THE WHITE HOUSE




                  Office of the Press Secretary

                         (Naples, Italy) 




______________________________________________________________

For Immediate Release                           July 9, 1994     






                          PRESS BRIEFING

                                BY

             SECRETARY OF THE TREASURY LLOYD BENTSEN

            AND SECRETARY OF STATE WARREN CHRISTOPHER 




	     

                          Palazzo Reale

                          Naples, Italy  




	     

7:10 P.M. (L)




	     

	     SECRETARY BENTSEN:  Creating jobs.  That's been one 

of our major objectives here.  And I've certainly heard some good 

reports thus far.  They're talking about the G-7 having a 2.5 

percent growth in its GDP.  That's sure a lot better than the one 

percent that we saw last year.  

	     

	     In some places that means getting into business for 

yourself.  We're seeing that happen in Russia.  We're seeing the 

privatization of some 70,000 firms.  I never thought I'd see the 

day when approximately half of the GDP in Russia would be coming 

from private sources.  

	     

	     At this summit, it would certainly help to have the 

American economy in good shape.  I didn't feel the kind of peer 

pressure I felt at my first G-7 meeting in London when they said, 

now, don't be telling us what to do about our economy until you 

get your own economy in shape.  

	     

	     To all of them, we could point out what we are doing 

about our budget deficit.  We came to Italy as the Ferrari of the 

economies -- the fastest-growing one, the one that makes up some 

40 percent of the GDP, but insofar as growth has three-quarters 

of it.  It won't be that way long.  That doesn't mean that ours 

is slowing down, but it means that theirs is catching up.  

	     

	     Today, we have reaffirmed our strategy for growth, 

and we've done it because it's working.  The U.S. is going to 

keep cutting that budget deficit.  And for Europe to reduce its 

deficit so it can create the conditions for lower interest rates 

and for Japan to stimulate its economy.  Nothing encouraged me 

more than the statement by Mr. Takemuri to tell us that Japan is 

going to extend its cut on the income tax until they're assured 

that the economy is recovering well. 

	     

	     I thought our discussion on jobs was also useful.  

The President put this one on the table, and I think the 

Europeans are glad he has.  

	     

	     On trade, the top priority was to complete the 

Uruguay Round of GATT.  I told my friends that I felt that the 

Congress would ratify it this year.  And as soon as I return to 

Washington that's what I'll be working to try to accomplish.

	     

	     On Russia, I'm impressed with what they're 

achieving.  I look at that inflation.  It took the G-7 countries 

five years to lower the annual inflation rate from 4.4 percent

to 2.3 percent.  And that was a tremendous accomplishment.  It's 

now the lowest that it's been in decades.

	     

	     But the Russians have lowered their inflation from 

20 percent per month -- that's what it was last year -- to under 

5 percent last month.  They agreed to expand the amount of 

support -- support that Russians will get as they proceed along 

the reform path, that will help them.  There is also new support 

to help other transforming economies now in the exchange markets.




	     Let me give you a sense of the discussion amongst 

the finance ministers.  We agreed that the underlying economic 

fundamentals are sound, and that the conditions for an enduring 

recovery with low inflation are now in place in each of our 

countries.  We're all concerned.  We agreed that recent movements 

in exchange rates are not in line with the basic conditions 

prevailing in our economies.  And thus, as I've been saying, a 

stronger dollar would be desirable.




	     We look forward to increasing cooperation, and the 

one thing I don't telegraph is our future actions.  But we're 

prepared to act when it's appropriate.  We agreed to enhance the 

policy of coordination of the process.  You'll likely see more 

frequent meetings with our central bank colleagues to develop the  

responses to potential threats to recovery.  It'll also involve 

more cooperation among regulatory authorities to preserve the 

stability and the soundness of global financial markets.




	     Now let me end with this.  I want to credit 

President Clinton for making the G-7 a more user-friendly group.  

We may be meeting in formal settings, but I am starting to see a 

more general discussion and more give-and-take and a more 

collegial spirit.  




	     He did something else at this summit.  Fifty years 

ago our leaders put in place institutions that contributed to a 

remarkable period of growth.  And at this summit the President 

began the process of creating an architecture for the next 50 

years, which Secretary Christopher will tell you more about now.




	     Now let me introduce you to a very good and a very 

able friend with a tough job, Secretary Christopher.




	     SECRETARY CHRISTOPHER:  Thanks, Secretary Bentsen.  

I really want to say at the outset  how much our whole delegation 

has benefitted from the wise leadership and sound counsel that 

Lloyd Bentsen always gives in this kind of a situation.  The 

leaders today made a number of important decisions, a number of 

things that would have a major impact on the world, the United 

States for years to come, but I particularly want to highlight 

one aspect of President Clinton's vision of leadership.  Through 

his personal efforts, the leaders of the G-7 have agreed to take 

on one of the most important responsibilities that there is, and 

that is adapting and renewing the institutions we have to the new 

period ahead, to the 21st century.  This will be at the center of 

the agenda in Halifax.  This was a very distinctive contribution 

of President Clinton -- both the ideas and the words. 

	     

	     As you know, from the beginning of his presidency, 

President Clinton has led the way to integrate the new market 

democracies of Central and Eastern Europe and of the New 

Independent States -- integrate those into the structures and 

institutions of the West.  

	     

	     The trip we're taking has highlighted those 

priorities and also indicated the major strides that have already 

been made in this regard.  In Riga and Warsaw, the President 

provided new support and assistance to the countries of Central 

and Eastern Europe in their difficult transformation in an 

economic and political sense.

	     

	     Tomorrow we will continue our efforts to support 

reform and renewal in Russia.  We'll end this trip by the 

President's speech at Brandenburg Gate, a very vivid symbol of 

overcoming the divisions of Europe.

	     

	     I want to call your attention to a few of the 

achievements of this summit that are particularly relevant to our 

foreign policy.  We've reaffirmed our commitment to integrate 

Russia and the States of Central and Eastern Europe, to the 

Western political and economic structures.  We've renewed and 

affirmed our commitment to ratify GATT this year.  We've 

recognized the importance of Ukraine's political and economic 

transformation into the future, into a fully integrated Europe. 

We've taken particular steps to assist in Ukraine's energy needs 

and to the closing of the Chernobyl reactor.

	     

	     Finally, in preparing for President Yeltsin's 

historic participation in tomorrow's discussions, we have 

endorsed the efforts begun last year at Tokyo to encourage the 

remarkable economic transformation of Russia.  My own 

participation in this summit has concentrated on the discussions  

between the leaders on political issues.  This will be the focus 

of tomorrow's meeting when we'll be joined, of course, by 

President Yeltsin and Foreign Ministry Kozyrev. 

	     

	     We'll cover a number of topics on the world's 

political agenda -- NATO and the Partnership for Peace, North 

Korea, Nonproliferation, Bosnia, Haiti, Algeria -- the whole 

compendium of important issues.

	     

	     From our discussions at the ministerial level thus 

far, I can tell you there's a high degree of convergence between 

the nations of the G-7 on these subjects.  I look forward to 

further discussions and will be reporting to you further tomorrow 

on these subjects.

	     

	     Thank you very much.

	     

	     Q	  Mr. Secretary, can I ask you a question about 

Korea, if you would?  Apparently there will be no funeral 

delegations which normally would be a way to reaffirm past 

positions.  Will the U.S. make some move to try to reaffirm the 

commitment you have to a nuclear freeze and to a full inspection?  

And beyond the nuclear issue, this is a vacuum of sorts that is 

open now.  What does the U.S. propose to do or how will you try 

to reinforce the allies and allay any anxieties?

	     

	     SECRETARY CHRISTOPHER:  Any change in leadership in 

a country as remote as North Korea on any change that comes 

suddenly clearly deserves very careful watching, and we'll be 

watching this situation with great care over the next several 

days and weeks.  The President said we know relatively little at 

the present time.  I began to discuss this matter around 6:00 

a.m. this morning when Foreign Minister Han of South Korea --

Republic of Korea -- called and we discussed the developments and 

what it might mean for the future of the discussions.  And the 

day has been marked by a number of consultations on that subject.




	     What we know is that in Geneva -- although today's 

meetings were set aside -- the delegation from North Korea, 

headed by Vice Premier Kong, a high-ranking North Korean, has 

asked that our delegation standby to resume the discussions when 

he receives further instructions, and I think that's a somewhat 

encouraging sign.




	     We have seen press reports that the North Koreans 

want to maintain the schedule with respect to the summit meetings 

between North and South Korea.  But we are in a period in which I 

think the situation deserves very careful watching, we intend to 

do that.  Of course, we'll try to confirm the nuclear freeze.  

Probably the soundest way to do that is in Geneva.  But we will 

be trying to use this period as effectively as we can to keep 

moving in a positive direction with North Korea, not to lose the 

momentum that seemed to be created by the announcements of the 

North/South talks and the beginning of the talks in Geneva.




	     Q	  Secretary Christopher, did we have any sense of 

who is in charge now and whether the successor will likely be his 

son?




	     SECRETARY CHRISTOPHER:  The preliminary signs that 

we have there is that Kim Jung Il is head of the funeral planning 

party in North Korea.  That's some sign of a continuity of 

leadership there.  There are some other signs that it may devolve 

upon him, but frankly, it is too early for us to have any 

definitive judgments about this.  And once again, I put this 

under the category of a situation because of the remoteness to 

the country, because of the suddenness of the change in 

leadership it bears very careful watching and comparing notes 

with countries in the region who might have good sources on that 

subject.




	     Q	  Is it your sense, Mr. Secretary, that the 

summit between North and South Korea will take place as 

originally scheduled later this month, or are there indications 

already that that is going to be delayed?




	     SECRETARY CHRISTOPHER:  Well, my only information on 

this subject comes from press reports that I saw earlier today 

that the North Koreans want to keep that on calendar.  But I 

think we need to await official word as to this before we can 

confidently say.




	     There was a question for Secretary Bentsen.




	     Q	  Secretary Bentsen, you said you don't telegraph 

your future actions, but were you hinting in some way that you 

will move on the dollar?




	     SECRETARY BENTSEN:  That would be telegraphing.




	     Q	  And were you disturbed by the 20-point plunge?




	     SECRETARY BENTSEN:  Well, we still believe in a 

strong dollar, and we still think we have strong economic 

fundamentals.  And we share with the Federal Reserve the 

objective of continued growth with low inflation; and no, I will 

not telegraph what we might do.  

	     

	     Q	  To follow up that point, yesterday you 

mentioned that you would not be surprised if the G-7 were to 

include some mention in the accord about the desirability of 

stable exchange rates that reflect economic fundamentals.  We did 

not see that sort of a sentence in the communique.  Were you 

disappointed that that wasn't put in?




	     SECRETARY BENTSEN:  No, I wasn't disappointed on 

that.  We discussed the issue, particularly amongst the finance 

ministers.  And we shared the objective of a strong dollar.

	     

	     Q	  Why didn't you --

	     

	     SECRETARY BENTSEN:  And we agreed the fact -- well, 

I'm telling you now, and you've heard that repeated by other  

members of the G-7, and particularly finance ministers who have a 

responsibility in that regard.




	     Q	  But why not put it on paper?  I mean, what was 

the problem of putting it on paper?




	     SECRETARY BENTSEN:  You put it on for me, I just 

gave it to you.




	     Q	  I wanted to ask Secretary Christopher -- you 

mentioned a whole list of subjects which -- political discussions 

on NATO and the PFP.  Does the U.S. have specific goals that you 

could share with us on those issues, or are you just going to 

have a generalized discussions?  Are there any specifics that 

you're looking for?




	     SECRETARY CHRISTOPHER:  No, on almost every issue, 

we will have a specific goal.  For instance, I mentioned Bosnia.  

I think the United States hopes to come out of this summit 

meeting -- and I am confident that we will -- with a strong 

endorsement of the put forward by, first the Contact Group, and 

then the ministerial meeting in Geneva last year.  And on each of 

the subjects I discussed, we have a particular goal or a 

particular language we want to achieve in the summit communique.  

These communiques have significance for the parties involved.  

They have significance because they commit the G-7 countries to 

particular forms of action.




	     Q	  Will there be any specific goal stated on 

Haiti?




	     SECRETARY CHRISTOPHER:  I don't want to foreshadow.  

I certainly could not tell you exactly what the leaders will do.  

But with respect to Haiti, I would expect -- and quite 

confidently, once again, here -- that the leaders would denounce 

the illegal government of Haiti and call for the restoration of 

democracy in that country.




	     Q	  Secretary Bentsen, following up on your earlier 

comments about the Federal Reserve, there seemed to be some 

indications from you and others yesterday that you were reverting 

slightly to the tone you were using late last year when you were 

suggesting that it was inappropriate for the Federal Reserve to 

tighten credit further.  Correct me if I'm wrong, but do you 

still have quite the same relationship with the Fed?  Has there 

been any change in that relationship?




	     SECRETARY BENTSEN:  I think we have a very good 

communication with the Federal Reserve.  And I did not try to 

anticipate their actions, or comment on their actions.  I respect 

the independence of the Federal Reserve.




	     Q	  Secretary Christopher, there's been a lot of 

talk here by the President and yourselves about transforming the 

institutions of Bretton Woods and the post-war institutions into 

new ones for the post-Cold War world.  The first attempt here, 

with the Trade 2000, has gotten off to a rather halting start, to 

say the least.  I wonder if you'd talk a little bit -- if we are 

present at the creation, now, of something new, why is it much 

more difficult for both of you to forge these kind of new 

institutions in this world, compared to the one of the post-World 

War II?




	     SECRETARY CHRISTOPHER:  I'll talk about the 

political institutions, and ask Lloyd to talk about the economic 

institutions.  




	     I think we're making excellent progress in 

developing new institutions for this post-Cold War period.  The 

Partnership For Peace has been a remarkable success with 21 

nations now signed up for it.  I think that's the way to renew 

and modernize NATO.  And in another continent, the development of 

APEC into a much more vital institution with the first-time 

leaders meeting in Seattle is another adaptation of an early 

institution to the post-Cold War period.

	     

	     In the Americas the summit meeting, the first one in 

two or three decades, I think, gives an opportunity to forge 

there a new set of institutions for the 21st Century. 

	     

	     So, all across the globe we are developing new 

institutions.  It is more difficult in a sense than it was 

earlier because we do not have the congealing effect of the need 

to contain or combat communism.  But I think that we are 

addressing this new set of institutions and comparing them 

against the problems that we will face in the 21st Century, and 

they may be quite a different set of problems.  Problems like 

crime, narcotics, environment, population, nonproliferation.  

Those global issues need a new set of institutions and, so, we'll 

be developing new institutions and modernizing old institutions.  

Even the United Nations deserves a very hard look to see how that 

can become a more effective institution.

	     

	     Perhaps Lloyd would be good enough to talk about the 

finance. 

	     

	     SECRETARY BENTSEN:  I might speak on the economic 

side of it.  And what you're seeing is these institutions in 

partial transition and a continuation of that.  Let me give you 

an example of that when we're talking about the IMF.

	     

	     As I recall, the IMF has around $30 billion in loans 

and around $40 billion in assets.  There's room for further 

expansion in assistance.  And you're seeing that in the SDRs that 

will be issued.  You're seeing that for all of the new member 

countries.  You'll see that for all of the states of the former 

Soviet Union, and you'll see it for economies that are in 

transition, too, an expansion of that kind of assistance.  And in 

looking at the World Bank, you will be seeing further 

consideration of things like the environment, like the poor, and 

it will not just be for structures or projects at that regard.  

So, an expansion of the types of loans that they're making.

	     

	     SECRETARY CHRISTOPHER:  I understand I'm keeping you 

all from Italian soccer.  Under these lights here I feel like I'm 

playing myself.  (Laughter.)

	     

	     Q	  Secretary Bentsen, can you clarify the dollar 

situation one more time, please?  The President seemed to throw 

cold water on the idea of intervention on Friday, talking about 

the dollar exchange rates in relation to economic fundamentals, 

but today you're saying we're prepared to act when it's 

appropriate.  

	     

	     Can you, without telegraphing your plans, rule out 

any further intervention or higher interest rates?




	     SECRETARY BENTSEN:  No, that would be telegraphing.  

No.  That would be telegraphing.  And I get back to the very 

basics I've told you.  And, again, we believe in a strong dollar 

and we think that the underlying economic fundamentals of the 

country are excellent and we share the objective with the Federal 

Reserve of continued growth, low inflation, and I will not 

telegraph my intentions.

	     

	     THE PRESS:  Thank you.  7:35 P.M.




                               END7:35 P.M. (L)