View Header


Office of the Press Secretary

For Immediate Release May 25, 2000
                           PRESS BRIEFING BY

The James S. Brady Press Briefing Room

12:55 P.M. EDT

MR. CROWLEY: Good morning. The President leaves on Monday for a trip to Europe, to Portugal, to the U.S.-EU summit, to Germany, to Russia and Ukraine. And here to give you a synopsis of our travel agenda is the National Security Advisor Sandy Berger and the National Economic Advisor Gene Sperling, starting off with Sandy.

MR. BERGER: Thank you, P.J.

Let me begin, as usual by seeking to put this in a broader context, and then I will run through the individual stops and what we expect to achieve or hope to achieve. I think it's useful to look back to the President's first trip to Europe in January, 1994. At that time, there was discussion about a Europe whole and free. There was no real blueprint for that.

The President, in '94, outlined a blueprint, and in the years since we have made significant progress. At that time, many questioned the relevance of NATO after the Cold War and feared a neglected gray zone between Western Europe and Russia. Western inaction in Bosnia was one more factor that was calling to question the future of an alliance that maintained its Cold War membership and mission.

In the meantime, we have adapted and enlarged NATO, the Alliance is stronger than ever, we've stopped a war in Bosnia and ethnic cleansing in Kosovo, and now NATO and other forces are there, helping to secure a peace.

NATO, in the meantime, has become a powerful magnet for the new democracies of Central and Eastern Europe. It was once said around that time that Europe's project for a single currency and security policy would either fail or cause transatlantic alliances to fray. But the EMU has been established, Europe is developing a stronger defense identity within NATO, the President is about to attend his 14th U.S.-EU summit, which is certainly a record.

The U.S. has supported a stronger Europe as a complement to, not a competitor of, a stronger trans-Atlantic alliance. A few years ago there was a widespread fear that Russia's gains would be reversed by the nationalistic or community backlash. There have been lots of setbacks along the way, and the final outcome of Russia's transition still remains an open question. But the Russians have repeatedly rejected return to the past and they've just completed the first democratic transfer of power in Russia's 1,000-year history.

So this trip, at least in part, is an opportunity to take stock of the progress that has been made and to build on the vision that the President articulated in Brussels back in January, 1994 -- a peaceful, undivided, democratic Europe for the first time in history. It's also a chance to focus on two pieces of unfinished business. That vision, integrating southeast Europe and helping to build a modern, democratic Russia in one enduring challenge, maintaining the strength of the trans-Atlantic relationship.

Now, let me walk through the itinerary. As P.J. indicated, we'll leave late on Monday -- or later on Monday; travel first to Portugal, which in and of itself is quite a remarkable success story. It's been 26 years since their revolution and it has gone from a dictatorship to a democracy, from genuine backwardness to relative prosperity, from isolation to engagement.

The Portuguese -- President Guterres and Portugal, itself, are completing a very impressive tenure as rotating President of the EU, during which they convened two special summits, one on Africa and one on the new economy. They very ably managed the development of the emerging European security and defense policy, and a great deal of credit goes to Prime Minister Guterres.

Following an arrival ceremony, the President will meet with President Sampaio, and then with Prime Minister Guterres. I expect the discussions to focuse on European security issues, Southeast Europe, our cooperation on East Timor, and the work that we're doing together in a number of African countries.

The President will visit a Science and Technology Museum in Lisbon, and speak with a number of people involved in it. Prime Minister Guterres has undertaken an effort to open a new frontier of discovery for one of the oldest exploring nations in the world. Portugal is doing very advanced work in science, combating infectious diseases like AIDS and malaria, in collaboration with American scientists and supported by NIH. And that, of course, is an important priority for us. And we will finish the day in Portugal with a state dinner hosted by President Sampaio.

The second day in Portugal is focused on the U.S.-EU Summit. As the EU has deepened and expanded, with the monetary union, with the common foreign and security policy, coordination of justice and home affairs issues, broadened membership, the U.S.-EU relationship has become much deeper and more important.

The President, several years ago, instituted these twice a year summits. He was right to do so. Our trading relationship, for example, between the United States and the EU is more than $1 billion of trade every day. This is an extraordinarily broad and deep relationship.

Remarkably, American investment in Europe increased seven fold between '94 and '98. In the meantime, Europe is the leading investor in 41 of our 50 states. Gene will talk about some of the remaining trade disputes with Europe; they're certainly not trivial, but it's not surprising, I think, given the volume of our trade.

Similarly, the EU is increasingly a partner of ours on security, as it develops a common, foreign and security policy backed up by a defense policy. Henry Kissinger used to say that the wished that he had one phone number to call in Europe to find out what Europe's foreign policy was. Well, now, there is, it's Javier Solana. His phone number is 322-285-5661. (Laughter.) I read that very quickly, so poor Javier doesn't get bombarded.

Our agenda will focus on the security side on Southeast Europe, the Balkans; on Russia, on the ESDP, the European Security and Defense Policy -- on trade and economic issues -- Gene will talk about those. And then they have set some time aside during the summit for a discussion of the new economy.

I also expect they will talk about cooperation on infectuous diseases and see whether we can gain the EU's support as we head into the G-7 summit in July for a broader initiative on infectuous diseases in the developing world -- HIV, AIDS, TB, malaria.

And, finally, after the working lunch, the President, Prime Minister Guterres and EU President Prody will conduct a press conference.

We then travel to Germany, we arrive there Thursday afternoon. The President initially meets with President Rau, then with Chancellor Schroeder. He'll have a private dinner with the Chancellor that evening.

I expect they will talk a good deal about Russia in light of the President's trip, and I believe Putin is coming to Germany sometime in the not-too-distant future. We'll obviously also talk about the Balkans. You may recall that it was a year ago that Chancellor Schroeder and President Clinton, when the President was in Bonn, launched the stability pack, an effort to collectively deal with Southeastern Europe, and I think it will be time to take stock.

The President also will have an opportunity to meet with some younger German leaders who are building partnerships with America, many of them actually working on projects in Kosovo and Bosnia and elsewhere in the Balkans -- sort of NGO to NGO, people to people cooperation.

This roundtable discussion will be the first in a series of what is being called "America's Voices," a dialogue with prominent Americans from government, arts, media and science that will take place in Germany over the next six months. It's taking place in connection with Expo 2000 in Hanover, and the President wants to start off by hearing from some dynamic German voices.

On Friday, we travel to Aachen, where the President will receive the Charlamagne Prize. This is the 50th year of a very prestigious award, given to leaders who have made major contributions to European unity and world peace. Previous winners have included Jean Monet, Robert Schuman, Winston Churchill, Vaclav Havel, Helmut Kohl and Tony Blair.

The President is only the third American to receive the award, in addition to George Marshall and Henry Kissinger. And I hope someone will tell Henry that I've mentioned his name twice here today.

In Aachen, the President will make a major foreign policy address, looking back at the effort to build an undivided, democratic, peaceful Europe and focusing on the unifinished business that lies ahead. Then it's back to Berlin. The President -- will take place in a conference on good governance known more popularly as the Third Way. One of the interesting aspects of this conference is it will be far larger and broader than the previous such conversations. It will be hosted by Schroeder, but there will be 15 other heads of state, not just from Europe, but also President Mbeki of South Africa; Cardoso -- Latin America; De La Rua, Argentina; Barak, Helen Clark from New Zealand; leaders from I think four continents. It begins with dinner on Friday, and then working sessions on Saturday.

On Saturday evening, we leave for Russia, where the President will arrive at 7:00 p.m.-7:30 p.m. Obviously, it's an important time, following the inauguration of the new President, Vladimir Putin, and the election of a new Duma.

The question now is not only where Russia is heading, but how it intends to get there. The issue is whether the systemic changes that are needed can take place without undermining democratic freedoms. Is the Russian government consolidating its strength as an end in itself, or as a means to bring prosperity to its people and deepen Russian integration in the international community -- these are all conversations I think the President will have with Putin, and vice versa.

I think you should understand that this is the first of what is likely to be four meetings that President Clinton and President Putin will have over the remainder of this year. We expect to see -- we will see President Putin in Okinawa at the G-8 Summit. We expect him to be coming to New York for the Millennium Summit in September, and then we will see him again at the APEC meeting in the fall. And so this is the beginning of a dialogue.

The President will urge Russia to seize the opportunity that has been afforded by its current economic recovery to press ahead with reforms that will make the recovery last. He will urge respect for democratic freedoms, especially for press freedom; and affirm publicly and privately our continuing concerns about Chechnya.

We'll address a range of issues there, including arms control issues. Non-proliferation will be a major topic. We're making significant progress on our threat reduction efforts to secure and dispose of fissile material that could be used for nuclear weapons. I hope that we will be able to reach an agreement by the summit that will result in the disposition of 34 -- the destruction of 34 tons of military-grade plutonium on each side. This is an enormously important agreement if we are able to finalize it. That's enough plutonium, literally, to make tens of thousands of nuclear weapons. And obviously, it's a non-proliferation issue, as well as a bilateral issue.

In addition, we expect to continue our discussions about missile and nuclear proliferation, and cooperation to prevent leakage of Russian technology to countries like Iran.

The summit will begin Saturday evening with dinner between the two Presidents. It will resume on Sunday in two sessions during the day. The two leaders will then have a press conference on Sunday afternoon. On Sunday evening, the President will do an interview with a major Russian independent radio station, which is a chance to reach out directly to the Russian people and express support for the independent media in Russia.

On Monday, the President will address the Russian parliamentarians, and by extension, the Russian people at the Russian State Duma. This is the first such address ever by the United States President.

That afternoon we're off to Ukraine. We also have a broad agenda, as you know, with Ukraine, including non-proliferation, economics, security cooperation. The visit comes at a very interesting and critical time in Ukraine's transition. President Kuchma has recently been reelected over a communist rival. He's appointed a quite impressive new Prime Minister who was here a few weeks ago. They've taken some hopeful steps toward reform, down-sizing government, strong budget, laying the groundwork for privatizing land.

The President will meet with Kuchma in Kiev. We also anticipate a speech to some outdoor gathering. His message will be simple: Your success, Ukraine, is important to us. And it is obviously -- a path has been marked by Ukraine's neighbors in Central and Eastern Europe; if you stay the course, the road to Europe is open to you. And we hope in delivering that message it will be heard not only in Ukraine, but beyond, in all of the nations of the former Soviet Union. We also hope to be able to discuss progress towards ultimately shutting down the reactor in Chernobyl, which continues to be an issue that we're working on.

We will arrive back here on June 5th. We will change our laundry -- we will wash our laundry, I guesss, change our clothes, and on June 7th, we will leave for a quick trip to attend the memorial service for Prime Minister Obuchi in Japan, and we will immediately return to the White House. So that will be -- I don't believe we will be staying overnight in Japan. We'll be taking a little, short hop over to Tokyo, going to the memorial service, and coming back. The President believes that it is extremely important, given the fundamental importance of the U.S.-Japan relationship that the United States express its solidarity with the Japanese people and its support for our partnership.

Let me ask Gene to talk about the economic issues.

MR. SPERLING: As Sandy said, the trade and economic parts of this discussion or this trip are really divided into two parts; the first being the trans-Atlantic economic partnerships with the EU and the second being the discussions in Russia and the Ukraine.

The centerpiece of the President's discussion of U.S.-EU economic issues will occur on May 31st at the U.S.-EU summit in Lisbon. The summit will provide an opportunity for us to engage in discussion with our largest trade partner. We now have over $450 billion of trade between us and two-way investment is now approaching $1 trillion.

As Sandy said, the EU is very interested in having the economic portion of the summit focus on the new high-tech economy, making that a central theme of the summit. And I think they're very interested in sharing with us some of their ideas in areas that the President has been involved in for several years.

For example, they have an e-Europe initiative in which they have established goals very similar to the type we have of connecting all their schools by 2001, classrooms by 2002, et cetera. We also would like to clearly use the occasion to try to -- building up to the G-8 to get more focus on the importance of the type of telecom liberalization and deregulation that is necessary to have this part of the economy become as vibrant as it has been in the United States, where the degree of competition since the telecom deregulation competition bill has led to unquestionably more competition, cheaper prices, cheaper access, and I think most people believe the greater dissemination of these tools have been a contributing factor in the significant rise in productivity.

It also raises other issues, if one thinks about it. If you think about the rise of e-commerce between the United States and Europe, obviously delivery systems, air cargo, e-commerce purchases don't mean much if there are too many barriers in terms of delivery, whether it's in air cargo and other ways. And so, these are some of the issues that we hope to focus on.

There's also interest in not only the digital divides within our country, but in terms of the global digital divide, and this is an issue, again, we hope the discussion here will be a building block to discussions at the G-7 on ways that we could be facilitative if not in terms of support, at least in terms of information and assistance in helping developing countries think through their own strategies on telecommunications and digital divide.

Another area where we hoped to have this be a building block going at the G-8 is, as Sandy mentioned, in the infectuous disease area where we have very much had a framework, a framework that focuses on both providing the demand incentives in the future for new research on new drugs, in addition to focusing on purchase funds through the GAVI for more purchase of existing drugs that can cure existing diseases. Eighty percent of all AIDS deaths take place in Africa; this is clearly at the top of the crises in the world, and to the degree that this summit can help build, even be a building block for even greater attention at the G-7, that would be our hope.

Some of the specific things we are hoping to accomplish, we are hoping by the time we're there we will have finalized work on a safe harbor, from the EU directive on data protection. That vote will probably take place, literally, the day before we arrive. Also we are hoping, under so-called Madrid protocol, to make additional progress towards allowing our companies to file one EU-wide patent application, rather than having to file separate patent applications in each of the 15 EU countries.

And also, as last time, we made progress in government-to-government talks on the biotechnology issues, we're hoping to make progress in having more of an expert-to-expert forum to deal with this. We have not had a biotech product approved by the EU since 1998, and this is obviously an emotional issue, but we hope to continue the focus on having science-based solutions.

Unquestionably, any meeting between the United States and the EU will certainly deal with some of the major trade disputes that are between us. I think they're fairly well-known, in terms of beef and bananas and growing concern over subsidization issues with Air Bus. I'm sure that the FSC issue will also arise, where our Foreign Service Corporation tax provision had been found inconsistent with the WTO. Our Deputy Secretary Stu Eisenstat has already been in conversations with EU on possible WTO consistent solution that we have already tried to put forward.

Certainly, we will also talk about what are the hopes and possibilities of relaunching the WTO round that didn't quite make it in Seattle. There have been good discussions and I certainly think that when you look at the passage of the Caribbean CBI and Africa bill, it shows at least in one of the areas, which is efforts to show more openness on the developing countries' side -- we've made very tangible progress in the passage of that law.

The President, as Sandy said, will go on to Russia and Ukraine. Obviously, this will be a very interesting meeting because the economic issues are very front and central in Russia right now. Most people are expecting that Putin will put forward an economic plan if not by the end of this month, soon. I think they've even had a tax reform plan coming forward even as we speak right now, which is designed to lower rates and broaden the base.

Clearly, I think that Mr. Putin will want to discuss their plans for land reform, tax reform, need to improve shareholder rights. It really is a series of things which are the type of structural reforms that they are going to have to do to not only convince foreign investors, but more importantly, their own people that Russia is a place where one can safely put their funds, that it has the type of shareholder rights, the kind of enforcement of contract rights, bankruptcy rules that give people the security to put investments when they do see good ideas or profitable enterprises there.

Russia has had some good economic news lately. Some of that has certainly been the result of the rise in oil prices, which is obviously a main source of revenue for them. And as the ruble has weakened, it's made foreign imports more expensive, and so the Russian people have had to rely more on buying from the domestic producers within Russia.

But there have also been some good signs. Inflation, which was at 85 percent two years ago, is now predicted to be between 18 percent and 20 percent for this year. Their revenues, percentage of GDP of which their aim from the IMF had been 14 percent, may come in as high as 18 percent for this year, and if you actually looked at the last four quarters of growth in Russia, it would be up over 7 percent, which is not type of growth numbers that they have ever seen since the end of the Soviet Union.

After that, the President will go to Kiev for meetings with President Kuchma. Again, the economic agenda will be a significant issue. Ukraine's economy also declined sharply during the '90s, but has shown some positive signs. They're estimating growth at perhaps 1.3 percent, but there have been some people in the private sector, as Goldman-Sachs, who actually thought their growth could be closer to 3 percent.

Again, a lot of the same issues, particularly in the area of privatization. They have to, again, take some of these tests that will give people more confidence, particularly how they keep their accounting and books on the budgeting so people really have a clear and transparent view of what their budget is, and clearly they're going to have to obviously continue to cooperate with the IMF on the reserve management and transparency and other issues related to the problems that they had several years ago with their Central Bank.

With that, I will stop. And Sandy and I are available for questions.

Q Sandy, two things. Do you expect that this will be the President's last trip to Europe, or do you anticipate him going back for anything during the final eight months in his presidency? And secondly, could you be more specific about what you expect in Russia in terms of any breakthrough or agreements on AMB, missile defenses and arms control?

MR. BERGER: We have no other trip to Europe that is now planned, but I wouldn't rule out the possibility that there would be a further trip for one reason or another between now and the end of the year.

With respect to ABM and START, I don't expect any resolution of this issue during this visit. This is the first time the President would have had an opportunity to discuss it with President Putin. He will describe for President Putin what we see as a new threat. I think almost everyone agrees there is, over some time horizon, the danger of long-range ballistic missiles from third countries that could reach the United States. We've developed, but not yet decided upon a limited national missile defense system that deals with the threats that are anticipated. We would like to do that in the context of an ABM treaty that is modified in some respects so that it strengthens arms control. And, in parallel, we would like to proceed on START III.

But I don't expect these issues will be resolved at this summit. I expect that it will be a good opportunity for us to explain our view of the problem, and for President Putin to express his view of the problem.

Q Sandy, George W. Bush has suggested publicly that he would like the President not to make any kind of arrangements on arms control, it would tie the hands of a future President. Is that going to impinge at all on these talks in Moscow?

MR. BERGER: Let me say this. I think Presidents are elected by the American people to serve four-year terms, and I believe that they're expected to advance the national interest from day one until the final day. And I expect the President will do that. He will act in a way that he believes is in the national interest, and he will not do things that he doesn't believe are in the national interest.

That doesn't mean we will or will not reach an agreement. It doesn't mean -- as the President has said, he will decide later this summer whether he will -- whether we will go forward to deploy the limited system we have developed later this spring, based upon a number of criteria that you're aware of.

I guess I would simply point out that President Clinton's predecessor, President Bush, signed the START II treaty in December of 1992, after the 1992 election. And I think it was quite appropriate, because as I said, I think it -- the United States cannot afford to do business only three years out of four.

Q How do you respond to the latest revelations that the national missile defense project is fundamentally flawed from a technical point of view?

MR. BERGER: Well, the President has said that he will make a decision later this year, based upon four criteria -- Number one, what is the nature of the threat. What is the nature of the threat of long-range ballistic missiles from North Korea later in the decade, potentially from Iran or Iraq? How serious is it? What is the time frame?

Number two, what is the technilogical feasibility of the system? We will have had some tests. There have been a number of issues raised. Initially, there will be another test in, it looks like now, the beginning of July. Presumably, there will be something called a defense readiness review; they'll make some recommendations to Secretary Cohen. He will make some recommendations to the President. So we'll look at all those questions.

Number three is what is the cost of the system, and how does that relate to other priorities. And number four, what is the overall effect of such a system on the national security in general -- not just on the immediate threat. So all of those issue are on the table. We will look at all of the information that is available to us at the time, and the President will make a decision as to whether to proceed.

Q But if I might just follow up on that, sir, there is a respected body of opinion amongst academics who have looked at the date from the first round of tests, and who say, first of all, the data has been doctored, and second, that there is no technical way in which this can work. And you're about to spend, it seems, billions and billions of dollars on that.

MR. BERGER: That's about three editorial comments in that question. I would say, first of all, we will look at all of the information. I think there are differences of viewpoint on this, respected people I think on both sides of this argument. But we have not made a judgment. We will make a judgment based upon a very clear analysis of all of the information and all four of the factors I talked about.

What we have been talking about with the Russians over the last year is some modifications to the ABM treaty which would enable us to proceed with this limited system in a way that preserved the AMB treaty. I think that is in Russia's interests to do. But, as I say, we will make that decision later this year.

Q When the President meets with Chancellor Schroeder in Germany, would he bring up the issue of parental custody and access to children?

MR. BERGER: I think there's no question that the issue will be raised. I don't want to -- I don't know whether it will be raised in this meeting or that meeting, but I think it's a serious issue. It's one that Secretary Albright raised with Foreign Minister Fischer recently. He went back on the basis of that, as I understand it, and asked for the formation of a commission from the Parliament to look into the issue. And it will be an issue that will be discussed while we're in Germany.

Q Mr. Berger, you said that one of the topics the President will bring up with Mr. Putin is leakage of Russian technology to Iran. Could you describe for us how serious a problem that administration views that, and what specifically the administration will propose on trying to stop it?

MR. BERGER: Well, this is something that we've been working with the Russians on for a number of years. I worked on this with Secretary of the Security Council Putin three years ago, before his meteoric rise. I consider that kind of a role model -- National Security Advisor to President. (Laughter.) Only in terms of the career path. (Laughter.)

So we've been working on this for a long time. There are, clearly as central control of the Russian economy has broken up, there have been technology from Russia that has been obtained by Iran as part of their missile program and as part of their nuclear program. I should say that Iran's also gotten technology from others as well.

I think the Russians have taken a number of steps over this two- or three-year period to try to control particularly technology on proliferation -- leakage on the missile side. They've adopted an export control law, they have put essentially export control officers in major entities. We have sanctioned a number of entities of Russia that we believe were proliferating. The Russians have sanctioned a number of entities.

So I would say they have made progress, but there's still a problem. And it's one that obviously we can make more progress on if we work on together, and this is something that we will talking about.

Q -- recommendations you will bring to the meeting?

MR. BERGER: There were a number of steps that were agreed to between Minister Koptev, who is the head of the space program in Russia, and Bob Gallucci, who is our Special Envoy for this -- dean at Georgetown. And they agreed to an agenda. And a number of the things on the agenda have actually happened. For example, the adoption of an export law. Some of the things on the agenda have not happened. I think we've got the prescription right, but I don't know that we have the implementation totally in place.

Q Do you know about whether the President will be speaking with our allies about stepping up their role in U.N. peacekeeping operations, either in Kosovo or elsewhere around the world?

MR. BERGER: Well, we have had a very good collaboration with the Europeans in -- let's start with the Balkans. We're less than 15 percent of the force in Kosovo. Europeans and others are about 85 percent of the force. I don't remember exactly the percentages in Bosnia. I think we're below 20 percent. So they really have carried the lion's share of the peacekeeping in the Balkans. We want to see that. In Bosnia, that trend line is coming down rather dramatically over the past few years, but we still need to keep the force levels adequate.

In Kosovo, we don't want to see a drawdown that we think is

premature. Burden-sharing is very important to us in terms of the Europeans with respect to the Balkans. It was an issue, as you know, in the Congress this year. I think the Europeans have done quite well and we'll continue to urge them to do even more.

Q Before the President leaves for Europe and Russia, what action do you think the U.S. is taking or will take to save the democracies in Sri Lanka and Fiji? And also, Pakistan, according to the intelligence reports, ready to test another bomb -- if any of these issues are going to come during his talks in Russia and elsewhere in Europe?

MR. BERGER: Let me say, first of all, we would view very unfavorably a further test by Pakistan. We don't have evidence that they intend to test, but it would be, obviously, a serious setback if they did, and I think a big mistake for Pakistan.

We are working with the U.N. and others on the very tragic problems in Sri Lanka that you mentioned. I think generally, I would expect South Asia to come up in -- one area that we'll talk about with Putin are regional issues. What can we do together to diffuse the situation in South Asia. How can we try to bring peace to some of the conflicts in Central Asia -- for example, the conflict in Nagorno-Karabakh, where the French and us and the Russians are cochairs of the OSCE process to try to bring peace to that region.

So I think we'll have a discussion with President Putin and President Clinton about these regional conflicts in areas where we can cooperate.

Q Mr. Berger, your original expectations -- the administration's expectations for this summit on arms control seemed to be much more optimistic at one time, and you've been forced to scale them back, apparently in the face of Russian --

MR. BERGER: I don't think we've scaled them back. I've never expected an issue as complex as this to be resolved in this summit. This is the first time that President Clinton will have an opportunity to discuss this. These are serious issues, and they involve both whether we can agree to modifications in the ABM treaty, whether we can make further progress on the START III process that President Yeltsin and President Clinton set as an objective in Helsinki in 1997.

But I think, hopefully, we will have some greater degree of understanding of each other's position which can lead, then, our folks to continue discussions between Moscow and subsequent meetings.

Q What incentive is there for the Russians, given the calendar, given the fact that this administration has only months to run? What incentive is there for the Russians to agree to any deal this year at all, rather than waiting for the next --

MR. BERGER: I think they have to decide whether they want to reach an agreement now that will assure them that a limited NMD system will take place within -- bounded by -- within a ABM treaty that continues to maintain strategic stability, or whether they want the possibility that a future President might go forward with an NMD system, perhaps even more Star Wars-oriented NMB system, that would be more threatening to the Russians in the absence of an ABM treaty. That's a calculation they have to make.

Q Sir, could you clarify -- I don't exactly understand the relationship between the NMD and the ABM treaty. I mean, is our position that it doesn't violate it, or that is does violate it, and we need to work --

MR. BERGER: No, I think there's no question that either the limited system that we have proposed, or even some of the other ideas that have been proposed in terms of sea-based systems, boost-phased systems, require a modification of the ABM treaty. And so, what we seek from -- what we would like to have from the Russians, what we'd like to see is their agreement to such a modification.

It is obviously not a prerequisite, but it, in our judgment, would be preferable to have a system -- to have this proceed in the context of an ABM treaty, which we believe does, in fact, contribute to strategic stability. And those, for example, who are saying we want a bigger NMD system, but lower numbers of START really are proposing two inconsistent things, because if you have a bigger NMD system, the Russians are going to build up, not build down. So I think we've struck a balance here which, hopefully, the Russians will see is in their interest, but that's what we'll see.

Q Why is it okay, then, for us to violate treaties that we sign with other countries? I mean, I guess --

MR. BERGER: First of all, there's a provision in the ABM treaty whereby any party can, with six months notice, withdraw from the treaty. We're not proposing here today to violate the ABM treaty. We're saying to the Russians -- the ABM treaty actually provides for its amendment, and it has been amended once before. It's not something frozen in concrete back in 1972. It envisioned that there would be new threats that would have to be dealt with. And so it is not a violation of the ABM treaty to change the ABM treaty by mutual consent, so that if this President or a subsequent President decides to move ahead with a national missile defense system, it is bounded by an ABM treaty which will provide strategic stability.

Q Do you expect any other agreements besides plutonium disposition -- agreement you will sign at Moscow summit? There were some reports that there can be a kind of a deal or at least some rather important decisions on commercial space launches.

MR. BERGER: Well, I think there will be discussion of space launches. Just to kind of explain that to your colleagues, we have a quota on the number of American satellites that can be launched on what is actually a Lockheed-Russian joint venture in Russia. The quota expires in December. We have to decide whether we continue it, whether we end it, whether we extend it. It is related to the non-proliferation issue that I was asked about before. There are some things that we have agreed with the Russians that we would do to help plug up the leaks of technology for Iran's missile program. And so our consideration of a larger quota or ending the quota is tied to our confidence that they are implementing their -- not their obligations -- that we are proceeding with strong partnershiop and cooperation on the non-proliferation side.

Q On Northern Ireland, do you have a message to the Ulster Unionists as they prepare to take a critical vote there? And do you also have a comment -- a newspaper reports of divisions between the President and Tony Blair over the peace process.

MR. BERGER: First of all, the newspaper report is total, complete fiction, which is the nicest, kindest word that I could think of to describe it. It is absolute fabrication. There's nothing true in that article, except perhaps the by-line. (Laughter.)

Second of all, let me say, there's been very close cooperation between the President, Prime Minister Blair, the Taoiseach Bertie Ahern on this all the way through. I think that the Prime Minister and Prime Minister Ahern would be the first to acknowledge that. When they call and ask the President to do something, he almost invaribly does it. And when they ask his advise, he gives advise. Sometimes when they don't ask his advise, he gives advise. But it's been a genuine and I think quite extraordinary cooperation that's taken place.

In terms of the advise to the Unionists -- it's not my position to give to the Unionists. I would say only this. We are at an historic moment in Northern Ireland. We are very close to overcoming one of the final obstacles to really stabilizing and perpetuating the Good Friday Agreement. The IRA has come forward with a decommissioning initiative which we welcome, and I think it is extremely important that we now proceed with sensitivity to both communities, but with a view to the fact that the people of Ireland want peace.

Q Did the President get briefed, perhaps by you, on this GAO exercise, where they got personnel and vehicles into federal buildings with phony passes, and do you see this as a national security threat?

MR. BERGER: He was not briefed by me about it. I don't know an awful lot about it myself, so I'll get back to you on it.

Q The last time we visited Moscow, if I recall correctly, during the three days we were there, the currency collapsed about 30 percent. Has the Russian government actually taken any steps since then to improve the economic condition there, or are we simply hopeful that with Putin coming into power, they will take steps in the future to stabilize the economic situation?

MR. SPERLING: Well, I don't want to establish that there was a causal relationship between the President's trip and the -- I think the collapse was about 10-12 days before that. I think the real question is things have definitely improved there. Russia is very dependent on commodities, particularly oil and gas prices. As you know, oil prices have gone up significantly. That has increased their revenues very significantly.

Also, as the ruble has stayed very weak, that not only makes it easier to export, it makes it more expensive for the Russian people to import. And so they turn more -- where they might have bought a product, a foreign product, they start buying more domestic products. These two factors have clearly strengthened their budget situation, and strengthened their economy.

So I think the real question is whether this good period of economic times will just be something to rest on, or whether they will use it to make the more important structural reforms. And again, when I say the structural reforms, a point Secretary Summers always points out is the biggest problem with capital flight is not the capital flight of foreignors taking the money out, but the Russian people themselves who have significant -- I believe as much as $80 billion -- of capital flight.

And this is -- and why? It's because, in our country, if you're investing, you're wondering whether it's going to be a good investment; you may be wondering how the economy is going. You're not worried that somehow you won't have your rights protected in a shareholder dispute, or somehow bankruptcy laws won't apply, or that the contracts will not be protected.

These are all the type of more structural reforms that one has to make for Russia over time to become a place where people feel more confident in investing, a banking climate that focuses more on correct risk assessment. These are the important structural reforms.

I think if you -- several of us got to meet with, I guess, perhaps my counterpart yesterday -- I think if you look at the comments they've made, I think that they are saying the things that we would agree with was -- is most important. But I think the question is, one, will the proposals be there; and second, will there be the will and the capacity to get them through the Duma; and then will it be applied over a period of time so that there becomes more significant investment.

One thing that President Zedillo always tells other countries is that if you've had a bad period behind you, you can't simply do the right thing. You have to do the right thing, plus more to kind of erase the negative perceptions and build more confidence.

Q -- breakthrough on beef and --

MR. SPERLING: I don't -- we would love to have a breakthrough, but I don't think there's tremendous reason for optimism. In fact, on beef, the Commission actually proceeded on May 24th with regulations continuing the ban, which I think was a negative and unfortunate step in the wrong direction.


END 12:50 P.M. EDT