THE WHITE HOUSE
Office of the Press Secretary (Moscow, Russia) ________________________________________________________________________ For Immediate Release September 1, 1998
PRESS BRIEFING BY PRESS SECRETARY MIKE MCCURRY, DEPUTY SECRETARY OF STATE STROBE TALBOTT, DEPUTY SECRETARY OF TREASURY LARRY SUMMERS, NATIONAL ECONOMIC ADVISOR GENE SPERLING, AND SENATOR PETE DOMENICI
Hotel National Moscow, Russia
6:13 P.M. (L)
MR. MCCURRY: Good evening. Let me explain what we're going to do. Deputy Secretary Talbott, who participated in all the sessions that President Clinton had with President Yeltsin and Acting Prime Minister Chernomyrdin today, needs to depart, so we're going to do this briefing in stages. I expect Deputy Secretary of the Treasury Larry Summers to be here briefly, and I also expect Senator Pete Domenici, Republican from New Mexico, who is with us here as part of the President's delegation, who specifically wanted the opportunity to talk about the plutonium agreement that we briefed you on earlier -- he will be here at some point, too. So we will stagger these folks in and out.
But we'll start with what I think is the principal readout of the President's meetings with President Yeltsin and Prime Minister Chernomyrdin -- Deputy Secretary Talbott.
DEPUTY SECRETARY TALBOTT: Thank you, Mike. Good afternoon, everybody. Let me start with a very brief chronology. The President road into town with Acting Prime Minister Chernomyrdin who had come out to the airport to meet him, so they had about 35 minutes together in the car. And I will touch a little bit on the discussion there in just a moment.
There's one other conversation that is very relevant to today's activities, and that is the working dinner that Secretary Albright and Foreign Minister Primikov had last night which served to advance and set up for the Presidents a number of the foreign policy issues.
Then after the wreath-laying ceremony at the Kremlin, the President went into what was originally scheduled as a one-on-one meeting just with interpreters and notetakers, originally scheduled to be a little less than an hour. It ended up running nearly an hour and a half, cutting into the time that had been set aside for an expanded discussion of economics and some other issues. So that discussion then took place over a working lunch there in the Kremlin, and in the working lunch the two Presidents were joined -- this is the American side -- by Secretary Albright, Secretary Daley, Mr. Berger, Larry Summers, Gene Sperling, and Ambassador Collins.
Now, in the conversation that President Clinton had with the Acting Prime Minister and also in the session that he had this morning with President Yeltsin, obviously, the Russian political and economic situation loomed very large. On his part, President Clinton stressed the importance for the United States and for the rest of the world that Russia recover from its current economic crisis. There was some fairly detailed discussion, both with the acting Prime Minister and also with President Yeltsin about what constituted sound and promising principles of economic management, and also the very relevant question, of course, of how to pursue those in an extremely active parliamentary and democratic political setting.
President Clinton stressed the need for policies, practices, and laws that will restore investor confidence in Russia, the key point being that policies that will bring investment back into Russia and stop and reverse the flight of money out of Russia are absolutely essential if Russia is going to succeed in turning the situation around.
I don't think I'm your best source for an elaboration on all of this because Larry Summers will be here shortly, and he will be able to give you a bit more on the discussion that took place largely on economics over lunch.
On the Russian political situation, President Clinton has now had a chance to hear both from President Yeltsin and from the Acting Prime Minister about how they see the state of play. Now, the state of play, of course, is dynamic, and it's uncertain, so there is not a great deal that I can give you by way of detail into that situation, except to say that President Yeltsin and, for that matter, the Acting Prime Minister, confirmed their staunch commitment to reform and vowed that there would be no retreat.
Let me touch, if I could, on just a couple of foreign policy questions and then I'd be happy to take your questions.
As I mentioned, the two Presidents were building on the work that that Foreign Minister and Secretary Albright did over dinner last night. They had covered in that working dinner quite a number of issues, but they focused on a couple of issues that are urgent and where the United States and Russia need to do more, and they need to do it faster because of dangerous regional conflicts elsewhere in the world -- the first being Kosovo, and the need here is to address an extremely serious humanitarian tragedy and to address it in a way that guarantees unimpeded access for humanitarian organizations and allows refugees and displaced people to return to their homes. They also talked about the need to address the root political cause of the humanitarian and refugee crisis in Kosovo, and that means by the United States and Russia working together to help bring about a negotiation on an interim solution to the Kosovo problem.
The other urgent situation that they had discussed both at the ministerial and the presidential level was Iraq and the need to press Saddam Hussein to comply with Iraq's commitments to the United Nations Security Council. As in virtually all meetings, both at the presidential level and at the ministerial level going back now more than a year and a half, the subject of Iran was discussed, and especially the need to strengthen the work that has already taken place between the United States and Russia to stop the flow of dangerous and illicit technology to the Iranian ballistic missile program.
Why don't I go to your questions.
Q There's a lot of controversy over him. Is the U.S. position that that's an internal affair of the Russian Federation, or, in an effort to try to help President Yeltsin restore stability, would we like to see Chernomyrdin confirmed?
DEPUTY SECRETARY TALBOTT: Sam, your first answer is the one I will associate myself with. This is strictly an internal matter for Russia to work out. What the United States can appropriately do is explain, affirm, elaborate on what it stands for by way of principles, as opposed to taking sides on questions of personality.
That said, Prime Minister Chernomyrdin is obviously somebody that President Clinton knows very well from his earlier service in the Russian government through the Gore-Chernomyrdin Commission. But the President and everybody else on our side is taking great care to let the Russian political situation play out by its own lights. And what we will do is make clear where we stand, how we can help, when we can help and what Russian policies we can support.
Q The President made four points in his University speech, for example, the collection of taxes and not printing money to get themselves out of these difficulties. Did he make all four of those points to Yeltsin personally?
DEPUTY SECRETARY TALBOTT: Yes. Larry will be here shortly and can tell you a bit more about the way in which President Clinton's economic message was elaborated during the lunch. And I might add that President Clinton also had a chance to talk about the fundamental economic issues in the car coming in with the acting Prime Minister.
Q But, to be clear, the President, Mr. Clinton, elaborated on all four of those points to Mr. Yeltsin face to face?
DEPUTY SECRETARY TALBOTT: He touched on our basic economic message.
Q I wonder how, given the dynamic and uncertain nature of Russian politics today, the President can be so certain as he was today to say that democracy is Russia's destiny.
DEPUTY SECRETARY TALBOTT: Well, the uncertainties of the immediate situation here do not change a couple of points about the past and a couple of points about the future. With respect to the past, seven years plus a number of days ago, Russia made a fundamental choice, and that means the reformist leaders of Russia at the time, very prominently including Boris Yeltsin, and it means the people of Russia, and that was to embrace democracy.
They had no illusions -- I don't think anybody else had any illusions -- that the transition from a totalitarian system and a communist Soviet system was going to be smooth or easy, or, for that matter, that it was going to proceed in a straight line. But they've stayed with that course for seven years. We have heard a wide array of voices across the spectrum in Russian politics say that they are in favor of staying on a democratic course. Obviously, there are very basic disagreements about what that means in practice, particularly in terms of economic policy.
I don't think there is any question that there is fundamental support for democracy on the part of the Russian people. We're going through a, to put it mildly, interesting and uncertain and difficult episode right now, but we have not heard anything while we have been here that calls into question that democracy is the path to which this country is committed. It's going to undergo -- it's going to continue to undergo a great deal of strain, but that in many ways is to be expected, given the magnitude of the problems that they face.
Q One of the purposes of this visit was to get a firsthand view of how Yeltsin is doing, both politically and health-wise. What is your assessment of that? How did he seem, and how was the encounter between the Presidents?
DEPUTY SECRETARY TALBOTT: The 90-minute meeting, followed by a very intense discussion over lunch that President Clinton had with President Yeltsin today showed President Yeltsin to be vigorous, very much engaged, very much on top of the extremely difficult situation that he is trying to deal with. Obviously, President Clinton came here not just to deliver a message, but also to listen carefully. And he did a good deal of listening in the car with the Acting Prime Minister, and a good deal of listening in the one-on-one session that he had with the President. And he, of course, is going to think about what he has heard. But nothing that he has heard cuts across the commitment that you all have heard as well, both from Mr. Yeltsin and from Mr. Chernomyrdin, that they are determined to keep reform on track.
Q To follow up on that, that is what they heard from both Chernomyrdin and Yeltsin, that Russia is committed to making reforms?
DEPUTY SECRETARY TALBOTT: Absolutely. They also heard a lot, including in some detail, about what is a very complicated and quite contentious political struggle that's going on. And as I think is apparent to everybody here, there are lots of other players in this whole drama, and it is not over, to put it mildly. And we all think that the most appropriate thing for us to do is understand what's going on; make certain that the key people on the Russian side -- and, of course, President Clinton will be meeting with a number of other Russian political figures tomorrow -- that they understand what American policy is, what American interest is, why it's in the American interest that Russian reform continue and succeed; and at the same time, to hear them out so we can have the best possible understanding of what it is that we need to adjust to as time goes by.
Q Did Mr. Yeltsin and Mr. Chernomyrdin make a plea for IMF funds to be released at the end of the month? And if so, what was the reply?
DEPUTY SECRETARY TALBOTT: Larry can touch on that a bit more. Clearly, the Russian government understands that the ability of the United States and the international financial institutions to support Russian economic reform depends on Russian policies. And there was a good deal of discussion. At the same time, clearly, they want the IMF and other IFFI support to go forward. And they are trying to -- they're grappling with some tensions and contradictions, I would say, between economic imperatives and what they understand to be some political complications, and we have had a chance today to both hear and see them trying to come to terms with that. And it's not finished yet.
Q Was the President asked for his personal intervention on that matter in the meetings this morning?
DEPUTY SECRETARY TALBOTT: Not in so many words. I'm sure you'll have a chance to hear from Russian spokesmen an authoritative readout on their perspective on this. There's no question in our mind that President Yeltsin and the Acting Prime Minister want to see IFFI support continue, and we have had a very good opportunity today to reenforce and explain what is required for that support to go forward.
Q I wanted to know if the communists could be brought into the idea of reform. What are the chances that they will follow into that path, and do you think that they would be reliable as a counterpart in order to build a stable coalition that would move into reform in Russia?
DEPUTY SECRETARY TALBOTT: It's a good question, not an appropriate one, however, for me to answer. I don't think it's either appropriate or helpful for me to stand up here in my capacity and serve as a commentator on Russian internal politics. There are lots of other people, including some people in this room, who can play that function. We have assiduously maintained our respect for the sovereignty of the Russian democratic political system and I've already made clear what we think is the appropriate use to put this meeting to and that's not it.
Q But given the relationship of the past 50 years, we would not want to see communism return to control this country, would we?
DEPUTY SECRETARY TALBOTT: I think the President, in his speech at the Institute, laid out in some very carefully chosen words exactly what we would want to say on that subject. We're not going to pick and choose among Russian individual political figures, Russia's parties, factions in the current Duma -- not least, Sam, to be very honest with you, because I'm not sure it would be helpful to those we wanted to help for us to create a hierarchy of whose policies with think most promising.
The President said very clearly today in his speech at the Institute that he hoped and believed that Russia would keep moving forward and not go back and try policies that have so clearly and dramatically and disastrously failed in the past. And I think it's on that basis that we should address questions of that kind.
Q What's the administration prepared to do now, beyond the next chunk of IMF money, to bolster the Russian economy here, based on what the President has heard?
DEPUTY SECRETARY TALBOTT: Why don't you save that one for Larry, who will be here in a moment.
Q Since the President mentioned several times during his speech that Russia needs to play by the rules, particularly international economic rules, do you think that message hit home today when the President was talking to the Russian leader?
DEPUTY SECRETARY TALBOTT: They certainly listened carefully to a very detailed and carefully laid out explanation of exactly that point.
And by the way, speaking of rules, I want to make one other point about Russian politics. There are a lot of things, of course, that have caused concern, notably here, around the world as well, about the difficult past through which Russian politics have been going. But so far at least -- and we've heard nothing to suggest that this will change -- Russia is playing by the rules of its own constitution, which is to say, for all of the differences and disagreement and, indeed, the word that we heard used several times today was "struggle" that's going on here, it is a struggle that is taking place within a constitutional framework. That in itself is something quite new for this country and, therefore, all the more positive, particularly if, as we hope and expect, it can hold.
I think I now have an opportunity to turn the podium over to a representative of the other branch of our constitutional government, if I'm not mistaken, and I do so with pleasure. Anyway, we'll have a chance to give you more tomorrow and Larry should be here before too long. Thanks.
MR. MCCURRY: I just wanted to remind you, those of you who did not hear the briefing earlier today, that we're delighted to have as a member of the President's delegation one of the foremost authorities in the United States Senate on U.S. relations with the Russian Federation, Senator Pete Domenici of New Mexico.
I think some of you heard Gary Samore from the NSC describe earlier today what a leading role Senator Domenici has played on fissile materials generally, and his interest particularly in the plutonium disposition agreement announced today. And the Senator we asked to say a few words about that.
SENATOR DOMENICI: Thank you very much. I won't take much of your time, but I will tell you I came on this trip because I understand that the President of our country and President Yeltsin will sign at least a joint statement of principles on a very important subject, and that has to do with the fact that both our nations have a very huge excess supply of weapons-grade plutonium. Both have agreed that they ought to get rid of 50 tons of it, that 50 tons ought to be rendered -- changed so that it's no longer usable in nuclear weapons.
A lot of us have been working on that. I came here in July to meet with various Russian leaders because the Congress will be involved in this in some way or another. And I'm very pleased to note that tomorrow afternoon -- for those who have been skeptical about what might come out of this summit, this is one very positive thing that will come out, because both nations are going to agree to set themselves on a path to take 50 tons of weapons-grade plutonium, to put it into safekeeping in a manner that will be safeguarded and protected by international agreements, so that it will not just be their word and our word, but it will be internationally -- international agencies will make sure we're controlling it properly.
It will be changed in form, and then over a 10-year period some effort will be made to reuse it or substantially use it up. In any event the agreement is such that 50 tons will no longer be available for weapons use. Now, that's rather historic. It will take a while to implement it, but I think with our scientists, their scientists, and some good judgment and some things we already know, that this could be the beginning of a rather formidable new relationship with reference to the whole arsenal of nuclear weapons and all of the material, fissile material and the like that are related to it.
And I'm very pleased to have been part of it. I will be one who will try to convince members of Congress that where we have to do something to help the Russians move in the right direction, even with some resources, for this accord, that we ought to do that.
In the President's budget, there is already money on our side to start the two main aspects of moving us in the right direction. One is to begin the storage of plutonium in one of two places in the United States. And the other is to build a MOX plant, a very large plant to convert some of our weapons-grade plutonium into material that can be used in light-water breeder reactors, which is a very giant first step for America. We have not done that since we entered the atomic and nuclear age.
That's a rather big decision on our part. I hope we can get it done. It will be controversial. But it's in the budget, I've appropriated it, and we'll be started on that path at home.
I'll be glad to take any questions on that subject.
Q Senator, you're the Chairman of the Senate Budget Committee --
SENATOR DOMENICI: Yes, sir.
Q Does it concern you that in the last three sessions of the market the Dow has dropped 1,100 points, and as we speak this morning it's in negative territory again?
SENATOR DOMENICI: Of course it concerns me. I don't think it's anything that we ought to be frightened about yet. Obviously, the American economy, as far as its basics, are actually in rather fantastic shape. What's happening to the American stock market is it's suffering because countries like Russia and other nations are having problems with their sovereign capability to see to it that foreign debt is in some way going to be repaid. And once Russia began defaulting, Central American and South American stock began to be put in jeopardy for the same kind of reason -- just a fear that finally it happened and maybe it can happen elsewhere.
I do believe if some positive things come out of this summit, and if they can turn some of their things around here just slightly so that the world can look at it and see there's a chance, then I believe things are going to right themselves in the United States with reference to that and I don't think it has any effect on our budget or fiscal policy yet.
Q Are tax cuts necessary at this point to try --
SENATOR DOMENICI: I don't think we need to stimulate anything yet. We have as low of interest rates as possible in the United States. In fact, there's one rather interesting fact, we have a lower Treasury bond rates than we do short-term rates overnight by the Fed. That's kind of something we don't usually have. I don't think the Fed is going to do anything about that, I don't think they're going to change their conduct with reference to interest and money supply. I think they're going to sit pat for a while and see what happens. I think we'll come out of it and be back on a very positive note soon.
Q Fifty tons -- what does that mean in terms of missiles, say? How many tons of fissile material is there in an SS-18?
SENATOR DOMENICI: Well, I think I can say without worrying about classified information, we claim we've got about 100; they claim they've got about 160 tons. So it's a pretty healthy start, looking at both arsenals.
We couldn't get rid of 50 tons, we couldn't convert it the way we have to convert it much quicker than we're planning under this statement of principles. Fifty tons is a very, very big chunk, to go from nothing to that. If it works we ought to proceed with more. And please understand, in the United States we are not fearful that this plutonium is going anywhere, but it still would be good to send a signal to the world that we want to get it out of circulation. In Russia they seem to be willing to enter into an agreement which will assure the world that 50 tons isn't going anywhere either. It will be supervised internationally and that's one of the commitments they made, they actually brought that up in one of the sessions we had. So that's kind of a healthy sign, it seems to me.
Q Senator, the President, during his remarks at Moscow State University mentioned some doubters back home don't think he should have come. What's your message to your colleagues back home who have raised questions about the President coming to Russia at this point, dealing with the issues you're talking about?
SENATOR DOMENICI: Look, I believe the speech was a good speech also -- I guess, from my own personal standpoint, a bit long. (Laughter.)
Q Nothing new there.
SENATOR DOMENICI: But perhaps even from his standpoint it was a bit long. But in any event, frankly, I believe the point he made, if not once, a number of times, was that we are friends. And I believe that when they have the kind of problems they have the best thing you can do is give them some kind of assurance, the best you can give that we are friends, that we're concerned about their problems.
I will tell you, we can't fix the Russian economy. The United States can do very little now. They've got to make some very bold and positive decisions and the world will know it when they do. And then I think the speech tonight and the concern of the world will probably bring more international cooperation and partnerships into play.
I would tell you with reference to the IMF, I think the United States Congress will replenish the IMF before we leave. But I think there will be reforms made, and those reforms will have to do with better assurance that the banks that are in the countries we're going to help have the right kind of transparency so that everybody can look at their books, we will know there is not cronyism blatant in the future and other reforms before we pass it, but I believe we will.
Nonetheless, the money to Russia under IMF is not dependent upon our replenishment, there is adequate resources there. We shouldn't continue the flow of money either under the IMF's existing commitment until Russia does some things that are of major significance, as indicated by a number of people.
Thank you all very much.
MR. MCCURRY: Thank you, Senator.
Now joined in progress by Deputy Secretary of the Treasury Larry Summers, and the President's National Economic Advisor Gene Sperling. And you were heavily promoted by your colleague from the State Department, Mr. Talbott. He said you would answer all the questions.
DEPUTY SECRETARY SUMMERS: Let me begin by saying I have enormous admiration for my colleague from the State Department. Let me just provide a brief readout on the lunch discussion between -- there was about seven officials on our side and seven officials on their side. The discussion focused heavily on the economic issues with, of course, President Clinton and President Yeltsin leading the discussion with Prime Minister Chernomyrdin being a very active participant on the Russian side.
In the discussions we stressed the kinds of points that President Clinton made in his speech today, emphasizing the importance at a very difficult moment of sound policies that addressed the difficulties in the banking system, that addressed the need to avoid excessive money creation that could lead to very serious problems; the need to maintain satisfactory relations with creditors -- international creditors -- and the need, above all to establish a framework in which capitalism and market forces can operate and the underlying economic energy of Russia can be capped.
The point was made that there's a very large stock, perhaps $40 billion of dollar bills, that are held in Russia, and that the best way for that money to not be held in a sterile way, but invested in the Russian economy is to create a system based on financial stability and, above all, the rule of law.
President Yeltsin and Prime Minister Chernomyrdin, in discussing these issues, made it clear that they did not want and were determined not to see any kind of return to the communist system. And they recognized in their comments the importance of addressing the problems in the banking system, of maintaining sound policies. They also recognized that it was for Russia to formulate a government, to formulate an economic plan, and to shape its economic destiny, while they of course welcomed the advice and support from the West.
And so I think it was a good discussion. It was a frank discussion that recognized the economic difficulties that Russia faces, both in terms of inflationary pressures and in terms of strains in the -- various kinds of strains in the financial and banking systems. But it was a discussion in which it was recognized that these were problems that had to be addressed. Again, without a Russia formed at this point, or without a Russian economic plan, it wasn't possible to go further than discussing these general principles.
Let me stop there and take questions.
Q Larry, Strobe Talbott spoke about the power struggle going on in Russia right now. I wonder if you come away from these discussions validating that in the end of the day Yeltsin and Chernomyrdin are so committed to those reforms that they would not cut a deal with the communists to undercut them. Or do you still come away right now believing that that's still a possibility?
DEPUTY SECRETARY SUMMERS: I can never remember well enough to repeat it precisely the Churchill comment about Russia, which I think applies to internal politics in most places, about an enigma inside an enigma, or whatever it is.
Q You're right, you can't remember it.
DEPUTY SECRETARY SUMMERS: Right, I've just demonstrated that I don't remember it properly. I don't think at this point that I'm prepared to make a judgment or to try to make a prediction. I think that things are very much in flux. It's clear that there is a lot of discussion back and forth about the course that will be followed, and I think it's clear that there are enormous stakes both for Russia and the United States in the outcome. But I wouldn't want to be in the position of hazarding a prediction at this point.
Q The President and you and other U.S. officials have stressed for some time that this dislocation in world markets in Asia and elsewhere could come home to roost. Is that what we're seeing in the U.S. stock markets in the last three or four sessions? Are we now beginning to be sucked into a worldwide recession?
DEPUTY SECRETARY SUMMERS: Sam, let me first say that the fundamentals of the American economy are strong, and we have a sound economic strategy -- a strategy based on promoting exports, a strategy based on maintaining a high level of investment and capacity creation, a strategy based critically on fiscal discipline. And with that strategy in place, I don't see any reason why these market developments should interfere with the basic momentum of economic expansion, although they will -- obviously, they will have effects on certain sectors of the economy.
I do think that market developments in the United States are in part a reflection of the international forces and strains in other markets around the world, and that really speaks to what I think has been a crucial killer of our policy for the last year, the recognition that the United States has a very strong interest in providing support to countries as they seek to contain these financial problems. And that is not out of any motivation of charity or comity, but because it is very much in our national interest -- in jobs, in markets, in security -- to see these problems contained. And that's one of the reasons why it is so crucial that, as Senator Domenici said, the IMF legislation pass this week -- pass as soon as possible.
Q Is it fair to say the United States didn't bring anything to the table today in terms of financial aid or a guarantee of help in getting the IMF money moving by the end of the month? There wasn't a lot the United States could offer this morning.
DEPUTY SECRETARY SUMMERS: I think it was a very useful discussion in which I think the strength of the U.S. commitment to reform in Russia was very clear. And I think there was a shared recognition that the way it is and the way it should be is that Russia will chart its economic destiny and that there will clearly be a willingness of the international community to respond as appropriate to Russia's economic plans.
Q But we didn't offer them concrete help for their economic emergency today, correct?
DEPUTY SECRETARY SUMMERS: Yes.
Q I'm just wondering, based on -- obviously they knew your position going in, so what assessment did they give you that the chances of them remaining loyal to this idea are strong? I mean, are they going to wind up in another week or two having to compromise, go some other route?
DEPUTY SECRETARY SUMMERS: I think that in the discussions in which I participated I think they made clear their understanding that what was important was to go forward and not to go backwards. I think that they conveyed that very clearly. But how a very complex political process involving both an executive and a legislative will play out is something that I think, as Strobe Talbott said, is something that's in flux and not something I would want to predict.
Q You spoke about continuing sound measures. Does that mean that you're assessing what they've done up until now as being sound economic policy? And if not, how would you assess where they are today? There's lots of criticism flying around the city about who's at fault for the crisis.
DEPUTY SECRETARY SUMMERS: I did not mean -- well, clearly, Russia is a very different country than it was five years ago -- an open society that has had elections; that has 70 percent of its people in the private sector; that has items, not empty signs, in store windows. I certainly didn't mean to suggest that there are not very important issues in Russian economic policy that have to be addressed going forward. And I think those go crucially to the question, above all, of the rule of law and the protection of property rights, the protection of contracts and the ability to basically carry on business in a law-based way.
They also go to strengthening basic public institutions, the ability to collect taxes that are owed in a law-based way, rather than based on discretion; the ability to maintain adequate regulation of a financial system and so forth. So I think that there are obviously issues that have to be addressed in each of the areas that the President talked about in his speech going forward.
Q As Russia tries to form a government, the communists are calling for the very measures that President Clinton criticized -- increasing the money supply, taking over banks, perhaps nationalizing key industries. Did Chernomyrdin or President Yeltsin say that they expected perhaps a temporary rollback or implementation of these reforms in order to get a government established here in Russia, and then, once things have settled down, would they continue on the free market path?
DEPUTY SECRETARY SUMMERS: No, that was not something that figured in the discussions. And I think that it would be very problematic for Russia to move backwards rather than forwards in any of those areas.
Q The Russians are saying that Mr. Yeltsin told the President that there would have to be some tactical adjustments that could mean enlarging the state's role in the economy. Is that, in fact, what he told the President?
DEPUTY SECRETARY SUMMERS: I think there was -- I think the point was made that there were crucial government functions, the provision of social safety nets addressing problems of arrearage, improving the quality of regulation, achieving development in depressed areas. And that those are important issues that Russia will want to see addressed going forward. But I hope in conformity with the basic principle of moving forward towards a market system.
But, again, you're asking questions trying to parse words, and what is really going to be important here is not words, but it is going to be the actions that are taken in the coming days, weeks, and months.
Q Let me follow that. You didn't get a sense that the Russians are saying that they will have to revert to a little more state control over the economy? That is not what you understood them to say?
DEPUTY SECRETARY SUMMERS: I don't think that's what I said. I think what I said was that they indicated a number of areas in which they felt more active state involvement was appropriate, but the way in which they did -- the areas they indicated were appropriate did not necessarily mean -- a more effective collection of taxation, for example, means more state involvement, but it certainly would not mean a going backwards towards communism.
So I think in order to evaluate this, what we're going to just have to do is wait and see what kind of plan the Russians come up with and what kind of actions they take, because it's the actions that are ultimately going to be important.
Q So it sounds like you're saying the reform doesn't have to be completely pure. In other words, there might be some return to perhaps keep a higher budget deficit in order to solve some of these short-term social problems, and that isn't incompatible with the reform that you want. Is that how we should understand you?
DEPUTY SECRETARY SUMMERS: I don't think so. This isn't about ideology; this is about constructive economic strategy that can provide for stability, that can provide for opportunity for Russian workers and for Russian families. There are obviously a whole set of choices that a government has to face and they can be made in different ways that are consistent with a framework that promotes that. It's not for us to dictate what specific choices that Russia makes.
We are -- and I think it was conveyed -- very much concerned that whatever path is followed be one that is financially responsible in the sense of not leading to high rates of inflation, not leading to problems in the payment system, allowing businesses to flourish. And that's what is important. One has to look at a complex set of calculations to make any kind of judgment about any particular plan and what kind of deficit is permissible. We're just not at a stage where that can be addressed.
Q Just to nail this down then, and taking what you said at face value, barring further Russian action, the U.S. view is they get no international aid?
DEPUTY SECRETARY SUMMERS: The U.S. view is that at this point there is not a plan and a set of actions embarked on. When there is a government and when there is a plan we want very much for that to be a plan that can usefully be supported by assistance and will provide assistance, with the international community will, through the international financial institutions, will provide assistance in the context of the plan.
But at this point we're waiting to see the plan and the actions, which is what will determine what happens -- most importantly, what happens to Russia's economy and secondarily will obviously influence how much support can fruitfully be provided.
Q Is it fair to say that can't happen by the end of the month?
DEPUTY SECRETARY SUMMERS: I would not want to judge or rule anything in or our in terms of the schedule. But clearly there are a number of steps, there are a number of steps that have to be taken in Russia in discussion with the international financial institutions. But I wouldn't want to set a timetable.
Q Just stepping back to the U.S. stock market for a moment, you said that U.S. economics are fundamentally sound. Does that mean that there's no policy actions that are appropriate, that any -- policymakers, even Congress, the White House or maybe in the Fed should take at this point?
DEPUTY SECRETARY SUMMERS: Gene Sperling may want to add something to this answer. No, I don't think -- I think obviously we continue to monitor the situation in financial markets and in the economy. But ultimately what is important is the real economy, not market fluctuations. And we think we have a basically sound strategy that has proven itself with respect to the real economy.
It is important for the global economy, which effects our economy very directly, that we be in a position to respond to these financial problems and that's why congressional support for the IMF increase is so crucial, and we hope that it will happen as soon as possible.
MR. SPERLING: I just wanted to refer anyone back to the President's State of the Union where back in January the President laid out that while out economy was strong and our prospects remained sound that the Asian financial crisis would have its effects on every country, no country would be completely immune. And certainly I think a lot of the support we have in the Senate for the IMF, the bipartisan support, reflect the fact that in many rural communities over the past several months exports have been hurt because of this and that it's been a growing support for the IMF because of that. We've also said that a strong IMF itself would be a pro-stabilizing factor, and I think you're seeing in more of your reports people mentioning that.
So I think the time is long past due where we pull together and have the bipartisan support for the IMF. And I know we throw around "the fundamentals are strong" so you just hear "the fundamentals" but it is worth taking the step below us to what those are. Unemployment is 4.5 percent. When we came into office, I don't think any of us necessarily expected in our lifetimes to see unemployment for a sustained period of time at that level. You've had inflation at 30 year lows. Investment -- productive investment has been over double digit five years in a row. I don't know if that's happened this century. And that means not only has our economic plan worked in terms that deficit reduction has brought down investment and spurred productive investment, but five years in a row of having productive investment grow at 10 percent each year is building the productive capacity of the economy.
So that is not an empty phrase. Those fundamentals are the very simple things that make up the underlying economy and right now, those do remain strong. And it is our belief that over the long run, the market will follow fundamentals. There's no question there's some nervousness and uncertainty and, as Larry has said, reduced appetite for risk in some investors in emerging markets. But in the long run, we do believe that fundamentals will determine how markets respond. And that's why the actions that Larry Summers and Bob Rubin have worked so hard with is to make sure that each country that is taking the proper steps in trying to reform itself and get their fundamentals strong has the kind of international support, because in the long run we think that will make the difference. Markets will go through cycles.
Q But you've said two things, haven't you? You said that the Asian crisis you warned -- you said the President warned -- would affect us and is now affecting us; then you say U.S. fundamentals are strong and in the long run that's what will control. Don't you mean in the long run it's the worldwide fundamentals that control and they seem, in many sectors, to be going south?
MR. SPERLING: Look, when I say no one is immune, I mean -- Michael Jordan was sick in one of playoff games a couple of years ago and he still was pretty strong. Illness affects him, he's still the best ball player. The U.S. economy is strong. It would probably be in a stronger place if it was not for the effect, and it's clearly -- of the Asian financial crisis -- and its clearly had its effect on several rural regions in our country and the farm exports. So I don't think it's inconsistent to acknowledge that the fundamentals are strong and the economy is strong, yet which doesn't mean that we haven't been affected somewhat and it doesn't mean that some of the nervousness is not having some effect.
Q What do you say to investors who are seeing their -- a least their paper profits all evaporate and maybe more than that in the last three or four stock market sessions?
MR. SPERLING: You have to give us credit, we've always been disciplined about not commenting day by day about the market. We've been disciplined about saying that our focus was the fundamentals. The stock market was at 3200 when we came into office. It's still been a decent place for people to put their investment.
Q -- I asked for a prediction. What do you think people should do?
MR. SUMMERS: Sam, I have a prediction to make about the stock market. It will fluctuate. You were ahead of me. I don't think it's appropriate for us to try to judge which way the market will go. And, obviously, these are significant events that are taking place in markets, but I think the best thing that we can do is to monitor these situations, to assure that the payment system is functioning properly, and to keep our eye on the main ball, which is the strength of the American economy and the strength of the global economy, because that's so important for us.
Q Larry, can I just ask you a quick question? Did any Russian official outline a ballpark for additional foreign assistance that they would now like to see?
DEPUTY SECRETARY SUMMERS: That was not something that figured in the discussions.
Q Didn't come up.
MR. MCCURRY: Okay. Anything else? Terry, you were anxious to end this briefing.
Q I was looking for more briefers. (Laughter)
MR. MCCURRY: We got some more out here.
Q So there is no plan that the President has in the back of his mind that if things continue to be bad he might cut short his trip?
MR. MCCURRY: No need to do that, given the monitoring mechanisms that are in place back in Washington that we have been fully in touch with throughout the day.
Q Anything else for tonight?
MR. MCCURRY: There is a state dinner tonight and the toasts are public, right?
MR. LOCKHART: No, it's a closed event.
MR. MCCURRY: We'll see if we can pass some color on to the pool, but besides color coming from the pool, I don't anticipate anything else. We are keeping an eye on other developments. I don't think we've got a lid on just yet in terms of here, but as soon as we can get one we'll let you know. We're checking back with Washington to see what other kind of paper we've got coming from back home.
END 7:07 P.M. (L)