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Background Briefing by Senior Administration Officials

July 07, 1993

The Okura Hotel

Tokyo, Japan

2:10 P.M. (L)

MR. STEINBERG: This is a BACKGROUND BRIEFING, attributable to senior administration officials. And I'm delighted to have here today [names deleted]

Again, I remind you this is a BACKGROUND BRIEFING, attributable to a senior administration official.

SENIOR ADMINISTRATION OFFICIAL: Thank you, Don. And good afternoon to all of you. What I'm going to do, as Don says, is offer a brief overview of the Clinton administration's thinking about the setting and significance of Boris Yeltsin's participation in this week's meeting.

Now, the participation of a top leader from Moscow is already becoming something of an established feature at G-7 meetings. The Soviet Union aid to peristroika were very much on the agenda of the Houston G-7 meeting in 1990. And former President Gorbachev, of course, was in London in 1991 and President Yeltsin was in Munich last year.

But one of the underlying premises of our approach to this meeting this week is that President Yeltsin's participation here is not just another in a series of such appearances. We believe that the relationship between Russia and the G-7 has crossed a threshold, or at least is approaching a threshold. And it's the threshold between dealing with an urgent, desperate geopolitical emergency on the one hand, and settling in for the long haul on the other. That is dealing with a long-term strategic opportunity to back a winner rather than just trying to rescue a loser.

In the previous G-7 meetings, virtually the only issue on the agenda was that of financial assistance, which is to say Western support for economic reform in Russia and the other new independent states of the former Soviet Union. Now, obviously, that subject is still very much on the agenda here this week. And [name deleted] of the NSC will review where U.S. bilateral programs stand, while [name deleted] of Treasury will do the same thing with regard to various multilateral efforts.

But for us, the premise of economic assistance to Russia has changed. We have a higher degree of optimism that Western funds will be well spent. We are now using words like "investment" and "cooperation" and "partnership" less as euphemisms for aid and more because they capture what we are trying to accomplish, what we're trying to put in place. Which is, in President Clinton's phrase, a strategic alliance with post-communist reform.

In the year since Boris Yeltsin came to Munich, some important things have changed in the larger political context in Russia, and mostly for the better. Generally, those changes boil down to this: The reformist Yeltsin government has consolidated its position. There is a sense of momentum, and momentum in the right direction to both political and economic developments in Russia.

In the political arena, that's largely a result of the April 25th referendum, which was a huge victory for reform and democracy. And, since then, particularly in recent weeks, President Yeltsin has been able to press his advantage toward a new post-Soviet constitution and new parliamentary elections later this year, which could result in a workable legislative executive relationship and, in short, a truly functioning government in Russia that would be better able to implement economic reforms, and also work with the international community on programs of the kind that the G-7 is putting forward at this week's meeting.

In the economic arena, privatization is going fullspeed ahead, and there are some encouraging signs of macroeconomic stabilization and a progress in the battle against inflation.

What this means is that while, obviously, President Yeltsin still has plenty of problems, he comes to this meeting less as a supplicant and more as a leader who has proved himself up to the gargantuan task that still lies ahead.

In the past it has been part of the subtext of these meetings -- help Russia or else. There's been a sense of crisis, of emergency, of averting disaster. Now I realize that that note has not completely disappeared from the background noise at this meeting, and there's still a lot of hard work to be done. Years and even decades of hard work, and the Russians are going to need our help throughout that period.

But Russia, thanks to President Yeltsin's leadership and also to a real extent, thanks to Western support for him, Russia has backed away from the political and financial abyss. There's now more of a sense, certainly on President Clinton's part, that this administration's early backing for Yeltsin is already paying off; that reform in all of its dimensions really is taking root in Russia and that it will have many benefits for the West -- economic, political, and diplomatic benefits -- and that, therefore, what we're doing both bilaterally and multilaterally really does constitute an investment in the future.

And now to back up that general proposition with some specifics is my colleague.

SENIOR ADMINISTRATION OFFICIAL: Thanks. Good afternoon everybody. Let me just take a couple of minutes to review briefly the record of this administration on U.S. bilateral economic assistance to Russia. The President, of course, in his sessions on Thursday with his G-7 colleagues, in the session of G-7 leaders with Yeltsin on Friday, and in his bilateral meeting with Yeltsin on Saturday morning on July 10, is going to have a chance to talk about what the United States has done itself to further reform in Russia.

And let me remind you that in Vancouver the President announced a $1.6-billion package of support for Russia. In Tokyo, two weeks later at the finance and foreign ministers meeting, the United States announced a $1.8-billion package, which was in addition to the $1.6 billion and separate. And the President is also seeking $700 million in fiscal year 1994 for aid to Russia and the other states.

The obvious point here is that these series of announcements represents a major expansion in American assistance to Russia, and I would say it is a direct outgrowth of the President's determination to provide American leadership on this issue and to maximize support for Yeltsin's reforms at a critical time in Russia.

Let me just say a few words about the Vancouver package itself. There's been a lot of interest in how we're doing and implementing it. The President said, as you remember, in his press conference with Yeltsin in Vancouver that it was going to be very important that the United States actually do what it said it was going to do. And I think that he will be in a position this week to report both to the G-7 but also to President Yeltsin that, in fact, he has done that.

Of the $1.6 billion that was announced in April, 65 percent of it has been obligated by the U.S. government. That's over $1 billion. And let me give you some examples: $900 million of the $1.6 billion was in a variety of food assistance programs to Russia. We have signed contracts with the various Russian ministries on all of this assistance. Much of it has already arrived in Russia and all of it will arrive this summer.

We have also begun some individual projects. We've established, for instance, three medical partnerships between American hospitals and Russian hospitals. We provided $60 million in direct assistance to the Russian government to support the auctions of Russian state enterprises underway this summer. There are 240 Russian bankers training in the United States this summer. There are 218 American farmers working in Russia this summer and in the fall to promote agricultural reform. And there are several thousand young Russians in the United States this summer in what we're calling "Democracy Summer." Some are training with American firms, others are attending American universities in graduate programs.

In addition to what we have done in implementing the Vancouver package -- and we think this is a very good record -- we're also moving forward on a particularly important issue, and that is trade and investment. And the Ex-Im Bank is going to sign today in Washington a $2-billion oil and gas framework agreement. It's one of the most important things that this administration has done in its first six months in its policy towards Russia. It will facilitate the sale of American oil and gas equipment to the Russian energy sector, and we hope will help to revive the Russian energy sector.

Having just reviewed our record in implementing the Vancouver program, let me just give you my thoughts on the significance of the Vancouver package and also the significance of our implementation of it. First, I would say that it's terribly important not only to us, but also to the Russian government, that the United States does what it says it's going to do. And I think it represents an elevation of this issue within our own government.

In previous years, as you know, the United States was not always successful in implementing the programs that it set forth for the Soviet Union and then for Russia. We received some criticism from the Russian government and the Russian press and the Russian people on this. We're ahead of schedule, and it didn't just happen. We've accelerated the work within our own government. Ambassador Tom Simons, who oversees these programs, holds weekly meetings with all of the agencies, and we paid a lot of attention to the hard work and the nitty-gritty work of implementation -- the unglamorous work of implementation.

Second, I would say that this is concrete support and it's not just words, and that's also important. There's been a lot of criticism in the Russian press from officials in the Russian government again, that the United States has been strong in the past in rhetorical support and has fallen short in concrete deeds. These are concrete deeds. I've given you some examples of what we're doing; I'd be glad to give you others if you're interested.

I also think, finally, that this demonstrates the importance of American leadership on this issue. At a time when some of our allies are finding it difficult for budgetary reasons or for their own domestic reasons, or because of their own responsibilities in Europe or elsewhere to shoulder the burden, the United States has picked up that burden and is leading.

Let me just say a few words about the second package, which is the $1.8-billion package that we announced in Tokyo. You know that it passed the House of Representatives a couple of weeks ago by a very wide margin. It's currently before the Senate. The administration is making this one of its major legislative objectives for the summer -- passage by the Senate and the full Congress -- and we're very hopeful; in fact, we're positive that it will be passed with bipartisan support.

This is going to be a very important program of assistance. It's going to convey direct support again for Russian government attempts at privatization, which is the most important thing happening in Russian economic reform now. It will expand the ability of Ex-Im and OPIC to help American companies trade and invest, another important goal of this administration.

We're going to be providing support for nuclear power safety, something that the United States has not done in the past. We're going to, hopefully, direct $100 million towards nuclear power safety. We want to work in each of the 23 nuclear power plants in Russia to upgrade fire safety, for example. We hope very much that, with the passage of this legislation, we'll be in a position to provide housing for Russian military officers withdrawing from the Baltic States and for other parts of Eastern Europe.

As you know, in Vancouver we announced a pilot project. This new legislation would allow us to build up to 5,000 houses for Russian officers in the next two years. And it will also promote exchanges, which are very important to achieve our goal of helping democratization. We want to bring 25,000 young Russians here in the next two years. That sums up very briefly what the second bilateral package is.

The President will be discussing this again in the Friday meeting, the G-7-plus-one meeting, and he will specifically discuss this, of course, in his bilateral meeting on Saturday morning with President Yeltsin.

Thanks very much. I think [name delted] of the Treasury Department is now going to briefly review where we stand on the multilateral side.

SENIOR ADMINISTRATION OFFICIAL: Thank you. When President Clinton came into office in January, Russia was on the edge of a hyperinflation. It's easy to forget now how deep the crisis was in Russia at that time, and the extent of the pessimism that prevailed. President Yeltsin and the Parliament were locked in a struggle for legitimacy, and most of the discussion was about whether there would be a referendum rather than how President Yeltsin might do in a referendum.

There had been inflation of 25 to 30 percent per month for several months since October of last year. And, despite that, Parliament and the industrials were still calling for more credits for industry and worried about maintaining output. Now, six months later, economic reform is staging a comeback in Russia. Russia is taking important steps to restore financial order to bring down the rate of inflation. Opponents of reform have really been side-lined.

Stabilization of prices has replaced stabilization of output as the salient economic objective in public discourse. Inflation is now down below 20 percent, in the range of 15 to 20 percent per month. Still a terrible problem. It's their top economic problem, but, clearly, Russia has stepped back from the abyss of hyperinflation.

This accomplishment is mainly the handiwork of Deputy Prime Minister Boris Fyodorov who will be here this week. You may remember, he represented Russia at the G-7 meeting in Hong Kong in March and at the April ministerial meeting here in Tokyo.

He has managed to take important steps towards bringing Russia's budget problem under control and has reached agreement with the Central Bank on controlling the printing of money.

There's also progress on privatization. The privatization program, as my colleague mentioned, is going forward at a very rapid clip. Some 60,000 small enterprises, small shops and service establishments have bee privatized. And remarkably, some 2,000 medium and large enterprises, with two million employees, a total of two million employees have been privatized through the voucher program designed by the Yeltsin government.

The process of privatization at this point is probably irreversible.

Let me review the U.S. role and the G-7 role in putting together multilateral support for Russian economic reform. In February, President Clinton called on his G-7 partners to deepen their engagement with Russia. In March, the U.S. took the lead in pushing our allies to break the deadlock in the Russian debt rescheduling talks, and the Russian debt rescheduling was completed at the end of the first day of April. In April, the U.S. led the G-7 in efforts to put together a multilateral support package for President Yeltsin and the economic reformers.

At the Tokyo ministerial meeting, as you know, the G-7 made a commitment to provide $28.4 billion of multilateral support. The package agreed upon at that time involved three different kinds of support. First, quick funds that would be available to follow initial steps toward stabilization taken by the Russian economic reform team. The idea was not to wait until Russia had gone all the way down the road towards stabilization, but to provide them with some assistance as they began to put their stabilization effort into motion.

These funds have now been activated. Just a week or so ago, the IMF approved the new STF, Systemic Transformation Fund, loan of $1.5 billion for Russia. And in the course of the last couple of months, the World Bank has managed to obligate the $500 million worth of funds under its first Import Rehabilitation Loan. This is real cash for the Russian reform team to strengthen their -- to help them strengthen their stabilization efforts.

Second, the Tokyo package included $10 billion worth of support for a full stabilization program. This is available for Russia. The G-7 this week is going to encourage the Russian government to intensify its stabilization efforts, its antiinflation program, and will encourage the Russians and the IMF to get to work soon on negotiations for an IMF standby loan, which could be followed by the activation of a currency stabilization fund a little bit later on.

Third, there was support for structural reform. This included many elements; one part that has also been activated is the World Bank energy sector loan, a $610 million loan approved a month ago.

My colleague mentioned also -- in this connection, he mentioned the Export-Import Bank's framework agreement under which it will provide credits so that the energy sector in Russia will be able to buy capital equipment from the United States.

Beyond the $28.4-billion package proposed in April, the U.S. made three proposals for additional multilateral support, or for three additional multilateral issues, initiatives. First was the privatization and restructuring program proposed by the U.S. government in April. This program is meant to help large Russian enterprises that have gone through Russia's novel privatization program, but that lack and the expertise and the capital to function well in a market environment.

The privatization program would have three key activities: It would provide funds for technical assistance so that firms would be able to get expertise that they need to modernize, to develop business plans, and to function better as financial entities. It would provide funds for restructuring proper, meaning funds to buy capital equipment and to modernize facilities. And would also provide funds to support the transfer of social services currently provided by these large enterprises, transfer those social services either into the private sector or into the realm of municipal public finance.

What we aim for with the privatization and restructuring program here this week, is to create a start-up phase for the program. In the start-up phase we hope to be able to put together $2 billion of support for an 18-month period ending December 1994. The $2-billion start-up program would include, we hope, $500 million of grants from the G-7 countries; $500 million worth of export credits so that Russian --privatized Russian enterprises can buy capital equipment on credit terms; and $1 billion in loans from the World Bank, both for the restructuring of enterprises and for support for the oblast that would taking over social services.

A second U.S. initiative was to urge the European Bank for Reconstruction and Development to create a $300-million fund for small and medium-sized enterprises. This was actually part of the $28.4-billion package, but was an initiative jointly sponsored by the U.S. and the Russian government that the Russian Deputy Prime Minister Boris Fyodorov had proposed sometime ago.

The purpose of this fund is to support small entrepreneurs, to help them get a start, to help a market economy take hold in Russia. Half of the $300 million will be funded by the EBRD, the remaining half by G-7 governments.

The third initiative was to create a support implementation office. President Clinton and President Yeltsin agreed in April in Vancouver on the need for such an office. Its purpose will be to insure that Western support is used effectively.

Let me stop there, and perhaps you can ask questions.

Q: On the fund a little more specifically, I know you're just getting underway here, but you came in with two commitments just before the summit from the Germans and the British. Have you heard anything new, and, specifically, what have you heard from the Japanese?

SENIOR ADMINISTRATION OFFICIAL: The question was whether there are any new commitments on the part of G-7 partner countries with respect to the privatization and restructuring program. No, there's really no news from last week on this. The first set of discussions of the subject will begin this afternoon, so right now there's really nothing new on --

Q: It's a target basically, or just kind of an estimate of what the pool will finally end up being?

SENIOR ADMINISTRATION OFFICIAL: Yes. Well, our aim is to reach the $2-billion figure with the component pieces that I mentioned. In particular, the discussions will focus on putting together a pool of $500 million of grant funds from the G-7 countries.

Q: Fyodorov said in Moscow last week that one of the most important things he thought that the G-7 could do for Russia now was to work on lifting trade restrictions that have been left over. Other Russian officials have said the same thing. Can we expect anything around the next couple of days on that?

SENIOR ADMINISTRATION OFFICIAL: I don't know if everybody heard the question. The question was that Deputy Minister Fyodorov said in Moscow the other day that the Russians are interested in having trade restrictions on Russia lifted. As you remember, this was a significant issue at the Vancouver summit. And since then, we have been working on a number of fronts to try to make some inroads on this problem.

It's a two-way problem. What we're concerned about is that American companies have the right to invest easily, more easily in Russia and the right to trade with Russia. There are some significant barriers to American trade and investment in Russia, and we're working very hard with the Russian government now to break them down.

For instance, in the energy sector there are two or three multibillion-dollar deals that American companies have planned that are just on the edge of approval and that need a push through some of the red tape in the Moscow bureaucracy, and we have made this a priority for this administration to get those deals through.

On the other side, the Russians are concerned not only about what they perceive to be trade restrictions on the part of the United States, but also of Europe and some of the Asian countries. And there, we're trying to work out on a caseby -case basis their problems, for instance, in uranium, in aluminum and potash, arrangements whereby Russia could trade with the United States in those areas, but do so in a fair way. And we've made progress on some, we haven't made progress on others.

Q: Two questions regarding the privatization. First, do you expect to get commitments with all seven of the G-7 governments for the $500 billion? Second, can you explain, would the money for the privatization fund go directly to privatized companies or go to the government who would then redistribute it to the privatized companies? Or would it go to displaced workers?

SENIOR ADMINISTRATION OFFICIAL: On the first question, let me leave that aside -- discussions will go on this week about who is going to commit to what, and I think there will be more information about that as the week goes on.

On the second point, let me say that the institutional arrangements for the operation of the privatization and restructuring fund are still in the design phase. But there is agreement among the G-7 countries on several points. First, that there would be as much decentralization in the operation of the program that is possible.

This would take several forms. First, there could be venture funds, or restructuring funds that are established in the various regions of Russia where privatization is taking place and where reforms are going ahead, and these funds would channel monies straight to those enterprises that need money for restructuring. Some of the funds would be in the form of loans, other parts would be in the form of equity investments.

The technical assistance monies will be part -- through these funds as well straight to the enterprises that are going to be the recipients of the technical assistance. Certain of the funds, the part that comes from the World Bank by the charter of the World Bank require a sovereign guarantee of the Russian government. And for that reason, it is agreed and the Russian Finance Ministry insists that the monies pass through that committee in the Russian government that approves sovereign guarantees and is channeled again through financial institutions to the regions of Russia where reforms are going forward. Then, those funds would be lent by the financial institutions to the privatized companies. So there are different mechanisms for the different kinds of -- to suit the requirements of the sources of funds.

Q: Back at the crisis period a few months ago, one of the problems seemed to be that the Russians hadn't taken enough internal steps to change their laws to help business et cetera. Now, are you saying actually that internal changes happened sufficiently to guarantee that these funds would be used directly? Or are there still steps that the Russian government has to take with its own laws?

SENIOR ADMINISTRATION OFFICIAL: There are certainly still steps that we hope the Russian government will take with its own laws, particularly, touching on one of the points that my colleague met with regard to clearing away various obstacles, legislative obstacles, regulatory jurisdictional obstacles to trade and investment from the outside.

That is a topic for one of several bilateral U.S.- Russian commissions that is working to improve the relationship in the economic sphere and, specifically, it's the charge of the commission cochaired by Commerce Secretary Brown and Deputy Prime Minister Shokhin. I would say that it would probably be unrealistic to expect a great deal of progress in that area, particularly with regard to the legislative changes that are necessary in order to guarantee private property and that kind of thing until the constitutional standoff between the executive and legislative branches of the Russian government is worked out.

Q: At the same time that you're talking about massive aid to Russia, there are a number of political issues that are outstanding. The rocket deal with India, which I understand you've still failed to reach some sort of resolution -- there is concern over Ukraine's nuclear weapons, and at least at last report, Russia was resisting your efforts to try to get some sort of monitoring of warheads. There is Russian talk about apartheid in Estonia and there is concern about Russia's role in Georgia. Could you talk a little bit about those issues and how far you intend to press them at this time?

SENIOR ADMINISTRATION OFFICIAL: Of course, there is concern about all of those issues. I think it's a fact of life of the relationship that we now have and will have with Russia for a long time that there are going to be points of tension, points of disagreement. That, by the way, is true with virtually every relationship we have in the international arena.

What has changed significantly and spectacularly, I would say, first of all the overall context of these disagreements. They're no longer taking place in the context of a global rivalry driven by ideology and the mutual demonization of the two sides. There are many, many issues, of course, where we have moved very close to Russia, but some issues on which we still do have our differences with them. And you've named a couple.

Certainly, the Clinton administration attaches great importance to its nonproliferation goals, including in the area of ballistic missile proliferation. And we're conducting very close, very intensive negotiations right now with Russian government on that subject. The Baltics, you've had briefings and public comments in the last few days about our continuing concern that despite tensions between the Baltic governments and Russia that the withdrawal of Russian troops from those republics, those states, continues and that the Russian troops be out later this year, which, among other things, is an imperative of American law.

And then, on the question of instability -- in the Trans-Caucuses, not just in Georgia, but also in Azerbaijan and around Nagorno-Karavakh, that's a point on which actually we have been consulting quite closely with the Russian government, a lot of the problems in that part of the former Soviet Union are indigenous to that region and we're using what I think is the good relationship we have with Russia in order to do everything we can to encourage Russia to play a constructive role there.

On the issue of the nuclear weapons of the former Soviet Union and the territory of Ukraine, I would not characterize that of a point of particular disagreement or tension between the United States and Russia. The United States and Russia both want to see those weapons dismantled and Ukraine become a non-nuclear weapons state under the nonproliferation treaty, but I might say having stayed very close to that issue myself and having visited Ukraine several times in that last month or so, including recently with Secretary Aspin, the senior leaders of the Ukrainian government are also affirming their intention to carry out that commitment.

Q: If I could follow that up --


Q: But since you were there, the declaration --the nuclear missiles of theirs, isn't that a hitch, or is that part of the process of becoming non-nuclear?

SENIOR ADMINISTRATION OFFICIAL: The process of Ukraine becoming non-nuclear is a complicated one and that obviously is another complication. Now, of course, the announcement that you're referring to, Barry, comes out of the Rata or the Ukrainian Parliament which, of course, has the responsibility for ratifying the START I Treaty and also acceding to the nonproliferation treaty, which are the two commitments that Ukraine made under the Lisbon protocol.

But what we've continued to attach great importance to is that President Kravchuk and all of his senior advisors and ministers, including, very importantly, the Minister of Defense, with whom Secretary Aspin met recently, continue to assure us that they will indeed keep their promises under the Lisbon protocol. But, as you know, a political drama of some magnitude continues to go on in Ukraine. And, obviously, the timing of the resolution of all this will depend in part on how the overall political drama is resolved.

Q: Can I ask two questions? One, there have been some complaints from Ukraine and some of the other republics that all the attention given to Yeltsin overlooks their needs. And, two, is it going to be difficult to give World Bank and other support for the oil industry when the ministry cuts off the oil pipeline for a month for joint ventures, not Russian enterprises?

SENIOR ADMINISTRATION OFFICIAL: Let me respond to the general proposition. The Clinton administration made a very calculated decision at the outset to give quite a bit of priority to the relationship with Russia. Now, this, I think, was not only justifiable at the time, but more than justifiable in retrospect. There was, of course, a political crisis of major proportions underway in Russia. Moreover, the leaders of virtually all of the non-Russian former republics of the Soviet Union made clear to the incoming Clinton administration that whatever their feelings about Moscow, whatever grievances historical and otherwise they might have about Moscow, they felt that it was critically important to the success or reform in those non-Russian former republics of the former Soviet Union that Boris Yeltsin and his reform policy survive in Russia itself. That is that reform along the periphery, as it were, depended to a significant measure on the survival of reform in Russia. So that was one reason that we gave the kind of emphasis that we did to supporting reform in Russia.

At the same time, we never pursued a Russia only policy. Quite the contrary -- in the Freedom Support Act, which in fiscal '94 will mean about $700 million. About half of that is targeted for the non-Russian former republics. In the socalled Tokyo package, the $1.8 billion package that my colleague was referring to a moment ago, there is earmarked $300 million for the non-Russia republics. And under the various G-7 initiatives and facilities that my colleague was speaking about, there is a considerable amount of reform support assistance available to Ukraine and the other non-Russian former republics.

On the oil question, maybe my colleague could have a word or two.

SENIOR ADMINISTRATION OFFICIAL: Before I get to the oil question, let me just add to what my colleague said on the first question, and that is that our assistance is flowing to states that are reforming. There are 15 states now that arose out of the former Soviet Union: Armenia and Kyrgyzstan and Kazakhstan are three states who are receiving significant portions of American assistance, and that is a direct function of the fact that they have made significant reforms. Our aid is not going in substantial numbers to countries that have not made reforms. I think that's an important point.

Would you mind restating your question on the oil?

Q: In June they cut off the GATT -- the oil pipeline for joint ventures, joint ventures found that we could not export oil. So my question is, isn't that going to be difficult then to give export/import credits when you run that kind of arbitrary risk?

SENIOR ADMINISTRATION OFFICIAL: I think that problem -- well, we've been in contact with several of the U.S. firms involved and that problem is on its way to being resolved. So I do not think that will be an obstacle to American trade and investment.

But let me just take the opportunity of the question to make another point and that is that this relationship is changing the U.S.-Russian relationship. For decades that U.S.- Soviet relationship was primarily based on nuclear questions and on foreign policy crises in various parts of the world.

The Vancouver summit in our experience was unique because economic issue -- some of these trade and investment issues were raised first. In previous summits, even in just the last few years, trade issues would be raised in the last 15 minutes of the meeting. At Vancouver there were seven hours of discussion and the majority of the time was taken up on economic issues.

And the Clinton administration, and the President specifically believe that we've got to do a much better job in helping American businesses trade and invest there because ultimately if reform is going to succeed in Russia -- and we hope that it will and we think that it will -- it's going to have to be fueled by a significant expansion of Western capital and Western technology.

What governments can do -- what the United States or German of Japanese governments can do helps in the short term, but the kind of assistance they need in the long term can only come in volume from business. And we're working very hard to -- on a company by company basis in some cases -- to get these investment projects freed up.

Q: about the amount of pledge by each country, for the $500 million privatization program -- is each country participating or is each country paying --

SENIOR ADMINISTRATION OFFICIAL: The discussions on that subject are not complete and so I really don't have a country by country commitments for you. I think, as I said, those discussions are beginning really this afternoon. They'll be conducted at a high level and I think that there will be information on that subject in a matter of days. But I don't really have anything for you now.

Q: Are you talking about the program after the 18- month period?

SENIOR ADMINISTRATION OFFICIAL: No, the discussions here will be about the start-up phase.

Q: Boris Yeltsin this week on moving American barriers to Russian trade. I think this was a subject --

SENIOR ADMINISTRATION OFFICIAL: The question was what will the United States be offering Russia this week in the bilateral meeting on removing American barriers to trade. You remember in Vancouver President Yeltsin asked that the United States take some action to remove Cold War barriers to trade.

The President then, on April 23rd, two weeks after Vancouver, signed an executive order ordering various parts of the administration to look into what could be done. I think that the President will have something to say about this at the end of this week. We've done a lot of work in -- work that includes a number of U.S. government agencies to try to get at that.

President Yeltsin also asked about the question of Jackson-Vanik. We've looked into that. We've worked very hard on the Russian government during the last couple of months on that, and I think that we'll have something probably at the end of the week to say on that as well.

Q: Are you saying that you practically -- are you going to grant a permanent waive, or are you going to graduate Russia from that?

SENIOR ADMINISTRATION OFFICIAL: No, I'm not saying that at all. I'm just saying we dealt with the question and we've talked to the Russians about it. But I would lead you away from expecting that we're going to fully graduate Russia from Jackson-Vanik. But what we have done in early June the President suggested to Congress another one year waiver for Jackson-Vanik and that provides MFN and provides the trade benefits that Russia needs.

THE PRESS: Thank you.

END2:55 P.M. (L)

William J. Clinton, Background Briefing by Senior Administration Officials Online by Gerhard Peters and John T. Woolley, The American Presidency Project

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