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                  Office of the Press Secretary
                         (Warsaw, Poland)

For Immediate Release July 7, 1994
                       BACKGROUND BRIEFING

July 7, 1994

                            The Sejm
                         Warsaw, Poland 

1:34 P.M. (L)

SENIOR ADMINISTRATION OFFICIAL: The principal item that Prime Minister Pawlak addressed was the economic situation in Poland and his deep interest in close cooperation -- between the United States and Poland. He came back time and time again to the importance of joint ventures, American investment here. He placed the emphasis really on that far more than on the problems of the system. As a matter of fact, that really wasn't the line. He emphasized investment above all.

With regard to foreign policy, he made a very brief remark in which he emphasized that as far as Poland was concerned, there was deep interest in close cooperation in developing good relations in the region generally. And he then referred specifically to the importance of good relations with Russia and Germany, and in that context, said that he felt a stable situation -- foreign policy situation in the region would be of interest not only to Poland, but to the United States as well.

That's basically it. I would be happy to answer questions.

Q Can you describe to us beyond the investment fund that was described in the paperwork, what other kinds of ideas for developing investment he had and what kind were discussed?

SENIOR ADMINISTRATION OFFICIAL: The President laid out, in response to points that Prime Minister Pawlak made, what it is he had prepared to do, and you will hear that in the speech. There are going to be press releases on this, too, that describe the various funds in some detail.

Let me simply say this. We have, during the last half-year or so, placed a great deal of emphasis on the entire problem of the economic development of the region generally, and in Poland in particular, within that particular context. And this what the President has emphasized in his discussion with Pawlak and will be emphasizing in his speech.

There are two aspects to it. On the one hand, what we very much are interested in and will continue to pursue is the development of the private sector here to be certain that the economy continues to bounce back and will, in time, absorb the significant number of unemployed here. At the same time, we recognize that there are immediate needs that need to be met as far as the unemployed are concerned.

With regard to that, we have now been in close contact with the Polish authorities about cooperative efforts to

deal with that issue, as well. And, as a matter of fact, we heard that President Walesa has suggested the importance of having a cooperative group meet. Well, he hasn't been fully briefed on the fact that they have been scheduled for Monday and Tuesday. We are already going to have a meeting here, dealing not with generalities but with highly-specific projects that we want to undertake in Poland in a period --

Q And who will be at the meeting?

SENIOR ADMINISTRATION OFFICIAL: There will be -- from our end, it'll be all at the operational level, I want to emphasize. Don Presley, who works for Ambassador Rey who is the head of the AID mission here, will be augmented by people coming from Washington who are specialists in the various fields -- housing, social security, all the various concrete matters of concern.

We have also, I want to tell you, invited the European Union to come in on it so that there won't be any need for the Poles to deal separately with us and the European Union. We simply said, let's all sit down with them together, and we'll split it up among ourselves as to what each of us can do and see whether we can work cooperatively with the government of Poland.

So, there are certain initiatives that are underway now that I want to tell you that are really knew. And we hope that all of these will get off the ground and effectively make a contribution to the effort over here.

Let me try to just emphasize one more thing, and that is that I think -- you weren't on the plane, I said it there - -- but we're not in a stage of another Marshall Plan. This is not what the American taxpayers support, and it's also not something that is really, at this particular juncture, needed here. What is needed -- and Pawlak really emphasized that -- is the transplantation of know-how. What he said to us, actually, was that legal framework for reform is in place.

Then he said the mentality isn't there. And basically, the people over here are capable, competent, energetic and all that. But the experience of the last 40 years simply deprived them of the opportunity of knowing something about how the private enterprise economy works, how management works. And this is what a lot of people have already picked up; but more of them still need to pick it up.

Q There's a lot of kind of business, technical assistance programs all over Eastern Europe. But what you're talking about is something different. It's like social service technical assistance.

SENIOR ADMINISTRATION OFFICIAL: Put it this way -- both. In other words, we need to continue our effort, for example, to really help them create an effective banking system here. We are involved, however, also in helping them set up mortgage banking and really get the concept of mortgage banking across to them -- which will be new, and which has, obviously, social implications because after World War II, it was the housing industry that really sort of boomed in our country. And the entire idea of getting 95 percent mortgages was new at that time. And over here, we need to move forward in that direction.

Q But is the infrastructure -- is their banking system at a point where it can now do that? I mean, there were certain structural --

SENIOR ADMINISTRATION OFFICIAL: We've actually spent some time teaching them, yes. Yes, we have.

Q So this meeting on Monday is private and public sector stuff only?

SENIOR ADMINISTRATION OFFICIAL: It's -- well, let me put it this way. We work with government officials. But at the same time, in order to help them create private sector participation in the efforts to advance private sector, including NGOs, by the way. For example, one of the things that we want to try to introduce here, because they again have not had experience with this, counseling for the unemployed, job placement, training programs. All of that, as I say, is something that will be new here.

Q Sir, did the Prime Minister raise the question of Partnership For Peace membership?

SENIOR ADMINISTRATION OFFICIAL: No, he didn't say a word about it. It just didn't come up.

SENIOR ADMINISTRATION OFFICIAL: I wonder if that isn't a perfect place for me to jump in here and just give you a quick perspective on that whole question.

I came here in the middle of December, and there were some pretty unhappy campers in Poland -- basically, very concerned about their future, their closeness to the West, their involvement in the West, which they obviously feel very sensitive to. I think they have a thousand years of history and 50 years of personal experience that they're dealing with.

I think you will find, as you talk to Poles while you are here, that there has been a sea change in view on that subject. And I think that's a fair use of phrase -- an enormous change in the comfort level of Polish people in the know, so as to say, or in the government, on their position in the West. I think you'll find that the President's speech will confirm that. And the Poles will come away feeling pretty satisfied with where they stand in the process.

No Pole is ever totally happy. Being partly one myself, I can tell you. But still, the difference in comfort level between what it was in early December to what it is today is enormous. And it's obviously confirmed by the fact that the President and the whole team have come here to do that.

And Partnership for Peace is an important element in that in the sense that they now have become the champions of Partnership For Peace. They understand what it is. As you know, they'll be doing exercises here in a couple of months, which they will host, which the U.S. military will be involved in as well. They will be active partners. They just two days ago signed their work plan with NATO, which details exactly what they will be doing. So, from that standpoint, I think U.S. policy and the U.S. approach to the security of this part of the world is now something that the Poles understand and are much more comfortable with than they were in the early days.

Q What was the nature of their unhappiness? Why? What was their complaint?

SENIOR ADMINISTRATION OFFICIAL: Well, in the past, they just weren't sure what commitment we really had to them. I think by now they --

Q They thought it wasn't real?

SENIOR ADMINISTRATION OFFICIAL: They thought it wasn't real. But by now --

Q They wanted to join NATO.

SENIOR ADMINISTRATION OFFICIAL: Yes, and they still want to join NATO. But they now understand that that's a process, that that's something that can't happen overnight because there are 16 countries that all have to agree to the provision of the very, very airtight guarantees that are involved in NATO.

SENIOR ADMINISTRATION OFFICIAL: While we're at this point, let me just add, there's something that has to be distributed to you; and that's the statement made by Jerzy Milewski, who is the number two in the Defense Ministry, when he signed the other day the agreement in Brussels. And he spells out what the Ambassador just referred to, what they really need to do between now and the time that they join NATO to prepare their army, to be really a working member of it. It's all spelled out in the statement just as the Ambassador --

Q Have the Poles expressed any concern that the Russians have now been allowed into the Partnership For Peace?

SENIOR ADMINISTRATION OFFICIAL: No. Indeed, they are quite pleased with that. The Foreign Ministry -- in fact, if you get a chance, ask the Foreign Minister that question, and he'll tell you that it's very important that the Russians be involved in the process, that they be integrated into the West as well. That's the whole idea.

So, there's been an evolution, I would say, in the view of the Poles as they see what's involved, and, frankly, as we see what's involved. We're all learning in this new world that the administration is confronted with. And we're all, I hope, every day doing a little better.

Q How far beneath the surface are Walesa's and his government's concerns about his low approval rating in this country and the impact it may have on continuing his economic reforms?

Q Was it discussed?

SENIOR ADMINISTRATION OFFICIAL: His own personal position certainly wasn't discussed. How concerned are they about reform moving forward? I don't sense there's any concern at all. And that goes across most of the political spectrum in this country -- the coalition that is now in power, obviously the people who are in opposition who started the reforms.

The coalition that's in power right now is doing nothing but confirming those reforms
and moving them forward. I like to use the informal phrase -- I'm not used to doing things like this -- but saying that this coalition is more Catholic than the Pope when it comes to strong Chicago-school type economics.

Q But is it more Polish than the Pope? (Laughter.)

SENIOR ADMINISTRATION OFFICIAL: Is it more Polish than the Pope? We'll find out. So far it seems to be both.

Q And Mr. Pawlak's popularity rating is 77 percent.

Q Outside of the meetings, can you assess the Walesa popularity and sort of future? He said he's going to run again.

SENIOR ADMINISTRATION OFFICIAL: I've got to tell you that as a diplomat in this country, that is a question I cannot answer even though I'd like to. I would say I have my own views on the subject, which tend to be somewhat optimistic. But that's not a subject that I should get into as an accredited diplomat here. I want to keep my job. (Laughter.)

Q Do you see this new coalition, which includes these former communists that the former communists are turning into social democrats or even more centrist?

SENIOR ADMINISTRATION OFFICIAL: So far, everything they have done in terms of real action has been along the lines that continue the reforms, that move the economic growth path of the country forward, at least from the perspective of a former American businessman and half-baked economist.

Q And what about Pawlak's party? Oh.

SENIOR ADMINISTRATION OFFICIAL: -- When I was here last, we had a luncheon that the ambassador sponsored with the leadership of the Democratic Alliance of the left, which is the ex-communist party. They all were voicing a commitment to economic reform to the market, and certainly every one of them sounded like a total convert.

SENIOR ADMINISTRATION OFFICIAL: Well, I'll give you a quote -- not a quote for attribution, but a quote that I use, and that is the head -- who is the head of the SLD party here, the former communists or whatever you want to call them, said to me. He said, the worst thing that could happen to us as a party is that if inflation were to rear its head again, because our constituency would be the most damaged by that.

Q Well, what about Pawlak? I mean, Pawlak comes from this Peasants' Party.

SENIOR ADMINISTRATION OFFICIAL: He comes from the Peasant Party. But Pawlak is very realistic -- how would we say - -- I almost want to call him a businessman, but he's not at all; he's never had an experience in business. But he's a very competent guy if he has things explained to him and they make sense. He's very rational in his approach -- I think that's the way to put it, from everything I've seen. When he ultimately makes a decision, it's quite a rational one and very often fits the economic scene.

Q Isn't there, nonetheless, a real chance that the government could decide to broaden social benefits in a way that would involve a lot of spending and that still could raise that possibility of inflation?

SENIOR ADMINISTRATION OFFICIAL: Well, let me tell you what they say on this subject. What they say is, they're in for four years, and that's probably fairly likely, given the political configuration right now, because that's when they have to have another election. They have a majority. And what they're saying -- and I'm paraphrasing, so please don't quote me on this. But basically, to keep it simple, what they're saying is, we're going to increase the pie for the first couple of years, and then we'll focus on dividing it up better.

Meanwhile, hopefully we'll be helping them through some of the work that they're still doing on teaching them how best to divide the pie as the pie grows more.

Q Could you give some examples of where the social securities and that doesn't quite work in Poland, why they need this technical assistance?

SENIOR ADMINISTRATION OFFICIAL: Let me put it this way, I can't remember the numbers, but the numbers are horrendous. The number of people who get some form of social benefit in this country as a percentage of the total population is like 85 percent or 90 percent. And that, of course, is a vestige of the old communist system, where everybody got some piece of the dole somewhere along the line.

That all has to be redone to focus it on people who really need it.

Q You're saying that some people get it now that really don't need it?

SENIOR ADMINISTRATION OFFICIAL: I'm just saying that according to some calculations of the people that are beneficiaries would, under a means test -- and a reasonable means test -- not qualify.

SENIOR ADMINISTRATION OFFICIAL: And 80 percent of the population gets it, or 85 percent of the population gets some form of a dole. So if you compare those two 80 percenters, it's pretty significant.

Q So then, the people that are really desperate aren't getting enough, you're saying, to really --


SENIOR ADMINISTRATION OFFICIAL: It also unbalances the budget. You see, that's the point. What you've got to do is - -- the whole idea of reform here would have to be that the focus is on those that really are in need. And for the rest of it, see whether you can make a much more effective use of the resources that are available.

One of the things, obviously, that one would be interested in is to see whether one can't begin to engage in such efforts as infrastructure improvement, which can put people to work.

SENIOR ADMINISTRATION OFFICIAL: We might want to have you both comment on the President's speech itself. I can give a little -- give you a sense of kind of what the President's going to be speaking to. But you may want to flesh out the speech that you're going to be about to hear from the President. A lot of what you're -- what's that?


SENIOR ADMINISTRATION OFFICIAL: I'll be happy to read it to you. (Laughter.) I won't rob you of the joy of discovery to have the President deliver it personally.

SENIOR ADMINISTRATION OFFICIAL: Let me give you my perspective on the speech, because I'm not sure the words will do it for you as Americans. So I'm going to put my Polish hat on. Some of you may know that I was born here and I have that sort of in my blood.

What he's basically doing is doing something the Poles really appreciate, in that he's honoring them for their history of being -- don't quote me again -- raped, pillaged and plundered, so as to say -- in one form or another for 1,000 years; and how they have survived that, and how they have come out of it now in a situation where they basically have led the reform, led the move to democracy, et cetera.

Then, of course, there's a lot more in it. But the Poles love to hear the fact that they're heroes. And I think that's the main thing that the speech is going to get across to the Pole on the street. I just -- literally, I have to admit, I just had a chance to read it about two minutes ago.

SENIOR ADMINISTRATION OFFICIAL: Let me just add to that. I think that's right. The President will observe that and monitor the contributions of Poland and Polish Americans to our own country. But then he goes --



SENIOR ADMINISTRATION OFFICIAL: What you have to take a look at in the speech is the formulation that you will find with regard to the quest in Partnership For Peace and membership in NATO. There are significant words in the speech that

Q What's the meaning?

Q Is it farther than where he went yesterday?

Q Where's the ticket?

SENIOR ADMINISTRATION OFFICIAL: In terms of where we are going, that it will be understood that we are committed to the concept of NATO expansion, and that, under those circumstances, there will be --

Q This hasn't been unclear in the past, but what are we to draw from that?

SENIOR ADMINISTRATION OFFICIAL: Just see what's in the language. The fact of the matter is that we are moving forward in the direction, through the Partnership For Peace, of beginning to work on the integration of these forces. This is where the Milewski statement becomes also very important -- that we are translating a set of words, "partnership for peace," into a reality that will be meaningful to the Polish army in its relations to NATO with regard to various aspects of NATO activity.

Q Is there something here that the Poles have not heard before?


Q Can you walk us --

SENIOR ADMINISTRATION OFFICIAL: Let me just go through some pieces of the speech. That's where I think would be helpful so we don't torture you too much on this.

In addition, too, though, as the ambassador said of honoring the contributions of Poland and Polish Americans, he also notes why he's here in terms of the present. "I've come here to the heart of a new democratic Central Europe to look ahead, to speak of how we can reverse the legacies of stagnation, oppression, fear and division; eradicate the artificial line through Europe's heartland closed by force a half-century ago; and help chart a course for an integrated Europe of sovreign nations."

And then he'll speak to the three principles that you've heard the President reference before in Brussels and at the French National Assembly of supporting democracy and advancing free markets and meeting the new security challenges of the future.

Q But does he speak to Poland and/or Hungary or the Czech Republic moving more quickly and to the exclusion of others?


Q Well, last night Walesa said he wanted --

Q So, what's the twist? I mean, don't keep us guessing, please.

Q Money.

Q $200 million?

SENIOR ADMINISTRATION OFFICIAL: Well, we did that yesterday, didn't we?

             Q    No.
                     SENIOR ADMINISTRATION OFFICIAL:  Not here but in 


SENIOR ADMINISTRATION OFFICIAL: Again, there's going to be paper on this.

SENIOR ADMINISTRATION OFFICIAL: -- basically, the Visegrad nations.

Q For peacekeeping? Is this new?

SENIOR ADMINISTRATION OFFICIAL: For money -- to basically, in connection with the Partnership that read -- if you want my interpretation of what's in that package, what kind of things money can be used for, it's to make them interoperable.

Q Is this like the Baltic Brigade's money?

SENIOR ADMINISTRATION OFFICIAL: No, no. This is a different, ttotally different pile.

SENIOR ADMINISTRATION OFFICIAL: $100 million will be effective next fall to help with the Partnership goal.


SENIOR ADMINISTRATION OFFICIAL: That's right --Fall of '95, of which $25 million is directed to Poland.

Q Last night when Walesa said he wants a security guarantee with the President's term, something more than on paper. Is this going to meet that criteria? Is the President going to say anything about timing?


Q I'm sorry, I don't understand how this money is different from the Baltic Brigade money.


Q The same sort of money?

SENIOR ADMINISTRATION OFFICIAL: I'm sorry. I thought you meant it's all going to the --

Q No, I'm not saying it's part of it --

SENIOR ADMINISTRATION OFFICIAL: It's somewhat different because the Baltic money is supposed to be for peacekeeping. What we're talking about here is for interoperability.

SENIOR ADMINISTRATION OFFICIAL: And he will ask Congress for it.

SENIOR ADMINISTRATION OFFICIAL: It's going to be -- a critical aspect is just developing a system of communications, that is, in which you can just give aid to each other.

Q And this does not include --

SENIOR ADMINISTRATION OFFICIAL: -- emphasizing the NATO thing. But hear what I said at the beginning. It was a sea change in the opinions here in Poland of where they stand in the world. They will push us to the wall on NATO membership day in and day out, and that quote was a perfect example of that. It will continue because that's where they're coming from. If they really go to sleep at night, how do they feel? That's the key question. And I contend that they feel a lot better going to sleep tonight than they did in December.

Q If the President doesn't say that he's willing to go NATO and say, let's start talking about this, which we were told yesterday by a senior aid there are no plans to do, isn't it just lip service to the idea that here we want NATO expansion and we'll let you know when we get around to it?

SENIOR ADMINISTRATION OFFICIAL: It's not lip service when they have a whole team of people in NATO, in Brussels and in Mons working on s pecific, whatever these people do in NATO. I don't understand what the military does, but they talk to each other, what plan, they do exercises, they do all that kind of stuff.

SENIOR ADMINISTRATION OFFICIAL: What you've got to keep in mind is that integrating an army is not just having the senate pass an amendment to a NATO treaty. It's working out the relationships, and the second -- that's being done now.

Q the goose-stepping reference?

SENIOR ADMINISTRATION OFFICIAL: And the President coming to the Parliament. I mean, the President coming to the Parliament to make that commitment and this $100 million fund.

Q And the $100 million cannot be shared with the Russians. Is that correct?



Q It's totally regional --

Q Is that something that has been decided -- $25 million decided for Poland?

SENIOR ADMINISTRATION OFFICIAL: The $25 million has been decided for Poles.

Q But that's the only signature --

SENIOR ADMINISTRATION OFFICIAL: Just think of that $75 million as the fund for an effective next year.

END2:00 (L)