[Public Papers of the Presidents of the United States: William J. Clinton (1998, Book II)]
[October 2, 1998]
[Pages 1718-1720]
[From the U.S. Government Publishing Office www.gpo.gov]

[[Page 1718]]

Remarks on Initiatives for the International Economy and an Exchange 
With Reporters
October 2, 1998

    The President. Good morning. Today I would like to talk to you about 
the steps we are taking to keep our economy growing by keeping the 
world's economy growing. Less than 36 hours ago, America closed the 
books on an era of exploding deficits and diminished expectations by 
recording a budget surplus of $70 billion, the largest on record and the 
largest as a percentage of our economy since the 1950's. Every American 
should be proud of this.
    Today we received more evidence that the economy remains solid. For 
15 months in a row now, unemployment has stayed below 5 percent for the 
first time in 28 years. Over the last year, wages have risen at more 
than twice the rate of inflation, and now the economy has added more 
than 16.7 million new jobs since 1993.
    Today, America enjoys a great moment of prosperity. But we cannot 
remain an oasis of prosperity in a world in which so much of our growth 
depends upon trade and in which so many of our trading partners are 
experiencing economic turmoil. We must hold to the economic strategy 
that has brought us to where we are today and move aggressively to deal 
with the challenges around the world. We must maintain our fiscal 
discipline. When I supported targeted tax cuts that we paid for in this 
budget, I made it clear, and I want to make it clear again: I will veto 
any tax plan that drains the new surplus. We simply have to set aside 
every penny of it, not only to set a good financial example around the 
world but to save Social Security first.
    Second, we must continue to invest in education. The fiscal year has 
just ended. Yet, Congress still has not found time to send me an 
appropriations bill on education. Congress must put progress ahead of 
partisanship and send me an education bill that funds our investments in 
smaller classes; 100,000 new teachers, better trained; and safe, more 
modern schools, with every class able to be hooked to the Internet by 
the year 2000.
    To ensure prosperity for the American economy, I say again, however, 
we must continue to lead, and we must move more aggressively to lead in 
the global economy. Today, the world faces the most serious financial 
challenge in 50 years. Our future prosperity depends upon whether we can 
work with others to restore confidence, to manage change, and to 
stabilize the financial system. Our chief priority is and must be 
economic growth, here and around the world.
    Last month in New York, I outlined several steps we can take 
immediately to address the crisis. I asked Secretary Rubin and Federal 
Reserve Chairman Greenspan to convene a major meeting of their 
counterparts to recommend ways to adapt international financial 
institutions to the 21st century. Yesterday Secretary Rubin spoke about 
that, and I am pleased that, on short notice, Secretary Rubin and 
Chairman Greenspan have arranged the meeting of finance ministers and 
central bankers from the major industrialized nations and the key 
emerging markets for next Monday here in Washington. I will personally 
participate in their deliberations. The following day, I will address 
the World Bank and the International Monetary Fund to underscore the 
urgency of quick action and the need for long-term reform of the 
international financial system.
    But we must do more to help the international community respond to 
the challenges posed by the current crisis. And today we are taking the 
following steps, steps that build on the approach I outlined a few weeks 
ago at the Council on Foreign Relations.
    First, we must act to strengthen the international financial 
community's capacity to limit the contagion. This week, Secretary Rubin 
and Chairman Greenspan will explore with the International Monetary Fund 
and their G-7 colleagues whether best to design a new mechanism, 
anchored in the IMF, to provide contingent finance to help countries 
ward off global financial contagion. This step, combined with full 
funding for the IMF, would give the international community a powerful 
new tool to help reduce the risk posed by the current financial crisis.
    Second, we must help the people who have been hurt by this crisis. 
As I said in New York,

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multilateral development banks like the World Bank, the Asian 
Development Bank, the Inter-American Development Bank have played a 
critical and positive role. Today I ask them to explore the following 
steps to develop a new emergency capacity to lend quickly so as to help 
other countries reform their financial sectors while also helping the 
most vulnerable citizens; to use loan guarantees and other innovative 
means to leverage private sector lending to emerging markets; and to 
expand their own lending as much as possible within their guidelines to 
countries now affected by the crisis who desperately need an infusion of 
new cash.
    Finally, the United States will take new steps to encourage American 
businesses to continue exporting to and investing in emerging markets 
hurt by the crisis. Jim Harmon, the head of our Export-Import Bank, will 
travel to Brazil, Argentina, and Mexico over this month. I have asked 
him to establish new short-term credit facilities to make it easier for 
American businesses to continue exporting to critical Latin American 
markets. He will coordinate these efforts with his counterparts in other 
leading industrial nations to ensure that trade credit continues to flow 
during this period of financial stress. That is very, very important to 
our economy.
    And the Overseas Private Investment Corporation, OPIC, has developed 
a new instrument to help emerging economies raise money from 
international capital markets. That also is very important.
    Now, with these steps, we are acting to protect our own prosperity 
and to exercise responsible economic stewardship in the world. But we 
cannot act alone. Congress must take some responsibility as well. In the 
few working days it has left this year, the most important thing 
Congress can do to protect our farmers, our ranchers, our businesses, 
and our workers is to secure full funding for the International Monetary 
Fund. Congress cannot afford to delay approving IMF funding another day. 
Every day Congress delays increases our vulnerability to crisis, 
decreases confidence in global markets, and undermines our prospects.
    Without giving the IMF the resources it needs, many vital efforts to 
strengthen the international financial institutions simply will fall 
short. We can have an honest debate about the best ways to put out 
economic fires abroad, but there should be no doubt about whether we 
give the fire department the resources to do the job. If America is to 
continue to grow, we must support the IMF. If America is to continue to 
grow, we must lead. We cannot lead if we won't even pay our fair share 
to the International Monetary Fund. I have been asking for this for 
nearly a year now. The crisis overseas has continued to intensify. This 
is inexcusable, and we need the money now for Americans and their 
interests and for the long-term stability of the world. This is 
terribly, terribly important.
    We have done our best to manage this crisis, to mobilize other 
countries. We want other countries to do more. We are not going to be 
able to get them to do more if we won't even do what is plainly our 
responsibility. No other country in the world has benefited as much as 
we have in the last 6 years from the global economy. We can lead back 
away from this financial precipice, but we need the resources to do it.
    Now, let me say to all of you: Remember where we were 6 years ago. 
There were some people who were saying America was in decline. Today, we 
have a new surplus. We have wages rising--the highest levels in over 20 
years. We have the confidence in the country soaring. We have an 
unprecedented opportunity to build for the future. But with all this 
turmoil in the rest of the world, we also have a heavy responsibility to 
the future. We know that a lot of our growth has come because others 
were growing in the rest of the world and could buy American products 
and American services. We know we are going into an unprecedented time. 
This country has got to lead. We've got to be aggressive. We've got to 
stay on the balls of our feet. We've got to be aware that this thing is 
changing every day.
    We can help a great deal to modify the difficulties, to move the 
world back toward growth, and to keep our own prosperity going. But if 
we're going to do that, we've got to lead. We've got to do our part. We 
can't talk about these things and not put up our share of the 
    So again I say, we're going to do what we can. I'm looking very much 
forward to the IMF and the World Bank meeting. I'm looking forward to 
meeting with the finance leaders and the central bankers of these 22 
countries. We're going to come up with some good ideas, but ideas have 
to be followed by action. And for

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us to take the action we need to take, the Congress has got to provide 
funds for the IMF.
    Thank you very much.

Possibility of Worldwide Recession

    Q. How close are we to a worldwide recession? Is there a danger of a 
recession in this world?
    The President. Well, I think the proper answer to that, Sam [Sam 
Donaldson ABC News], is that about a quarter of the world is and has 
been in recession. About a quarter of the world is in a period of very 
low growth. The rest of us are growing. But in the nature of things, if 
you want growth to continue, you have to restore growth in that part of 
the world that's suffering now; and it cannot be done without aggressive 
action--as I said in New York a couple of weeks ago--aggressive action 
to restore the stability of the world financial system, to restore the 
confidence of investors, and to deal with the legitimate problems within 
each country that many of those countries have to deal with that we 
can't do anything about.
    But there are three things we've got to do: We've got to do what we 
can to restore stability of the world financial system; we've got to 
restore the confidence of investors so they'll put their money back into 
markets everywhere; and we've got to work with these countries to solve 
the problems within the countries that only they can solve. But the 
answer to your question is, we don't have to have a worldwide recession 
if those of us that enjoy growth will take the initiative and move now.
    But we cannot afford to dally around here. If we'd had this money 6 
months ago, we could have done more than we have. So I think it's 
important that everybody recognize that we don't know--nobody can 
predict the future with great certainty, but I have a lot of confidence 
in the strength of the American economy and our ability to keep doing 
well, but it rests in large measure on our ability to do the right thing 
around the world.
    But keep in mind, 30 percent of our growth in the last 6 years has 
come from our ability to sell our goods and services around the world. 
We have a personal, vested interest quite apart from our larger ethical 
responsibilities to lead the world that we've profited so much from; 
we've got a vested interest in averting a global financial slowdown by 
taking initiatives and doing it now. We've got to do it now.


    Q. On Kosovo, should the world be surprised that the Serbs believed 
that they could possibly get away with massive bloodletting once again 
in the region without fearing action from the United States and in 
particular its European allies?
    The President. Well, that's the argument I've been making for 
months, that we have seen, we saw in Bosnia what works in dealing with 
Mr. Milosevic. And the Kosovo situation is somewhat different in that 
Kosovo is actually a part of Serbia, although by law it's supposed to be 
autonomous. But let me tell you what we're doing. Let's focus on what 
we're doing.
    We have been working for months and months--I have personally been 
working for months, first of all, to get NATO and then to get the U.N. 
to send a message to Mr. Milosevic to stop the violence.
    We have NATO working; we have the U.N. resolution. I believe that 
our allies in Europe are with us, and I think that we all understand and 
we hope he got the message. I think it is very important. We have to be 
very, very strong here. We need to stop the violence, get a negotiated 
settlement and work our way through this. We don't want thousands upon 
thousands of people to be caught up in a war or to starve or freeze this 
winter because they have been displaced. And we are working very, very 
hard on it, and we're briefing on the Hill as well.
    I want to say a special word of appreciation to Senator Dole, who 
has been very outspoken about this, very supportive about an aggressive 
role for the United States, very understanding that we cannot allow this 
conflict to spread again and risk what we stopped in Bosnia, starting 
again in Kosovo. So we're working on it very hard, and I'm quite hopeful 
that we'll have a positive resolution of it. Thank you.

Note: The President spoke at 10 a.m. at the South Portico of the White 
House, prior to his departure for Cleveland, OH. In his remarks, he 
referred to President Slobodan Milosevic of the Federal Republic of 
Yugoslavia (Serbia and Montenegro).