Chinese Embassy Bombing in Belgrade: Compensation Issues

Chinese Embassy Bombing in Belgrade: Compensation Issues

Order Code RS20547
Updated April 12, 2000
CRS Report for Congress
Received through the CRS Web
Chinese Embassy Bombing in Belgrade:
Compensation Issues
Kerry Dumbaugh
Specialist in Asian Affairs
Foreign Affairs, Defense, and Trade Division
Summary
U.S. and Chinese officials have reached agreement on compensation payments
arising out of the May 7, 1999 NATO bombing of the Chinese Embassy in Belgrade. In
the first of these agreements, on August 25, 1999, the United States made a “voluntary
humanitarian payment”of $4.5 million to the families of the 3 killed and to the 27 injured
as a result of the bombing. On December 16, 1999, U.S. and Chinese officials
announced they had agreed that the United States would seek funding for $28 million in
compensation for damage to the Chinese Embassy facility, and that China would pay
$2.87 million in compensation for damage inflicted by rioting crowds to the U.S.
Embassy and other diplomatic facilities in China. The $28 million payment is included
in the FY2001 Foreign Operations Appropriation budget request, and will have to be
voted on by Congress.
Background
For months prior to the accidental bombing of the Chinese Embassy in Belgrade,
Chinese officials and Chinese press accounts had been uniformly critical of NATO’s and
U.S. military involvement in Kosovo. On March 26, 1999, China joined Russia and
Namibia in voting in favor of the U.N. Security Council resolution calling for an immediate
halt to NATO air strikes in Yugoslavia. (The draft resolution failed on a vote of 3-12.)
The basic points of China’s position were: that NATO airstrikes were an interference in
Yugoslavia’s internal affairs; that unilateral NATO action was operating without U.N.
authorization, and thus violated the U.N. charter and set a bad international precedent; and
that the Kosovo issue should be settled through peaceful negotiations conducted under
U.N. auspices.
In Chinese press accounts, Beijing equated Kosovo’s independence aspirations with
similar aspirations (called “splittism”) in Tibet and Xinjiang — both autonomous regions
of China — and in Taiwan, which Beijing considers a “breakaway province.” Indeed, some
Chinese press accounts described Kosovo as a “breakaway province” of Yugoslavia
involving “splittist” elements — thus explicitly drawing a link between Kosovo and
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China’s own internal challenges. In the opinion of many specialists, the similarity between
independence aspirants in China and those in Kosovo meant that Chinese leaders were
extremely unlikely to soften their position on NATO involvement in Yugoslavia.
Belgrade Bombing
On May 7, 1999, the Chinese Embassy in Belgrade was hit by five laser-guided
bombs dropped by U.S. planes during a NATO bombing campaign. Three Embassy
employees were killed and 27 were wounded in the NATO attack, and the Embassy
building itself was severely damaged. In the days following the bombing, U.S. officials
offered a number of apologies for the attack, calling it a grave mistake and tragedy that
occurred as a result of a series of failures in U.S. intelligence and targeting procedures:
! May 8, 1999 – Secretary of Defense William Cohen and CIA Director George
Tenet issued an unusual joint statement, saying the United States “deeply
regret[s] the loss of life....The bombing was an error.”
! May 8, 1999 – Secretary of State Madeleine Albright wrote a letter to China’s
Foreign Minister, Tang Jiaxuan, saying “On behalf of my government and as a
member of NATO, I extend sincere apologies and condolences.... There was
absolutely no intention to hit your embassy...”
! May 8, 1999 – An official Department of State statement called the bombing a
“tragic mistake,” and went on, “We wish to express our sincere condolences and
remorse to the Chinese people and Government.”
! May 8, 1999 – U.S. Ambassador to China James Sasser officially apologized to
Chinese officials in Beijing.
! May 10, 1999 – President Clinton, in opening remarks at a White House strategy
meeting on children and violence, began with “I would like to say a word about
the tragic bombing of the Chinese Embassy in Belgrade. I have already
expressed our apology and our condolences to President Jiang and to the Chinese
people....”
In a Department of Defense (DoD) News Briefing on May 10, 1999, Secretary of
Defense William S. Cohen blamed outdated maps and target verification problems, and
stated that NATO forces had not intended to attack the Chinese Embassy, but rather
intended to hit the Federal Directorate for Supply and Procurement, a key Yugoslav
military target.1 Secretary Cohen also stated that the United States had already taken steps
to ensure that such a mistake did not happen again. He described those steps as including:
tasking the State Department with reporting to the intelligence community whenever
foreign embassies move or new embassies are built; strengthening the internal mechanisms
and procedures within the intelligence community for developing targeting information and
updating maps; and developing rapid-response procedures at the Defense Intelligence
Agency and the National Imagery and Mapping Agency for updating databases for no-
strike targets.
In a followup briefing, senior U.S. intelligence officials answered press questions
about the complexities involved in military targeting and about how such an error could
have been made. These officials stated that U.S. military targeters had used both U.S.
intelligence databases and an incorrect map to establish bombing targets. These sources
1 Secretary of Defense William Cohen, DoD News Briefing, May 10, 1999.

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were then subjected to a multi-stage check for accuracy within both the intelligence
community and DoD, and none of these sources nor the multi-stage checks had depicted
the Chinese Embassy as having moved from its previous location in old Belgrade to the
new site.2 In response to a press question about where the incorrect target suggestion
came from, one of the officials said, “This was a nomination originally from an agency in
Washington.” Although no other specifics were offered at the time, subsequent reports
revealed that the target site was the only one selected by the Central Intelligence Agency
in the 78-day Kosovo bombing campaign.
Protests in China and Beijing’s Official Response
Chinese officials were highly suspicious of U.S. and NATO contentions that the
bombing of their embassy was accidental. In the days following the bombing, Chinese
state-run newspapers declared the bombing was a deliberate act of aggression meant to
punish China for its opposition to NATO’s intervention in Kosovo. Tens of thousands of
protestors demonstrated outside the U.S. and other NATO countries’ government facilities
in Beijing and in five other Chinese cities, throwing rocks, splattering paint, and inflicting
other damage. The residence of the U.S. consul-general in Chengdu was seriously
damaged by fire and smoke, and protesters attempted to burn the U.S. consulate in
Guangzhou. U.S. diplomatic personnel, including Ambassador James Sasser, were
trapped for several days in the U.S. Embassy. The Chinese government and some Western
observers insisted the public sentiment was real. Some Western press accounts, however,
portrayed the protests as at least partially government-organized, and attributed some of
the inflamed public passion to the Chinese government’s delay in publicizing any of the
U.S. apologies until May 11, 1999. President Clinton reportedly tried to place several
phones calls to Chinese Party Secretary Jiang Zemin, but was rebuffed by Chinese officials.
The President finally was able to speak with Jiang on May 14, 1999.3
In the week after the bombing, the Chinese government suspended three formal
bilateral dialogues with the United States: high-level military contacts; cooperation on non-
proliferation; and human rights discussions. In subsequent weeks, China also ceased to
allow U.S. military ship visits in Hong Kong and failed to resume negotiations on its World
Trade Organization (WTO) accession. On May 10, 1999, China’s Foreign Minister lodged
a serious protest and demanded four things of the U.S. government: an apology and an
official explanation of U.S. and NATO actions; a “complete and thorough” investigation
of the bombing; prompt publication of the results of the investigation; and to “severely
punish” those found to be responsible.4
Later, Chinese officials also demanded that
the United States pay for damage to the Chinese embassy and for loss of life and injuries.
2 Subsequently, it was revealed that the Chinese Embassy had moved to the new Belgrade site in
1996.
3 Testifying before the Senate Foreign Relations Committee on May 27, 1999, Assistant Secretary
of State for East Asia Stanley Roth criticized the “inexplicable delay” in President Jiang’s
willingness to receive President Clinton’s phone call, and offered other criticisms of Chinese
government reactions to the bombing.
4 “Chinese Foreign Ministry Lodges Serious Representation to U.S.,” May 10, 1999,
http://www.china-embassy.org/Cgi-Bin/Press.pl?lodges. See also, Laris, Michael, “U.S., China
Discuss Bombing,” Washington Post, June 16, 1999, p. A34.

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U.S. officials, in turn, asked the Chinese government to pay for damage done to U.S.
government facilities in China as a result of public protests.
On June 16, 1999, a U.S. delegation headed by Undersecretary of State Thomas R.
Pickering met in Beijing with officials from China’s Foreign Ministry to offer an official
U.S. explanation of how the bombing occurred, along with a letter from President Clinton
to China’s President Jiang Zemin.5 The Chinese government rejected that explanation as
unsatisfactory. U.S. and Chinese negotiators met on a number of occasions throughout
the rest of 1999 to discuss appropriate payment terms, ultimately reaching agreement on
two separate monetary packages: one for loss of life and injury; and one for mutual
damage compensation payments.
According to testimony by Director of Central Intelligence George J. Tenet before
the House Permanent Select Committee on Intelligence on July 22, 1999, the U.S.
government would conduct an accountability review on the events surrounding the
bombing, would contemplate “discipline” for errors, and would report results to the
Chinese government. According to a Washington Post report of April 9, 2000, the CIA
early in April 2000 fired one intelligence officer and reprimanded 6 CIA managers for
errors committed in selecting the target site. Undersecretary Pickering briefed the Chinese
Ambassador to the United States on April 8, 2000, about the results of the U.S.
accountability review. On April 10, 2000, China rejected the U.S. explanation, again
demanding that the United States “punish those responsible.”6 U.S. officials, however,
now maintain that the matter is closed.
Payment Agreements
U.S. $4.5 million “Voluntary Humanitarian Payment”. On July 30, 1999, the
United States agreed to make a “voluntary humanitarian payment”of $4.5 million to the
families of the 3 killed and to the 27 injured as a result of the NATO bombing error. U.S.
officials were particular in referring to the payment as “voluntary” in order to avoid
acknowledging legal liability.7 The agreement was announced by David Andrews, a U.S.
State Department Legal Adviser, after two rounds of U.S.-China discussions on the
matter. According to U.S. State Department officials, the payment was made to the
Chinese government on August 25, 1999, out of DoD discretionary appropriated funds.
Decisions about how to divide the funds among the bombing victims and their families
were specified in the agreement, with payment to be made directly to the victims by the
5 In addition to Pickering, the delegation included U.S. Ambassador to China, James Sasser;
Assistant Director of the CIA, James Simon; Assistant Secretary of Defense for International
Security Affairs, Franklin Kramer; Deputy Director for the Defense Intelligence Agency, Jeremy
Clark; Deputy Assistant Secretary of State for East Asia and the Pacific, Susan Shirk; and Director
for Asian Affairs at the National Security Council, James Keith. In “Oral Presentation to the
Chinese Government Regarding the Accidental Bombing of the PRC Embassy in Belgrade,” June
17, 1999. http://www.state.gov/www/regions/eap/1999_eap_speeches.html
6 Myers, Steve Lee, “China Rejects U.S. Actions on Bombing of Embassy,” New York Times, April
11, 2000, p. A6.
7 Laris, Michael, “U.S. agrees to pay Chinese Embassy bombing victims,” Austin American
Stateman,, July 31, 1999, p. A13.

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Bank of China. U.S. officials say they received confirmation from Beijing in October
1999 that the funds had been disbursed according to agreement.
Property Damage Agreements. On December 16, 1999, after five rounds of talks
following the June 1999 Pickering mission, Department of State Legal Adviser David
Andrews announced that two separate agreements had been reached on property damage
payments: one for $28 million in U.S. payment to China for damage to the Chinese
Embassy in Belgrade; and one for $2.87 million in Chinese payment to the United States
for damage to U.S. diplomatic and consular facilities as a result of post-bombing protests
in China. These sums were in addition to the $4.5 million “voluntary humanitarian
payment.” The U.S. payment is contingent upon an appropriation by the U.S. Congress,
and a request for this amount is included in the Foreign Operations Appropriation account
budget request for FY2001. By mutual agreement, the Chinese payment of $2.87 million
is contingent upon U.S. approval and payment of the $28 million. The concluded
agreement is intended to cover any and all future claims, and it presumes that China will
make no further demand on the United States for explanation, apology, or punishment of
“responsible parties” for the accidental bombing.
U.S. officials maintain that the sums agreed upon represent fair compensation for the
respective damage inflicted to the properties of both countries. According to State
Department officials, the $28 million U.S. payment is consistent with estimates made by
the State Department’s Foreign Buildings Office on the approximate costs for building, in
Belgrade, a facility comparable to the Chinese Embassy, which the Chinese government
maintains was effectively destroyed by NATO bombs and will have to be replaced.8 In
addition, the $28 million U.S. payment includes: compensation for temporary housing in
Belgrade for Chinese Embassy personnel, who were housed within the Belgrade embassy
compound; funds for replacement of Chinese antiques and furnishings which China claims
were destroyed in the bombing; and funds for replacement of technical equipment.
Likewise, according to State Department officials, the Chinese payment of $2.87 million
will fully cover the remaining U.S. costs incurred for repairing damage done to U.S.
facilities by demonstrators in the days following the bombing.9
Implications for Congress
Although the $4.5 million U.S. “voluntary humanitarian payment” of August 1999
was paid out of DoD discretionary funds, State Department officials maintain that the $28
million U.S. payment for property compensation is too large to be covered by such
contingency accounts. Therefore, the property compensation agreement with China has
to come from U.S. funds appropriated for that purpose. A request for this amount has
been included in the FY2001 international affairs budget, which Congress will consider as
part of the Foreign Operations Appropriations bill. The bill could see Appropriations
Committee mark-up as early as May 2000, with full consideration and conclusion not likely
8 According to Chinese government officials interviewed for this report, the new Chinese Embassy
in Belgrade will be built at a different site.
9 According to Administration officials, actual U.S. repair costs were somewhat lower after a U.S.
company donated windows to replace those broken in U.S. diplomatic facilities – a cost that State
Department officials say was about $45,000.

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until September or October 2000. Several points of controversy could affect
congressional consideration.
Inclusion in the Foreign Operations bill. In a decision thought to have been
controversial within the executive branch and likely to be so in Congress, the
Administration elected to include the $28 million payment as part of the international
affairs budget’s Economic Support Fund account (ESF) – a flexible economic aid channel
used to support U.S. security and political interests, funded within the Foreign Operations
spending measure. (The total ESF request for FY2001 is $2.3 billion, most of which
involves assistance to Israel and Egypt.) To cover any potential restrictions in U.S. law
against aid transfers to China, the legislative request earmarking the payment also waives
any restrictions in current law.10 Some may suggest that the payment to China should
come out of other U.S. government agency budgets. They may feel that the CIA budget
would be a more appropriate source of payment, or that the approximately $300 billion
Department of Defense (DoD) budget would be better able to absorb the payment than the
$22 billion foreign policy budget would be. There is recent precedent for making such a
payment out of DoD’s budget in the case of a $20 million U.S. payment following a
February 3, 1998 accident involving a U.S. military aircraft and a ski gondola in Italy.11
Payment amounts. Some may object to the dollar amounts involved in the
payments. They may feel that the $2.87 million agreed on for China’s payment to the
United States is too low to cover actual damage to U.S. diplomatic facilities, or that
China’s payment should be increased to reimburse a U.S. company for having donated part
of the repair costs. Likewise, some may raise concerns about the amount of the $28 million
U.S. payment to China, suggesting it to be too high, or perhaps objecting to U.S. funds
being used to help pay for replacement of technical equipment reported to have been used
in Chinese intelligence-gathering activities in Eastern Europe. Concerns may also be raised
about the agreement to make China’s payment to the United States contingent upon the
U.S. payment to China.
Congressional Options. Congressional decisionmakers have a variety of options in
considering the issue involving the U.S. payment to China, including straightforward
approval as part of the foreign operations budget, or flat denial of any appropriation of
U.S. funds for that purpose. Or, congressional appropriators may elect to approve the
payment, but as part of another U.S. government agency appropriation rather than as part
of the ESF account. Appropriations Committee or other Members may amend the
payment request, either by changing the amount or by placing conditions or restrictions
on the payment. Finally, the payment provision could simply be deleted, either in
committee, during floor consideration, or in conference.
10 In the OMB Budget Submission, Appendix Volume, p. 997.
11 In the February 3, 1998 incident, a U.S. Marine Corps A-6 aircraft severed the cable of a ski
gondola near Cavalese, Italy, killing 20 people. The following year, a U.S. payment of $20 million
for reimbursement of property damage was provided in Section 8114 of the Department of Defense
Appropriations Act (P.L. 105-262), under the heading “Operation and Maintenance, Navy.”