Bill Clinton photo

Press Briefing by Secretary of State Warren Christopher and Secretary of the Treasury Lloyd Bentsen

January 13, 1994

The Radisson Hotel

Moscow, Russia

3:57 P.M. (L)

MR. GEARAN: Good afternoon. The format for this briefing will have Secretary of State Warren Christopher followed by our Secretary of the Treasury, Secretary Bentsen. For your informational purposes, at the end of the day, towards 10:00 p.m. or so, we'll have an additional background briefing on events for the balance of the day for all of you to -- we'll post an exact time and let you know at the appropriate time.

Let me just give some -- at the beginning, some general impressions from the President on his day here in Moscow in his meetings this morning with President Yeltsin.

He sees President Yeltsin as being very confident, very much on top of the job here. He sees that -- he believes the President can figure a way to work with the parliamentary body and the challenges that lie ahead; that he's committed to reform, and that he expressed his enthusiasm for the Partnership For Peace.

In terms of President Yeltsin's team and the other officials that our delegation met with, the President saw them as very positive and very engaged in the work that they're doing, not particularly obsessed with their political opposition, and upbeat and confident. Overall, he saw this as very reassuring for the United States and, indeed, for the cause of freedom and democracy all over the world.

Finally, in terms of the visit to the church, there are some questions from those members of the pool that were not able to go into the small church. For those of you who have seen the pool report I'm sure noted that this was a Russian Orthodox church that was burned under Stalin and used as a public restroom and recently rebuilt in the last two years. The President had heard about it and read about it and expressed an interest to going there. He has a very strong interest in the role of religion in -- the role that religion has played in democracies in this region.

While he was in the church, the priest allowed him to light a candle in a special place where they have for loved ones that are deceased. The President was very appreciative of that because he related to us that he had wanted to find a place to say a prayer for his mother.

Let me introduce the Secretary of State, Warren Christopher.

SECRETARY CHRISTOPHER: Good afternoon. It seems like I've seen a number of you not too many hours ago. We're about one-third of the way through our stop here in Moscow and I thought I'd give you a preliminary readout, although obviously it's only a very early readout.

We came here with essentially four purposes: First, it was an opportunity for President Clinton and President Yeltsin to renew their acquaintance after about six months after the Tokyo summit, a good opportunity for them to bring each other up to date.

Second, it was an opportunity for President Yeltsin to give President Clinton a report on developments here in Russia from an economic standpoint and a political standpoint as well. Third, it gave President Clinton an opportunity -- the trip did -- to report on the stops he's already made in Europe, Brussels, Prague and Kiev. And, finally, the purpose was to enable the two leaders to discuss foreign policy issues, particularly Ukraine.

Just a few words about the one-on-one session. It lasted about an hour and 20 minutes, perhaps a little more than that. I'm going to take off the subjects they discussed without trying to get into the substance. No doubt, the Russians will at some point want to characterize the substance as well.

First, the Russians indicated an unstinting commitment to the reform process; indeed, an intensification of the reform process. They discussed this in the context of the need for greater concern over the social consequences of the reforms. Secretary Bentsen will be obviously going into much greater detail on the economic discussions that have been had today.

Second, there was a discussion of the Partnership For Peace, which is really the conceptual continuity between the stops that we've had in Brussels, Prague and here. This Partnership For Peace provides a concept for the integration of Europe as a whole, the new architecture for European security in the future.

The third subject discussed was Ukraine, where President Clinton thanked President Yeltsin for the cooperation that has been afforded by Russia to enable the agreement to be reached which will be signed tomorrow.

In the larger economic meeting, President Clinton also acknowledged and thanked Prime Minister Chernomyrdin for the very strong support he has given to the completion of the agreement between the three -- the trilateral agreement. Throughout the course of the last week Prime Minister Chernomyrdin has been very helpful in finalizing this highlysignificant agreement.

The fourth subject they discussed was President Clinton's reporting on efforts he is making in the G-7 to obtain further multilateral support for economic reform here in Russia. And finally, President Yeltsin gave President Clinton a rather thorough report on his appraisal of the political situation here in Russia.

The one-on-one meeting was followed by a rather detailed and lengthy economic meeting which Secretary Bentsen, who will be the principal person speaking this afternoon, will report to you on. Tonight we will be having a working dinner devoted largely to foreign policy, where I'm sure these subjects, among others, will come up: security in Europe; the Russian relationships with their neighboring countries of the new independent states; nonproliferation, that to include both Ukraine and North Korea; Bosnia; and finally the military-tomilitary cooperation between the two countries. As you probably already know, Under Secretary Risner and General Ryan are here representing the Defense Department.

That is a skeletal outline of what the two leaders and their colleagues have done up to this point. I had about an hour and fifteen minutes with Foreign Minister Kozyrev in which we devoted our discussion to the Partnership for Peace and to Bosnia. I would say up to this point we have had an extraordinarily productive meeting -- still a considerable distance to go, but it is reassuring to be back here in the presence of the Russian leaders and find them undeterred by any events, indeed, redoubling their efforts to move forward with the reform process both on the economic side and on the political side, and very important to me, on the foreign policy side.

Thank you very, much. And here is Secretary Bentsen.

SECRETARY BENTSEN: Well Russia certainly is a critical juncture, but I sense their commitment to reform is going right ahead. There's not going to be any hesitation on that one. There was unanimity of opinion in that regard.

President Clinton and President Yeltsin had a discussion about how far the progress had gone thus far; and it's really substantial. If you take a look at the situation where inflation was at 30 percent at the beginning of this, and now it's at 12 percent; if you look at the budget deficit as compared to the GDP, starting out at 20 percent and now at 9 percent; if you look at dollar wages rising three-fold in that same period of time, after President Yeltsin and Deputy Prime Minister Boris Fyodorov described Russia's impressive economic record, President Clinton said that that was a real achievement and that message just has to get out to the world to understand how much progress has been made in reform thus far.

I told President Yeltsin that in my capacity as Secretary of the Treasury I'd traveled quite a bit around this world, and of the economic teams that I had seen, that his was one of the best. President Clinton and President Yeltsin certainly agreed that Russia had a very strong economic team, and that there was no turning back from fighting inflation and continuing to privatize. President Clinton promised that as long as Russia keeps reforming, we'll work with the G-7, with the IMF and the World Bank to get that support as rapidly to them as possible.

President Clinton assured President Yeltsin of the strong support the West has for the reforms that are being made, and we do not want this momentum to slow. President Clinton also agreed with President Yeltsin that more attention has to be paid to easing some of the hardships that we've heard about. We talked about finding ways to cut back on the red tape and to get some of this aid and support to them faster. And I think that the support implementation group can play a very important part in that. And, as you know, the new director flew in with me yesterday and is now on that job.

We discussed how Russia and the international financial institutions can cooperate more effectively so we can have more reform and more support. And we also discussed trade and investment issues. Now, before the large bilateral, I met with Mr. Fyodorov and the First Deputy Prime Minister, Mr. Gaydar. The three of us had a good talk about the wide range of economic subjects. I found both Fyodorov and Gaydar quite eager to carry on those reforms, and even to accelerate them. And that's the way it has to go. I also assured Mr. Gaydar that the West wants to see foreign assistance advance as fast as the reforms advance.

When Mr. Fyodorov and I were talking about how privatization is going, he told me that some of the people in Russia used to line up, queue up for bread and now that they're queuing up for vouchers for businesses, shares in business, and that those things had increased in the last few months six times.

And, finally, Secretary Christopher and I met with the new American Chamber of Commerce, and told them how we're urging the Russians to create the kind of body of contract law that will encourage investment from the private sector.

With that, I'd welcome any questions you have.

Q: Mr. Secretary, thank you. Did you or anyone else bring up with the Russians the problems created by government corruption and the cynicism that that engenders among the public?

SECRETARY BENTSEN: No, that was not -- I don't recall that being discussed, Johnny.

Q: Secretary Bentsen and Secretary Christopher both, what is your view of the LDP Party, the way the United States should treat them, and why wasn't the representative of the party invited to the reception this evening?

SECRETARY CHRISTOPHER: Well, we didn't invite Mr. Zhirinovsky because his actions and his language and his statements do not make him fit to be in a meeting or invited by the President of the United States. The invitations were issued on an individual basis, and the individual was invited on that basis.

Q: Mr. Secretary, could I just follow up on that? This person you're saying then will not be coming as a representative of the party? And I guess the question is, are we to understand that the President does not have a problem with the philosophy of the party, it's only a problem with the person of the man Zhirinovsky?

SECRETARY CHRISTOPHER: I don't want to get into trying to characterize or judge the party at this point, simply reiterate what I said, that we felt that it was not appropriate for the President of the United States to be inviting a person who has made the statements and whose conduct has been the conduct of Mr. Zhirinovsky. The other individual was invited because we thought he could make a contribution to the meeting.

More broadly, I think when you see the guest list tonight you'll see that it's really quite eclectic in its selection, a wide range of people invited, which is exactly what President Clinton intends.

Q: Mr. Secretary, when you had the discussion of the need to ease the social pain in the country, did you also discuss the need to ease that pain within the military, not in the institutional sense but the personal sense, for all of these young troops and officers who have no housing and so on?

SECRETARY BENTSEN: We did not discuss that specific part of it. We did talk about the fact that the World Bank has some $500 million ready to assist insofar as easing some of the social burdens that have taken place, some of the hardships. They were particularly interested in funds for retraining, for worker dislocation, and in turn, for some of the equity funds to go into some of the major industries that are not competitive anymore, to try to see that we get some equity capital in those and to make them productive. Those things were discussed and we have funds for that purpose.

And if you look at what we had insofar as the revitalization, reorganization in that fund, part of it was supposedly dedicated for that. In addition to that, you're seeing $100 million now set up -- and Mr. Blumenthal is the director of that -- to assist in the modernization and the productivity and the creativity insofar as industry to make it more productive.

Q: Since restiveness within the military is obviously going to be a continuing concern, do you anticipate that you're going to have to concentrate on this specifically, since so many --

SECRETARY BENTSEN: I would assume on that one that the government of Russia would be leading that.

Q: Could you please give us a sense of how central you or Secretary Christopher believe Boris Yeltsin's participation is to reforms? It's hard for some of us watching this trip to decide whether President Clinton is here supporting Mr. Yeltsin personally or supporting the concept of reform. And could you give us a sense of how those two things interrelate?

SECRETARY BENTSEN: Well, I think they very much interrelate insofar as the support for President Yeltsin and for reform. I think one of the very pleasing things to me was to see the continued commitment by President Yeltsin to reform and in talking to Gaydar and to talking to Fyodorov, they felt in some instances it had to be accelerated and that some of the pain that they had was by not going fast enough on reform.

One of the cruelest taxes of all is inflation, if you're talking about pensioners or you're talking about middle income people. And if you want to see business investment made you have to have a stable economy, or American business, a foreign business is not going to invest. So it is a primary responsibility.

Q: That doesn't answer the question about the President's -- where the President's commitment is. Does Mr. Clinton feel a certain personal commitment to Boris Yeltsin here? Is that one of the things he's trying --

MR. BENTSEN: Well, I certainly think he is committed to trying to help him in this regard, because he is carrying out the kinds of policies that we think are important for Russia to further democratize, to further privatize to a market economy that gives us a peaceful neighbor with a rising standard of living and with an expansion of trade on both sides.

Q: I was going to ask Secretary Christopher, how much in control is Yeltsin at this point? Is there a real threat from the opposition party, the nationalists, and will they join the Partnership For Peace? Did you get any sense of affirmative --

SECRETARY CHRISTOPHER: To take the second part first, we got a very positive response from the Russians, both the President from President Yeltsin, and myself from Foreign Minister Kozyrev, on the Partnership for Peace. I think it's up to the Russian government to formally respond to the invitation which they'll soon be receiving.

On the second point, as I say we're only part of the way through our visit, and you'll have a further readout ON BACKGROUND tonight with respect to the one-on-one meeting, but I don't have any sense at all, other than that President Yeltsin is firmly in control. He was definitely in charge of the bilateral meeting on economics today and seemed, as Mark said, very much on top of his game.

Q: Secretary Bentsen, can you explain how you balance your belief that they have to continue very firmly toward reform with your thoughts about cushioning the effects of that, perhaps through the multilateral -- your thoughts about cushioning the effects of the reforms? What can be done to cushion the effects, while not giving up the pace and the momentum?

SECRETARY BENTSEN: I think that can be done. That money is there. You see, one of the problems that you had was, in borrowing money, they wanted to look at the cash flow for whatever was being invested in to be sure that was going to be paid. Now, one of their problems right now is the expansion of credit to industries that are not competitive, that are not selling or making a product that will be bought in the rest of the world or even domestically. And that is a very high subsidy to pay to try to get to some of the social problems.

It is much better taken care of by some of that subsidy being taken away from some of the outmoded industries and, in turn, go to the social structure insofar as retraining dislocated workers, the creation of jobs by equity investment coming in, taking them in a different direction, developing a competitive product. Those are the types of things that can be done. And the World Bank is in a position to do that.

Q: Mr. Secretary, you said a moment ago that Messers Gaydar and Fyodorov spoke about accelerating reform.

SECRETARY BENTSEN: They said in some instances to accelerate it, yes.

Q: Well, did Boris Yeltsin indicate that he's even going to keep them on his team and that he shares their view on accelerated reform?

SECRETARY BENTSEN: Well, I didn't ask that. He spoke about -- I spoke about the competence of his economic team, and he agreed we had one that is making economic history for this country for the kind of transformation and the kind of change that's taking place here.

Q: Well, how do you square those comments with what Mr. Chernomyrdin has been saying to the Duma just in the last few days that this reform has to be controlled and be carefully crafted.

SECRETARY BENTSEN: Well, I think that that's true, and that that doesn't stop you for a minute from pressing on. But, controlled and carefully crafted? Sure. But it's reform and it is major reform, and it is taking place and it's going to be continued from everything I heard and, in some instances, actually accelerated. One of the points that was being made, though, was that they have to have a containment of the expansion of credit. That has to be to be able to curb inflation and to put together a kind of a package that's going to accelerate the payments from the IMF.

Q: -- complains about political and economic instability here that make it difficult for them to invest. Is it your sense that this country has settled down enough now for American businesses to put big money into Russia?

SECRETARY CHRISTOPHER: Well, when one goes and meets with American businessmen, as I frequently do when I'm traveling abroad, you hear an evaluation of the situation in the country that always focuses on the problems they're facing. They do that because that's what I ask them to do in the main, because it doesn't help us do our job if they only tell us what's going right. So we did hear a list of things that might be done better here and might be more conducive to investment.

But sitting at the head table and talking to the others, I see a number of countries just right on the edge of making major investments here. They're looking toward further reform. They're looking for further refinement in the legal structure. They're looking for clarification on the tax front. But I think the main theme that I got out of the meeting was what a tremendous opportunity there is here in Russia, which has brought 25 companies together to form the American Chamber of Commerce, which has been 80 percent subscribed* in the first month in which they've been trying to put the American Chamber together. So there's a very strong interest by American business in Russia, no doubt working through some very serious problems.


SECRETARY BENTSEN: Let me comment on that a little. Let me comment on that just for a minute, if I may, without interruption.

Q: Remember the full question, though, please. Has the country settled down enough?

SECRETARY BENTSEN: Well, I think what you're seeing is a country that is stabilizing. They have some decisions to make and they are at a critical juncture. But when I looked at a meeting that must have had 400 or 500 people there who are interested in business and investing here, is it risk capital coming in? Of course, it's risk capital. But when you see risk capital coming into a market like this, they are coming because they think there is also the opportunity for great rewards.

To see them continuing to try to improve a body of contract law, which is terribly important, to encourage that kind of investment, that's progress being made. More to be made? Of course, there is.

THE PRESS: Thank you.

END 4:21 P.M. (L)

William J. Clinton, Press Briefing by Secretary of State Warren Christopher and Secretary of the Treasury Lloyd Bentsen Online by Gerhard Peters and John T. Woolley, The American Presidency Project

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