For Immediate Release
Office of the Press Secretary
July 19, 2001

Background Briefing by
A Senior Administration Official
the Millennium Hotel
London, England

1:30 P.M. (L)

     MS. COUNTRYMAN:  Hi.  We'll start our BACKGROUND briefing by a senior administration official.  He's going to help you understand the exciting times we're about to have in Genoa, the G-7, G-8 Summit.  Thanks.

     SENIOR ADMINISTRATION OFFICIAL:  Thank you.  It's a pleasure to be here.  I'm going to try and give you an overview of what's going to occur in Genoa, focusing in particular on tomorrow, but roughly on the whole summit.

     The President is, of course, looking forward very much to the start of the summit tomorrow at about noon in Genoa.  It is, of course, the first summit of the new millennium, and the focus, as I believe you all know now, is on poverty alleviation.

     As the President said in his speech at the World Bank earlier this week, he believes that a world where some live in comfort and others live on less than $2 a day is a world that is both unstable and unjust.  And he described the opportunity, though, that we have today to bring the poor of the world into an expanding circle of development.  And he described that as a moral challenge, and he also noted that it is, in fact, a priority of U.S. foreign policy.

     The President committed the United States to working in a true partnership with the developing world to remove obstacles to development -- obstacles such as trade barriers, unsustainable debt, illiteracy, hunger, disease.  The President will seek to advance his vision of that partnership at the G-7, G-8 summit in Genoa.

     Now, it's our belief that poverty alleviation begins, first and foremost, with dynamic, sustained global economic growth.  In effect, economic growth, global economic growth is the ultimate poverty alleviation strategy.  So the summit will begin tomorrow at a lunch with the G-7 leaders at which will be discussing what each of us, each of the G-7 countries can do individually and what we can do collectively to ensure sustained global economic growth.

     Now, the first thing that we can do is each get our own houses in order.  And so we'll be discussing the economic situation in each of the countries.  The U.S. is, of course, leading the way.  We've taken decisive action with rate cuts and tax cuts -- tax cuts that ought to inject an estimated $40 billion into the economy in the third quarter, expecting growth to accelerate in the second half of the year.

     And so, there will be a discussion of the actions that can be taken to ensure that each of us contributes to sustained global economic growth.

     And then there are, of course, actions that we can take collectively as the G-7 to ensure that same sustained global economic growth.  And one of those is ensuring that we have a sound international financial system in place.

     As you know, the United States, from the President's World Bank speech, has been focusing in particular this year on the World Bank and the Multilateral Development Banks, the regional development banks and what they can do better to address the issue of poverty.  And in particular, what we've been arguing is that they need to refocus their mission on raising standards of living by increasing productivity growth -- particularly by investing in areas such as education.

     And we're pleased that the G-7 has embraced some reforms proposals for the multilateral development banks that the United States has been advancing -- reform proposals that address issues such as better coordination among the regional development banks and the World Bank, enhancing their own internal governance and accountability so that we know that we're achieving measurable results, reviewing their pricing policies and, in particular, also promoting good governance in the borrowing countries or the recipient countries.

     The other thing, of course, that we've been doing collectively as a G-7 is implementing the so-called HIPC initiative for debt relief -- Heavily Indebted Poor Countries      -- will be talking about implementation of that initiative.  The United States, of course, has been supporting that.  We're encouraging countries to continue to implement necessary reforms and to ensure that the savings from debt relief are invested in key social areas, such as education, health care, and tearing down trade barriers.

     Another issue that we can do collectively, and perhaps the most important thing that the G-7 can do to reignite, as the President said in his World Bank speech, a new era of global economic growth is to lend their support as leaders to the successful launch of a new round of global trade negotiations later this year in Doha when the fourth ministerial of the WTO occurs.

     We believe that there needs to be a renewed commitment to free trade, and we expect the leaders at the G-7 summit to commit themselves to ensuring a successful launch -- to be engaged personally to ensure that that round is launched.  As many of you know, some significant impetus to that was provided earlier this week in Washington when Ambassador Zoellick and his EU counterpart, Pascal Lemy, met to announce that an increasing convergence of views between the U.S. and the EU on what might be included in an agenda for a new round.

     The President, of course, with respect to the round will speak in particular to the issue of trade as a poverty alleviation strategy.  We know that the biggest economic benefit from a global round, which means barriers lowered not only in the industrialized countries, but also in the developing countries -- the biggest benefits will accrue to the developing countries themselves from, in particular, lowering barriers among one another.

     The President will also reiterate something that he noted in his World Bank speech which follows directly from that point, which is that while we respect the right of free expression and the right of people to have their opinions known and heard, and while we believe that legitimate environmental and labor concerns need to be addressed, the fact of the matter is, as former President Zedillo of Mexico said, those who protest against free trade are doing the poor in these countries no favor; that a new round could have a huge impact, potentially huge impact on poverty globally -- and by the way, not just in the poor countries, but also in the middle-income countries as well.

     Then the remainder of the day, after the G-7 sessions are formally concluded and the G-7 statement, I assume, will be released shortly thereafter, early in the evening tomorrow we're going to have a unique event, and that will be the formal establishment or unveiling of the global fund to fight HIV-AIDS, malaria and tuberculosis.

     We're very pleased that this fund follows extremely closely the structure and objectives laid out by the President in May when he met in the Rose Garden with Kofi Annan and President Obasanjo of Nigeria, both of whom will be present at the summit tomorrow night -- and I'll fill you in more on that in a moment    -- and announced, first, the initial contribution for that fund, but also outlined a set of principles that we thought ought to guide the development of the fund.  We think those principles are crucial to ensuring the effectiveness of it, namely its focus on prevention and a continuum of treatment and care, and in particular, several layers of accountability -- not just financial accountability, but scientific and medical accountability to ensure that the manner in which these funds are put to work do, in fact, yield tangible benefits and results because we'll be funding proven practices on the ground in these countries that are affected by the AIDS pandemic.

     The United States also, as part of the formal establishment of this fund -- and we hope to have it up and operational by January 1, which is light speed in the international world if you think about this being a gleam in people's eyes initially at the Okinawa Summit roughly a year ago and now something actually up and running by January 1 -- the United States will be also funding the secretariat of this effort to the tune of about $1 million so that we can ensure that it is, in fact operational as soon as possible.

     Then, the day tomorrow will conclude with a very unique event, the so-called "outreach event," and this event will bring together at the summit, both through a working session and then a subsequent dinner, the leaders of a number of nations from Africa, from Asia and from Latin America together with the leaders of the G-8.  At that point, President Putin will have arrived at the summit and in fact will be present as well for the launch, I believe, of the HIV fund.

     So the leaders of these developing nations, the leaders of the G-8, plus the heads of a number of major international institutions, including the Secretary General of the World Bank, the director generals of the World Health Organization, the Agriculture Organization, Mike Moore will be there.  And we will have a discussion about poverty alleviation strategies.

     The President expects obviously to listen closely, to try and share experiences and listen to the experiences that these leaders share with him about their efforts to combat poverty.  And also about their aspirations. We expect it to be a free-flowing, relatively unstructured discussion, something, by the way, that the United States has been urging that the summit do, mainly be less formal, more unstructured, so we can have a real exchange of views among leaders.

     We expect topics to be raised and touched on, to include obviously, the benefits of trade and a new trade round; hunger, and how we can go about alleviating hunger.  Eight hundred million people hungry in this world, 250 million of them children.  The President will reiterate again what he said in his World Bank speech, namely the benefits in combatting hunger that can be obtained through the use of biotechnology, new technologies that can help developing countries double, triple crop yields while using fewer scarce resources like water and land, as well as using fewer pesticides so it's environmentally friendly as well.

     In addition to trade and hunger, we'll be talking about education, one of the key inputs to growth and development.  And in particular, the President will be highlighting a proposal that he made that the World Bank provide an increasing amount of its funds to the poorest countries in the form of grants, rather than loans; debt relief being a temporary way to relieve countries of an unsustainable debt burden, grants being a permanent way to stop the debt.

     And in particular, we've said that not only should the World Bank be providing more funds in the form of grants, but they should also be providing more funds to education.  The United States is increasing its bilateral assistance to education, international bilateral assistance, by 20 percent this year.  As the President announced at the World Bank speech, he's directing his Secretary of State and the Administrator of the Agency for International Development to develop a new initiative aimed at education in Africa, with particular focus on teacher training.  Teachers, by the way, having been tragically impacted by the AIDS pandemic; some countries losing 10 percent of their teacher training force and being literally, virtually, unable to maintain the level of teachers that they've got and keep pace with the ravages of the pandemic.

     Beyond education, we also expect to talk about wider issue of governance, governance really being a precondition for the wise and effective use of the benefits that accrue from trade, from aid, and from participation in the global economy.  Governance being accountability, transparency, human rights, rule of law.  And this discussion will take, in may cases, I suspect, the form of a lot of listening going on and learning going on, but also one of the focuses of the poverty alleviation strategies articulated at this summit has to do with how we can better provide developing countries the tools to participate in the global economy.  So you're going to hear a lot about capacity building.

     And we can build capacity -- or help these countries build capacity -- in a number of areas.  Trade is one example.  Help them with technical assistance so that they can put in place legislation needed to become a member of the WTO, for example.  We can provide technical assistance on implementation of WTO agreements.

     We're going to be doing something of that sort with our African Growth and Opportunity Initiative later this year, when we invite all the African nations that participate in that initiative to Washington to talk about implementation of the initiative and how we can help them take better advantage of it.

     So that's day one of the summit.  It's an awfully full day and it will range across all the major topics of the summit.  We expect that many of the social issues -- education, disease, and investment in good governance -- many of these issues will be taken up on the second day of the summit, which is exclusively devoted of a discussion among the G-8 of poverty alleviation strategies.  And there we are sure to also pick up such topics as the so-called DOT Force -- you'll be hearing more about that -- and perhaps a demonstration of it, which was the Information Technology Initiative launched at Okinawa.  It's a unique public-private partnership that's come together and developed a comprehensive action plan to focus on how developing countries can take better advantage of digital opportunities in their development strategies, and how we, in turn, can build information technology into our development strategies.

     We also expect to be talking within the G-8 about environmental issues, including the United States urging and strong position and support of all of the other G-8 and all the OECD nations adopting the same strong environmental guidelines for their export credit agencies as are used by the World Bank and by the United States.

     Export credit agencies being such things as the U.S. Export-Import Bank.  These agencies can have a huge impact on the environment.  They provide some five to seven times the amount of project finance capital, globally, as all of the development banks do in a year.  And ensuring that that capital is provided to projects that do not have an adverse environmental impact is something that the United States has done for years by following tough World Bank guidelines.  World Bank does it; regional development banks do it; we'd like to see the other countries do it, as well.

     That's the summit in short -- focus on poverty alleviation strategies through global economic growth, brought about by the G-7 doing the right thing at home and taking decisive action; reforms of the international financial system; the launch of a new trade round; and a true partnership with developing countries to address issues such as education, hunger and disease.

     Happy to take any questions.

     Q    Can you update us on where you are on that right now, on the debt relief, and whether you expect any concrete commitments out of additional countries --

     SENIOR ADMINISTRATION OFFICIAL:  There are 23 HIPCs now going through, currently in process in the program.  There are some 40-plus that are eligible.  One of the things that we want to make sure of is that we get the ones that are in the process, going through the process as smoothly as possible, ensuring implementation of their reforms and a wise use of the savings from debt relief.

     Debt relief, of course, is supposed to free up capital.  These countries, the way it works is the countries are to commit to poverty reduction strategies -- they're actually poverty reduction strategy papers that they submit -- what we want to see is a better monitoring of the use of those savings so we can make sure that the benefits from debt relief are getting where they're going.

     We would also like to see the other countries go through the program. Some of those are countries in conflict.  We've been reaching out to those countries.  But the first thing that has to happen in those countries is they have to lay down their arms.

     Q    Can you say, since Cologne, how much debt has actually been forgiven through this process?

     SENIOR ADMINISTRATION OFFICIAL:  I don't have the number since Cologne.  What I can tell you is that once the 23 HIPCs that are currently in the program complete the program, the stock of debt will have been reduced by almost 70 percent to some $54 billion worth of debt will have been forgiven.

     Q    Have you guys had to change your schedule at all because of the security precautions, and do you think that President Bush will make a comment to protestors the way he did in Quebec?

     SENIOR ADMINISTRATION OFFICIAL:  I'm not aware of any changes in the schedule, and in terms of comments to the protestors, he's already commented about the protestors and to them.  And, look, part of this summit is going to be about engaging.  In fact, a major thrust of it, just as it was at Quebec where we had sort of a very different outreach session there directly with NGOs, we want to engage with those with legitimate concerns -- and we recognize legitimate disagreements.

     I think the President's point in the World Bank speech about trade was simply a very, very powerful one, which is that as he quoted President Zedillo as saying, it is strange, but it seems as if some of these demonstrators want to save the developing world from development.  And what we want to do is work with the developing world to ensure development. And we think one way to get there is trade.

     Q    On the same point, at Seattle, of course, what killed the negotiations had nothing to do with the protestors; it had everything to do with the developing countries, themselves, which have many of the same concerns about further trade opening.  And you will recall, they were very much against a new round at that time, saying that they couldn't absorb the openings in the old round.  I haven't heard the President yet address their concerns.  It's almost as if he saying the opposition comes from the people on the street instead of from the countries that he's saying he wants to help.

     SENIOR ADMINISTRATION OFFICIAL:  First of all, we are addressing their concerns.  Secondly, I don't think that there is that kind of opposition. When we talk developing countries, they're incredibly eager to be involved in freer trade.  We were approached at Quebec by country after country seeking free trade agreements.  We expect that to continue with developing countries around the world.

     One of the things that we are talking about and one of the things that I just talked about is capacity-building.  This is one of the concerns that the developing countries have.  They're saying, look, if we're going to engage in a new round, we need help.  We need help in ensuring the implementation of the old agreements, we may need help in ensuring implementation of the new agreements, we may need help in terms of ensuring that we have the tools to seize the benefits of trade.

     I think they recognize the benefits and they recognize, in particular, the benefits from a multilateral round that far exceed the sort of preferential access that developed country markets have given.

     Q    To follow on that, do they also say that one of the key elements is greatly opening the industrialized world's markets on agriculture, all those areas that are sensitive and still, in many ways, protected?  The President has not really addressed his willingness to do that, particularly in the agricultural and textile areas.

     SENIOR ADMINISTRATION OFFICIAL:  Let me do two things.  One, a brief answer and then hand it over to my colleague for some further facts.  We've got the African Growth and Opportunity Act, we have enhanced Caribbean Basin Initiative.  We have the Andean Trade Preference Act.  We have the General System of Preferences.  We have a whole variety of programs that are being increasingly made robust.

     The President is committed to not only renewing, but also expanding the Andean Trade Preference Act.  With respect to AGOA, I talked about how, later this year in October, we're going to be holding in Washington a conference designed to help countries take advantage of that.  The truth is, we're doing an enormous amount.  Ninety percent of developing country goods enter the United States duty-free.  We are the fastest-growing market for developing countries and take more imports from the developing countries than the entire EU 15 combined.  But I think my colleague can address that in even greater detail.

     SENIOR ADMINISTRATION OFFICIAL:  Just a few additional points.  First of all, I think it's been very clear the United States has a very ambitious set of objectives in agriculture.  And we certainly agree with the statements that we've heard from a number of heads of international organizations that liberalization in the agricultural sector would be of immense benefit to developing countries.

     Second, we have been very strong of the view that these preferential programs for the poorest countries are very important -- AGOA, everything but arms, and so forth.  And so, we want to implement those very actively.

     At the same time, 80 percent of the world's poor live outside those poorest countries.  And that is one more reason why it's only through a broad-based round of global trade negotiations that the full developmental impact of trade is going to be felt; in part because the World Bank itself has done analysis to show that if you try to compartmentalize the benefits of a global round of trade liberalization, that the largest chunk of benefits will be from the south-south trade that will be able to flow and be enhanced by virtue of reduced barriers among the developing countries themselves.

     Certainly a very important part of that will also be developing country exports to developed countries, made possible by liberalization in areas of interest to them.  But that actually is smaller quantitatively than the benefits to developing countries of increased trade among developing countries.

     So our view has been that this is very, very important for development for poverty alleviation; that developing countries would be the major beneficiaries of the broad-based approach that the United States has been advocating towards a new round.

     SENIOR ADMINISTRATION OFFICIAL:  At the risk of beating a dead horse, it's fundamentally why you hear the President say and Ambassador Zoellick say all the time that we're following a trade policy that operates on a number of different levels -- bilateral, regional and multilateral.  And that includes preferential market access, too.

     But I think you'll see a blanket recognition both among the G-7, as well as -- I should say the G-8, as well as among the developing world that, yes, we recognize that they want increased preferential market access; we're providing it.  But they recognize, as well, that the real bang in economic terms comes from multilateral trade liberalization -- south-south and north-south, as well.

     Q    On the AIDS fund, is the trust fund going to be administered by the U.N.?

     SENIOR ADMINISTRATION OFFICIAL:  Not quite administered by the U.N. We've agreed on the Bank, right?

     SENIOR ADMINISTRATION OFFICIAL:  Well, yes -- I mean, there will be a governing --

     SENIOR ADMINISTRATION OFFICIAL:  Why don't you go ahead.

     SENIOR ADMINISTRATION OFFICIAL:  The United Nations organizations that are involved in health we anticipate would be part of a governing council. I mean, my colleague said earlier that what has to happen between now and the end of the year is to put in place the governance and operational structures that would make this institution hit the ground running.

     I think there is a very clear notion that there needs to be a governing structure that would include the U.N. agencies that are actively involved in this fight.  There seems to be a lot of support for the World Bank, as a fiduciary agent, help manage the money.  There's a very strong view that there needs to be a strong role for science and medical accountability.  So you have to have that injected into the governing structure.  And it's precisely these sorts of details, about how you have a governing system that's accountable, but also fast and low cost.  That needs to be worked out in greater detail.  We've put forward some very specific ideas on that, and that's one of the things that's been discussed in the preparatory process leading up to Genoa.

     Q    What's the money used for?  Is it for research?  Is it for medicine?

     SENIOR ADMINISTRATION OFFICIAL:  Well, the primary purpose    -- if you let me just carry on one second further -- we have seen this as being -- focusing on precaution on a continuum of treatment and care.  That means that prevention -- I should have said prevention -- prevention, there are all sorts of programs that we have seen tried in developing countries already that could be replicated in other countries.  The treatment programs could build on some established projects that have already been tried, where in countries where you have a good health delivery system, and a way of monitoring the treatment process and use of the medicines and so forth.  You could work on those and expand them.  But the focus has been prevention, treatment and care, more than research.

     Q    And right now, in addition to the $200 million seed money from the United States, can you tell how much is in the fund?  What's the target is, and what additional commitments the U.S. has made?

     SENIOR ADMINISTRATION OFFICIAL:  Honestly, we don't know.  In other words, a number of countries have made commitments and a number of private organizations have made commitments.  We expect further commitments to be made in the context of the summit.  And rather than speculate what that all adds up to -- some of the commitments are single-year, some are multi-year. Rather than speculate, let's see what number we come up with at the summit. Clearly the summit is an action-forcing event in the best sense here.

     We led the way with the initial contribution.  I think the President described it as a -- what did we call it -- seed money, and if we can at least encourage countries to contribute near our level, that would be an extraordinary thing.

     The real accomplishment, I think, remains not only putting the pieces together, but putting them together in a way that will ensure that those funds are used effectively to really prevent disease, care for the ill and the orphans -- 10 million orphans currently -- and provide treatment.  So, in answer to the question, that's the full range of activities.  It's not focused on any single one exclusively.  We believe that prevention -- it's got to begin with prevention, but treatment and care are a major part of it, as well.

     Q    Has the United Nations set a goal for how much they want to raise or how much they would like to see each country contribute?

     SENIOR ADMINISTRATION OFFICIAL:  Not that I'm aware of.

     Q    I thought it was $70 billion.

     SENIOR ADMINISTRATION OFFICIAL:  The number that you often    -- some people have brooded about that the cost of this problem may be that much on an annual basis.  But keep in mind, not all that money that has to go, necessarily, through the fund.  The United States will spend $1 billion a year, and does spend $1 billion a year, on international AIDS-related efforts already.  We spend more than any other nation, $1 billion a year alone.

     Now, some of that will go through the fund.  A lot of the rest of that is going through our other bilateral and other assistance programs.  But whether it's -- regardless of the sum of money, clearly it's a big problem. This is a huge start toward tackling that problem.  Kofi Annan said -- was very kind to say in the Rose Garden appearance with the President, that this day may be remembered as the day we turn the corner, when he walked out there with President Bush and President Obasanjo.

     And with the actual establishment of a fund formally at the summit, with the start-up, making it operational by January 1, with substantial contributions from not only the G-8, but remember it's supposed to be other countries as well, and the private sector, this is a huge step toward addressing the problem.

     Q    Do we expect the President to make additional commitments tomorrow?

     SENIOR ADMINISTRATION OFFICIAL:  The President has said that the United States is prepared to make additional commitments as the fund proves its success.  And we expect it will do so, with the very unique mechanisms to ensure accountability.

     Q    -- go to the summit with anything in particular in mind?

     SENIOR ADMINISTRATION OFFICIAL:  Not in terms of additional contributions to the fund.  But as I say, we stand ready to support that fund as it proves its success.

     Q    Other than trade and persuading the international financial organizations to get their houses in order, are there any other strategies that are going to be under discussion for restarting the global economic engine, things that can be done collectively?

     SENIOR ADMINISTRATION OFFICIAL:  That's a big "other than," first of all.  I might add, that I think we all agree that the most fundamental and significant thing we could do is lend impetus to launch of a new trade round.  The economic benefits of that for the global economy are huge; we all recognize that.

     The other part of that strategy, of course, the reform of the multilateral development banks.  Huge potential impact on poverty alleviation, as well.  But there are other strategies under discussion.  I mean, the whole subject of the DOT Force is, how do we use these emerging information technologies and incorporate them not simply into, now, the brick and mortar companies, the United States, but how do we make those -- how do we incorporate those technologies into development strategies, and how do we build capacity in the developing world to take advantage of digital opportunities.

     That's a strategy.  We know that increases productivity.  Another major strategy under discussion, and perhaps one almost equally, if not more fundamental than trade, will be education.  We know that that is one of the key inputs into growth for these countries.  And the President has emphasized assessment, to ensure accountability for results.  We have the so-called Dakar goals of universal primary education by 2015 that were set. We'll reaffirm those goals, but how are we going to get there?  One way we're going to ensure we get there is by measuring progress toward those goals, ensuring accountability for results and identifying best practices. Another critical input is going to be teacher training.

     In the Summit of the Americas context, we talked about establishing centers of teacher excellence throughout the region.  That's a model that we're going to be looking at in Africa as well.

     Q    To what extent, then, will the financial problems of Argentina and Turkey and possibly other countries be deemed a threat to the goal that you want to achieve?

     SENIOR ADMINISTRATION OFFICIAL:  Those topics may arise in conversation.  I will say that the issues presented only underscore the potential impact from a new trade round for generating growth and reinvigorating the global economy.

     Q    To what extent do you the issue of the weak Japanese economy, especially the concerns about the huge -- loan -- will come up in the discussion among the G-7 leaders?

     SENIOR ADMINISTRATION OFFICIAL:  I'm sorry, the weak Japanese economy and what else?

     Q    The loan problem reform program.

     SENIOR ADMINISTRATION OFFICIAL:  As the President said at Camp David, he endorses -- he thinks that Prime Minister Koizumi's reform program is on the right path.  We want to support him in that effort, we encourage it. We've noted the need to address structural reforms, as well as the problems of the corporate loans, under-performing loans, and we think that the path is the right one and support him in that.

     Q    Does the G-7 leaders discuss about the emerging market issue, including Argentina emerging market economy issue?

     SENIOR ADMINISTRATION OFFICIAL:  I can't tell you it's for sure going to come up.  Virtually anything could come up.  As I said, one of the things we're looking forward to is a lively and unstructured and candid exchange of views.

     Thank you.

     END  2:07 P.M. (Local