Background Briefing by Senior Administration Officials
Vancouver, British Columbia
9:40 A.M. PST
Folks, we're about to start the BACKGROUND BRIEFING on the aid package.
SENIOR ADMINISTRATION OFFICIAL: Good morning. The President -- President Clinton and President Yeltsin agreed yesterday on a series of American initiatives to support economic and political reform in Russia, and it's valued at $1.6 billion.
Before taking your questions and running through the basic outlines of this package, I want to make a few points. First, this is the maximum that the Clinton administration can do with available funds to support Russian reform. All of the funds have been allocated and appropriated by the Congress. There is no need for the administration to go back to the Congress to fund any of these programs. All our Fiscal Year '93 funds currently are available, so in effect, all of these programs can begin tomorrow.
The second point is that this package is designed to support Russian reformers. All of the initiatives in the package are directed at reformers and for their benefit, and all have been worked out with prior consultation with the Russian government.
Third, the President is determined that we will deliver on these commitments this year. The package is designed to maximize our ability to support reform. In designing it we wanted to avoid making commitments that we could not meet, and we feel very confident that we can meet all of these commitments in front of you.
Fourth, I'd like to note the special importance of trade and investment. I think it's fair to say that Russia's capital and technology needs throughout the next decade extend well into the hundreds of billions of dollars. No collection of governments can meet those needs; only the private sector can do so. And so the President and President Yeltsin agreed to make trade and investment a major priority in the relationship.
They also agreed that there would be a new joint commission on energy and space formed, headed on the U.S. side by Vice President Gore; on the Russian side by Prime Minister Chernomyrdin. And the goal of this effort is to break through the barriers to trade and investment on both sides and to promote a vastly expanded relationship.
If it would be helpful I'd be prepared to run down the first page, which is a summary of U.S. assistance, and just give you some general background on what these programs are. I'll do it quickly and then I'll be glad to take questions.
The first group of initiatives are humanitarian food and medical assistance. This is part of our effort which has been underway for several years to provide basic humanitarian grant food assistance so that the Russian government can assure there's at least a minimal amount of bread on the shelves in the major cities. That's $194 million in grant -- that is from Food for Progress, the grant portion of Food for Progress. We'll also be continuing our grant assistance in medicines and pharmaceutical supplies, and that's $30 million.
The second item is concessional food sales. As you know, the United States has had a long-term grain relationship with Russia. It's important to us and it's important to Russia that we continue that relationship. The President has chosen the Food for Progress program which is a concessional loan program. The value over the next seven months is $700 million. These are concessional terms. The exact terms have not been worked out, but I think it's fair to say there will be a grace period on principal of six or seven years, and concessional rates thereafter for the life of the deal.
The third program is a collection of private sector support. We think this is one of the most important things we're going to do. Privatization and the creation of small businesses is the number one priority of the reform government in Moscow. And so the President has decided to create a Russian-American enterprise fund capitalized this year at $50 million. And the goal of this fund is to make direct loans to small businesses in Russia, to take equity positions in those businesses.
The President has also decided to create a privatization fund which would work directly with the Russian government in its priority objective of trying to convert state enterprises from a state-owned basis to a private basis. He has also agreed -- the President has also agreed to establish a Eurasia foundation. This would be a private foundation led by prominent Americans to fund democratization projects in Russia.
The fourth grouping you see there in the summary page is democratization itself. I think it's fair to say that this administration has given a new impetus to the goal of pursuing democratization in Russia. You see that we have a total of $48 million in programs, various programs. The detailed tables give an indication of some of the programs that we're launching.
The President is also calling for the development of a democracy corps, which will be an overarching umbrella group to try to incorporate all of the disparate private and public efforts now underway from the United States to support reform in Russia.
The fifth program you see is Russian office of resettlement. This is a new initiative created and conceptualized by this administration. This is a demonstration project. What we'd like to do is work with the Russian military to help resettle Russian officers returning from the Baltic states and other parts of the former Soviet Union. We want to make sure that we work out the best way to do that, whether it's with Russian labor and Russian materials or using prefab American construction. And so we've decided to fund on a demonstration basis the construction of 450 housing units. We'll be working very closely with the Russian military on this. And I would say that we have a long-term commitment to this project.
The sixth area is energy in the environment. They are two issues that the President feels strongly about. Our initial efforts will be feasibility studies to look into the possibility of enhancing their energy production, both oil and gas; and equally important trying to cut down on the leakages in the oil and gas pipeline systems, which cause so much environmental damage.
I've talked a little bit about trade and investment, about the new group being created that the Vice President will chair on our side. Secretary Ron Brown will also be cochairing with Deputy Prime Minister Shohkin, a business development committee, which will work in all other sectors of the economy, to break down the many barriers that currently exist and impede trade and investment. We are also going to appoint a full-time investment ombudsman in the American government to work on this problem full-time.
And the point I'd like to make here is, trade and investment in the 1990s is every bit as important, to draw an analogy, as arms reductions was in the '70s and '80s. And we just thought that in looking at this we needed to make a commitment within our own government to have people work on it -- senior people on a full-time basis, because it is terribly important.
You'll notice that the United States is going to support Russia's membership in the GATT. Russia has had observer status. Russia has requested our support and, in fact, requested our advice in becoming a member of the GATT. We think that the long-term goal of drawing Russia into the global economy is paramount, a very important goal. And that is why we are supporting the membership in the GATT. We are also supporting their access to GSP, the Generalized System of Preferences.
You'll note that Ex-Im has extended $82 million in credit for a caterpillar deal in Siberia, that OPIC has extended $150 million in credits and loan guarantees for a Conoco oil project. I'd like to emphasize that we are very close to an agreement between Russia and the United States for a $2-billion framework facility through the Ex-Im Bank that would finance Russian purchases of American oil and gas equipment and services. We think this is a very important development. We think we'll get there by April 14th, which is the opening day of the Tokyo conference, the G-7 conference.
Before I take any further questions, I'd like to defer to my colleague, who will review the security assistance objectives with you.
SENIOR ADMINISTRATION OFFICIAL: Our major unfinished agenda with the Russians and with their counterparts in Ukraine, Kazakhstan and Belarus is in the area of the safe and secure dismantlement of the nuclear arsenals on their territory under the terms of the START I and START II agreements. Recently we completed in Moscow three, I think, very important agreements that devote a significant chunk of Nunn-Lugar funding to three important programs. The first is the program of $130 million for the strategic nuclear delivery vehicle dismantlement program. That is for submarines, for ICBM dismantlement and for bomber dismantlement -- $130 million.
The second is a $75 million tranche of funding for the construction of a facility to store nuclear materials removed from the warheads as they are dismantled. This will essentially contribute to the overall design and the early phases of the construction of that storage facility.
And finally, a $10-million tranche of money to help in the establishment of a monitoring system for the nuclear materials as they are withdrawn from the weapons system. So we add that $215-million total to the extant Nunn-Lugar assistance which has been flowing -- about $150 million for some overall safety improvements for various kinds of equipment and safety measures that we have been working out with the Russians over the last couple of years.
So this is an area where we will be going a lot more work with not only the Russians but with the Ukrainians, Kazhaks, and Belarussians. Belarus, for example, has just, in the last couple of weeks, received up to $65 million in FY'93 funds for safety, security and dismantlement programs on Belarussian territory. And this was in the wake of their ratification of START I, an agreement to accede to NPT.
So we are working very hard with all the parties to the Lisbon protocols, and will continue to work very hard with them. And I look upon these three recent agreements with Russia as a very important step in that process.
Q: The OPIC funds to -- is that for the field in Kazhakstan -- and Conoco already signed this deal with Kazhakstan. Why do you feel now it is necessary -- if it's the same one, why do you feel it's necessary?
SENIOR ADMINISTRATION OFFICIAL: It's not the same deal. Chevron signed a deal with Kazhakstan, the Tenges oil field. This is a new investment project. It's a polar lights oil development and renovation project, and it's being announced today. So it's completely new.
Q: Can you tell us more about what's involved?
SENIOR ADMINISTRATION OFFICIAL: Yes. Conoco, like other American oil companies has been searching for ways to do two things. One, to prospect for new oil in Siberia, west Siberia; and two, to try to get into the business of renovating oil wells and renovating pipelines, both oil and gas, in Russia. The objective here, obviously, is to take advantage of the natural resources in Russia, increase energy production, which will, in turn, increase hard currency revenues, which is what Russia needs.
So we think this deal is very, very good development for Russia. The Russians do as well, and it's good for an American company. And the American government has played a leading role in pulling this together through the credit facility in OPIC and through the loan guarantee.
Q: So it's to search and also to renovate fields that are already there?
SENIOR ADMINISTRATION OFFICIAL: That's right.
Q: On that point, should other American companies expect to get administration support for such deals, or should they now go to the Ex-Im and try to get the money out of the $2 billion?
SENIOR ADMINISTRATION OFFICIAL: Well, as you know, Ex-Im is part of the U.S. government and various parts of the U.S. government have been pushing, including the State Department and the White House for this deal to be consummated. And we think it will. And if we arrive at this agreement by April 14th, there will be $2 billion in financing available for American companies to sell their equipment and sell their services.
Q: That should take up all of the rest of the deals and their won't be -- and their will or there won't be support for OPIC sort of deals such as this Conoco?
SENIOR ADMINISTRATION OFFICIAL: There's a tremendous amount of interest on the part of American oil and gas companies to invest in Russia. We think that the Ex-Im oil and gas facility, the $2-billion facility, once it is concluded, will soak up a lot of that interest. But I think the interest may even extend beyond that. And if so, the government will respond.
Q: What's the current year budget costs of that $2-billion agreement should it go forward? And is there any current year budget costs --
SENIOR ADMINISTRATION OFFICIAL: I'll have to refer you to Ex-Im for that. I don't know the details of that.
Q: The concessional food sales -- is there any current year costs to that, or is it delayed until the years in which the payments are due?
SENIOR ADMINISTRATION OFFICIAL: The concessional food sales are from Food for Progress, which is a USDA program. USDA has the funds, we don't need to go back to the Congress to expend those funds. There will be a hit in the budget. I'd refer you to USDA and OMB for the details on that.
Q: Can you talk about the Democracy Corps?
Q: and the private sector -- how many folks are going to be involved in that?
SENIOR ADMINISTRATION OFFICIAL: Why don't I start with the Democracy Corps first. I think the administration felt coming into office that there were literally thousands of organization, private organizations in the United States that in one way or another were working at the goal of trying to achieve democratization in Russia, helping on a farmer-to-farmer basis. And there were literally 10 or 15 U.S. government agencies that had a variety of programs in this area. And so the administration felt -- the President felt it was important to try to draw all of these initiatives together under one group to give some coherence to the efforts and to give some impetus to the efforts. And so this is a presidential initiative.
It will be headed by Ambassador Tom Simons who will soon take up his duties as the coordinator for U.S. assistance in the former Soviet Union. And we're very hopeful that we might use this Democracy Corps not only to draw upon the resources of our own government, but the resources of the American private sector and schools and communities across the nation.
Q: any kind of commitment yet, any kind of word yet on FY'94, and any new money that needs to be appropriated besides the $300 million the President talked about?
SENIOR ADMINISTRATION OFFICIAL: The administration is requesting additional funds in FY'94 of $700 million. What the President has done this weekend is to consult really intensively yesterday with President Yeltsin about additional measures the United States could take in some of these areas to support reform. He'll be consulting with the Congress. When he returns to Washington, he'll be consulting also with the other ally governments, and we'll make a decision at that time.
Q: Two questions about the $700 billion agricultural money. First of all, I thought it was the sort of consensus that what Russia did not need was more loans for food. So why did you decide to do it that way? Secondly, could you explain -- agriculture has been stopped from making further loans for food because of Russia's inability to pay. How does this fit into that situation?
SENIOR ADMINISTRATION OFFICIAL: As you know, the United States for a long time has been a major supplier of grains and food commodities, agricultural products to Russia. I think between 1991 and '92 we had extended -- a little bit of history here -- about $5.5 billion in credits, credit guarantees, through the Commodity Credit Corporation. That was the principal vehicle to ensure the sale of American grain products. On December 1 of last year, '92, the Russian government stopped its payments on that program. They are now in arrears to us on that program, and therefore, by law, the United States cannot continue that program. And so the President, working with Secretary Espy and other officials in the Cabinet, looked for other ways that we could promote American grain sales.
And I think we have two ways to do that. We've announced today $194 million in grant food assistance through the Food for Progress program. But we do not have sufficient authority to spend $700 million in grant food, and so we looked for a concessional loan program.
I think everybody agrees that Russia -- that a short-term loan program for Russia would not make sense now, but a long-term concessional loan program would. And that is what this program is. It will provide, once the final details are worked out, for a six to seven-year grace period on payments of principal. And then from years seven through 15, which is the life of the deal, it will provide for concessional rates of interest -- generally around three to four percent. And so we believe and the Russian government believes this is a good deal for them because it will avoid the imperative of early payments and put them into the out years, but it will also continue this very important grain relationship, which is important for them, and it's important for the American farm community.
Q: I gather from what you say that this could make it explicit -- the Russians' failure to pay the interest on ECC loan does not in any way affect this kind of loan going through, is that right?
SENIOR ADMINISTRATION OFFICIAL: Let me be explicit about that. We are prevented under the law to from continuing the Commodity Credit Corporation short-term credit program because of Russia's arrearages to the United States. All of you know about those arrearages. They total about, I think, around $640 million. USDA can give you an exact figure. So having taken that into consideration and wanting to preserve American market share and a long-term grain relationship, wanting to respond to a specific request from the Russian government for major food assistance, knowing that we couldn't take it from the grant programs because we don't have sufficient authority there, we looked at Food for Progress, which is a program we've used to great effect in other parts of the world. And we consulted with the Russian government and arrived at this solution.
I think the Russians are pleased because it provides them with the food, but also gives them a little bit of relief on the short-term payments.
Q: Where do those funds actually come from?
SENIOR ADMINISTRATION OFFICIAL: They come from the Food for Progress program, which is a program under USDA's authority. USDA has the authority to spend these funds. We do not need to go back to the Congress for these funds. And I want to make that general point again: Everything in this package, the $1.6 billion package, comprises funds that have already been allocated and appropriated by the Congress. The administration can begin to spend these monies tomorrow. And it's very important in our eyes that we expend all the funds this year, that we meet these commitments. And we are confident we'll be able to do so.
Q: How did you arrive at the figure of $700 million -- does that max out that program, or did you actually have a range from 0 to --
SENIOR ADMINISTRATION OFFICIAL: There's a reason for it. The reason was that the Russian government told us that's about the amount of grain that they needed between now and harvest time. And so the idea is that we would begin the shipments probably $100 million per month from now until the harvest in the autumn, at which time Russia won't require the same level of food imports from the West.
Q: I would imagine there's going to be some considerable envy and jealousy on the part of some of the other republics because of the size and the scope of this with Russia. Have you given any consideration to advancing negotiations for the same kinds of projects with the Ukraine, with Georgia , with some of the other republics?
SENIOR ADMINISTRATION OFFICIAL: Yes, we're very conscience of the fact that we also have an interest in extending American support to the 11 other countries of the former Soviet Union. We have told ourselves, and we have planned that in the area of technical assistance, the grant technical assistance that you see, roughly 50 percent of the funding will go to Russia and roughly 50 percent to the other countries.
In the area of food sales, we have been active with Ukraine, in grant food assistance with Georgia and Armenia. We will continue that. And I think it's fair to say that after this summit we will go back and look at all of our programs with the other countries to ensure that they are adequate and they are productive and they're hard-hitting.
Q: Has anything happened at the summit to lead American energy companies and other companies to believe that Russia is going to be more user-friendly toward them in terms of taxing, legalities, bureaucracy?
SENIOR ADMINISTRATION OFFICIAL: Well, one of our primary objectives coming into this summit was to highlight, not only the economic agenda, but also trade and investment. And I'd like to refer to the point I made at the beginning. We're convinced in talking about this problem -- the problem of how to support Russia long-term -- we're convinced that no collection of Western governments have the financial resources over the next decade to fuel the continuation of reform, that only the private sector can do that.
We look at our own society and we see tremendous capability in resources in the oil and gas sector. It is a very good match with what the Russians need now, which is financial investment in the existing oil and gas wells and pipeline and new technology and new capital to finance new production.
That's what the Russian government has told us it wants to do, and so that's why we have made such a major emphasis on it. That's why trade and investment was a prominent issue on the first day of these talks, and in fact, figured prominently last night in the meeting between President Yeltsin and President Clinton. And we're hoping that together we might send a strong signal to the American business community that we support their efforts to invest in Russia, that the United States, through ExIm and OPEC and the Department of Commerce, will be there to support them.
Q: My question is, is Yeltsin in any position to deliver on making Russia a more --
SENIOR ADMINISTRATION OFFICIAL: We think he is. I would note that President Yeltsin's Prime Minister, Mr. Chernomyrdin, worked for 30 years in the Russian oil and gas sector. He will now chair a high-level commission with the Vice President, Vice President Gore, to try to break through the barriers that currently exist to Western investment in the oil and gas sector. We believe we have a commitment to make that committee an important committee. And we're looking forward to the work.
Q: What type of mechanism is already in place to administer the private sector portion of the program? And will the U.S. be directly involved in the tail end of distribution of the actual funds or is the money simply turned over to the Russian government for distribution at their will?
SENIOR ADMINISTRATION OFFICIAL: Are you talking about the variety of programs listed here? It depends on the program itself. In most cases, though, we are either working through American PBOs or American government agencies to ensure that the money obviously is well spent, that the money gets to the intended source. That's an obligation we have to the Congress to ensure the money is well spent and that we can account for the money. We have done that in the last couple of months intensively and we will continue to do it for each of these programs.
But they are all quite different. For instance, in the area of grant food and medical assistance, for grant food it is carried out through USDA and USDA accounts for the delivery of the food. For grant medical assistance, we've been working through Project Hope which is a private organization. For the housing -- for instance, the resettlement of Russian officers, we'll be working with a group of American PBOs. On some of the democratization projects, we're working directly with Russian private individuals and private foundations. We're working with journalists in Russia on a media project that you may have noticed.
So we literally have here 30 to 40 different activities under all these rubrics and they're all going to be carried out in slightly different ways. Some directly with the Russian government, some with Russian citizens.
Q: The Jackson-Vanik restrictions that remain and on the COCOM restrictions that remain, can you tell us what the President has to do on that?
SENIOR ADMINISTRATION OFFICIAL: Well, as George noted yesterday, President Yeltsin raised these as irritants in the relationship. The President has noted that. I think it's fair to say we will go back now in our own government when we return to Washington and look at both of these questions, and we'll get back to the Russian government.
Q: You were not prepared for these questions when you got here?
SENIOR ADMINISTRATION OFFICIAL: We were prepared for these questions. We've looked at them. But we're not prepared to make a quick decision this weekend. They require -- let me just explain, particularly on Jackson-Vanik. They require consultation with the Congress. They require consultation with the American Jewish community. And we're very sensitive to those concerns. And so we'll want to go back and talk to them before we take any action.
Q: Is this package designed so that you will not have to go to Congress for anything at this point?
SENIOR ADMINISTRATION OFFICIAL: As I said at the beginning, the advantage of this particular package is that all the funds have been allocated and appropriated by the Congress. So the administration will not have to go back to the Congress to seek any additional authority to fund any of these efforts. In effect, they can all begin tomorrow, and I know that many of the agencies responsible for these projects will begin tomorrow. And that's the advantage of this particular initiative.
Q: If this, as the President says, is a long-term, long-haul thing, and members of Congress are at this moment heading for Moscow, why aren't you talking about going to Congress and suggesting to the President of Russia that you are prepared to go to Congress for various things?
SENIOR ADMINISTRATION OFFICIAL: I think we've been clear about that. The President is discussing this weekend with President Yeltsin some additional ideas that we have for American funding of additional projects, and ideas that he has. We have a major congressional delegation that left last night, headed by Representative Gephardt and we'll want to consult with that delegation and other members of Congress before doing anything. And we'll also want to consult with our allies. So that's where it stands now.
Q: We've been told repeatedly that a number of these items represent different or new ways of spending the money already appropriated. Could you just tick off which of these items represents reprogramming or at least spending money in ways that it was not previously set to be?
SENIOR ADMINISTRATION OFFICIAL: I think that we've said that these are all projects that either Congress had allocated money for through the Freedom Support Act; there were some funds that were left over from FY'92. And this administration took office and had some new ideas about how the funds might be expended.
We didn't use just the Freedom Support Act funds or the FY'92 funds. We went into some of the agency allocations -- Ex-Im, OPIC, and USDA -- and tried to look for creative ways to further our programs.
And example of that is the Food for Progress concessional loans. We had hit a brick wall with another type of funding through USDA. We could not go forward legally, and so we looked for a more creative way to ensure continued American market share and ensure continued grain sales, and we think we found it.
Q: Where, for example, are you getting the money for this Russian officer resettlement --
SENIOR ADMINISTRATION OFFICIAL: That's from the Freedom Support Act funds.
Q: In other words, all of the money is being directly spent in new ways, so to speak --
SENIOR ADMINISTRATION OFFICIAL: Most of the grant projects that you see -- if you look at the general chart, the second chart, it's broken down into grant and credits. And if you look under grants, the technical cooperation projects that total $281.9 million -- that is almost all Freedom Support Act funding. A little bit of it is leftover funds from fiscal year '92. The Nunn-Lugar funds, of course, you know about the legislative history of those funds.
Q: cooperation --
SENIOR ADMINISTRATION OFFICIAL: From FY '92? I don't have the exact figure. It was not a considerable figure.
Q: Could you tell us please, has anything happened here this weekend that will break the log jam between Ukraine and Russia over START -- for START I and II as a result of what's happened here --
SENIOR ADMINISTRATION OFFICIAL: Both presidents, President Yeltsin and President Clinton, will be discussing this issue this morning. In fact, we haven't yet gotten to security and arms control related issues. That will be this morning's session. I know that President Clinton will be very strongly reinforcing that this is a top priority for us. We've been talking to the Russians and the Ukrainians over the last couple of weeks about ways that we might help to facilitate the discussions between them. Up to this point, this has been a very important negotiation that's been going on essentially between Moscow and Kiev. And we are at the point now of essentially discussing with them if there are ways that we could contribute to this discussion, help to move things forward essentially.
But in terms of what is coming out of this weekend, I don't yet know. In a couple hours we'll know.
Q? Just a follow-up on the financing here. Is any of this robbing Peter to pay Boris -- since it's all current year appropriations, have you taken it from anyplace that's been earmarked and put it into this fund?
SENIOR ADMINISTRATION OFFICIAL: There are smoke and mirrors here, and I think it's an important point to note. We could have given you a page of assistance numbers that included out-year funding. We're going to make a long-term commitment to many of these projects -- for instance, the enterprise funds, the privatization effort, the housing effort. And we've already talked to the Russians about our long-term commitment.
We could have put in really big numbers and this could have been a bigger package, but we wanted to make a point: This package is FY '93. It's funds that we have. And we're going to do what we say we're going to do. And the President feels very strongly about that. In the past there is a legacy that the western governments, the combination of governments, put up large budget figures and for any number of reasons we're not able to meet them, we're determined, and the President is determined, to carry out every single program in this package. And we'll do it.
But we do have a longer-term commitment, and that's part of the discussions on economics this weekend. We're looking for Russian ideas on what it is we can do to most effectively support reform. And we've told them that we do have a commitment on some of these programs beyond this fiscal year.
Q: taken it way from any --
SENIOR ADMINISTRATION OFFICIAL: No, we haven't. Okay, the question is, have we reprogrammed any of these funds; so have we taken it from other countries to pay for programs in Russia? The answer is no, we have not done so.
Q: In terms of funding, there is no available monies left -- and you simply find a creative way to find money somewhere else. Doesn't that, in fact, support the -- theory?
SENIOR ADMINISTRATION OFFICIAL: Not at all. I don't think it does. That's a particular example, and the example is grain sales. The Commodity Credit Corporation credit guarantee program was short-term loans that Russia had to pay back within 12 to 15 months. You all know about Russia's debt problem, and Russia was unable to meet those commitments. So we looked for a way to do two things: to meet Russia's requirement for grain. They're a net grain importer on a massive scale, and also meet our objective of making sure that the American farmers have a chance to sell their products to Russia. And we simply look for another way to finance that. And we have legislative authority to do it. This program has been successful in other areas. We had not tried it before in the former Soviet Union, but we thought we should now.
Q: Isn't this really the Bush-Clinton aid package for Russia, since these funds were really first derived by initiatives put forward by President Bush?
SENIOR ADMINISTRATION OFFICIAL: No, I don't think that's a fair characterization. A lot of these funds were appropriated by the U.S. Congress is 1991, in 1992. This administration took office and inherited some obligations that the Bush administration had made. But we had a long six to seven week review of this program. We decided to meet the commitments that had been made by the previous administration.
But we have gone well beyond them in funding the enterprise fund, which was just an idea, but the idea had not been filled out with a program. There was no number attached to it. In grouping together some projects and trying to make them into a coherent whole in the privatization effort, I would say, is another Clinton initiative.
Further, we listened to the Russian government and listened to the Russian military who told us that the resettlement of their officers was important to them for political and economic and social reasons. And President Clinton has responded to that. And we are making a long-term commitment that beyond this demonstration project we're going to figure out a way to do much more in trying to settle those officers.
I would also say that the President has given impetus to all of us in the agencies to think much more broadly about what it is we can do on democratization, because there we have some experience and some comparative advantage that lends itself to the Russian experience. And in calling for the creation of a democracy corps, which is another new initiative, we're hopeful that we can take the resources of the private sector as well as the American government, to achieve that objective.
So I would not characterize it that way at all. And as most of you know, I am a career civil servant. I was in the last administration. I'm very familiar with what the last administration did. And I would characterize this as a Clinton assistance package for Russia.
Q: There's been a lot of criticism that aid in the past has not gotten to the people. Is there anything in this outside of the ombudsman, that will guarantee that this money will not just disappear because it's being administered by the Russian government?
SENIOR ADMINISTRATION OFFICIAL: I think that -- I know that the President and other senior officials of our government are concerned that American money be spent wisely and that it get to the source that it's intended -- for which it's intended. And so we're going to take great care -- AID and the State Department will take great care in making sure that the funds are expended properly and that they're reaching their source.
I would not that this package is not simply a package of support solely to the Russian government. Some of these projects, especially in democratization and exchanges, are going to be worked out directly with Russian private individuals, with businesses. The private enterprise support is another example of that.
SENIOR ADMINISTRATION OFFICIAL: If I could just add a word on this point with regard to the SSD-related programs, one area that we've been looking at very, very closely is consideration of actually using Russian firms in subcontracting for these kinds of programs. They would be working very closely, of course, with the American firms, who would be the prime contractors. But this is a fine example, I think, of a more --of a imaginative and flexible approach toward getting some of that funding down to the grassroots level, down to the ground in Russia; but at the same time ensuring that it is spent efficiently and for the purposes for which it was intended.
Q: When would the democracy corps start? Exactly when do you see this happening? How would get it off the ground?
SENIOR ADMINISTRATION OFFICIAL: Well, the President is today calling for the creation of a democracy corps. I think it's fair to say that we're going to work out its framework over the next couple of weeks. Ambassador Simons takes up his duties on May 1st. But in effect we've already started, because over the last couple of weeks the administration has begun to reach out to people in the private sector who have come to us asking us to help facilitate their activities in Russia. And we've said that we will be helpful. We've also tried to kind of coordinate in a much more effective way the activities of our own government. We do have 10 or 15 agencies that are active in Russia in one way or another. We think it makes sense to draw them together and to focus their efforts.
Q: Excuse me. How much of this $1.6 billion will actually be spent in the United States by American made goods?
SENIOR ADMINISTRATION OFFICIAL: I don't have any figures for you now, but perhaps we could try to work something up in the next couple of days on that.
Q: This figure is larger than the figure that has been in the press -- did this program grow yesterday as a result of the discussions, or have we just been that far off the mark?
SENIOR ADMINISTRATION OFFICIAL: No, I think -- unfortunately the press has been a little bit off the mark, and I'm sorry to say that. No, this package -- President Clinton put us to work about seven weeks ago on this package. And he was briefed intensively on this. He contributed a lot of the intellectual leadership in this package. He contributed a lot of the ideas in the package. And I think it's fair to say that we had this rough package worked out about two weeks ago. We have been refining it ever since. We spent a couple of days last week going over it with the Russian government, both the embassy in Washington and the government in Moscow through our own embassy. And so it's been evolving. But this particular package has been together for about two weeks.
Q: Where is Yeltsin's input into this then? There was so much talk before about the President wanted to get Yeltsin's views about specifically what was needed and so forth. Is that in the out years?
SENIOR ADMINISTRATION OFFICIAL: No, it's both. President Yeltsin has on several occasions told us, for instance, that support for the creation of private businesses is important to him; that the resettlement of Russian military officers is important; and that first and foremost the effort to privatize the state industries is important to them.
And so what we did was to try to make those the centerpiece of our technical assistance part o the package. We listened to him. On the privatization effort, we have been working with the Russian government for months on this trying to work out all the details. So the Russian government on most of these programs was involved every step of the way.
But let me get at the other part of your question. The President is also using this weekend to talk about a broader set of initiatives that we might undertake. And we're looking for his ideas. The President has brought his own ideas to the table -- for instance, on energy and the environment and in housing. But we're looking for Russian ideas not. We need to consult with the Congress; and we need to consult with the other allied governments that are also active.
Q: There's essentially nothing that happened in the last day and a half that measurably altered the package that you came in with?
SENIOR ADMINISTRATION OFFICIAL: This particular package, as I said, was worked out and was ready about two weeks ago. We have since then consulted with the Russian government on the final stages of its development, and so this weekend we've primarily talked about future, about what more the United States and other Western countries can do to support reform in Russia, which is our base objective here.
Q: I noticed that you -- that money appropriated to train bankers and businessmen and officers. Can you tell me what about job training for workers who are displaced by privatization?
SENIOR ADMINISTRATION OFFICIAL: You're right; we have a program to train Russian -- young Russians in banking and financial services in the United States. Part of the housing initiative, it's not just to build housing units, it's to retrain Russian officers who are retiring into other professions.
Q: money for job training for workers whose jobs are disappearing because of privatization --
SENIOR ADMINISTRATION OFFICIAL: We have not yet allocated any money for that.
Q: Why not?
Q: of the $6 million is going to build 450 housing units. Isn't that a lot of money per unit given what the Western dollar will buy in the former Soviet Union?
SENIOR ADMINISTRATION OFFICIAL: If you want to do housing the right way, it's not just the building the framework of a house, you've got to think about all the utilities. You've got to think about the purchase of land. You've got to think about sewage and gas and electricity and so forth. And it's also retraining. It's not enough to put retired -- an officer coming out of -- Riga or Tallin or Vilnius in a house in western Russia. We think we have an obligation to try to retrain those officers as well. This is responding to a request from the Russian government.
Q: of the $6 million will go to retrain --
SENIOR ADMINISTRATION OFFICIAL: That's right.
Q: Are you talking about apartment buildings or single --
SENIOR ADMINISTRATION OFFICIAL: We're talking about single, individual dwellings.
Q: You're saying that only 450 families will be served by this?
SENIOR ADMINISTRATION OFFICIAL: What I want to -- I thought I pointed out earlier, this is a demonstration project. What we didn't want to do -- given the experience that the Germans and the Turks and the Italians have had in building housing in western Russian, we did not want to leap into it with a huge amount of money. What we want to do is work over the next couple of months and try to figure out with American organizations in the private sector the best way to get this job done.
I noted that we have a long-term commitment to that. And so I would expect that we would put a lot more money into this in the future . But we want to do it wisely; we want to spend the money wisely.
Q: What is it about this program that convinces you that it will protect Russia's reforms and that Russia will be in a position to may back the money they're supposed to pay back, especially considering their other debt problem?
SENIOR ADMINISTRATION OFFICIAL: Well, look, I think it's important to note that the United States on its own does not have the capability to fuel a continuation of Russian reform. It's got to be a collective Western effort, and we're looking to our allies to do more as well. But beyond that, it's really what the Russians do that is going to decide the fate of reform. We can simply play a role, and we feel we have an obligation to do so, which is consistent with our national interests.
Q: Did the President say that the value of the U.S. contribution was that it would create security and prosperity for the United States? So what is it about this program that does this?
SENIOR ADMINISTRATION OFFICIAL: I think you have to go back to the fundamental objective of our policy toward Russia, and that is we want to do everything we can to support the continuation of reform. We are convinced that if reformers stay in power, then we'll be able to continue the drawdown of nuclear forces, foreign policy cooperation and economic interaction, which are the three benefits to the United States from reform in Russia. So it's not a simple question. You can't just say that this program is the answer. It's a long-term question and we have to make a long-term commitment to it.
Q: And then on the question of Russia's ability to repay, what convinces you they'll be able to pay seven to 15 years from now?
SENIOR ADMINISTRATION OFFICIAL: Well, the Russian government has made a commitment to repay, and what we're hoping is that if reform continues, and if they can continue to improve their oil and gas sector and earn additional hard currency revenues, that Russia will be in a position six or seven years from now to pay back those loans.
Q: substantial government-to-government loan we've ever gotten into with the Russians?
SENIOR ADMINISTRATION OFFICIAL: I don't want to answer authoritatively on that. I don't go back 20 or 30 years on this. But in the last four or five years, yes it is, because the previous way that we financed grain exports was really to just ensure private bank loans. This is a different type of effort.
Q: government loans in any other sector that you recall? I know it wasn't done in --
SENIOR ADMINISTRATION OFFICIAL: I think it's fair to say this is a new and unique effort.
END10:25 A.M. PDT
William J. Clinton, Background Briefing by Senior Administration Officials Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/272288