Press Briefing by Director of the National Economic Council Gene Sperling

The Rizzan Sea Park Hotel

Okinawa, Japan

10:43 A.M. (L)

MR. SIEWERT: Good morning. As you know, the President announced a new initiative today, on his final day of his final G-8. Gene Sperling is here to brief on that, the President's Director of the National Economic Council, his National Economic Advisor.

Before he begins, just one minor scheduling note. The President will return to Andrews Air Force Base approximately 4:00 p.m. this evening and will head directly to Camp David, where he's eager to get back to the work that's been going on there in his absence.

And I'll let Gene take the floor here.

MR. SPERLING: It's increasingly clear that the Okinawa summit is very much the development summit, with a concentrated focus on not only debt relief, but battling infectious disease and the divides in education and information technology between the developed countries and the poorest countries in the world.

With each year there has been continued focus and progress, and the President very much wanted to build on Cologne, not only in furthering debt relief, but in having a more full, integrated approach that deals with poverty and draws the G-8 summits from being something that used to deal with exchange rate and trade issues to G-8 summits that focus on the most serious poverty challenges facing the world.

One of the issues that was successfully elevated in the G-8 and in the G-8 communique today was the endorsement of the goal of universal education in developing countries by the year 2015. This goal was established at Dakar, Senegal this spring and is endorsed in the G-8 summit.

Let me just say a couple of words about the basic problem. There are 120 children out of school, in fact, who never go to school in the poorest countries. Sixty percent of them are girls; most of them, 46 million, are in Asia, but Africa has 42 million and the highest percentage, 41 percent of children out of school. OXFAM, who has done tremendous work in this predicts that at present rates, even with the existing efforts underway, the Dakar goal will fall short by at least 75 million under current trends. And so this is a truly imperative goal.

The problems of free universal education in developing countries are complex. Some of it is cultural, much of it is economic. As we used to have de jure and de facto segregation, there is de jure and de facto free education. In some countries where there is supposedly free education, the cost of fees, the cost of school uniforms, of books or transportation can take one-fifth to one-half of a family's income. And so the Dakar goals start first with the developing countries coming forward with a goal, a plan for education for all. It is only in that context that any form of bilateral, multilateral aid can be effective.

In terms of the integration of why this matters, in terms of health and other issues, most people who deal with AIDS prevention find it almost impossible to deal with AIDS prevention for younger people if they are illiterate and not in school. So this is very much a part of AIDS. In terms of overall health, one of the most stunning statistics is that in countries such as Brazil, the number of children in families where the mother is illiterate averages over six; it is 2.5 where the mother has been schooled and literate. So there is a strong connection between literacy for girls and smaller, healthier families.

Obviously, the link between education and wages and income has been well established.

It does make a difference, the efforts do make a difference. Uganda was a country where the fees and other costs meant that if an average family put a child in school it cost one-fifth of their income. In 1996, they had only 2.1 million children in school. By abolishing the fees, having the commitment to universal education, in a few years they've gone from 2.1 million to 5.3 million children in school. So this is not a hopeless problem, this is something that can be dealt with, with a national commitment and the willingness of the developed countries and the multilateral institutions to facilitate this.

We're coming here today with real, tangible steps. First of all, in the communique, the G-8 endorses the Dakar goal of universal education by 2015. Secondly, with the support and urging of our government, and others, the World Bank has announced, Jim Wolfensohn has announced the they will increase their lending for education by 50 percent. They averaged over the last several years about $1.8 billion in lending to poor countries for education. Jim Wolfensohn has now committed that the World Bank would increase that by at least 50 percent, to $3 billion. So that is a tangible commitment by the World Bank.

Secondly, it takes bilateral commitments, and the United States has $55 million in additional funds for universal education which we are seeking in the Labor/HHS appropriations going on.

The announcement today is another significant bilateral effort that the United States is making for this goal. And it is a $300 million initiative, a global food for education initiative to allow for school lunches and school breakfasts in the poorest countries for the poorest children.

This idea was brought to our attention by former Senator McGovern and Senator Dole, who together have taken their leadership on the school lunch program domestically and have now been pushing for this at an international level. It has also been supported by Congressman Jim McGovern and Secretary Glickman and everyone in the White House policy councils. The $300 million would come from excess U.S. commodities. It can be done, and will be done through executive action. It does not require a new appropriations. It is done under the charter act that allows for surplus removals and 416(b), which allows for donations of our surplus for developing country issues.

This $300 million that comes from excess commodities and soy beans, wheat and corn would help feed 9 million children during a year, in selected developing countries. It is a down payment on a potential larger global effort to offer free lunches and breakfast and early childhood feeding in the developing countries.

The benefits of this are at least two-fold. Number one, for very young children the deficiencies in food can affect cognitive development. For school-aged children, it affects learning, listlessness and attendance. Secondly, it has been shown repeatedly that school feeding programs have a positive effect on parents putting their children in school. An interesting example is that in the Dominican Republic, when there was a school feeding program, when it was temporarily suspended, 25 percent of the children dropped out. So in a pretty interesting example there, 25 percent of the children were clearly induced to be in school because of the school feed initiative.

U.N. studies have shown this repeatedly in country after country that a school lunch or school breakfast initiative -- and the same for pre-school programs like WIC, or for infant children -- has had a positive impact on what -- parents putting their children in school.

This program would be done in coordinate with the World Food Program of the U.N.'s arm in Rome, with Secretary Glickman at the Department of Agriculture. And I just want to thank Tom Freedman, Domestic Policy Council, Secretary Glickman and people on my staff and OMB and NSC who have worked very hard to make this initiative.

We will work to select the countries for this program. Our criteria will be, one, whether they have a commitment to universal, free education. We don't want a school lunch program that funds only the children whose parents could afford to pay the fees and school uniforms. There needs to start with a commitment to free universal education. That will be a prerequisite for countries being selected.

Secondly, we need to find a way to do this in the most appropriate way so there in no way displaces local farmers in these communities. And then we also will look for where countries will target the initiative best to its poorest children.

I should be clear: of the excess commodities, some portion of these commodities are actually used for school lunch. Another portion is monetized, or sold, and then the funds from that are used for transportation, for storage, for refrigeration and administration.

Anyway, I'd be happy to take questions.

Q: How many countries are we talking about?

MR. SPERLING: I don't think that we have decided on a particular number. The $300 million -- can support 9 million children being fed. That may seem like a lot, but if you think about it, many of these countries have average, per capita incomes of only $300, $400. So at $300 million, you can see that for over $30 a year, you can provide school lunch, even school lunch and school breakfast. So I think it can target 9 million. I think how many countries may depend on how many are able to meet the criteria put forward.

I should say that we already have demonstrations in this area. In Indonesia right now, we use excess dry fat milk for a program that feeds 400,000 young people. We have another initiative in Yemen. So both AID and the Department of Agriculture do have pilot programs in place right now that have had positive results.

Q: There has been some criticism that these kinds of programs are essentially a drop in the bucket, in terms of funding. You're talking about a billion dollars in new loans from the World Bank and $300 million in food. Three hundred million dollars is less than Japan spent to put on this summit.

MR. SPERLING: Well, first of all, it's not a drop in the bucket for the 9 million children who are benefitted by it. For those 9 million children and their parents and their families, in countries where children often have iron deficiencies, have protein energy deficiencies, the ability to have a healthy meal, the inducement to go into school can make all of the difference.

Secondly, this needs to be a global effort, and what we're doing is we're using our capacity to do something now that we can do through executive action as a down payment. And our hope would be that if we can do this right and this has support, that it will be something that, first of all, will gain support from the United States Congress with the bipartisan support of Senator McGovern and Senator Dole and Congressman McGovern and others. We're hopeful that that would be the case.

Also, it's important to do things right. And one could do this program in a way that one hurried, and didn't have negative impacts on the local rural communities. But I very much share your overall sentiment, which is that the problems in developing countries and poverties are immense and we all should be doing more.

I don't feel that any of us are doing enough, but I do feel very proud of the fact that President Clinton has very much done what he can to focus these last couple of summits on debt relief, on infectious disease, on education issues. And we worked very hard with the World Bank, through our budget with the new initiative through this to come here and really have a tangible down payment. And it is a down payment, but it will matter a lot to those children. And if it helps build forward a global effort, then perhaps this could be the start of something more significant in the future.

Q: Gene, is the emphasis on development at this year's summit a necessary response to public criticism of the globalization process by the public and by developing countries, themselves?

MR. SPERLING: I'm sorry -- at the beginning or your -- is it the focus?

Q: Is the focus on development a necessary response to that criticism of globalization?

MR. SPERLING: Let me answer two ways. One, I think the focus on debt relief and having debt relief target on poverty reduction has been one long-coming. I mean, Cologne was a further advancement, HIPC existed; what Cologne was last year was an extended focus on speeding up, having deeper, quicker relief for a larger number of the poorest countries, and making sure that the countries come forward with -- that they are coming forward with actually poverty reduction plans.

When one insists on countries coming forward with plans on transparency, on structural reform, on budget reform, one isn't just being a stick in the mud here. You don't want to encourage debt relief to free up debt service for somebody to do pork projects or to help somebody's second cousin, or for corruption. You want assurance on behalf of the people you're trying to help and on behalf of the people in developed countries who have to support this, that the money that you are freeing up is part of an integrated plan.

So I think part of it is that we've made progress on debt relief in a way that I think has built more support and has more countries coming forward. The second issue is, I think that all of us are waking up to how extreme the crisis of AIDS is in Africa and the developing countries.

I'm proud of what we've done, but I think as the more people see, the more people read, I think the more people -- countries will be compelled to go even further than we have.

But I do want to pick up on one point. When people talk about the kind of debates about globalization, you are seeing here a place for a consensus, a new consensus. In other words, much of the debate that's going on has been in how broad and inclusive the trade issues should be. At the same time, many of the parties that are in dispute can come together on this integrated approach to poverty reduction through debt relief, infectious disease, universal education, digital divide. And so I do believe that as we continue to have a debate on how to proceed best with open markets and open trade -- which we deeply believe are critical to poverty reduction in developing countries -- there is this other area that does seem to bring together warring factions into a consensus for poverty reduction, debt relief, and education and health.

Q: Gene, the program the Ex-Im Bank announced last week to loan a billion dollars a year to African countries for AIDS drugs, was that coordinated with the rest of the administration? And how does loaning a billion dollars a year to African countries advance the goal of debt relief?

MR. SPERLING: Well, the initiative by Ex-Im I think was using under what the abilities and authorities they have, their willingness to allow countries who find it in their interest to have access to the Ex-Im for dealing with infectious disease, for them to at least have that access, I think that it has the potential to help. But, obviously, it's important that as that initiative is administered, that it not -- that it be consistent with our overall debt relief efforts and overall plans.

I don't think there's going to be a one size fits all; I think that in some cases, it will not make sense for countries to increase their debt. In other cases, it may be part of a coordinated approach where it does. So I don't think there's a one size fits all answer to that. I think the concerns that you raise are real concerns, and I think whether or not that works really will go to the effectiveness of which initiatives are selected and how the individual countries coordinate it with their overall debt relief and poverty reduction strategies.

Q: Gene, two questions. On debt relief, do we have the sense that the Japanese, particularly, are among the most resistant to moving more quickly or accelerating the pace of debt relief? Could you talk about the Japanese perspective on that since they were the host? And, second of all, the two development initiatives announced about the digital divide in computers and technology, and now agriculture, giving food to developing nations, are both areas in which the United States is the competitively strongest in the world. In agriculture and in IT. Could you answer the critics who say that this is essentially little more than enlightened self-interest for the United States?

MR. SPERLING: Well, I mean, I have a couple of responses to that, which is I do believe all of us should feel a moral imperative to have a more equitable global society, and that on pure humanitarian, moral and religious grounds, that people should want to come together and deal with the crisis of poverty, and particularly AIDS right now.

Secondly, though, I think that it is enormously in the enlightened self-interest of the developed countries to want the developing countries, on economic terms and on security terms, to be stronger, to be healthier, to become more a part of the global economy, to become a part of the globally stable society. There's no question countries that are more secure economically and healthwise are also more likely to be part of a more stable global order.

I think that we have, again, looked at debt relief overall. Our main focus, and where we've put most of our money, nearly $4 billion, has been in infectious diseases. And in this initiative -- you said on agriculture we have comparative advantage. That isn't what the initiative is. Let me be clear: the overall initiative is universal education. That's what the goal is. The goal is universal education for poorer countries. All of the G-8 supported that.

Then the question is, what can we do multilaterally to support that, and what can we do bilaterally? So when we are stepping up bilaterally to meet commitments, of course each of the countries is going to look for areas where they have particular strengths. But this is not us pushing an agricultural initiative; this is us being part, with others, of pushing the universal education initiative. And we're stepping up with money; we're stepping up with encouraging the World Bank to do more. And we have found a particular way that we could help feed 9 million children and induce more to go through school, through an executive action while we are still in office.

In terms of information technology, I can say absolutely that our goals and incentives on there are simply to not allow the existing divides to get deeper. It is absolutely right that it would make no sense to focus on information technology divide in absence of dealing with debt relief, education, and infectious disease. And that is exactly why we've done them together.

On the other hand, when one looks at the importance of overall national income in reducing poverty, reducing health, to think that you would be helping out the developing world by letting them fall farther and farther behind the developed world in this information technology revolution would also be insane. So this -- not to use an old President Clinton term from 1992, but that really is a false choice. The whole focus here has been on an integrated approach, and that's what the focus should continue to be.

Q: Gene, did the Russians raise the debt issue at all, vis-a-vis Russia?

MR. SPERLING: Excuse me?

Q: Was there any discussion at all of Russian debt relief? And what was Mr. Putin's input about relieving debt to the Third World?

MR. SPERLING: There was no mention of -- President Putin did not raise debt reduction in the bilateral with the President. They talked about it extensively in their bilateral in Moscow, considerable conversation, and they discussed it briefly in a phone call that President Putin had with the President a few weeks ago. But this meeting focused mostly on the Mideast, North Korea. As to whether or not it came up in the G-7/G-8, you'll have to ask Lael Brainard. I just don't know whether he raised it or not.

Q: Gene, is it possible for you to break down by commodity what this new program is going to buy? You mentioned the actual commodities, but can you say the amount of --

MR. SPERLING: In the first couple of years, I think that there is about -- I think one's aiming for at least 750,000 metric tons, of which soy, corn and wheat, we have excesses in amounts on each of those that are over 100,000 to 250,000 this year, and projected for the next couple of years, as well. But I'm probably going to have to defer to Secretary Glickman on what the exact amounts of each would be. But the big areas of surplus are soybeans, corn and wheat. Soybean is the one that has the longest projected surplus, probably over the next several years.

And I should -- I do want to be up front in the following: this initiative here is something that one can do without congressional action, as long as we continue to have such surpluses. But a few years from now, if there were to be less surpluses, there will have to be a judgment made by the U.S. Congress whether this is something that they want to support through the appropriations or other processes.

But clearly we have significant excess commodity in those areas now, which -- some of them will be monetized and sold. But as you can see, those are also commodities which themselves can actually be part of an actual school lunch or school breakfast meal.

MR. SPERLING: Thank you.

END 11:06 A.M. (L)