April 20, 2000

Ruth Foster
Minister of Foreign Affairs
314 W. 34th St.
Hampshire, HS 32018
Arcadia

SUBJECT : Negotiations with AID

Dear Ms. Foster :

We were all pleased to get the chance to negotiate this important matter about aid with AID. As you requested, we had negotiations with AID and reached some agreement. This letter summarizes the agreement and I hope the following will satisfy your needs.

The general focus of these negotiations has been on the total amount of aid and the form of donation. We have found that AID wants us to increase the amount of aid to the amount that other countries give and donate all the aid in cash. The gap between the total amount of aid which AID wanted and we suggested, however, was so wide that we had to compromise quite a lot. After all, we agreed that Arcadia would donate 105 million dollars on condition that 90 million dollars out of total 105 million dollars would be in the form of products and the rest 15 million dollars would be in the form of human resources.

Some background information on the negotiations will help you understand more clearly how they developed. AID representatives came to negotiations with a rather negative point of view on our aid policy. It seemed that AID was never willing to understand our deteriorating economic state. In our preliminary meeting, we made a plan to convince that because of our dangerous economic situation, we can't donate as much money as other countries. At the same time, in order to stimulate our economy, we planned to donate some parts of the total amount for aid in the form of products and human resources. We have thought the aid in the form of products and human resources can be sent directly and more profitable to the poor, and this form of donation may improve Arcadia's image in the world community. We expected AID to object our aid policy on the total amount. Considering this AID's objection, at the end of our preliminary meeting, we decided that we could increase the amount of the aid under 100 million dollars on condition that we could donate it in the form of products, because the donation of products could stimulate our economy.

However, negotiations didn't make a compromise easily. In the first meeting, AID proposed that we increase the amount of aid to 120 million dollars in cash and were never willing to decrease the amount under 100 million dollars. Futhermore, AID suggested that if we wanted to donate the aid in the form of products, we should give much more products than when we donate aid in cash. So the negotiations became more complex than we had expected. To reach an agreement, we had to compromise and agree to a much higher figure (35 million dollars) than we had initially intended, but we managed to get AID to accept our suggestion that we would donate 90 million dollars' worth of products, not 90 million dollars in cash, and 15 million dollars in the form of human resources. Therefore, by the end of the negotiations, we finally agreed that Arcadia would donate 105 million dollars: 90 million dollars in the form of products which the poor really need and 15 million dollars in the form of human resources that serve the poor. Futhermore, after those passionate negotiations, each leader of two representatives met and made a more detailed compromise which is composed of three sections: products, human resources and carrying the aid. These can be understood more easily by following table.

< Products and Human Resources >

Products ($90 million)		Human Resources ($20,000/workers) ($15 million - 750 people)
$50 million	Drugs	400 people	Irrigation skilled workers
$30 million	Food	250 people	Medical service workers
$10 million	Agricultural equipment	100 people	Agricultural trainers

< Shipping the aid >

Our assesment of this agreement is rather positive. Although we will have to increase the amount of aid from this year's 60 million dollars to 105 million dollars, we concluded that it can improve our image in the world community and we can stimulate our economy and get some economic profits by the synergy effect which creating employment and increased production can cause. As for economic benefits, office of Economy Planning said that by creating the employment for the aid, unemployment rate will be decreased from 13% to 8% and the synergy effect which results from this decreased unemployment rate, stimulating production, and tax income from increased production will reach 30 million dollars' worth in next year if it is estimated in cash. In addition, we certainly pledged to raise the amount of aid and to provide services to the poor directly in spite of our serious economy situation. This may be quite helpful to improve our image in the world community.

Our team recommends that Arcadia continuously should pay attention to the distribution of the aid by sending an Arcadian supervisor who inspects the AID's distribution of aid to AID. According to many surveys, the aid is apt to be given only to governments, not to the poor and just help the governments strengthen their authorities. If the aid which we would donate is used only for the governments to make their authorities strengthen, the aid will be meaningless and Arcadia won't be able to improve our image in the world community, rather we would get more negative image. Therefore, Arcadia had better get AID to accept that Arcadia would send an Arcadian supervisor who has a right to inspect the distribution of aid to AID.

In conclusion, we feel that the agreement we have reached respects each other's position. AID could ensure that we would increase the amount of aid over 100 million dollars, and in our respect we can look forward to the synergy effect from stimulating our economy by donating it in the form of products and human resources.

As always, we want to express our gratitude for your concern and help. If you have any questions, please do not hesitate to contact me. We'll be at this hotel until April 29.

Sincerely,

Lee Dong Hoon

Arcadia Representative