Press Briefing by Secretary of the Treasury Lloyd Bentsen and Secretary of State Warren Christopher
7:10 P.M. (L)
SECRETARY BENTSEN: Creating jobs. That's been one of our major objectives here. And I've certainly heard some good reports thus far. They're talking about the G-7 having a 2.5 percent growth in its GDP. That's sure a lot better than the one percent that we saw last year.
In some places that means getting into business for yourself. We're seeing that happen in Russia. We're seeing the privatization of some 70,000 firms. I never thought I'd see the day when approximately half of the GDP in Russia would be coming from private sources.
At this summit, it would certainly help to have the American economy in good shape. I didn't feel the kind of peer pressure I felt at my first G-7 meeting in London when they said, now, don't be telling us what to do about our economy until you get your own economy in shape.
To all of them, we could point out what we are doing about our budget deficit. We came to Italy as the Ferrari of the economies -- the fastest-growing one, the one that makes up some 40 percent of the GDP, but insofar as growth has three-quarters of it. It won't be that way long. That doesn't mean that ours is slowing down, but it means that theirs is catching up.
Today, we have reaffirmed our strategy for growth, and we've done it because it's working. The U.S. is going to keep cutting that budget deficit. And for Europe to reduce its deficit so it can create the conditions for lower interest rates and for Japan to stimulate its economy. Nothing encouraged me more than the statement by Mr. Takemuri to tell us that Japan is going to extend its cut on the income tax until they're assured that the economy is recovering well.
I thought our discussion on jobs was also useful. The President put this one on the table, and I think the Europeans are glad he has.
On trade, the top priority was to complete the Uruguay Round of GATT. I told my friends that I felt that the Congress would ratify it this year. And as soon as I return to Washington that's what I'll be working to try to accomplish.
On Russia, I'm impressed with what they're achieving. I look at that inflation. It took the G-7 countries five years to lower the annual inflation rate from 4.4 percent to 2.3 percent. And that was a tremendous accomplishment. It's now the lowest that it's been in decades.
But the Russians have lowered their inflation from 20 percent per month -- that's what it was last year -- to under 5 percent last month. They agreed to expand the amount of support -- support that Russians will get as they proceed along the reform path, that will help them. There is also new support to help other transforming economies now in the exchange markets.
Let me give you a sense of the discussion amongst the finance ministers. We agreed that the underlying economic fundamentals are sound, and that the conditions for an enduring recovery with low inflation are now in place in each of our countries. We're all concerned. We agreed that recent movements in exchange rates are not in line with the basic conditions prevailing in our economies. And thus, as I've been saying, a stronger dollar would be desirable.
We look forward to increasing cooperation, and the one thing I don't telegraph is our future actions. But we're prepared to act when it's appropriate. We agreed to enhance the policy of coordination of the process. You'll likely see more frequent meetings with our central bank colleagues to develop the responses to potential threats to recovery. It'll also involve more cooperation among regulatory authorities to preserve the stability and the soundness of global financial markets.
Now let me end with this. I want to credit President Clinton for making the G-7 a more user-friendly group. We may be meeting in formal settings, but I am starting to see a more general discussion and more give-and-take and a more collegial spirit.
He did something else at this summit. Fifty years ago our leaders put in place institutions that contributed to a remarkable period of growth. And at this summit the President began the process of creating an architecture for the next 50 years, which Secretary Christopher will tell you more about now.
Now let me introduce you to a very good and a very able friend with a tough job, Secretary Christopher.
SECRETARY CHRISTOPHER: Thanks, Secretary Bentsen. I really want to say at the outset how much our whole delegation has benefitted from the wise leadership and sound counsel that Lloyd Bentsen always gives in this kind of a situation. The leaders today made a number of important decisions, a number of things that would have a major impact on the world, the United States for years to come, but I particularly want to highlight one aspect of President Clinton's vision of leadership. Through his personal efforts, the leaders of the G-7 have agreed to take on one of the most important responsibilities that there is, and that is adapting and renewing the institutions we have to the new period ahead, to the 21st century. This will be at the center of the agenda in Halifax. This was a very distinctive contribution of President Clinton -- both the ideas and the words.
As you know, from the beginning of his presidency, President Clinton has led the way to integrate the new market democracies of Central and Eastern Europe and of the New Independent States -- integrate those into the structures and institutions of the West.
The trip we're taking has highlighted those priorities and also indicated the major strides that have already been made in this regard. In Riga and Warsaw, the President provided new support and assistance to the countries of Central and Eastern Europe in their difficult transformation in an economic and political sense.
Tomorrow we will continue our efforts to support reform and renewal in Russia. We'll end this trip by the President's speech at Brandenburg Gate, a very vivid symbol of overcoming the divisions of Europe.
I want to call your attention to a few of the achievements of this summit that are particularly relevant to our foreign policy. We've reaffirmed our commitment to integrate Russia and the States of Central and Eastern Europe, to the Western political and economic structures. We've renewed and affirmed our commitment to ratify GATT this year. We've recognized the importance of Ukraine's political and economic transformation into the future, into a fully integrated Europe. We've taken particular steps to assist in Ukraine's energy needs and to the closing of the Chernobyl reactor.
Finally, in preparing for President Yeltsin's historic participation in tomorrow's discussions, we have endorsed the efforts begun last year at Tokyo to encourage the remarkable economic transformation of Russia. My own participation in this summit has concentrated on the discussions between the leaders on political issues. This will be the focus of tomorrow's meeting when we'll be joined, of course, by President Yeltsin and Foreign Ministry Kozyrev.
We'll cover a number of topics on the world's political agenda -- NATO and the Partnership for Peace, North Korea, Nonproliferation, Bosnia, Haiti, Algeria -- the whole compendium of important issues.
From our discussions at the ministerial level thus far, I can tell you there's a high degree of convergence between the nations of the G-7 on these subjects. I look forward to further discussions and will be reporting to you further tomorrow on these subjects.
Thank you very much.
Q: Mr. Secretary, can I ask you a question about Korea, if you would? Apparently there will be no funeral delegations which normally would be a way to reaffirm past positions. Will the U.S. make some move to try to reaffirm the commitment you have to a nuclear freeze and to a full inspection? And beyond the nuclear issue, this is a vacuum of sorts that is open now. What does the U.S. propose to do or how will you try to reinforce the allies and allay any anxieties?
SECRETARY CHRISTOPHER: Any change in leadership in a country as remote as North Korea on any change that comes suddenly clearly deserves very careful watching, and we'll be watching this situation with great care over the next several days and weeks. The President said we know relatively little at the present time. I began to discuss this matter around 6:00 a.m. this morning when Foreign Minister Han of South Korea -- Republic of Korea -- called and we discussed the developments and what it might mean for the future of the discussions. And the day has been marked by a number of consultations on that subject.
What we know is that in Geneva -- although today's meetings were set aside -- the delegation from North Korea, headed by Vice Premier Kong, a high-ranking North Korean, has asked that our delegation standby to resume the discussions when he receives further instructions, and I think that's a somewhat encouraging sign.
We have seen press reports that the North Koreans want to maintain the schedule with respect to the summit meetings between North and South Korea. But we are in a period in which I think the situation deserves very careful watching, we intend to do that. Of course, we'll try to confirm the nuclear freeze. Probably the soundest way to do that is in Geneva. But we will be trying to use this period as effectively as we can to keep moving in a positive direction with North Korea, not to lose the momentum that seemed to be created by the announcements of the North/South talks and the beginning of the talks in Geneva.
Q: Secretary Christopher, did we have any sense of who is in charge now and whether the successor will likely be his son?
SECRETARY CHRISTOPHER: The preliminary signs that we have there is that Kim Jung Il is head of the funeral planning party in North Korea. That's some sign of a continuity of leadership there. There are some other signs that it may devolve upon him, but frankly, it is too early for us to have any definitive judgments about this. And once again, I put this under the category of a situation because of the remoteness to the country, because of the suddenness of the change in leadership it bears very careful watching and comparing notes with countries in the region who might have good sources on that subject.
Q: Is it your sense, Mr. Secretary, that the summit between North and South Korea will take place as originally scheduled later this month, or are there indications already that that is going to be delayed?
SECRETARY CHRISTOPHER: Well, my only information on this subject comes from press reports that I saw earlier today that the North Koreans want to keep that on calendar. But I think we need to await official word as to this before we can confidently say.
There was a question for Secretary Bentsen.
Q: Secretary Bentsen, you said you don't telegraph your future actions, but were you hinting in some way that you will move on the dollar?
SECRETARY BENTSEN: That would be telegraphing.
Q: And were you disturbed by the 20-point plunge?
SECRETARY BENTSEN: Well, we still believe in a strong dollar, and we still think we have strong economic fundamentals. And we share with the Federal Reserve the objective of continued growth with low inflation; and no, I will not telegraph what we might do.
Q: To follow up that point, yesterday you mentioned that you would not be surprised if the G-7 were to include some mention in the accord about the desirability of stable exchange rates that reflect economic fundamentals. We did not see that sort of a sentence in the communique. Were you disappointed that that wasn't put in?
SECRETARY BENTSEN: No, I wasn't disappointed on that. We discussed the issue, particularly amongst the finance ministers. And we shared the objective of a strong dollar.
Q: Why didn't you --
SECRETARY BENTSEN: And we agreed the fact -- well, I'm telling you now, and you've heard that repeated by other members of the G-7, and particularly finance ministers who have a responsibility in that regard.
Q: But why not put it on paper? I mean, what was the problem of putting it on paper?
SECRETARY BENTSEN: You put it on for me, I just gave it to you.
Q: I wanted to ask Secretary Christopher -- you mentioned a whole list of subjects which -- political discussions on NATO and the PFP. Does the U.S. have specific goals that you could share with us on those issues, or are you just going to have a generalized discussions? Are there any specifics that you're looking for?
SECRETARY CHRISTOPHER: No, on almost every issue, we will have a specific goal. For instance, I mentioned Bosnia. I think the United States hopes to come out of this summit meeting -- and I am confident that we will -- with a strong endorsement of the put forward by, first the Contact Group, and then the ministerial meeting in Geneva last year. And on each of the subjects I discussed, we have a particular goal or a particular language we want to achieve in the summit communique. These communiques have significance for the parties involved. They have significance because they commit the G-7 countries to particular forms of action.
Q: Will there be any specific goal stated on Haiti?
SECRETARY CHRISTOPHER: I don't want to foreshadow. I certainly could not tell you exactly what the leaders will do. But with respect to Haiti, I would expect -- and quite confidently, once again, here -- that the leaders would denounce the illegal government of Haiti and call for the restoration of democracy in that country.
Q: Secretary Bentsen, following up on your earlier comments about the Federal Reserve, there seemed to be some indications from you and others yesterday that you were reverting slightly to the tone you were using late last year when you were suggesting that it was inappropriate for the Federal Reserve to tighten credit further. Correct me if I'm wrong, but do you still have quite the same relationship with the Fed? Has there been any change in that relationship?
SECRETARY BENTSEN: I think we have a very good communication with the Federal Reserve. And I did not try to anticipate their actions, or comment on their actions. I respect the independence of the Federal Reserve.
Q: Secretary Christopher, there's been a lot of talk here by the President and yourselves about transforming the institutions of Bretton Woods and the post-war institutions into new ones for the post-Cold War world. The first attempt here, with the Trade 2000, has gotten off to a rather halting start, to say the least. I wonder if you'd talk a little bit -- if we are present at the creation, now, of something new, why is it much more difficult for both of you to forge these kind of new institutions in this world, compared to the one of the post-World War II?
SECRETARY CHRISTOPHER: I'll talk about the political institutions, and ask Lloyd to talk about the economic institutions.
I think we're making excellent progress in developing new institutions for this post-Cold War period. The Partnership For Peace has been a remarkable success with 21 nations now signed up for it. I think that's the way to renew and modernize NATO. And in another continent, the development of APEC into a much more vital institution with the first-time leaders meeting in Seattle is another adaptation of an early institution to the post-Cold War period.
In the Americas the summit meeting, the first one in two or three decades, I think, gives an opportunity to forge there a new set of institutions for the 21st Century.
So, all across the globe we are developing new institutions. It is more difficult in a sense than it was earlier because we do not have the congealing effect of the need to contain or combat communism. But I think that we are addressing this new set of institutions and comparing them against the problems that we will face in the 21st Century, and they may be quite a different set of problems. Problems like crime, narcotics, environment, population, nonproliferation. Those global issues need a new set of institutions and, so, we'll be developing new institutions and modernizing old institutions. Even the United Nations deserves a very hard look to see how that can become a more effective institution.
Perhaps Lloyd would be good enough to talk about the finance.
SECRETARY BENTSEN: I might speak on the economic side of it. And what you're seeing is these institutions in partial transition and a continuation of that. Let me give you an example of that when we're talking about the IMF.
As I recall, the IMF has around $30 billion in loans and around $40 billion in assets. There's room for further expansion in assistance. And you're seeing that in the SDRs that will be issued. You're seeing that for all of the new member countries. You'll see that for all of the states of the former Soviet Union, and you'll see it for economies that are in transition, too, an expansion of that kind of assistance. And in looking at the World Bank, you will be seeing further consideration of things like the environment, like the poor, and it will not just be for structures or projects at that regard. So, an expansion of the types of loans that they're making.
SECRETARY CHRISTOPHER: I understand I'm keeping you all from Italian soccer. Under these lights here I feel like I'm playing myself. (Laughter.)
Q: Secretary Bentsen, can you clarify the dollar situation one more time, please? The President seemed to throw cold water on the idea of intervention on Friday, talking about the dollar exchange rates in relation to economic fundamentals, but today you're saying we're prepared to act when it's appropriate.
Can you, without telegraphing your plans, rule out any further intervention or higher interest rates?
SECRETARY BENTSEN: No, that would be telegraphing. No. That would be telegraphing. And I get back to the very basics I've told you. And, again, we believe in a strong dollar and we think that the underlying economic fundamentals of the country are excellent and we share the objective with the Federal Reserve of continued growth, low inflation, and I will not telegraph my intentions.
THE PRESS: Thank you. 7:35 P.M.
END 7:35 P.M. (L)
William J. Clinton, Press Briefing by Secretary of the Treasury Lloyd Bentsen and Secretary of State Warren Christopher Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/269794