For Immediate Release
Office of the Press Secretary
July 20, 2001
Background Briefing by
A Senior Administration Official
on Opening Meetings of the G7/G8 Summit
8:45 P.M. (Local)
OFFICIAL: I'm here to brief you, following up on the
briefing I gave yesterday, on the opening working sessions of the G7/G8
Summit. I know, of course, that you have questions about the
events in the streets today, so here's what I can tell you first about
I understand that the President has been
informed of the violence, of the injuries and the death. The
President regrets the violence, believes the violence is regrettable;
the death is tragic; and the injuries to the protesters and to the
police officers are highly regrettable.
I am here to brief you about, as I said,
the opening sessions of the summit. And it, of course,
began, as I noted yesterday, with a working lunch. And that
was followed by a working session, as well. And you'll
recall that today was devoted to the so-called G7, meaning that it was
the most industrialized countries with President Putin from Russia
arriving later in the afternoon, in time for the announcement of the
HIV fund. And I can brief you on that, as well.
In terms of the opening sessions, you'll
recall that, of course, the theme of the summit is poverty
alleviation. I noted yesterday the President has made it a
priority of U.S. foreign policy as well. We believe that
poverty alleviation begins, of course, with global economic
growth. Traditionally, the G7 Summit has had a lively
discussion about the economic situation in each of the G7
countries. That, in fact, was the subject of today's opening
working lunch, where we talked about the situation in each of the G7
countries and what each of us was doing to contribute to global
And the United States, of course, with its
tax cuts and rate cuts, we noted, was taking decisive
action. And, in fact, the G7 statement that was released
notes that while each of us is addressing a variety of different
factors, that collectively it was the belief of the leaders that the
fundamentals provide a solid foundation for stronger growth.
That foundation, of course, is the
foundation for the poverty alleviation strategies that they're
discussing this evening, and that we're going to be discussing tomorrow
as well. But what we're doing in our own economies, as I
noted yesterday, is only part of the solution to poverty alleviation
and contributing to global growth.
There is another big part -- again, a
tradition part of G7 conversations, which is a close examination of the
international financial architecture, the international financial
system, and what can be done to improve it, because a sound, effective,
healthy international financial architecture is, itself, one of the
underpinnings for growth.
The discussion this year focused
principally on the World Bank and the multilateral development
banks. And in particular, with respect to the multilateral
development banks and the World Bank, what they could do to focus their
activities more on key social investments: education, health
care, issues that contribute to raising the standards of living and
increasing productivity growth. And, in fact, the G7
embraced a set of reforms of the multilateral development bank that
require, among other things, better coordination among the banks,
better internal governance and accountability in transparency within
the banks, a review of their pricing policies and also a requirement
that the banks look more closely at the governance situation in the
borrowing countries -- good governance being one of the keys to growth
itself; good governance being, of course, not only sound policies, but
rule of law, respect for human rights, that sort of thing.
The President, as you know, feels very
strongly that it is important for the banks to focus their energies and
their activities on these key social investments so that we are
guaranteed a return on their investments, a measurable
return. And he's called in particular for increasing the
amount of activities that the World Bank devotes to
education. Currently, only about 7 percent of the bank's
resources are devoted to education. Bilaterally, the United States, in
the President's budget this year we've increased our own bilateral
international assistance to education by about 20 percent, to over $120
million, because we feel so strongly that literacy and learning lead to
democracy and development. And education remains a key input
In addition, after discussing the
multilateral development banks and the reform proposal and endorsing
that proposal, the leaders also talked about the debt relief
initiative. And, as I mentioned yesterday, that is the
Heavily Indebted Poor Countries initiative, the so-called HIPC
initiative, under which some 23 countries now have received or are
receiving debt relief; the stock of debt being reduced by some $54
billion thus far.
And that relief is part of an integrated
program whereby they undertake economic reforms and commit to investing
the savings from debt relief in key social sectors and priorities such
as education and health, the sorts of things that contribute directly
to poverty alleviation.
The discussion about the debt relief
initiative, of course, centered not only on the countries that have
gone through the program or who are going through the program, but
there are a number of countries that are eligible, but have yet to go
through the program; many in conflict. And there was a
discussion about how to draw them into the program, and of course, the
prerequisite of that is they need to lay down their arms.
We also talked about implementation of the
program, ensuring better use of the savings from debt relief, and the
need for better monitoring to ensure that, in fact, those savings were
being used as the countries commit to using in their poverty
The President, as you know, supports the
debt relief program, but he's also gone beyond the debt relief program
by proposing that more of the assistance that the World Bank provides
to the poorest countries be provided in the form of grants rather than
loans. Because for many of these countries, debt relief ends
up being only a temporary benefit because once they're relieved of the
debt burden they still have to invest to grow, they still have to
improve their educational systems, their health care delivery
systems. And if they have to borrow back up again in order
to make those investments, they're back in the situation of again
having potentially unsustainable debt.
The President's proposal would shift up to
50 percent of the World Bank's activities with the very poorest
countries from loans to grants. And we believe that grants provide a
permanent solution rather than a temporary solution to the problem of
unsustainable debt; and particularly if those grants are tied, as the
President has advocated, to measurable performance goals, and he's
advocated that they be particularly tied to, again, these key social
sector investments, such as education, health care and various kinds of
We were pleased that the G7 embraced this
idea and, in fact, incorporated it into the G7 statement, which notes
that the G7 will explore the increased use of grants for priority
social investments, naming in particular education and health as well.
I would also note that the grant proposal,
interestingly enough, was endorsed today by Jubilee Plus, which is the
successor organization to Jubilee 2000, which, as many of you know, was
one of the motive forces behind the debt relief movement to begin
with. So we're gratified for the endorsement of the grant
idea by Jubilee Plus, and we're really gratified that the G7 has chosen
to embrace this notion and committed to exploring the increased use of
grants for these very important social sector investments in education
and health, among other things.
One of the other fundamental strategies
for achieving growth, once we get our own houses in order, which we've
all committed to doing -- and the U.S. is leading the way -- once we
have reformed the international financial system, the other big boost
that the leaders agreed we could give to global economic growth is the
launch of a new trade round. And the leaders agreed to
commit themselves, personally, and engage themselves personally and
jointly to ensure the successful launch of a new round at the 4th
ministerial conference of the World Trade Organization, which is
scheduled to occur in November of this year.
And, as you know, one of the things that
the President committed to doing in his World Bank speech, before
coming to the summit, was bringing the power -- was applying the power
of markets to the needs of the poor. No better way to do that than
through a new global trade round that opens markets not only throughout
the industrialized world, but also among developing countries, where
trade barriers tend to be much higher.
And, in fact, 40 percent of developing
country trade is with other developing countries. So there's
an enormous amount of economic benefit that can be derived from a
global trade round and the leaders have endorsed the notion of
launching that round at the end of the year. And as many of
you are aware, further impetus was given to the launch of that round
earlier this week in Washington, when Ambassador Zoellick, the U.S.
Trade Representative and his EU counterpart, Pascal Lemy, announced an
increasing convergence of views with regard to the agenda, or the items
on the agenda for the launch of the new round. It's between
the United States and the European Union.
Later in the day, after Secretary General
Kofi Annan arrived, the G8 leaders, together now with President Putin,
joined Kofi Annan in announcing the formal establishment of something
that was about a year ago, at the last summit, really a gleam in
people's eyes -- namely, a global fund to fight HIV/AIDS, malaria and
The President announced in May of this
year in a Rose Garden ceremony, together with Kofi Annan and President
Obasanjo of Nigeria, who is at the outreach event this evening, as well
-- the President announced U.S. support for the establishment of such
a fund. And he endorsed it based upon a set of principles
that he articulated.
Those principles included that the fund
ought to be a public/private partnership engaging not only governments,
but also the private sector, NGOs, faith-based groups and
others. He endorsed a fund that entailed an integrated
approach, emphasizing prevention in a continuum of treatment and
care. He endorsed a fund that involved several layers of
accountability, not only financial accountability, but a unique layer
of scientific and medical accountability -- the point being, simply,
that we need to ensure that we create a vehicle for these funds, that
we'll invest those funds in proven, best practice programs so that we
know we can get results in terms of individuals treated, infections
prevented, orphans cared for.
And we are very pleased that the fund that
was announced today, this evening, follows those principles, and very,
very closely, and in fact, the leaders committed to having the fund
operational by the first of the year and announced the establishment of
a task force or start-up group whose task it will be to get that fund
Finally, as many of you recall, the United
States made the first contribution to that fund, what was then a
founding contribution of $200 million in May. Today, the G8
leaders reported that contributions total approximately $1.2 billion.
And we welcome contributions obviously not only from the G8, but from
the non-G8 countries and from the private sector and private
foundations and charitable organizations as well.
The task force itself will be managed by
secretariat, which the United States will support, with roughly another
$1 million in assistance, and one of the first tasks of that task force
will be to find someone who can serve as the head of the task force
itself in ensuring that the fund gets up and running on time, as
We think that that's a unique
accomplishment, and obviously, the AIDS pandemic is ravaging many parts
of the world, particularly Africa. And at the outreach event
tonight, which is going on as we speak, we have five leaders from
Africa: Nigeria, South Africa, Algeria, Senegal, Mali -- did
I miss anybody -- how many -- well, Africa's. South Africa,
Nigeria -- I've got them all -- and we also have the leader of
Bangladesh and the President of El Salvador.
So we have countries, many of which,
several of which are so-called HIPC countries. They
participate in the Heavily-Indebted Poor Countries
program. Most are WTO members; not all,
however. And each faces both some of the same challenges as
the others, as well as a set of unique challenges. And what
the G8 leaders were looking for tonight was an opportunity to exchange
views with those leaders about poverty alleviation strategies.
Many of these leaders, of course, are the
ones who have called for the establishment of a fund of the sort that
was established today. And they will, of course, be talking
about the issue of health care. But beyond the issue of
health care, we expect them to be talking about education, about trade,
about good governance and about the partnership that the President
talked about in his World Bank speech -- namely a partnership based
upon a sense of both mutual respect and mutual responsibility.
Where we, the industrialized nations,
recognize the needs of the developing nations and we recognize that as
they put in place the right policies and move to take responsibility
for those policies, we, in turn, have an obligation to try and provide
them with the tools to help them benefit from trade, from the aid and
assistance that we give, as well as from further integration into the
So that discussion began in a working
session, it then continues over dinner. And in addition to
the leaders at both sessions, the heads of the G8, as well as the
invited leaders of the various developing countries are going to be
joined by Secretary General Kofi Annan, as well as the Directors
General of some of the major international
institutions. James Wolfensohn of the World Bank is here, as
are the directors general of the World Health Organization, the World
Trade Organization and the Food and Agriculture Organization.
It was a full day, and for the leaders a
productive day in terms of the launch of the fund, the HIV fund, the
commitment to reforming the multilateral development banks, embracing
the notion of exploring an increased use of grants as a way to stopping
the debt permanently on the poorest countries, an endorsement of the
launch of a new global trade round later this year, and a commitment to
continuing to follow pro-growth policies at home.
Happy to take questions.
Q I wonder, how
satisfied did the President come away from today's meetings that the
Europeans and Japanese will take measures to address the continuing
deterioration in economic indicators?
OFFICIAL: As I mentioned, it's traditional at the G7 to have
-- to lead off with a discussion of what each of the countries is doing
within their economies, and today was no different. It was
discussed, and as the G7 statement reflects, while growth has slowed
and we all acknowledge that, each of the countries is stepping up and
addressing the needs in their economy, or the challenges in their
economies that need to be addressed in order to ensure continued
economic growth or renewed growth, particularly structural reform and
various forms of market rigidities. And the sense was that
the right things and the right policies were being pursued not only in
the United States, but also in the Euro area, Canada and Japan, as
Q When the
President in the statement here says that the United States is leading
the way in setting the conditions for global prosperity, does that mean
that the President would like other countries to implement similar
policies on his agenda -- lower taxes and so forth? Was this
OFFICIAL: No, it doesn't mean that everybody needs to do the
same thing. What it means is that everybody needs to put in
place pro-growth policies. In the United States, that meant
putting in place tax cuts and it meant moving decisively both on tax
cuts and rate cuts. That's been done here. And I
think the phrase, "leading the way," means precisely that, in terms of
taking decisive action to put in place the kinds of policies that are
going to ignite renewed growth and yield a new expansion of both one's
own economy and the global economy.
Other countries are doing -- some
countries are doing similar things, others are doing different
things. Some have structural issues that need to be
addressed, as well.
Q Does the
President believe they're all doing all that they can?
OFFICIAL: Certainly, the leaders committed to doing all that
can and to forging ahead with pro-growth policies. And, as I
say, I think the statement reflects the sense that you can just read
the opening sentence of the world economy section -- while the global
economy has slowed more than expected, sound economic policies and
fundamentals provide a solid foundation for stronger growth.
And that certainly was the sense of the
session. That doesn't mean we don't have challenges and it
doesn't mean that a lot of hard work remains. But it certainly means
that the leaders are committed to trying to meet all of those
Q If I can just go
back to the protester. Can you just give us a little more
details of exactly who notified the President? Any more
details on when and what his reaction might have been? And,
also, in terms of the Italian radio reporting that there was some
consideration of suspending the summit because of what happened on the
streets -- has there been any discussion of that?
OFFICIAL: First of all, in terms of details, who informed
the President, I don't have that information. In terms of,
you said --
Q -- that there was
a consideration. A, has there been any talk among the
OFFICIAL: I have not seen those reports, nor have I heard
any talk along those lines.
Q There was no
discussion about future meetings and maybe going to smaller cities,
things like that?
OFFICIAL: Not that I am aware of. But I was not
in every session today, I have to add. Some of the sessions,
as many of you know who have followed summits in the past, some of the
sessions are attended only by the heads; some of the sessions by the
heads and the sherpas. But to my knowledge, the schedule
remains in place for tomorrow. I'm certainly planning on attending the
meetings I'm scheduled for tomorrow.
Q Were you at the
opening session where that subject --
OFFICIAL: No, I was not at that session.
Q What was the
nature of the meeting that was thrown on at the end of the day here
today that you had to attend?
OFFICIAL: The sherpa meeting? It was -- actually,
it never really occurred. I, for one, didn't make it, nor
did several -- I think at least one or two of the other
sherpas. Simply, the sherpas need to get together to clean
up some of the text of the G8 communique, and we'll do that at some
point tomorrow. We were trying to take advantage of an
opening in the schedule before the outreach session, but sherpas had to
brief their leaders and prepared them for the outreach session, and it
turned out not to be feasible to do it at that time. But it
was -- we had planned all along to try and get together at some point.
We had hoped today; it looks like it will obviously have to be tomorrow
at some point.
Q Could you tell
us, short of any actual discussions about changes in the agenda, how
the demonstrations have affected the conversations you're having with
your counterparts, and the atmospherics behind the scenes?
OFFICIAL: We had a lot of important work to do today, and we
forged ahead with that work and focused on the work that we were
Q The Italian Prime
Minister's spokesman quoted the President as telling his counterparts
that the United States will experience an economic recovery in the
second half of this year. Did he, in fact, tell his
OFFICIAL: Again, I can't quote him directly because I was
not in that session, but as you know, we do expect the tax cuts to
inject approximately $40 billion into the economy in the third quarter;
we do expect growth to accelerate in the second half of the year.
Q We were told
earlier on that the President, while talking to the leaders, said that
the U.S. slowdown has bottomed out, and that from now on things should
start to pick up. Can you confirm that?
OFFICIAL: I think that's exactly what I just said when I
noted that, again, we've taken decisive action with these tax cuts;
they should inject -- when I say $40 billion into the economy in the
third quarter, of course, they're going to inject more next year, as
well, and that will provide further stimulus. But in the
near-term, we expect that injection from the tax cuts into the economy
to be significant and we expect growth to accelerate in the second
Q But can you
confirm those words from the President?
OFFICIAL: I can't -- as I say, I was not there for that
Q Who was at that
OFFICIAL: That was leaders only.
Q Was there any
sense of urgency?
OFFICIAL: There certainly is a sense of determination to
address these challenges. I mean, there's a sense and a
frank acknowledgement that growth has slowed and that we need to do
something about it, and a commitment to doing something about
it. And if you look at the statement you'll see that each
country or each area -- and the Euro area is addressed as such --
commits to taking certain actions. And in almost all cases, those are,
in fact, actions that are already underway and that the leaders
committed to continue and to intensify.
Q But, I mean, in
using the word, "urgency," as opposed to "determination" -- meaning,
you could be determined to do something and decide that it will take
you a long time to do it and be resigned to following a timetable, as
opposed to needing to get something going right away and get it
done. Was that a way to characterize what they --
OFFICIAL: Nobody -- let's put it this way -- nobody is
dragging their feet in any way. I mean, this is something
that is important for all of their economies, and what's unique about
the G7 meeting is it's a discussion at one and the same time not only
about one's own economy, but about the global economy. So
there's a recognition that we not only need to take decisive action to
renew growth and restore growth and to put in place pro-growth policies
for our own countries, but also for global growth, because we know we
benefit from that, as well.
So as I say, I don't think that there
could be any clearer determination to put those actions in place and
certainly nobody is wasting any time in doing so.
Q Was there any
discussion on the strong dollar --
OFFICIAL: Not that I'm aware of.
Q Any discussion of
currency relationships, at all?
OFFICIAL: Not thus far.
Q Do you expect
OFFICIAL: The way these sessions are structured, and
something the United States has encouraged is less structure,
frankly. What we would like to do is have these discussions
follow where the leaders' interests lie. So I wouldn't want
to speculate on where they're going to go.
I can tell you that tomorrow we're going
to be turning to a fuller and more intensive discussion of these
poverty alleviation strategies, with a particular focus on the poorest
countries, looking at everything from trade capacity building, in other
words, what we can do to ensure that the poorest countries have the
tools they need to benefit from open markets.
We're going to be looking at what can be
done to encourage private investment in these
countries. We're going to be looking at what can be done to
not only lower trade barriers, but also improve literacy rates, to
improve health care delivery systems, to improve agricultural
production. Hunger and nutrition are going to be topics tomorrow,
including such things as the benefits -- potential benefits of
biotechnology, which can increase crop yields while using less water
and fewer pesticides.
There are 800 million malnourished people
in this world, 250 million of whom are children. That's an
urgent need. We were talking about the word "urgent"
earlier. That is certainly an urgent need that the leaders
will recognize and be discussing.
So there's a whole series of social sector
related issues that involve strategies that are part of this
partnership that we're trying to build with the developing
world. Those are going to be the subject of the discussion
largely tomorrow; whereas, today was about laying the foundation for
global growth through sound policies, open trade and reforming the
multilateral development banks and the World Bank.
Q Can we put your
initial statement about the President and the death of the protestor on
OFFICIAL: Up to the press folks.
MS. COUNTRYMAN: We can probably
-- we'll type up the transcript of what he said and we'll put it out.
Q Can you get us
some more on the tick-tock of how the President -- who notified the
President? Did he make these comments to the staff, or
MS. COUNTRYMAN: Yes, I'll try.
Q We're hearing
from other countries that that was a subject of discussion among
leaders, with Chirac leading a movement to try to solidify the European
position, in opposition to the Bush rejection of Kyoto -- did that come
up today? Is it going to come up tomorrow? Where
does that fit in?
OFFICIAL: I'm not aware and -- I'm not aware that it came up
today. Environment is an issue that we expect to be taken up
tomorrow. Not only the issue of climate change, of course,
but there is another, very important issue which is environmental
guidelines for export credit agencies like the Export-Import Bank,
Hermes, Coface, many of -- virtually all of the industrialized nations
have export credit agencies that are -- through their lending policies
can have a huge potential impact on the environment.
In fact, the export credit agencies tend
to support more project capital finance -- five to seven times more
than the multilateral development banks do. The multilateral
development banks, like the World Bank, has a set of environmental
guidelines that it follows when it analyzes a particular activity, and
it require an environmental impact assessment to be done. It
requires that assessment to be disclosed prior to financing, so that
there's transparency. Those are the same guidelines that the
United States follows.
The United States has been urging the
other G7 countries to adopt those same guidelines and, in fact, it was
the subject of a commitment made at the Okinawa Summit to adopt high
standards in terms of common environmental guidelines for export credit
agencies. So we're going to be talking about that, as well
as other environmental issues tomorrow.
Q Can I ask about
the grants program? The President's grants idea? Was there
a discussion -- am I right that that would be a revenue loss for the
World Bank? And if so, was there a discussion of how to make
up for that revenue, and would the U.S. put up money for it?
OFFICIAL: No. I'm glad you raised that
question. The way the World Bank currently works is that
World Bank loans to the poorest countries, the so-called IDA-only
countries have a 10-year grace period. So for 10 years,
there's no difference between a loan and a grant. In other
words, if I put money out tomorrow in the form of a loan, or if I put
it out tomorrow in the form of a grant, it doesn't make a difference to
the cash flow of the bank.
So the first part of the answer to the
question is, there's certainly no cash flow issue early
on. In fact, there's no issue for roughly a
decade. And then what you would have to do is assess the
impact of those grants. We happen to think that grants make
sense, first of all, because debts that aren't being -- loans that
aren't being repaid aren't doing anybody any good, and we ought to
recognize that fact, rather than ignore it.
Secondly, we think grants can be very
targeted and can be tied to performance, so they have an element of
discipline that we also think is very useful for stimulating
appropriate investments and ultimately growth. And that's the third
point. If these grants are successful, and these countries
are growing more, 10 years out, you're going to have to sit back and
look at the impact of those grants, and at that point assess what level
of contribution is appropriate for the World Bank.
But we think that grants is an idea whose
time is come. Debt relief is important; we support it, we'll
continue to support it. It has a critical role to play in
relieving countries of unsustainable debt, but that's only half of the
solution. The other part of the solution is preventing them
from getting into the situation where they have unsustainable debt all
over again. Grants solve that problem.
Q Can I ask you to
characterize the discussion on Argentina, and developing countries in
crisis at the moment, and whether there was any concern about
contagion, any effects on other developing countries?
OFFICIAL: There was a discussion in general of the fact that
we need to watch closely the way in which the international financial
system is dealing with these emerging
countries. And in fact, you may have noticed that the G7
statement itself speaks directly to Turkey and to
Argentina. And what it says, if I've got it here so that
you're all aware, is it notes that in the context of emerging market
economies in particular, it notes that it's very important that steps
be taken to strengthen the international financial system to better
prevent crises from beginning, not merely managing them once they occur
but to better prevent them.
The communique goes on to note that recent
measures taken in Argentina and Turkey, the G7 believes, represent
positive steps, and those countries are in the communique, commended
for their efforts, and encouraged to continue implementation of their
reform programs in close collaboration with the IMF.
The whole notion of how to better prevent
crises is one that, of course, has been long on the G7
agenda. Progress has been made. But in addition
to what we can do in terms of the international financial architecture,
there's also the critical element, which is alluded to here
in the statement on Argentina and Turkey -- namely that these
countries have to continue with the implementation of crucial reforms,
and to do so in collaboration with the IMF.
I have to get to another part of town.
9:22 P.M. (L)