THE WHITE HOUSE
Office of the Press Secretary
(Vancouver, British Columbia)
| For Immediate Release | | November 24, 1997 |
PRESS BRIEFING BY
NATIONAL SECURITY ADVISOR SANDY BERGER,
ASSISTANT TO THE PRESIDENT FOR INTERNATIONAL
ECONOMIC POLICY DAN TARULLO
DEPUTY NATIONAL SECURITY ADVISOR JIM STEINBERG,
AND DEPUTY SECRETARY OF TREASURY LARRY SUMMERS Waterfront Centre Hotel
Vancouver, British Columbia
3:00 P.M. (L) MR. MCCURRY: Good afternoon, everyone. We want to go ahead and begin a readout on the President's activities today, given the deadlines some of you are facing. I expect to be joined in a little while by someone who can help us a little bit with the meeting the President is having now with President Kim of the Republic of Korea.
I have two briefers here, National Security Advisor Samuel Berger, and Mr. Dan Tarullo, Assistant to the President for International Economic Policy, and we have now been joined by Mr. Steinberg, the Deputy National Security Advisor; and the Deputy Secretary of the Treasury, Dr. Lawrence Summers -- experts all on a variety of subjects.
Mr. Berger will start, and he is getting the readout on President Kim's meeting so he may actually do that.
MR. BERGER: Let me give you a readout of my readout. Two issues were very much part of almost all of the meetings the President had today. One was the Asian financial situation, both with respect to Pacific countries and generally. The other was climate change as the President both explained our position, sought to gain support of the countries present here for the participation of developing countries in an overall climate change regime.
Rather than simply repeat a similar discussion through each of these bilaterals, Dan Tarullo, when I'm done, will talk about those two issues both in general and as they related to the individual meetings, and I will not try to repeat that.
To give you a little bit of a chronology and some sense of the other issues that were raised in these meetings, we started this morning, the President hosted a breakfast for the heads from the ASEAN states, Prime Minister Goh, Prime Minister Leekpai, the new Prime Minister from Thailand; the Sultan of Brunai; Prime Minister Mahathir; Prime Minister Ramos. Prime Minister Soeharto had not arrived. There was a timing problem in terms of his attendance, and we met with him right after the breakfast.
That meeting really did focus very much on the two issues that I've mentioned. That is, the financial situation and the issue of climate change, with the President making a very strong argument for participation of the developing countries in the climate change regime. And I'll let Dan amplify on that.
In the meeting following that with President Soeharto, he began by expressing his gratitude to the United States for the assistance that we provide to Indonesia in connection with the devastating forest fire problem that has plagued that country and the region. We provided, in addition to some technical assistance, three C-130s that were equipped with fire-fighting equipment. And President Soeharto was very grateful for that as well as for the participation of the United States in a backup capacity in the financial arrangements that have been developed in connection with Indonesia's financial concerns.
Again, much discussion of both the climate change and the financial issues. Let me -- at one point of the meeting, however, there was a discussion of trade in which the President expressed to President Soeharto his satisfaction that the APEC leaders here tomorrow will endorse in their communique a program for trade liberalization in nine sectors, similar to what they did last year with respect to the Information Technology Agreement. He acknowledged President Soeharto's leadership because it was during President Soeharto's chairmanship of APEC, when we met at Bogar, that the thrust towards a trade agenda really took shape. And the President made note of the fact that this is a very important part of the way in which Asia will regain its strength through greater trade.
There was some discussion of human rights issues, and President Clinton talking about the need for countries like Indonesia to deal with how to accommodate order and liberty and create the correct balance as they develop, and indicated that particularly in this new information world, provision will need to be made for people who move to the beat of a different drummer and for localized concerns within the context, obviously, of social stability. President Soeharto did not respond to that directly.
The President's meeting with President Jiang followed. They talked a bit about President Jiang's recent trip to the United States. And President Clinton said he thought that the trip and the visit had been productive. President Clinton made reference to some important new proposals that the Chinese have made on WTO, with respect to its WTO offer. And the two leaders attached their trade ministers to continue and resume negotiations based upon these new -- significant new offers from the Chinese.
The President indicated that we would be moving forward on the peaceful nuclear energy agreement, as he indicated when President Jiang was in Washington. Also, a discussion of climate change. The President raised the issue of political dissidents. He said that he was pleased that Wei Jingsheng had been released and encouraged President Jiang to continue that process with others, as well as to sign the covenant on civil and political rights.
There was some discussion of Iraq, in which the President -- since China this month is in the chair at the Security Council, it has a particularly significant role in moving this forward. The President indicated that we committed to the sanctions regime until there is compliance -- our President -- and that we cannot give concessions for defiance or weaken UNSCOM, and that, hopefully, we would be able to work together with the Chinese as we went forward.
President Jiang, in his discussion, also I think felt that the visit to the United States had been satisfactory from his point of view. He also acknowledged that they had sought to make some new offers on WTO and thought the trade ministers should pick this up. He welcomed the President's statement that we would implement the peaceful nuclear agreement, as we talked about. Lots of climate change. With respect to dissidents, President Jiang repeated what he has often said in the past, that this is a matter for the judicial and legal procedures of China.
On Iraq, he indicated that he hoped Iraq would comply with the United Nations resolutions, the matter could be resolved peacefully, and that it would work with the United States in doing so.
The meeting with Prime Minister Hashimoto -- some discussion of the defense guidelines, and President Clinton expressing gratitude for the way in which the Chinese have handled this matter as we've moved forward to modernize that defense relationship. Again, lengthy discussions of climate change and financial issues, which Mr. Tarullo will brilliantly elucidate for you, with the President indicating that it was important from the United States' perspective that there is progress on deregulation -- thought that was important both for Japan and for the United States as it sought to strengthen its position going forward.
I am told -- I did not participate in the Kim meeting, but I am told by a usually reliable source -- that is, my deputy -- that it was a brief meeting, but that President Clinton expressed his appreciate to President Kim, who as you know, goes out of office in a few weeks, after the Korean election, but with whom we have worked very closely over the years for that cooperation that has been so productive, I believe, for both countries, both in resulting in the agreement to end North Korea's nuclear program and now, finally, after 16 months, the agreement to begin negotiations on a permanent peace arrangement in the Peninsula.
So it was mainly a, in addition to some discussion of the Korean financial situation, it was mainly an expression of the President's gratitude to President Kim.
Let me ask Dan now to fill in the two big pieces that I have left out.
MR. TARULLO: Thank you, Sandy. Rather than try to go through a blow-by-blow, let me distill some of the main themes that actually arose during the course of all four sets of meetings, and then, to the degree that there was something specific and particularly interesting in one of the meetings on these topics, I'll try to identify that as well.
With respect to the financial system situation in Asia, which obviously has commanded a good deal of attention in the lead-up to APEC and here this weekend, I think several points emerged in the course of the meetings, beginning with the ASEAN breakfast this morning and continuing right through the meeting with Prime Minister Hashimoto.
First, it is clear that all the leaders -- President Clinton and all of his interlocutors -- take the situation very seriously. It is indeed a challenge and a challenge that needs to be met forthrightly. A number of the leaders pointed out that there are obvious implications for the rest of the world and not just for the Asian economies that are directly affected. The President noted on several occasions that nearly a third of our exports go to Asia, so obviously we have a direct interest in the continued growth and well-being of the Asian economies.
Secondly, however, I think there was also running through the discussions among the leaders, confidence in the underlying strengths of the Asian economies. There are, as you all know, a number of common elements which have served those economies well over the past three decades -- the high literacy in education rates, the fact that they have high savings rates, that they have an outward orientation, making their industries compete on world markets -- these strengths have not disappeared in the course of the last few weeks or months. They are still there to build on. And, as the President said on several occasions and some of the other leaders echoed, if the countries in question adopt the right kinds of macroeconomic policies and structural adjustment policies and take the necessary measures to strengthen their financial systems, then there should be a good prospect of reigniting the conditions for sustained growth in the region.
A third point, which I think came up in every meeting, was the importance of the Manila Framework, which was brought to a conclusion last week by Larry Summers and Tim Gehtiner from the Treasury Department, in Manila. This was endorsed by each of the leaders in their conversations. Certainly, when there was any lengthy discussion of it, as you all know, there's a regional agreement, but one that identifies the centrality of the International Monetary Fund as a response to the kinds of problems and financial dislocations that we've seen over the course of the last several months.
Beyond that, however -- and this was particularly true in the ASEAN meeting, where there was fully a 45-minute discussion of these issues -- there was a determination on the part of the leaders -- of the President, of his guests at the ASEAN breakfast, certainly of President Soeharto and Prime Minister Hashimoto as well -- to push forward with the Manila Framework, not to have it be a one-shot process, a single document that was issued by the finance ministries in Manila, but instead be part of a process that goes forward in order to assure that the right kind of support is being given, that the right kinds of policies are being adopted, and that international institutions are well-suited to dealing with the kinds of problems we're seeing now.
To that end, as you may or may not already know, there will be a meeting of finance ministers next week in Kuala Lampur. This is the so-called ASEAN Plus Six. There is already planned a meeting in Japan in January, of the participants in the Manila Framework to do their first review of the framework and the first efforts to begin implementing it. And a number of leaders again, particularly in the ASEAN breakfast, stressed to the President, and he whole-heartedly agreed, that it was important to maintain high-level attention to these issues and to continue to push them forward, not just among the countries in the Asia Pacific region, but to take them to the IMF and to other countries which are members of the IMF.
With respect to the ASEAN breakfast itself, a number of the leaders made reference to their particular situations, particularly in terms of the rapidity with which they were faced with problems. On several occasions it was, to me at least, quite interesting that on several occasions several of the leaders said something like, there is not a quick fix here, it's going to have to take work and we need to study exactly what else may usefully be done. At least one leader made reference to the International Monetary Fund's planned study of market participants, which is a way of analyzing what has been going on in the region.
I think in the Indonesia meeting, the President and President Soeharto spoke specifically of the IMF plan which, as you know, contains contingency backup financing by a number of countries, including the United States. President Soeharto thanked President Clinton for U.S. participation in this, and the two Presidents agreed on the importance of Indonesia taking steps, which it fully intends to do, to implement the terms of the program.
With respect to Japan, there was first a discussion between Prime Minister Hashimoto and President Clinton of the Asian situation generally, and then there was a discussion of the Japanese economy specifically. With respect to the financial situation in Asia, the Prime Minister and the President again both endorsed the Manila Framework and agreed that the United States and Japan, both directly through the leaders and through our monetary authorities through the Ministry of Finance and the Treasury Department, need to and intend to continue to work closely together to move forward the Manila Framework and, indeed, our response generally. As you know, we were able to work quite successfully with Japan and the other countries in putting together the framework in the first place.
With respect to the Japanese economy as such, there was a fair discussion of -- a fairly long discussion, given the relative brevity of the meeting, of the Japanese economy. President Clinton reiterated some of the points he's made in the past about the importance of domestic demand-led growth. He also indicated the obvious importance which we attach to a strong economy, not just for U.S. interest, but also -- and this is different, really, since the last meeting -- for the rebound of Asia. He indicated the interest that we all place in strengthening the Japanese financial system and noted, did acknowledge the steps that Japan is taking in that regard.
He really did emphasize the potential for Japan to bring back the Asian economy and, in that light, reiterated the kinds of points we've been making on the macroeconomy and also the financial system.
Prime Minister Hashimoto gave a quite extended discussion of the Japanese economy. He indicated that, regrettably, the concerns that we U.S. officials had expressed earlier in the year about the growth prospects for Japan had turned out to be reasonably accurate, and indicated that a series of exogenous events had further exacerbated the macroeconomic difficulties which Japan was facing.
With respect to the financial system itself, he indicated the intention of Japanese authorities to protect depositors in their financial system, but again, as you may have gleaned from recent activities, indicated that that did not necessarily mean protecting individual financial institutions. He laid the emphasis on depositors.
Then Sandy has alluded to deregulation, the importance the President placed upon concrete results by the time of the Birmingham summit, from the deregulatory dialogue that we agreed in Denver with Prime Minister Hashimoto. However, both the Prime Minister and the President did also make reference to a far-reaching deregulation of the Japanese economy as an important element of medium-term growth.
On climate change, which I'll try to do briefly, here the President was not looking today for commitments or for agreement, but he was, I think, making his case to his fellow leaders about the importance of developing country participation in the upcoming Kyoto conference and ultimately a Kyoto treaty if one is agreed upon.
His basic framework for approaching this issue begins with the facts of global warming, the fact that it is a global problem; that, notwithstanding, the fact that to date the largest portion of concentration of greenhouse gases in the atmosphere have come from developed countries, that within the next 30 years, developing countries will be emitting as much or more as the developed countries, and thus any realistic effective solution does necessitate the participation of developing countries.
He indicated on each occasion that this did not mean commitments identical to those of the developed countries. He used as an example the proposals the United States has made on joint implementation and emissions trading as instances in which there was a win-win circumstance in which developing countries would be able to gain access to cleaner, more modern technology in exchange for credits for emissions reduction being given to companies from developed countries.
Because of the fact that the bilaterals were quite brief, there was not a back-and-forth of much sort on climate change itself except from Prime Minister Hashimoto, who, as chair of the Kyoto conference, indicated his interest in trying to achieve a successful conclusion.
In the ASEAN breakfast this morning, however, a number of the leaders, even though there was only about 15 minutes for this part of the conversation, a number of the leaders did respond by indicating the interest that they do have in obtaining cleaner technologies. I think the Thai Prime Minister in particular indicated that he did not want his country to end up having to accept the older, dirtier technologies if the rest of the world was moving to cleaner ones.
I think that in several instances there was some interest in pursuing some of these issues, but, as I say, this was not a morning looking for commitments. The President asked that the leaders take these matters under consideration and consult with their own environmental and other ministers.
MR. MCCURRY: I want to ask Deputy Secretary Summers to add a little to that, because he has to leave momentarily.
DEPUTY SECRETARY SUMMERS: All I have to add is a very brief comment on the Yamaichi situation. U.S. regulators were in close contact with their Japanese counterparts throughout the weekend and continue to monitor the situation closely. We welcome the Japanese Finance Minister's statement assuring that the markets -- that Japan will take necessary steps to contain the effects of the closure of Yamaichi and to safeguard the stability of the financial system. We understand that Yamaichi's U.S. broker-dealer is being liquidated and we expect that this will be achieved smoothly and without disruption.
Q Could we ask Sandy Berger a couple of questions about China? Was there any elaboration on -- the Chinese are delighted that the President said that he would push for peaceful exchange of nuclear technology, non-weapon technology. Did they develop it at all? And, secondly, did the Chinese have something to say, which we thought from the foreign ministers' meeting yesterday with Albright might come up, on they agreeing with us that they want to improve the North-South Korean dialogue?
MR. BERGER: On the second issue, that did not come up. On the first issue, just to put it back in the context for each of you, when Jiang was in the United States and the discussion leading up to that, we received the kinds of assurances with respect to non-participation of programs of other countries involved in developing nuclear weapons, which enabled us to make the certification under the 1985 Peaceful Nuclear Energy Agreement, which, in turn, would allow American firms to sell equipment to China involved in nuclear civil electrical power plants. The President indicated that he intended to go forward with that certification. Jiang indicated he was pleased that was the case.
Q So you're going to ask Congress to approve?
MR. BERGER: Well, you notify Congress.
Q -- two ways. You can have the sale and then -- what procedure is he going to follow, do you know?
MR. BERGER: Our intention is to notify Congress as provided under law. And then what happens is that if a particular company wants to sell a turbine it has to go to the Commerce Department, get a license; that licensing procedure is one in which you can determine what the end use is, you can place some constraints with respect to a particular sale.
Q Sandy, can you tell us if the President regretted his comment yesterday referring to the financial turmoil in Asia as "a few little glitches in the road"?
MR. BERGER: As far as I know, "glitch" is an undefined term. Obviously, the President, in describing a situation like this, wants to be cautious in not either overstating it or causing the situation to get more complicated by virtue of inordinate rhetoric. I don't know that this was a carefully conceived word, glitch. I think he was talking about that these are not insurmountable.
MR. TARULLO: What the President said this morning in one of the pool sprays I think sums up his perspective on it more accurately, or most accurately, which is it's a serious matter which he thinks he and the other leaders need to pay serious attention to. But, as I said earlier, he has great confidence in the underlying strength of those economies.
Larry has got to catch a plane, so if there are questions for Larry we should take them.
Q Larry, can you tell us, in the wake of the bank failure last week in Japan, the brokerage house this week, how much concern on the American side is there that Japan -- going to be the next country that needs a bail out?
DEPUTY SECRETARY SUMMERS: Japan's situation is profoundly different than that of other economies in the region. It is the second largest economy in the world, with enormous strengths based on low saving and tremendous -- high saving, low unemployment -- and tremendous and very impressive productivity performance.
What is important for the economies of Asia, for us and for the global economy is that the Japanese move decisively to address the longstanding concern of their need to stimulate domestic demand in their economy and to act to resolve the various financial strains that have arisen in Japan by responding to the problems of troubled financial institutions in a way that protects depositors. That was the subject of the discussion between the President and the Prime Minister, and I think it is important for the global economy that Japan move forward, as it has committed to do, in those areas.
Q If that's the case, when the President was asked, is Japan going to need a bail out from the IMF, why didn't he say, no?
DEPUTY SECRETARY SUMMERS: The President was I think speaking to the situation in Japan, which is one that obviously is the situation in each of these economies, is of concern. But I think that the President concluded his answer by emphasizing the importance of a resumption of growth in Japan as something that was crucial to pulling the other economies in Asia along.And I think that the way to see Japan in the context of these problems in Asia as a situation where a resumption of strong domestic-led growth can make a major contribution to resolving the problems in Japan.
Q How did the Japanese respond --
Q Can you tell us how the Japanese responded to the President's assertion that --
MR. MCCURRY: One at a time.
Q Did the Japan respond to -- did the Prime Minister respond by indicating that Japan accepts the idea that they have a major responsibility for improving growth in Asia, or did they give their usual spiel about how they're going to have a lot of retirees 20 years from now and they're sorry there's not much they can do. Did they indicate that their willing to -- since your forecast was right and theirs was wrong, that they're willing to change their policies?
DEPUTY SECRETARY SUMMERS: I think the Prime Minister made clear a number of domestic concerns, but I think very clearly recognized the importance of Japanese economic -- of Japan's economy succeeding both primarily for the benefit of the Japanese people, but also for the economy of Asia.
Q Can you explain more specifically how the Manila arrangements will work? Obviously, the IMF is central to this. The countries in the region now will have a greater say and they will also probably have to provide more of the funds in case of a major crisis. Will it be a situation in which they will also have a greater say with regard to the type of conditionality, or how exactly will this work?
DEPUTY SECRETARY SUMMERS: As the President said, in terms of crisis response there are three critical elements in the Manila Framework: First and probably most important, strong domestic response by the countries involved to create an economic environment that can attract capital and maintain confidence. Of particular importance in that regard is measures to strengthen the banking system.
Second, a strengthened IMF response. That is a response that will come from the IMF. We spoke in Manila of developing a 21st century approach to 21st century crises. That means a large financial response up front to provide the confidence that is necessary to avoid instability. That will be provided by the IMF, working through the IMF board.
It was the intent of the countries that met in Manila, as I suspect it will be the intent here at APEC, for this group of countries to help to move the world system along in this area in just the same way that APEC has in the past catalyzed efforts in the World Trade Organization to promote global trade liberalization.
The third piece is a cooperative financing mechanism such as was in place in Indonesia, through which the countries in the region will, on a case-by-case basis, backstop IMF finance to ensure that adequate resources are available.
I just want to be very clear that I do not foresee under any circumstances that I foresee any IMF program for Japan. Obviously, Japan working with the IMF has a crucial role in responding to -- as do we -- in responding to the various situations that may arise.
Q You said the President stressed -- that it was stressed to Japan the importance of stimulating domestic demand. How much concern is there that for both Japan and Korea, as a logical means of trying to work through this economic problem they're having now, their exports will increase and the trade deficits the U.S. suffers with both of those countries will be exacerbated?
DEPUTY SECRETARY SUMMERS: I think it is crucial in both Japan and Korea to -- although the situations again, as my answer to the last question suggests, the situations in Japan and Korea are profoundly different and I don't want to analogize them in any general way. What I think is important is in Japan is the growth be domestic demand led, that they take steps to help the financial system so they can finance strong levels of investment, and that they take steps to revive consumer confidence so that consumers are spending and so that the Japanese economy is growing, supported by demand from within.
I think as a general statement applying to the Korean situation and other situations, that one of the reasons why a resumption of confidence is important is that it will permit greater investment flows into these countries, which in turn will coincide with stronger exchange rates, which I think is in their own interests and in the interests of the global economy.
Q Does that mean that you do not foresee a worsening of the trade deficits?
MR. MCCURRY: Other questions?
Q Did Prime Minister Hashimoto give any indication that he's willing to go beyond policies already announced to spur domestic demand-led growth?
MR. TARULLO: He didn't comment on that other than to emphasize the importance that he placed upon achieving a set of policies to achieve -- to implement a set of policies to achieve domestic demand-led growth.
In talking about deregulation he did indicate that it would be a pillar for renewed growth in Japan; did not describe it as the exclusive means thereto.
Q Did he discuss any possible changes not yet announced on the fiscal policy front, specifically taxation?
MR. TARULLO: No, he did not. He did not.
Q On Iraq, could you explain how it is over the weekend that Saddam's real estate holdings expanded from 40-something to 70-something sites? And could you expand a little bit on the President's comments on what is meant by a palace in Iraqi terms?
MR. BERGER: Well, I don't know which figures you're talking about.
Q The President used 78, 78 palaces.
Q The presidential sites, the President cited 78 such palaces today.
MR. BERGER: As opposed to what?
Q Sixty-three yesterday, according to Secretary Cohen.
MR. BERGER: When we get back to Washington we'll try to do an inventory and get you the correct numbers. I think the fundamental point here -- I don't know, quite honestly, sitting here, precisely what the number is. The point the President is making here is that there are dozen of presidential palaces, that they are not simply residences, even though they are designated as presidential palaces that they are very large in size and very often associated with large land areas. And if the UNSCOM inspectors believe that there is a reason to have access to one of those sites, they should be permitted to have access. I will try to clarify the discrepancy in the numbers.
Q Sandy, but on that the President said, you know, his suspicions aside -- as you just said, it's up to the U.N. to decide -- but what are the U.S. suspicions? If indeed as he said several of these are as big as the District of Columbia --
MR. BERGER: I don't think the U.S. suspicions here are relevant. One of the things we've tried to emphasize over the last two weeks is that UNSCOM should not be politicized by Saddam Hussein, by the Russians, by the Americans, or by anyone else. They ought to be able to function as professional experts, as nuclear nonproliferation experts -- many of them the leading experts in their country -- and be able to do their job in a professional, technical way. And I think that's what the President was referring to.
Q Well, Sandy, is the United States satisfied at the moment with the state of play regarding the inspections and the continuing carrying out of UNSCOM's and the U.N.'s mission?
MR. BERGER: Well, as I understand it over the last three days, the inspectors have been permitted to do their work. We're not going to dictate to them or seek to dictate to them how they conduct their work. Resolution 687, which is the resolution that from which their authority -- fundamental authority derives, and a series of subsequent resolutions over the years, makes it clear that they should have access to whatever sites they deem appropriate.
If they believed for their own good reason that they should go to a location designated as a presidential palace, the fact that it's so designated should not automatically disqualify it from inspection if they think that that's necessary.
Q Same question in a different form. Very basically, if the U.S. and Butler say they want unlimited access and the Iraqis are saying they want to limit access, isn't there a collision course between the two sides?
MR. BERGER: Well, let's take this one step at a time. We've got the UNSCOM inspectors back. The last few days they've focused principally on determining what's happened over the last three weeks to sites and locations where they have monitoring equipment, And they'll set their own pace and they'll set their own agenda. And we're simply saying that we will back them up in doing that. We hope that the U.N. Security Council will back them up in doing that. But the agenda here, the work plan ought to be handled in a systematic, professional manner by UNSCOM without regard to political considerations.
Q That doesn't really answer the question where already today it seems there's a direct contradiction between the wishes of one side and the wishes of the other side.
MR. BERGER: And you're trying to accelerate a confrontation. Let's wait until that situation plays itself out. At this point, they have been given access to the locations they've determined -- in the past, over the past six years, they have been not infrequently denied access to various locations and those matters have gone back to the Security Council. In some cases, they've been resolved; some cases, they haven't. But I'm not going to anticipate something that has not yet happened simply because of rhetorical statements made by Iraqi officials.
Q You and Larry mentioned the necessity of Japan strengthening its financial system, particularly in light of what's happened with Yamaichi Securities. In the bilateral meeting, was there any exchange between the leaders on the need for using public funds in terms of reconstituting a solid financial system in Japan and moving out of the -- crisis?
MR. TARULLO: No, there was not. As I indicated, the President noted the interest we had in supporting Japan's determination to strengthen its financial system. The Prime Minister in part of his response indicated the principle which was guiding him in this effort, and that is the protection of giving reassurance to depositors, as opposed to depository institutions. But there was no specific discussion of public funds or indeed any other particular policy measure.
Q Did the Prime Minister explain what the Japanese Central Bank Governor meant by the Japanese possibly selling foreign currencies to raise money to help out the banks of Japan? Was there any --
MR. TARULLO: No --
Q Is there any concern in the administration that the Japanese, who are the largest holder of treasuries, will start selling them?
MR. TARULLO: No. That topic did not come up, hasn't been a topic of conversation. And I think for anything specific on that, I'd refer you to the Treasury Department, although Larry is gone, but Rubin or someone in Washington. But I would just say that our basic approach in this, as in most economic matters, is that a strong, sound American economy usually means that our basic economic issues are well addressed.
Q Mike, can somebody elaborate on what is the U.S. position role and the U.S. share in backing up the IMF package that is going to be approved here tomorrow?
MR. TARULLO: Well, be clear -- there's not going to be an IMF package as such approved tomorrow. What the leaders are going to, we anticipate, embrace is the Manila Framework, which Larry described when he was here. That framework, remember, includes as an element the willingness of the participating countries on an ad hoc basis to provide backup financing to an IMF program. It's not a sum of money; it's not a pot of money. It is an indication of willingness to move forward expeditiously in a way not unlike what happened in Indonesia's case. The difference will be there is a network now already established and so the lines of communication and presumably the rapidity of response are both enhanced.
Q Our share was $3 billion in the Indonesia case, right?
MR. TARULLO: Correct.
Q Dan, what is it going to be in the overall
MR. TARULLO: As I said, be clear, there is not an overall pot or package. There is the stated willingness of the countries, in appropriate cases, to back up an IMF program that has already been approved with a country which is taking necessary structural adjustment measures. But there is not a dollar sum or any monetary sum attached to the effort in general or to any specific case. That's something which needs to be determined as the Fund makes decisions, and then indeed by us as we and the other countries decide what kind of contingency backing would be necessary, if any.
Q Dan, the President told the pool that the leaders will be discussing whether the Manila Framework is actually going to be adequate. What is the prospect of this discussion? And could you tell us also about the three-level approach --
MR. TARULLO: Larry paralleled the three-level approach the President indicated: One, countries take responsibility for their own economic policies and pursue appropriate macroeconomic and structural policies. Two, that the IMF should be at the center of any international response to assist countries which are taking those kind of adjustment policies when there is a serious financial challenge. And three, that the other countries participating in the Manila Framework stand ready in appropriate cases to provide backup financing for the IMF program.
Now, when the President referred to the discussion of the leaders, I think he was probably making reference to the ASEAN breakfast and anticipating perhaps a similar discussion tomorrow in which the leaders were saying, yes, this is an important thing; we need to stay with it. We do want to make sure that this is an adequate response.
But I think their consensus view is that the way to make sure it's adequate is to implement it and to implement it in quite an assertive fashion. That's why we've got a meeting next week. That's why we've already got a meeting planned in January. And that's why the leaders showed great interest in having our finance ministries continue to work on ways to move this to the IMF and to the rest of the countries of the world.
Q -- initiative on WTO -- can you tell us a little bit about what that involves?
MR. TARULLO: Yes. In the course of discussions between the trade ministers -- Minister Wu Yi of China and Ambassador Charlene Barshefsky of the United States -- over the last couple of days, Minister Wu Yi presented to Ambassador Barshefsky an important new offer for China's protocols to accede to the WTO.
As somebody indicated earlier when we were making the initial presentation, President Clinton and President Jiang agreed that those two ministers should pursue the offer and continue to work on it. And the President restated in the meeting with President Jiang our position, which is that we have an interest in China's accession to the WTO, but that it needs to be on terms consistent with commercial considerations.
Q The President spoke only of two pillars. When did this third regional pillar get added?
MR. TARULLO: He spoke of two pillars in Denver?
Q In other words, the first two you mentioned, and now there is a regional one. When did that come in?
MR. TARULLO: That was what the Manila Framework was about. I mean, it was what Indonesia was about as an ad hoc matter, was an anticipation that contingency financing from other countries to supplement the IMF was an important mechanism for reestablishing confidence.
As you recall, in the case of Mexico, there was also bilateral and IMF financing a few years ago. What the Manila Framework does is to reaffirm the two -- I didn't recall this, but I'm sure you're right -- the two pillars, the two principles that we've been pursuing to date, which remain totally valid: the centrality of the IMF, the importance of sound policies by affected countries. But now we've got a regional effort to complement the IMF approach and program, to provide increased regional surveillance to complement the IMF surveillance. And in that sense, as Larry suggested, the way we've been thinking about it is analogous to the way in which APEC has moved the WTO -- the world trading system -- along in specific areas.
MR. MCCURRY: Mr. Berger is departing. Does anyone have any last question for him?
Q Did the President raise any particular case of a political prisoner in his meetings with Soeharto and with President Jiang?
MR. BERGER: He raised those issues in both cases.
Q He raised some --
Q -- can you be more specific?
Q How about East Timor, did he raise East Timor?
MR. BERGER: Yes, he did.
Q And what did he say about it?
Q Sandy, since so much of the corruption in Indonesia is linked to --
MR. BERGER: Go ahead, Peter, I'm sorry. You want to follow up with that expansive answer on my part, the exogenous question on your part?
Q Did he elaborate on what he had to say about East Timor?
MR. BERGER: The President raised with President Soeharto, as I said before, this both specifically and in the context of how societies, developing societies, balance the need for stability and order with the need for personal liberty, and the need for central authority with the needs of local groups to express their identity and have their cultural and political rights preserved. And he was talking about East Timor specifically, and he was raising the question as a generic one, as well.
Q Sandy, that's not the usual approach. The usual -- what we are told is that capitalism and democracy go hand in hand and we always assert that the two need each other, you have some symbiotic relationship. Now you're talking about a balancing act with a dictator. I don't get it.
MR. BERGER: I don't think the two are -- two ideas can co-exist at the same time. In any society, particularly a developing society, which is seeking to build its country and increase the well-being of its people, there are concerns about social stability. And what the President basically was saying was that those concerns about social stability cannot obscure the necessity of finding a mechanism for letting people express their political rights. I think it's quite -- the two are quite consistent. He was raising the question of East Timor, but also, I think, putting it in a broader framework for President Soeharto.
Q Sandy, what's the sense of bailing out an economy like Indonesia's where there is so much government corruption? And given that so much of that corruption is linked directly to President Soeharto and his family, how can President Clinton even raise that issue with President Soeharto?
MR. BERGER: There are, as I understand it -- and I'll let Dan answer the question. (Laughter.) He's far more knowledgeable about the IMF bailout -- IMF financial package than I am. There are -- as part of that program there are reforms that are required in Indonesia.
MR. TARULLO: In every program standby arrangement that the IMF puts together, Fund's staff pay great attention to making sure that the resources which will be available to the country in question will be used effectively and efficiently to achieve the stabilization ends for which they are intended. In this case, as in all other cases, I think the Fund, in negotiating the terms and conditions of the standby arrangement, paid good attention to what kind of structural and macroeconomic policy changes would be made in Indonesia. And I think there was general confidence on the part of the board of the Fund that the resources would be productive and would allow the stabilization to occur if the conditions were adhered to.
Q Did the President press the U.S. transparency and anticorruption initiatives with President Soeharto?
MR. TARULLO: Well, actually our -- I don't know if you're alluding the agreement that we just reached last week in the OECD -- that was among the OECD member countries. Indonesia is not a member of the OECD, but that code has now been completed and will start getting implemented next year. It will be open for accession to other countries as well. But what it applies to is bribery in member state countries by companies from member countries of public officials in overseas markets.
MR. BERGER: We're getting close to having this briefing as long as all of the bilaterals put together.
MR. MCCURRY: Let's take one or two more.
Q Question on global warming. Did we see some additional flexibility, both from Ms. Albright and the President on the participation of non-industrialized nations, that maybe they can come in even later and not so much up front?
MR. BERGER: I'll give you a general answer -- and, Dan, chime in. I think what you saw the President doing today was pressing that these countries, many of whom are significant developing countries, to come into the system, to recognize their stake in this not only from an environmental perspective, but from an economic perspective. And in each case, the President raised this, pressed it very hard, tried to explain the problem from his perspective, tried to explain why their participation in some fashion in the solution was a way for them to shape a growth pattern based upon a different energy mix than the developed countries had so that they wouldn't have to, in a sense, undo what they've done 30 years form now.
MR. TARULLO: The key -- when the President gave his speech at the National Geographic Society announcing U.S. policy, he indicated the importance for the United States of the participation of key developing countries. That was a position he stated; it continues to be our position today.
As Sandy suggested, I think what the President was most concerned with doing was indicating to the leaders, his counterparts from some of the important developing countries, that the United States, indeed, the other industrialized countries, have no interest in trying to slow or stop growth in developing countries by trying to bring them in to the Kyoto system.
Instead, what he was suggesting was that there is a path of development to take which is a cleaner, more energy efficient, less greenhouse gas emitting path. And the prospect of that path, and thus the possibilities for reductions from what would otherwise have occurred, that we are trying to impress upon other countries and trying to get developing countries to understand this need not be a threat to their economic development.
MR. MCCURRY: One or two more.
Q Dan, could you specify to us a little bit more fully what the President said to Japanese Prime Minister about how he could lead Asia out of the economic woes? You said he didn't specify particular policies. How then did he direct the Japanese --
MR. TARULLO: He sounded several themes, which -- and what he said was that the best thing that can be done for Asia is to have a strong Japanese economy operating once again; that the real answer for recovery is more domestic demand-led growth, dealing with a strengthening of the financial system, and pursuing the Prime Minister's deregulatory agenda. I would note that each of those three elements is one which the Prime Minister has himself embraced as his own.
And the President suggested that the effective pursuit of those three ends would produce renewed growth in Japan, thereby helping Asia and, indeed, being an engine for the entire world economy. And that was the prospect I think that the laid out. It was a combination of those three sets of policy measures.
Q This idea that Japan would be able to play a key role in helping Asia regain growth, was this raised in any of the other meeting with, for example, the ASEAN leaders? And when you say that the Japanese expressed the idea that the U.S. forecasts on their growth turned out to be more accurate, what he literally admitting that they had blundered in their forecast of the Japanese economy in the near-term?
MR. TARULLO: Well, I mean, forecasting by it's nature is an imprecise art. I think what the Prime Minister did was to acknowledge that the concerns which the President had expressed in earlier meetings in April in Washington and in June in Denver had been borne out, and that the impact of the consumption tax increase had not been limited to a single quarter, but appeared to have had spillover effects into subsequent -- into the third quarter. He also referred to, as I said earlier, a series of exogenous events which had exacerbated the situation in Japan.
Q Was the issue raised in the meeting with the ASEAN leaders this morning that Japan ought to be able to play a good role in helping --
MR. TARULLO: There was not a specific discussion of Japan, but there was, as I said earlier, a comment by I think virtually leader on the importance of global growth to help support renewed Asian growth and, on the other hand, the importance of renewed Asian growth to support global growth. So in a sense it was subsumed into a more general theme.
Q What's going on the rest of the day?
MR. MCCURRY: The President has -- the leaders are meeting right now for a final review of their agenda for tomorrow. They then meet with the APEC Business Advisory Council, and then after a short break go on with their dinner and entertainment program for the evening. If we have any details that we need to pass on from those sessions that are not done by the host country, we will pass that on to the pool.
Q Mike, will we get any opportunity to talk with the President tomorrow?
MR. MCCURRY: We'll have to -- I'll have to check the schedule. I just don't know what the schedule is tomorrow.
Q Mike, can you clarify if the President raised the case of Wang Dan with President Jiang?
MR. MCCURRY: I think Mr. Berger indicated that he raised the issue and raised specific cases, but I'm going to decline to talk about individual cases he may have discussed.
Q -- specific cases with President Soeharto?
MR. MCCURRY: I think he answered that question affirmatively already.
Q Mike, on global warming, do you know of any developing nation other than Argentina that has signed on to the idea of
MR. MCCURRY: The joint implementation? We've had good consultations with others. I don't know offhand whether any other countries has specifically signed it. We've got some projects under way, if I'm not mistaken -- hey, Dan, do we have JI with any other developing countries behind Argentina? Costa Rica? Anyone else?
MR. TARULLO: Remember, JI is not yet a --
MR. MCCURRY: It's not a formal structure.
MR. TARULLO: Right. There is not yet an international framework within which joint implementation could exist. There are, in fact, projects with a number of countries -- and indeed Japan -- Prime Minister Hashimoto was describing some joint projects that he is about to undertake with China -- which are parallel to the kinds of things you would see under joint implementation. But that's a term of art which would apply within the context of a regime that doesn't yet exist.
MR. MCCURRY: But the concept has been favorably received in a lot of the discussions we've had with other countries.
Anything else? We've got to knock this off. Okay, thanks.
