Press Briefing by Secretary of the Treasury Lloyd Bentsen
The Briefing Room
3:10 P.M. EDT
SECRETARY BENTSEN: Well, let me make a few comments and then we'll open it up to questions.
First, let me say that annual economic summits usually don't bring surprises. If there is a big surprise, something's wrong. But heading into this economic summit there is something of a surprise and it's a pleasant one because economics is actually at the top of the agenda. And it's a pocketbook's economics -- jobs, growth, trade.
President Clinton's actions are earning us the same kind of economic respect this year that this country's had in the past in military and diplomatic arenas. Here we have a President who took care of business at home first, cut our deficit; long-term interest rates are the lowest long-term interest rates since the beginning of summits, and our economy even with modest growth is growing faster than anyone else's.
When we go to the table, we'll have three major economic issues. First, growing the world economy. Slow growth in other countries means we have shrinking markets to sell our products to, and that means it's difficult to create jobs at home. So, to promote our growth by promoting growth elsewhere, we want to keep seeing lower interest rates in Europe, like the cut we saw in Germany today of a half a point, and we want to see Japan continue to stimulate its economy.
Second, expanding trade. We want to wrap up the Uruguay Round of the GATT and do it quickly. And we expect all countries to make a contribution in making that one work. It could add 1.4 million jobs in the United States over the next decade. And part of that means Japan must open up its market. Our discussions with them will continue after their election.
Third, Russia. Nothing is more important for global security. In Tokyo we'll push to keep the flow of aid going. I was in Moscow last month, I saw a lot of progress. We have to make sure that Russia continues to stabilize its economy, continues to work at cutting back on inflation, continues to stop the expansion of credit.
Now, let me end with this. If at this summit, we can agree to cooperate and reduce tensions on issues like trade, then it's going to lead to jobs here and abroad. And that will make it well worth our effort.
Now, let me open it up.
Q: Mr. Secretary, what in concrete terms do you expect to get out of this summit, particularly in view of the fact that the Japanese have no government? I mean, can anything be really decided on other than cutting tensions, as you say here?
SECRETARY BENTSEN: Well, I think a lot is already started on it, Helen. I think it goes back to February, the G-7 meeting in London when the President had presented his budget and what he was going to try to do in cutting back on that deficit and the reaction that we had from the G-7 countries that finally now the United States is taking care of some of the things we said they should have taken care of a long time ago. And we had an excellent reaction from them.
And I think we saw a moribund organization that began to come to life again -- each of them wants to take care of their own nation's concerns, but I think more and more of an understanding that we're in this thing together and what one of them does spills over on the other and if we're going to create jobs that means we all have to grow. There's no way the United States by itself is going to pull this world out of recession. And that's why we pushed so hard for cutting back on interest rates. That's why we pushed for a stimulus package out of the Japanese, who had a contractionary budget and then in April did a supplementary budget that gave them some growth.
Q: Mr. Secretary, the items that you've ticked off here, the three economic issues are strikingly familiar to those that have been dealt with at recent previous summits. The one that seems to have been around the longest is GATT, what really are your realistic expectations?
SECRETARY BENTSEN: Well, the way you've phrased that was as though we hadn't accomplished anything, but we have. These interest reductions are material.
Q: I'll concede that to you, Mr. Secretary. I just wanted to really ask you what you expect to do on GATT.
SECRETARY BENTSEN: What we're doing is taking a quad approach where we have the European Community and we have Canada and the United States and Japan trying to get -- come together on some market opening things for products and goods. If we can bring that one off, and that won't be easy, but if we can bring that off I think that group will have a substantial influence in adding an impetus to bringing to resolution some of the concerns in meeting our target of December 15th.
It's not going to be easy. It will be a tough thing to do. But it's a bit different approach when we take those in that quad approach and try to reconcile some of their differences. We're making some headway.
Q: On that subject, though, last weeks talks didn't go well in Tokyo. Can you give us --
SECRETARY BENTSEN: No, that's bilateral we're talking about now, if you want to get to that.
Q: There was a quadrilateral on the GATT, as well, which didn't go well. They're trying to get that restarted.
SECRETARY BENTSEN: Well, you don't get the best offers, you know, on those things until the last. And that's always the case. So I'm optimistic we're going to make some headway on the quad approach. Now, when you get to the bilateral approach, obviously, we run into concerns and the problems of a government in transition. And they're election is just about 10 days off. So that obviously gives us a problem in getting an agreement with the Japanese.
Q: Does the best U.S. offer include cutting textile tariffs, which is what Europe wants us to do?
SECRETARY BENTSEN: We haven't reconciled those differences yet.
Q: Mr. Secretary, on the bilaterals with Japan, is there any chance there would be a framework with the Japanese on trade, a framework agreement?
SECRETARY BENTSEN: Between now and July the 7th?
Q: Well, there was an article this morning. It was an interview that you gave to The Wall Street Journal which seemed to indicate that there was an outside chance that there would be a lastminute breakthrough.
SECRETARY BENTSEN: I think that's the best way to phrase it. I think that would be an outside chance. I think that that's not a probable result, but it's worth exploring and we will explore it.
Q: And what are the prospects of a framework agreement with a new Japanese government? Do you have any idea --
SECRETARY BENTSEN: Well, we're certainly going to pursue that. Of course, we don't know who those people are going to be yet, so it's very difficult to evaluate it. But we think it's a very important objective for our country and not just for ours because that -- as you know, that substantial surplus in trade is not just with us it's with the entire world now.
Q: And understanding you don't know who the new government will be yet, do you anticipate, no matter who it is, that there would be any major changes in the way they do business in terms of trade negotiations, considering the history of their trade negotiations with the U.S.?
SECRETARY BENSTEN: I don't think you're going to see a major overnight change. I don't believe that, regardless of who you have come in. But I think that the pressures are from around the world and that this kind of a relationship, economic relationship, cannot continue without developing a great deal of friction, and we don't want to see that happen. Japan is a very important ally of ours. They work well with us on questions of security, on some of the big international issues. But the economic one is a serious one that has to be resolved. We're going to push it and we think it will be resolved.
Q: Mr. Secretary, you stressed here a couple times the importance of lower interest rates in Europe. Has the Bundesbank done enough in your opinion, or is there room for more?
SECRETARY BENTSEN: Let me say I'm very pleased with what they've done. I like what they've done -- they've come down, let's see, 1.5 to 2 points and our rates have come down approximately a point. That's a kind of stimulus -- and then what they've also done with their budget, they have really made some headway on the deficit in their budget. I think that will give them further room to lower interest rates. So I'm optimistic that will be done. But they've shown a lot of political courage on what they've done on their budget.
Q: Regarding the GATT, there's are some very big differences between Europe and this country, especially about the House agreement. Do you think a breakthrough is possible in Tokyo?
SECRETARY BENTSEN: I think we're going to make some headway on it. As far as a major breakthrough at that point -- but I think we'll continue to progress on it. I think, once again, as I stated earlier, that this quad approach can be helpful to us.
Q: What do you think about the warning or the threat of the French Prime Minister this week who said there wouldn't be any agreement -- in Tokyo if this country doesn't lift its duties on imports of steel --
SECRETARY BENTSEN: I think that is not -- that's a failure to understand our laws here and what we're doing is following the law and we're following the GATT rules in the process.
Q: Mr. Secretary, what, if any, are the prospects for the President and the other summit partners setting set economic growth targets?
SECRETARY BENTSEN: I think insofar as hard numbers, it would be universal. I don't think that's realistic; I don't think you can do that. Because each nation has a different situation that it's facing. I think what we're talking about is a mutual commitment to growth by those countries. I believe that what we saw insofar as the G-7 is an interest to try to bring that one off in a multilateral approach to a degree we haven't seen.
Q: Well, there's been some talk of a figure of three percent. So you're saying that we're not going to see that?
SECRETARY BENTSEN: I don't see an arbitrary number that applies to all.
Q: Mr. Secretary, you talked about the Japanese political situation in terms of bilateral talks. But doesn't it also make it difficult if not impossible to make any real headway on the GATT, on the Russia aid and on some of the other ancillary issues at the summit?
SECRETARY BENTSEN: No. I think that a very substantial amount of aid has been -- progress has been made on the Russian situation. What you are seeing is we were pushing for the IMF to go ahead and use a systemic approach on the first billion and a half. And we were working with the Russians, urging them to curtail their credit expansion and to curb inflation and to increase their interest rates. They did that again by the last raise of some 20 percent. So headway was made by the Russians on that and the negotiations progressed with IMF and you see that money now in the pipeline. And that's every important.
You're seeing also some headway made on SPRF, not to the degree that we had expected to or hoped to in the beginning because a number of these countries are having budgetary problems of their own, but, nevertheless, a package put together that I think is going to have the first $500 million that will be raised for that and then that you'll have -- I'm optimistic that we'll get another $500 million in the way of export credits. And then a billion from the IFI's. And that will help very substantially in the way of privatization.
When I was over there last month, to see the remarkable degree of progress made in privatization of small businesses -- now over 50 percent of them that have been privatized. I think that's extraordinary. And to see the accord achieved between Fyodorov and Gerashchenko of the Central Bank insofar as curtailment on the expansion of credit, that was good.
Q: Mr. Secretary, do you believe -- again you welcomed the International Monetary Fund's first emergency loan under the STF program, the $1.5 billion for Russia. The IMF says that the second tranche, the second $1.5 billion may not come until the end of the year. Do you think that's too slow for such a facility?
SECRETARY BENTSEN: No, I would not try to judge that without seeing -- because part of the understanding is -- and that that first $1.5 billion was given early, after some headway made by the Russians in controlling their credits and their inflation. And we've seen that and the IMF had honored their commitment then.
The second half is held back to wait and see the further progress that has to be made and we'll have to judge that and evaluate that -- the IMF will. And I am in accord with them on that regard.
Q: Do you have any desires of how they use that $1.5 billion, do you know? Does it matter how the Russians use that?
SECRETARY BENTSEN: Of course, it matters how they use it.
Q: How would you like to see it used?
SECRETARY BENTSEN: Very carefully. (Laughter.)
Q: Are we going to put IMF per Vietnam, push it?
SECRETARY BENTSEN: Now, what we want to see is further privatization, and the further stabilization of their currency, and continued steps toward democratization. But that also means that they have to set up a body of laws insofar as investments in their country by people from outside of Russia. There are billions -- we have billions of dollars in the way of private capital, businesses that want to invest if they can understand the law of property rights, contractual legal terms that can be carried out and that they can be depended on, and what can be done insofar as taxation by regions. All of those have to be a part of it.
While I was there, I had about an hour's discussion with the Prime Minister concerning some of those investments, particularly those in resources for which they can get hard currencies relatively fast. If you look at their oil production out there, they have one out of seven of their wells is closed down because of the lack of parts. You're looking at the pipeline, the compressors are not developing the pressure that they have to. You're looking at leaks in them. You're looking at them flaring gas, which we gave up doing 20 and 30 years ago.
Q: The President the other day said that there was some encouraging economic news in the U.S. but most of it was pretty discouraging. Do you see the U.S. achieving even a 2.5 percent growth rate for all of 1993?
SECRETARY BENTSEN: Well, I would certainly expect that in the second half, that you'd be doing better than that. But give you something that's precise, I'm not going to try to that. I've read too many of those from economists. (Laughter.)
Q: Mr. Secretary, the size of the package that you outlined a moment ago on Russian aid, two $500 million pieces and the $1 billion from the IFI, would seem -- if I remember correctly, it would be a good deal smaller than the package that the President had talked about earlier this year.
SECRETARY BENTSEN: I told you that --
Q: Are you now --
SECRETARY BENTSEN: Let me tell you -- I haven't been in Washington long enough where I don't still think $2 billion is a lot of money.
Q: But are you now reconciled to the fact that that's the best you're going to be able to get from the other G-7 partners?
SECRETARY BENTSEN: Let me tell you, I feel pretty good about what he was able to do. I thought that was quite an ambitious target to start with.
Q: Mr. Secretary, you've said from this podium this afternoon that it's going to be an uphill battle to close the Uruguay Round, that the bilateral framework may not happen in advance of this meeting, and that political chaos in Japan has slowed down this whole G-7 process. Why should most Americans look to this meeting as having anything significant to do with their lives? Even on the marginal things --
SECRETARY BENTSEN: I think that the glass is half full and I think that the supporting numbers are pretty strong for us. And I believe that part of the concern today is that -- wondering what's going to happen to the budget package. And I think that's reflected by businesspeople.
What we have seen is an increase in overtime for a week, in overtime hours. That has not translated into jobs yet. But once I think that this thing settles and business knows what it can count on in the way of that budget, then I think you'll see business competence go up, and I believe those overtime hours will translate into jobs and you get job increases. But even so, remember we're doing better than the rest of the world insofar as growth. And if you look back to January 1st and what has happened in the creation of jobs since then, you've had 755,000 jobs. In April, you saw over 200,000 increase; in May you saw another 200,000 increase. So that's progress.
Q: But to follow on --
SECRETARY BENTSEN: Let me give somebody else that's been trying to say something.
Q: On the IMF loans to Vietnam, are we lifting our prohibitions against them? Vietnam.
SECRETARY BENTSEN: I don't the information on that, Helen.
Q: You don't?
Q: You said that one out of seven oil wells are closed down.
SECRETARY BENTSEN: Helen, I've been in that discussion, but I am not up to date on it. I'm not trying to duck you, I just don't know.
Q: You said one out of seven oil wells are shut down in Russia. There are five pipelines that go into every country in Europe. Are those still open or shut down?
SECRETARY BENTSEN: You've had some delivery problems. They're not delivering their capacity; that's part of the problem. And you've had another problem insofar as they're going into other countries, and the fact that they were not being paid, and they slowed down some of the deliveries because of that.
Q: To follow on Gwen's question, can you help us explain to our readers why they should think this summit is important to them? Basically, you've said there isn't much that the President's going to be able to bring home from it.
SECRETARY BENTSEN: No, I didn't say that. That's what you said. What I said was that it was not going to be dramatic, it was not going to be something -- and, normally, they are not. These things take time. And what you're seeing is policies that will be agreed to that we think will lead to growth and will create jobs. But it will not be overnight.
Q: Mr. Secretary, do you think this whole format is outdated and anachronistic? Do you think it should be changed dramatically so you all can meet in a much less formal way, bring other people in?
SECRETARY BENTSEN: Well, I must say that I very much enjoyed the format of the one we had in London where we didn't have to put out a communique to you fellas and didn't waste a lot of time trying to defend everybody's position in the communique. We finally had a press conference afterwards, and that was it. And it was a very collegial atmosphere and we saw cooperation coming out of it, and we made more news than you folks knew about it. And that's not easy.
Q: Mr. Secretary, are you concerned that the IndiaRussia rocket deal -- that deal that Russia wants to sell technology to India on rockets and rocket fuel, do you think that will impede trade and aid with Russia? The IMF is concerned --
SECRETARY BENTSEN: Well, I'm optimistic we'll be able to resolve it.
Q: Is President Clinton have -- does he have anything to prove at this economic -- this is his first economic summit.
SECRETARY BENTSEN: Let me tell you -- I think he goes into this one representing the world's greatest economy. And I think he goes into it showing leadership and working on that economy, and showing the political courage, and puts his imprint on this summit dedicated to growth. And that's important. I think that's a plus.
Thank you very much.
Q: If it's not very dramatic, if you don't expect any dramatic results --
SECRETARY BENTSEN: Thank you very much.
THE PRESS: Thank you.
END3:31 P.M. EDT
William J. Clinton, Press Briefing by Secretary of the Treasury Lloyd Bentsen Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/269147