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Office of the Press Secretary

For Immediate Release June 20, 1996
                          PRESS BRIEFING BY
                           DANIEL TARULLO,

The Briefing Room

2:35 P.M. EDT

MR. JOHNSON: Good afternoon, ladies and gentlemen. In response to your persistent and frequent demands, we have for you today a briefing on the President forthcoming trip to Lyon for the summit. Your briefer today is Daniel Tarullo, the Deputy Assistant to the President for Economic Policy.

MR. TARULLO: Good afternoon. What I'll try to do is take about 10 minutes to walk you through the different pieces of the Lyon summit and then take any questions you may have. The Lyon Summit will be divided into basically three parts, the first of which is the traditional G-7 Economic Summit; the second of which is a new special session this year to focus on global issues, new global challenges; and the third of which is also the now traditional foreign policy part of the summit.

The first piece is the economic side and here, I think, that the themes that you'll be hearing most about are threefold. First, general assessment of the world's economic situation and where it will be going in the next year. Second, I think you'll see some attention to the rest of the world, the developing world, financial stabilization, development and the like. And, third, I suspect you'll be hearing a lot of attention to jobs and unemployment.

With respect to the economic side of things, I think it's notable the difference that the United States projects in its situation going to this summit, the fourth of the President's administration from that which we had during the Tokyo Summit shortly after he had taken office. At that time, the United States had a very high budget deficit as a share of GDP, higher than that of Japan, higher than that of Germany, higher than that of France. Today the United States budget deficit has come down by over half as you know. It is now the lowest in the industrialized world as a share of GDP.

Second, when the President came to office, unemployment was a major problem in the United States. At Tokyo our unemployment problems were on a rough par with those of our G-7 partners. Since early 1993 the administration has presided over the creation of 9.7 million jobs, the vast majority of which are in the private sector. These jobs have been good jobs, paying good wages. Over 70 percent of the jobs created in the last couple of years have been in the managerial and supervisory sectors. We have, at the same time, seen investment growth averaging over 13 percent annually. Unemployment has been below 6 percent for 20 months in a row.

And I think what's important about this is that, in Tokyo in 1993, the other G-7 leaders said to President Clinton, you have to get your countries budget deficit down, the situation you've been in over the last several years is not sustainable, it threatens world economic growth. And we've done just that. And I think we can go in indicating that we have kept our promised not only to the American people, but to the rest of the G-7.

By the same token, the President, as you many recall, had promised the American people -- not the rest of the G-7 -- that we would see the creating of 8 million jobs in the United States during his administration. Actually, we passed the 8 million mark about three years in and now, we're at around 9.7.

The importance here is that in continental Europe, unemployment is at double-digit rates. They -- double digits look, unfortunately, to be somewhat sticky. We've not seen any decline from those rates. And there is enormous interest, I think, in seeing how the United States was able to tackle an unemployment problem and reduce its budget deficit at the same time. So this will, obviously, be something that is discussed at some length. I think you've got an idea of our position, and we will, of course, listen with interest to the prospectives that the other countries have.

With respect to the rest of the world, those of you who covered the summit last year may recall that we were coming on the heels of the Mexican peso crisis and the so-called tequila effect in the rest of Latin America and throughout the world. Last year at the summit, the leaders asked for a variety of steps to be taken, which would diminish the chances that we would have a similar financial crisis in the developing world and which would assure, from our perspective, that if such a crisis were to develop, the United States would not bear the burden of rescue alone.

By the time we get to Lyon, the various steps which the leaders asked be taken will have been taken. There will be new surveillance criteria already in place. The International Monetary Fund -- we have agreed with our G-10 partners to double the resources available to the IMF if a crisis should strike. We have pushed forward on regulatory cooperation among banking regulators. And we have gotten the central bankers to look at new mechanisms for dealing with debt problems in the developing world. This is, in effect, a harvesting of an initiative launched last year. But I think it's a significant one. And once again, it shows the capacity of the G-7 to react to deal with a set of problems and to take action.

I've already touched on unemployment. Let me say a few words about the global challenges session. The G-7 economic activity discussion will be on Friday morning and Friday lunch of next week. Then the communique will be issued. Following that, Prime Minister Chernomyrdin, coming in place of President Yeltsin, will join the seven, and a discussion will be held on what we refer to as global challenges or global issues.

These are things like international organized crime, terrorism, environmental issues, spread of infectious diseases. These are issues, which, as the President has said in the recent past, know no boundaries. They are not domestic problems. They're not foreign policy problems. They are problems which cross national borders and which must be dealt with accordingly.

Although the problems are not brand-new, they have in some respects achieved greater prominence with the end of the Cold War and also with the improvements in transportation and communications throughout the global economy. It is, I think, a mark of some significance that there is now a special session dealing with those problems because the G-7 and the 8 -- including Russia -- have really served as a catalyst for international action in this area.

This year, I would draw your attention particularly to the cooperation actions of the 8 to deal with international crime and drug trafficking. Again, last year in Lyon, there was a request that we -- excuse me, in Halifax -- that we get, by the time of Lyon, a set of recommendations on how, in very specific terms, there are holes in, or gaps in the international -- the law enforcement systems in cooperation among national law enforcement authorities. We have those recommendations.

It is our hope that the whole set of 40 recommendations dealing with such things as extradition, alien smuggling, sharing of information and the like will be adopted by the leaders and that there will be a commitment to implement those recommendations between now and next years summit in Halifax. It is an issue on which the President is particularly interested. As you know, he has pushed this global agenda in a variety of fora, and he is quite pleased that the focus that he's given to these issues is now shared by the rest of the 8.

That session continues Friday afternoon. Then on Friday evening and on Saturday morning, there will be a dinner and a session on Saturday to discuss the sort of more traditional foreign policy issues. This year, I would expect that both Bosnia and the Middle East will receive some attention.

With respect to Bosnia, when the leaders met in Moscow for the Nuclear Safety Summit in April, they decided that they wanted their governments to pay some attention to the non-military implementation of the Dayton Peace Accords. Since that time, and most recently at the Florence Conference, the foreign ministries, our State Department have doing just that. And they will be reporting to the leaders who, I think, will be pushing at the issue of just how, in very specific terms, we can advance the causes of elections in Bosnia and of the economic reconstruction of the region.

At the suggestion of the United States, Carl Bildt will be in Lyon meeting with the foreign ministers to review the various activities in which he's been participating and to hear from our governments what we think the priorities ought to be.

Q Does he think the elections should be held?

MR. TARULLO: I don't want to speak for Mr. Bildt, Helen. I know that he is coming to Lyon. He seems quite gratified to be able to come, but I don't want to comment on his position on that.

That will be the end of the summit after that foreign affairs session on Saturday morning. There will then be a special meeting involving the heads of four international organizations and the leaders -- the heads of the International Monetary Fund, the World Bank, the United Nations and the World Trade Organization. The purpose of this meeting, which President Chirac suggested last year, is to further the aims of coordination and efficiency among international development institutions and also the WTO, which is relevant to development as well.

There, I think, will be specific discussions of overlap of functions and those sorts of institutional questions, also what can be done for the poorest countries and finally, continuing the theme that the leaders will have pursued, attention to Bosnia and to what the international organizations are doing in order to support t he holding of elections and economic reconstruction. That session is not part of the summit as such, but it has been arranged in coordination with the summit. That ends at about 2:00 p.m. on Saturday afternoon.

As you probably know, the President will be having bilaterals on Thursday with Prime Minister Hashimoto, President Chirac and Prime Minister Major, and a bilateral on Saturday with Prime Minister Chernomyrdin.

Q -- Chernomyrdin, how many of these events is Chernomyrdin participating in?

MR. TARULLO: Chernomyrdin --

Q The Russian --

MR. TARULLO: Exactly. He takes the place where President Yeltsin would have been. And what that means is he will be coming in Friday afternoon at the beginning of the session on global challenges and will participate in the balance of the summit.

Q Including the international --

MR. TARULLO: The post-summit discussion with the international organization heads, yes.

Q Will there be any discussion of Russia coming into G -- make it G-8, as a permanent partner?

MR. TARULLO: Well, I think what has already happened this year is that recognition has been taken of the increasingly important role that Russia plays on a number of these global issues, like crime, nuclear safety. They hosted the summit in Moscow. They're important for environmental issues. And they also have much to contribute on health issues and other technical issues where they have some considerable expertise.

Their status has gradually evolved, I think, in the summits. But this year it has been recognized with this special session. There will be a special chapter in the Chairman's statement addressing these issues will fall neither in the economic realm nor the foreign affairs realm.

There is a G-7. The G-7 will be doing its traditional macroeconomic and international financial activities.

Q At Sharm el-Sheikh, the terrorism summit -- and since you're going to have global problems at Lyon as well -- when we were at Sharm el-Sheikh, there was a discussion of setting up new international mechanisms to go more effectively after terrorists. And there was some discussion even of a model after Interpol directed at terrorism problems. Are we going to see any follow-up in Lyon with regard to terrorism, particularly with regard to establishing more effective international mechanisms?

MR. TARULLO: Not the Sharm el-Sheik initiative as such, but I think you will see continued attention to a somewhat different terrorism issue which is illicit trafficking in nuclear materials. There's a program which the leaders adopted in Moscow to deal with potential problems related to nuclear materials of obvious destructive potential. And I think what you're going to see at Lyon is another push from the leaders to get more countries signed up to that program beyond the eight and Ukraine who signed up in Moscow. To my knowledge there's not anticipation of specific discussion of the Sharm el-Sheik initiatives. I believe those are still proceeding through the foreign ministries.

Q Can you give us an idea of what kind of economic discussions will take place with Chernomyrdin?

MR. TARULLO: There's nothing specifically on the agenda to deal with a couple of particular economic points but if the past is prologue, as I suspect it is, the discussion with Prime Minister Chernomyrdin will include a review of Russia's own economic situation, will doubtless include the continued expressions of support for economic reform from the other leaders.

Q What do you think of the chances of reaching an agreement at the summit on extending more generous terms to the poorest countries on debt relief?

MR. TARULLO: At this point we don't know whether we will get an outcome on that issue. We have had some proposals. The IMF has had some proposals. The World Bank has had some proposals. I think that you will certainly see an expression of interest in agreeing upon additional terms for debt relief. How specific that agreement will be, whether it will include some of the features that one or another country has proposed, that's actually an issue which is outstanding at this time, and we'll see what happens in the next week.

Q What's in the smuggling discussion? What do you anticipate? Are you talking also about nuclear -- not proliferation -- nuclear fuel, nuclear ingredients?

MR. TARULLO: That's exactly what it is. It is materials that have the potential to be included in explosive -- that's right. That is what the program on illicit trafficking in nuclear materials is all about. It has already been adopted by the eight countries plus Ukraine at the Moscow summit. We think that a priority -- and, again, it's a matter of speaking to it publicly and putting a push for it publicly -- is to get additional countries to sign up to it.

Q The G-7 partners are prepared to reiterate to the President their opposition to Helms-Burton and press him to use his discretion to suspend implementation. What is Clinton prepared to tell them at the summit?

MR. TARULLO: I think that on that issues, as on a number of others, it actually is a question of U.S. leadership. Here is a circumstance in which other countries have been somewhat reluctant to follow, as we note, but the President has been quite clear that in talking about a small number of rogue states, it is imperative that the world community take action to contain the activities of these countries which are threats to peace and democracy. He has indicated the willingness of the United States to take such action. And I think we will put a challenge to our allies to back up their expressions of concern with action. We really do, every year, get together and tell one another that this is a real problem we've got to do something about it. But in the end it is the United States which takes some action and does something about it.

And I think that's the question that needs to be talked about.

Q There's a follow on that question then that he's going to tell the G-7 leaders that indeed he'll be supporting initiatives in Congress on Iran and Libya?

MR. TARULLO: I think, based on the discussions that we the administration have already had, there certainly is legislation which we can support on Iran and Libya. What the contours of that may be, those are obviously still under discussion. But I don't think there is any doubt that we are willing to take additional action.

Q Dan, in other words, you're saying that rather than trying to mount some sort of defense of Helms-Burton, in that sense the President is going to tell the others to follow him, to do the same thing --

MR. TARULLO: It's what he's been saying for three years.

Q But he's not been saying since the signing of Helms-Burton whether or when he might invoke his waiver authority. Is he going to shed any light on how he's going to implement Helms-Burton on that score?

MR. TARULLO: I don't know. I'm certainly not aware of any.

Q Do you have any time estimate, just in terms of the mechanics of implementing the bill, particularly with regard to the waiver section, of whether that would take a matter of weeks or months to even get to a decision point?

MR. TARULLO: I think by statute there are two decision -- two potential decision points, one in mid-July, and one in mid-October.

Q The President had hoped to talk to Boris Yeltsin about the test ban treaty and some other issues. What are the chances of making any real significant progress on that with Chernomyrdin?

MR. TARULLO: Well, I think that as we saw in Moscow, President Yeltsin has actually been quite supportive of the CTBT, and, in fact, he was one of the proselytizers following the Moscow summit. So I don't -- that really is not an outstanding issue amongst us. We've been together in urging other countries to sign on.

Q Are there going to be any agreements, any treaties, anything concrete out of the --

MR. TARULLO: As is -- the G-7 is not an institution or an organization which creates treaties or binding international agreements. What the G-7 is about is trying -- and the 8 as a complement to the G-7 -- what the summits are about are a couple of things: One, providing an opportunity to the leaders in a small group with nobody else around them, just sitting around a table to discuss the issues that are most important to them at that particular time.

Two, to use the occasion of the summit to drive activities within national governments. And that's why you see things like the Halifax financial agenda being realized, some U.N. reform measures, the crime recommendations. These are things that are driven precisely because the leaders have said, we want them, and we want them this year.

And three, giving the opportunity for some pronouncements by the seven or eight -- depending on the issue -- leaders of matters that are of substantial importance to the rest of the world. Last year in Halifax, there was a statement on Bosnia. This past spring in Moscow, there was a statement on the situation in the Middle East. And this is an opportunity for the leaders to speak with one voice to the rest of the world on issues and, thereby, to have some substantial effect.

Q Could you elaborate on the kind of wording you expect or hope for on these -- what you described as the issues that know no borders -- crime, drug trafficking -- those kinds of things? What kind of communique language are you looking for?

MR. TARULLO: Well, I think what we are looking for on crime, in particular, which, as I say, has sort of been the centerpiece of some of the efforts this year, is an endorsement of the very specific set of recommendations which were made by this experts group. We're not going to -- I mean, I'm enough of a masochist doing the sherpa work, I don't want to incorporate all those into the Chairman's statement, but to endorse by reference specific actions that we want our national law enforcers to take to cooperate with one another on things like extradition, alien smuggling, seizure of assets and the like.

So not just sort of a platitude saying, gee, it's important to fight international crime, but to say, we are committed to doing these things, and we want our guys to continue working on these things and to be prepared, next year, to tell us what they've done. And that's sort of the second function I was referencing before, use the annual summits to drive work in the intervening year.

Q I wonder, in regard to Japan, there are a number of unresolved trade issues; outstanding among them, a violation of an existing insurance agreement and a coming expiration of the semiconductor trade agreement. Is the President going to aggressively bring up those issues with his Japanese counterpart?

MR. TARULLO: At each of the meetings between the President and the various Prime Ministers of Japan, during the President's administration, there have been three sets of topics. There's been the political and international affairs set. There has been the security set of issues. And there have been the economic issues. My expectation is that each of those sets of items will be touched upon and will be touched upon appropriately.

Q You made reference to the Middle East, which is almost a reflex whenever there's an international -- on Bosnia, you know, you went into some detail. Is this a pass the plate on the Middle East session or --

MR. TARULLO: No, we're not going -- it's important to note, we're not going with a specific wish list or anything like that on the Middle East. These eight countries are all committed to the peace process, and there is a need, obviously, to take an assessment of where things are in the Middle East and to ask one another how best to move the peace process forward.

Q You've said alien smuggling a couple of times as the lead item on the crime agenda. What other items are on the crime agenda?

MR. TARULLO: I didn't mean to -- it's just at the top of my list because it begins with 'A,' so I didn't mean to give it a particular prominence. Extradition -- what we've called the "nowhere to hide" set of agreements; information exchange on various things; dealing with fraudulent documents; the way in which criminals can move across national boundaries; seizure of assets of criminals; increased cooperation to deter money laundering. As I say, they're quite specific. They get in the weeds pretty quickly, but that's where you do law enforcement.

Q A year ago there was much concern expressed around the time of the Halifax Summit about what had been the relatively weak level of the dollar. Is it your perception that that concern has since abated?

MR. TARULLO: As you know, no one who speaks at this podium comments with any specificity upon the dollar. I will only say that I think that our prescription of saying that sound economic policies and intelligent coordination by finance ministers has been borne out as an appropriate set of policies to follow.

Q In Milwaukee when the President met with Kohl, it was reported that the German Chancellor favored making Yeltsin a full-fledged member of the group, turning it into G-8, including economic issues. That didn't happen, and it's not going to happen in Lyon. Is Lyon going to send any kind of signal in terms of the evolution or possible change in the future of the G-7, particularly with regard to Russia? And has there been a steady decline in the G-7's ratio of GDP to world output, in other words, a smaller and smaller part of the world economy?

MR. TARULLO: With respect to the first question, what you really -- what you've seen over the last four years is a growing participation by Russia in the work of the summit. The --

Q Not the economic --

MR. TARULLO: The global issues, which I mentioned, are really sort of a new set of things which fall somewhere in between. There is still a G-7 composed of the countries which are donors to international financial institutions. And that status remains unchanged.

With respect to the second issue, yes -- as a matter of fact, in the 21 years since the Rambouillet Summit, the first economic summit, the portion of GDP -- world GDP -- accounted for by the seven countries has diminished. We've been growing in that time, but some of the developing countries have been growing even more quickly.

Q Do you have the figures?

MR. TARULLO: Do I have the figure -- not offhand. Sorry, I don't have the figures.

Q Less than 50 percent now, isn't it?

MR. TARULLO: Less than 50?

Q Five-zero.

MR. TARULLO: Yes, it would be less than five-zero.

Q Was it more than 50 21 years ago?

MR. TARULLO: It probably was, yes. Probably was.

Q Can you give us some idea of a ballpark figure --

MR. TARULLO: I don't want to give you an idea which turns out to be mistaken. We can get you the precise information if you need it.

Q -- mechanical questions here -- what number G-7 is this? There wasn't one right after Rambouillet. There wasn't one right after -- there were some gaps in years.

MR. TARULLO: No, no, no, no. This will be 22, I think.

Q You can never stop anything like this, right? (Laughter). What happened -- an administration to back somebody said -- well, first I think it was the French or the Canadians -- wanted the United States to meet with them, meet in a room by itself and tell us the results. But there was serious consideration given to maybe not doing this every year. You made reference to the old notion it's a chance to sit back informally and discuss -- but you're back to the old system --

MR. TARULLO: Actually, I don't think --

Q -- of annual boring summits.

MR. TARULLO: I don't think you're back to -- what you've actually seen in the last couple of years is more informality within the sessions themselves.

Q But you've got to do this every year?

MR. TARULLO: There is a utility that the leaders seem to attach to it because although they talk to one another a good deal individually -- and the Europeans see one another all the time -- this particular group does not get together. And there still is a set of shared outlooks which are important for developing and implementing policies.

Q And it's a terrific eating town.

MR. TARULLO: Lyon certainly is.

Q And Denver is next year, right?

MR. TARULLO: Denver is next year.

Q What are the dates?

MR. TARULLO: The 19th through 21 -- I think 19 through 21 June.

Q Dan, one last question. Do you think the G-7 leaders can see a day when China would be invited to participate in the political discussions and sit down?

MR. TARULLO: I don't anticipate any discussions of additional members of the seven this year.

Thank you.

Q Who represents the U.N. -- Boutros-Ghali?

MR. TARULLO: He will be there.

Q He will?

MR. TARULLO: Yes, he'll be there.

Q He will be the U.N. person at --

MR. TARULLO: Yes, he's the Secretary General.

Q Well, I know --

Q For the moment -- (laughter) --

Q Who picked Denver and why?

MR. TARULLO: Who picked Denver and why? Denver is a wonderful city. It's a wonderful city, the Rocky Mountains. And we haven't had a summit in that part of the country.

THE PRESS: Thank you.

END 3:03 P.M. EDT