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�FRIENDS AND FOES
I. Friends
1. Policy.com on IMF Funding (2/2/98)
2. Paula Stern - Background Paper on the Mexico Crisis
(1/27/95)
3. Washington Post op-ed (1/5/98)
4. Statement by Camdessus (1/15/98)
II. Foes
1. Policy.com on moral hazard
2. Senate passesfiinding(3/27/98)
3. ? - Stop Fast Track Funding for IMF
4. Canadian Professor on Korea Bailout
5. Feldstein on Refocusing the IMF
PHOTOCOPY
PRESERVATION
��Policy.com- Issue of the Week, 2/2/98: IMF Funding: Background
http://www.policy.com/issuewk/98/0202/020298d.html
Policy.com
The policy news & information service
: Issue of the Week
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IMF Funding
February 2,1998
Issue of tlie Week
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The Asian Currency Crisis and the IMF
Issues Library
WHO STANDS> WHERE?
Index '
Organization by Issue
Glossary
In Support of IMF Funding
Comm ents
Interact
The President
"The N; B is needed to ensure that sufficient
'V
resourc es are available to respond to
moneta ry crises in a world of rapidly
expanc ing trade and finance. Recent events
in Sout beast Asia only underscore the threat
of shoe ks to the global financial system and
the need for a strong and responsive IMF."
White htduse Press Statement, November
26,199 /
Rep. Lee Hamilton (D-IN)
"The gr eatest challenge now facing these
econonlies is to restore investor confidence
and finsancial; market credibility. Several steps
are needed... Third, the International
Moneta ry Fund (IMF) is extending emergency
funds tc> beleaguered countries, in exchange
for asstjrances that they will make economic
reforms that will help ensure their ability to
repay tlleir loans... The IMF is producing
results n the region."
House Floor Statement, January 28, 1998
Rep. James Leach (R-IA)
Chairman of the House Banking
and Financial Service
Committee
"Our co untry has a greater interest than any
other in a strengthened IMF that
multilat sralizes the financial support for
ongoincj economic reforms in countries
importa nt to U.S. interests and that can
responci to threats to the international
financia I system so that America does not
end up serving as the world's lender of last
resort."
"Leach Introduces IMF Funding, Reform Act,"
Januaryr28, 1998
Dan Tarullo
Assistant to the President
International Economic Policy
"The IM F has the resources, they have the
expertis>e, they have the experience of how to
assist c ountries in stabilizing. We have a
good in stitution, we ought to support it, we
ought tc) use it."
White hlouse Press Briefing, November 20,
1997;:
Robert Rubin
Treasury Secretary
"The Urlited States has enormously important
econonlie and national security interests at
stake in promoting restoration of financial
stability in Asia. When we act to resolve the
Asian c risis, we act to protect and benefit the
Americ;an people."
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BACKGROUNDER
January 27, 1995
THE MEXICO CRISIS: DOING THE RIGHT THING
by Paula S t e r n
P o l i t i c a l gamesmanship should n o t d e r a i l U.S.
e f f o r t s t o s t a b i l i z e Mexico's f i n a n c i a l markets and t o
prevent i n s t a b i l i t y i n o t h e r g l o b a l markets.
B i p a r t i s a n , o r b e t t e r , n o n p a r t i s a n a c t i o n now on t h e
loan guarantee package proposed by t h e A d m i n i s t r a t i o n
t o a s s i s t Mexico t h r o u g h i t s f i n a n c i a l c r i s i s i s t h e
r i g h t t h i n g t o do. I t i s r i g h t because i t i s i n our
n a t i o n a l i n t e r e s t t o have a prosperous, p o l i t i c a l l y
s t a b l e n e i g h b o r on our 2,000-mile common border, and
because t h e c r i s i s t h r e a t e n s t o undermine confidence i n
asset and c u r r e n c y markets i n o t h e r d e v e l o p i n g n a t i o n s ,
p a r t i c u l a r l y i n L a t i n America. But i t should be c l e a r
t h a t Mexico i s u n u s u a l l y i m p o r t a n t t o t h e U n i t e d
S t a t e s , so t h a t t h e a c t i o n we take i n t h i s
e x t r a o r d i n a r y case does n o t become a precedent f o r
dealing with other nations i n s i m i l a r s t r a i t s .
The U n i t e d S t a t e s cannot a l l o w t h i s peso panic t o
become a f u l l - b l o w n economic d i s a s t e r , and y e t , w h i l e
s u p p o r t i n g Mexico and our own i n t e r e s t s , t h e r e a r e
l e g i t i m a t e reasons f o r b e i n g c a u t i o u s and s k e p t i c a l
because Mexico w i l l s t i l l face s e r i o u s problems even i f
the p a n i c i s stanched. That i s why U.S. a s s i s t a n c e
should be c o n t i n g e n t on fundamental f i s c a l , monetary,
and s t r u c t u r a l p o l i c y reforms t h a t w i l l prevent t h i s
k i n d o f c r i s i s from r e c u r r i n g . There i s p l e n t y o f blame
t o share by b o t h governments, t h e p r i v a t e s e c t o r s i n
both n a t i o n s , and t h e I n t e r n a t i o n a l Monetary Fund
(IMF). But t h e f a c t i s t h a t Mexico's f u n d a m e n t a l l y
sound economy needs t h i s b r e a t h i n g space t o g e t back on
i t s f e e t . Recent economic reforms were b e g i n n i n g t o pay
o f f f o r Mexico and t h e U n i t e d S t a t e s , s e r v i n g as a
model t o o t h e r d e v e l o p i n g n a t i o n s t o p r i v a t i z e and
d e r e g u l a t e . This c r i s i s must n o t go down i n t h e h i s t o r y
books w i t h t h e n o t a t i o n o f " i f o n l y , " as " i f o n l y t h e
government had more e f f e c t i v e l y supported t h e f a i l i n g
banking system i n 1931 and 1932, t h e Great Depression
might n o t have happened."
WHAT IS THE MEXICO CRISIS?
Mexico's l o n g - t e r m economic fundamentals a r e
sound, b u t i n t h e past few months Mexico has s u f f e r e d a
major l o s s o f l i q u i d i t y , o r access t o c a p i t a l , and a
l o s s o f c o n f i d e n c e . S h o r t - t e r m f o r e i g n investment
f l o w i n g i n t o Mexico was being used t o f i n a n c e a $28
b i l l i o n d e f i c i t i n t h e c u r r e n t account (the excess o f
i m p o r t s o f goods and s e r v i c e s over e x p o r t s ) c r e a t e d by
an i n c r e a s i n g a p p e t i t e f o r i m p o r t s . The d e f i c i t
convinced f i n a n c i a l markets t h a t t h e peso would
d e c l i n e . That, along w i t h r i s i n g U.S. i n t e r e s t r a t e s ,
t r i g g e r e d movement o u t o f t h e peso. Other f o r c e s
c o n t r i b u t e d t o t h e l o s s o f confidence by f o r e i g n
i n v e s t o r s : p o l i t i c a l u n r e s t i n Chiapas, m u l t i p l e
a s s a s s i n a t i o n s , a growing concern over t h e budget
d e f i c i t , and a h i s t o r y o f p o s t - e l e c t i o n d e v a l u a t i o n s .
Mexico was n o t able t o pay o f f o r r o l l over s h o r t term
bonds (Tesobonos) i s s u e d t o ease t h e problem.
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Most market observers -- t o hear them t a l k now -knew Mexico's peso was o v e r v a l u e d f o r a l o n g t i m e , b u t
the d e l a y and i n e p t h a n d l i n g o f i t s o f f i c i a l
d e v a l u a t i o n i n December o f 1994 produced a f u l l s c a l e
c r i s i s o f c o n f i d e n c e , as American fund managers p u l l e d
t h e i r money o u t o f Mexico and o t h e r emerging markets.
S i g n i f i c a n t l y , i t i s e s t i m a t e d t h a t 90 percent o f t h e
s h o r t term debt h e l d by f o r e i g n e r s i s h e l d by
Americans. This i n c l u d e s m i l l i o n s o f i n v e s t o r s i n
pension o r mutual funds t h a t have h o l d i n g s i n emerging
markets ( d e v e l o p i n g c o u n t r i e s ) .
WHAT IS THE U.S. PLAN TO CONFINE THE CRISIS?
The A d m i n i s t r a t i o n has proposed a package o f l o a n
guarantees t o h e l p r e s t o r e i n v e s t o r confidence i n t h e
devalued peso and i n t h e Mexican f i n a n c i a l markets.
These guarantees should enable Mexico t o r a i s e l o n g term funds i n p r i v a t e c a p i t a l markets t o pay o f f i t s
s h o r t - t e r m f i n a n c i a l o b l i g a t i o n s . This should h e l p
r e s t o r e f i n a n c i a l s t a b i l i t y and prevent t h e c r i s i s from
spreading t o o t h e r markets.
WHAT CONDITIONS MUST MEXICO MEET?
Clinton Administration o f f i c i a l s state that the
l o a n guarantees w i l l i n c l u d e s t r i c t f i n a n c i a l
c o n d i t i o n s imposed on t h e Mexican government t o c o n t a i n
i n f l a t i o n , reduce Mexico's e x t e r n a l d e f i c i t , r e s t o r e
s t a b i l i t y t o t h e peso, and c o n t r o l wage i n c r e a s e s . I n
a d d i t i o n , t h e U n i t e d States should i n s i s t on c o n t i n u i n g
Mexican government d e r e g u l a t i o n and p r i v a t i z a t i o n o f
i t s economy. I f these c o n d i t i o n s are n o t r i g o r o u s l y
drawn and e n f o r c e d , t h e r e w i l l be more t r o u b l e l a t e r .
Mexico a l s o w i l l be r e q u i r e d t o pay a r i s k fee i n
cash up f r o n t f o r t h e r i g h t t o use t h e guarantee. For
purposes o f c o n g r e s s i o n a l budget r u l e s , t h i s means t h a t
t e c h n i c a l l y t h e U.S. budget w i l l score a "net g a i n . " I n
a d d i t i o n , Mexico w i l l be r e q u i r e d t o p u t up a "basic
fee" t o cover any r i s k s t o t h e U.S. budget and a
"supplemental f e e " t o discourage t h e government from
u s i n g t h e l o a n guarantees a f t e r t h e c r i s i s has passed.
I n t h e event o f a d e f a u l t , t h e U n i t e d States w i l l
i n s i s t on genuine c o l l a t e r a l f o r t h e l o a n guarantee
package i n t h e form o f pledges o f r e c e i p t s from Mexican
foreign o i l sales.
IS THIS FOREIGN ASSISTANCE, A LOAN, OR A GUARANTEE?
The package i s n o t f o r e i g n a s s i s t a n c e o r a l o a n .
The U n i t e d S t a t e s w i l l guarantee new borrowing by
Mexico i n o r d e r t o r e s t o r e i n v e s t o r c o n f i d e n c e . These
guarantees c a r r y some r i s k s f o r t h e Treasury and t h e
U.S. t a x p a y e r , b u t as long as Mexico repays i t s debt,
as i t has i n t h e p a s t , t h i s guarantee w i l l have no
e f f e c t on t h e U.S. budget.
WHAT ARE THE STAKES FOR THE UNITED STATES?
R i s i n g e x p o r t sales have c o n t r i b u t e d s i g n i f i c a n t l y
t o U.S. economic growth i n r e c e n t years. From 1986 t o
1993, U.S. e x p o r t s o f goods and s e r v i c e s accounted f o r
n e a r l y 40 p e r c e n t o f GNP growth. Therefore, we bear
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s i g n i f i c a n t c o s t s when a major t r a d i n g p a r t n e r l i k e
Mexico l a c k s t h e l i q u i d i t y r e q u i r e d t o f i n a n c e i m p o r t s
from t h e U n i t e d S t a t e s .
Mexico i s our t h i r d l a r g e s t t r a d i n g p a r t n e r , w i t h
an e s t i m a t e d 770,000 U.S. jobs dependent on e x p o r t s t o
Mexico. Seventy p e r c e n t o f a l l i m p o r t s t o Mexico come
from t h e U n i t e d S t a t e s . A l o n g - t e r m f i n a n c i a l c r i s i s i n
Mexico would decrease our e x p o r t s s u b s t a n t i a l l y and
a r g u a b l y widen t h e U.S. t r a d e d e f i c i t by some b i l l i o n s
of d o l l a r s , as was t h e case f o l l o w i n g Mexico's l a s t
c r i s i s i n 1982. I t c o u l d a l s o s u b s t a n t i a l l y i n c r e a s e
i l l e g a l i m m i g r a t i o n t o t h e U n i t e d S t a t e s , and
p o t e n t i a l l y c r i p p l e U.S. e x p o r t s t o o t h e r emerging
market economies.
DOES THIS CRISIS MEAN NAFTA WAS A MISTAKE?
The North American Free Trade Agreement (NAFTA)
signed by Mexico, t h e U n i t e d S t a t e s , and Canada i n 1993
d i d n o t cause t h e c r i s i s , d e s p i t e t h e w i l d claims o f
the t r e a t y ' s opponents. The U.S. r e l a t i o n s h i p w i t h
Mexico i s such t h a t i t would r e q u i r e t h i s k i n d o f
s p e c i a l t r e a t m e n t w i t h o r w i t h o u t NAFTA. NAFTA i s a
t r a d e agreement, n o t a monetary arrangement, and Mexico
would p r o b a b l y have e x p e r i e n c e d t h i s c r i s i s had NAFTA
not e x i s t e d . Thanks t o NAFTA, Mexico cannot r a i s e
t a r i f f s a g a i n s t i n c r e a s i n g U.S. i m p o r t s i n a s h o r t - t e r m
response t o t h e c r i s i s . I n any event, support f o r a
c r e d i t package should n o t be a referendum on NAFTA.
WHAT ARE THE DEAL BREAKERS?
Everybody i s b r i n g i n g h i s / h e r own agenda t o t h i s
debate. I n s t e a d o f f o c u s i n g s q u a r e l y on t h e o n l y agenda
t h a t counts -- s t a b l e f i n a n c i a l and c u r r e n c y markets -p o l i t i c a l i n f i g h t i n g on t h e H i l l has become
i n c r e a s i n g l y rancorous and s e l f - s e r v i n g .
Some c o n s e r v a t i v e s a r e demanding t h a t t h e Mexican
government r e s t o r e t h e exchange r a t e o f t h e peso t o i t s
p r e - d e v a l u a t i o n r a t e o f 3.5 pesos t o t h e d o l l a r i n
order t o spur U.S. e x p o r t s . This attempt t o m a n i p u l a t e
c u r r e n c y markets and peg t h e peso i n t h e face o f
c o n t r a r y market r e a l i t y would f a i l and h u r t t h e Mexican
and U.S. economies i n t h e b a r g a i n . Some e r s t w h i l e NAFTA
opponents a r e hoping t o reopen t h e c o n t e n t i o u s NAFTA
n e g o t i a t i o n s and t o impose new c o n d i t i o n s on worker
r i g h t s i n Mexico. C r i t i c s o f Cuban P r e s i d e n t F i d e l
Castro a r e demanding t h a t Mexico c u t o f f f i n a n c i a l a i d
t o Cuba. F i n a l l y , t h e r e a r e those who j u s t want t o say
no t o a n y t h i n g P r e s i d e n t C l i n t o n proposes, d e s p i t e t h e
consequences t o t h e n a t i o n and t h e w o r l d .
WHAT SHOULD BE DONE TO AVERT SUCH A CRISIS FROM
RECURRING?
The Mexican c r i s i s underscores t h e importance o f
monetary and f i s c a l d i s c i p l i n e and b e t t e r c o o r d i n a t i o n
between macroeconomic and monetary p o l i c i e s among major
t r a d i n g p a r t n e r s . To prevent f u t u r e c r i s e s , t h e IMF
should make a r e a l i t y o f i t s r e s p o n s i b i l i t y t o c a r r y
out " m u l t i l a t e r a l s u r v e i l l a n c e " i n "small c o u n t r i e s "
l i k e Mexico as w e l l as l a r g e r ones. A major t a s k o f t h e
IMF i s t o h e l p f o r g e c l o s e r macroeconomic c o o r d i n a t i o n
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among t r a d i n g n a t i o n s i n t h e w o r l d economic system t o
d e t e r c o u n t r i e s from choosing unsound macroeconomic and
monetary p o l i c i e s t h a t can r e s u l t i n severe c u r r e n c y
imbalances. The IMF i s supposed t o m o n i t o r c o u n t r i e s t o
a v e r t c r i s e s from d e v e l o p i n g and p r o v i d e t h e necessaryl i q u i d i t y t o s t a b i l i z e f i n a n c i a l markets. I n t h e case
of Mexico, t h e IMF as w e l l as Wall S t r e e t and t h e
f i n a n c i a l p r o f e s s i o n a l s i n t h e U.S. government were n o t
v i g i l a n t enough i n t r a c k i n g t h e economic fundamentals.
I t i s c o n c e i v a b l e t h a t t h e IMF, which was c r e a t e d a
h a l f c e n t u r y ago, i s a l s o due f o r f u r t h e r r e f o r m and
update. The $40 b i l l i o n guarantee package f o r Mexico i s
equal t o t h e t o t a l funds a v a i l a b l e f o r l e n d i n g by t h e
IMF. The IMF should examine t h e sources and amounts o f
i t s monetary r e s e r v e s and c a l l on a d d i t i o n a l c o u n t r i e s
t h a t have accumulated l a r g e monetary reserves (whether
they are c o n s i d e r e d "developed n a t i o n s " or not) t o
c o n t r i b u t e newer, l a r g e r a l l o c a t i o n s .
CONCLUSION
The peso p a n i c i s a l o c a l c r i s i s and keeping i t
l o c a l demands s e r i o u s economic s o l u t i o n s supported by a
b i p a r t i s a n Congress. The l a t e s t p u b l i c o p i n i o n p o l l s
make t h i s a d i f f i c u l t v o t e , b u t i t should n o t be a
d i f f i c u l t c h o i c e . The U n i t e d States should p r o v i d e
support f o r t h e f a l t e r i n g Mexican economy, b u t i t
cannot be viewed as a b l a n k check and i t should n o t be
seen as a p r e t e x t f o r opening up o t h e r i s s u e s . I t i s
c r u c i a l t h a t any t i g h t c o n d i t i o n s be d i s c r e e t l y
a p p l i e d . I f t h e y a r e viewed as h u m i l i a t i n g l y p u n i t i v e ,
i t w i l l o n l y f u r t h e r erode P r e s i d e n t Z e d i l l o ' s weakened
p o l i t i c a l s t a n d i n g and t h r e a t e n t h e necessary l o n g - t e r m
economic and p o l i t i c a l r e f o r m s .
Paula S t e r n i s Senior Fellow o f t h e P r o g r e s s i v e P o l i c y
I n s t i t u t e and Elke Mayer, PPI P o l i c y A n a l y s t ,
contributed t o this report.
P r o g r e s s i v e P o l i c y I n s t i t u t e , 518 C S t r e e t NE,
Washington, DC 20002 * p p i i n f o @ d l c p p i . o r g *
(202) 547-0001.
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�Robert Solomon Letter to the Editor
http://www.brook.edu/es/sol 15%7e 1 .htm
Return to the Brookings Home Page
Give the IMF Some Credit
The Washington Post - January 5,1998
By Robert Solomon, Guest Scholar, Economic Studies
James Classman's diatribe against the International Monetary Fund ["Who Needs the IMF?" op-ed, Dec.
9] is full of misconceptions about the fund's original purposes and present functions.
The IMF was not set up primarily "to help guard the world's currencies under the Bretton Woods
monetary agreement" and did not change its aims after par values for currencies were abandoned. Its
original purpose, which still holds, was to help countries in need to finance balance-of-payments deficits
so that they would not take actions that would harm their trading partners.
Mr. Glassman would substitute bankruptcy for that function. Of course, countries do not go bankrupt.
He also claims that IMF credits to Asian countries are "blowing a chance to inject freedom, imagination
and competition into [those] economies." That is precisely what the IMF is trying to accomplish in
Korea.
Mr. Glassman trots out the well-worn "moral hazard" argument: the potential availability of IMF loans
encourages countries to act "imprudently." What he ignores is that IMF credits come with policy
conditions that borrowing countries find painful to accept and implement.
Korea's economy is badly in need of reform, given the degree of government intervention in it. Mr.
Glassman believes that the free market could accomplish those reforms better than an IMF program.
How would the free market have dealt with the problem that Korea was running out of reserves and that
without IMF financing it might have resorted to trade restrictions that are hardly consistent with free
markets?
ROBERT SOLOMON
Guest Scholar
The Brookings Institution
Washington
Note: The views expressed in this piece are those of the author and should not be attributed to the staff,
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News Brief No. 98/2
January 15, 1998
International Monetary Fund
700 19th Street, NW
Washington, D.C. 20431 USA
Statement by the Managing Director on the IMF Program with Indonesia
The Managing Director of the International Monetary Fund (IMF), Michel Camdessus, said today in
Jakarta that "As you know, an IMF staff team, together with Mr. Fischer (IMF First Deputy Managing
Director) and myself, have over the last few days been discussing with the Indonesian authorities an
acceleration and deepening of much needed reforms agreed under the IMF-supported program.
"This is why I am pleased today to announce that the government of Indonesia and the IMF have
reached agreement on a much strengthened and reinforced economic program. Many of the measures in
this program are new, others have been there from the beginning but are now being accelerated, but all
have one common purpose: they aim to restore confidence in the currency and in the economy, by
demonstrating that the government recognizes the problems confronting the country and is prepared to
take the necessary measures to overcome them, even if they are difficult and painful.
"Let me summarize briefly the program that we have just agreed.
First, the broad macroeconomic framework. The program is designed to avoid a decline in output,
while containing inflation to 20 percent this year, with the aim of bringing it back to the single-digit
level next year, despite the sharp depreciation of the rupiah. At the same time, the external current
account balance is expected to move from a deficit into a sizeable surplus, thereby generating additional
foreign exchange to help the country to repay its external debt.
Second, the budget. The 1998/99 budget will be revised, to accord with the newly agreed
macroeconomic framework, while still adhering to Indonesia's long-standing balanced-budget principle.
Based on the IMF presentation, this would imply that the budget would record a small deficit, of about 1
percent of GDP, a level that strikes an appropriate balance between the need to avoid an undue fiscal
deterioration, and the need to avoid an undue fiscal contraction that would further depress economic
activity. Nevertheless, to achieve this objective, serious measures will still be required. In particular,
action will need to be taken to curb energy subsidies, which have grown to unsustainable proportions as
the rupiah's depreciation has pushed domestic prices far below world levels. Accordingly, the
government will phase out subsidies gradually by raising both fuel and electricity prices in steps, except
for those on kerosene and certain diesel fuels, where increases will be kept to a minimum, so as to
protect the poor.
Third, fiscal transparency. In order to ensure that the public is kept fully informed of all government
activities, the accounts of the Reforestation and Investment Funds will be brought onto the budget in
1998/99.
Fourth, public sector projects. Under current economic conditions, public spending must be limited
only to those items that are of vital importance to the country. For this reason, the program envisages
that development spending will be curtailed, including by canceling immediately the 12 infrastructure
projects that were recently postponed or placed under review. Moreover, budgetary and extrabudgetary
support and credit privileges granted to IPTN's airplane projects will be discontinued, effective
immediately. In addition, all special tax, customs, and credit privileges for the National Car project will
be revoked, effective immediately.
Fifth, monetary policy. Monetary Policy will need to be kept firm for a sustained period, until
confidence in the currency is restored. To signal the government's commitment to this stance, Bank
Indonesia will be given full autonomy to conduct monetary policy, and start immediately to unilaterally
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decide interest rates on its SBI certificates. As the program measures take hold and confidence returns,
market interest rates should gradually begin to fall, while capital that has moved overseas should return
to the country, providing the banks with sufficient liquidity to resume their lending activity.
Sixth, bank and corporate sector restructuring. It has become vitally important to restore the banking
system to fmancial health and to alleviate the difficulties of the corporate sector. Specific plans to assist
the banking system are now being formulated, which will be announced over the coming days.
Seventh, structural reforms. The program envisages that virtually all of the restrictions that have been
put in place will soon be swept away. For instance:
From February 1, BULOG's monopoly will be limited solely to rice. This means its existing monopoly
over the import and distribution of sugar as well as its monopoly over the distribution of wheat flour will
be eliminated.
To complement this action, domestic trade in all agricultural products will be fully deregulated, so
traders will have the freedom to sell their goods wherever they want and to whom they want. The Clove
Marketing Board will be eliminated, by June 1998.
As of February 1, all restrictive marketing arrangements will be abolished, leaving firms free to
produce and export their products as they wish, and as the market decides. Specifically, the cement,
paper, and plywood cartels will be dissolved.
Another pressing need in the current circumstances is to encourage foreign investment. Accordingly,
for instance, by February 1, all formal and informal barriers to investment in palm oil plantation will be
removed, while all restrictions on investment in wholesale and retail trade will be lifted.
Measures are also being taken to alleviate the suffering caused by the current, severe drought. The
program envisages that community-based work programs will soon be introduced to sustain the
purchasing power of the poor. In addition, to ensure that adequate food supplies are available at more
reasonable prices, effective February 1, tariffs on all food items will be cut to a maximum rate of just 5
percent, while tariff rates on non-food agricultural products will be reduced by five percentage points.
Last, but not least, particular attention is being paid to the proper financing of small and mid-size
enterprises and exporters. To make funds available for this purpose through the banking system, the
Asian Development Bank is putting in place a program whose details will be announced shortly.
"As you can see, this program has a very strong structural component, in the financial sector as well as
in the corporate sector. The intensive involvement of our friends from the World Bank and the Asian
Development Bank is therefore crucial for successful implementation. I am pleased that the staffs of our
international organizations are cooperating effectively, and I am also happy to tell you that Mr.
Wolfensohn, the President of the World Bank, will visit Indonesia shortly.
***
"As President Suharto wishes to take personal responsibility for the quick and full implementation of the
program, he has decided that the people of Indonesia must be fully informed of its content through the
immediate publication of the Letter of Intent, which he has decided to sign personally. Moreover, he has
decided that in order to ensure that the economic objectives are realized, he will appoint a high council
of economic ministers—reporting directly to him-to oversee the implementation of the program.
"In expressing my confidence in the success of this program, my thoughts go to those who may
experience hardships-hopefully for only a short period of time-because of the very strength and
rapidity of the adjustment process. The program provides for strengthened measures targeted to
alleviating the plight of the most vulnerable people in the country. I would like the Government of
Indonesia to know that the Management of the IMF is open to consider very favorably any adjustments
of budgetary allocations in this domain, provided these are financed by a corresponding reduction of
other budgetary expenditures of lesser priority, military or otherwise.
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"This revitalized program is bold and far-reaching, addressing all of the critical problem areas of the
economy and deserving the full support of the international community. I am confident that, if this
program is implemented with the determination and commitment that I myself have seen over the past
two days, Indonesia should soon be able to begin to overcome its economic crisis," Camdessus said.
IMF EXTERNAL RELATIONS DEPARTMENT
Telephone: 202-623-7300 — Fax: 202-623-6278
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U.S. Treasury Press Release, January 21,
1998
Against the IMF Bailout
Comments
U.S. Senate Republican Policy
Committee
"Major/specific corrections to these practices
must be conditions of U.S. approval of and
participation in any bailout program."
"IMF Bailout for Korea Must Include
Structural Reform of Trade Practices,"
December 2, 1997
Rep. Ron Paul (R-TX)
"The IMF has a poor track record of
preventing ifinancial crises. ' All of the major
currency and banking crises of the last five
years have occurred under conditions of
heightened surveillance by the IMF.'...The
IMF 'may actually promote crises, because
governments often resist sound economic
and financial policies . . . because they know
that the IMF wilt be there to bail them out in
the event of a crisis.'"
House Floor-Statement, November 13, 1997
William Simon
Former U:S. Secretary of the
Treasury
•'Congress should not only reject this [S3.5
billion IMF funding] proposal, but also take
the long overdue step of ending all future
funding for the IMF. As a practical matter, the
institution cannot continue to exist without the
participation of the most powerful nation in
the world. By withdrawing; its funding, then,
the U:S. can take a leadership role in putting
this outdated organization out of business."
"Abolish the IMF," October 23, 1997
Pat Buchanan
Conservative Columnist
"The looting of our country must stop. And it
can be stopped, if the agencies that thieve
and redistribute U.S. wealth -- the IMF and
World Bank - are denied all power to put at
risk the credit of the American people."
"No More Bailouts - Abolish thelMF!"
December 1, 1997
:
"The Asian Economic Crisis"
January 28, 1998
In this testimony, Representative Lee Hamilton (D-IN) provides a primer on the
Asian economic crisis, by explaining what brought about the crisis, what its effects
have been and what steps have been taken to rectify it. On a positive note,
Representative Hamilton commented that "the crisis is driving Asian leaders to
adopt market-oriented reforms of the kind favored by the U.S.: economic systems
that are more open, liberalized, deregulated, and transparent. Because of the
crisis, countries across the globe are seeing the advantages of open, accountable
governments and financial systems."
"IMF Bailout In Asia Is Money Wasted, Analyst Says" Decembers, 1997
The costly International Monetary Fund bailout of Indonesia, Thailand, the
Philippines and South Korea will cause these countries to delay reform of the
misguided, and some would charge corrupt, economic policies that are to blame
for Asia's economic crisis, two Heritage Foundation policy analysts say in this
news release. "Few policy-makers in the United States have paid much attention
to the root causes of this crisis, which include excessive government intervention
in the economy, the lack of free and competitive financial institutions, close
economic relationships between government and business, and corruption
involving both governments and family owned conglomerates," according to Bryan
Johnson and John Sweeney.
Currency in Chaos: The Human Toll
December 21, 1997
Dr. Judy Shelton writes in this Empower America report that what is needed to
reenergize many of the Asian currency markets is "crafty and strong" local
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In this transcript from the "Jim Lehrer News Hour," analysis of the Asian economic
crisis is provided by Michael Armacost, president of The Brookings Institution;
former Vice President Walter Mondale; former Assistant Secretary of State for
East Asian and Pacific Affairs, Winston Lord; and Paul Krugman, an economist at
Massachusetts Institute of Technology. Some of the participants say that a lot of
the pressure to help Asian economies is coming from the marketplace. They add
that if there is external pressure, it's wiser to fund the economies through an
international organization. The United States must take into account, however,
that Japan poses a large problem for any international lending organization that
goes into Asia. As the world's second biggest economy, Japan must place itself
on its own feet it there is to be any long-term economic progression in Asia, the
experts claimed.
How Bill Clinton Proposes To Spend The 'Surplus': Bailing Out Foreign
Governments -- And Their Western Underwriters
January 7, 7998
This report from The Center for Security Policy says that the Clinton
administration clearly has made the wrong decision to support "socialistic"
programs such as the recent International Monetary Fund (IMF) bailout aimed at
restoring East Asian economies. "President Clinton and the U.S. Treasury
Department knew, or certainly should have known, that the initial $57 billion IMF
package for Seoul would not restore market confidence in South Korea,
particularly given the structural character of the problem," the report says.
Furthermore, actions taken by the IMF and supported by the United States seem
to be spreading to other nations, including Indonesia and China, according to the
report.
"Asian Deflation Threat Grows Ugly"
December, 1997
As the U.S. economic picture brightens, the picture in much of Asia grows bleaker
says John H. Makin of the American Enterprise Institute. While the U.S. economy
is seeing a resumption of modest reflationary pressure, deflationary pressure is
intensifying in Asia, Makin says. "Beginning with the initial Thai devaluation of 15
percent on July 2, currencies of the Asian tigers have fallen like dominoes as the
effort intensifies to export the deflationary pressure emerging in Asia, following
Japan's recent example," he continues. The investment boom in the Asian tigers,
China, and, more recently, Vietnam, has increased the capacity to produce goods
more rapidly than the demand for those goods has increased, Makin says.
Introduction
IMF Background
The IMF Funding Debate
The Asian Currency Crisis and the IMF
The 1994 Mexican Peso Crisis and the IMF: A Retrospective
he
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March 27,1998
IMF funding passed by the Senate
IMF funding was passed by the Senate in a package including money for disaster relief and
military spending. The full $18 billion requested by the White House was included in this bill.
The IMF funds were running low after recently having bailed out three Asian countries. Many of
the Senators have stated that a decline in the economies of these countries could have a serious
impact on the economy of the United States. Some Senators expressed a concern that taxpayer
money is being used for bailing out reckless spending and loans. There is also a concern the IMF is
paying no attention to international labor rights.
IMF funding will face a tougher battle in the House of Representatives.
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The current round of massive bailouts in East Asia ~ South Korea, Indonesia, and Thailand ~
has focused unusual attention on the International Monetary Fund (IMF). Apparently believing
that legislators will now see the IMF as indispensable, the Clinton Administration has chosen
this moment to request $18 billion for it, but they have probably been surprised by the resistance
from legislators across the political spectrum. This is a critical opportunity to block or heavily
condition funding for the agency most responsible for designing and managing the globalized
economy ~ an opportunity that many groups seeking to combat the IMF's impact on the poor, the
environment, and labor have long been waiting for.
The IMF is the lender of last resort for countries with debt and otherfinancialproblems, and it
uses its power to impose strict conditions on countries in exchange for its loans. These economic
policy packages, usually called "structural adjustment programs" (SAPs) have been imposed on
over 90 countries around the world, including most of Latin Americaj South Asia, and Africa.
Other agencies like the World Bank also require SAPs, but it is the IMF which sets the pace. The
conditions on the bailout loans being made to the East Asia governments closely resemble those
of standard SAPs.
One of the main components of structural adjustment programs is the requirement that labor
policies be made more "flexible." This obnoxious euphemism masks the fact that IMF
bureaucrats practically dictate to governments around the world the policies that erode legitimate
protections for workers and union organizers and encourage neglect of minimum wage laws.
Countries that sign with the IMF usually experience massive layoffs in short order. South Korea
is now bracing for a million layoffs, just as about two million Mexicans lost their jobs in the
wake of the IMF-led bailout of 1995.
In tandem with its philosophy on labor laws, the IMF also makes the rules that foster the growth
of free-trade zones (and maquila sectors) around the world. They do this by pressuring
governments to lower barriers to outside investment and to eliminate rules limiting the ability of
corporations to move their profits out of the country.
Now that IMF economics have been demonstrated so vividly in East Asia (which got into trouble
partly because of such policies), we can strike a real blow against this pro-corporate, anti-worker
regime promoted around the world by the IMF.
The $18 billion appropriation President Clinton seeks will probably come up soon after Congress
starts its new session at the end of January. It is likely to be introduced as part of a "budget
supplemental" attached to an unrelated, high-profile bill such as the one to extend U.S. troops'
presence in Bosnia. In this way, the Administration would hope to prevent an open debate on this
obscure but very powerful institution.
It is vital that we prevent Clinton from "fast-tracking" IMF funding in this way. The stakes are
high: if we succeed, we will have created significant momentum for heavily conditioning, or
even eliminating, U.S. support for the institution most responsible for imposing poverty policies
around the world. If we fail, we may have lost any opportunity to have a real impact on IMF
policies for at least the next three years. The first step is to contact legislators and urge them to
reject President Clinton's attempt to"fast-track" IMF funding through an attachment to an
unrelated bill. Let the IMF, which imposes harsh policies on countries from South Korea to
Zimbabwe to Nicaragua in a profoundly undemocratic manner, be exposed to the full light of the
democratic process in the U.S., its biggest contributor and most powerful member. Legislators
should commit themselves to insuring that IMF funding goes through the normal appropriations
process, with full and open public hearings every step of the way. The effort to block or heavily
PHOTOCOPY
PRESERVATION
�condition IMF funding will not stop with this "fast-track" maneuver. The 50 Years is Enough.
Network is preparing a longer analysis that should be available next week (week of January 19).
We also have a sample op-ed piece and other materials in the works. It is vital that we wage this
first battle NOW, but the overall campaign is just getting underway.
ACTION REQUEST
******************
Before the next Congressional session begins on January 27, call your Representative's local
office and try to meet or talk with her/him or key aides. After January 27, call the House
switchboard, 202/225-3121 or 800/522-6721 to reach your Representative. Urge your
Representative to oppose funding for the IMF that occurs without sufficient time for the issues to
be fully debated. Funding forthe IMF should not be considered as part of any other legislation.
�The IMF Korea Bailout
http://www.kimsoft.com/ 1997/sk-imf'c.htm
The IMF Korea Bailout
Michel Chossudovsky
Professor of Economics, University of Ottawa, author of "The Globalization of Poverty, Impacts of IMF
and World Bank Reforms, Third World Network, Penang and Zed Books, London, 1997. The author can
be contacted at the email address given above.
Copyright by Michel Chossudovsky Ottawa 1997. All rights reserved.
In late November 1997 following the dramatic plunge of the Korean won on the foreign exchange
market, an IMF team of economists led by Mr. Hubert Neiss was rushed to Seoul. Its mandate: negotiate
the terms of a "Mexican-style bail-out" with a view to "restoring economic health and stability".
An important precedent had been set: the IMF's standard "economic medicine" (routinely imposed on
the Third World and Eastern Europe) had been launched for the first time in an advanced industrial
economy... The details of the economic reform program, however, had already been decided in advance
in consultation with the US Treasury, Wall Street's commercial and merchant banks as well as with
major banking interests in Japan and the European Union.
A Letter of Intent ("Memorandum on the Economic Program") was put together in a hurry on behalf of
the government with virtually no analysis of the broader causes of the financial meltdown. (The "policy
solutions" had already been decided upon: no analysis was deemed necessary).
A covering letter was drafted with the help of IMF officials dated December 3 and signed by the
Governor of the Bank of Korea, Mr. Kyung-shik Lee and the Minister of Finance Mr. Chan yuel Lim.
The Memorandum included the usual Policy Framework Paper (PFP) imposed by the Bretton Woods
institutions on indebted Third World nations. (See International Monetary Fund, Korea, Request for
Stand-by Arrangement, Washington, December 3, 1997, The text of the IMF Agreement together with
the "Memorandum on the Economic Program" was published by Chosun Ilbo.)
Managing Director Mr. Michel Camdessus was in Seoul during the final days of negotiation; the IMF's
mission was briskly wrapped up on December 3d after a one week stint; a "proposed decision" on the
stand-by arrangement had already been drafted by IMF staff for adoption by the IMF Executive Board
on the following day (December 4th). In close consultation with IMF negotiators, the World Bank and
the Asian Development Bank had also sent in their own teams. A World Bank package with stringent
conditionalities on "financial governance" was announced on December 18th.
A Safety Net for the Creditors
On Christmas Eve December 24th, officials from six leading US commercial banks including Chase,
Bank America, Citicorp and J. P. Morgan were called in for talks at the Federal Reserve Bank of New
York. The "big five" New York merchant banks (Goldman Sachs, Lehman Brothers, Morgan Stanley
and Salomon Smith Harney) were also involved in these discussions on South Korea's short-term debt.
(Financial Times, 27-28 December 1997, p. 3).
Almost simultaneously, some 80 European creditor banks under the chairmanship of the Deutsche Bank
were meeting behind closed doors in Frankfurt while Japan's big ten banks (which account for a large
portion of Korea's short term debt) were involved in high level discussions in Tokyo with Mr. Kyong
shik Lee, Governor of the Bank of Korea.
No Capital Inflows under the Bailout
The bail-out (to be financed by G7 governments, the IMF, the World Bank and the Asian Development
Bank) will evidently not result in capital inflows into Korea: it largely serves the interests of the
international banking community, enabling US, European and Japanese banks to cash in on Korea's
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short term debt. In turn, Korea will be locked into the servicing of this debt under the Agreement until
the year 2006.
The Macro-Economic Agenda
The IMF program derogates Korea's economic sovereignty, it plunges the country virtually overnight
into a deep recession. The social impact is devastating. The standard of living has collapsed; the IMF
program depresses wages and creates massive unemployment. (Wages expressed in US dollars have
already been cut in half as a result of the devaluation). The Agreement also requires the government to
introduce "labor market flexibility" including procedures for compressing wages and shedding "surplus
workers".
The IMF Agreement consists in tearing down Korea's banking system while creating conditions, which
enable the speedy acquisition of the most profitable industrial assets by foreign capital. The Agreement
lifts the ceiling on individual foreign ownership to 50 percent by the end of 1997 and 55 percent by
February 1998. The IMF Agreement requires further trade liberalization as well as the opening up of the
domestic bond market to foreign capital. It also marks the demise of central banking in Asia's most
vibrant economy.
Under legislation demanded by the IMF, the Agreement allows for 100 percent ownership by foreign
merchant banks: "foreign financial institutions will be allowed to purchase equity in domestic banks
without restriction" (Memorandum, para. 32, p. 44).
Derogating Korea's Sovereignty
A de facto "parallel government" has been installed. The Bank of Korea (BOK) is to be reorganized, the
powers of the Ministry of Finance are to be redefined. Under the bailout, external creditors will dictate
fiscal and monetary policy. Monetary policy under the IMF's stewardship will be tightened. Government
spending on social programs and infrastructure will be curtailed. Enforcing Enabling Legislation through
Financial Blackmail.
During a special session of the legislature on December 23d "lawmakers endorsed the four government
motions concerning the IMF rescue plans". (Choe Seung chul, Assembly Opens to Legislate Key
Financial reforms", Korea Herald, 23 December 1997). Legislation following IMF guidelines was
approved which dismantles the extensive powers of the Ministry of Finance while also stripping the
Ministry of its financial regulatory and supervisory functions.
South Korea's Parliament has been transformed into a "rubber stamp". Enabling legislation is enforced
through "financial blackmail": if the legislation is not speedily enacted according to the IMF's deadlines,
the disbursements under the bail-out will be suspended with the danger of renewed currency speculation.
The IMF had also demanded the speedy passage of legislation which will provide for "central bank
independence". The latter provision will thwart the financing of economic development "from within"
through monetary policy -a process of State supported credit which has largely been instrumental in
Korea's dynamic industrial development over the last 30 years.
The central bank has been crushed. Institutional speculators have pillaged its foreign exchange reserves.
In late November, the Bank of Korea's reserves had plunged to an all time low of 7.26 billion dollars.
Under the IMF Agreement, which freezes the supply of domestic credit, Korean corporations will
increasingly rely on foreign lending institutions (para. 28) (The latter are also routinely involved in
speculating against the Korean won).
The Newly Elected President Supports the I M F
President elect Kim Dae-jung had warned in a press conference during the electoral campaign on
December 5th (following the IMF Executive Board decision of December 4th) that "...now foreign
investors can freely buy our entirefinancialsector, including 26 banks, 27 securities firms, 12 insurance
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companies and 21 merchant banks, all of which are listed on the Korean Stock Exchange, for just 5.5
trillion won,' that is, $3.7 billion". (Michael Hudson, "Draft for Our World", Dec. 23, 1997). But upon
winning the election on Dec. 18th, Kim announced his unbending support for the IMF: " I will boldly
open the market. I will make it so that foreign investors will invest with confidence".
The I M F ' s Bankruptcy Program
The devaluation of the won has generated a deadly chain of bankruptcies affecting both financial and
industrial enterprises. The devaluation has also contributed to triggering sharp rises in the prices of
consumer necessities.
Ironically, rather than restoring "economic stability", the IMF program has served to heighten the impact
of the devaluation leading to a further string of bankruptcies. A so-called "exit policy" (ie. bankruptcy
program) has been set in motion: the operations of some nine "troubled" merchant banks were suspended
on December 2 prior to the completion of the IMF mission. In consultation with the IMF, the
government is to "prepare a comprehensive action program to strengthen financial supervision and
regulation..." (Agreement, para. 25).
Dismantling the Chaebols
The IMF Agreement has created conditions which facilitate so-called "friendly" mergers and
acquisitions by foreign capital. The automotive group Kia, among Korea's largest conglomerates
declared insolvency. A similar fate has affected the Halla Group involved in shipbuilding, engineering
and auto-parts.
The IMF program contributes to fracturing the chaebols which are now invited to establish "strategic
alliances with foreign firms" (meaning their eventual control by foreign capital). In turn, selected Korean
banks will "be made more attractive" to potential foreign buyers by transferring their non performing
loans to a public bail out fund: the Korea Asset Management Corporation (KAMC).
The freeze on central bank credit imposed by the IMF prevents the Central Bank from coming to the
rescue of "troubled" enterprises or banks. The agreement stipulates that "such merchant banks that are
unable to submit to appropriate restructuring plans within 30 days will have their licenses revoked
(Agreement, para. 20, p. 8).
Crippling Domestic Enterprises
The freeze on credit demanded by the IMF has contributed to crippling the construction industry and the
services economy: "banks are increasingly reluctant to provide loans to businesses while bracing for the
central bank's tighter money supply" ( Sah Dong seok, "Credit Woes Cripple Business Sectors", Korea
Times, 28 December 1997). According to one observer, more than 90 percent of construction companies
(with combined debts of $20 billion dollars to domestic financial institutions) are in danger of
bankruptcy" (Song Jung tae, "Insolvency of Construction Firms rises in 1998", Korea Herald, 24
December 1997).
The contraction of domestic purchasing power (i.e. lower wages and higher unemployment) has also
sent "chills through the nations perennially cash-thirsty small businesses". The government concurs that
"quite a number of smaller enterprises [which rely on the internal market] will go under in the coming
months". (Korean Herald, 5 December 1997). Some 15,000 bankruptcies are expected in 1998. Western
Business Goes on a Shopping Spree.
Korea's high tech and manufacturing economy is up for grabs. Western corporations have gone on a
shopping spree with a view to buying up industrial assets at rock-bottom prices. The devaluation has
already depressed the dollar value of Korean assets, the IMF sponsored reforms should contribute to a
further slide.
Already, the Hanwha Group is selling its oil refineries to Royal Dutch/Shell after having sold half its
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chemical joint venture to BASF of Germany."( Michael Hudson, op cit). "Samsung Electronics, the
world's largest producer of computer memory chips, has seen its market value fall to $2.4 billion, down
from $6.75 billion at the beginning of October before the crash was engineered... It's now cheaper to buy
one of these companies than buy a factory-and you get all the distribution, brand-name recognition and
trained labor force free in the bargain"... (Michael Hudson, op cit).
Destroying National Currencies
Since the onslaught of the debt crisis in the early 1980s, the IMF has played a central role in exchange
rate policy often requiring indebted Third World countries to devalue their currency by 50 percent as a
"pre-condition" for the subsequent negotiation of a loan agreement. IMF sponsored currency devaluation
has invariably resulted in abrupt price hikes and a dramatic compression of real earnings.
What is distinct in the cases of Korea, Indonesia and Thailand is that the devaluation (which preceded
the bailout agreement and the imposition of sweeping macro-economic reforms) had not been explicitly
demanded by the Washington based bureaucracy. Rather it was the result of speculative pressures on
currency markets exerted by the large merchant banks and financial institutions (through the use of a
variety of speculative instruments).
In the context of the Asian financial crisis, "institutional speculators" (rather than the IMF) have come to
play an indirect role in the process of macro-economic reform. In other words, international banking and
financial institutions have (in a de facto sense) dictated country-level foreign exchange policy, —i.e.
through the deliberate manipulation of currency markets. In this context, "institutional speculators" are
involved in "setting the stage" for the subsequent IMF bailout operation. They are also involved in
routine consultations with the Bretton Woods institutions pertaining to the various components of the
macro-economic reform package included in the bail-out agreements (e.g. the deregulation of Korea's
financial sector and the opening up of Seoul's bond market to foreign capital).
In turn, the same Western and Japanese financial and banking institutions (routinely involved in
currency and stock market speculation) are the creditors of Asia's central banks. They also hold large
amounts of short-term debt and have, therefore, a vested interest in averting loan default by Asian
financial institutions. Not surprisingly, these same Western and Japanese financial institutions have
pressured G7 governments to implement the bail-out operations of which they are the ultimate
beneficiaries, -i.e. the 57 billion dollars under the IMF sponsored agreement with the Seoul government
will be used to reimburse Korea's creditors.
How will these multi-billion dollars operations befinanced?The contribution of the Bretton Woods
institutions and the Asian Development Bank (ADB) constitutes but a fraction of the total. The largest
contributions to the bailouts are from G7 governments, requiring the issuing of vast amounts of public
debt.
In other words, G7 governments have come to the rescue of the merchant and commercial banks by
accepting to finance the bail-out, yet to undertake this objective, G7 national treasuries are obliged to
issue large amounts of public debt which is invariably underwritten by the large merchant banks. In
other words, the "beneficiaries" of the bailout are also the underwriters of the public debt operation
required to finance the bailout. An absurd situation: G7 governments are "financing their own
indebtedness"...
While the bail-outs are conducive to the building up of public debts (in both the Asian and G7 countries)
-thereby reinforcing the stranglehold of the creditors over the conduct of economic policy-tens of
billions of dollars of public money are transferred into the hands of private fmancial institutions leading
to an unprecedented accumulation of private wealth. In turn, the macro-economic reforms imposed in
the context of the IMF sponsored bailouts are conducive to a dramatic collapse of the real economy
leading to the impoverishment of millions of people.
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FOREIGN AFFAIRS - March/April 1998 Issue
REFOCUSING THE IMF
By Martin
Feldstein
OVERDOING IT IN EAST ASIA
In the Asian currency crisis, the International Monetary Fund is risking its effectiveness by
the way it now defines its role as well as by its handling of the problems of the affected
countries. The IMF's recent emphasis on imposing major structural and institutional reforms
as opposed to focusing on balance-of-payments adjustments will have adverse consequences
in both the short term and the more distant future. The IMF should stick to its traditional
task of helping countries cope with temporary shortages of foreign exchange and with more
sustained trade deficits.
Today's emphasis on structural and institutional reforms has not always been part of IMF
programs. The IMF was founded in 1945 to help operate a system of fixed exchange rates,
in which all currencies were pegged to the dollar, in turn fixed with respect to gold, that
experts then considered necessary to encourage international trade. Although that system
succeeded temporarily, differences in inflation between countries forced many to alter their
currency values. When the fixed-rate system collapsed completely in 1971, the IMF was
forced to find a new raison d'etre.
The fund found a new and important role, which is still appropriate for the current crisis, in
the 1980s. Changes in economic conditions led Mexico and other Latin American countries
to announce they could not meet the interest and principal payments on their large
borrowings from overseas commercial banks. A default on those obligations would haye
wiped out the capital of many leading banks in the United States, Europe, and Japan, so the
U.S. government provided a temporary bridge loan that allowed Mexico to meet its
imminent payments. Negotiations then began between the Mexican government and
representatives of the lending banks, who agreed to restructure the debts, lengthening
maturities and lending additional money with which the borrowers could meet part of their
interest obligations. Similar negotiations were later conducted with the other Latin
American debtors.
To meet their interest obligations and reduce their outstanding debt, Latin American
countries had to earn more foreign exchange by increasing their exports or decreasing their
imports. So Latin American governments raised taxes, cut government outlays, and
tightened credit to reduce domestic uses of national output. The IMF monitored these
adjustments and provided moderate amounts of credit to indicate that it was satisfied with
the policy progress that the debtors were making. But the primary provision of credit was
left to negotiations between the foreign banks and each of the debtor countries.
Over time the process was successful. The region's economic growth eventually resumed,
and the countries were generally able to service their rescheduled debts. The commercial
banks wrote off some loans of small, heavily indebted countries. In the end the banks
swapped their remaining loan balances for so-called Brady Bonds that had government
guarantees but paid less interest or had a reduced principal. This approach succeeded
because of a general recognition that the problem of the major Latin American countries
was one of liquidity rather than insolvency-that is, they were temporarily unable to pay
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current foreign obligations but were not permanently unable to earn enough foreign
currency by exporting to service and repay their debts.
The next major chapter in the IMF's history began with the collapse of the Soviet Union and
the liberation of its former European satellites. These countries needed to shift from
communism to a market economy and to integrate themselves into international financial
markets. Their officials, bankers, and economists had little or no experience with market
economics. The IMF could therefore provide useful advice on a much wider range of
economic issues than it had previously done in Latin America or elsewhere in the world.
Much of this advice-about the strategy of privatization, banking systems, and tax
structures-was useful. Much of it was also controversial. But while economists outside the
fund had a variety of views about the right way for Russia and the other countries of Eastern
Europe and the former Soviet Union to proceed, the IMF was generally able to get its way
because it brought substantial financial rewards to countries that accepted its advice.
The IMF is now acting in Southeast Asia and Korea in much the same way that it did in
Eastern Europe and the former Soviet Union: insisting on fundamental changes in economic
and institutional structures as a condition for receiving IMF funds. It is doing so even
though the situations of the Asian countries are very different from that of the former Soviet
Union and Eastern Europe. In addition, the IMF is applying its traditional mix of fiscal
policies (higher taxes, less government spending) and credit tightening (implying higher
interest rates) that were successful in Latin America. To assess the appropriateness of these
policies, it is necessary to understand what is happening in Asia.
THE ASIAN MELTDOWN
The Southeast Asian currency collapse that began in Thailand was an inevitable
consequence of persistent large current account deficits and of the misguided attempt of
Thailand, Indonesia, Malaysia, and the Philippines to maintain fixed exchange rates relative
to the dollar. Thailand's current account deficit-the sum of its trade deficit and the interest
on its foreign obligations-had exceeded four percent of Thailand's GDP since 1990,
implying that Thailand had to attract that much foreign capital each year. Such large current
account deficits have inevitably ended in a sharp decline in the local currency's value when
foreign creditors and domestic investors became concerned that the borrower would be
unable to service its debts. Thailand's large current account deficit persisted for a
surprisingly long time because creditors believed that Thailand might be "different" since
much of the capital inflow came as direct investment by Japanese manufacturingfirmsand
lending by their affiliated banks. Creditors also derived confidence from Thailand's high
savings rate and its government budget surplus, noting that the current account deficit
reflected enormously high business investment rather than government or consumer
profligacy. But the primary thing that kept foreign funds coming to Thailand and local funds
staying there was the combination of relatively high interest rates on Thai baht deposits and
a promise that the baht's value would remain fixed at 25 baht per dollar. It looked like too
good a deal to pass up.
But the baht's fixed value relative to the dollar could not be sustained. The pressure for a
devaluation of the baht increased in 1996 and 1997 when the Japanese yen declined by 35
percent relative to the dollar. Since Japan is Thailand's major trading partner, the sharp rise
in the value of the dollar (and therefore of the baht) relative to the yen made Thai products
more expensive and therefore less competitive and pointed to even larger trade deficits in
the future. Foreign speculators as well as local investors began to sell bahts. The Thai
government secretly bought the baht to support its value but eventually had to give up. At
that point the IMF stepped in with a multibillion dollar rescue plan.
The Thai currency collapse spread to Indonesia, Malaysia, and the Philippines as financial
investors became worried about their large current account deficits, high ratios of foreign
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debt to local GDP, and deteriorating trade competitiveness. Each country was forced to
abandon its fixed exchange-rate policy and let the market determine the currency's value.
Indonesia lacked the reserves to meet its short-term obligations and called in the IMF.
Malaysia has not yet done so, while the Philippines was already in an IMF program when
the crisis began.
All of these countries clearly need to shrink their current account deficits by increasing
exports and reducing imports. That in turn requires reductions in public and private
consumption and investment. The proper remedy is a variant of the traditional IMF
medicine tailored specifically to each country-some combination of reduced government
spending, higher taxes, and tighter credit. Even in those countries where government
budgets are already in surplus, an increase in taxes or a reduction in government spending
will shrink the current account deficit. The experience in Latin America provides a useful
model of what can be done.
But the IMF's role in Thailand and Indonesia went far beyond the role that it played in Latin
America. Instead of relying on private banks and serving primarily as a monitor of
performance, the IMF took the lead in providing credit. In exchange, it has imposed
programs requiring governments to reform their financial institutions and to make
substantial changes in their economic structures and political behavior. The conditions
imposed on Thailand and Indonesia were more like the comprehensive reforms imposed on
Russia, including the recent emphasis on reducing Russian corruption, than like the
macroeconomic changes that were required in Latin America. In Indonesia, for example, in
exchange for a $40 billion package (more than 25 percent of Indonesia's GDP), the IMF has
insisted on a long list of reforms, specifying in minute detail such things as the price of
gasoline and the manner of selling plywood. The government has also been told to end the
country's widespread corruption and curtail the special business privileges used to enrich
President Suharto's family and the political allies that maintain his regime. Although such
changes may be desirable in many ways, past experience suggests that they are not needed
to maintain a flow of foreign funds.
The Korean situation is different from that of the four countries of the Association of
Southeast Asian Nations and is more important because its economy is the 1 Ith-largest in
the world. Korea's problem did not stem from an overvalued exchange rate and an excessive
current account deficit. The value of the Korean won had not been fixed in recent years but
had gradually adjusted to maintain Korea's competitiveness. A collapse of the market for
semiconductors, a major Korean export, had caused Korea's current account deficit to jump
from 1.7 percent of GDP in 1995 to 4.7 percent of GDP in 1996. But by mid-1997 it was
already back to a 2.5 percent annual rate and heading lower.
The Korean economy was performing well: real GDP grew at eight percent per year in the
1990s, as it had in the 1980s, inflation was below five percent, and the unemployment rate
was less than three percent. Although there were recent bankruptcies among the smaller
business conglomerates and merchant banks, this was clearly an economy to envy. Korea
got in trouble in mid-1997 because its business and financial institutions had incurred
short-term foreign debts that far exceeded Korea's foreign exchange assets. By October,
U.S. commercial banks estimated that Korea's short-term debts were $110 billion-more than
three times Korea's foreign exchange reserves. With investors nervous about emerging
markets in general and Asia in particular, it is not surprising that the Korean won came
under attack.
Since Korea's total foreign debt was only about 30 percent of GDP (among the lowest of all
developing nations), this was clearly a case of temporary illiquidity rather than fundamental
insolvency. Moreover, since the current account deficit was very small and rapidly
shrinking, there was no need for the traditional IMF policy of reduced government
spending, higher taxes, and tight credit. Yet something needed to be done to stop the loss of
foreign exchange and to maintain bank lending to the country and its healthy businesses.
Because of the overhang of excess short-term foreign liabilities, each foreign bank acting
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independently had a strong incentive not to roll over its loans. Investors, fearing a drain on
Korea's reserves and a depressed won, were induced to anticipate the process by selling the
won immediately.
What Korea needed was coordinated action by creditor banks to restructure its short-term
debts, lengthening their maturity and providing additional temporary credits to help meet
the interest obligations. The creditors should have preferred this course to having the
borrowers default on their loans, just as the creditors did 15 years earlier in their
negotiations with the Latin American debtors. The rate of interest required to attract such
long-term foreign lending on a voluntary basis-and thereby avoid a withdrawal of private
lending to other emerging-market countries-was about four percentage points above the
interest rate on U.S. Treasury bonds and therefore well within what Korea could finance by
its exports. During November the interest rate on ten-year dollar bonds issued by the
government-backed Korea Development Bank varied between two percent and four percent
above the interest rate on U.S. Treasury bonds. Even a four percent premium on a
completely restructured Korean foreign debt would have been equal to only about one
percent of Korea's GDP and about four percent of its exports. The IMF could have helped
by providing a temporary bridge loan and then organizing the banks into a negotiating
group. (In fact, the IMF did just that in late December with the help of the national central
banks after its original plan had failed.)
Instead, the IMF organized a pool of $57 billion from official sources-the IMF, the World
Bank, the U.S. and Japanese governments, and others-to lend to Korea so that its private
corporate borrowers could meet their foreign currency obligations to U.S., Japanese, and
European banks. In exchange for those funds, the IMF demanded a fundamental overhaul of
the Korean economy and a contractionary macroeconomic policy of higher taxes, reduced
spending, and high interest rates.
The IMF's program emphasized eight structural problems of the Korean economy that it
said had to be changed. Foreign investors are not able to acquire Korean businesses by
purchasing their shares or to own majority stakes in Korean businesses. Korea's domestic
financial markets are not fully open to foreign banks and insurance companies. Imports of
some industrial products are still restricted, especially Japanese cars. Korean banks do not
apply good Western banking standards of credit evaluation but follow what might be called
the Japanese development model, in which the government guides banks to lend to favored
industries in exchange for an implicit guarantee of the loans. The Bank of Korea is not
independent and does not have price stability as its only goal. The corporate structure
involves large conglomerates (the chaebols) with an extremely wide range of activities and
opaquefinancialaccounts. Korean corporations generally have very high debt-to-capital
ratios that make them risky debtors for domestic and foreign lenders. Finally, Korean labor
laws make layoffs very difficult and provide strong impediments to the flow of workers
between firms.
The IMF said that it would provide credit only as Korea altered these central features of its
economy. It predicted that economic growth in 1998 would be only half the 1997 level and
that the unemployment rate would double. These conditions would be exacerbated by the
IMF's requirement for high interest rates and for tighter fiscal policy to reduce the budget
deficit between 1997 and 1998. Many private observers estimated that the adverse effects on
output and employment would be substantially worse.
EVALUATING THE STRATEGY
The fundamental issue is the appropriate role for an international agency and its technical
staff in dealing with sovereign countries that come to it for assistance. It is important to
remember that the IMF cannot initiate programs but develops a program for a member
country only when that country seeks help. The country is then the IMF's client or patient,
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but not its ward. The legitimate political institutions of the country should determine the
nation's economic structure and the nature of its institutions. A nation's desperate need for
short-term financial help does not give the IMF the moral right to substitute its technical
judgments for the outcomes of the nation's political process.
The IMF should provide the technical advice and the limited financial assistance necessary
to deal with a funding crisis and to place a country in a situation that makes a relapse
unlikely. It should not use the opportunity to impose other economic changes that, however
helpful they may be, are not necessary to deal with the balance-of-payments problem and
are the proper responsibility of the country's own political system.
In deciding whether to insist on any particular reform, the IMF should ask three questions:
Is this reform really needed to restore the country's access to international capital markets?
Is this a technical matter that does not interfere unnecessarily with the proper jurisdiction of
a sovereign government? If the policies to be changed are also practiced in the major
industrial economies of Europe, would the IMF think it appropriate to force similar changes
in those countries if they were subject to a fund program? The IMF is justified in requiring a
change in a client country's national policy only if the answer to all three questions is yes.
The Korean case illustrates the need for this test very well. Although many of the structural
reforms that the IMF included in its early-December program for Korea would probably
improve the long-term performance of the Korean economy, they are not needed for Korea
to gain access to capital markets. They are also among the most politically sensitive issues:
labor market rules, regulations of corporate structure and governance, government- business
relations, and international trade. The specific policies that the IMF insists must be changed
are not so different from those in the major countries of Europe: labor market rules that
cause 12 percent unemployment, corporate ownership structures that give banks and
governments controlling interests in industrial companies, state subsidies to inefficient and
loss-making industries, and trade barriers that restrict Japanese auto imports to a trickle and
block foreign purchases of industrial companies.
Imposing detailed economic prescriptions on legitimate governments would remain
questionable even if economists were unanimous about the best way to reform the countries'
economic policies. In practice, however, there are substantial disagreements about what
should be done. Even when there has been near unanimity about the appropriate economic
policies, the consensus has changed radically. After all, the IMF was created to defend and
manage a fixed exchange-rate system that is now regarded as economically inappropriate
and practically unworkable. Similarly, for a long time the advice to developing countries
that came from the World Bank, the IMF's sister institution, and from leading academic
specialists emphasized national plans for government-managed industrial development. The
official and very influential U.N. Economic Commission for Latin America preached the
virtues of protectionist policies to block industrial imports in order to encourage countries to
develop their own manufacturing industries. Now the consensus of professional economists
and international agencies calls for the opposite policies: flexible exchange rates,
market-determined economic development, and free trade.
Today, there is nothing like unanimity about the appropriate policies for Korea or Southeast
Asia. Korea's outstanding performance combining persistently high growth, low inflation,
and low unemployment suggests that the current structure of the Korean economy may now
be well suited to Korea's stage of economic and political development and to Korean
cultural values stressing thrift, self-sacrifice, patriotism, and worker solidarity. Even if it
were desirable for Korea to shift toward labor, goods, and capital markets more like those of
the United States, it may be best to evolve in that direction more gradually and with fewer
shocks to existing businesses. Unless the reforms could only be done under the duress of an
IMF program or are specifically needed to end the liquidity problem, making the transition
in the midst of a currency crisis would be very poor timing.
The short-term macroeconomic policies that the IMF prescribed for Korea are equally
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controversial. The program calls for the traditional IMF prescription of budget deficit
reduction (by raising taxes and cutting government spending) and a tighter monetary policy
(higher interest rates and less credit availability), which together depress growth and raise
unemployment. But why should Korea be required to raise taxes and cut spending to lower
its 1998 budget deficit when its national savings rate is already one of the highest in the
world, when its 1998 budget deficit will rise temporarily because of the policy-induced
recession, and when the combination of higher private savings and reduced business
investment are already freeing up the resources needed to raise exports and shrink the
current account deficit?
Under the IMF plan, the interest rate on won loans is now about 30 percent, while inflation
is only 5 percent. Because of the high debt typical of most Korean companies, this
enormously high real interest rate of 25 percent puts all of them at risk of bankruptcy. Why
should Korea be forced to cause widespread bankruptcies by tightening credit when
inflation is very low, when the rollover of bank loans and the demand for the won depend
more on confidence than on Korean won interest rates, when the failures will reduce the
prospect of loan repayment, and when a further fall in the won is an alternative to high
interest rates as a way to attract won-denominated deposits? Although a falling won would
increase the risk of bankruptcies among Korean companies with large dollar debts, the
overall damage would be less extensive than the bankruptcies caused by very high won
interest rates that would hurt every Korean company. Finally, why should Korea create a
credit crunch that will cause even more corporate failures by enforcing the international
capital standards for Korean banks when the Japanese government has just announced that it
will not enforce those rules for Japanese banks in order to avoid a credit crunch in Japan?
ENCOURAGING EXCESSIVE RISK
The IMF faces a serious dilemma whenever it deals with a country that cannot meet its
obligation to foreign creditors. The IMF can encourage those creditors to roll over existing
loans and provide new credit by promising them that they will be repaid in full. That type of
guarantee was implicit in the IMF's $57 billion credit package for Korea. But promising
creditors that they will not lose in the current crisis also encourages those lenders and others
to take excessive future risks. Banks that expect loans to be guaranteed by governments do
not look as carefully as they should at the underlying commercial credit risks. And when
banks believe that the availability of dollars to meet foreign exchange obligations will be
guaranteed by the IMF, they will not look carefully at the foreign exchange risk of the
debtor countries.
There is no perfect solution to this "moral hazard" problem. In principle, the IMF and the
Korean government should provide the guarantees needed to keep current creditors engaged
while swearing that it is the last time that such guarantees will be provided. Although there
may be no way to make such a promise persuasively, the IMF may have encouraged future
lenders too much by the speed with which it took control-without waiting for lenders and
borrowers to begin direct negotiations with each other. The call by IMF Managing Director
Michel Camdessus for member governments to provide an additional $60 billion in IMF
resources, on top of the $100 billion increase requested last September, just after
announcing the Korean program in December also encourages banks and other lenders to
believe they will be bailed out in the future.
At the same time, the message to emerging-market countries sent by painful and
comprehensive reform programs was that they should avoid calling in the IMF. Malaysia is
now doing just that, even though its conditions are roughly similar to those of Thailand and
Indonesia. More generally, the tough program conditions make it difficult to get a country
to work with the IMF until it is absolutely necessary. The IMF appears like the painful
dentist of the old days: just as patients postponed visits until their teeth had to be pulled, the
countries with problems wait too long to seek technical advice and modest amounts of
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financial help.
The desire to keep out of the IMF's hands will also cause emerging-market economies to
accumulate large foreign currency reserves. A clear lesson of 1997 was that countries with
large reserves could not be successfully attacked by financial markets. Hong Kong,
Singapore, Taiwan, and China all have very large reserves, and all emerged relatively
unscathed. A country can accumulate such reserves by running a trade surplus and saving
the resulting foreign exchange. It would be unfortunate if developing countries that should
be using their export earnings to finance imports of new plants and equipment use their
scarce foreign exchange instead to accumulate financial assets.
When the foreign exchange crisis hit Korea, the primary need was to persuade foreign
creditors to continue to lend by rolling over existing loans as they came due. The key to
achieving such credit without an IMF guarantee of outstanding loans was to persuade
lenders that Korea's lack of adequate foreign exchange reserves was a temporary shortage,
not permanent insolvency. By emphasizing the structural and institutional problems of the
Korean economy, the fund's program and rhetoric gave the opposite impression. Lenders
who listened to the IMF could not be blamed for concluding that Korea would be unable to
service its debts unless its economy had a total overhaul. Given the magnitude of the
prescribed changes, lenders might well be skeptical about whether Korea would actually
deliver the required changes, regardless of what legislation it enacted. Even the $57 billion
IMF pool did not promote confidence in Korea's ability to pay since the IMF emphasized
that the money would be released only as Korea proved that it was conforming to the IMF
program. Unsurprisingly, after the program was announced, the bond rating agencies
downgraded Korean debt to junk bond status.
As a result, by late December Korea's reserves were almost gone, shrinking at a rate of $1
billion a day. The U.S. government and the IMF recognized that the original strategy had
failed and agreed to accelerate $10 billion of the committed loans as a bridge to prevent a
default. More important, the U.S. Federal Reserve and the other major central banks called
in the leading commercial banks and urged them to create a coordinated program of
short-term loan rollovers and longer-term debt restructuring. The banks agreed to roll over
the loans coming due immediately, and the crisis was averted. The banks are now meeting
with the Korean government to develop plans for longer-term restructuring. The situation in
Korea might have been much better and the current deep crisis avoided had such
negotiations begun much earlier.
Several features of the IMF plan are replays of the policies that Japan and the United States
have long been trying to get Korea to adopt. These included accelerating the previously
agreed upon reductions of trade barriers to specific Japanese products and opening capital
markets so that foreign investors can have majority ownership of Korean firms, engage in
hostile takeovers opposed by local management, and expand direct participation in banking
and other financial services. Although greater competition from manufactured imports and
more foreign ownership could in principle help the Korean economy, Koreans and others
saw this aspect of the plan as an abuse of IMF power to force Korea at a time of weakness
to accept trade and investment policies it had previously rejected.
The IMF would be more effective in its actions and more legitimate in the eyes of
emerging-market countries if it pursued the less ambitious goal of maintaining countries'
access to global capital markets and international bank lending. Its experts should focus on
determining whether the troubled country's problem is one of short-term liquidity and, if so,
should emphasize that in its advice and assistance. The IMF should eschew the temptation
to use currency crises as an opportunity to force fundamental structural and institutional
reforms on countries, however useful they may be in the long term, unless they are
absolutely necessary to revive access to international funds. It should strongly resist the
pressure from the United States, Japan, and other major countries to make their trade and
investment agenda part of the IMF funding conditions.
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The IMF should remember that the borrowers and the lending bankers or bondholders
should bear primary responsibility for resolving the problems that arise when countries or
their corporations cannot meet their international debt obligations. The IMF should provide
technical assistance on how the debtors can improve their current account balances and
increase their foreign exchange. It should act as a monitor of the success that the country is
making in moving toward self-sustainable liquidity, providing its own funds as an
indication of its confidence in the country's progress rather than as a bailout of international
lenders and domestic borrowers. If the IMF can focus its attention on this narrower agenda,
it can devote more of its scarce staff talent to the problem of crisis prevention. The IMF
should work with countries that have not yet reached a currency crisis in order to prevent
the large current account deficits or the excess short-term debts that could later precipitate a
crisis. If the fund is seen more as a client-focused and supportive organization than as the
imposer of painful contractions and radical economic reforms, it is likely to find that
countries will be more willing to invite its assistance when it can be most helpful.
Martin Feldstein is Professor of Economics al Harvard University and President of the
National Bureau of Economic Research.
Return to Foreign Affairs Home Page
Copyright 1998 by the Council on Foreign Relations, Inc.
All rights reserved.
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The World Bank Graduates
Home ! Search Up One Level
fTHE WORLD BANK GROU['
THE GRADUATES
The Graduation Process
The International Bank for Reconstruction and Development-known as the World
Bank-makes loans to developing countries that have a minimum level of creditworthiness.
The World Bank raises most of its money on the world's financial markets. The interest rate
charged on its loans is now just over 6.5 percent, and the maturity period is 15 to 20 years.
Over its 50+-year history, the World Bank has lent some $396 billion to developing
countries and economic institutions.
The World Bank is "a lender of last resort." So, as countries improve their creditworthiness
on international capital markets, and as their per capita incomes increase, they are expected
to "graduate" and stop borrowing from the World Bank.
The key to the process of graduation is a country's per capita income level, which is
adjusted every year. Countries with 1992 per capita incomes of over $5,295 are expected to
begin the graduation process. The World Bank and the government concerned come to a
joint agreement on the length and the stages of this transition. Since 1947, the year the
World Bank made its first loan, 26 countries have graduated. Korea was the most recent
country to graduate on March 3, 1995.
The International Development Association (IDA) was established in 1960 to fund
investments in countries unable to afford World Bank lending terms. IDA provides
no-interest loans, known as credits, to the world's poorest countries. These credits have only
a small annual service fee of 0.75 percent and can be paid back over a very long period-up
to 40 years. IDA gets its funds from contributions from some of the World Bank's member
countries. By mid-1997, these contributions (including allocations from the World Bank's
own net income) exceeded $100 billion.
IDA credits have made it possible for the poorest countries to have access to the
combination of financial and technical services that the World Bank provides to the more
creditworthy borrowers.
There is a formal eligibility threshold for IDA credits which is updated annually. Currently,
eligibility is limited to countries with 1996 per capita incomes below $925. However,
virtually all IDA credits are currently made to the very poorest countries-those with 1996
per capita incomes below $785.
Some IDA borrowers are eligible for a combination of World Bank loans and IDA credits.
There are currently 17 such "blend" countries-including China and India.
Once a country's income exceeds the eligibility threshold and its creditworthiness improves,
it is deemed no longer to be eligible for IDA credits and becomes a World Bank borrower.
Since 1960, 20 countries have graduated from IDA.
Loans to Australia Finance Qantas and
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"Snowy Mountain" Project
Australia began borrowing from the World Bank in 1950. The first loan the Bank approved,
for $100 million,financedimports from the United States and helped build up the country's
farms, industries, transportation network, and mines. The imports consisted of tractors for
land clearance, earth-moving equipment, diesel electric locomotives and diesel rail cars, and
excavators and drills for strip mining. Three other World Bank loans totaling about $200
million helped the government continue with this effort. Another loan, approved in 1956,
helped Qantas, the national airline, purchase aircraft and equipment.
In 1962, a final loan helped finance an ambitious Snowy Mountains hydroelectric project
that provided both electricity and water for irrigation in the agriculturally important Murray
and Murrumbidgee valleys. The Bank's loan helped finance the construction of a
hydroelectric power plant, which irrigated extensive stretches of land in New South Wales
and Victoria by diverting water from the Snowy River to the Murray River.
Australia borrowed a total of $417 million from the Bank before the country graduated in
1962. Its per capita income now is about $18,000 a year.
World Bank Loan Sparks Austrian Post-War
Industrial Growth
After World War 11, Austria's economy was in a shambles. Inflation was out of control,
food shortages prevailed and many houses in this mountainous European country lacked
heat.
By the early 1950s, the country was slowly getting back on its feet but still faced seemingly
insurmountable obstacles. For example, some industries were poised to resume production,
but many couldn't start up their machines because of power shortages. Demand for
electricity outstripped supply.
The World Bank's first loan to Austria in 1954 financed the completion of a massive
hydroelectric power project that helped fuel the country's rapid post-war development.
Industrial growth surged and the country soon began exporting goods such as machinery,
iron and steel, textiles, and paper products. And, Austria was able to boost government
revenues by selling excess electricity to neighboring Italy.
Between 1954 and 1962, the year the country graduated, the World Bank approved a total of
$106 million in loans for Austria. Many of the loans helped build up key industries.
Today, Austria has become one of the world's most prosperous nations, with an annual per
capita income in 1994 of more than $24,630. Industries are booming, virtually everyone is
literate, and the average life expectancy is among the world's highest.
Bank Helps Make the Bahamas a Preferred
Destination for Tourists
The Bahamas form an archipelago in the West Indies that comprises 29 coral islands and
661 cays. With extensive beaches, palm trees, mild winters, and subtropical summers, the
country's biggest industry is now by far tourism, which accounts for 70 percent of the
Bahamas' gross national product.
The World Bank's first loan to the Bahamas-in 1976-came at a time when the country was
relatively poor. The loan was a vital first step in building tourism on New Providence
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Island. The $10 million loan helped increase drinking water supplies on the island and
improve sewerage services. Today, New Providence Island is one of the country's main
tourist destinations.
Under the project, 6 million gallons of water a day was obtained from wells built on nearby
Andros Island. The water was then brought to New Providence Island by tankers. The
project included a water-conservation program and the rehabilitation of the island's
sewerage system. In addition, an "interceptor" was built to prevent sewage discharged from
ships from polluting the harbor.
The World Bank provided the Bahamas with a total of five loans totaling about $43 million
between 1976 and 1989, when the country graduated. In addition to helping pay for water
and sewerage services, the loans helped pay for expert advice, mostly to develop the
country's tourism industry.
Today the country has a bright economic future. The per capita income is about $12,000 a
year, and the islands have become a thriving tourist destination.
Education Projects Provide Solid Foundation for
Barbados' Development
The cultivation and export of sugarcane was the backbone of Barbados' economy until the
late 1960s. But then production declined because of a drop in demand, a shortage of arable
land, and because the government decided to diversify into other crops. Tourism was
promoted and gradually became the most important industry. But the island was still
relatively poor-its per capita income rising to about $1,500 in the early 1970s.
Barbados, however, has a high literacy rate, mainly because of the quality of its primary
schools. This gave the Caribbean island a strong base for development. The World Bank's
first loan to Barbados in 1978 helped make the whole education system more efficient and
introduced more modern and relevant curricula. Other loans for education helped build up
technical and vocational training. A final loan in 1993 was aimed at making further
improvements, such as reforming the national examination system.
The government also wanted to develop its light industries-clothing, ceramics, glass, and
electronics. A World Bank loan of $10 million in 1980 helped to build factories and set up
training programs, creating some 5,000 jobs. The island also benefited from a network of
good roads. Two projects, supported by Bank loans of $32 million, helped cut back traffic
congestion and accidents and reduced transport costs. Over 20 years, the country had
received 12 World Bank loans for a total of $103 million.
With its final loan, in 1993, Barbados graduated from the World Bank. Today its per capita
income is about $6,560.
Export Industries Helped Rebuild Belgium's Economy
Unlike many countries of Europe, Belgium emerged from World War II with relatively few
battle scars. While Germany, Italy, and the United Kingdom bore the brunt of numerous
bombing raids, Belgium had much of its infrastructure intact.
Still, the war stalled the Belgian economy. The government had to take steps to keep
inflation under control and give businesses, especially heavy industries, a chance to grow
again.
Central to this plan was a decision to help those industries that exported goods to the United
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States and to the rest of Europe. The World Bank, contributed-albeit in a modest way- to
this recovery plan. In 1949, the Bank's first loan to Belgium for $16 million helped the
government import equipment for a tin-plating mill, a steel-processing facility, and a power
plant.
In 1954, the World Bank again assisted Belgium's export industries, providing a $20 million
loan to finance the development of the country's main port and inland waterways. The locks
at the Port of Antwerp were completed and waterways connecting the country's industrial
areas were improved. The work made it easier to ship raw materials to inland industries and
to transport manufactured goods to other countries.
The government's plan to revive the country's industrial base was extremely successful.
Today 73 percent of Belgium's gross domestic product comes from exports. Another mark
of success: in 1958 Belgium graduated from the World Bank. And Belgium now has the
world's 13th highest per capita income: around $22,870.
Cyprus: Bank Assistance Helps Country Prosper
After Independence
When Cyprus gained its independence from Britain in 1956, much of the country was mired
in poverty, and most communities lacked even the most basic services. One indication of
the poverty: out of 600 towns in the country, only 17 had electricity.
The World Bank's first loan to Cyprus, in 1963, helped build a 60-megawatt power station
at Moni, on this Mediterranean island's southern coast. The loan also helped the country
extend the electricity grid to about 200 villages.
Between 1963 and 1991, the World Bank provided Cyprus with loans totaling $419 million.
These loans helped Cyprus build or modernize its infrastructure-such as ports, roads, water
supplies, and sewers.
The Bank also helped develop the country's agricultural sector. The last $6 million World
Bank loan helped finance drainage and sewerage development in villages on the
southeastern coast. Cyprus graduated from the World Bank in 1992.
The World Bank's assistance contributed to Cyprus' prosperity. Today, the country's per
capita income has reached nearly $10,300 a year.
Denmark Rebuilds After the Disruption of War
Like other countries in Europe in 1945, Denmark embarked on a major program of
economic reconstruction after the disruption of World War II.
Tofinancepart of that effort, the country borrowed $40 million from the World Bank in
1947. The loan helped pay for the imported equipment and materials that Denmark's
industries needed to get started again.
Imported textile machinery and turbines removed production bottlenecks in key industries,
while imported trucks and tires made it possible to transport goods more easily. Imported
laboratory equipment helped agricultural and industrial researchers, while imported tractors
helped make up for a serious shortage of agricultural labor.
By 1950, the Danes had largely recovered from the war-thanks in part to two good harvests,
political stability, and sound government financial policies.
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The World Bank continued to provide assistance for the long-term reconstruction effort,
however. The Bank provided two loans totaling $45 million to help increase supplies of
electricity. These were the last World Bank loans approved for Denmark as the country
graduated from the World Bank in 1964.
Today, Denmark is one of the world's richest countries, with a per capita income of almost
$28,000.
World Bank Lends to Restore Post-War Finland
World War II wreaked havoc with Finland's economy. The country suffered heavy losses of
territory and population, and its farms, industries, and transportation systems were left in
poor condition. But by 1949, Finland's economy had already begun to recover.
In that same year, the World Bank gave the economy a further boost with a $12.5 million
loan to help the country import equipment and materials for the completion of an electric
power project. The loan also helped modernize the woodworking industries and expand
production of limestone powder to regenerate farmers' lands.
In later years additional loans were approved for similar power and woodworking projects.
Other loansfinancednew highways and a water pollution-control program. The last Bank
loan for Finland was approved in 1975, the year the country graduated. Overall, the Bank
approved a total of $316 million in loans for the country.
Finland is now a wealthy country with a per capita income of about $18,850 a year.
France Receives World Bank's First Loan
The major concern of France's "Fourth Republic," which came into existence at the end of
1946, was economic reconstruction. The country had already made extraordinary progress,
with industrial production reaching about 90 percent of prewar levels. But further recovery
was hampered by a shortage of coal and other raw materials. Meanwhile, food was in short
supply in the towns and cities.
It was to France that the newly created World Bank extended its first loan-$250 million in
1947. Because of France's size and productive capacity, the Bank believed that the country's
complete economic recovery was vital to the recovery of the entire continent.
The loan helped pay for imports of coal, petroleum products, steel, cotton, and metals such
as zinc, lead, and copper. It also paid for import of locomotives, passenger-train and freight
cars, tankers, tugs, and barges. And the loan financed nine new aircraft used by Air France
on the Paris-New York run. This was the only World Bank loan to France; the country
graduated in that same year-1947.
Within three years national production had expanded. Two good harvests in 1948 and 1949
brought agricultural production close to the pre-war level, and the food shortages were
almost entirely eliminated. France, which also received large amounts of aid under the
Marshall Plan, soon reclaimed its place among the world's most influential nations.
Today, France has a per capita income of more than $23,400 a year.
Greek Industry Becomes More Competitive
Greece became an associate member of the European Community in 1962 and started to
prepare itself for the competition that full membership would bring. Many Greek firms were
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too insulated from outside ideas, used obsolete technology, and were over-burdened with
debt. It was imperative that the country's industries be modernized and strengthened.
A National Investment Bank for Industrial Development was set up in 1963 to help resolve
the problem. This investment bank provided long-term loans to Greek industries to help
modernize their facilities. Between 1968 and 1975, the World Bank aided the investment
bank with five loans totaling $97.5 million.
The Bank also approved four loans in the 1970s to finance the development of Greece's
educational system. These loans enabled the country to meet industries' needs for skilled
manpower. Technical education centers and facilities for training teachers were built, and
the Bank gave technical assistance to the University of Patras.
Greece graduated from the World Bank in 1979 when it took out its last loan to develop its
forests. It became a full member of the European Community in 1981, and today its per
capita income is about $7,700 a year.
Iceland's Development Surges Ahead with
Industrial Growth
Iceland declared its independence from Denmark in 1944. At that time, the young country
had an economy that relied heavily on the fishing industry. But catches were variable, and
the country sought a more solid foundation for its economic future. The government decided
to diversify the economy and build up industries, and it turned to the World Bank for help.
Industrial growth was held back, however, by a shortage of electricity. The problem was
especially serious in the capital of Reykjavik, where most of the budding industries were
based.
The Bank's first loan-in 1951-financed equipment and materials for two hydroelectric
power plants, one on the Sog River and the other on the Laxa River. The loan also financed
65 miles of transmission lines and power-distribution systems. The project gave Iceland's
industries the power they needed to either start up or expand production. But as industries
continued to grow, more power was needed. The Bank approved two more loans for the
development of electricity supplies-one in 1966 and another in 1973.
The World Bank approved a total of ten loans for Iceland between 1951 and 1973. The
loans helped pay for the development of hot-water supplies, farms, highways, fisheries, and
fertilizer industries. The country graduated from the Bank in 1974. Iceland, with a
population of only 266,000, now has an annual per capita income of about $24,630, making
it one of the world's most prosperous nations.
First Loan to Iraq to Control Floods
The Tigris River flows for over 700 miles through Iraq. The mountains of the river's
headwaters have heavy rainfall and snow cover, resulting in quick and destructive floods
downstream. Baghdad was protected by a series of levees, but any breach would cause the
city enormous damage. In addition, floodwaters that were diverted around the city routinely
damaged crops in a large and fertile area.
In 1950, the World Bank's first loan to Iraq helped finance a flood-control project. The
principal feature was a dam across the river above Samarra to divert flood waters through a
channel to a low-lying area between the Euphrates and the Tigris Rivers.
Between 1950 and 1973, the World Bank approved six loans totaling about $156 million.
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The loans paid for new roads and improvements to the national education system. They also
paid for irrigation, grain storage, and telecommunications systems.
Iraq's economy was helped by the discovery of oil, and the country graduated from the
World Bank in 1973.
Ireland's Progress Depended on Availability
of Electricity
In the late 1960s, Ireland hoped to bolster its weak economy by expanding the country's
industrial base. But the expansion meant there had to be more electricity available to run
factories.
In 1969, the World Bank approved its first loan-for $14.5 million-for Ireland. The loan
helped the country boost electricity supplies, enabling industries to step up production. The
World Bank approved another two loans-one in 1971 and the other in 1972-to finance two
more power projects. The 1971 project expanded generating facilities at Tarbet, in the west
of the country. In 1976, Ireland graduated from the Bank.
Between 1969 and 1975, the World Bank approved nine loans totaling about $152 million
for Ireland. The loans were targeted mainly at building up industries and improving
education.
Ireland's membership of the European Community in 1973 was also a stimulus for the
economy. Today Ireland's per capita income is about $13,530 a year.
Israel: A Young Country that Industrialized Quickly
The state of Israel was born less than 50 years ago, but it has already become an economic
power with a per capita income that is higher than Spain's. The World Bank played an
important but modest role in this development.
The World Bank's first loan for Israel was approved in 1960. The loan financed the
construction of a major offshore port at Ashod on the Mediterranean to replace the
outmoded, unsheltered ports of Tel Aviv and Jaffa.
Subsequent loans contributed to the country's rapid industrial development, supported
agricultural development, and helped pay for new infrastructure, such as highways and
sewers.
The World Bank approved a total of 11 loans amounting to $284 million to Israel between
1960 and 1975. The last of these loans, in 1975, reflected the rapid evolution of the
economy. It helped finance 45 industrial research and high-technology projects, including
research into the cosmetic and pharmaceutical uses of the wild jojoba plant which is native
to the country.
The World Bank's financial assistance played a part in Israel's rapid transformation into a
modern industrialized and service-oriented state. Today Israel's industries are varied and
sophisticated. They include diamond cutting and polishing, textiles, potash mining, and
high-technology electronics.
Israel graduated from the World Bank in 1975. Since then, its per capita income has
continued to rise to the current level of more than $14,300 a year.
Italy Attacks Poverty in the South
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Immediately after World War II, Italy launched a major campaign to develop the southern
part of the country. This region, including the islands of Sicily and Sardinia, had remained
trapped in poverty.
A government agency, Cassa per il Mezzogiorno (Fund for the South), began a ten-year
public works program in 1950, to develop the area, borrowing almost $400 million from the
World Bank to finance it. Most of the projects had already been under way before the World
Bank started approving loans. But the Bank's assistance helped move the projects forward.
World Bank loans helped build roads, aqueducts, and sewers and helped reclaim land by
draining marshes and irrigating arid areas. On this land, farmers were able to grow fruits,
vegetables, and cereals, as well as animal fodder to start meat and dairy production. Other
loans helped resettle farmers on redistributed land. Tourism was encouraged through further
loans improving archeological sites such as Pompeii, and constructing access roads and
hotels. Another loan in 1965-the last from the World Bank-helped establish industries in
the south. That same year, Italy graduated from the Bank.
Italy entered a period of rapid industrial growth in the 1960s. The country's per capita
income is now about $19,300 a year.
The World Bank Plays Early Role in Japan's Economic
Transformation
Japan's transformation from a war-shattered nation to the world's second-most important
economic power is one of the most striking developments of this century. The World Bank
played a small but important role in this transformation.
Five decades ago, Japanese industry was in disarray. After World War II, most of the
country's cities and factories were devastated. In response to this overwhelming need, the
World Bank agreed to assist in the country's reconstruction.
The World Bank's first three loans-all made in 1953-helped establish a program to develop
the country's electricity services. The loans helped finance the construction of three
thermal-power plants to serve areas south and west of Tokyo.
Between 1953 and 1966, Japan received 31 World Bank loans totaling $857 million. Many
of these loans helped develop the country's infrastructure. One series of loans helped Japan
build one of the country's most important roads, a 300-mile expressway linking Tokyo and
Kobe. A landmark $80 million loan in 1961 helped the country build a 300-mile railway
line, which eventually became the world's fastest railway service operating the so-called
"bullet" train.
Loans were also made to the government to build up the private sector, including such
companies as Toyota and Nippon Steel, which later became highly successful. Japan
graduated from the World Bank in 1967.
Today, Japan, with a population of about 125 million, has a per capita income of
$34,630-the world's third highest. Japan has become the second-largest shareholder in the
World Bank.
Korea: The First Country to Progress from Being a Purely
Concessional
IDA Borrower to Being a Donor
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Korea graduated from the World Bank upon signing two final loans-$100 million for urban
transport and $75 million for waste disposal, both in the city of Pusan-on March 3, 1995.
Korea's per capita income was less than $100 when it joined the World Bank in August
1955. On graduation, Korea was the twelfth largest economy in the world and the eleventh
largest trading nation. Up to 1996, Korea has contributed more than $114 million to the
International Development Association in support of the Bank's poorest member countries.
Initially needing concessional loans through IDA, Korea moved quickly to IBRD borrowing
(see entry under IDA Graduates). All along the country placed particular value on the advice
and international experience that World Bank loans brought with them.
Korea's ability to pursue economic development with shared growth has been key. To
spread wealth Korea pursued land reform, supported its small- and medium-size industries
and provided universal primary education and wide access to secondary and higher
education. As a result, the incidence of absolute poverty has been sharply reduced, infant
mortality rates have been improved, most people have access to safe drinking water and
sanitation services, and nutrition and life expectancy have improved. Korea's per capita
income today is about $8,260.
Luxembourg Rapidly Rebuilds in Post-War Period
After the war, Luxembourg was able to recover fairly quickly-thanks mainly to its large
iron and steel industry. But the early years of reconstruction were not without difficulties.
Luxembourg had been in an economic union with Belgium since 1922 but the Belgians
faced a major challenge of their own, and they were not able to be of as much assistance as
they might have wished. Luxembourg then turned to its steel industry, an important source
of foreign-exchange earnings, to help pay for the reconstruction effort.
In 1947, the World Bank came to the assistance of Luxembourg with a $12 million loan to
help strengthen the steel industry-Luxembourg's first and only loan from the Bank. The
loanfinancedimports of equipment that the steel industry needed to manufacture
high-quality products, including rolling stock for the railways.
Luxembourgers are now the richest people in the world. Their annual per capita income is
about $39,600.
Malta—Once Dominated by Foreign Powers, Now Moves
Forward on its Own
The history of Malta, an archipelago in the center of the Mediterranean, reflects the
country's strategically important location. It has been successively conquered by the
Phoenicians, Carthaginians, Greeks, Romans, Arabs, Spanish, French, and finally the
British. And during World War II, Malta was heavily bombed by the Axis powers.
By 1963, Malta had finally begun to recover from the war. That year, Malta obtained its
only loan from the World Bank-for $7.5 million-to help pay for a new thermal-power and
seawater-distillation plant in the harbor of Valletta. The new station had the capacity to
produce 100 megawatts of electricity and 6 million tons of desalinated seawater a day. The
next year, Malta graduated from the Bank.
In 1971, seven years after it gained its independence from Britain, Malta drew up an
association agreement with the European Community, which boosted the island's
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development and especially its tourism. Tourism continues to be the island's principal
industry and its main foreign exchange earner. However, Malta also has important
shipbuilding and ship-repair facilities and industries that produce textiles, clothing, food,
and shoes. Prosperity is coming to the country, which in 1993 had a per capita income of
about $7,970 a year.
The Netherlands Borrows to Buy Ships, Aircraft
"The devastation caused by the war was relatively greater in the Netherlands than in any
other Western European country," a World Bank, report said in 1947. Damage to the
economy was so extensive that recovery depended on financial assistance from abroad. But
the Dutch, the Bank also noted, were skilled and hard-working and had already exhibited
extraordinary resilience in rebuilding.
The World Bank approved a $191 million loan to the Netherlands in 1947 to give the
country's reconstruction program a start. The Dutch government used the loan to buy ships,
industrial equipment, raw materials, and fuel.
Four other loans-all approved in 1948-enabled the Netherlands to buy six cargo ships. Then
in the early 1950s, the Bank approved a $7 million loan to help enable KLM Royal Dutch
Airlines to buy 23 aircraft for international and European routes.
The Netherlands borrowed a total of $244 million from the World Bank between 1947 and
1957, the year the country graduated from the Bank. The Dutch now have a per capita
income of more than $22,000.
New Zealand Modernizes Ports
Most of New Zealand's coastline is favorable to the establishment of ports. In the early days
of settlement, transport from one area to another was mainly by coastal shipping, so many
ports sprang up.
By the early 1960s, there were over 30 important ports, but some were in urgent need of
modernization. The country was exporting increasing amounts of meat and dairy products,
wool and timber, and importing items such as fertilizer, cement, coal, and petroleum. Some
of the ports were either too small or too shallow and lacked adequate approaches and
storage areas.
The country's economy was depressed at this time. Export prices were declining, and there
was a possibility that the country might lose free access to its important markets in the
United Kingdom, which was then considering negotiating membership in the European
Community. New Zealand knew it might have to find and expand other markets for its
exports.
A World Bank loan of almost $8 million in 1963 helped develop the ports at Auckland,
Lyttelton, Napier, Tunaru, and Whangarei. The loan paid for quay cranes, cargo-handling
and dredging equipment, tugs, tug jetties, piers, wharves, shipways, and navigational aids.
Today the modernized ports are especially important to the country's economy, which
depends on trade with its neighbors in Asia, as well as with the United States and countries
in Europe.
New Zealand received a total of six World Bank loans between 1963 and 1972 worth $126
million. That same year, 1972, New Zealand graduated from the World Bank. Today its per
capita income is over $13,300.
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Norway Rebounds from World War II
Soon after World War II began, Norway's national economy came to a standstill. With the
disruption in trade it could not export the fish and raw materials it normally depended on for
foreign exchange; nor could it import the materials its industries needed.
When the war ended, Norway began to rebuild its economy with help from the World Bank.
Between 1954 and 1963, the World Bank approved six loans totaling $145 million. The first
loan-for $25 million-aided Norway's shipping industry.
Another loan assisted the general economic development of the country, and the four
remaining loans enabled Norway to tap into one of its most abundant resources:
hydroelectric power. Today, virtually all of Norway's electricity comes from hydroelectric
plants.
The country's economic recovery was virtually complete by the early 1960s, and the country
graduated from the World Bank in 1964.
Norway's economy experienced another boom in the 1980s, when oil and natural gas were
discovered nearby in the North Sea. Today, petrol and natural gas account for 40 percent of
Norway's exports. And Norway's per capita income at about $26,390 is now one of the
highest the world.
Oil Revenues Aid Oman's Economic Growth
Until about 30 years ago, Oman was a relatively poor country with very little arable land
and few natural resources. Then in 1964, large reserves of oil were discovered. Only three
years later, Oman began exporting oil. Today, oil dominates the economy.
When oil exports began, the economy grew about 22 percent a year. The government used
the bonanza to modernize the country. It built roads, a modern port, and an airport and
started developing education, housing, and health services. The modernization took place so
rapidly that the government had little time to coordinate the effort and make sure there were
enough highly trained people to manage the development of the country.
To help the government overcome these problems, the World Bank provided Oman with a
loan in 1974 to pay for expert advice in putting together a well-coordinated development
program. It was the World Bank's first loan to the country. It helped the government
reorganize and strengthen the Development Planning Ministry and train its staff. The
ministry's statistical department was revamped. And, the ministry was given advice on how
to identify and supervise government investments. Expert advice was also provided to the
government's agriculture and fisheries departments.
The World Bank also advised the Ministry of Communications and Public Works on how
best to supervise work done by consultants and contractors and how best to administer road
construction programs.
Between 1974 and 1987, the World Bank provided Oman with 11 loans totaling $157
million. Loans helped finance highway maintenance, education, telecommunications, and
engineering. In 1987, the Bank's final loan to the country-it graduated the same year-helped
provide basic health care to about 300,000 people living in the Batinah region. By the time
the project was completed, 90 percent of the targeted population was vaccinated and 90
percent of pregnant women had received prenatal and birth-delivery care.
Today, the annual per capita income of Oman is about $5,100.
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Loans to Portugal Help Pay for Infrastructure, Industrial
Development
Abandoning the neutrality that it had maintained during World War II, Portugal became a
player in the international arena in the late 1940s. In 1955, it was admitted to the United
Nations.
But even though Portugal played a part in the international community, it remained
economically isolated in Western Europe and needed financial assistance to catch up with
many of its neighbors.
The World Bank began helping Portugal in 1963. The Bank's first loan, for $12.5 million,
financed the development of the country's electricity services; much of the loan helped
finance a dam across the Douro River and a power plant.
Thereafter, the World Bank provided Portugal with six more loans to help develop the
country's electricity services. It also provided loans to help improve the delivery of clean
water supplies in Lisbon, the capital, and to help build and maintain highways.
Between 1963 and 1989, the World Bank approved 35 loans-totaling more than $1
billion-for Portugal. In addition to providing loans to develop the country's infrastructure,
the World Bank helped Portugal develop its forests and fisheries. The Bank also helped
modernize the country's textile industries. Portugal has become an international competitor
in the low-priced textile markets, producing large quantities of cotton vests and pants.
Portugal graduated from the Bank in 1989.
Portugal's economy has continued to grow, especially since the country was admitted to the
European Community in 1986. Now the country's per capita income is about $9,320.
Singapore: From Sleepy Trade Depot to Bustling
International Trade Center
Singapore, a 220-square-mile island south of the Malay peninsula, is one of the " economic
tigers" of Southeast Asia.
But in the years immediately after World War II, the people of Singapore faced falling
incomes and rising unemployment. To tackle the problem, the government took various
types of actions. First, it made key industries internationally competitive by upgrading their
technology and by making sure the country had a highly skilled labor force. Second,
Singapore took steps to become a regional and international fmancial center. The
government promoted the growth of bond markets, introduced tax incentives for investors,
and aided foreign investment by removing all foreign-exchange controls.
Late in the 1970s, the government took another step forward when it started investing in
high-tech and capital-intensive industries such as biochemicals, aerospace, biotechnology,
and information technology.
The genius of the country's economic transition from a trading depot under colonial
domination to an important player in the global economic arena was that the industrial
changes were accompanied by a general improvement in living standards. To accomplish
this, the government subsidized education, health, and housing in the 1960s and 1970s. So
successful were the housing policies that they resulted in 9 out of 10 people owning their
homes-the highest rate of home ownership in the world.
The World Bank played a role in the country's economic transition. Starting in 1963, the
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�The World Bank Graduates
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Bank helped the country develop services and infrastructure that improved living
standards-electricity, water supplies, and sewers, telecommunications, and ports. In
addition, the Bank provided financial support to the national education system, which
included special programs to train people for new jobs in the rapidly changing economy.
The World Bank approved 14 loans totaling $181 million for Singapore. The last loan
before the country graduated was approved in 1975. That loan financed a program to protect
the environment.
Singapore's dramatic progress is reflected in its annual per capita income: $22,500.
Spain's Economy Opens Up, Prospers
Until the latter part of this century, the Spanish economy lagged behind most other countries
in Western Europe. Many of the country's economic problems stemmed from a devastating
civil war between 1936 and 1939.
But in 1959, the country adopted a new development strategy that began opening up the
economy. Economic liberalization accelerated with the restoration of democracy in 1977.
Milestones in the modernization of the country were the rapid industrialization in the north,
an opening up to tourism, and a massive migration of landless farm laborers from southern
Andalusia to Spain's northern industrial towns in the 1960s. The migration transformed
Spain from a predominantly agricultural society to an urban, industrial one.
The World Bank helped Spain move forward by providing loans to develop the country's
infrastructure and transport systems. The Bank helped modernize Spanish farms, and it
provided loans to strengthen the education system.
The World Bank's first loan in 1963, for instance, helpedfinanceimprovements on the
highway between Madrid, the capital, Barcelona on the Mediterranean, and the resort town
of Alicante. A new highway was also built linking industrialized towns in the northwest,
and a city-to-airport freeway was built in Mallorca.
Between 1963 and 1977, when the country graduated from the World Bank, the country
received 12 loans totaling $364 million. The Bank's last loan-for $18 million-helped
promote industrial research and increased the number of students graduating from
engineering schools.
With membership of the European Community and rapid economic growth in the second
half of the 1980s, the Spanish economy now ranks 11th in the world. Per capita income
today is about $13,440.
In September 1994, Spain hosted the World Bank's 49th annual meeting.
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Facts and Figures About the World Bank Group
Homei .Search Up One Level
|nHE WORLD BANK GROUP
Facts and Figures About the World Bank Group
The World Bank Group
The W o r l d Bank Group comprises five organizations: the International Bank for Reconstruction
and Development (IBRD), the International Development Association (IDA), the International Finance
Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre
for the Settlement of Investment Disputes (ICSID).
The International Bank for Reconstruction and Development, frequently called the "World Bank" was
established in July 1944 at the United Nations Monetary and Financial Conference in Bretton Woods,
New Hampshire, USA. The World Bank opened for business on June 25, 1946. The World Bank's goal
is to reduce poverty and improve living standards by promoting sustainable growth and investment in
people. The Bank provides loans, technical assistance and policy guidance to developing-country
members to achieve this objective.
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TOC >
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Facts and Figures About the World Bank Group
E WORLD BANK GROUP
Facts and Figures About the World Bank Group
Membership
As of April 6, 1998, the IBRD had 181 members; IDA had 160; the IFC had 173; MIGA had 145 and
ICSID had 129. The Republic of Palau became the latest member of the IBRD, IDA, IFC and MIGA on
December 16, 1997. Chad became the latest memeber of IFC on April 2, 1998, and Chad became the
latest member of MIGA on February 24, 1998.
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WORLD BANK G ROU I
Business
Partnership
Center
The Business Partnership Center (BPC) has
two main functions: i) it is a central contact
point for outside business inquiries about the
Bank Group's products and services; and ii) it
promotes strategic partnerships with leading
business organizations.
Focal Point for Business Inquiries The BPC
acts as a referral service and hot line,
directing incoming inquiries (via phone, fax,
and e-mail) to appropriate staff within the
Bank Group for action. It also disseminates
various business information products (such
as brochures, a resource guide, and general
information kits).
(BPC)
The World Bank Group Business Partnership
Center
1818 H Street, N.W.
Washington, D.C. 20433
Email: Business Partner@worldbank.org
tel: (202) 522-4bpc (522-4272)
fax: (202) 522-1727
Promotion of Partnerships with Business
Organizations The BPC has also started
establishing institutional linkages and
partnership arrangements with several
leading business organizations around the
world. The objective of such partnerships is
to enhance the flow of information and
promote business opportunities and joint
initiatives with the private sector.
Resource Guide f o r Business The Resource
Guide contains brief descriptions of the Bank
Group's products and services that are of
interest to the business community. It also
lists whom to contact within the Bank Group
for specific information.
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9/30/98 11:49 AM
���THE WHITE HOUSE
Office of the Press Secretary
(New York, New York)
For Immediate Release
September 14, 1998
REMARKS BY THE PRESIDENT
TO THE COUNCIL ON FOREIGN RELATIONS
Council on Foreign Relations Building
New York, New York
12:00 P.M. EDT
THE PRESIDENT: Thank you very much, Pete. Hillary and I are delighted to be here
with you and Joan, and I'm glad to be joined by Secretary Rubin and Jim Harmon, Gene
Sperling, other members of our team. I'm glad to see Dick Holbrooke over here. I hope, if we
can overcome the inertia of Congress, he will soon be a member of the team again. And I thank
David Rockefeller and Les Gelb and others who welcomed us here today.
The subject that I want to discuss ~ let me just say one thing in advance — I'm going to
give you my best thoughts. We have been working on this for three years at some level of
intensity or another, going back to the Naples G-7 meeting in the aftermath of the Mexican
financial crisis. I have done everything I could do personally to reach out across the country, and
indeed across the world, for any new ideas from any source. I'm going to give you my best
thinking today about what we can do, but I want you to know that I'm here, and if I had my
druthers, this would be about a three-hour session where I'd give this talk and then I would listen
for the rest of the time.
So I want to encourage you, if you think we're right, to support us. But if you have any
ideas, for goodness sake, share them, because I agree with what Pete said: this is the biggest
fmancial challenge facing the world in a half-century. And the United States has an absolutely
inescapable obligation to lead, and to lead in a way that's consistent with our values and our
obligation to see that what we're doing helps lift the lives of ordinary people here at home and all
around the world.
The Council on Foreign Relations has always stood for political and economic freedom,
since right after World War I. And I think one of the things that has impacted all of us, and it
was implicit in what Pete said, is that for the last decade the growth of freedom around the world,
with more than half the people in the world living under governments of their own choosing,
more than half the villages, the one million villages in China now, even electing their own
governments, and this sweeping replacement of command and control economies by market
economies. I think it seems to have happened so easily, so effortlessly, so inexorably, that I
think we think the trend is inevitable and irreversible.
�But if you consider today's economic difficulties, disruptions, and the plain old, deep,
personal disappointments of now tens of millions of people around the world, it is clear to me
that there is now a stark challenge not only to economic freedom, but, if unaddressed, a challenge
that could stem the rising tide of political liberty as well.
Obviously we have profound interests here. It is a great irony that we are at a moment of
unsurpassed economic strength at a time of such turmoil in the world economy. We, I think all
of us in this room, know that our future prosperity depends upon whether we can work with
others to restore confidence, manage change, stabilize the financial system, and spur robust
global growth.
For most of the last 30 years, the United States and the rest of the world has been
preoccupied by inflation, for reasons that all of you here know all too well — and it was a good
thing to be preoccupied with. Today the low and stable inflation we enjoy has been critical to
our economic health, and low inflation has also contributed to that of many other nations as well.
But clearly the balance of risks has now shifted, with a full quarter of the world's population
living in countries with declining economic growth or negative economic growth.
Therefore, I believe the industrial world's chief priority today, plainly, is to spur growth.
It seems to me there are six immediate steps we should take to help contain the current financial
turmoil around the world, and then two longer-term projects in which we must be involved.
To take the immediate first, we must work with Japan, Europe, and other nations to spur
growth. Second, we will expand our efforts to enable viable businesses in Asia to emerge from
crippling debt burdens so they can once again contribute to growth and job creation. Third,
we've asked the World Bank to double its support for the social safety net in Asia to help people
who are innocent victims of financial turmoil. Fourth, we'll urge the major industrial economies
to stand ready to use the $15 billion in IMF emergency funds to help stop the financial contagion
from spreading to Latin America and elsewhere. Fifth, our Ex-Im Bank, under the leadership of
Jim Harmon, will intensify its efforts to generate economic activity in the developing world
immediately, in the next three months. And sixth. Congress must live up to its responsibility for
continued prosperity by meeting our obligations to the International Monetary Fund.
Secretary Rubin has been working with his counterparts in the G-7 to get cooperative
support for several of these measures. I understand Chairman Greenspan is also consulting with
his counterparts on these items as well.
As we take these immediate steps, we also must intensify our efforts to reform our trade
and financial institutions so that they can respond better to the challenges we now face and those
we are likely to face in the future. We must build a stronger and more accountable global trading
system, pressing forward with market-opening initiatives, but also advancing the protection of
labor and environmental interests, and doing more to ensure that trade helps the lives of ordinary
citizens across the globe.
�Above all, we must accelerate our efforts to reform the international fmancial system.
Today I have asked Secretary Rubin and Federal Reserve Board Chairman Greenspan to convene
a major meeting of their counterparts within the next 30 days to recommend ways to adapt the
international financial architecture to the 21st century.
Over the past six years, our strategy at home of fiscal discipline, investment in the skills
of our people, and open trade has worked for all Americans. Unemployment at a 28-year low,
inflation a 32-year low, wages rising at twice the rate of inflation after decades of stagnation.
And on October 1st we'll have the first balanced budget in 29 years.
But the global economy brought a lot of that prosperity to us, and now fast-moving
currents have brought or aggravated problems in Russia and Asia. They threaten emerging
economies from Latin America to South Africa. With a quarter of the world's population in
declining growth, we must recognize what Chairman Greenspan said the other day: we cannot
forever be an oasis of prosperity. Growth at home depends upon growth abroad. A full 30
percent of our growth, just since I became President, has been due to our expanding positive
involvement in the global economy.
That's why ordinary Americans should care if Asia or Russia or South America is on
solid economic footing. These people are our customers. With one-third of the growth of our
economy coming from exports, much of it from emerging markets, we know that those markets
will falter as their economies flatten. When the problem is widespread and perceived to be
moving in the wrong direction, we have seen that our stock market can react, having a direct and
immediate impact on the wealth of the American people.
These nations are also our competitors. And under conditions of decent equilibrium that
is a very good thing, indeed. But when their currencies drop precipitously, the prices of their
goods fall, they could undercut the sales of our own goods here at home that are otherwise
profitable, dramatically increasing our trade deficit under circumstances that could cause the
American people to turn away from open trade toward protectionism in a way that has terrific
negative consequences long-term for our global growth objectives.
Finally, these nations are our friends, our allies and our security partners. Where
economic turmoil plunges millions into sudden poverty and disrupts and disorients the lives of
ordinary people, the risks of political and social instability and of a turn from democracy clearly
rise. Just look at Russia. Russia is facing an economic crisis that threatens the extraordinary
progress the Russian people have made in just seven years, building a new society from the
ground up. The ruble and the stock market have plummeted, banks are weak, tax collections
have slowed, the government has trouble paying its debts and its salaries.
Some Russians have become wealthy, but many, many more are struggling to provide for
their families. 1 talked to some of them when I was in Russia just a few days ago.
Amid such political uncertainty and economic difficulty, some now talk of abandoning
the path of reform and returning to policies of the past, even policies that have already failed. At
�worst, adversity in Russia could affect not only the Russian economy and prospects for our
economic cooperation ~ at worst, it could have an impact on our cooperation with Russia on
nuclear disarmament, on fighting terrorism and the spread of weapons of mass destruction, on
standing together for peace, from the Balkans to the Middle East.
Now Russia has a new Prime Minister, Mr. Primakov, who's been in office a grand total
of four days. He and President Yeltsin face one of the great challenges of their time. Never has
there been a more important moment to set a clear direction for the future, to affirm the
commitment of Russia to democracy and to free markets, and to take decisive steps to stabilize
the economy and restore investor confidence.
But if Russia is willing to take these steps, we must do everything we can to provide
support to them. Because again I say, as long as ordinary people don't feel any benefits from
this, in the end it's going to be difficult to sustain the direction we think the world should take.
On the other hand, we need to be honest with Russia and everyone else. No nation, rich
or poor, democratic or authoritarian, can escape the fundamental economic imperatives of the
global market. No nation can escape its discipline. No nation can avoid its responsibility to do
its part.
But since all economies are increasingly interdependent, fear and uncertainty about the
economy of one country can prompt investors to pull money out of other countries thousands of
miles away. Markets work best when they are driven neither by excessive inflows or outflows of
capital based on indiscriminate optimism or pessimism.
Regardless of what changes in policies or institutions may be warranted, we have to say
we'll only be able to help those countries who are willing to help themselves. If a nation chooses
to print money indiscriminately, to wink at cronyism or corruption, to hide bad loans and protect
corrupt or inefficient banks, then investors, foreign and domestic, sooner or later, will withdraw
their investments, with consequences both swift and severe.
That is why we support the fundamental approach of the International Monetary Fund to
extend assistance only when nations have taken responsibility, strengthening their banking
systems, introducing honest accounting and open markets, awarding credit on merit instead of
connections.
Still, what has been done is clearly not enough to reverse the decline in particular
countries, to douse the flames of the international financial crisis, to support steady and
sustainable growth in the future. In the face of this new challenge, America can and must
continue to act and to lead to take the urgent steps needed today to calm the financial crisis,
restart the engine of growth in Asia, and minimize the impact of financial turmoil on other
nations, and to make certain that for tomorrow the institutions and rules of international finance
and international trade are prepared to support steady and sustainable growth over the long term.
First and foremost, the leading economic nations must act together to spur global growth.
�Our strong and growing economy here has made a major contribution to global growth, just as
our weak economy was holding the world back six years ago when I attended my first G-7
meeting in Tokyo and every other country said, the first thing they needed was for America to
put its economic house in order. We did that.
Now I believe strongly we must maintain our fiscal discipline. It has led to lower interest
rates and a huge investment and job growth. Maintaining economic growth is the best thing we
can do right now, not only for the United States but for the global economy.
I would also remember that back in 1993 we had a general agreement that what was
needed was America should get rid of its deficit, Europe should lower its interest rates, and Japan
should open its markets. There was this general agreement that if we did all those things, we
would have a remarkable resumption of growth.
Europe did moderate its interest rates and the then prime minister ~ now the finance
minister — Mr. Miyazawa, oversaw a significant market opening trade agreement between the
United States and Japan, which also benefited others, not just us. And of course we got rid of our
deficit. The results were quite satisfactory for several years for us.
Now Europe has to continue to pursue policies that will spur growth and keep their
markets open because they, too, must be able to provide markets for Asian goods as those nations
seek to find their footing. But the key here is Japan, for the second largest economy in the world,
by far the biggest economy in Asia, has now gone several years without any economic growth.
Thank goodness, a lot of their ordinary citizens have been able to maintain a decent life because
of the wealth of their country and probably because of the enormous personal savings rate they
have enjoyed for many, many years now.
But it is difficult to see how any actions of the world community can be successful in
restoring growth in Asia in the absence of the restoration of growth in Japan, which would enable
Japan to lead the region out of its present condition. Therefore, we must support Japan and do
everything we can to help create the conditions in which, together, we can all lead again, just as
we did in 1993.
Their challenges are quite formidable. They have to spur domestic demand, revive a
banking system, restore confidence, deregulate the economy, and open markets. And we all
know all the forces that seem to be working against these developments in Japan. But I would
remind you that this is a very strong, sophisticated nation full of people of knowledge and
enormous achievement. It is fully capable of playing its world leadership role. I believe its
business leaders right now know what needs to be done and would support it.
Next week I'm going to meet with Prime Minister Obuchi here in New York to discuss
how America can support Japan's efforts to restore economic growth and investor confidence.
And I will do everything I can to try to make sure that as we go forward, we have America,
Europe, and Japan all doing our part to get beyond this present moment, just as we did back in
1993.
�The second step we should take is to intensify our efforts to speed economic recovery in
Asia. When countries like South Korea and Thailand have taken strong and responsible steps,
the freefall has ended, progress is being made. But the human cost of Asia's collapse is only now
being fully felt. Recent press reports have described an entire generation working its way into
the middle class over 25 years, then being plummeted into poverty within a matter of months.
The stories are heartbreaking -- doctors and nurses forced to live in the lobby of a closed
hospital; middle class families who own their own homes, sent their children to college, traveled
abroad, now living by selling their possessions.
It is in our interest to help these nations and these people recover. They will become once
again our great markets and our great partners. It is also the right thing to do. We've worked
with international lenders, like the IMF, to help these nations to adopt pro-growth budget, tax,
and monetary policies, but clearly we're going to have to do more to restore Asian growth. We
must work to lift the weight of private sector debt that has frozen the Asian economies.
Today, I'm asking Secretary Rubin to work with other financial authorities and
international economic institutions to enhance efforts to explore comprehensive plans to help
Asian corporations emerge from massive debt where individual firms have been swept under by
systemic, national economic problems, rather than their own errors. We need to get credit
flowing again. We need to get business back to making products, producing services, creating
jobs.
Third, Asian businesses need assistance, but so do millions of Asian families. We must
do more to establish an adequate social safety net in recovering nations. Wrenching economic
transition without an adequate social safety net can sacrifice lives in the name of economic
theory, and, I might add, can generate thereby so much resistance that reform grinds to a halt. If
we want these countries to do tough things, we have to protect the most defenseless people in the
society and we have to protect people who get hurt when they didn't do anything wrong. I think
that is terribly important.
With our support, the World Bank and the Asian Development Bank have started to deal •
with these challenges, but they have to expand their efforts. There is simply not enough being
done. I asked them to double their aid through an expanded social compact initiative focusing on
job assistance, basic needs and economic transition, on children and the elderly, on groups most
vulnerable to economic change. And I want to commend Jim Wolfensohn for his efforts and his
willingness to lead this expanded initiative. We have to be ready to respond immediately with
financial force if necessary, to the currency crisis, if it spreads, especially if it threatens the
economies of Latin America, where nations have struggled to make progress to do the right
thing, only to find themselves buffeted by economic storms outside their control.
Therefore, the major economies should stand ready to activate the $15 billion now in the
emergency funds of the IMF, the general agreement to borrow, to ensure that the IMF continues
to support reform and fight economic contagion.
Fifth, our Export-Import Bank will increase its commitments to specific economic
�development projects over the next three years -- three months - projects which will have
concrete benefits for ordinary citizens in other countries, projects which will increase our own
exports and thereby help our economy, and ones which can help to restore confidence in
countries that they are not alone and that actual, specific, positive developments can occur.
Sixth, for the effort of the international community to succeed, America simply must meet its
own obligations to the International Monetary Fund. After a year of financial firefighting, the
IMF's resources are badly strained. Every day we don't act, we undermine the confidence the
world badly needs that we are trying to restore. Congress simply must assume its responsibility
for our leadership in the economy.
In my State of the Union address, I said it was better to prepare for a storm when the skies
were clear than when the clouds were overhead. Well, eight months later, the clouds are closer,
and you can nearly hear the thunder. Now, the Senate, by an overwhelming bipartisan majority,
has, thankfully, approved our obligation to fund our part of the International Monetary Fund.
But with only five weeks left in this congressional session, there is still no action from the House
of Representatives.
Let me put this as plainly as I can: failure by this Congress to pay our dues to the IMF
will put our own prosperity at risk. Failure to act will send a sharp signal that at a time of
economic challenge, our lawmakers were unwilling to protect our workers, our businesses, our
farmers from the risks of global economic change, and unwilling to maintain our leadership in
building a global economy system that has benefited us more than any other nation.
Concerted action to spur growth, helping Asia through private sector debt restructuring,
and a strengthened social safety net, helping to protect the rest of the world through the use of the
IMF's emergency fund, increasing the activity of the Ex-Im Bank, and meeting our own
obligations to the IMF — these are the six immediate steps we want to take.
But we must also be willing to take action for the long run — to modify the fmancial and
trading institutions of the world to match the realities of the new economy they serve. By
creating the WTO, the World Trading Organization, in 1994, we began to build a modern trading
system. We must redouble our efforts to tear down barriers around the world. But as I said in
Geneva last May, we must do more to ensure that spirited economic competition among nations
never becomes a race to the bottom ~ in environmental protection, consumer protection, or labor
standards.
We are working to open the procedures of the WTO to participation by the public and the
full range of affected interests, so that people will know and see and be able to do for themselves
things which will ensure that the trading system makes the world better for all the people in all
the countries.
We've already completed 260 trade agreements, opening markets in areas from autos to
telecommunications. Next year we will host the meeting of the world's trade ministers to set the
agenda for expanded trade in the first decade in the new century.
�History teaches us that at a time of worldwide difficulty, it would be folly to retreat into a
protectionist shell. We must keep trade flowing among nations, but I will say again, if we want
to do that, we have got to give ordinary citizens and the groups that represent them in countries
all over the world the sense that it is going to be done in a fair way, consistent with nations'
obligations to advance the interests of their working people and protect not only their national,
but the global environment.
This November, when I meet with the leaders of the Asian economies at the APEC
meeting, we will move forward to further open markets in Asia. And when Congress returns
next year, I will work to pass legislation to open markets further —from trade negotiating powers
to the African Trade Initiative. I will do so in a way that I believe will win broad support from a
majority of both parties.
From the G-7 meeting in Halifax in 1995 in the wake of the Mexican financial crisis, to
the Birmingham meeting this year, we have been working, also, with our major economic
partners to plan for new financial architecture for the 21st century.
For the first time, this year we included key emerging markets in the process in a new
Group of 22, recognizing their important stake in the global economy. This group has been
working together for nearly a year now to improve the global financial assistance with a special
focus on improving financial sectors, on transparency, and on private sector burden sharing.
I just want to emphasize again that even as we respond to the urgent alarms of the
moment, we must speed the pace of this systemic work as well. That is why I have asked
Secretary Rubin and Chairman Greenspan to convene the finance ministers and central bankers
of the G-7 and key emerging economies in Washington within 30 days to develop a preliminary
report to the heads of state by the beginning of next year on strengthening the world financial
system.
We must develop policies so that countries can reap the benefits of free-flowing capital in
a way that is safe and sustainable. We must adapt the IMF so that it can more effectively
confront the new types of financial crises, minimizing their frequency, severity, and human cost.
We need to consider ways to extend emergency financing when countries are battling crises of
confidence due to world fmancial distress as distinct from their own errors in policy. We must
find ways to tap the energy of global markets without sentencing the world to a cycle of
continued extreme crises.
For half a century now in our national economy, we have learned not to eliminate but to
tame and limit the swings of boom and bust. In the 21st century, we have to find a way to do
that in the global economy as well.
I've discussed this in recent days with Prime Minister Blair of Great Britain, who is now
the Chair of the G-7. He shares my belief that this is an urgent task. It is critical to the mission
that he and I and Prime Minister Prodi of Italy will be discussing next week at the New York
University Law School in a very interesting meeting that the First Lady and others in our
�administration helped to organize on how to extend the benefits of the world economy to all and
how to strengthen democracy in a time of such sweeping economic change.
Now, let me just say it all again very briefly: in short, we must improve our ability to
address the current financial emergency, and we must build a system to prevent such future
emergencies, whenever possible, and to blunt their impact when they do occur. There is no
mission more critical to our own strength and security.
And let me say this again, what is at stake is more than the spread of free markets and
their integration into the global economy. The forces behind the global economy are also those
that deepen democratic liberties: the free flow of ideas and information, open borders and easy
travel, the rule of law, fair and even-handed enforcement, protection for consumers, a skilled and
educated work force.
Each of these things matters not only to the wealth of nations but to the health of
freedom. If citizens tire of waiting for democracy and free markets to deliver a better life for
them, there is a real risk that democracy and free markets, instead of continuing to thrive
together, will begin to shrivel together. This would pose great risks not only for our economic
interests but for our security.
We see around the world the international aggressors, the harborers of terrorists, the drug
lords. Who are these countries? They're authoritarian nations without democracy and without
open markets. Nations that give their people freedom are good neighbors; when nations turn
away from freedom, they turn inward toward tension, hatred, and hostility.
We now have a chance to create opportunity on a worldwide scale. The difficulties of the
moment should not obscure us to the advances of the last several years. We clearly have it
within our means, if we do the right things, to lift billions and billions of people around the world
into a global middle class and into participation in global democracy and genuine efforts toward
peace and reconciliation. That is a possibility, but recent events show it is not a certainty.
At this moment, therefore, the United States is called upon once again to lead — to organize the
forces of a committed world; to channel the unruly energies of the global economy into positive
avenues; to advance our interests, reinforce our values, enhance our security.
In this room, I think it is not too simple to say we know what to do. The World War II
generation did it for us 50 years ago. Now, it is time for us to rise to our responsibility, as
America has called upon to do so often so many times in the past. We can, if we do that, redeem
the promise of the global economy and strengthen our own nation for a new century.
Thank you very much.
��THE WHITE HOUSE
Office of the Press Secretary
(New York, New York)
For Immediate Release
September 21,1998
OPENING REMARKS AND EXCERPTS BY THE PRESIDENT
AT STRENGTHENING DEMOCRACY
IN THE GLOBAL ECONOMY: AN OPENING
New York University School of
New York, New York
4:42 P.M. EDT
THE PRESIDENT: Thank you very much, John. I would like to thank you and the NYU
School of Law, the Progressive Policy Institute, the World Policy Institute and the New School
University — all of you -- for your support of this endeavor. And especially, we want to thank
NYU Law School for hosting this.
I'd like to thank Hillary and the people on her staff and others who worked with you to
conceive and execute this remarkable meeting. I want to thank all the participants here on the
previous panels. I have gotten a report about what you've said and I will try not to be repetitive.
I would also like to thank Prime Minister Blair, Prime Minister Prodi, President Stoyanov for
being here and sharing this couple of hours with me. I want you to have the maximum amount
of time to hear from them.
If you listened to the people in the earlier panels today, you know kind of how this socalled "third way movement" evolved, beginning in the 1980s here, in Great Britain and in other
places. If you look around the world, there is an astonishing emergence in so many countries,
and obviously in different contexts, of people who are trying to be modern and progressive; that
is, they're trying to embrace change, they're trying to embracefreemarkets, they're trying to
embrace engagement in the rest of the world. But they do not reject the notion that we have
mutual responsibilities to each other, both within and beyond our national borders.
Most of us have very strong views about the role of government. We believe that the
government should support a pro-growth policy, but one that is consistent with advancing the
environment. And that's the other thing I know you've heard before, but there are hard choices to
be made in life and in politics. But not all choices posed are real.
One of the things that paralyzes a country is when the rhetoric governing the national
civic and political debate is composed of false choices designed to divide people and win
elections, but not to advance the common good once the elections were over.
�I think that, more than anything else, that feeling that I had many years ago back in the
'80s got me into trying to rethink this whole notion of what our national political principles ought
to be, what our driving platform ought to be.
I think that we have found that yes, there are some very hard choices to be made, but
some of the mega-choices that people tell us we have to make really are false, that you can't have
a growing economy by pitting working people against business people, you have to get them to
work together.
You can't have a successful economic policy over the long run unless you include the
environment, not destroy it. It is impossible to any more have a clear division between domestic
and foreign policy, whether it is economic policy or security policy, and I would like to argue,
also, social policy. That is, I believe we have a vested interest in the United States in advancing
the welfare of ordinary citizens around the world as we pursue our economic and security
interests. And of course, that brings us to the subject we came to discuss today, which is how to
make the global economy work for ordinary citizens.
I would just say, I would like to make two big points. Number one is, the rest of us, no
matter how good our conscience or how big our pocketbooks, cannot make the global economy
work for ordinary citizens in any country if the country itself is not doing the right things. And I
think it's very important to point that out.
Second, all the countries in the world trying to do the right things won't make sense
unless we recognize that we have responsibilities, collective responsibilities that go beyond our
borders, and I would just like to mention a couple of them.
First of all, we have to create a trading system for the 21st century that actually works to
benefit ordinary people in countries throughout the globe. That's what all this labor and
environmental conditions and letting all the interest groups be a part of the trade negotiations, all
of that's just sort of shorthand for saying, look, we've got to figure out some way that if wealth
increases everywhere, real people get the benefit of it, and it's fairly spread and people that work
hard are rewarded for it.
Second, I think that we simply have to realize that while the IMF and the World Bank
and these international institutions have proved remarkably flexible and expandable, if you will,
over the last 50 years, we are living in a world that is really quite different now with these global
financial markets and the increasing integration of the economy. And while again I say in the
absence of good domestic policies there is nothing a global system can do to protect people from
themselves and their own mismanagement.
The world fmancial system today does not guard agains that boom/bust cycle that all of
our national economic policies guard against. That it is does not reflect the lessons that we
learned in the aftermath of the Great Depression of 1929 nationally. It does not reflect those
lessons on an international scale.
�And I believe that the most urgent thing we can do is to find a way to keep capital
flowing freely so that the market system works around the world, but do it in a way that prevents
these catastrophic developments we've seen in some countries and also may prevent an
overindulgence of giddiness in some places where too much money flows in in the beginning
without any sort of proper risk premium at all on it.
We have to recognize that there's going to be a global financial system and we have to
think about how we can deal with it in the way each of us deal nationally to avoid depression and
to moderate boom/bust cycles.
Now, in the short run, I thin there are a lot other things we have to do. Europe, the United
States, Japan adopting aggressive growth strategies; working through some of the bad debts in
Asian countries, dealing with Russia, especially; preventing the contagion from going to Latin
America, especially to Brazil. There are lots of other things we can do.
Just one point, finally, I do believe that it is unavoidable that trauma will come to some of
the countries in the world through the workout they have to go through. And therefore I believe
that the developed countries -- either directly through the G-8 or indirectly through the World
Bank ~ should do much, much, much more to build social safety nets in countries that we want
to be free market democracies; so that people who through no fault of their own find themselves
destitute have a chance to reconstruct their lives and live in dignity in the meantime. I think that
is quite important. That Jim Wolfensohn has commited to do that and I think the rest of us
should, as well.
So in summary, I'm grateful that the third way seems to be taking hold around the world.
I think if you look at the record of the people on either side of me, the evidence is that the
policies work for ordinary citizens and our countries. I think the challenges ahead of us are very,
very profound. But I think if we meet them we will find that this whole approach will work in a
global sense in the same way it's worked nationally in the nations here represented and in many
others around the world.
Thank you very much.
PRIME MINISTER BLAIR: Firstly, can I say what an honor it is to be here at the NYU
and to take part in this discussion and to see from the previous discussion that today reunites me
with two very old friends. One is Ronnie Dworkin (phonetic) who was a tutor in Lower Oxford
when I was there, attending his lectures. And let me tell you, at the time it was a pretty rare
event.
And also my very good friend, Alara Tunu (phonetic), is one of the people who got me
into politics in the first place. I don't know whether that's a compliment to you or not, Alara, but
thank you for being here.
What this is about to be is very, very important and it's there. There is huge change going
on around the world. There's change is in our economic and social reality.
�It would be strange if it didn't make a difference to the way that we look at our political
realities and to the way that we reassess the impact of political ideas. And to me politics ~ of
course, for politlicians it's about winning elections. But it is also about ideas and, indeed, I kind
of think that the more coherent the ideas - I've an optimistic, perhaps naively optimistic belief
the better the chance of winning the election.
And I think the big change that has really happened is for people from — if you like the
progressive part of politics, we are witnessing effectively the rebirth of progressive politics. And
I believe through the concept of the third way that we can try and give definition to that.
And progressive politics to me is about the great alliance between progress and justice.
Those are the two things that brought me into politics, they're the two things that keep me there.
And in a way, our voyage of discovery, intellectually, politically, has been to try and get our
politics back to its essential core values -- community, social justice, the belief in a strong society
as necessary for individual fulfillment, and try and apply those values to today's world. In other
words, to take the basic value structure, minus the dogma, and then you get a politics that can
really be applied in a vibrant, intelligent way to the problems the world faces.
Just to give you a very brief run-through, I think that applies virtually in every area of
policy. It leaves behind, if you like, the old left that was about big government or statecontrolled tax-and-spend, and it is not the politics of laissez-faire, either. It is an attempt, as I
say, to construct a different politics of community for today's world.
In the economy, what is fascinating to me is that it is the governments of the center and
center left that are building a foundation of prudent finance, of actual physical and financial
rectitude, and then putting on top of that a role for government ~ but a different role - it's
government as enabler, education, skills, techology, infrastructure; not government trying to run
business, not government burdening business down with over-heavy regulation. So in the
economic sphere, we recognize a role for community, but a different one from what has gone
before.
Socially, it is about a different contract of citizenship. It's saying, for example, in the
welfare system, look, there are rights and duties that go together. It says in relation to crime that
we've got a different attitude from before. We've a phrase in Britain, "Tough on crime, tough on
the causes of crime." We recognize these things happen in a social setting, we believe that we've
got to punish those that are committing crimes, but at the same time we're trying to deal with the
social conditions that give rise to criminal behavior.
Across a whole range of areas — welfare, crime, family policy ~ we're breaking into a
new type of politics and a new type of policy derived from the application of our values. In our
democracy, a lot of us are reinventing government. Combinations of public/private sector, the
voluntary sector todayou is infinitely more important to my country than it ever has been before.
We don't need to sit with the old paradigms of the way that government worked, we can have
new forms of government, new forms of community action through government.
�And the fourth area is in the international sphere, where I think the big question and the
big political battle is between the internationalists and the isolationists, between those people
who believe that the politics of unity has to be applied on an international sphere, and those
people who want to retreat back into their own national insularities.
Now, that is a big, big issue for us, because in my view, we will never conquer the
problems that we face in the economic world unless we're prepared to redevelop international
institutions, unless we're prepared to engage in a different era of international partnership and
cooperation.
Now, I think it's a very exciting time because, in a sense, we are able to chart a different
path forward, and it does mean that there are different coaltions of support that we're building.
And we can see this with what Romano Prodi is doing obviously in Italy, but right round the rest
of the world, too. It is sometimes what I call the radical center of politics. But it is essentially a
belief that we can construct a different type of politics for the 21st century based on the values of
what I would call progressive politics, but rigorously, in a really disciplined way, applying those
in an entirely fresh perspective for the problems that we face today.
And I think that if we do that and if we do that through a dialogue such as this and carry it
on and continue it, then we start to give our people hope, because there is leadership and
direction and purpose coming from the policies that we have. So it's not just a list of policies that
we're giving them, or election campaigns that we're fighting, but we're saying, look, there is a
body of ideas out here that have something relevant to say to you and the problems that you face.
And if we do that, then I think maybe people will look back on the very fundamental polarities of
ideology of the 20th century as an aberration rather than the norm; and, personally, I think that
would be a good thing. Thank you.
******
THE PRESIDENT: I would like to start the conversation by asking you to think about
your jobs, first from a domestic point of view, just totally within your country, and then we'll
move to our global responsibilities.
To go back to what Prime Minister Blair said, basically the whole idea of this third way is
that we believe in activist government, but highly disciplined. On the economic front, we want
to create the conditions and give people the tools to make the most of their own lives, the
empowerment notion. On the social front, we want to provide rights to people but they must
assume certain duties. Philosophically, we support a concept of community in which everyone
plays a role.
Now, arguably, that philosophy has led, in every one of the countries here present, to
some very impressive gains in economic policy, in crime policy, in welfare policy, and all of
that. But I would like to ask you instead to talk about what the — what is the hardest domestic
problem you face?
�What do you have to deal with that the ~ this so-called third way philosophy we've
developed either doesn't give you the answer to, or at least you haven't worked through it yet.
And how would you analyze what still needs to be done?
I think it very important that we understand ~ that we not stand up here and pretend that
we have found a sort of magic wand to make all the world's problems go away, but instead we've
found a working plan that sensible and compassionate people can ally themselves with and be a
part of. But I think it's important that we, frankly, acknowledge what out there still needs to be
done, what seems to be beyond the reach of at least what we're doing now.
* * * **
THE PRESIDENT: Former Governor of New York, Mario Cuomo, used to say, "People
campaign in poetry, but they must govern in prose." That's one part of what you said. It's also
true, as I used to say, that I never met anyone who did not support change in general.
Everybody's for the general, hardly anyone is for it in particular. And I think that's another
problem we face. But I agree with that.
I'd like to follow up, but I'd like to go ~ Romano, what's your biggest domestic
challenge?
PRIME MINISTER PRODI: My prose.
My problem is that-
PRESIDENT CLINTON: Italians never have to speak in prose.
* * * **
THE PRESIDENT: I might say one of the interesting things to me as an American about
this consultative process in European governments is the extent to which it really does seem to
work very well when practiced in good faith. I was just in Ireland, and Ireland has had the
fastest-growing growth rate in Europe, I think, for the last several years. Of course, it was
starting from a lower base.
But they have an intensive system like the one you describe. And I have been
particularly interested in the practice in The Netherlands, and they have sort of a third way
government. I wish that Prime Miniser Wim Kok were here, but he couldn't come. But they
actually have an unemployment rate more or less comparable to what Great Britain and the
United States, and a more - certainly a more generous social safety net than we do, with a very,
very high percentage of part-time workers showing a higher level of flexibility in the work force
than virtually any country with which I'm familiar. So I think there is something to be said for
this.
�One of the things that I think will be interesting is to see whether or not this whole model
can produce both a good macroeconomic policy, which gives you growth, and lower
unemployment in a way that still saves enough of a safety net for people to believe they're in a
just society. I mean, it's a very tough thing.
France has had significant growth in several years and still not lowered the
unemployment rate. So this, I think, is a big challenge. But I think the point you made is very
good.
What's your biggest domestic problem?
*****
THE PRESIDENT: I would like to make a brief comment and then go into the second
question, and then after we all do that, then maybe Dean Sexton will come up and we'll go
through the questions. I think one big problem that prosperous countries have is, even if you
have the right sort of theory of government, even if you have a strong majority support, is
dealing with the huge problems that won't have their major impact until a good time down the
road.
For example, almost all developed economies are going to have a serious
intergenerational problem when all the so-called baby boomers retire. And we are hoping that
sometime early next year, that we'll be able to get our big national consensus in America to
reform the Social Security system, the retirement system and our Medicare system, our medical
program for elderly people, in a way that will meet the social objectives the program has met, in
Social Security's case, for the last 60 years and in the case of Medicare for the last 30-plus years.
And we know if we start now, we can make minor changes that will have huge impacts.
If we wait until it's a major crisis, then we'll either have to raise taxes and lower the standard of
living of working people and their children to take care of the elderly, or we'll have to lower the
standard of living of the elderly to protect the working people and their children.
So, clearly, this is something that, it's really worth beginning now on because by doing modest
amounts now, you can avoid those dire consequences. And to be fair, I think the whole success
of our kind of politics consists in our being able to hold people together, to give people a sense
that there really is a genuine sense of community out there.
Ironically, in Japan, they have just the reverse problem: everybody is so panicked about
it because their society is even older than Great Britain and the United States and Italy that
they're almost over-saving, and it's hard to get growth going there. But for us, the other problem
is the bigger one.
Now, having said that, I'd like to segue into the international arena.
�It seems to me that all of us who are internationalists are pretty good at solving problems
when they're hitting us in the face, but not very good in convincing our parliaments to give us the
investment to build progress over a long period of time, but will avoid those problems in the first
place.
For example, we all got together and stopped the war in Bosnia after too many people
have died and had been on television for too long, and there was too much blood in the streets.
And it was quite expensive, but we're all glad we did it. Now, for a pittance of what that cost, we
could all send him a check and we'd never have a problem like that in his country. I mean, that's
just one example. I don't mean just give the money, I mean investment. You know, I don't
mean - you know what I mean. But this is a big problem.
Hillary and I were in Africa a few months ago in a little village in Uganda, looking at all
these microcredit loans that have gone to women in this small African village and watching
them put together the infrastructure of a civil society. Now, the United States funded, with our
aid programs, 2 million such loans last year. In a world with 6 billion people, with whom several
billion are quite poor, we could fund for a modest amount of money 100 million such loans a
year and create the core of a civil society in many places where we would never have to worry
about terrorism, where we would never have to worry about huge public health outbreaks, where
we'd never have to worry about these massive environmental problems.
So I put that out because I do believe that somehow, the investment systems of the global
economy, through the World Bank, the IMF and other things, are not - nor are the aid systems of
various countries or in the aggregate, the EU — adequate to deal with what I think is the plain
self-interest of the developed world in helping prove that this global system will work for
ordinary people - not because it's the morally right thing to do; it is the morally right thing to do
- but because it would be good for ordinary Americans 10 years from now not to have to worry
about other Bosnias, not to have to worry about the Ebola virus going crazy, not have to worry
about the horrible problems of global warming and malaria reaching higher and higher climates - all these things — these are things that require disciplined commitments over a lifetime.
Maybe I've had it on my mind because I've been at the U.N. today, but if you think about
what we spend on that as compared to what we happily spend to solve a problem — I mean, for
example, if, God forbid, things really went bad in Albania and Kosovo at the same time and you
called me on the phone and rang the bell, you know, we would all show up. Whatever you tell
me to do there, I'm going to try to help you, no matter how much it costs, right?
But for a pittance, over a period of years, we could maybe move so many more people
toward the future we seek. And that goes back to the point Tony made. How do you have a
genuinely internationalist outlook that resonates with the people that we have to represent, the
kind of people that are out there on the street waving to us when we came in today, people who
have worked for very modest salaries, and the kind of people that keep NYU Law School going - how do we make the argument that some of the money they give us in taxes every year should
be invested in the common future of humankind.
�* * * *
THE PRESIDENT: Well, I think it does limit it, but I think that the answer to that is to
keep pushing for more democracy and for more gender equality and more concern for all
children, especially young girls. A lot of the most perverse manifestation of gender inequality
that I have learned from Hillary's experiences has to do with the treatment of young girls and
whether they get schooling and other kinds of things that are regularly offered to young boys in
some developing societies. So I think that's very important.
But if you go back to your question, we're just celebrating the 50th anniversary of the
Universal Declaration of Human Rights, something I talked about over at the U.N. today. Well,
those human rights are not universal, but they're more widely embraced than ever before. I think
we should push all these things simultaneously. I don't think you can possibly say, "Well, we
won't do this until we've got these other nine things done." If we took that approach toward any
endeavor in life, no business would ever be started, no marriage would ever be undertaken, no
human endeavor would ever be undertaken.
I do think the accurate part of Professor Dworkin's implication is that if there is no
prospect of achieving any advances on these fronts, then it's going to be hard to have a truly
democratic market society. I do believe that. But I think that we just have to face the fact that
some cultures are going to be different from others, and if they have democratic governments, we
should keep pushing them on these other fronts. That's my view, anyway.
*****
THE PRESIDENT: At the risk of getting myself in trouble, let me give a very specific
example of — Professor Dworkin asked about women's rights. I think there is a very great
difference in the question of what our policy should be, let's say toward the Taliban, if they take
Muslim women who are doctors and say, you can't practice medicine anymore — in ways that
really put the health system of the country at risk because it violates their religious convictions
and how should we approach them.
And how should we approach a country, let's say, in Africa or Latin America which
historically has had gross disparities in the education rates of young girls and young boys. I
would argue that if you go into those countries and you start putting money into education, you
start putting money into education technology, and you start putting money into these villages
and microenterprise loans for village women, giving them power, independent power to the
economy, that you will get the objective you want by making sure women get treated more
equally with men, and their children are much more likely to be treated more equally.
So I think you have to look at it on the facts. Whereas, with another kind of society you
might say, well, we need to approach a different strategy. But to go back to what Mr. Prodi said,
nine times out of 10 or more, it doesn't make any sense to isolate them. It's still better to try to
find some way to engage these countries and work with them if they're willing to deal with us on
peaceful and honorable terms.
�Q The next question comes from one of our trustees. He says, this morning Mrs.
Clinton spoke of the government, the economy and society as three legs of a stool. These legs
can be problemmatic without a proper seat. What's the fundamental component of seat? If it's
education and equal opportunity, what concrete steps must a democratic government take to
assure education is available to all, and what should the goal of the education be? Teaching
democratic ideals, how to be a better global citizen or what?
* * * * *
THE PRESIDENT: I think the issue in education - I think the first question was, should
it primarily teach good citizenship. I agree with Tony — you can't be a good citizen if you can't
function. I think what you want is an education system that teaches knowledge, citizenshfp and
learning skills. You basically have to teach people how to keep learning for a lifetime. And I
think that every country is different, but you have to disaggregate what the challenges are.
For example, if the system itself is of good quality but insufficiently accessed, or if there
is no system, then what you have to do is just fix something that people can access. If the system
is all there, but encrusted to some extent and not performing, then you have to go after the system
and that's much harder; that's what Tony was saying.
In our country we have now dramatically increased access to higher education. Really, if
you look at all the tax benefits, the scholarships and the work study programs and all this, there's
almost no reason that anybody in America who can otherwise qualify shouldn't go to college
now. We need to do the same sort of thing, I think, with preschool programs, starting with very
young children. We need to build that infrastructure out there. Now, in the schools, we need to
do better, and part of it is influence. We need more good physical facilities. We need more
teachers in the early grades. We need more teachers in the underserved areas.
But a lot of it is ~ are quality things. We need more competition. That's why I'm for the
charter school movements and public school choice. We need more standards and
accountability. That's why I'm for the master teacher movement and for — we need an end to
social promotion; but if you do that in the inner-city schools, and you have the kind of standards
as Tony is talking about, and you actually hold people — schools, teachers and students —
accountable for student performance, then I would argue, ethically as well as educationally, we
are obliged to do what has been done in Chicago and give every child who is not performing well
the chance to go to summer school and the chance to be in an after-school program
Chicago now has — the summer school in Chicago is now the 6th biggest school district in
America, the summer school ~ and it's a great thing. And guess what happened to juvenile
crime? So I just would point that out. I think that each society needs an analysis of what it takes
to take this three-legged school up - some of it is going to be more, some of it is going to be .
better. And it's very important not to confuse more with better in either direction, because better
won't make more, but neither will more make better. By and large, most of us need to be doing
some mix of both.
�Q Mr. President, I would be wrong to leave the topic of education without noting
something narrowly self-interested, but important to many of the students, many of the students
in this room.
THE PRESIDENT: It's the American way; do it.
Q It was the case that if graduate and professional schools, like law schools, gave grants
to students while they were in school in the United States, that was a tax-free event. But if we
gave to students after they got out of school and chose to go into public service, something that
you've encouraged for a long time, if we gave them grants to help them repay the enormous debt
that a law school education in the United States costs, that was taxable.
AnDemocrat on behalf of the students not only here, but throughout the United States
who benefit from the fact that you've pressed very hard to eliminate the taxability of loan
repayment assistance so that students could turn down high-paying jobs to go out and use law,
the instrument we're talking about today, to serve, I want to thank you very much for supporting
that.
THE PRESIDENT: I think that's very important. If that were the definition of narrow
self-interest that most citizens embraced, this would be a better country today. That's great.
*****
THE PRESIDENT: I remember the basic question was will environmental security be
like a military security issue in the 21st century? The answer is I think it's very likely that it will
be. And the more irresponsible we are for a longer period of time, the more likely that is to
happen.
I think it's useful in looking at environmental problems to break them down into two
categories, although there's always some overlap. One is there is one truly global environmental
problem, and that's climate change. Because the climate of the Earth is changing in ways that
already is disrupting life throughout the Earth.
I mentioned one example earlier. You have mosquitos at higher and higher levels now
giving people malaria who never got it before and there's no resistance to it so they're getting
sicker and they're getting on airplanes and flying; and now they're bumping into people at
airports and there's now a phenomenon called airport malaria in the world ~ where technology
and global warming are bumping into each other. That's a global problem. You can see it in
weather, in disease and a little bit in air pollution.
Then there are national problems which have global impacts because they're so big. And
they prevent countries from becoming what they ought to ~ air pollution, water pollution, soil
erosion, food supply pollution, those kinds of things.
�Then there's a huge problem we've got that's sort of in the middle -it's partly the result of
global warming and partly the results of national pollution, and that is the degredation of the
oceans, which is a breathtaking environmental problem that if unaddressed we will pay a huge
price for.
Now, from my point of view, there are two big issues here — and I agree with Tony, I
think Kyoto is a big step forward. So I go to my Congress that's supposed to be Republican, free
market oriented and I say, okay, guys, no regulations and no taxes, tax cuts and increases for
research and development. And they say, it's a Communist plot and they hold hearings about
how, you know, this is just some deep, dark conspiracy to undermine the strength of the United
States.
Now, wait a minute. You're laughing abuot this but actually behind this as opposed to
some other things there is the core of an idea they have. This idea, widely shared in the
developing world and held onto in America more than any other developed country is — it goes
right against what Tony said — this is very serious, we're having fun, but this is a serious
conversation — their idea is that there is an inevitable iron connection between the production of
greenhouse gases through the burning of fossil fuel and economic growth; and if you reduce
greenhouse gases going into the atmosphere there is no way on Earth that you will not reduce
economic growth.
There's all this businesss about technology and conservation and its' all a big plot
designed to bring down the growth machine of America. Now, you laugh - we've had hearings
on it, we've spent hundreds of thousands of dollars complying with subpoena requests and
document requests and sending witnesses up to the Hill to basically say this is not a conspiracy to
destroy the future of America.
But the serious idea here is, if you want something done about climate change, you must
prevail in every developing country with evidence — evidence that there is no longer an iron
connection between the burning of fossil fuels and economic growth.
The second point I want to make goes to the second question they ask about: how come
we spend so little on foreign aid on the poor now? Because they don't have any votes in our
country and because we don't think enough about it. I mean, every year my foreign aid budget is
cut back.
But one thing we can do is to participate jointly with other countries in environmental
projects in developing countries in ways that help reduce climate global warming and create lots
of jobs in areas where there are lots of poor people. I believe if there is a serious global effort to
deal with these environmental challenges, we would be investing all over the world the way the
United States did, for example, in a massive reforestation project in Haiti. And when you do that
kind of work, a lot of this work is very basic work that needs to be done, you can create huge
numbers of jobs for poor people who would otherwise not have them.
�So I would say to all of you, I think this is a big opportunity - I tried to say some
provocative things to make you laugh so you'd listen, because it's late in the day and you're all
tired. But I'm telling you, the biggest environmental — the obstacle to our having responsible
environmental policy in the whole world, including in the United States, is the belief of too many
policymakers in 1998 that there is still an iron law between how much junk you put in the
atmosphere and how much your economy grows.
And until we break that in the minds of decision-makers, we will not do what we should
do on the climate change challenge, and until we do it, we are playing Russian roulette with our
children's future and running an increased risk that this will be the national security issue of the
21st century.
*****
THE PRESIDENT: John, I would like to thank you, the law school, and NYU and the
other sponsors of the event. Again, let me thank all of you who participated. And I want to
thank Hillary and Sid Blumenthal and the others who conceived of this, and Mr. Blair's folks in
Great Britain, who worked so closely on this.
I would like to close with - ask for just a brief reprise of two things we talked about.
One is, can this whole third way approach be applied successfully to long-term problems that
have big consequences before they have them, i.e., in American terms, Social Security,
Medicare, climate change.
Two is, can we not only develop a global consciousness and global policies within our
respective country, but actually band together to deal with this present global financial challenge
in a way that gives us a trading system, a labor rights system, an environmental system and a
financial system that, in effect, recreates what works on the national level, globally; that, in
effect, takes these great 50-year-old institutions and does whatever has to be done to make sure
that they see us through for the next 50 years.
Will the ideas that we've developed and the approach that we have developed work in
those two great areas of challenge? Because if they do work in those two great areas of
challenge, then I think that the 21st century is in very good hands.
Thank you very much.
END
6:28 P.M. EDT
��THE WHITE HOUSE
Office of the Press Secretary
For Immediate ReleaseMay 5, 1998
REMARKS BY THE PRESIDENT
AT RONALD REAGAN BUILDING DEDICATION
Ronald Reagan Building
Washington, D.C.
1:36 P.M. EDT
THE PRESIDENT: Thank you very much. Mrs. Reagan, Mr. Barram, Secretary
Daley, Senator Moynihan, Delegate Norton, Senator Dole, Senator Lott, all the members of
Congress and the Diplomatic Corps who are here; Mr. Mayor, Secretary Schultz and General
Powell, and all the former members of the Reagan administration who are here and enjoying
this great day; to Maureen and the friends of President and Mrs. Reagan who are here: I'd
like to begin by thanking Jim Freed and his team for a magnificent building. I think we all
feel elevated in this building today.
I also want to say on behalf of Hillary and myself a special word of appreciation to
Mrs. Reagan for being here. From her own pioneering efforts to keep our children safe from
drugs to the elegance and charm that were the hallmarks of the Reagan White House, through
her public and brave support for every family facing Alzheimer's, she has served our nation
exceedingly well. And we thank her.
The only thing that could make this day more special is if President Reagan could be
here himself. But if you look at this atrium, I think we feel the essence of his presence: his
unflagging optimism, his proud patriotism, his unabashed faith in the American people. I
think every American who walks through this incredible space and lifts his or her eyes to the
sky will feel that.
As Senator Moynihan just described, this building is the completion of a challenge
issued 37 years ago by President Kennedy. I ought to say, and doggedly pursued for 37 years
by Senator Moynihan. I must say, Senator, there were days when I drove by here week after
week after week and saw only that vast hole in the ground, when I wondered if the "Moynihan
hole" would ever become the Reagan Building. But, sure enough, it did, and we thank you.
�As you have heard, this building will house everything from an international trade
center to international cultural activities to the Agency for International Development to the
Woodrow Wilson Center for Scholars. It is fitting that the plaza on which we gather bears the
name of President Wilson. And it is fitting that Presidents Wilson and Reagan are paired, for
their work and, therefore, the activities which will be culminated in this building span much of
what has become the American Century.
Since President Reagan left office, the freedom and opportunity for which he stood
have continued to spread. For half century, American leaders of both parties waged a cold
war against aggression and oppression. Today, freed from the yolk of totalitarianism, new
democracies are emerging all around the world, enjoying newfound prosperity and longawaited peace. More nations have claimed the fruits of this victory - free markets, free
election, plain freedom. And still more are struggling to do so.
Today, we joy in that, but we cannot — indeed, we dare not — grow complacent.
Today, we recall President Reagan's resolve to fight for freedom and his understanding that
American leadership in the world remains indispensable. It is fitting that a piece of the Berlin
Wall is in this building. America's resolve and American ideals so clearly articulated by
Ronald Reagan helped to bring that wall down.
But as we have seen repeatedly in the years since, the end of the Cold War did not
bring the end of the struggle for freedom and democracy, for human rights and opportunity.
If the history of this American century has taught us anything, it is that we will either work to
shape events, or we will be shaped by them. We cannot be partly in the world. We cannot
lead in fits and starts or only when we believe it suits our short-term interests. We must lead
boldly, consistently, without reservation, because, as President Reagan repeatedly said,
freedom is always in America's interests.
Our security and prosperity depend upon our willingness to be involved in the world.
Woodrow Wilson said that Americans were participants in the life of the world, like it or not.
But his countrymen did not listen to him, and as a result, there came a great Depression, the
rise of fascism, the second world war. Our nation then learned we could not withdraw from
the world.
Then a new generation of Americans reach outward in the years after World War I I ,
building new alliances of peace and new engines of prosperity - NATO, the United Nations,
the IMF, the International Trading System. It is no accident that during this period of great
American leadership abroad we experienced unparalleled economic prosperity here at home.
And it is no accident that freedom's great triumph came on America's watch.
Today on the edge of a new century, the challenges we face are more diverse. But the
values that guide America must remain the same. The globalization of commerce and the
explosion of communications technology do not resolve all conflicts between nations. Indeed,
they create new challenges. They do not diminish our responsibility to lead, therefore, instead
they heighten it. Because today's possibilities are not tomorrow's guarantees, we must remain
�true to the commitment to lead, that every American leader of both parties, especially Ronald
Reagan and Woodrow Wilson, so clearly articulated in this 20th century.
For 50 years we fought for a Europe undivided and free. Last week the United States
Senate took a profoundly important step toward that goal by welcoming Poland, Hungary and
the Czech Republic into NATO, an achievement I believe that would make Ronald Reagan
proud. The alliance that helped to keep the peace for half century now brings us closer than
ever to that dream of a Europe united, democratic and at peace.
Now Congress has other opportunities to fulfill the spirit and honor the legacy of the
man whose name we affix to this building today. Congress has the opportunity to maintain
our leadership by paying for our support to the IMF and settling our dues to the United
Nations. I hope they will do it.
President Reagan once said we had made what he called an unbreakable commitment to
the IMF, one that was unbreakable because in this age of economic interdependence an
investment in the IMF is simply an investment in American prosperity. And we fought for 50
years for peace and security as part of the United Nations.
In 1985, Ronald Reagan said the U.N. stands as the symbol of the hopes of all mankind
for a more peaceful and productive world. We must not, he said, disappoint those hopes. We
still must not disappoint those hopes. President Reagan understood so clearly that America
could not stand passively in the face of great change. He understood we had to embrace the
obligations of leadership to build a better future for all. The commerce that will be conducted
in this great building will be a testament to the opportunities in a truly global economy
America has done so much to create.
The academic and cultural activities that will be generated from people who work here
will bring us closer together as well. Because the agency for International Development will
be here, we will never forget that the spark of enterprise and opportunity should be brought to
the smallest, poorest villages in the world. For there, too, there are people of energy,
intelligence, and hunger for freedom.
This is a great day for our country. This is a day of honoring the legacy of President
Reagan, remembering the service of President Wilson, and rededicating ourselves to the often
difficult but ultimately always rewarding work of America.
As I stand within the Reagan Building I am confident that we will again make the right
choices for America, that we will take up where President Reagan left off - to lead freedom's
march boldly into the 21st century.
Thank you and God bless you.
•
END
1:47 P.M. EDT
�V/V.
�THE WHITE HOUSE
Office of the Press Secretary
(Geneva, Switzerland)
For Immediate Release
May 18, 1998
REMARKS BY THE PRESIDENT
AT THE COMMEMMORATION OF THE 50TH ANNIVERSARY
OF THE WORLD TRADE ORGANIZATION
Palais des Nations
Geneva, Switzerland
7:48 P.M. (L)
THE PRESIDENT: Thank, you very much, Director General Ruggiero, Federal
Counselor Couchepin, your Excellencies, thank you for the opportunity to address you on this
most important occasion.
Near the end of World War II, as leaders and ordinary citizens began to dream of a
system that would prevent a return to war, President Franklin Roosevelt asked the people of the
United States and the world to look ahead to peace with these words: He said, "A basic essential
to permanent peace is a decent standard of living for all individual men and women and children
in all nations. Freedom from fear is eternally linked with freedom from want."
It was that understanding that led a farsighted generation of postwar leaders,
determined to avoid past errors of protectionism and isolationism, to embrace what was then still
a revolutionary idea, that freedom — freely-elected governments, free markets, the free flow of
ideas, the free movement of people — would be the surest route to the greatest prosperity for the
largest number of people.
They were also confident that growing economic interdependence would lead to
greater peace among nations. The economic alliances and institutions they created — the IMF,
the World Bank, the GATT ~ built a platform for prosperity and peace that has lasted down to
the present day.
In the fullness of time, events have confirmed the convictions of the founders of the
international system. World trade has increased fifteenfold; average tarrifs have declined by 90
percent; the trading community has grown from 23 nations to 132, with 31 more working to join.
Russia and China, where the shackles of state socialism once choked off enterprise, are
�moving .to join the thriving community of free democracies. Trade is creating prosperity among
the nations of the Americas and offers hope to the emerging economies of Africa and Asia.
On the edge of a new millennium, our people are creating a new economy, a very
different one from that our founders faced 50 years ago. The new one is driven by technology,
powered by ingenuity, rewards knowledge and teamwork, flexibility and creativity, and draws us
closer across the lines that have divided us for too long.
On any given day, over 3 million people take to the air on commercial flights. Three
decades ago, phone lines could only accommodate 80 calls at one time between Europe and the
United States. Today, they can handle one million calls at one time. In the United States alone,
economic output has tripled while the physical weight of goods produced has barely changed.
The world's new wealth largely comes from the power of ideas.
This new global economy of ideas offers the possibility, but not the guarantee, of lifting
billions of people into a worldwide middle class and a decent standard of living, the opportunity
to give their children a better life. Yet it also contains within it, as we all know, the seeds of new
disruptions, new instabilities, new inequalities, new challenges to the balance of work and
family, of freedom and security, of equal opportunity and social justice, of economic growth and
a sustainable environment.
The challenege of the millennial generation here gathered is, therefore, to create a world
trading system, attuned both to the pace and scope of a new global economy and to the enduring
values which give direction and meaning to our lives. We took the first vital step when we
created the World Trade Organization in 1995, a goal that had alluded our predecessors for
nearly half-century. The Uruguay Round that founded the WTO amounted to the biggest tax cut
in history — $76 billion a year when fully implemented. Since that event, world trade has
increased by 25 percent. Since 1995, we also have begun to build an infrastructure for this new
economy, with historic agreements on information technolgy, telecommunications, and fmacial
services, which together affect trillions of dollars in global commerce every year.
At the G-8 Summit just concluded in Birmingham, the leaders worked on ideas to
strengthen the international financial architecture so that private capital markets can spur rapid
growth while minimizing the risk of worldwide economic instability. Now, we must build on
these achievements with a new vision of trade to construct a modern WTO for the 21st century.
I would like to offer you my suggestions.
First, we must pursue an ever more open global trading system. Today let me state
unequivically that America is committed to open trade among all nations. Economic freedom
and open trade have brought unprecedented prosperity in the 20th century; they will widen the
circle of opportunity dramatically in the 21st. One-third of the strong economic growth we have
enjoyed in America these past five years was generated by trade. For every country engaged in
trade, open markets dramatically widen the base of possible customers for our goods and
services. We must press forward.
�Redoubling our efforts to tear down barriers to trade will spur growth in all our
countries, creating new businesses, better jobs, higher incomes, and advancing the free
flow of ideas, information, and people that are the life blood of democracy and prosperity. At the
U.S.-EU Summit in London today, we embraced this goal and committed ourselves to reducing
barriers and increasing trade in a dozen important areas.
No matter how much some people might wish otherwise, globalization and the
technology revolution are not policy choices, they are facts. The choice is whether we shape
these forces of a new economy to benefit our people and advance our values, or retreat behind
walls of protection to be left behind in the race for the future.
At a moment when, for the first time in all human history a majority of the world's
people live under governments of their own choosing; when the argument over which is better —
free enterprise or state socialism ~ has been won; when people on every continent seek to join
the free market system, those of us who have benefitted most from this system and led it must
not turn our backs. For my part, I am determined to pursue an aggressive market open strategy in
every region of the world. And I will continue to work with members of our Congress, in both
parties, to secure fast track negotiation authority.
Second, we must recognize that in this new economy, the way we make trade rules and
conduct trade affects the lives, daily ~ and the livelihoods, and the health, and the safety of
ordinary families all over the world. Therefore, our efforts to make the trading system more
open must themselves be made more open.
In order to build a trading system for the 21st century that honors our values and expands
opportunity, we must do more to ensure that spirited economic competition among nations never
becomes a race to the bottom — in environmental protections, consumer protections, or labor
standards. We should be leveling up, not leveling down. Without such a strategy, we cannot
build the necessary public support for continued expansion of trade. Working people will only
assume the risks of a free international market if they have the confidence that the system
will work for them.
The WTO was created to lift the lives of ordinary citizens. It should listen to them. I
propose the WTO for the first time, provide a consultative forum where business, and labor, and
environmental, and consumer groups can provide regular and continuous input to help guide
further evolution of the WTO. The U.S. and the EU agreed today to provide such a forum as part
of our new trade agenda. It is far more important for the WTO to follow suite. When this body
convenes again, the world's trade ministers should sit down with representatives of the broader
public to begin to do this.
Third, we must actually do more to harmonize our goals of increasing trade and
improving the environment and working conditions. Expanded trade can and should enhance the
environment. Indeed, the WTO agreement, in its preamble, explicity adopts sustainable
development as an objective of open trade, including a commitment to preserve the environment
and to increase the capacity of nations to do so. Therefore, international trade rules must permit
�soverign nations to exercise their rights to set protective standards for health and safety, the
environment, and biodiversity. Nations have a right to pursue those protections, even when they
are stronger than international norms.
I am asking that a high-level meeting be convened to bring together trade and
environmental ministers to provide strong direction and new energy to the WTOs environmental
efforts in the years to come ~ a suggestion that has already been made by Sir Leon Brittan of the
European Commission.
Likewise, the WTO and the International Labor Organization should commit to work
together to make certain that open trade does lift living standards and respects the core labor
standards that are essential not only to worker rights, but to human rights. I ask the two
organizations' Secretariats to convene at a high level to discuss these issues.
This weekend, the G-8 leaders voiced support for the ILOs adoption of a new declaration
and a meaningful follow-up mechanism on core labor standards when the ILO ministers meet
next month here in Geneva. I hope you will add your support. We must work hard to ensure that
the ILO is a vibrant institution. Today, I transmitted to our Senate for ratification the ILO
convention aimed at eliminating discrimination in the workplace.
Because this new economy is based on ideas, information, and technology, the return on
investment in education has never been higher. And the adverse consequences of being without
skills has never been greater. These trends cannot be reversed. Our goal, therefore, must be to
help more people benefit from the possibilities of the new economy, even as we ensure that the
forces of technology and new trade patterns do not aggravate inequality or reinforce poor labor
conditions.
Here I must add - even as we do more to harmonize our goals of more trade and higher
incomes for ordinary people, each nation must do more to provide universal access to quality
education and training. Without that, no trade rules, however wisely conceived or effected, can
guarantee individual success to the people we are really trying to reach.
Fourth, we must modernize the WTO by opening its doors to the scrutiny and
participation of the public. Through long trial and error, we have learned that governments work
best when their operations are open to those affected by their actions. As American Supreme
Court Justice Lewis Brandeis said a long time ago, "sunshine is the best of disinfectants."
The WTO should take every feasible step to bring openness and accountability to its
operations. Today, when one nation challenges the practices of another, the preceeding takes
place behind closed doors. I propose that all hearings by the WTO be open to the public, and all
briefs by the parties be made publicly available. To achieve this, of course, would require a
change in the rules of this organization. But each of us could do our part now. The United States
today formally offers to open up every panel we are a party to, and I challenge every other
nation to join us in making this happen.
�Today, there is no mechanism for private citizens to provide input in these trade disputes.
I propose further that the WTO provide the opportunity for stakeholders to convey their
views, such as the ability to file amicus briefs to help inform the panels in their deliberations.
Today, the public must wait weeks to read the reports of these panels. I propose that the
decisions of the trade panels be made available to the pubic as soon as they are issued.
Fifth, we must have a trading system that taps the full potential of the Information Age.
This revolution in information technology is the greatest force for prosperity in our lifetimes.
The Internet is the fastest growing social and economic community in history, a phenomenon
with unimagined revolutionary potential to empower billions around the world. It has been
called the "death of distance," making it possible for people to work together across oceans as if
they were working together across the hall.
When I became President, there were only 50 sites on the World Wide Web. Four years
ago, there were still less than 3 million people with access to the Internet. Today, there are over
100 million people, with the number doubling every year.
Today, there are no customs duties on telephone calls, fax messages, e-mail or computer
data links when they cross borders. We have spent 50 years tearing down barriers to trade in
goods and services. Let us agree that when it comes to electronic commerce, we will not erect
these barriers in the first place. I ask the nations of the world to join the United States in a
standstill on any tariffs on electronic transmissions sent across national borders. We cannot
allow discriminatory barriers to stunt the development of the most promising new
economic opportunity in decades.
Earlier today at the Summit of the EU, we agreed to deepen our collaboration in this
area. And last week, the Japanese Prime Minister, Mr. Hashimoto, and I , agreed to move
forward together with a market-oriented, private-sector-led approach to enhance privacy, protect
intellectual property, and encourage the free flow of information and commerce on the Internet. I
hope we can build a consensus that this is the best way to harness the remarkable potential of this
new means of communication and commerce.
Sixth, a trading system for the 21st century must be comprised of governments that are
open, honest, and fair in their practices. In an era of global financial markets, prosperity depends
upon government practices that are based upon the rule of law rather than beaurocratic caprice,
cronyism, or corruption. Investors demand it. And their loss of confidence can have sudden,
swift, and severe consquences, with ripples throughout entire regional economies.
With its insistence on rules that are fair and open, the WTO plays a powerful role toward
open and accountable government. But the WTO must do more. When we meet next year, all
members of the WTO should agree that government purchases should be made through open and
fair bidding. This single reform can open up $3 trillion worth of business to open competition
around the world. And I ask every nation to adopt the antibribery convention developed by the
OECD. Both these steps would promote both investor confidence and stability.
�Finally, we must develop an open global trading system that moves as fast as the global
marketplace. In an era in which new products lifecycles are measured in months, and
information and money move around the globe in seconds, we simply can no longer afford to
take seven years to finish a trade round - as happened during the Uruguay Round - or to let
decade pass between identifying and acting on a trade barrier we all know
ought to fall.
In the meantime, new industries arise, new trading blocs take shape, and governments
invent new trade barriers every day. We should explore what new type of trade negotiating
round or process is best suited to the new economy. There must be a way to tear down barriers
without waiting for every issue in every sector to be resolved before any issue in any sector is
resolved. There must be a way to do this that is fair and balanced to nations large and small, rich
and poor. Surely we can negotiate trade agreements in a way that is faster and better than the
way we have followed to date.
For example, agriculture ~ which I understand has been discussed quite a bit here -- is at
the heart of our economy and many of yours. Tearing down barriers to global trade is, I believe,
critical to meeting the food needs of a growing world population. Starting next year, we should
aggressively begin negotiations to reduce tariffs and subsidies, and other distortions that restrict
productivity and the best allocation of food. We must develope rules rooted in science to
encourage the full fruits of biotechnology. And I propose that even before negotiations near
conclusions, WTO members should pledge to continue making annual tariff and subsidy
reductions so that there is no pause in reform.
We have to recognize that the fastest growing area of economic activity in the world is
services -- the one least disciplined by WTO rules. So when services negotiations are launched, I
think it is essential to engage in wide-ranging discussions to ensure openness for dynamic service
sectors, such as express delivery, environmental, energy, audiovisual, and professional services.
We have to continue our strong momentum to dismantle industrial tariffs. A good place
to start would be an agreement on the sectors from chemicals to environmental technologies
proposed by APEC. And we must move forward in strengthening intellectual property
protection.
These are my proposals for a 21st century trading system — one that is more open and
accountable; one that listens to the voices of citizens; that works to protect the environment,
and lift the lives and incomes of ordinary people; one that is in sync with the Information Age;
that promotes honest, effective government; and that makes better, faster decisions. In short, a
trading system based on the new economy and old, enduring values. To move forward, I am
inviting the trade ministers of the world to hold their next meeting in 1999 in the United States.
I ask you to think about the opportunity that has been presented to all of us — the chance
to create a new international economy in which open markets and open economies spark
undreamed of innovation and prosperity; in which the skills of ordinary citizens power the
prosperity of entire nations; in which the global economy honors those same values that guide
�families in raising their children and nations in developing good citizens; in which poor people,
at last, find opportunity, dignity, and a decent life; in which increasing interdependence among
nations enhances peace and security for all.
This will be the world of the 21st century if we have the wisdom and determination, the
courage and the clarity of our forebears 50 years ago.
Thank you very much.
END
8:13 P.M. (L)
�
Dublin Core
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Title
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Michael Waldman
Description
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<p>Michael Waldman was Assistant to the President and Director of Speechwriting from 1995-1999. His responsibilities were writing and editing nearly 2,000 speeches, which included four State of the Union speeches and two Inaugural Addresses. From 1993 -1995 he served as Special Assistant to the President for Policy Coordination.</p>
<p>The collection generally consists of copies of speeches and speech drafts, talking points, memoranda, background material, correspondence, reports, handwritten notes, articles, clippings, and presidential schedules. A large volume of this collection was for the State of the Union speeches. Many of the speech drafts are heavily annotated with additions or deletions. There are a lot of articles and clippings in this collection.</p>
<p>Due to the size of this collection it has been divided into two segments. Use links below for access to the individual segments:<br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0469-F+Segment+1">Segment One</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0469-F+Segment+2">Segment Two</a></p>
Creator
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Michael Waldman
Office of Speechwriting
Date
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1993-1999
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2006-0469-F
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Segment One contains 1071 folders in 72 boxes.
Segment Two contains 868 folders in 66 boxes.
Provenance
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Clinton Presidential Records: White House Staff and Office Files
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William J. Clinton Presidential Library & Museum
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Adobe Acrobat Document
Text
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paper
Dublin Core
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Title
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IMF Spch. [International Monetary Fund Speech]- Briefing Book [2]
Creator
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Office of Speechwriting
Michael Waldman
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Box 64
<a href="http://clinton.presidentiallibraries.us/items/show/36404"> Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/7763296">National Archives Catalog Description</a>
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2006-0469-F Segment 2
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White House Staff and Office Files
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William J. Clinton Presidential Library & Museum
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Adobe Acrobat Document
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Preservation-Reproduction-Reference
Date Created
Date of creation of the resource.
6/3/2015
Source
A related resource from which the described resource is derived
7763296
42-t-7763296-20060469F-Seg2-064-004-2015