I'm delighted to be here. I know that you and your president, Sandy Trowbridge, and the entire NAM organization have been an enormous help during the last 2 years, not only with advice and counsel but with a roll-up-your-sleeves effort to help pass the economic recovery programs that are ending this recession. And with your assistance, we also were able to negotiate a bipartisan compromise solution to save our social security system.

You know, we didn't come to Washington at an ideal time -- [laughter] -- and we've certainly had our share of problems. But the signs of recovery are springing up all around us, and there's no mistaking the fact that at long last America is on the mend. And the courage and the vision of the people and institutions that are represented here today deserve a big share of the credit for this hard-earned but inflation-free recovery. So, on behalf of all your fellow citizens who've been freed from the ravages of runaway inflation and can look again to a future of better times and then new opportunity, I thank you.

America is meeting her challenge here at home. But there are other challenges, equally important, that we must face. And today, I'd like to talk to you about one of them.

Late last year, I visited Central America. Just a few weeks ago, our Ambassador, Jeane Kirkpatrick, also toured the area. And in the last few days, I have met with leaders of the Congress to discuss recent events in Central America and our policies in that troubled part of the world. So, today I'd like to report to you on these consultations and why they're important to all of us.

The nations of Central America are among our nearest neighbors. El Salvador, for example, is nearer to Texas than Texas is to Massachusetts. Central America is simply too close, and the strategic stakes are too high, for us to ignore the danger of governments seizing power there with ideological and military ties to the Soviet Union.

Now, let me just show you how important Central America is. Here -- [referring to a map] -- and you can't see it from over there because I'm in the way -- but here at the base of Central America is the Panama Canal. Half of all the foreign trade of the United States passes through either the canal -- [laughter].\1\ (FOOTNOTE) I've been dying to give you all an economic lesson, and you show up for geography. [Laughter and applause] But as I say, half of that trade passes either through the canal or the other Caribbean sealanes on its way to or from our ports.

(FOOTNOTE) \1\7E7E7EThe laughter was a reaction of the audience to the rushing of photographers from one side of the podium to the other in order to photograph the President and the map.

And, of course, to the north, as you can see, is Mexico, a country of enormous human and material importance with which we share 1,800 miles of peaceful frontier.

And between Mexico and the canal lies Central America. As I speak to you today, its countries are in the midst of the gravest crisis in their history. Accumulated grievances and social and economic change are challenging traditional ways. New leaders with new aspirations have emerged who want a new and better deal for their peoples. And that is good.

The problem is that an aggressive minority has thrown in its lot with the Communists, looking to the Soviets and their own Cuban henchmen to help them pursue political change through violence. Nicaragua, right here, has become their base. And these extremists make no secret of their goal. They preach the doctrine of a ``revolution without frontiers.'' Their first target is El Salvador.

Important? Well, to begin with, there's the sheer human tragedy. Thousands of people have already died and, unless the conflict is ended democratically, millions more could be affected throughout the hemisphere. The people of El Salvador have proved they want democracy. But if guerrilla violence succeeds, they won't get it. El Salvador will join Cuba and Nicaragua as a base for spreading fresh violence to Guatemala, Honduras, Costa Rica -- probably the most democratic country in the world today. The killing will increase and so will the threat to Panama, the canal and, ultimately, Mexico. In the process, vast numbers of men, women, and children will lose their homes, their countries, and their lives.

Make no mistake. We want the same thing the people of Central America want -- an end to the killing. We want to see freedom preserved where it now exists and its rebirth where it does not. The Communist agenda, on the other hand, is to exploit human suffering in Central America to strike at the heart of the Western Hemisphere. By preventing reform and instilling their own brand of totalitarianism, they can threaten freedom and peace and weaken our national security.

I know a good many people wonder why we should care about whether Communist governments come into power in Nicaragua, El Salvador, or other such countries as Costa Rica and Honduras, Guatemala, and the islands of the Caribbean. One columnist argued last week that we shouldn't care, because their products are not that vital to our economy. That's like the argument of another so-called expert that we shouldn't worry about Castro's control over the island of Grenada -- their only important product is nutmeg.

Well, let me just interject right here. Grenada, that tiny little island -- with Cuba at the west end of the Caribbean, Grenada at the east end -- that tiny little island is building now, or having built for it, on its soil and shores, a naval base, a superior air base, storage bases and facilities for the storage of munitions, barracks, and training grounds for the military. I'm sure all of that is simply to encourage the export of nutmeg.

People who make these arguments haven't taken a good look at a map lately or followed the extraordinary buildup of Soviet and Cuban military power in the region or read the Soviets discussions about why the region is important to them and how they intend to use it.

It isn't nutmeg that's at stake in the Caribbean and Central America; it is the United States national security.

Soviet military theorists want to destroy our capacity to resupply Western Europe in case of an emergency. They want to tie down our attention and forces on our own southern border and so limit our capacity to act in more distant places, such as Europe, the Persian Gulf, the Indian Ocean, the Sea of Japan.

Those Soviet theorists noticed what we failed to notice: that the Caribbean Sea and Central America constitute this nation's fourth border. If we must defend ourselves against large, hostile military presence on our border, our freedom to act elsewhere to help others and to protect strategically vital sealanes and resources has been drastically diminished. They know this; they've written about this.

We've been slow to understand that the defense of the Caribbean and Central America against Marxist-Leninist takeover is vital to our national security in ways we're not accustomed to thinking about.

For the past 3 years, under two Presidents, the United States has been engaged in an effort to stop the advance of communism in Central America by doing what we do best -- by supporting democracy. For 3 years, our goal has been to support fundamental change in this region, to replace poverty with development and dictatorship with democracy.

These objectives are not easy to obtain. We're on the right track. Costa Rica continues to set a democratic example, even in the midst of economic crises and Nicaraguan intimidation. Honduras has gone from military rule to a freely elected civilian government. Despite incredible obstacles, the democratic center is holding in El Salvador, implementing land reform and working to replace the politics of death with a life of democracy.

So, the good news is that our new policies have begun to work. Democracy, with free elections, free labor unions, freedom of religion and respect for the integrity of the individual, is the clear choice of the overwhelming majority of Central Americans. In fact, except for Cuba and its followers, no government and no significant sector of the public anywhere in this hemisphere wants to see the guerrillas seize power in El Salvador.

The bad news is that the struggle for democracy is still far from over. Despite their success in largely eliminating guerrilla political influence in populated areas, and despite some improvements in military armaments and mobility, El Salvador's people remain under strong pressure from armed guerrillas controlled by extremists with Cuban-Soviet support.

The military capability of these guerrillas -- and I would like to stress military capability, for these are not peasant irregulars; they are trained, military forces. This has kept political and economic progress from being turned into the peace the Salvadoran people so obviously want.

Part of the trouble is internal to El Salvador, but an important part is external -- the availability of training, tactical guidance, and military supplies coming into El Salvador from Marxist Nicaragua. I'm sure you've read about the guerrillas capturing rifles from government national guard units. And recently, this has happened. But much more critical to guerrilla operations are the supplies and munitions that are infiltrated into El Salvador by land, sea, and air -- by pack mules, by small boats, and by small aircraft.

These pipelines fuel the guerrilla offensives and keep alive the conviction of their extremist leaders that power will ultimately come from the barrels of their guns. Now, all this is happening in El Salvador just as a constitution is being written, as open Presidential elections are being prepared, and as a peace commission -- named last week -- has begun to work on amnesty and national reconciliation to bring all social and political groups into the democratic process.

It is the guerrilla militants who have so far refused to use democratic means, have ignored the voice of the people of El Salvador, and have resorted to terror, sabotage, and bullets, instead of the ballot box.

During the past week, we've discussed all of these issues and more with leaders and Members of the Congress. Their views have helped shape our own thinking. And I believe that we've developed a common course to follow.

Now, here are some of the questions that are raised most often.

First, how bad is the military situation? It is not good. Salvadoran soldiers have proved that when they're well trained, led, and supplied, they can protect the people from guerrilla attacks. But so far, U.S. trainers have been able to train only one soldier in ten. There's a shortage of experienced officers. Supplies are unsure. The guerrillas have taken advantage of these shortcomings. For the moment, at least, they have taken the tactical initiative just when the sharply limited funding Congress has so far approved is running out.

A second vital question is: Are we going to send American soldiers into combat? And the answer to that is a flat no.

A third question: Are we going to Americanize the war with a lot of U.S. combat advisers? And again, the answer is no.

Only Salvadorans can fight this war, just as only Salvadorans can decide El Salvador's future. What we can do is help to give them the skills and supplies they need to do the job for themselves. That, mostly, means training. Without playing a combat role themselves and without accompanying Salvadoran units into combat, American specialists can help the Salvadoran Army improve its operations.

Over the last year, despite manifest needs for more training, we have scrupulously kept our training activities well below our self-imposed numerical limit on numbers of trainers. We're currently reviewing what we can do to provide the most effective training possible, to determine the minimum level of trainers needed, and where the training should best take place. We think the best way is to provide training outside of El Salvador, in the United States or elsewhere, but that costs a lot more. So, the number of U.S. trainers in El Salvador will depend upon the resources available.

Question four: Are we seeking a political or a military solution? Well, despite all I and others have said, some people still seem to think that our concern for security assistance means that all we care about is a military solution. That's nonsense. Bullets are no answer to economic inequities, social tensions, or political disagreements. Democracy is what we want, and what we want is to enable Salvadorans to stop the killing and sabotage so that economic and political reforms can take root. The real solution can only be a political one.

Now, this reality leads directly to a fifth question: Why not stop the killings and start talking? Why not negotiate? Well, negotiations are already a key part of our policy. We support negotiations among all the nations of the region to strengthen democracy, to halt subversion, to stop the flow of arms, to respect borders, and to remove all the foreign military advisers -- the Soviets, the Cubans, the East Germans, the PLO, as well as our own from the region.

A regional peace initiative is now emerging. We've been in close touch with its sponsors and wish it well. And we support negotiations within nations aimed at expanding participation in democratic institutions, at getting all parties to participate in free and nonviolent elections.

What we oppose are negotiations that would be used as a cynical device for dividing up power behind the people's back. We cannot support negotiations which, instead of expanding democracy, try to destroy it; negotiations which would simply distribute power among armed groups without the consent of the people of El Salvador.

We made that mistake some years ago -- in Laos -- when we pressed and pressured the Laotian Government to form a government, a co-op, with the Pathet Lao, the armed guerrillas who'd been doing what the guerrillas are doing in El Salvador. And once they had that tripartite government, they didn't rest until those guerrillas, the Pathet Lao, had seized total control of the Government of Laos.

The thousands of Salvadorans who risked their lives to vote last year should not have their ballots thrown into the trash heap this year by letting a tiny minority on the fringe of a wide and diverse political spectrum shoot its way into power. No, the only legitimate road to power, the only road we can support, is through the voting booth, so that the people can choose for themselves; choose, as His Holiness the Pope said Sunday, ``far from terror and in a climate of democratic conviviality.'' This is fundamental, and it is a moral as well as a practical belief that all free people of the Americas share.

Having consulted with the Congress, let me tell you where we are now and what we'll be doing in the days ahead. We welcome all the help we can get. We will be submitting a comprehensive, integrated economic and military assistance plan for Central America.

First, we will bridge the existing gap in military assistance. Our projections of the amount of military assistance needed for El Salvador have remained relatively stable over the past 2 years. However, the continuing resolution budget procedure in the Congress last December led to a level of U.S. security assistance for El Salvador in 1983 below what we'd requested, below that provided in 1982, and below that requested for 1984. I'm proposing that $60 million of the moneys already appropriated for our worldwide military assistance programs be immediately reallocated to El Salvador.

Further, to build the kind of disciplined, skilled army that can take and hold the initiative while respecting the rights of its people, I will be amending my supplemental that is currently before the Congress to reallocate $50 million to El Salvador. And these funds will be sought without increasing the overall amount of the supplemental that we have already presented to the Congress. And, as I've said, the focus of this assistance will remain the same -- to train Salvadorans so that they can defend themselves.

Because El Salvador's problems are not unique in this region, I will also be asking for an additional $20 million for regional security assistance. These funds will be used to help neighboring states to maintain their national security and will, of course, be subject to full congressional review.

Secondly, we will work hard to support reform, human rights, and democracy in El Salvador. Last Thursday, the Salvadoran Government extended the land reform program which has already distributed 20 percent of all the arable land in the country and transformed more than 65,000 farm workers into farm owners. What they ask is our continued economic support while the reform is completed. And we will provide it. With our support, we expect that the steady progress toward more equitable distribution of wealth and power in El Salvador will continue.

And third, we will, I repeat, continue to work for human rights. Progress in this area has been slow, sometimes disappointing. But human rights means working at problems, not walking away from them. To make more progress, we must continue our support, advice, and help to El Salvador's people and democratic leaders. Lawbreakers must be brought to justice, and the rule of law must supplant violence in settling disputes. The key to ending violations to human rights is to build a stable, working democracy. Democracies are accountable to their citizens, and when abuses occur in a democracy, they cannot be covered up. With our support, we expect the Government of El Salvador to be able to move ahead in prosecuting the accused and in building a criminal justice system applicable to all and, ultimately, accountable to the elected representatives of the people.

And I hope you've noticed that I was speaking in millions, not billions. And that, after 2 years in Federal office, is hard to do. [Laughter] In fact, there are some areas of government where I think they spill as much as I've talked about here over a weekend.

Fourth, the El Salvador Government proposes to solve its problems the only way they can be solved fairly -- by having the people decide. President Magana had just announced nationwide elections moved up to this year, calling on all to participate, adversaries as well as friends. To help political adversaries participate in the elections, he has appointed a Peace Commission, including a Roman Catholic bishop and two independents. And he has called on the Organization of American States and the international community to help. We were proud to participate, along with representatives of other democratic nations, as observers in last March's constituent assembly elections. We would be equally pleased to contribute again to an international effort, perhaps in conjunction with the Organization of American States, to help the government ensure the broadest possible participation in the upcoming elections, with guarantees that all, including critics and adversaries, can be protected as they participate.

Let me just say a word about those elections last March. A great worldwide propaganda compaign had, for more than a year, portrayed the guerrillas as somehow representative of the people of El Salvador. We were told over and over again that the government was the oppressor of the people. Came the elections, and suddenly it was the guerrilla force threatening death to any who would attempt to vote. More than 200 buses and trucks were attacked and burned and bombed in an effort to keep the people from going to the polls. But they went to the polls; they walked miles to do so. They stood in long lines for hours and hours. Our own congressional observers came back and reported of one incident that they saw themselves -- of a woman who had been shot by the guerrillas for trying to get to the polls, standing in the line, refusing medical attention until she had had her opportunity to go in and vote.

More than 80 percent of the electorate voted. I don't believe here in our land, where voting is so easy, that we've had a turnout that great in the last half century. They elected the present government, and they voted for order, peace, and democratic rule.

Finally, we must continue to help the people of El Salvador and the rest of Central America and the Caribbean to make economic progress. More than three-quarters of our assistance to this region has been economic. Because of the importance of economic development to that region, I will ask the Congress for $65 million in new moneys and the reprograming of $103 million from already appropriated worldwide funds, for a total of $168 million in increased economic assistance for Central America. And to make sure that this assistance is as productive as possible, I'll continue to work with the Congress for the urgent enactment of the long-term opportunities for trade and free initiative that are contained in the Caribbean Basin Initiative.

In El Salvador and in the rest of Central America, there are today thousands of small businessmen, farmers, and workers who have kept up their productivity as well as their spirits in the face of personal danger, guerrilla sabotage, and adverse economic conditions. With them stand countless national and local officials, military and civic leaders, and priests, who have refused to give up on democracy. Their struggle for a better future deserves our help. We should be proud to offer it. For in the last analysis, they're fighting for us, too.

By acting responsibly and avoiding illusory shortcuts, we can be both loyal to our friends and true to our peaceful democratic principles. A nation's character is measured by the relations it has with its neighbors. We need strong, stable neighbors with whom we can cooperate. And we will not let them down. Our neighbors are risking life and limb to better their lives, to improve their lands, and to build democracy. All they ask is our help and understanding as they face dangerous armed enemies of liberty and that our help be as sustained as their own commitment.

Now, none of this will work if we tire or falter in our support. I don't think that's what the American people want or what our traditions and faith require. Our neighbors struggle for a better future, and that struggle deserves our help and we should be proud to offer it.

We would, in truth, be opening a two-way street. We have never, I believe, fully realized the great potential of this Western Hemisphere. Oh, yes, I know in the past we've talked of plans. We've gone down there every once in a while with a great plan, somehow, for our neighbors to the south. But it was always a plan in which we, the big colossus of the north would impose on them. It was our idea.

Well, on my trip to Central and South America, I asked for their ideas. I pointed out that we had a common heritage. We'd all come as pioneers to these two great continents. We worship the same God. And we'd lived at peace with each other longer than most people in other parts of the world. There are more than 600 million of us calling ourselves Americans -- North, Central, and South. We haven't really begun to tap the vast resources of these two great continents.

Without sacrificing our national sovereignties, our own individual cultures or national pride, we could, as neighbors, make this Western Hemisphere, our hemisphere, a force for good such as the Old World has never seen. But it starts with the word ``neighbor.'' And that is what I talked about down there and sought their partnership, their equal partnership in we of the Western Hemisphere coming together to truly develop, fully, the potential this hemisphere has.

Last Sunday, His Holiness Pope John Paul II prayed that the measures announced by President Magana would ``contribute to orderly and peaceful progress'' in El Salvador, progress ``founded on the respect,'' he said, ``for the rights of all, and that all have the possibility to cooperate in a climate of true democracy for the promotion of the common good.''

My fellow Americans, we in the United States join in that prayer for democracy and peace in El Salvador, and we pledge our moral and material support to help the Salvadoran people achieve a more just and peaceful future. And in doing so, we stand true to both the highest values of our free society and our own vital interests.

Thank you, and God bless you.

Note: The President spoke at 12 noon in the International Ballroom at the Washington Hilton Hotel after an introduction by Bernard J. O'Keefe, chairman of the National Association of Manufacturers.