THE WHITE HOUSE
Office of the Press Secretary
PRESS BRIEFING
BY
DEPUTY SECRETARY OF TREASURY LARRY SUMMERS,
ASSISTANT SECRETARY OF STATE FOR EAST ASIAN AND
PACIFIC AFFAIRS STANLEY ROTH, AND
UNDERSECRETARY OF STATE FOR ECONOMIC BUSINESS AND
AGRICULTURAL AFFAIRS STUART EIZENSTAT
The Briefing Room
1:18 P.M. EST
MS. LUZZATTO: We're going to have a read out of the meeting today between President Clinton and Prime Minister Chuan of Thailand, with Deputy Secretary of the Treasury Larry Summers; Stanley Roth, Assistant Secretary of State for East Asian and Pacific Affairs; and Stuart Eizenstat, Undersecretary of State for Economic Business and Agricultural Affairs.
ASSISTANT SECRETARY ROTH: Let me begin simply by describing the overall tone of the meeting and some of the issues covered, and then I will defer to my two colleagues to get into more of the specifics.
The meetings lasted approximately two hours, beginning with a very short session in the Oval, followed by a meeting with the Cabinet in the Cabinet Room, and then a luncheon. I would describe the conversations as extremely cordial and amicable. It was the type of conversation you would expect between two allies, in that there were no contentious issues, I would say, discussed during the meeting; that even though there were some areas we have different points of view, there were absolutely no issues that I would describe at contentious.
The President began the sessions by expressing our appreciation for Thailand's recent behavior, the steps which it had taken to manage its economic difficulties, talking about admiring their courage and discipline and that we expressed our desire to continue to support their efforts, as well as the hope that they would continue their reform program. And Mr. Summers will describe more about the economic issues.
The President also indicated the that United States had put together a major aid effort covering a wide range of programs to try to be helpful to Thailand's needs in the current situation. And Undersecretary Eizenstat will describe that program in some detail.
All I would like to say is that for his part, Prime Minister Chuan was extremely appreciative of the aid package and of the steps which the United States has taken during this entire crisis and has expressed appreciation for U.S. engagement on these issues; and expressed considerable appreciation for the support package that Stu will describe shortly.
In addition to the bilateral relationship, a number of regional issues were discussed as well. This includes Indonesia which, of course, is a concern both for the United States and all countries in Southeast Asia. And a fairly similar point of view was expressed by both governments about the need to try to manage the situation in a way that would be most stabilizing to the region.
There was a discussion as well of some bilateral economic issues on the trade side, although that didn't figure particularly prominently. And then over the lunch it concentrated mostly on regional issues, with extensive discussions about Cambodia and Burma, in particular, most of the time. In addition, the President raised the issue of global warming and emphasized the availability of the United States for joint ventures to try to reduce some of the pollution problems and attack the problem of global warming. Prime Minister Chuan expressed his support.
Also, Prime Minister Chuan used the luncheon discussion to emphasize some of the steps which Thailand is taking to Secretary General democratic institutions in his own country. Thank you.
UNDERSECRETARY EIZENSTAT: We consider it very much in our interest to see a prosperous, thriving, democratic Thailand. We have a friendship extending over 165 years. They're a key military treaty ally and the hub of our strategy to maintain stability in that vital part of the world. The relationship between our two countries extends across a whole range of bilateral, regional and multilateral issues, such as trade and investment, counter-narcotics and Cambodia.
We've worked together with the White House and nine agencies over the last month and a half to put together, along with the private sector, a package which we believe is worth $1.7 billion this year alone to assist Thailand during this difficult period. It will strengthen, we hope, business confidence and demonstrate our support for the Thai people during this financial crisis. The areas which we'll be assisting Thailand reflect the many issues on which we've long cooperated -- trade and investment, military security, law enforcement and people to people.
First, in terms of trade and investment: Ex-Im Bank, the Trade Development Agency and OPIC have approved a number of projects. Ex-Im Bank will provide up to $1 billion in critically needed short-term trade financing, which will get trade moving again by guaranteeing Thai letters of credit so they can import everything from food stuffs to raw materials for eventual export and will permit businesses to buy these necessary inputs so they can maintain production and keep people employed.
The Trade Development Agency is offering technical assistance and feasibility study on four major projects. And OPIC only yesterday approved two major power projects which will employ 2,500 Thais to enjoy both jobs and a stronger energy future.
In the area of military cooperation, we'll maintain the overall scope and quality of joint exercises that have benefitted both of our countries over the years. The Thais are interested in a de-mining program on the Thai-Cambodian border, and we're prepared to include them in our de-mining program.
We've also agreed to relieve Thailand of its remaining financial liability in connection with the purchase of eight FA-18 aircraft. This was one of their major concerns, and the Defense Department will procure these eight FA-18s for use by the Marine Corps to meet anticipated aircraft replacement needs. And this will save about $250 million for the Thai government.
Q That's the cost that we're forgiving?
UNDERSECRETARY EIZENSTAT: That's correct. That' we're buying back, in essence.
Q I thought those airplanes weren't compatible with the domestic arsenal. Weren't they --
UNDERSECRETARY EIZENSTAT: No, they are. The Marine Corps can use them in their domestic arsenal.
In the law enforcement area, we're negotiating an agreement with the Thai government to establish an international law enforcement academy in Bangkok. We have one in Budapest, serving Eastern Europe. This will serve East Asia. The academy will provide training to law enforcement officials from all over Southeast Asia to combat trans-national crime. Thailand is increasingly seen as the regional leader in ASIAN on law enforcement issues and has long cooperated with us on counter-narcotics issues, including extraditing 11 narcotics traffickers to the U.S. since 1996.
In the people-to-people area, the area that they were most concerned about was student aid. And here we've worked with the State Department, USIA, the Immigration and Naturalization Service, the U.S.-ASIAN Business Council and the Kenan Institute, for a very creative public-private partnership to help the 13,000 Thai students who are now in the United States -- for example, to be able to take a reduced course load while they are working. And this plus private sector aid will help these 13,000 students and a number of others, perhaps another 170 who are stranded in Thailand and unable to come, have their studies here.
In addition, we will provide essential vaccines to poor children in Thailand and support rural health programs. The Peace Corps, which had planned to phase-down its program, will instead maintain its presence in current levels to demonstrate our support for the Thai people throughout the country. We're aware that some public misperceptions may have existed in Thailand about the depth of our commitment. However, the warm, friendly climate of our meetings today, plus this major aid package, will reinforce our historically close ties. The Thai leaders know of our support for Thailand, working with the IMF, as well as the many other areas we have long cooperated.
DEPUTY SECRETARY SUMMERS: We have been watching the economic situation in Thailand, working with the Thai government closely -- since the onset of their economic crisis last summer. We have been very much encouraged by the progress since the Chuan government came to power last fall. Thailand has worked closely with the IMF on the key measures of structural reform, cleaning up problems in the banking system, working through problems in the corporate sector and maintaining a monetary policy conducive to confidence -- that are important in responding to a crisis situation.
Comparing the situation of the Thai government as I spoke with the Prime Minister and the Finance Minister, this time, with the situation when I visited Thailand in mid-January, I was very much struck by the improvement that has resulted from a combination of strong policy and international support. The exchange rate, which was in the low 50s to the dollar then has appreciated by more than 20 percent. There is substantial investor interest. The health and confidence in the financial system has improved and Thailand is considering and I expect will at some point return directly to the capital markets to borrow money. These are all important indications of what sound, determined policy can do.
Secretary Rubin, in his meeting with the Prime Minister, had an opportunity to speak about these issues and he and the Prime Minister agreed that while very substantial progress had been made, and while the assistance that was being provided was welcome, that it would be important to have steadfast commitment to strong policies in the period ahead. If Thailand could do what I think it very much aspires to do, which is be a leader by example in the Asian region. And in that context that United States reaffirmed that it would be prepared to support, if it proved to be necessary, enhanced IMF financing through the IMF's new supplemental resource facility for supporting countries that encounter financial crisis.
Q While we've got you here, can you tell us whether you think President Soeharto of Indonesia has now finally, truly agreed to cooperate with the IMF for the reforms?
DEPUTY SECRETARY SUMMERS: I think we'll have to see what takes place. I've had an opportunity to discuss, as others have, the situation in Indonesia with our G-7 partners. And I think that the G-7 countries and the IMF share a common perspective, that it is very important to work to restore confidence in Indonesia, that there is a great deal that can be done to restore confidence in the Indonesian financial system, in the Indonesian economy and to promote stability of the Indonesian currency; but that those efforts have to be based on Indonesia's own efforts at reform working with the IMF.
And so we will have to see how the discussions between Indonesia and the IMF go. There are a number of experts from G-7 countries who are visiting Indonesia to discuss various technical aspects, but with the coming in of the new Indonesian economic team, following its announcement tomorrow we will have to see what decisions the Indonesians make. We very much hope that the Indonesians will take steps that the IMF can support and on which a restoration of confidence can be built.
Q When you say, we'll have to see what takes place, that sounds like no more of a note of confidence than have to say, see what Saddam does as keeping his agreement. I mean, that's not very optimistic, is it?
DEPUTY SECRETARY SUMMERS: I think there's enormous -- I think there's very substantial potential in Indonesia to improve the situation through strong policy steps, strong policy steps to promote living standards by curbing import monopolies of the kind Indonesia has committed; strong policy steps to promote currency stability through appropriate monetary policies; strong policy steps to establish a framework with the IMF which would make possible substantial provisions of export credit.
There's a great deal of possibility in the situation, but we've just come off a period -- we're just in a period where the new Indonesian economic team is going to be announced and we see that as a very promising possibility. But what results is going to depend upon the choices that are made in Indonesia.
Q Is there some feeling of frustration on your behalf about the response you've been getting so far from Indonesia?
DEPUTY SECRETARY SUMMERS: I think we're looking forward. And what we're looking at is the kinds of steps that Indonesia has to take and the kinds of steps that the G-7 countries and some of their regional partners can take in response in the context of an IMF framework, which is something we very much want to see. But it does, as we've always said, depend upon the steps that Indonesia takes.
Q Dr. Summers, can you tell us what kind of steps you're talking about specifically that we can participate in as a G-7 nation? And are we sending a delegation to Jakarta?
DEPUTY SECRETARY SUMMERS: Well, my colleague, Undersecretary Lipton, is on his way to Jakarta, as are economic experts from other -- some other economic experts from the G-7 to provide advice and encouragement on technical questions in the financial area.
I think that I'd just leave it by saying that I think in the context of an IMF program there are things that can be done that would address the key concerns of assuring adequate finance, of meeting needs in terms of necessities and of promoting currency stability, which I think is very important in the current setting. But what's important now is that a framework be reached. I think we should bring this back to Thailand, actually.
Q But you said there were no issues there, we love each other -- I mean, there's no contentiousness, nothing.
DEPUTY SECRETARY SUMMERS: I think that there is such a thing, Sam, as reporting good news. (Laughter.) Or at least it's a thing you might want to consider. (Laughter.)
Q I'm too old of a dog to learn new tricks. (Laughter.)
Q Not around here.
DEPUTY SECRETARY SUMMERS: I think that what has happened in Thailand I think really is a very powerful demonstration. And I think it's a demonstration with relevance for other countries of what strong policy can do, both in changing the mood and the psychology towards confidence and very directly with respect to currency values, which in turn affect the purchasing power of people and laying a framework in which you can credit.
Q About Thai students, how many hours of work a week a Thai student can do, and what type of work can they do and when can they start doing this?
UNDERSECRETARY EIZENSTAT: There are 13,500 Thai students now in the United States. We have been working both with our own government agencies, with the Association of International Educators, with individual universities. And the Immigration and Naturalization Service, within the next two weeks, will have a change in regulations, a temporary change, which will permit them to reduce their course load and to be able to work additional hours so that they don't have to be full-time students in order to work and support themselves.
We've also raised $2 million from the private sector for student assistance. And the universities, some 90 percent of the universities who have Thai students -- and that's well over 100 -- are doing things such as the following: one-time waiver of tuitions, special scholarships and grants, delayed or installment plans for tuitions, special off-campus employment and housing opportunities. And that, together with the new change that the Immigration and Naturalization Service will make in its work regulations, we hope will permit those Thai students who have financial problems because of the devaluation of the currency to be able to stay and to be here.
And, by the way, this is something that we're extending, the INS, the Immigration and Naturalization regulations will apply also to students from Malaysia, Indonesia, Korea, the Philippines, as well as Thailand.
Q Let me ask you, how many hours of work per week these students can do?
UNDERSECRETARY EIZENSTAT: Well, we're still working on the actual regulations, but it will permit a substantial number of hours per week and a fairly significant reduction in their course load, so they do not have to be, as the current rules require, full-time students.
Q And how long will this thing last?
UNDERSECRETARY EIZENSTAT: Well, it will last until we think the crisis is abated. But we'll take it on a year to year basis and look.
Q Dr. Summers, in Thailand you had mentioned that there are some additional steps that they need to take to solidify their position as leader in Southeast Asia, in the region, or that there are further policies that they might need to do. Can you elaborate on that? What other steps do they need to add to what they've already done?
DEPUTY SECRETARY SUMMERS: I think they need to continue on the path that they have set. Critical elements include the repair and recapitalization of the banking system -- a process very much like the process, on a very large scale relative to the economy, that we went through in the United States in the late '80s and early '90s.
Second, they need to work through the problem of corporations and real estate investments that have become overly levered or in some sense bankrupt. And the way to do that is through carrying out appropriate bankruptcy procedures where that's necessary. And of particular importance in many financial cases will be debt equity swaps that will permit debt that now acts as an impediment to new borrowing, to new investment, to repair, to be converted into equity where the holders have an incentive to maximize the return going forward. So it's re-engineering financially, if you like -- the corporate sector that was a second important area of the discussion.
I think it's also crucial, and I think this is where many elements of our assistance package come in, to work to provide employment and to provide support for those who become unemployed. Because inevitably after a shock like this there will be an increase in unemployment. And so support in the social sectors, particularly in the rural areas, will be very important.
Q Secretary Summers, you were talking about G-7 common perspectives. Another common perspective appears to be to urge Japan not to rely on external surpluses but to stimulate domestic demand in order to boost its economy. You must have seen the numbers today, that domestic demand had a negative impact on GDP in the calendar year of '97. Have you urged specific tax cuts in terms of numbers or stimulus spending to the Japanese?
DEPUTY SECRETARY SUMMERS: I've heard that kind of question before. We continue to be very concerned about the situation in Japan that is a concern I think is shared quite widely, both in Europe and in other parts of Asia. We believe that there are three crucial elements for Japan going forward and that all three are essential if the full benefits of any one are to be realized.
The first is effective repair of the financial system through a decisive approach to recapitalizing financial institutions and assuring depositors that their money will be good, and infusing capital into the banking system so as to avoid a credit crunch.
Second, is fiscal stimulus that can provide and increased impetus to demand in the economy. In an economy where the interest rate is very low, as it is in Japan, and in an economy where inflation is certainly not a threat, there seems to us to be room for Japan to expand its economy. And it seems to us that these are the classical conditions in which fiscal policy is most likely to be effective in spurring demand. So the second crucial element is moving to a posture of fiscal expansion.
And the third crucial element is continuing on deregulation and opening up markets in key sectors. The Big Bang is welcome in the financial sector, but there are many other sectors where systematic deregulation is very important.
Q Thank you very much.
END 1:40 P.M. EST