THE DENVER SUMMIT OF THE EIGHT
Daniel K. Tarullo
Assistant to the President
National Press Club
Washington, D.C.
June 16, 1997
Good morning. I appreciate the opportunity to preview the Summit
of the Eight, to be hosted by President Clinton this weekend in
Denver. The Summit is a milestone in two great successes of the
Clinton Presidency -- the resurgence of American economic
strength and the progressive incorporation of Russia into the
community of market democracies. The results of these successes
will be very much in evidence in Denver.
This morning I will begin by reviewing these two accomplishments
through the lens of the Summit. Then I will discuss how the
President is building on these successes at this year's Summit.
With our economic fundamentals in order and with the foundations
for a new relationship with Russia laid, the President is using
this Summit to organize ourselves, along with our partners, to
harness the opportunities of a globalized economy for all our
citizens and to work together to counter new global problems.
The Resurgence of the American Economy
When President Clinton participated in his first Summit, at Tokyo
in 1993, the U.S. budget deficit was -- at over 3.5% of GDP --
the central economic topic of discussion and concern. Our
partners warned that chronic, growing deficits would inevitably
lead to higher interest rates and a drag on world economic
growth.
At home, unemployment was over 7%. Many feared that we faced a
Hobson's choice. Either we could accumulate an ever growing
national debt burden, or we could cut the deficit but endure
slower growth and higher unemployment.
The President, true to his emphasis on economic revitalization in
the 1992 campaign, returned home to push his budget reduction
plan through a divided and partisan Congress. Today, the deficit
has been reduced by over two-thirds, and will be less than 1% of
GDP this year. This spring the President completed the task he
had set for the country by forging a bipartisan agreement with
the Congress to bring the federal budget deficit to zero by 2002.
Coupled with his commitments to open markets and invest in our
people, the President's fiscal policies have yielded rich
dividends for the country. Twelve million jobs have been created
since 1993. As a result, unemployment is below 5% for the first
time in a generation. Inflation is at a thirty-year low.
Capital investment, productivity, and real wages have all risen.
In Denver, as in Tokyo, the American economy will be subject to
much attention. But this year that attention will derive from
the strength of its performance, rather than the risks it could
pose to world prosperity.
Russia and the Market Democracies
In 1993 Russia was still a new democracy, which had only begun
along its path of political and economic reform. In the
intervening four years Russia has made great strides down that
lengthy road. Having achieved macroeconomic stabilization and
having held democratic presidential and parliamentary elections,
Russia has renewed its commitment to reshape its economy and
create the conditions for sustained growth.
President Clinton has worked with determination to bring Russia
into greater participation in the community of market
democracies. Earlier this year, at Helsinki, Presidents Clinton
and Yeltsin agreed to a joint initiative to stimulate Russian
economic growth, strengthen commercial ties between our
countries, and continue Russia's integration into international
economic institutions such as the Paris Club, the World Trade
Organization, and the Organization for Economic Cooperation and
Development.
The President has also sought to place on a new and more secure
footing the security and strategic aspects of our relations with
Russia. Last month in Paris this work culminated in the signing
of the historic NATO-Russia Founding Act.
Together, these efforts have transformed the relations of the
market democracies to Russia, even as Russia has transformed
itself. Russia has participated in the latter part of the past
several summits, and has increased its role in the preparatory
work for them. This year, for the first time, President Yeltsin
will be present from the start of the Summit, now known as the
Summit of the Eight. This increased role reflects Russia's
increased stature in the world and its growing cooperation with
the Seven on a broad range of issues. This change shows that we
are not simply dealing with the aftermath of past conflicts and
relations, but that we are prepared to move on, in a new
relationship, to confront the new economic and political
challenges that face us today.
The Summit and Economic Growth
The strong U.S. economic performance has given the President, and
the country, a credibility in international economic discussions
that we lacked just a few years ago. We have a good story to
tell, and people are listening. But the economic tasks before us
are far from over. At Denver we will continue to champion
economic policies that will promote sustained growth in our
partners and bring the benefits of a globalized, dynamic economy
to all. Let me now identify some of the economic concerns to be
addressed at the Summit.
First, we have an interest in our partners achieving their
own patterns of sustained growth that contribute to a healthy
world economy. Thus we look forward to Japan's realization of
Prime Minister Hashimoto's program for widespread deregulation in
an economy that has stalled in recent years. A successful
opening of the Japanese economy to more competition, domestic and
foreign, will be good for both Japan and the world.
In the interim, we count on the Prime Minister achieving his
stated objective of a strong domestic demand led recovery.
Similarly, we have a strong interest in seeing Europe economies
make the kind of structural changes that will lead to lower
unemployment and sustained growth.
Second, the Summit will continue to build international
cooperation to meet the increased risks that have accompanied the
faster pace of integration in global capital markets. A crisis
in one country, or in one globally active financial institution,
can produce systemic consequences much more swiftly than could
have been imagined just a decade ago.
In each of the last few Summits, we have identified measures to
be taken by international financial institutions and by national
regulators to reduce these risks. This year, we have agreed on
the establishment of a network of supervisors for global markets
and for a program to assist emerging economies in strengthening
their own financial systems. The changes and improvements
flowing from the financial stabilization agendas of the summits
have already reduced risks to global markets. And, just as
important, we have established a process to identify new risks
and seek new safeguards.
Third, the leaders will discuss at Denver two major social
and economic issues faced by all our societies -- adapting to the
structural changes in our economies wrought by globalization and
rapid technological development, and adjusting to the aging of
our societies. They will compare their own experiences and
thoughts, as well as considering new ideas for meeting these
leading edge issues of the next century.
While our job creation performance in recent years has been
enviable, the same cannot be said of all our partners.
Unemployment remains high, and will remain high, until structural
reforms are undertaken. At the same time, here and abroad, we
must work to ensure that we preserve our social contract even as
we cultivate an adaptable and prosperous economy. In reviewing
these issues, the leaders will concentrate in particular on the
potential for job growth in young, dynamic businesses.
There will be few societal changes more striking than the
accelerated aging of our populations in the next century. While
there is already much attention to the strains that could be
placed on public pension and health care systems, there has been
less attention to the opportunities for what gerontologists call
productive aging. Declining disability rates among the elderly
offer continuing active lives, including work lives, for those
who want them, but our economic and social institutions will have
to adapt to the needs and attributes of an older population.
Fourth, the Summit will turn the attention of the leaders,
and hopefully the world, to a piece of unfinished business in
bringing the benefits of the global economy to all regions of the
world. Sub-Saharan Africa has, in the main, been left behind as
trade, investment, and growth increased rapidly across much of
the developing world in the past twenty years. While we must
recognize that growth depends, in the first instance, on sound
economic policies by the developing countries themselves, we must
also recognize that we can support adoption and maintenance of
those policies. There are already numerous success stories in
Africa. At the Summit we will both highlight those successes,
and commit ourselves to providing debt relief and greater trade
access so as to encourage more success.
Meeting New Global Problems
When you look at the Summit Communiqu‚ that is released on
Sunday, I think you will be struck by the simultaneous breadth
and detail of cooperation among the Eight in addressing issues
such as transnational crime, terrorism, infectious diseases,
nuclear safety, and proliferation. These problems are not new,
to be sure, but they are assuming increasing importance as the
security threats of tomorrow, precisely because of the greater
integration, cheaper communications, and rapid transportation
that define the global economy. They defy solution by any one
nation acting alone, and thus demand a cooperative response.
President Clinton has thrust these issues onto the agendas of
many international gatherings, from the United Nations General
Assembly to the Summit of the Americas. He has, in the last few
years, encouraged the Eight to take the initiative in organizing
to deal with these new problems. This year, in Denver, we are
seeing the consolidation of this agenda as a core part of Summit
work.
The hallmark of this new agenda is that it is built on action by
networks of officials from our countries. Comparison with how
the world is organized to deal with economic problems explains
this orientation. In the economic realm, we have a well-
functioning set of international institutions such as the IMF and
the WTO, supplemented by looser groups such as the Basle
Committee and still more informal linkages among national
regulators and policy-makers. Periodically, of course, these
organizations, and the policies they pursue, need revision,
sometimes quite far-reaching revision. But the structures are
there to adjust.
Because they have only recently become truly global problems, the
items on our global agenda are not the object of established,
effective international organization. In some areas -- such as
the environment -- there are international organizations, but
they are not working as well as they must. In other areas --
such as infectious diseases -- a problem has intensified so
rapidly as to outstrip the capacity of the existing organization
to deal comprehensively with it. In still other areas -- such as
crime and terrorism, which as law enforcement matters are central
to the sovereign prerogative of nations -- there are only the
weakest of international institutions.
In each instance, the Summit identifies a set of problems and
either suggests their resolution within existing institutional
frameworks or, more frequently, instructs officials of the Eight
governments to act on these problems through building or
extending their own networks. Thus, for example, we are now
establishing a point of contact system to investigate and pursue
nuclear smugglers. Similarly, our law enforcement officials have
acted in concert to combat money laundering.
This year, we have taken concrete steps to implement the
cooperative aims that have been established by the Eight in the
areas of crime, terrorism, nuclear safety, and nuclear security.
Senior experts groups from our countries meet regularly
throughout the year to implement proposals on which the leaders
have agreed, and to develop new proposals and practices to deepen
cooperation.
At Denver we will also announce a program for responding to the
spread of emergent infectious diseases. Popular culture has
recently caught up with the fact that, in today s highly traveled
world, infectious diseases can spread rapidly before they are
even identified. And some of the old diseases have returned,
sometimes in drug-resistant strains, to pose renewed threats,
particularly to the world s poor, sick, and uneducated.
Finally, the global agenda at the Summit will include extended
discussion of one of the signal global challenges of the twenty-
first century -- the environment. This is a very significant
year for global environmental efforts, from the special session
of the United Nations General Assembly to the Kyoto conference on
global warming. It is thus fitting that the leaders address the
topic, not to replicate negotiations that are proceeding in other
fora with other countries, but to seek common understandings as
to how we will approach these issues, which will be with us into
the indefinite future.
The Evolution of the Summit Process
People frequently refer to the mid-year summit as the "annual
economic summit." Economics remains important, to be sure, but
it should be clear by now that the summits are about more than
economics. Indeed, the global agenda I have just described is
but the latest stage in the evolution of the summit process.
As you recall, the first summit in 1975 was a specific response
to the very specific energy crisis and the serious worldwide
recession it had spawned. Within a few years the summits had
evolved into a vehicle for economic management, insofar as crises
fortunately do not occur regularly. The capacity to respond to
financial or economic crisis is maintained by the institution of
the Summits, as well as by the work of finance ministries year
round.
But fairly quickly in summit history the leaders naturally turned
their attention to non-economic issues and problems as well. At
times the dividing line between economic and non-economic may
have been unclear. It soon became clear, however, that quite
traditional foreign policy problems were usefully discussed as
well.
The recent attention the President has given to global problems
has not displaced either economics or traditional foreign policy
discussions and decisions from summits. Through his initiative
in placing these issues on the summit table, he has moved the
summits into their next stage, using them as a catalyst for
efforts -- first by the Eight and then by the world as a whole --
to join forces to combat problems that threaten all nations.
Like the economic problems of twenty years ago, these issues are
pressing problems that demand cooperation if we are to protect
the well-being of our citizens.
CONCLUSION
Perhaps there have been times when the United States was more
needed on the world scene than it is today. It seems unlikely
that there has ever been a time when we had more to gain by
playing a world leadership role.
Our economy has restructured so that we are better equipped to
prosper in a post-industrial economy than anyone in the world.
As the world's preeminent political power, we can exercise
leadership to promote our own interests. And we need the
cooperation of others to cope effectively with the economic and
non-economic byproducts of a global economy.
The Denver Summit will build on our economic and political
successes to date -- the completion of the unfinished business
inherited by the President -- to move forward to organize for the
next set of tests we will face.
Thank you very much.
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