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                     Office of the Press Secretary
                             (Lyon, France)
For Immediate Release                                      June 28, 1996
                             PRESS BRIEFING
                         The G-7 Filing Center
                              Lyon, France

4:33 P.M. (L)

MR. MCCURRY: Good afternoon, ladies and gentlemen. As you know, Prime Minister Chernomyrdin arrived just a short while ago, so the discussions here at Lyon now will take place at 8:00 p.m. I think because of that and because they move into the political part of their dialogue, it would be very appropriate to have the Secretary of State start by outlining some of the issues that will be on the global and political agenda at the summit here in Leon. And then I've asked Secretary of the Treasury, Bob Rubin, to give you a little better idea of some of the importance of the economic issues addressed by the leaders this morning and the significance of the economic communique that's just been released.

It's a pleasure to have both Secretaries here.

Secretary Christopher.

SECRETARY CHRISTOPHER: Good afternoon. Since taking office, President Clinton has focused the summits on developing concrete strategies to address the most pressing concerns of both the American people and the international community at large.

At Tokyo, as you'll recall, the President galvanized support for the completion of the Uruguay Round, and he mobilized a major Western economic package for Russia. At Naples, the leaders adopted the President's proposal for a far-ranging review and reform of the principal international institutions in order to try to ready them to meet the challenges of the next century. And at Halifax last year, following the President's now successful efforts to end the Mexican financial crisis, the summit took important steps to improve the international community's ability to respond to that kind of crisis in the future. And very important steps have been taken along that line.

Coming to the summit here in Lyon this year, the President identified two priority areas that he wanted to focus attention on here in Lyon: First, securing the peace in Bosnia and, second, combating international crime and terrorism. We expect the leaders to adopt concrete plans of action in both of these areas.

In Bosnia, we've already made very considerable strides in implementing the Dayton Agreement. I want to commend the efforts of IFOR and the High Representative, Carl Bildt, in this regard. The guns have fallen silent in Bosnia. The opposing military forces have been separated and they're now demobilizing. The parties have agreed, only a few days ago, to far-reaching conventional arms reductions. Virtually all the prisoners of war have been released after a major effort on our part. And foreign forces have now departed from Bosnia.

Work has begun on the Gorazde Road, which is so important symbolically and substantively. And the long-term project of reconstruction is underway. Freedom of movement, far from perfect, nevertheless has been substantially improved with thousands of people every day crossing the interboundary lines.

We all recognize, of course, that this is a multiyear commitment on the civilian side and much more needs to be done. Here at Lyon we expect the leaders will adopt a concrete plan of action to strengthen the implementations in several areas, particularly relating to elections and economic reconstruction.

On elections, as you know, the head of the OSCE has now officially confirmed elections will take place as scheduled under the Dayton Agreement on September 14th. Elections are vital to put in place the key political institutions called for in Dayton, including a national presidency, a national legislature, and national courts. These institutions are essential if we're going to achieve the goal of Dayton of a multiethnic society and if we're to continue the work on reconstruction, which is so essential. Our action plan will lay out specific steps that the international community will take to make the elections a success.

On economic reconstruction, the leaders will lay out an agenda to make sure that peace produces real benefits in the lives of ordinary civilians -- ordinary citizens of Bosnia. And this will include new steps to ensure adequate funding and the construction of priority reconstruction projects.

The leaders will also review various aspects of Dayton compliance. One of the most important of these, of course, is compliance with the orders of the War Crimes Tribunal. I want to stress that the Dayton Agreement now flatly prohibits indicted war criminals from participating in the elections. The President will be working with his fellow leaders here to make clear that indicted war criminals like Mr. Karadzic must be removed from power, removed from influence, be out of the country, and in the hands of the War Crimes Tribunal.

Terrorism, international crime -- to move to the second subject -- are also priority issues for President Clinton, President Chirac, and the other leaders. Last night, at the urging of both President Clinton and President Chirac, the leaders adopted a statement declaring the fight against terrorism to be an absolute priority for all of them. The program of that the leaders will adopt during the next two days represents a very important series of steps in addressing what is obviously one of the most important problems facing the world today.

Since the beginning of our administration, President Clinton has put these concerns about terrorism and international crime at the very top of his agenda. Last year at the 50th U.N. General Assembly, the President called on all nations to adopt effective, coordinated strategies to fight these transnational issues such as terrorism, crime, narcotics, and arms trafficking, nuclear smuggling issues that have a very close interactive relation to each other, I'm sorry to say.

In Ottawa last December, the P-8 agreed to a declaration against terrorism, calling on all nations to ratify the 11 international antiterrorism agreements, to do so by the year 2000. Experts from the P-8 have developed a package of 40 recommendations on international crime and terrorism that the leaders will review and will endorse later today or later at the summit.

These recommendations, of course, are not the end of the effort. As you know, the leaders last night asked the ministers to meet within the next month to consider further actions.

This is the message that will go forth from Lyon: The international community is united and determined to prevail in the fight against terrorism. We must not rest until this fight against our most serious threat to our security and well-being has been won.

The significance of our decision is strengthened here by the presence of Russia in our discussions both of global and regional security issues. The elections held two weeks ago in Russia represent a milestone on the continued path of political and economic reform in that country. Russia's participation here, with the arrival this afternoon of Prime Minister Chernomyrdin and Foreign Minister Primakov, are further signs that Russia is integrating itself into the international community and contributing to international stability and security.

We look forward to a similarly successful second round of elections in Russia. We will continue to urge the leaders of the Russia and the people of Russia to strengthen and consolidate reforms as they move into their future.

Thank you very much.

SECRETARY RUBIN: Thank you, Chris.

Let me, if I may, add a few words with respect to the economic agenda of this summit and where we may be going, going forward.

The President came to the summit committed to advancing the international economic agenda that he has -- he began advancing, as Secretary Christopher said, at the first summit, the Tokyo Summit, the first summit of his administration: focusing on promoting sustainable growth and financial stability in the world economy, strengthening our capacity to deal with new challenges to the international financial system, supporting development and reform in the developing and transitional world, opening markets, building multilateral trading system, and supporting the transition in Russia and the former Soviet Union.

We have reached agreement in Lyon on quite a number of measures that continue to advance this process that began with the President in Tokyo and then led to Naples and Halifax. First, the leaders reaffirmed their commitment to macroeconomic policies and structural reforms to promote sustainable growth and job creation. And in this context let me say, because I suspect you will probably ask me anyway, that the leaders welcomed the broad movements in exchange rates in the major currencies since April of 1995 and instructed their finance ministers to continue to cooperate on economic and foreign exchange matters.

Second, the leaders welcomed the progress achieved in implementing the Halifax initiatives, which were designed to strengthen the financial system, including the establishment earlier of a strong early warning system through the disclosure requirements promulgated by the IMF, and the agreement on a new, $50 billion supplementary facility for the IMF done around the concept of the general agreements to borrow.

One of the key outcomes, in my view, at least, of our discussions in Lyon was to continue our emphasis on remaining at the frontier of globalization, innovation in the financial markets. And toward this end, the communique outlined new priorities with respect to enhancing regulatory cooperation to safeguard the financial system, including stronger risk management and transparency in innovative markets in the major financial centers; making operative with specific steps the agreement previously reached to cooperate in regulating the international financial organizations that operate across global borders; and establishing standards for financial institutions in emerging markets, a very important issue going forward.

They also called for review of the implications of electronic money -- Internet and the like -- and the identification of ways to make sure that the benefits of these developments are realized, and at the same time, ways to avoid the problems that are implicit in these developments.

Third, the leaders reaffirmed a results-oriented partnership for development which emphasizes the importance of sound economic policies and good governance in the developing world, more effective assistance by the multilateral development institutions, focused particularly on poverty alleviation and in putting in place the underpinnings for private sector development and continued support from the developed countries.

The finance ministers who have had a number of meetings during this two-day period will be talking about this development agenda over dinner this evening with the managing director of the IMF, the President of the World Bank, and the Director General of the WTO. And the leaders will meet with those three plus the Secretary General of the United Nations tomorrow to discuss those and other subjects.

The most important thing, with respect to the development agenda, the leaders agreed on a comprehensive approach for alleviating the debt burden of the poorest nations, so those nations, if they agree to sound reform policies, will be able to manage their debt burden and succeed economically. This approach includes a substantial commitment from the World Bank, which we expect will total the order of $2 billion from their own resources for debt alleviation, and contribution by the IMF through a continuing, enhanced structural adjustment facility, referred to as the ESAF, financed primarily by its own resources.

This approach also calls for increased debt reduction by the creditors of the Paris Club. We believe that debt reduction, debt relief for the poorest countries is the most efficient way of making a contribution to their reform and development.

All of these measures are vital achievements in the ongoing process of dealing with the global economy and the global financial markets. There is an enormous amount of work to do, but if you look back over the past three and a half years, I believe without question that there have been tremendous achievements that will greatly contribute to all of our economies and our national security in the years ahead, including very much to those of the United States.

Let me conclude by complimenting our French hosts, my colleague, Jean Arthuis, in particular, for their effective leadership in various meetings at this summit.

We would now be delighted to respond to questions.

Q Secretary Christopher, did the ministers today come up with any new approaches or initiatives on combatting terrorism?

SECRETARY CHRISTOPHER: Well, the ministers certainly understand the message that came from the leaders who met last night, and they're going to be adopting a series of measures, as you know. I think the principal that we got from them was that they want us to meet within the month at the ministerial level to carry this process forward. Steps will be taken here at the summit that are extremely important, but this is an ongoing project, an ongoing process, and I think they will be looking to the ministers to move the process forward when they meet within the month.

Q May I ask you just a quick follow-up? There was another process underway, Sharm el-Sheik, and it was to be followed by Luxembourg, which for other reasons had to be cancelled -- not postponed, I take it. How are you going to -- or do you have a way to bring into this approach those other countries and their experiences?

SECRETARY CHRISTOPHER: Barry, I think the processes are completely compatible. There is no single way to approach this issue. The modalities of the ongoing conference have not been decided. But I can assure you, based particularly upon my discussions in the Middle East this last week, this issue is very much on the minds of those in the Middle East and we must work in a coordinated way. This is not just a G-8 issue, by any means. This is an international, a worldwide issue. And we will be working in all the fora and on all the various ways we can, and we will ensure that no one feels excluded from this process.

Q Mr. Secretary, on the question of Bosnia, should the U.S. make an effort above and beyond what IFOR is doing to try to capture war criminals like Mladic and Karadzic?

SECRETARY CHRISTOPHER: Well, as you know, it's not part of IFOR's mission to hunt down the war criminals. At the same time, IFOR has very important responsibilities that can help lead to that result. I think IFOR's patrolling, which has substantially increased, including in Pale, is an important step in that direction. IFOR is ensuring that others have freedom of movement within the country. IFOR has a clear responsibility to arrest these war criminals if they come within their purview. Those are all things that IFOR can do effectively.

This must be a coordinated strategy, of course. We're trying to use all of our influence with President Milosevic of Serbia to ensure that he takes all the steps that he can and has promised to take to ensure that, as I said, Mr. Karadzic -- Dr. Karadzic -- is out of office, also out of influence and out of the country.

Q Secretary Rubin was there any discussion of the Helms-Burton retaliation? And also how is the fire in your department?

SECRETARY RUBIN: Those are unrelated questions, I assume. The questions were, were there any discussions of Helms-Burton, one; and two, how is the fire going in our department. And those, I am told, are unrelated.

Q Not necessarily. (Laughter.)

SECRETARY RUBIN: Not necessarily. Well, in the meetings that I was in, which was the bilaterals that the President had plus the finance ministers and a very brief plenary, Helms-Burton was raised a few times, but it was not a significant portion of the discussion. You know, every summit we have been at, there have been some matters that we disagree with our summit partners on. I think one of the things that struck me was how much constructive discussion there was here about a broad array of issue that all of us think are of great importance, about which we have pretty broad agreement, I would say.

On the question of the fire in our department, it turned out to be a very serious fire in a very wonderful building. And we will be working tonight and through the weekend to get this building back in shape as quickly as possible.

Q Mr. Secretary, there is a report of a bombing near Chechnya, 10 dead. President Yeltsin has labeled it a terrorist bombing. Are you aware of these reports?

SECRETARY CHRISTOPHER: I'm sorry, I have not even heard those reports.

Q There's also a report apparently that Mr. Mladic may have suffered a stroke --

SECRETARY CHRISTOPHER: I did that report, but I don't know anything about the authenticity of it.

Q We're getting information that there may be some kind of announcement in Washington about Mr. Yeltsin's health. Have you heard anything about that and can you --

SECRETARY CHRISTOPHER: I don't have anything on that at all. But just as I was walking in I saw Prime Minister Chernomyrdin arriving, and I'm supposed to be leaving here, indeed, within five minutes or so to meet with the Foreign Minister Primakov. And I'm sure if there is anything to be said about that, they'll tell us.

Q You failed to get agreement on the IMF gold sales. How much of a setback do you see that --

SECRETARY RUBIN: Oh, no, I think on the IMF ESAF I think we've actually wound up in pretty good shape. What we got was an agreement -- you can look at the communique to get the exact language -- but something to the effect that the IMF will optimize its resources in order to accomplish the purposes of debt relief. And when you look at the asset base of the IMF and you analyze that, I think what it points to is a sale of a small portion of the gold and reinvestment of those proceeds in interest bearing assets of some sort -- maybe a market basket of currencies -- with the income then to be used for debt relief.

So I think we got the essential commitment we need, and now it's a question of implementation. As I say, I think the implementation will ultimately lead to gold.

Q -- in other words, they support gold sales --

SECRETARY RUBIN: Well, everybody who is on board with the language that we have. And now we have to let that language take us where it will take us, and I just told you where I think it will take us.

Q Secretary Rubin, Chancellor Kohl said just an hour ago that the language in the communique was designed to meet Germany's veto of any gold sales whatsoever. Can you speak to that?

SECRETARY RUBIN: Well, I guess I would just repeat the same thing. We've all agreed that net reduction is critically important for the poorest countries. We've all agreed the IMF should fund this primarily through its own resources, and we've all agreed to optimizing the assets of the IMF to do so. And I think when you analyze it you will wind up with gold.

Q You expect some gold sales eventually --

SECRETARY RUBIN: Well, we've all agreed on the communique as I've just very roughly speaking paraphrased it, and I think it leads to one place.

Q Secretary Christopher, are you confident that if Boris Yeltsin is reelected on Wednesday, that he will continue on the path of reform that the United States supports?

SECRETARY CHRISTOPHER: We certainly think he should. We think he should continue the path of reform, that that's in the interest of Russia. And as I said in my statement, we look forward to a second successful round in the election and we look forward to a continuation of their commitment to the path of democracy.

Q Obviously, you think he should, but do you think he will?

SECRETARY CHRISTOPHER: I think that's not for me to predict here today. There's an election going on in Russia. And I can indicate our strong determination is to do everything we can to continue the path both of economic and political reform in Russia.

Q Secretary Christopher, there is some talk of irritation between the FBI investigators and the Saudis because they didn't have access to the four suspects who were executed a few weeks ago. And could you tell us and update at the same time how the investigation into the Dhahran bombing is going along?

SECRETARY CHRISTOPHER: Let me say that when I was there for six or seven hours on the night before last I was joined by Prince Saud, the Foreign Minister, and also by Prince Bandar, the Ambassador to the United States, who flew in as rapidly as he could get there. They gave us every cooperation that we asked for. They didn't stint on it in any respect.

I can't imagine that we won't have the fullest cooperation from the Saudis, who are just as concerned about this whole episode as we were. I think we can count on their cooperation. As you know, a FBI team -- there was already, fortunately, an FBI team in the country. They started to work the night that I was there. There's a substantial team, I think in excess of 40 people, who are on their way there. I was assured they'll work very closely together with the Saudis.

I don't have any results of that investigation, but I know that it is underway in the most aggressive way possible. We'd like to find an early solution to this, but we're going to get to the bottom of this issue, and at the same time we're not going to be deterred from doing what we must do in order to carry out the obligations we have to preserve peace and prevent aggression in Iraq.

Q Secretary Rubin, the very last line in the finance ministers' report says that the ministers fully support the -- review of IMF quotas and -- to receive sufficient resources are that -- is it your view that there are sufficient resources available at the IMF? When will a decision be made on this?

SECRETARY RUBIN: Well, our view on the IMF quotas is that we obviously believe in a fully-funded IMF. I don't believe they have an immediate need for resources, and we think that this should be reviewed and, at an appropriate time, action be taken. But we don't think that it is in imminent need for action.

Q After the election -- understand that.

SECRETARY RUBIN: We don't think there's an imminent need for action and we think that they're adequately funded for now.

Q Secretary Rubin, you said that the leaders supported the general movements in the major currencies since April of last year. That coincides with the drop, the decline of the dollar against the yen and the mark. So can we read this as a general endorsement of a stronger dollar?


Q By --

SECRETARY RUBIN: Well, I can tell you what we meant. I can't tell you what others meant. What we meant is what we have said consistently for a long time, which is that we believe a strong dollar is in the interests of the United States; we will not use the dollar as an instrument of trade policy; and we believe that the currencies over time will follow fundamentals, and the fundamentals of our economy are very strong right now, as you know.

Q Secretary Rubin, does the language in the communique mean you didn't get an agreement on raising the debt forgiveness?

SECRETARY RUBIN: Raising what?

Q The debt forgiveness for some of the poorer nations --


Q -- beyond a 67 percent level. And are you disappointed by that outcome?

SECRETARY RUBIN: No, but it's -- again, I don't remember the exact language, but the paraphrase was that we all agree that there needs to be, for the very poorest nations, further action taken by the Paris Club. And on a case by case basis, it needs to be determined how much further beyond the Naples -- Naples, you remember, was a two-thirds reduction. And the language is something to the effect that we have to see where we go from here on a case-by-case basis.

Q -- didn't you have any percent?

SECRETARY RUBIN: I don't think we were wedded to any particular percent. I think what we wanted to do was to establish the principle that debt reduction for the poorest nations was a very -- was a major step forward in dealing with the questions of developing countries. And I think we wound up with agreeing amongst all seven nations and in very good shape in that respect.

Q Secretary Rubin, in the leaders' meeting or the finance ministers' meeting, did the issue of unfunded public liabilities come up at all and the dangers that that's going to pose to fiscal policy in the medium-term?

SECRETARY RUBIN: Not in any very systematic or formal way. I think there may have been a reference or two to the fact that all of these countries have long-term issues that need to be dealt with in that area, but there was no systematic discussion of it.

Q Secretary Rubin, in reading the communique, the section dealing with job creation seems to be a pat on the back for the administration. But when you get to the trade section, there seems to be quite a variance with the emphasis in the communique to the importance of sticking with multilateral rules. And I'm wondering how the United States can at the same time, subscribe to the trade section of the communique and still proceed with Helms-Burton and the unilateral embargo of Iran.

SECRETARY RUBIN: Well, let me respond to both parts of the comment and the question, if I may. With respect to job creation, it is true, we have had a remarkably successful three and a half years economically in the United States. With 9.7 million new jobs created, we have equated almost 85 to 90 percent of the jobs -- almost 85-90 percent of the jobs have been in the G-7 and created in the United States. One of the things that struck me at least at this summit was how much respect there was to what's been accomplished in the United States over the past three and a half years and how dramatically our position at these summits has changed now as versus, say, five or six years ago by virtue of having dealt with the deficit, the issue that the world has wanted us to deal with so long and our success in job creation.

In terms of multilateralism, look, we are very strong believers in multilateralism. We took a lead position -- I'd say the lead position in the world -- in creating the WTO. The President has been extremely active in reenergizing APEC. And we created the Western Hemisphere Summit as a way for dealing with issues multilaterally. So we are very strong proponents of multilateralism. There will from time to time, for us and for every other country, be issues that need to be dealt with outside that framework. But I would say that we are probably the foremost -- not probably, I think we are the foremost supporters -- effective supporters -- of multilateralism in the world today.

Q But did you even try to get an exception clause in this for unilateralism? There's absolutely no mention of -- no allowance really for any unilateral steps on countervention to WTO or --

SECRETARY RUBIN: I'll stick with what I just said. I think that if you look at the record of the last three and half years, we have been extremely strong proponents of and extremely effective proponents of multilateralism. But we and every other nation will from time to time have some issue that's of extreme importance to us that we deal with in a different fashion.

Q -- on point 40, there are a number of very specific directions to the U.N. in regard to reform of their program. A two-part question: Is that an effort by the G-7 to take direct administrative responsibility for the reform? And second, in conjunction with that, was there discussion about the administration's position on Boutros-Ghali?

SECRETARY RUBIN: Mike ought to grant somebody a second question, because both of those are in Secretary Christopher's purview. They didn't come up in the finance ministers' meetings at all. And they didn't come up in the portion of the plenary meeting with the leaders that I was at. And it didn't come up, as I -- I don't recollect it coming up in the presidential bilaterals I was at.

Q Did your office burn -- or the Cash Room?

SECRETARY RUBIN: Helen wants to know whether my office was burned or whether -- you really are curious about this. You weren't involved in this, I trust. (Laughter.)

Q Not that I remember.

SECRETARY RUBIN: Not that you remember. (Laughter.)

The Cash Room, unfortunately, which is a wonderful old, old room in the Treasury Building, has about two feet of water in it. But that will be totally recovered, we'll be able to handle that. And my office, fortunately for the nation, was not burned. (Laughter.)

MR. MCCURRY: On the afternoon session, when they begin the discussions at 8:00 p.m. was to include discussions about U.N. reform and that if there was -- I hadn't heard anything based on the discussion at lunch that indicated it had been raised.

Okay, thank you everyone. We'll try to provide some type of readout later in the day on the afternoon discussions here.

Q Do you think there's going to be any more on terrorism at all, or are they just going to talk about it? No more proposals --

MR. MCCURRY: There will be some discussion this afternoon on the specific ideas we're putting forward. And I think some of you, it's beginning to wind it's way around here, some of the ideas that we've been developing -- those are going to be under discussion this afternoon.

Q Do you have anything on Mr. Yeltsin, because Russian TV is apparently reporting that there's some problem with his health?

MR. MCCURRY: We are aware of those reports, and we will remain in contact with our embassy in Moscow to see if we develop any information. As the Secretary of State indicated, if there's any information available to us, it will most likely be conveyed directly by Foreign Minister Primakov. And, of course, the President will be an opportunity to ask Prime Minister Chernomyrdin later today or tomorrow.

These reports are now circulating. I'm sure if there is anything to be concerned about, it will come up as a subject of conversation.

THE PRESS: Thank you.

END 5:03 P.M. (L)