent of the price paid for such debt by such eligible country, or the difference between the price paid for such debt and the face value of such debt." I will give you a numerical example, and I think what is missing is the phrase, "the larger of," on line 10.

Suppose you have $100 of debt. Suppose it is worth only $70, that mathematical example. Then the host country would have to ante up 40 percent of $70, which is $28. But they have got a discount of $30. So it seems the second clause would say they have got to ante up $30.

In that we may want to clarify language before it gets to courtit probably will not get to court, but before it gets to USAID, because USAID is going to have to administer it, and countries are going to ask you. Do you not think the phrase, "the larger of,” be