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U.S. DEPARTMENT OF STATE
95/06/16 Press Breifing: G-7 Summit Communique
Office of the Spokesman



                          THE WHITE HOUSE

                  Office of the Press Secretary
                       (Halifax, Nova Scotia)
___________________________________________________________________
For Immediate Release                                 June 16, 1995


                        PRESS BRIEFING
                              BY
           JOAN SPERO, UNDER SECRETARY OF STATE FOR
                ECONOMIC AND AGRICULTURAL AFFAIRS;
       DANIEL TARULLO, ASSISTANT SECRETARY OF STATE FOR ECONOMIC
                       AND BUSINESS AFFAIRS;
            LAWRENCE SUMMERS, UNDER SECRETARY OF THE TREASURY
                    FOR INTERNATIONAL ECONOMICS;
                             AND
              MIKE MCCURRY, PRESS SECRETARY


              World Trade and Convention Center
                    Halifax, Nova Scotia



5:45 P.M. (L)


     MR. MCCURRY:  Ladies and gentlemen, good afternoon, once again.  
I've asked Joan Spero, Under Secretary of State for Economic Affairs; 
Larry Summers, who's the Under Secretary of the Treasury for 
International Affairs; and Dan Tarullo, the Assistant Secretary of State 
for Economic and Business Affairs, and our lead sherpa, here to very 
briefly go through some of the high points of the G-7 communique, which 
you've now received, and point to some of those areas in which we 
believe the United States had particular impact.  Dan can also tell you 
a little more about the President's participation in some of the 
discussions today.

     And then I know there are one or two other matters on other 
unrelated issues -- at the end of all that, I'll be happy to clean -- 
anything that you're still working on.

     Let me start with Dan, and then turn it over to Joan and Larry.

     ASSISTANT SECRETARY TARULLO:  Working with the ritual, less than 
two hours sleep for sherpas the night before the G-7, my incoherence 
level may be explicable at least today.

     Let me give you -- let me give you a little bit of a flavor of the 
leaders meeting and then let Joan and Larry walk through the most 
important points of the communique.

     The leaders discussion, I think, was unusually lively this morning.  
President Chirac, as the newest member of the G-7, at his first meeting, 
having only been in office for a few weeks actually, brought, I thought, 
an enormous amount of energy and a lot of ideas into the discussion.  
Prime Minister Chretien was, I thought, quite masterful in the way that 
he moved the discussion along and drew people out to make sure that all 
kinds of views were on the floor.

     The main topics that were discussed in the course of the morning, 
which was the small leaders-only session, included an awful lot of 
attention to financial stabilization efforts, to the issues that the 
international monetary system has been facing over the last six to 12 
months, to employment and economic situations in each of the member 
states.

     The leaders also, I think, began looking ahead to some of the new 
issues that are going to affect those same sets of economic issues.  
There was a good deal of talk about the effects of aging populations 
upon national savings rates, upon unemployment and employment issues, 
and also in general upon the capacity of countries to maintain the level 
of social services that they have had in the past.

     This, I might add, so far as I can tell, was totally unprepared.  
That is, there weren't a lot of talking points that the leaders had on 
these issues.  I suspect there were none that any of them had.  It came 
up in the course of conversation about unemployment and economic 
prospects, and as I think happens under these circumstances, galvanized 
the interest of the leaders themselves.

     The President had several fairly lengthy interventions, one of 
which kind of gave a tour of the U.S.  economic situation, the 
deceleration in our growth rate this year, his appraisal of our 
prospects for maintaining and then resuming higher levels of growth in 
the coming year.

     He also paid, as won't surprise any of you, a good deal of 
attention to issues of structural unemployment, of difficulties in 
people getting higher wages over the course of the last 15 to 20 years, 
the kinds of issues that he's been talking about since he began running 
for President.

     The President also engaged in a fairly lively interchange on the 
financial markets issues.  He was recounting the experience the United 
States has had with Mexico and emphasized the importance he attached to 
the specificity of proposals for both prevention, transparency, on the 
one hand, and also the capacity to react with adequate resources when 
emergencies strike on the other.

     Finally, to anticipate what I suspect what would have been an early 
question from you, yes, the issue of U.S.-Japan auto dispute did come 
up.  It came up when raised by one or two of the other leaders who asked 
about U.S. activities and suggested that perhaps this was a problem.

     The President, I must say, was succinct but made two very strong 
points in response.  First, he stated quite forthrightly that this is a 
course that he's quite serious about, that he intended to use Section 
301 in order open markets for U.S. auto and auto parts producers abroad.  
But secondly, after stating that very succinctly, he suggested that this 
was not the place for he and Prime Minister Murayama to get into some 
sort of extended discussion on the merits of the issue; that there was 
important work to be done in the areas of international financial 
stabilization, development bank reform, reform of U.N. agencies and 
economic prospects of the countries.  And he wanted to be able to talk 
about that.

     The two areas where I think there's the most specificity, which is 
as all of you know, something that we had very much been in favor of, 
are in the area of international financial stabilization, which Larry 
Summers will address in a moment, and the issue of institutional reform, 
including U.N.  agencies and multilateral development banks, which Joan 
can address now.

     UNDER SECRETARY SPERO:  Let me just mention two areas that the 
United States pressed very strongly in these discussions -- in these 
negotiations and which you will find in the summit communique.

     The first one, as Dan mentioned, is U.N. reform, and the second one 
that I want to mention is economic support for the peace process in the 
Middle East.

     The -- I think there's a growing consensus, not only in the United 
States, but elsewhere, that the economic and social parts of the United 
Nations machinery have grown rather creaky and cumbersome over the last 
50 years.  That has special resonance in the United States in today's 
budget climate.  We simply have to show that the multilateral system can 
use our dollars effectively.

     And I think, increasingly, Americans who are very generous people, 
are questioning the ability of the multilateral system to make a 
difference.  And in the end that is going to have an impact on our 
ability to financially support the United Nations system.

     So in these discussions, the U.S. proposed several strategies for 
making the U.N.'s economic and social structure more effective, and 
you'll see those in the final communique.  First of all, we recommended 
consolidating agencies with similar or overlapping functions -- that is, 
making some rational sense out of the humanitarian relief and the 
development assistance area, for example.

     Secondly, we've asked for a hard look at the mandates of a number 
of existing bodies -- some of them such as UNCTAD and UNIDO are 
specifically mentioned in the communique -- to see whether they are 
still relevant.  And finally, we recommended a reform of the U.N. 
Secretariat to bring it up to modern standards of efficiency and 
accountability -- in effect, to bring it into the 20th century.  You 
will find all three of these recommendations in the communique.

     We also, in the area of the U.N., made recommendations for 
improving -- we made specific recommendations for improving U.N. 
operations in a number of very detailed areas -- in crisis management, 
in disaster relief, and in the area of environment.

     And then, finally, we will be working with the G-7 in a follow-up 
mechanism -- and you'll see a reference to follow-up generally in the 
communique.  We've agreed that we will continue work together inside and 
outside the United Nations as G-7 to push forward this reform agenda.  
We're not kidding ourselves, we know that this is a first step. And 
what's really going to matter is what is going to happen after Halifax.  
So we have committed that we are going to continue to be on the case.

     The second issue that I want to mention very briefly is the 
question of the Middle East peace process.  As you know, this is very 
high on the U.S. agenda and that we have long argued that we cannot have 
a lasting peace if we do not have a viable economic support for the 
peace process.  We have strongly supported, therefore, an initiative 
that has come from the four regional parties for the creation of a 
Middle East development bank.  And we have been sharing in international 
negotiation to address that issue.

     You will see in the summit communique support for the establishment 
of a new institution and a financing mechanism to support the Middle 
East peace process.  And you will also see that we urge the completion 
of the work in preparing for this new institution to be completed at the 
Amman summit, which will be held next November.

     With that, let me turn the podium over to Larry Summers.

     UNDER SECRETARY SUMMERS:  I think that in the financial area, this 
was one of the most successful summits in recent years in terms of 
concrete accomplishments.  There were four concrete accomplishments that 
I think are particularly important.

     First, a program to address the kind of problem pointed out by the 
Mexican crisis.  The program laid out in the communique has four 
elements.  First, a call on the IMF to improve its surveillance 
procedures.  Second, and I think most important, a call for a change in 
culture at the IMF, in the markets, and in developing countries, towards 
an emphasis on transparency as the best way of ensuring that the data is 
all there, and markets can respond to any problems very quickly.  A 
third element of that program is a call for an emergency financing 
mechanism based on heavy conditionality that can provide large-scale 
assistance rapidly if such support is necessary given the conditions and 
can do so in a multilateral fashion.  Fourth, a recognition that debt 
problems of the future will require different mechanisms, because the 
finance for emerging market countries has shifted from bank debt to bond 
debt, and the institutions need to adjust at the same time.

     The second concrete accomplishment is an agreement among the heads 
and their finance ministers on enhanced regulatory cooperation -- to 
develop and enhance concrete standards and safeguards to ensure the 
successful functioning of the global financial system, to avoid the 
kinds of problems that were pointed out by the Barings crisis.

     The third accomplishment is a blueprint for reform of the 
multilateral development banks that puts into the G-7 communique some of 
the kinds of things that President Clinton and his administration have 
been trying to achieve with the multilateral development banks for some 
years -- an increased investment -- emphasis on increased investment in 
people; increased emphasis on popular participation and on environmental 
preservation; a change in the culture of those institutions towards one 
of transparency to the public; and increased reliance on instruments 
that support rather than supplant the private sector, particularly the 
use of targeted guarantees to support private sector investments in the 
private sector in developing countries.

     Finally -- fourth -- this summit has a breakthrough on the issue of 
debt for the poorest countries, which is an issue that these summits 
have been considering for some years.  At this summit, the leaders call 
on the multilateral institutions -- the IMF, the World Bank and the 
regional development banks, to undertake a comprehensive program to 
address the debt problems to those institutions of the poorest 
countries, drawing on all of the resources and reserves of those 
institutions.

     In addition to the communique, this year is supplemented by a 
background paper that provides more information on the thinking and on 
the substance of the particular reforms that I have just described in 
the financial area.

     I think we'd all be happy to take any questions.

     QUESTION:  -- I don't mean to detract at all from these 
accomplishments, but isn't it fair to say that in many of these areas, 
particularly reform of the multilateral development institutions, the 
enhanced emergency funding, et cetera, the G-7 really needs the support 
of many other countries, many of the members of these institutions?  As 
we saw in Madrid last year, the G-7 tried to push an issue involving 
quotas, at the IMF through without success.  Have you contacted these 
other countries about this?  Can you count on their support?  And where 
do we stand, particularly on the issues of funding for the doubling of 
the GAB?

     ASSISTANT SECRETARY TARULLO:  Let me make a general point and Larry 
or Joan may want to add some specifics.

     The purpose of this entire review by the G-7 was to provide some 
leadership across the range of international economic institutions. And 
what we've done, both at staff level and, more importantly, at a leaders 
level, has been to identify what needs to be done most specifically in 
the areas of international financial stabilization and development 
institutions, and to lay out blueprints of considerable specificity, a 
kind of road map to reform or to adjustment.  It obviously has entailed 
some consultation, in different ways, under different circumstances, a 
lot of it bilateral, a lot of talking to other countries.  I think the 
Canadians as hosts, have actually done some institutional consultation 
along the way, as well.

     But the purpose of this -- the purpose of the exercise and of the 
communique is to encapsulate ideas and proposals to commit the G-7, as a 
group, to work for their realization, and now to go forward within those 
institutions and with members of the rest of the world to make those 
proposals a reality.

     UNDER SECRETARY SUMMERS:  I'd just say, Keith, that the President 
has consulted with the heads of state of a number of countries about the 
question of review of the international financial institutions in the 
course of his meetings with them over the last few months.  And 
Secretaries Christopher and Rubin have consulted extensively with their 
counterparts in other parts of the world.

     I think it will take some months, but I am confident, based on 
those consultations, that each of these concrete objectives will be 
something that is achievable and will represent some quite significant 
changes in the international institutions.

     UNDER SECRETARY SPERO:  Let me just -- could I just follow up with 
one comment, Keith, on the U.N. system.  I want to emphasize that we 
also did a lot of consultation there, as well -- that there was a lot of 
concern that we are only seven out of 185 members of the U.N., would 
this not be offending developing countries or some of the smaller 
European countries, for example.

     What we found when we started to talk to others, including the 
developing countries, and it wasn't just the United States -- the 
Canadians, our Japanese colleagues, the U.K. and others -- was that they 
were actually looking to the G-7 for leadership.  They said, you're not 
a directorate, but we look to you -- this is the 50th anniversary of the 
U.N.; this is an opportunity for change; we recognize that we need it, 
too.

     So I think that it's -- there's a strong agreement that not only 
did we consult before, but what you'll see in the follow-up mechanism is 
we recognize we have to continue that process.

     QUESTION:  Is there any -- could you give us any idea of what, 
quote, "greater transparency and more frequent reporting" means?  Does 
this mean that a country should report its current account and its -- 
its reserve position six times a year instead of three times, like 
Mexico is doing, with several month lag?  I mean, what's frequent? 
What's transparent?

     UNDER SECRETARY SUMMERS:  I would expect this goal not to be 
achieved immediately, but I would look forward to a time when all major 
countries that have substantial contact with international capital 
markets engaged in reporting similar to that that the industrialized 
countries now do, which would mean reporting of the central bank balance 
sheet at least on a monthly basis and perhaps significantly more 
frequently.

     It would also mean up-to-date information, again, on a monthly or 
more frequent basis on government receipts and government outlays.

     QUESTION:  Larry, regarding the currency markets, the communique 
simply restated the April finance ministers' communique.  Are you 
worried that that might leave the currency markets with the feeling that 
the G-7 is not fully committed to a firmer dollar?

     UNDER SECRETARY SUMMERS:  No, I think the April language was quite 
clear, and I think the subsequent action by the G-7 was clear as well.  
And so I think it was appropriate that -- and I welcome the leaders' 
decision to reaffirm the earlier -- the earlier statement.

     QUESTION:  How much and how soon do you expect the general 
agreements to borrow be doubled?

     UNDER SECRETARY SUMMERS:  How much doubling -- and there's about 
$27 billion -- there's about $27 billion there now.  I expect an 
agreement on that to be reached within the next several months, and it 
will then take some time for the actual funding to be -- actually 
funding to be implemented.

     QUESTION:  The President said today that the United States could no 
longer be the lender of last resort.  One presumes that there will be no 
single lender of last resort, that it will be spread broadly.  Can you 
tell me anything about the mechanism by which this cup will be passed 
around from country to country, and how many countries you would see 
taking part in --

     UNDER SECRETARY SUMMERS:  There are actually 11 countries that are 
in the current G-10 --

     QUESTION:  Ten plus --

     UNDER SECRETARY SUMMERS:  Yes.  And that is an emergency financing 
mechanism that they have maintained since 1962 for the help of each 
other, with the prospect also for assisting countries outside of the G-
10.

     I would expect that some of the resources for this doubling will 
come from those countries, and some will come from other countries. The 
other countries that they will come from will be in two categories: One 
will be the smaller industrialized countries, primarily in Europe, who 
are not part of the G-10 --

     QUESTION:  Scandinavia, Austria, that --

     UNDER SECRETARY SUMMERS:  -- exactly.  And the other will be the 
new financial centers, particularly but not only in Asia, who now hold a 
quite significant fraction of the world's reserves.

     QUESTION:  Would the United States contribute more --

     UNDER SECRETARY SUMMERS:  I would expect that there will be an 
additional United States' contribution.  But just what the size of that 
U.S. contribution will be is difficult to estimate at this point.

     QUESTION:  Will you be soliciting contributions from the government 
of Taiwan?

     UNDER SECRETARY SUMMERS:  That's not a decision that's been reached 
yet.

     QUESTION:  Have you had any discussions with members of Congress 
about that additional U.S. contribution?  And how difficult do you think 
it's going to be --

     UNDER SECRETARY SUMMERS:  We have had some very preliminary 
discussions in which we have indicated the type of proposal that we 
thought the G-7 might be making here and in which we and the members of 
Congress we've discussed this with have agreed on the importance of any 
finance that is provided -- being provided in a highly conditional way, 
that finance not come solely or primarily from the United States; and 
that the financial arrangements be such that they don't burden the 
American taxpayer and appear in the budget.  And I think that the GAB 
mechanism will meet those criteria.

     QUESTION:  Well, Larry, when you -- when you say that you're going 
to get other countries to contribute to this, will they then also have a 
voice in how the GAB is disbursed?

     UNDER SECRETARY SUMMERS:  I expect that any contributors to the 
emergency financing mechanism will certainly have a voice in how the -- 
in how emergency finance is provided.  Whether the -- the precise 
relationship between the existing GAB and the larger, both in terms of 
money and membership, constituency of the emergency financing mechanism, 
is yet to be worked out, in consultation with other new members.

     QUESTION:  -- say something about the regulatory cooperation?  Do 
you have any more specifics regarding -- (inaudible) -- more volatile 
capital markets, which probably -- (inaudible) -- Barings --

     UNDER SECRETARY SUMMERS:  I'd refer you to the background paper.  
As a first step, the finance ministers have commissioned reports from 
the banking regulators and the securities regulators in consultation 
with each other.  I think there's a feeling, a strong feeling, that 
coordination here is essential, both between the regulation of the same 
types of -- similar types of activities when they're undertaken by banks 
and securities companies, and also similar types of activities when 
they're undertaken in different markets.

     Among the areas that are particularly important are the 
transparency of reporting and capital requirements, as well as 
safeguards for the payment systems in, for example, the margin area.

     QUESTION:  Could I take you back to your comment that you had 
talked in a preliminary way with members of Congress -- I presume 
Republican members as well as Democrat -- about these three conditions. 
What was their reaction?

     UNDER SECRETARY SUMMERS:  I think that their reaction was that 
these were appropriate criteria and they certainly wanted to look at the 
proposal when the proposal when the proposal was in a form, which it 
certainly is not yet, to be brought to the Congress in the form of 
legislation.

     I think there is a recognition of the importance to the United 
States of this type of emergency being addressed in a multilateral way 
and there being a capacity to do that.

     QUESTION:  But did they give you any kind of preliminary assurances 
that they would be willing to sign off on an additional American 
contribution?

     UNDER SECRETARY SUMMERS:  I think there was a great deal of 
receptivity to the idea that -- appropriately conditioned -- and that is 
something that Secretary Rubin in talking about support from the first 
day of the Mexican crisis has emphasized, that appropriately 
conditioned, there is receptivity, yes.

     QUESTION:  On the new -- can you discuss the specifics of 
conditionality and how the objections to moral hazard were overcome?

     UNDER SECRETARY SUMMERS:  Well, the affects of moral hazard are, I 
think, addressed by imposing conditions, such that countries would not 
seek to undertake the kinds of measures that -- and would be at great 
pains to avoid the kinds of mistakes that would put them in need of this 
kind of emergency finance.  And I think that countries looking at the 
experience that Mexico is going through would be unlikely to do anything 
consciously that would put them on a -- put them on a path like that.

     QUESTION:  -- this may be a questions for Dan, I don't know.  Can 
you talk a bit more about the tone of the leaders discussion of the 
short-term economic situation?  Did the word recession come up, and was 
there a discussion of Japan's economic policies, the banking crisis 
there?

     ASSISTANT SECRETARY TARULLO:  The word recession did come up, 
although it came up in the context of a provisional conclusion that at 
least some drew that the G-7 was not slipping into a recession.

     There were concerns expressed about the slowing down of growth, but 
those were coupled with a fair degree of assurance, varying from country 
to country, that growth rates would be picking up over the coming 6 to 
12 months.

     I don't recall any specific discussion of the Japanese banking 
crisis.

     QUESTION:  Is Larry Summers gone?

     ASSISTANT SECRETARY TARULLO:  No, he's not gone.  We'll pull him 
back.  (Laughter.)

     They love your finance stuff, Larry.

     QUESTION:  There's been some suggestion that the French are pushing 
an idea for some sort of new stabilization mechanism for currencies, 
somehow balancing liquidity among the three reserve currencies, the 
three leading reserve currencies.  What's -- can you tell us about how 
the U.S. views that sort of proposal.

     UNDER SECRETARY SUMMERS:  I think the U.S. is comfortable with 
where we came out in the communique.  And I was not a participant in any 
extended discussion of any mechanism of that kind at the level of the 
finance ministerial discussion.

     QUESTION:  -- why in the backgrounder you did go on for more than a 
page on your thinking concerning foreign exchange --(inaudible) -- long 
explication, as these things go?  What was the message you were trying 
to send?

     UNDER SECRETARY SUMMERS:  I think it was obviously a -- one of the 
important issues that one has to think through -- have to be addressed 
at this summit in the context of the remit from the Naples summit.

     QUESTION:  Could Mr. Tarullo tell us what one or two countries 
raised objections to the U.S.'s Japan policy?  And also would you 
address Paragraph 40 and whether you see the praise --the high praise 
for the WTO and the dispute settlement mechanism as a rebuke of the U.S. 
position in Japan?

     ASSISTANT SECRETARY TARULLO:  The ground rules of the G-7 leaders' 
meetings are "you can quote your own leader, but you can't specify what 
anybody else said, as such."  So, as you can tell, what I've been trying 
to do is to characterize conversations generally and --

     QUESTION:  Second question.

     ASSISTANT SECRETARY TARULLO:  Second question?  Not at all. I don't 
consider it a rebuke at all.  We had no problem with the language there.  
I think it's very similar to the language which was in the OECD 
ministerial communique earlier this spring.  It certainly reflects the 
position of the United States, as does, I think, some of the earlier 
language about concern with the need to have initiatives to break down 
barriers to market access.

     QUESTION:  Would Mr. Summers put on the record some of the 
conditions that the Mexicans are having to meet, which generically would 
be typical of those that new borrowers in the same circumstance would 
have to meet, to address this issue of conditionality?

     UNDER SECRETARY SUMMERS:  The Mexican program includes conditions 
on the growth of credit, conditions on Mexican budget policy that 
require a budget surplus, conditions on the central bank's process in 
terms of steps towards transparency that puts their central bank today 
in terms of its reporting requirements on a basis very similar to that 
of the Federal Reserve or one of the European central banks, and 
conditions on structural reform to emphasize in particular the 
importance of privatization.

     QUESTION:  -- model for strong conditionality you referred to in 
the communique?

     UNDER SECRETARY SUMMERS:  I think it is difficult because -- to 
extrapolate -- because financial emergencies differ and each financial 
emergency -- and we hope there will be few -- comes in a quite different 
context with a different set -- with a different set of problems.

     QUESTION:  So strong conditionalities have to be worked out -- 
(inaudible) -- would it entail?

     UNDER SECRETARY SUMMERS:  Strong conditionality has to be worked -- 
the substance of the strong conditions have to be worked out in the 
context of any individual problem.  A crucial point of agreement on 
which all seven were agreed is that it would be a grave mistake to have 
any mechanism based on automaticity -- that is, to have any mechanism 
that was there, and then if something happened, countries automatically 
got money, without any review of their economic policy and without any 
explicit acceptance on their part of a set of new conditions.

     And that is an important point of debate in this area, but the 
judgment of the G-7 was very clear that the moral hazard problems 
associated with any mechanism that contained automaticity were such that 
that would be quite inappropriate.

     QUESTION:  Is the idea -- (inaudible) -- open markets still open? 
And what is the U.S. position about that?

     UNDER SECRETARY SUMMERS:  I think that does not seem to us to be 
the primary way forward in addressing these kinds of emergencies. It 
seems to us more appropriate to the IMF's role as the lender of last 
resort in the system for it to be financed in other ways.

     QUESTION:  You say there's a discussion -- further discussion 
opened up for IMF --

     MR. MCCURRY:  Can I suggest that the two or three of you that are 
still after Mr. Summers, maybe can chat with him over here. Okay?

     Let me just tell you the letter that I had promised earlier that 
the President has now sent off to Speaker Gingrich is being distributed 
now.  You'll see in that, that the President -- to follow up on the New 
Hampshire handshake agreement last week -- has proposed a base closing-
type commission for the subject of political reform in which members 
would be able to review issues and then present them to the President 
and the Congress with sort of a thumbs-up, thumbs-down, take-it-or-
leave-it mission.  And the letter -- you'll see from the letter how the 
President proposes that they proceed.

     I'd like to make it clear that the President, in writing to the 
Speaker, is continuing the spirit of bipartisan cooperation that was 
exhibited in the first instance at the time of their meeting in New 
Hampshire is suggesting to the Speaker that he look at this outline of a 
proposal, that he instruct his staff to meet with the President's staff 
so that we can get on with the business of actually drafting the 
necessary legislation.

     And I will also tell you that the President has sent a copy of this 
letter to the Speaker to Majority Leader Dole so that the Majority 
Leader is aware of the proposal that the President has now made as the 
letter to the Speaker indicates we assume that the Majority Leader will 
be delighted with the President's proposal since he has previously 
proposed the exact same type of commission himself.

     Yes, Leo.

     QUESTION:  The President, at his press conference, said he was 
working on the financing formula for the rapid reaction force.  A lot of 
this work, I gather, is being done by Albright in New York.  Do you have 
an expectation as to whether we might still get something today, or is 
this going to take a few more days?  What --

     MR. MCCURRY:  The statement that I saw from Ambassador Albright 
indicated they would be working on this in coming days.  And my 
expectation is they will not resolve this in this current news cycle. 
Let's leave it at that.

     QUESTION:  (inaudible.)

     MR. MCCURRY:  Won't resolve it in this news cycle.  And I don't 
think -- but obviously we will have several more days of discussion on 
the issue.

     Mr. Apple.  Mr. Purdhum.

     QUESTION:  Has the President spoken to the Speaker or have the 
staffs had consultation, because apparently there was some confusion on 
the part of the Speaker's staff earlier today saying they were utterly 
unaware of this.

     MR. MCCURRY:  I believe that there has been such contact now, and 
we have, prior to releasing the letter, now visited with the Speaker's 
staff on the proposal.  I don't know whether anyone in Washington has 
talked directly to the Speaker.  The President has not.

     QUESTION:  But Mike your word from this podium earlier had been the 
first -- we got a little ahead of --

     MR. MCCURRY:  I was trying to be helpful to those in this room that 
might have needed to know that we would be making a little news on this, 
and I apologize to the Speaker if I was a little ahead of the game.

     QUESTION:  Does the President plan to talk to the Speaker about 
this, and what --

     MR. MCCURRY:  Oh, he would like to follow up on this.  I think -- I 
think in fairness, what the President wanted to do was come forward with 
some ideas to get a more specific approach design so that we can pass 
the enabling legislation quickly.  And if they need to visit again on 
this subject, the President would be delighted to do so.

     QUESTION:  What deadline is the President setting for the Speaker's 
response on this?

     MR. MCCURRY:  He's -- we're not -- the nature of the conversation 
they've had to date on the subject would not suggest any need to set 
deadlines or to be arbitrary.  I think that we can move fairly swiftly 
in the spirit of cooperation and compromise that was suggested in the in 
the encounter between the Speaker and the President.

     QUESTION:  It sounds like you have not talked with Dole or vice-
versa or his people -- (inaudible) -- is that correct?

     MR. MCCURRY:  Well, we wanted, since the handshake was between the 
Speaker and the President, it seems sensible to work from that point.  
But today, in a sense, we're inviting the Majority Leader into the 
process by sending a copy of the letter to him, and by noting that we 
are following up on an idea that Senator Dole should legitimately claim 
some authorship of in the first instance.

     QUESTION:  (inaudible) -- hasn't talked to --

     MR. MCCURRY:  That, I don't know.  We'll have to check -- we're 
have to check on whether they've had any discussion on the Senate side.

     QUESTION:  Mike, on China?

     MR. MCCURRY:  Yes.  On China, I think some of you know there's been 
a report from China that the Chinese have withdrawn its ambassador to 
the United States in protest of the decision to allow Li Teng-hui to 
visit Cornell University on a private visit.  The United States regrets 
this decision by China.

     This decision by the President was made as a courtesy to a 
distinguished graduate of an American college, and was in keeping with 
American values and American feelings.  Very often, when we have raised 
our concerns about human rights with China, we are told that we ought to 
be more understanding of cultural traditions in China.  We would ask of 
China that they understand the importance that Americans attach in our 
culture to freedom of association and to honoring the academic 
achievements of those who graduate from American universities.

     That said, we would stress that the President's original decision 
was not aimed in any way at China and carried no implication of a change 
in U.S. policy toward either China or Taiwan.  We have made that clear 
on many occasions, and the President made that clear to the Chinese 
Ambassador when the President met with the Chinese Ambassador recently.

     Notwithstanding this unfortunate action on China's part, the United 
States will continue to abide by its commitment to a one China Policy, 
and will adhere to the three communiques that form the foundation of our 
relationship.

     QUESTION:  Is it your -- is it our impression that the Chinese 
intend to downgrade their representation in Washington, or that they 
will replace the Ambassador?

     MR. MCCURRY:  He has been withdrawn for an unspecified period, and 
we would hope the period would be a short one so we could continue our 
constructive engagement on a range of issues.

     QUESTION:  Excuse me, what is our assessment as opposed to our 
hope?

     MR. MCCURRY:  It is unknown at this point.

     QUESTION:  Mike, given that fact that the American Ambassador in 
Beijing is departing a little earlier than you had planned and has not 
yet been replaced, and that the Chinese Ambassador is gone, what is the 
administration planning to do to maintain some kind of a high-level 
discussion with the Chinese leadership?

     MR. MCCURRY:  Well, the departure of the current ambassador, 
Stapleton Roy, was previously scheduled, and unrelated to this action on 
China's part.  The United States would hope to move very quickly to name 
a full ambassador, and has been moving quickly to do so. And we have 
been in dialogue with the Chinese government on that subject.

     QUESTION:  Mike, your description of the permission granted the 
President of Taiwan to be at the Cornell -- the Cornell -- (inaudible) 
as an alumnist suggests that it was a one-time-only exception to U.S. 
policy.  Is that the way we should hear it?  Because it's been -- yes, 
obviously, the Taiwanese and others see it as the beginning of a process 
of letting them come in and letting him come back.

     MR. MCCURRY:  This was an occasion in which Mr. Li was making a 
private, unofficial visit to his university in connection with a 
reunion, I believe, that he wanted to attend.  And I'm not aware of any 
other circumstances that would suggest that he has a private, unofficial 
visit planned or contemplated.

     QUESTION:  Mike, has China said whether it will agree to the 
nomination of a new U.S. ambassador under these circumstances?

     MR. MCCURRY:  That involves diplomatic conversations that I best 
not discuss in public.

     QUESTION:  So it's a possibility -- (inaudible) --

     MR. MCCURRY:  I don't know.  I wouldn't read too terribly much into 
that.

     QUESTION:  Could you just clarify on the issue of the funding for 
the augmented peacekeeping force?

     MR. MCCURRY:  I think that subject has been addressed now at 
considerable length by the President and by me earlier, and I don't have 
anything new to add to what we've already said.  Is there something that 
is not clear?

     QUESTION:  Well, I -- we actively asking Middle Eastern and the 
Asian countries to put -- help participate in the funding?

     MR. MCCURRY:  No, that would suggest that we -- that would suggest 
we would have resolved the issue of how you do the funding.  And as 
we've indicated several times today, we are actively consulting with 
others at the United Nations how best to proceed on the funding 
question.  There has not been any decision made by the United Nations to 
put this out for contributions, voluntary contributions.  They're still 
discussing the nature of the contributions themselves and others on the 
Security Council have different views than the United States view on how 
that should proceed.

     Any other cats and dogs hanging out?  Okay, thank you all.

     QUESTION:  (inaudible)

     MR. MCCURRY:  What?

     QUESTION:  (inaudible)  (Laughter.)

     MR. MCCURRY:  We're going to do -- again, we'll promise a readout 
for the pool after the dinner tonight.  We are -- given the President's 
press conference today and the several times that he has commented on 
things today, we are giving some thought to -- so that everybody can 
move quickly through the program tomorrow -- not to doing a formal press 
conference tomorrow but having Strobe Talbott or someone like that do 
the readout on the Yeltsin meeting.

     QUESTION:  Ahhh!

     MR. MCCURRY:  That's our decision and you're free to complain if 
you want, but that's -- we are -- just to alert you that, we are 
thinking of doing that.

     QUESTION:  Is the President afraid to face the press, Michael?

     MR. MCCURRY:  Of course not, Ms. Devroy, and he did so at great 
length today.  And that's part of our thinking that maybe he doesn't 
need to do it at great length again tomorrow.

     QUESTION:  Is Strobe going to be in on the meetings tomorrow?

     MR. MCCURRY:  Yes.  He will be a authoritative interlocutor for 
you, as we say.

     QUESTION:  Not quite as authoritative --

     QUESTION:  Why, does he need to get to the golf game that early?

     MR. MCCURRY:  We noticed that the sunset time scheduled for 
tomorrow is 9:02 p.m., and our program of activities tomorrow would 
imply a rather late departure for any recreational activities that the 
President might contemplate.

     Thank you all.  See you.  

     THE PRESS:  Thank you.

                 END                        

6:35 P.M. (L)

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