4:13 P.M. (L)

MR. BERGER: Speak softly and carry a big shtick. (Laughter.) Let me very quickly summarize the three bilateral meetings the President had today with Prime Minister Blair, with Prime Minister Obuchi, and with Chancellor Schroeder.

The meeting with Prime Minister Blair and Chancellor Schroeder really were quite similar. They focused very heavily on Kosovo. I think all of them have agreed that we now are pivoting to a new stage. As the President said, having won the conflict, we now need to win the peace. And that is probably no less an undertaking than the air campaign.

They discussed a number of aspects of this. Essentially, first there is a -- and these will all be discussed here at the G-7 and G-8, both formally and informally. There will be, obviously, the need for short-term relief for Kosovo.

There hopefully will be a donor's conference announced in the next few days, which we would like to see as soon as possible -- in the next several weeks -- which will deal with the short-term emergency needs for Kosovo and the Kosovars.

There's then a longer-term rebuilding program for Kosovo, involving the construction, or reconstruction, of civil society -- the creation of local police, the holding of elections and all of the things that we've talked about.

And then the third dimension of this, and the one that the three leaders talked about the most, was the Southeastern European regional dimension. That is, trying to build and commit ourselves to build an integrative process in the region that not only helps to rebuild the region, but does so in ways that pull the countries together.

The frontline states, as you all know -- Albania and Macedonia, Bulgaria, Romania, others -- in many ways carried the heaviest burden of this war, besides the actual combatants here, strained by refugees, their economies very, very badly damaged, their democracies very fragile and very strained. And we now have a very serious obligation to try to help them build a broader future.

And the President talked with both Blair and with Schroeder about a long-term Southeastern European initiative, that Chancellor Schroeder has taken the leadership in the EU with the Balkan Stability Pact, which would bring the countries together, themselves, in helping them to define what their region might look like, and -- both integrated among themselves, and then integrated into Europe. So this was a very substantial part of the conversation.

They talked about who would be appointed as the U.N. representative for the civil implementation. I think the feeling with the President and with the other leaders is this is extremely important. There needs to be somebody here taking this job who has a unique set of managerial, motivational, and political skills to do the job.

Now, in addition, obviously, there was a brief conversation at the end of the President and the Prime Minister on Northern Ireland. I think this is something they will come back to later. With Chancellor Schroeder, a few bilateral issues. But basically, both meetings with Schroeder and Blair were about Kosovo.

Now, with Obuchi, I'll let Gene be more specific, but they talked about some economic progress in Japan, trade issues, growth. Prime Minister Obuchi indicated that they would participate to the tune of about $200 million in the cooperative threat reduction program with Russia. The President talked about this in the State of the Union. We have provided in our budget $4.2 billion over five years. This is to help Russia control its nuclear materials and redirect its nuclear and other arm industries. This will be a major initiative of the G-7 at the summit.

The President was grateful to the Japanese for having now enacted the defense guidelines, which determine the nature of our military cooperation. The President mentioned that next year's summit will be in Okinawa, which provides us an opportunity to resolve and implement some of the elements that we agreed to, in terms of our own military presence on Okinawa, including relocating the air station there.

And the President also talked to Prime Minister Obuchi a bit about Ambassador Pickering's trip to China and also about the situation in the Korean Peninsula, our concerns about North Korean missile testing and the need to watch that very carefully, as well as to maintain the agreed framework, which helps to maintain the -- prevent the North Koreans from developing their nuclear program.

Let me let Gene add some economic information, and then I'll answer questions about Helsinki and elsewhere.

MR. SPERLING: As Sandy mentioned, economics came up in each of the meetings somewhat, though it was not the primary focus. In his bilat with Prime Minister Obuchi, they started by talking about the positive report on the first quarter growth that Japan had received. The President said that everyone shares in them getting this positive news, but also stressed that it was important for Japan to use all available tools going forward, because the world would be looking at what the three- to four-quarter trends were in judging the full degree of the direction of Japan's economy.

They also talked about trade, particularly steel. The Prime Minister raised it, but the President talked about the fact that the trade number, the steel import numbers, had come down from Japan, but that they had not quite -- that while the overall numbers have come down to pre-crisis levels in virtually every category; and that while Japan's numbers have come down significantly, that they have not quite reached the pre-crisis levels and that it was very important for there to be sustained progress on this.

They talked about the legislation going forward. The President made clear he did not want to see the steel quota bill go through because the United States was going forward on further trade liberalization and progress at the WTO administerial in Seattle; did not want to see us in a position where we were passing a law that would be inconsistent with the rules of the WTO.

But the President stressed that because -- that there was a lot of momentum for such legislation and that made it all the more important for Japan to show progress in keeping their steel import numbers down, and that further progress in bilateral trade issues such as flat glass, insurance, autos, procurement, would all be helpful in creating the right environment to guard against protectionist legislation.

At the beginning of the meeting with Schroeder, and for a longer period of time in the meeting with Prime Minister Blair, they did talk about debt relief. This discussion should be going on as we speak in the G-7. They talked about the degree that the proposal that was on the table, a proposal the United States has been very strong in advocating and formulating, was a very bold proposal indeed.

We hope to be able to give you the full details in a couple of hours, but to give a context, there is currently $127 billion of debt from the heavily indebted poorest countries -- $127 billion. The current HIPC program dealt with $22.5 billion of that debt. The proposal that's on the table would more than triple that amount of debt reduction involving the G-7 countries. And if other countries were to share in this effort, then a full 70 percent of the $127 billion could be relieved, assuming that countries met the criteria they needed in terms of conditionality and proper governance.

The other important thing that they mentioned was that what was important about this debt relief effort is that this would free up actual cash flow savings for countries, and that the purpose of the proposal was to target those savings specifically to reducing poverty, education, crucial health needs -- so using very much the debt reduction savings, cash flow savings, to deal with the most significant problems of poverty in those countries.

Already some of the non-profit experts in this area reporting that under the current program, Bolivia received $67 million in debt service savings; in Uganda, $37 million in savings. Up to 26 to 33 countries could benefit were this proposal to go through in its current form.

They also will be talking about going through the architecture proposals, which is really the culmination of a significant amount of progress and work that's been done since Birmingham. And it will deal with the areas of how to have the private sector more involved and work out ensuring that lenders have the appropriate risk factors; that there's the type of data that would prevent against some of the problems that we saw in terms of short-term foreign cap debt reliance, and the kind of capital standards that would make lenders fully take account of the risks involved in lending to countries of very varying different risks.

So we will, hopefully, have more -- we will get the full specifics on the debt reduction as soon as it is agreed to.

Q What about the Russians? What's the latest on the deal?

MR. BERGER: Let me just say -- there will be more on what Gene said -- the debt relief actions that I believe that will be taken at this summit are really historic. And there will be more said about them later, but they'll have an enormous impact on the developing -- poorer countries in the developing world, perhaps more than any other single action taken by the developed countries at any time.

In terms of Helsinki, I think that we are into a period of closure here. There's still -- I spoke to them just a little while ago, we're discussing some final issues, but I think there seemed to be a level of optimism, sobered by the fact that some unpredictable things have happened in this area in the last week. But it looks quite good.

Q The President thought that in two hours that he might have a deal. Without holding to a specific --

MR. BERGER: I don't think he said two hours.

Q Oh, he did, a couple of hours. But withholding to a time period, do you expect it today?

MR. BERGER: I'm hopeful this will happen today. The NAC is meeting in Brussels, they've convened. The idea would be for Secretary Cohen, Secretary Albright to go to Brussels and brief the allies -- again, if there is an agreement. I think given the nature of this issue over the last week, until it's finally agreed to it's not finally agreed to. But I think it's very close to being agreed to.

Q -- accept a sector for the Russians, will they have their own sector?

MR. BERGER: I will let -- I think it's only appropriate, if there is an agreement, for it to be briefed there. I would say that what is emerging here is something entirely satisfactory to us. It preserves the unity of command and control. It preserves the effectiveness of KFOR, and brings Russia in in a way that we've wanted to from the beginning. So what is now being discussed is something that is entirely satisfactory to us.

Q Sandy, we get the impression, rightly or wrongly, that anything would have been satisfactory, you have been so resolutely up-beat all week.

MR. BERGER: Well, if anything would have been satisfactory we would have been done two and a half days ago we would have been done two and a half days ago. I mean, Bill has been there for two days and two nights going at this. And the fact is that we do have some things that we could not accept, and we're not only there on our own behalf, we're there on behalf of our NATO allies. So Secretary Cohen was not only in a position of having to deal with the Russians, but also then going back and calling the major allies and seeing whether they could agree to this, because some of this involves deployments in sectors where they have command.

So I think if we had wanted anything, it would have been done two days ago. We wanted to make sure we would wind up with something here that maintained the NATO-led force, maintained unified command and maintained the effectiveness of this force -- that is, that the Kosovars will go home, as they are doing. It appears to me that's the direction in which we're headed.

Q How many Russian troops could the NATO allies accept in Kosovo?

MR. BERGER: Well, again, I'm going to let the details of this be briefed when there's an agreement.

Q You stressed the back-and-forth nature of this surprise operation over the past week. What has that said about U.S.-Russian relations? Is the Cold War still over? And, perhaps more importantly, is Boris Yeltsin in control of these troops?

MR. BERGER: Well, I think that, first of all, obviously, relations between Russia and the West were strained by the NATO action in Kosovo. But, at the same time, they were reinforced by Russia's participation in helping us achieve a peace. And I think that if we are able to complete the discussions that Secretary Cohen, Secretary Albright are having in Helsinki we will have the Russians in KFOR, working along side us and other allies. And I think in the long-term this will strengthen U.S.-Russian relations.

Q Mr. Berger, to follow up on that, you mentioned that there's been some unpredictable things in the last week. Is there a concern that a major nuclear power, such as Russia, is acting unpredictably on an issue as important as Kosovo?

MR. BERGER: Well, the fact that we may not have been -- or Mr. Ivanov may not have known this unit was going to show up at the airport does not, I think, necessarily suggest that there is not decision-making in Russia. I don't want to get into -- there are a number of different possibilities about who ordered what when and who knew what when, what did he know and when did he know it.

Q Do you know the truth?

MR. BERGER: I think there are a number of possibilities and I think we have to operate as if any of them might be true.

Q Sandy, there is another report today that the President has signed a presidential finding authorizing the CIA to try to weaken Slobodan Milosevic's grip on power. Has the President signed a presidential finding and what's he trying to do along those lines?

MR. BERGER: Well, whether or not that particular -- that is true is something, as you know, that we never speak to those matters publicly.

I will say this: We have been supporting the opposition of President Milosevic quite openly for some time -- independent media, opposition parties. And I would expect that would only intensify in the period following what he has done in Kosovo.

I also think that as we stand up a really robust Southeast Europe reconstruction program and the people of Serbia see that their neighbors are participating in it, but they're not because they're led by an indicted war criminal, that that will exert some pressure on the system as well.

So, do we support democracy and democratic forces in Serbia? Yes.

Q Sandy, on Japan -- you mentioned that the President brought up the fact that the next summit is going to be in Okinawa, and that this provided an opportunity to resolve some of the military presence issues outstanding regarding Okinawa, including the air station. Does that mean that next year, the summit next year is a deadline to resolve the air base, or is an objective to do that by next year?

MR. BERGER: I don't think it's a deadline. We've had good cooperation with the Japanese on this. We, as you know, about a year or so ago signed what's called SACO, an agreement dealing with how we would maintain our presence, but reduce our footprint on the island. We've implemented many of those things. The one issue that remains unresolved is the relocation of the air station, the Futenma air station. That depends upon finding some other place to put it, which is a decision the Japanese have to make.

There's new political leadership in Okinawa that is quite cooperative on these issues. And I think it would be useful to get these resolved over the next year in any case, but, obviously, the fact that the summit will be there will just give us every -- I think both sides more incentive to do that.

Q Sandy, the Russian PM, when he arrived here, said that the Russians had come to Cologne with several proposals, and Yeltsin will present them. Are these proposals on Kosovo?

MR. BERGER: I don't know.

Q Sandy, is the Russian dispute slowing the return of the refugees into Kosovo?

MR. BERGER: I don't believe so. I think that -- as of this morning, we had 35,000 Serb forces who had left; we had, I believe, 19,000 -- I'm getting these numbers wrong -- KFOR forces that had come back. Just need to check those numbers. They're right? And refugees are returning, perhaps 6,000 yesterday, just across the border in Albania.

We obviously, as you know, have been suggesting that the refugees might come back when the areas were safer and more secure, and have encouraged them to do that. But I think that this is quite a poignant demonstration of how strongly these people want to go home. They want to get back to their homes. They want to find the missing relatives. They want to get on with their lives. That's not to say that they shouldn't wait until we can clear the mines out, but I think that's very powerful.

So I don't think this dispute has had -- or this issue has had any effect on the refugee returns.

Q Sandy, the Russian Prime Minister, Sergei Stephashin, also said on his arrival that the Russians can play a critical role in preventing Serbs from fleeing Kosovo, just like the other NATO allies can encourage Kosovar refugees to return. Is that something that you want the Russians to do, to encourage Serbs to stay in Kosovo?

MR. BERGER: I think one of the things the President has said from the beginning is that -- two things. Number one, KFOR's mandate is to protect both the ethnic Albanians and the ethnic Serbs. And there have been a couple of ugly incidents in the last 24 hours in terms of Serb monasteries -- at least, your folks reported. So, number one, KFOR is there to protect all of the people of Kosovo. And, second of all, one of the reasons why it would be helpful to have the Russians here is precisely because of that. They have the confidence, obviously, of Serb population and hopefully they will encourage Serbs to stay.

My impression has been the number, the rate at which Serbs are departing has diminished somewhat in the last day.

Q Sandy, after the Russians hijacked the airport in Pristina and misled you and misled the President about their intentions, what leads you to believe now that they can be a trustworthy partner in KFOR?

MR. BERGER: Well, they'll have their duties, like everyone else. They'll be subject to a chain of command. They have done so in Bosnia; we will expect them to do so in Kosovo.

Q You trust them, Sandy? Correct? You trust them?

Q Trick question.

MR. BERGER: Yes. I believe that people operate out of the basis of their self-interest, Scott. And I believe it is in the interest of the Russians to do their job in Kosovo, as they've done it in Bosnia.

Q But let me go back to the -- you were theorizing that there are a number of different possibilities about who knew what, and who gave the orders for the military to go in. Would you acknowledge that one of the possibilities is that Yeltsin and the political actors there simply aren't in control of all aspects of the Russian military?

MR. BERGER: Well, I don't want to get into speculations as to why 150 Russian soldiers wound up at the airport when they were not supposed to be there, and why we were told that they would not deploy and they deployed nonetheless. There are, as I say, a number of possible scenarios, and I think we have to be wise enough to contemplate all of them.

Q -- disarming the KLA, Sandy?

Q Given the fact that the President is making much of the Europeans taking over the lion's share of peacekeeping and reconstruction, was any thought given to having in Helsinki these negotiations with a multilateral cast rather than just U.S.-Russia? Why not have brought in the other four who are going to have their own sectors in Kosovo?

MR. BERGER: Well, the Helsinki talks arose from a conversation between President Yeltsin and President Clinton. As you know, they spoke, I guess, three times over the last weekend. And in their final conversation, President Yeltsin basically suggested that they operate on two tracks. One was that they work on the airport issues with General Jackson, working with his Russian counterpart. And the other he specifically said was Secretary Cohen and Minister Sergeyev would go to a third country -- we suggested Helsinki -- to resolve the longer-term issues.

Perhaps he was thinking of the fact that we had the same issue in Bosnia and, ultimately, Bill Perry and Minister Grachev came together and resolved it. Perhaps that model was in his head.

But I think Bill has been very conscience in Helsinki that he's not there representing the United States, that he has to -- whatever agreement he reaches has to be satisfactory to all of the NATO allies.

Q Sandy, on disarming the KLA, how is that going? There are reports of NATO troops that actually had to threaten force to get the KLA rebels to put down their weapons. How would you characterize the situation?

MR. BERGER: The understanding that the KLA signed up to in Rambouillet was to demilitarize, that is, to cease functioning as a military unit, nor to have the weaponry of a military unit. In our conversations with them over the past two weeks, most of the leaders of the KLA -- as you know, it's not entirely monolithic -- agreed that if the Serbs do, in fact, withdraw, if NATO does, in fact, deploy, that they would abide by that.

Now, as I understand it there have been some incidents where KFOR soldiers have disarmed KLA members that might have been acting in a threatening way. Don't forget that the commander of KFOR has very broad powers to maintain security in Kosovo. But my impression is that General Jackson believes that his first responsibility is to get his force deployed in full contingent -- 40,000-50,000 -- before fully taking on that job, although, we have had continuing discussions and there have actually been specific documents exchanged with the KLA about the nature of how they would demilitarize.

Q You said that these unexpected surprises over the last couple weeks have been sobering. Can you explain the effect that they've had on U.S.-Russian relations? It sounds like you're a lot warier now when you deal with them --

MR. BERGER: I think our relationship is basically sound. I think that, obviously, Russia is going through a period of difficulty, economically and otherwise. That sometimes manifests itself in their foreign policy. But I think that, number one, the vast majority of Russians clearly have made clear that they want to maintain their democracy. Number two, I think that most Russian leaders understand that the future of Russia lies with the West. Number three, I think President Yeltsin clearly has always understood both that principle and the principle that the people are the source of his power. Whenever he's had a problem, he's gone back to the public for a referendum.

And I think the final thing I would say is that I'm quite impressed by this government -- by Prime Minister Stepashin, who we've had a lot of contact with recently; by Foreign Minister Ivanov. I think the fact that Defense Minister Sergeyev and Secretary Cohen have been engaged in these intense discussions over the last two or three days is very, very healthy. So I think our relationship, by and large, is good, even though there are going to be areas where we disagree and differ.

MR. LOCKHART: Thanks, Sandy. Thanks.

Q Sandy, could you give us some kind of preview of the political statement tonight, that's going to come out?

MR. BERGER: I think someone else is going to come in and do that a little bit later.

Q It's going to be, like, late. Can you tell us --

Q Well, just -- purpose of the dinner.

MR. BERGER: Obviously Kosovo will be a big part of it; Middle East. I mean, it's the same -- your basic food groups. (Laughter.)

Q Sandy, is it your understanding that Yeltsin's going to come on Sunday? Is there any doubt about that?

Did you not hear that? (Laughter.)

Q He's off-mike.

MR. BERGER: No, I didn't hear it.

END 4:44 P.M. (L)