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World Bank/IMF Annual Meeting 9/27/89 [OA 4390] [1]
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World Bank/IMF Annual Meeting 9/27/89 [OA 4390] [1]
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Originally Processed With FOIA(s):
FOIA Number:
S
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the George Bush Presidential
Library Staff.
Record Group/Collection:
George H.W. Bush Presidential Records
Collection/Office of Origin:
Speechwriting, White House Office of
Series:
Speech File Draft Files
Subseries:
Chron File, 1989-1993
OA/ID Number:
13504
Folder ID Number:
13504-005
Folder Title:
World Bank/IMF Annual Meeting 9/27/89 [OA 4390] [1]
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25
6
5
3
Document No.
called in
WHITE HOUSE STAFFING MEMORANDUM
NC on 9/24 S
9/22/89
DATE:
ACTION/CONCURRENCE/COMMENT DUE BY: MONDAY, SEPT. 25, 2:00 p.m.
PRESIDENTIAL REMARKS: WORLD BANK/IMF ANNUAL MEETING
SHERATON WASHINGTON
SUBJECT:
WASHINGTON, DC
WEDNESDAY, SEPTEMBER 27, 1989
(9/22 - draft three)
ACTION FYI
ACTION FYI
VICE PRESIDENT
MCCLURE
"
SUNUNU
NEWMAN
SCOWCROFT
PORTER
DARMAN
STUDDERT
BATES
UNTERMEYER
BOSKIN
BREEDEN
PINKERTON
CARD
ROGERS
CICCONI
WINSTON
DEMAREST
FITZWATER
GRAY
HAGIN
REMARKS:
Please provide comments/edits directly to Chris Winston,
Room 122, x2930 with a copy to my office by Monday, September 25
at 2:00 p.m. Thank you.
RESPONSE:
N.C. H 12 SEP 68
James W. Cicconi
Assistant to the President
and Deputy to the Chief of Staff
Ext. 2702
09 SEP 22
McNally/Simon
September 22, 1989
Draft Three (B:IMF)
PRESIDENTIAL REMARKS: WORLD BANK/IMF ANNUAL MEETING
SHERATON WASHINGTON
WASHINGTON, D.C.
WEDNESDAY, SEPTEMBER 27, 1989
[[ACKNOWLEDGEMENTS]]
It is a pleasure for me to be here this morning, and to
welcome you to Washington.
And it is a special privilege for me to be here in the
company of my old friend, Barber Conable.
Almost 20 years ago, when Barber sat next to me in the House
Ways and Means Committee, we had a bet about who would be first
to become President. [[PAUSE]] We never said, "President of
what" -- so now Barber claims he beat me by two years. [[PAUSE]]
Remember the reaction when Barber was named bank president?
The headlines all said: "BARBARA WHO?" [[PAUSE]] That's okay.
Until this year, the same thing happened all the time to Barbara
Bush. [[PAUSE]]
We in the United States are keenly aware of the importance
of these annual gatherings, and we are proud that we can be your
hosts. We regard these meetings as key events -- events that
drive the work of all of us in maintaining a strong international
economic and financial system.
This is my first opportunity to speak to you as President.
But I have followed the activities of the International Monetary
Fund and the World Bank throughout my years of public service. I
2
have visited many of your homelands, and seen first-hand the
problems created by inadequate growth and development -- problems
that your two distinguished institutions are working to solve.
But today, we're here to talk not about problems -- but
about solutions.
We have witnessed a dramatic shift over the past few years
in the debate over how to achieve sustained growth and
development.
And although not a banker, you should know that I do have a
degree in economics. It taught me one simple lesson: When
you're standing in front of the world's greatest concentration of
financial genius -- don't talk about economics. [[PAUSE]]
Let's talk instead about FREEDOM.
All across the world, there has been an almost simultaneous
rediscovery of the power created when individuals are given the
freedom to decide -- the freedom to act in their own best
interests.
True, we're here today mainly to discuss economic freedom.
But make no mistake. In the end, both economic freedom -- and
political freedom -- are essential and inseparable companions on
the road to national prosperity.
The jury is no longer out. Take any one people, give them
two sets of rules, and see who prospers and who struggles. There
are two Germanys, two Chinas, and two Koreas. It's been almost
50 years. Let's put an end to economic experiment. Because
history has decided. [[PAUSE]]
3
It is not climate, natural resources, or cultural traditions
that make the difference. I said it in my inuagural address:
"We know what works: Freedom works. We know what's right:
Freedom is right. We know how to secure a more just and
prosperous life for man on Earth: through free markets, free
speech, free elections, and the exercise of free will unhampered
by the state.' [[PAUSE]]
In Latin America, Africa, and elsewhere, courageous leaders
are turning away from state control of their economies. Through
economic restructuring and deregulation, they are opening the
door to private initiative. And already they are seeing results.
In Mexico, for example, sound economic policies adopted by
the Salinas government are pointing to a return of flight
capital, and increased foreign investment.
Even more stunning is the transformation in thinking in the
communist countries -- not only in the Soviet Union, but in
Eastern Europe.
Our recent travels among the people of Poland and Hungary
led to many dramatic and stirring encounters. But almost as much
as we were impressed by the people, we were impressed by the
almost universal acceptance of the free market as the best hope
-- indeed, the only hope -- for reversing the economic fortunes
of these two proud countries.
The rediscovery of these basic truths in the East has been
matched by a recommitment to them in the West. Today the members
4
of the European Community are dedicated to eliminating internal
barriers to economic activity by the year 1992.
The Peruvian economist, Hernando de Soto, has helped us
understand this worldwide phenomenon by documenting the process
in Latin America.
de Soto was raised in Peru, and educated there and in
Europe, where he lived until 1979. But the chronic privation of
his homeland haunted him. Rather than analyzing flow-charts or
official statistics for the answer, he began walking the streets
of Lima.
He found that the poor of Latin America -- who have never
read Jefferson or Adam Smith -- ran their affairs democratically,
outside the formal economy, organizing their private, parallel
economy in a free and unregulated manner.
de Soto's great contribution has been to point out what, in
retrospect, may seem obvious: People everywhere want the same
things. And when left alone by government, people everywhere
organize their lives in remarkably similar ways.
de Soto's prescription has been successful everywhere it's
been tried. Governments must bring the "informal" workers into
the regular economy -- and then get out of the way, and let
individual enterprise flourish.
The wider application of these principles within our
economies is critical to achieving the stronger, more prosperous,
global economy of tomorrow.
5
We each must do our part. The industrial countries have a
special responsibility. We must coordinate economic policies to
help provide sustained growth with low inflation and greater
stability in exchange markets.
We in the United States are working especially hard to
reduce the federal budget deficit, and to increase our national
savings rate.
All our nations have a responsibility to ensure a fair and
open trading system. We have a tremendous opportunity to advance
that cause now, by making a success of the Uruguay Round of trade
negotiations.
Making the political commitments necessary to ensure a
success will not be easy in any of our countries. But it must be
done. We must strengthen the GATT, and allow our markets to open
in a mutual, step-by-step fashion.
As we seek to extend and expand growth in the world economy,
the debt problems faced by developing countries are central to
the agendas of the IMF and the World Bank. Over the past year,
the international community's strengthened approach to these
problems has provided new hope for debtor nations.
America's Secretary of the Treasury, my good friend Nick
Brady, has helped direct the focus on debt relief, bringing
developing nations and commercial banks back to where they belong
-- the negotiating table.
Quick action by both the IMF and the World Bank has given
this new strategy vital support. By making clear the terms under
6
which they will support the reduction of debt burdens -- and by
working with countries to develop the necessary economic reform
programs -- these institutions have made it possible to reduce
debt burdens without eliminating growth.
Thanks to these initiatives, the United States was able to
broker an agreement in July between Mexico and its biggest
private lenders. The deal enabled Mexico to make enormous
progress against its debt burden -- some ten to twelve billion
dollars.
This agreement underscores the benefits other debtor
countries stand to realize from this approach. Mexico's savings
from this package will free resources for productive use in the
economy, leading to increased investment and improved growth.
What Mexico has done is not a miracle. It is a product of
hard work and sustained commitment.
My father, Prescott Bush, Sr., was a successful businessman,
a banker whose forte was reorganizing failing companies, turning
money losers into profit makers. Dad believed in the old Ben
Franklin almanac maxims when it came to earning, saving, and
spending. We grew up understanding that life isn't an open-ended
checking account.
The strengthened debt strategy is flexible enough to address
the unique needs of each country. But the strategy will not work
without sound economic policies in debtor countries.
Inefficient, unrealistic, and growth-stifling policies must
go. Benefits are available to a broad range of other countries
7
that pursue economic reforms. Several are now actively engaged
with the IMF and World Bank, and with the banking community --
Costa Rica, Venezuela, and Morocco, to name a few.
Commercial banks have a special role in making this process
work. It is important that the banks follow through on efforts
made with Mexico and the Philippines, and sustain this momentum
with other countries.
We encourage these efforts not as self-sacrifice -- but as
self-interest. True, success not only will help the debtor
nations. But it will also strengthen the banks, by putting their
portfolios on a sounder footing.
One of the lessons of the 1980's, especially the debt
crisis, is that we're all in this together. And when we
cooperate, we all come out winners.
The IMF and the World Bank are at the crossroads of our
cooperative efforts. They are distinct institutions, even though
their work is complementary and their objectives often overlap.
The IMF must continue to foster the sound economic policies
necessary for sustained growth. As part of that responsibility,
the Fund has assumed an important and welcome role in the
strengthened debt strategy.
The United States believes that the IMF must have adequate
resources to fulfill its critical role. We will continue to work
with other members, in the hope of completing the current review
of quotas by the end of the year.
8
However, if we are to ask our taxpayers to put up additional
resources, they must be assured that the funds are truly needed,
and will be used prudently and effectively to achieve shared
objectives.
We all look to the World Bank to help build the foundation
for a future global prosperity that reaches all our citizens.
Its efforts to promote structural reform and development are
crucial to resolving debt problems. The Bank's decisions to take
on new responsibilities on the debt front are welcome.
To promote the Bank's objectives, the international
community established the International Development Agency within
the Bank as a means of providing concessional resources to the
poorest countries. We must all continue to support its
activities.
We have also learned, as I emphasized Monday at the U.N.,
and last summer at the Group of Seven, that environmental
destruction knows no borders.
The twin evils of crushing debt levels and a deteriorating
environment threaten not only the development, but even the
stability of our neighbors in Latin America, Africa, parts of
Asia and even Europe. And global warming and rapid deforestation
pose a threat to all humankind.
We face unprecedented problems. We need -- and we can find
-- unprecedented solutions.
To make growth truly sustainable, we must weigh
environmental considerations more heavily as we make economic
9
decisions. Let us charge those responsible for managing debt
reduction with finding ways and means to strengthen development
strategy through "debt for nature transactions" and other
innovative plans.
Because with leadership, problems can become opportunities.
Over the years -- as we've come to understand the crippling
effects environmental destruction can have on the long-term
growth of developing countries -- the World Bank has increased
the priority it assigns to environmental concerns. The Bank has
introduced such topics as reforestation, biological diversity,
air pollution, and waste disposal, into its country programming
and economic policy dialogue. We applaud these efforts. And we
will continue to support them.
In addressing the challenges of the 1980's, we have come to
a deeper understanding of the importance of cooperating as a
community of nations to address common problems.
This, too, is a matter of returning to basic truths. More
than thirty years ago, President Eisenhower spoke to this group
about his experiences in wartime. He recalled working with
groups that had to develop real cooperation among themselves --
or there could be no success.
Ike noted, as I do now, that there were people in the
audience who were our allies in that grand effort. He said:
"We early found one thing: without the heart, without the
enthusiasm for the cause in which we were working, no cooperation
10
was possible. With that enthusiasm, subordinating all else to
the advancement of the cause, cooperation was easy."
Today our mutual efforts to improve global growth, to ease
the burdens of developing country indebtedness, and to open up
markets for trade, have demonstrated anew that progress is best
achieved by facing pressing issues together.
This is a lesson we must carry with us into the 1990's if we
are to pass on to future generations a global economy that is
strong and resilient, and able to provide for the aspirations of
the citizens of all our countries.
Thank you for your hard work, your service, your commitment.
And thank you for coming to Washington. Godspeed you in your
efforts here, and God bless you and the nations you represent.
#
#
#
REMARKS: WORLD BANK/IMF ANNUAL MEETING
SHERATON WASHINGTON
WASHINGTON, D.C.
WEDNESDAY, SEPTEMBER 27, 1989
9:35 A.M.
THANK YOU. AND THANKS ESPECIALLY TO MY GOOD
FRIEND NICK BRADY, FOR THOSE WARM WORDS, AND FOR HIS
OUTSTANDING ECONOMIC LEADERSHIP -- BOTH AT HOME, AND
ABROAD. [[PAUSE]]
CHAIRMAN LEE, PRESIDENT CONABLE, MR. CAMDESSUS
[[KAHM-DEH-S00]] IT IS A PLEASURE FOR ME TO BE HERE
THIS MORNING, AND TO WELCOME YOU TO WASHINGTON. AND IT
IS A SPECIAL PRIVILEGE FOR ME TO BE HERE IN THE COMPANY
OF MY OLD FRIEND, BARBER CONABLE.
WE IN THE UNITED STATES ARE KEENLY AWARE OF THE
IMPORTANCE OF THESE ANNUAL GATHERINGS, WHICH DRIVE THE
WORK OF ALL OF US IN MAINTAINING A STRONG INTERNATIONAL
ECONOMIC AND FINANCIAL SYSTEM.
- 2 -
THIS IS MY FIRST OPPORTUNITY TO SPEAK TO YOU AS
PRESIDENT. BUT I HAVE FOLLOWED THE ACTIVITIES OF THE
INTERNATIONAL MONETARY FUND AND THE WORLD BANK
THROUGHOUT MY YEARS OF PUBLIC SERVICE. I HAVE VISITED
MANY OF YOUR HOMELANDS, AND SEEN FIRST-HAND THE
PROBLEMS CREATED BY INADEQUATE GROWTH AND
DEVELOPMENT -- PROBLEMS THAT YOUR TWO DISTINGUISHED
INSTITUTIONS ARE WORKING TO SOLVE.
WE HAVE WITNESSED A DRAMATIC SHIFT OVER THE PAST
FEW YEARS IN THE DEBATE OVER HOW TO ACHIEVE SUSTAINED
GROWTH AND DEVELOPMENT.
ALL ACROSS THE WORLD, THERE HAS BEEN AN ALMOST
SIMULTANEOUS REDISCOVERY OF THE POWER CREATED WHEN
INDIVIDUALS ARE GIVEN THE FREEDOM TO ACT IN THEIR OWN
BEST INTERESTS.
TRUE, WE'RE HERE TODAY MAINLY TO DISCUSS ECONOMIC
FREEDOM. BUT MAKE NO MISTAKE. IN THE END, BOTH
ECONOMIC FREEDOM -- AND POLITICAL FREEDOM -- ARE
ESSENTIAL AND INSEPARABLE COMPANIONS ON THE ROAD TO
NATIONAL PROSPERITY.
- 3 -
THE JURY IS NO LONGER OUT. LOOK AT THE TWO
ECONOMIC SYSTEMS AND SEE WHO HAS PROSPERED AND WHO HAS
STRUGGLED. 11 LET'S PUT AN END TO THIS ECONOMIC
EXPERIMENT. \/\/ BECAUSE HISTORY HAS DECIDED.
[[PAUSE]]
IT IS NOT CLIMATE, NATURAL RESOURCES, OR CULTURAL
TRADITIONS THAT MAKE THE DIFFERENCE. I SAID IT IN MY
INAUGURAL ADDRESS:
"WE KNOW WHAT WORKS: FREEDOM WORKS. WE KNOW HOW
TO SECURE A MORE JUST AND PROSPEROUS LIFE FOR MAN ON
EARTH: THROUGH FREE MARKETS, FREE SPEECH, FREE
ELECTIONS, AND THE EXERCISE OF FREE WILL UNHAMPERED BY
THE STATE." [[PAUSE]]
IN LATIN AMERICA, AFRICA, AND MEXICO, COURAGEOUS
LEADERS ARE TURNING AWAY FROM STATE CONTROL OF THEIR
ECONOMIES. ECONOMIC RESTRUCTURING AND DEREGULATION ARE
OPENING THE DOOR TO PRIVATE INITIATIVE. AND ALREADY
THEY ARE SEEING RESULTS.
- 4 -
EVEN MORE STUNNING IS THE TRANSFORMATION IN
THINKING IN THE COMMUNIST COUNTRIES -- IN BOTH THE
SOVIET UNION AND IN EASTERN EUROPE.
DURING OUR RECENT TRAVELS IN POLAND AND HUNGARY,
WE WERE IMPRESSED BY THE PEOPLE. BUT WE WERE ALSO
IMPRESSED BY THE ALMOST UNIVERSAL ACCEPTANCE OF THE
FREE MARKET AS THE BEST HOPE -- INDEED, THE ONLY
HOPE -- FOR REVERSING THE ECONOMIC FORTUNES OF THESE
TWO PROUD COUNTRIES.
AND WE WELCOME THE EFFORTS OF THE SOVIET UNION TO
LIBERALIZE AND DECENTRALIZE THEIR ECONOMY. I HAVE SAID
MANY TIMES THAT I WANT TO SEE PERESTROIKA SUCCEED. A
MORE OPEN AND HUMANE SOVIET UNION CAN ONLY BE IN THE
INTEREST OF THE WEST. AND AS WE SEE THE EVIDENCE OF
THAT REFORM, WE CAN MATCH IT WITH STEPS OF OUR OWN.
- 5 -
THE REDISCOVERY OF THESE BASIC TRUTHS IN THE EAST
HAS BEEN MATCHED BY A RECOMMITMENT TO THEM IN THE WEST.
TODAY THE MEMBERS OF THE EUROPEAN COMMUNITY ARE
DEDICATED TO ELIMINATING INTERNAL BARRIERS TO ECONOMIC
ACTIVITY BY THE END OF 1992. AND, EUROPE'S LEADERS
ASSURE ME THAT THIS WILL NOT BE AT THE COST OF NEW
EXTERNAL BARRIERS TO TRADE WITH THE E.C.
THE PERUVIAN ECONOMIST, HERNANDO DE SOTO, HAS
HELPED US UNDERSTAND A WORLDWIDE ECONOMIC PHENOMENON.
BY WALKING THE STREETS OF LIMA, NOT ANALYZING OFFICIAL
STATISTICS, HE FOUND THAT THE POOR OF LATIN AMERICA --
WHO HAVE NEVER READ JEFFERSON OR ADAM SMITH -- RAN
THEIR AFFAIRS DEMOCRATICALLY, OUTSIDE THE FORMAL
ECONOMY, ORGANIZING THEIR PRIVATE, PARALLEL ECONOMY IN
A FREE AND UNREGULATED MANNER.
DE SOTO'S GREAT CONTRIBUTION HAS BEEN TO POINT OUT
WHAT, IN RETROSPECT, MAY SEEM OBVIOUS: PEOPLE
EVERYWHERE WANT THE SAME THINGS. AND WHEN LEFT ALONE
BY GOVERNMENT, PEOPLE EVERYWHERE ORGANIZE THEIR LIVES
IN REMARKABLY SIMILAR WAYS.
- 6 -
DE SOTO'S PRESCRIPTION OFFERS A CLEAR AND
PROMISING ALTERNATIVE TO ECONOMIC STAGNATION IN LATIN
AMERICA AND OTHER PARTS OF THE WORLD. GOVERNMENTS MUST
BRING THE "INFORMAL" WORKERS INTO THE REGULAR
ECONOMY -- AND THEN GET OUT OF THE WAY, AND LET
INDIVIDUAL ENTERPRISE FLOURISH.
WE EACH MUST DO OUR PART. THE INDUSTRIAL
COUNTRIES HAVE A SPECIAL RESPONSIBILITY. WE MUST
COORDINATE ECONOMIC POLICIES TO HELP PROVIDE SUSTAINED
GROWTH WITH LOW INFLATION, REDUCED TRADE IMBALANCES,
AND GREATER STABILITY IN EXCHANGE MARKETS.
WE IN THE UNITED STATES ARE WORKING ESPECIALLY
HARD TO REDUCE THE FEDERAL BUDGET DEFICIT, AND TO
INCREASE OUR NATIONAL SAVINGS RATE.
ALL OUR NATIONS HAVE A RESPONSIBILITY TO ENSURE A
FAIR AND OPEN TRADING SYSTEM. WE HAVE A TREMENDOUS
OPPORTUNITY TO ADVANCE THAT CAUSE NOW, BY MAKING A
SUCCESS OF THE URUGUAY ROUND OF TRADE NEGOTIATIONS.
- 7 -
MAKING THE POLITICAL COMMITMENTS NECESSARY TO
ENSURE A SUCCESS WILL NOT BE EASY, BUT WE MUST
STRENGTHEN THE GATT, AND ALLOW OUR MARKETS TO OPEN IN A
MUTUAL, STEP-BY-STEP FASHION.
AS WE SEEK TO EXTEND AND EXPAND GROWTH IN THE
WORLD ECONOMY, THE DEBT PROBLEMS FACED BY DEVELOPING
COUNTRIES ARE CENTRAL TO THE AGENDAS OF THE IMF AND THE
WORLD BANK. OVER THE PAST YEAR, THE INTERNATIONAL
COMMUNITY'S STRENGTHENED APPROACH TO THESE PROBLEMS HAS
PROVIDED NEW HOPE FOR DEBTOR NATIONS.
AMERICA'S SECRETARY OF THE TREASURY, NICK BRADY,
HAS HELPED DIRECT THE FOCUS ON DEBT REDUCTION AS A
COMPLEMENT TO CONTINUED NEW LENDING -- BRINGING
DEVELOPING NATIONS AND COMMERCIAL BANKS BACK TO WHERE
THEY BELONG: THE NEGOTIATING TABLE.
- 8 -
QUICK ACTION BY BOTH THE IMF AND THE WORLD BANK
HAS GIVEN THIS NEW STRATEGY VITAL SUPPORT. BY MAKING
CLEAR THE TERMS UNDER WHICH THEY WILL SUPPORT THE
REDUCTION OF DEBT BURDENS -- AND BY WORKING WITH
COUNTRIES TO DEVELOP THE NECESSARY ECONOMIC REFORM
PROGRAMS -- THESE INSTITUTIONS HAVE MADE IT POSSIBLE TO
REDUCE DEBT BURDENS AND PROVIDE A SOLID FOUNDATION FOR
GROWTH.
THANKS TO THESE INITIATIVES, MEXICO REACHED AN
AGREEMENT WITH ITS CREDITOR BANKS ENABLING MEXICO TO
MAKE ENORMOUS PROGRESS IN REDUCING ITS DEBT BURDEN. IT
ALSO HELPED RESTORE CONFIDENCE IN THE MEXICAN ECONOMY
WHICH HAS ALREADY RESULTED IN A RETURN OF CAPITAL AND
NEW FOREIGN INVESTMENT.
THIS AGREEMENT UNDERSCORES THE BENEFITS OTHER
DEBTOR COUNTRIES STAND TO REALIZE FROM THIS APPROACH.
MEXICO'S SAVINGS FROM THIS PACKAGE WILL FREE RESOURCES
FOR PRODUCTIVE USE IN THE ECONOMY, LEADING TO INCREASED
INVESTMENT AND IMPROVED GROWTH.
- 9 -
WHAT MEXICO HAS DONE IS NOT A MIRACLE. IT IS A
PRODUCT OF HARD WORK AND SUSTAINED COMMITMENT.
THE STRENGTHENED DEBT STRATEGY IS FLEXIBLE ENOUGH
TO ADDRESS THE UNIQUE NEEDS OF EACH COUNTRY. BUT THE
STRATEGY WILL NOT WORK WITHOUT SOUND ECONOMIC POLICIES
IN DEBTOR COUNTRIES.
INEFFICIENT, UNREALISTIC, AND GROWTH-STIFLING
POLICIES MUST GO. BENEFITS ARE AVAILABLE TO A BROAD
RANGE OF OTHER COUNTRIES THAT PURSUE ECONOMIC REFORMS.
SEVERAL ARE NOW ACTIVELY ENGAGED WITH THE IMF AND WORLD
BANK, AND WITH THE BANKING COMMUNITY.
COMMERCIAL BANKS HAVE A SPECIAL ROLE IN MAKING
THIS PROCESS WORK AND MUST FOLLOW THROUGH ON EFFORTS
MADE WITH MEXICO AND THE PHILIPPINES, AND BROADEN THEIR
EFFORTS WITH OTHER COUNTRIES.
WE ENCOURAGE THESE STEPS NOT AS SELF-SACRIFICE --
BUT AS SELF-INTEREST. TRUE, SUCCESS NOT ONLY WILL HELP
THE DEBTOR NATIONS. BUT IT WILL ALSO STRENGTHEN THE
BANKS, BY PUTTING THEIR PORTFOLIOS ON A SOUNDER
FOOTING.
- 10 -
ONE OF THE LESSONS OF THE 1980'S, ESPECIALLY THE
DEBT CRISIS, IS THAT WE'RE ALL IN THIS TOGETHER. AND
WHEN WE COOPERATE, WE ALL COME OUT WINNERS.
THE IMF AND THE WORLD BANK ARE AT THE CROSSROADS
OF OUR COOPERATIVE EFFORTS. THE IMF MUST CONTINUE TO
FOSTER THE SOUND ECONOMIC POLICIES NECESSARY FOR
SUSTAINED GROWTH. AS PART OF THAT RESPONSIBILITY, THE
FUND HAS ASSUMED AN IMPORTANT AND WELCOME ROLE IN THE
STRENGTHENED DEBT STRATEGY.
THE UNITED STATES RECOGNIZES THAT THE IMF MUST
HAVE ADEQUATE RESOURCES TO FULFILL ITS CRITICAL ROLE.
WE WILL CONTINUE TO WORK WITH OTHER MEMBERS, IN THE
HOPE OF REACHING A DECISION ON QUOTAS BY THE END OF THE
YEAR. THE UNITED STATES HAS ALWAYS SUPPORTED THE IMF
AND WILL CONTINUE TO DO so.
WE ALL LOOK TO THE WORLD BANK TO HELP BUILD THE
FOUNDATION FOR A FUTURE GLOBAL PROSPERITY THAT REACHES
ALL PEOPLES. ITS EFFORTS TO PROMOTE STRUCTURAL REFORM
AND DEVELOPMENT ARE CRUCIAL TO RESOLVING DEBT PROBLEMS.
THE BANK'S DECISIONS TO TAKE ON NEW RESPONSIBILITIES ON
THE DEBT FRONT ARE WELCOME.
- 11 -
ALSO, TO ADDRESS THE SIGNIFICANT PROBLEMS OF THE
POOREST COUNTRIES, THE INTERNATIONAL DEVELOPMENT
ASSOCIATION WAS ESTABLISHED AND WILL CONTINUE TO HAVE
THE SUPPORT OF THE UNITED STATES.
WE HAVE ALSO LEARNED, AS I EMPHASIZED MONDAY AT
THE U.N., AND LAST SUMMER AT THE PARIS SUMMIT, THAT
ENVIRONMENTAL DESTRUCTION KNOWS NO BORDERS.
TO MAKE GROWTH TRULY SUSTAINABLE, WE MUST WEIGH
ENVIRONMENTAL CONSIDERATIONS MORE HEAVILY AS WE MAKE
ECONOMIC DECISIONS. WE MUST ALSO FIND WAYS TO
STRENGTHEN OUR ENVIRONMENTAL AND DEVELOPMENTAL EFFORTS,
THROUGH INNOVATIVE THINKING SUCH AS "DEBT FOR NATURE"
TRANSACTIONS.
- 12 -
OVER THE YEARS -- AS WE'VE COME TO UNDERSTAND THE
EFFECT OF ENVIRONMENTAL DESTRUCTION ON THE LONG-TERM
GROWTH OF DEVELOPING COUNTRIES -- THE WORLD BANK HAS
INCREASED THE PRIORITY IT ASSIGNS TO ENVIRONMENTAL
CONCERNS. WE APPLAUD THOSE EFFORTS. BUT THERE IS MORE
TO BE DONE. WE NEED TO WORK MORE COOPERATIVELY TO
DEVELOP CONSTRUCTIVE SOLUTIONS TO GLOBAL WARMING,
INCLUDING MEASURES TO PROMOTE ENERGY EFFICIENCY AND
CONSERVATION AND GREATER PROTECTION OF FOREST
RESOURCES.
IN ADDRESSING THE CHALLENGES OF THE 1980'S, WE
HAVE COME TO A DEEPER UNDERSTANDING OF THE IMPORTANCE
OF COOPERATING AS A COMMUNITY OF NATIONS TO ADDRESS
COMMON PROBLEMS.
- 13 -
I CAN THINK OF NO BETTER CURRENT EXAMPLE THAN THE
NEED TO WORK TOGETHER TO DEAL WITH INTERNATIONAL DRUG
TRAFFICKING AND MONEY LAUNDERING. IT IS A WORLDWIDE
PROBLEM. DRUG MONEY UNDERMINES HONEST BUSINESSES,
CORRUPTS POLITICAL INSTITUTIONS, AND EVEN THREATENS THE
SECURITY OF NATIONS. TO CONCEAL THEIR OBSCENE PROFITS,
DRUG BARONS MUST WASH THEIR MONEY BY CYCLING IT THROUGH
FINANCIAL INSTITUTIONS AND ILLEGITIMATE SHELL
CORPORATIONS.
THE UNITED STATES RENEWS ITS CALL UPON ALL
COUNTRIES TO RATIFY THE UNITED NATIONS VIENNA
CONVENTION, AND MAKE MONEY LAUNDERING A CRIMINAL AND
EXTRADITABLE OFFENSE. WE NEED TOUGH MEASURES TO TRACK
DOWN AND CONFISCATE THE PROFITS OF DRUG-RELATED CRIME.
I AM ENCOURAGED BY THE G-7 DEMOCRACIES' INTEREST
IN A COORDINATED RESPONSE TO THE MONEY LAUNDERING
MENACE. I URGE EVERYONE TO JOIN WITH US TO EXPLORE NEW
WAYS TO STOP MONEY LAUNDERING IN ITS TRACKS.
- 14 -
AND THERE MAY BE NO GREATER OPPORTUNITY BEFORE US
ALL TODAY THAN THE CHALLENGE OF POLAND AND MORE BROADLY
EASTERN EUROPE -- WHERE COUNTRIES ARE IN THE THROES OF
DRAMATIC POLITICAL AND ECONOMIC CHANGE.
THE UNITED STATES AND ITS INTERNATIONAL PARTNERS
HAVE ALREADY UNDERTAKEN NEW INITIATIVES TOWARD POLAND.
BUT NOW, IN LIGHT OF CLEARLY GROWING NEEDS, THE RECENT
ACCESSION OF A SOLIDARITY-LED GOVERNMENT, AND OUR SELF-
EVIDENT STAKE IN ITS SUCCESS, WE MUST DO MORE. WE
UNDERSTAND THE POLISH GOVERNMENT HAS UNDER
CONSIDERATION A BOLD PLAN FOR ECONOMIC RECOVERY.
I CALL ON THE I.M.F. AND THE WORLD BANK TO WORK
RAPIDLY WITH POLAND TO DEVELOP SUCH A PROGRAM AND
ENSURE ITS SUCCESSFUL IMPLEMENTATION. FOR ITS PART,
THE UNITED STATES INTENDS TO BE OUT IN FRONT OF THIS
EFFORT, TO TAKE ADVANTAGE OF THIS HISTORIC DEVELOPMENT
AND TO ENSURE ITS SUCCESS.
- 15 -
TODAY OUR MUTUAL EFFORTS TO IMPROVE GLOBAL GROWTH,
TO EASE THE BURDENS OF DEVELOPING COUNTRY INDEBTEDNESS,
AND TO OPEN UP MARKETS FOR TRADE, HAVE DEMONSTRATED
ANEW THAT PROGRESS IS BEST ACHIEVED BY FACING PRESSING
ISSUES TOGETHER.
THIS IS A LESSON WE MUST CARRY WITH US INTO THE
1990'S IF WE ARE TO PASS ON TO FUTURE GENERATIONS A
GLOBAL ECONOMY THAT IS STRONG AND RESILIENT, AND ABLE
TO PROVIDE FOR THE ASPIRATIONS OF THE CITIZENS OF ALL
OUR COUNTRIES.
THANK YOU FOR YOUR HARD WORK, YOUR SERVICE, YOUR
COMMITMENT. GOD BLESS YOU AND THE NATIONS YOU
REPRESENT.
#
#
#
THE WHITE HOUSE
WASHINGTON
September 25, 1989
INFORMATION
MEMORANDUM FOR THE PRESIDENT
THROUGH:
CHRISS WINSTON cw
FROM:
EDWARD McNALLY NW
SUBJECT:
REMARKS FOR THE WORLD BANK/IMF ANNUAL MEETING
I. SUMMARY
Attached for your consideration and review are draft
remarks for Wednesday morning's address to the annual meeting of
the World Bank and the International Monetary Fund.
II. DISCUSSION
At 9:35 a.m. on Wednesday, September 27, 1989, you are
scheduled to arrive at the Sheraton Washington Hotel to address
the annual meeting of the World Bank and the International
Monetary Fund.
You will be introduced by Treasury Secretary Nicholas
Brady. An audience of approximately 3,500 international bankers
is expected to attend.
The attached remarks were originally developed in a
draft prepared by the Treasury Department, after being re-worked
here by Stephen Farrar, Associate Director for International
Economic Policy in Roger Porter's Office. The remarks emphasize
your belief in the power of free markets and free choices to
bring about national prosperity for any country, offer your
support for the Brady Plan for debt relief, and underscore your
commitment to safeguarding the environment even while promoting
economic development abroad.
McNally/Simon
September 25, 1989 7:30 pm
Draft Four (B:IMF)
PRESIDENTIAL REMARKS: WORLD BANK/IMF ANNUAL MEETING
SHERATON WASHINGTON
WASHINGTON, D.C.
WEDNESDAY, SEPTEMBER 27, 1989
9:35 a.m.
Thank you. And thanks especially to my good friend Nick
Brady, for those warm words, and for his outstanding economic
leadership -- both at home, and abroad. [[PAUSE]]
Chairman Lee [[TYU KYU SUNG LEE, CHAIRMAN, WORLD BANK BOARD
OF GOVERNORS] 1, President Conable [[BARBER CONABLE, WORLD BANK
PRESIDENT] Mr. Camdessus [[KAHM-deh-SOOS]] [[MICHEL CAMDESSUS,
IMF MANAGING DIRECTOR]].
It is a pleasure for me to be here this morning, and to
welcome you to Washington.
And it is a special privilege for me to be here in the
company of my old friend, Barber Conable.
Almost 20 years ago, when Barber sat next to me in the House
Ways and Means Committee, we had a bet about who would be first
to become President. [[PAUSE]] We never said, "President of
what" -- so now Barber claims he beat me by two years. [[PAUSE]]
Remember the reaction when Barber was named bank president?
The headlines all said: "BARBARA WHO?" [[PAUSE]] That's okay.
Until this year, the same thing happened all the time to Barbara
Bush. [PAUSE]]
We in the United States are keenly aware of the importance
of these annual gatherings, and we are proud that we can be your
2
hosts, as we have been for over 40 years since these institutions
were created. We regard these meetings as key events -- events
that drive the work of all of us in maintaining a strong
international economic and financial system.
This is my first opportunity to speak to you as President.
But I have followed the activities of the International Monetary
Fund and the World Bank throughout my years of public service. I
have visited many of your homelands, and seen first-hand the
problems created by inadequate growth and development -- problems
that your two distinguished institutions are working to solve.
But today, we're here to talk not about problems -- but
about solutions.
We have witnessed a dramatic shift over the past few years
in the debate over how to achieve sustained growth and
development.
And although not a banker, you should know that I do have a
degree in economics. It taught me one simple lesson: When
you're standing in front of the world's greatest concentration of
financial genius -- don't talk about economics. [[PAUSE]]
Let's talk instead about FREEDOM.
All across the world, there has been an almost simultaneous
rediscovery of the power created when individuals are given the
freedom to decide -- the freedom to act in their own best
interests.
True, we're here today mainly to discuss economic freedom.
But make no mistake. In the end, both economic freedom -- and
)
3
political freedom -- are essential and inseparable companions on
the road to national prosperity.
The jury is no longer out. Take any one people, give them
two sets of rules, and see who prospers and who struggles. Since
World War II, we have seen two Germanys, [two Chinas], and two
Koreas. It's been almost 50 years. Let's put an end to this
economic experiment. VV Because history has decided.
[[PAUSE]]
It is not climate, natural resources, or cultural traditions
that make the difference. I said it in my inaugural address:
"We know what works: Freedom works. We know what's right:
Freedom is right. We know how to secure a more just and
prosperous life for man on Earth: through free markets, free
speech, free elections, and the exercise of free will unhampered
by the state." [[PAUSE]]
In Latin America, Africa, and elsewhere, courageous leaders
are turning away from state control of their economies. Through
economic restructuring and deregulation, they are opening the
door to private initiative. And already they are seeing results.
In Mexico, for example, sound economic policies adopted by
the Salinas government -- coupled with their recent agreement
with creditor banks -- are leading to a increased capital and
foreign investment, and reduced domestic interest rates.
Even more stunning is the transformation in thinking in the
communist countries -- not only in the Soviet Union, but in
Eastern Europe.
4
Our recent travels among the people of Poland and Hungary
led to many dramatic and stirring encounters. But almost as much
as we were impressed by the people, we were impressed by the
almost universal acceptance of the free market as the best hope
-- indeed, the only hope -- for reversing the economic fortunes
of these two proud countries.
The rediscovery of these basic truths in the East has been
matched by a recommitment to them in the West. Today the members
of the European Community are dedicated to eliminating internal
barriers to economic activity by the end of 1992. And, Europe's
leaders assure me that this will not be at the cost of new
external barriers to trade with the E.C.
The Peruvian economist, Hernando de Soto, has helped us
understand this worldwide phenomenon by documenting the process
in Latin America.
De Soto was raised in Peru, and educated there and in
Europe, where he lived until 1979. But the chronic privation of
his homeland haunted him. Rather than analyzing flow-charts or
official statistics for the answer, he began walking the streets
of Lima.
He found that the poor of Latin America -- who have never
read Jefferson or Adam Smith -- ran their affairs democratically,
outside the formal economy, organizing their private, parallel
economy in a free and unregulated manner.
De Soto's great contribution has been to point out what, in
retrospect, may seem obvious: People everywhere want the same
5
things. And when left alone by government, people everywhere
organize their lives in remarkably similar ways.
De Soto's prescription offers a clear and promising
alternative to economic stagnation in Latin America and other
parts of the world. Governments must bring the "informal"
workers into the regular economy -- and then get out of the way,
and let individual enterprise flourish.
The wider application of these principles within our
economies is critical to achieving the stronger, more prosperous,
global economy of tomorrow.
We each must do our part. The industrial countries have a
special responsibility. We must coordinate economic policies to
help provide sustained growth with low inflation, reduced trade
imbalances, and greater stability in exchange markets.
We in the United States are working especially hard to
reduce the federal budget deficit, and to increase our national
savings rate.
All our nations have a responsibility to ensure a fair and
open trading system. We have a tremendous opportunity to advance
that cause now, by making a success of the Uruguay Round of trade
negotiations.
Making the political commitments necessary to ensure a
success will not be easy in any of our countries. But it must be
done. We must strengthen the GATT, and allow our markets to open
in a mutual, step-by-step fashion.
6
As we seek to extend and expand growth in the world economy,
the debt problems faced by developing countries are central to
the agendas of the IMF and the World Bank. Over the past year,
the international community's strengthened approach to these
problems has provided new hope for debtor nations.
America's Secretary of the Treasury, my good friend Nick
Brady, has helped direct the focus on debt reduction as a
complement to continued new lending -- bringing developing
nations and commercial banks back to where they belong: the
negotiating table.
Quick action by both the IMF and the World Bank has given
this new strategy vital support. By making clear the terms under
which they will support the reduction of debt burdens -- and by
working with countries to develop the necessary economic reform
programs -- these institutions have made it possible to reduce
debt burdens and provide a solid foundation for growth.
Thanks to these initiatives, Mexico reached an agreement in
July with its creditor banks. The deal enabled Mexico to make
enormous progress in reducing its debt burden. It also helped
restore confidence in the Mexican economy which has already
resulted in a return of flight capital and new foreign
investment.
This agreement underscores the benefits other debtor
countries stand to realize from this approach. Mexico's savings
from this package will free resources for productive use in the
economy, leading to increased investment and improved growth.
7
What Mexico has done is not a miracle. It is a product of
hard work and sustained commitment.
The strengthened debt strategy is flexible enough to address
the unique needs of each country. But the strategy will not work
without sound economic policies in debtor countries.
Inefficient, unrealistic, and growth-stifling policies must
go. Benefits are available to a broad range of other countries
that pursue economic reforms. Several are now actively engaged
with the IMF and World Bank, and with the banking community --
Costa Rica, Venezuela, Poland, and Morocco, to name a few.
Commercial banks have a special role in making this process
work. It is important that the banks follow through on efforts
made with Mexico and the Philippines, and broaden their efforts
with other countries.
We encourage these efforts not as self-sacrifice -- but as
self-interest. True, success not only will help the debtor
nations. But it will also strengthen the banks, by putting their
portfolios on a sounder footing.
One of the lessons of the 1980's, especially the debt
crisis, is that we're all in this together. And when we
cooperate, we all come out winners.
The IMF and the World Bank are at the crossroads of our
cooperative efforts. They are distinct institutions, even though
their work is complementary and their objectives often overlap.
The IMF must continue to foster the sound economic policies
necessary for sustained growth. As part of that responsibility,
8
the Fund has assumed an important and welcome role in the
strengthened debt strategy.
The United States recognizes that the IMF must have adequate
resources to fulfill its critical role. We will continue to work
with other members, in the hope of reaching a decision on quotas
by the end of the year. The United States has always supported
the IMF and will continue to do so.
We all look to the World Bank to help build the foundation
for a future global prosperity that reaches all our citizens.
Its efforts to promote structural reform and development are
crucial to resolving debt problems. The Bank's decisions to take
on new responsibilities on the debt front are welcome.
In order to address the significant problems of the poorest
countries, the international community established the
International Development Association (IDA) within the Bank as a
means of providing concessional resources to those countries.
I.D.A. will continue to have the support of the United States as
it has had in the past.
We have also learned, as I emphasized Monday at the U.N.,
and last summer at the Paris Summit, that environmental
destruction knows no borders.
[The twin problems of crushing debt levels and a
deteriorating environment threaten not only the development, but
even the stability of our neighbors in Latin America, Africa,
parts of Asia and even Europe. And global warming and rapid
deforestation pose a threat to all humankind.]
9
We face unprecedented problems. We need -- and we can find
-- unprecedented solutions.
To make growth truly sustainable, we must weigh
environmental considerations more heavily as we make economic
decisions. We must also find ways to strengthen our
environmental and developmental efforts, through innovative
thinking such as "debt for nature transactions."
Because with leadership, problems can become opportunities.
Over the years -- as we've come to understand the crippling
effects environmental destruction can have on the long-term
growth of developing countries -- the World Bank has increased
the priority it assigns to environmental concerns. We applaud
the efforts made thus far. But there is more to be done. In
particular, we need to work more cooperatively to develop
constructive solutions to global warming, including measures to
promote energy efficiency and conservation and greater protection
of forest resources.
In addressing the challenges of the 1980's, we have come to
a deeper understanding of the importance of cooperating as a
community of nations to address common problems.
I can think of no better current example than the need to
work together to deal with international drug trafficking and
money laundering. It is a worldwide problem. Drug money
undermines honest businesses, corrupts political institutions,
and even threatens the security of nations. To conceal their
obscene profits, drug barons must wash their money by cycling it
10
through financial institutions and illegitimate shell
corporations.
The United States renews its call upon all countries to
ratify the United Nations Vienna Convention, and make money
laundering a criminal and extraditable offense. We need tough
measures to track down and confiscate the profits of drug-related
crime.
I was encouraged at the 1989 Economic Summit, when the G-7
industrial democracies demonstrated an active interest in a
coordinated response to the money laundering menace. My country
will host next year's summit, and I guarantee that the United
States will be pushing for further progress and bold action. I
urge everyone to join with us to explore new ways to stop money
laundering in its tracks.
This, too, is a matter of returning to basic truths. More
than thirty years ago, President Eisenhower spoke to this group
about his experiences in wartime. He recalled working with
groups that had to develop real cooperation among themselves --
or there could be no success.
Ike noted, as I do now, that there were people in the
audience who were our allies in that grand effort. He said:
"We early found one thing: without the heart, without the
enthusiasm for the cause in which we were working, no cooperation
was possible. With that enthusiasm, subordinating all else to
the advancement of the cause, cooperation was easy."
11
Today our mutual efforts to improve global growth, to ease
the burdens of developing country indebtedness, and to open up
markets for trade, have demonstrated anew that progress is best
achieved by facing pressing issues together.
This is a lesson we must carry with us into the 1990's if we
are to pass on to future generations a global economy that is
strong and resilient, and able to provide for the aspirations of
the citizens of all our countries.
Thank you for your hard work, your service, your commitment.
And thank you for coming to Washington. Godspeed you in your
efforts here, and God bless you and the nations you represent.
#
#
#
McNally/Simon
September 25, 1989 7:30 pm
Draft Four (B:IMF)
PRESIDENTIAL REMARKS: WORLD BANK/IMF ANNUAL MEETING
SHERATON WASHINGTON
WASHINGTON, D.C.
WEDNESDAY, SEPTEMBER 27, 1989
9:35 A.M.
Thank you. And thanks especially to my good friend Nick
Brady, for those warm words, and for his outstanding economic
leadership -- both at home, and abroad. [[PAUSE]]
Chairman Lee [[TYU KYU SUNG LEE, CHAIRMAN, WORLD BANK BOARD
OF GOVERNORS] President Conable [[BARBER CONABLE, WORLD BANK
PRESIDENT] Mr. Camdessus [[KAHM-deh-SOOS]] [MICHEL CAMDESSUS,
IMF MANAGING DIRECTOR]].
It is a pleasure for me to be here this morning, and to
welcome you to Washington.
And it is a special privilege for me to be here in the
company of my old friend, Barber Conable.
Almost 20 years ago, when Barber sat next to me in the House
Ways and Means Committee, we had a bet about who would be first
to become President. [[PAUSE]] We never said, "President of
what" -- so now Barber claims he beat me by two years. [[PAUSE]]
Remember the reaction when Barber was named bank president?
The headlines all said: "BARBARA WHO?" [[PAUSE] That's okay.
Until this year, the same thing happened all the time to Barbara
Bush. [[PAUSE]]
We in the United States are keenly aware of the importance
of these annual gatherings, and we are proud that we can be your
2
hosts, as we have been for over 40 years since these institutions
were created. We regard these meetings as key events -- events
that drive the work of all of us in maintaining a strong
international economic and financial system.
This is my first opportunity to speak to you as President.
But I have followed the activities of the International Monetary
Fund and the World Bank throughout my years of public service. I
have visited many of your homelands, and seen first-hand the
problems created by inadequate growth and development -- problems
that your two distinguished institutions are working to solve.
But today, we're here to talk not about problems -- but
about solutions.
We have witnessed a dramatic shift over the past few years
in the debate over how to achieve sustained growth and
development.
And although I am not a banker, you should know that I do
have a degree in economics. It taught me one simple lesson:
When you're standing in front of the world's greatest
concentration of financial genius -- don't talk about economics.
[[PAUSE]]
Let's talk instead about FREEDOM.
All across the world, there has been an almost simultaneous
rediscovery of the power created when individuals are given the
freedom to decide -- the freedom to act in their own best
interests.
3
True, we're here today mainly to discuss economic freedom.
But make no mistake. In the end, both economic freedom -- and
political freedom -- are essential and inseparable companions on
the road to national prosperity.
The jury is no longer out. Look at the two economic systems
and see who has prospered and who has struggled. Let's put
an end to this economic experiment. VV Because history has
decided. [[PAUSE]]
It is not climate, natural resources, or cultural traditions
that make the difference. I said it in my inaugural address:
"We know what works: Freedom works. We know what's right:
Freedom is right. We know how to secure a more just and
prosperous life for man on Earth: through free markets, free
speech, free elections, and the exercise of free will unhampered
by the state." [[PAUSE]]
In Latin America, Africa, and elsewhere, courageous leaders
are turning away from state control of their economies. Through
economic restructuring and deregulation, they are opening the
door to private initiative. And already they are seeing results.
In Mexico, for example, sound economic policies adopted by
the Salinas government -- coupled with their recent agreement
with creditor banks -- are leading to increased capital and
foreign investment, and reduced domestic interest rates.
Even more stunning is the transformation in thinking in the
communist countries -- not only in the Soviet Union, but in
Eastern Europe.
4
Our recent travels among the people of Poland and Hungary
led to many dramatic and stirring encounters. But almost as much
as we were impressed by the people, we were impressed by the
almost universal acceptance of the free market as the best hope
-- indeed, the only hope -- for reversing the economic fortunes
of these two proud countries.
The rediscovery of these basic truths in the East has been
matched by a recommitment to them in the West. Today the members
of the European Community are dedicated to eliminating internal
barriers to economic activity by the end of 1992. And, Europe's
leaders assure me that this will not be at the cost of new
external barriers to trade with the E.C.
The Peruvian economist, Hernando de Soto, has helped us
understand this worldwide phenomenon by documenting the process
in Latin America.
De Soto was raised in Peru, and educated there and in
Europe, where he lived until 1979. But the chronic privation of
his homeland haunted him. Rather than analyzing flow-charts or
official statistics for the answer, he began walking the streets
of Lima.
He found that the poor of Latin America -- who have never
read Jefferson or Adam Smith -- ran their affairs democratically,
outside the formal economy, organizing their private, parallel
economy in a free and unregulated manner.
De Soto's great contribution has been to point out what, in
retrospect, may seem obvious: People everywhere want the same
5
things. And when left alone by government, people everywhere
organize their lives in remarkably similar ways.
De Soto's prescription offers a clear and promising
alternative to economic stagnation in Latin America and other
parts of the world. Governments must bring the "informal"
workers into the regular economy -- and then get out of the way,
and let individual enterprise flourish.
The wider application of these principles within our
economies is critical to achieving the stronger, more prosperous,
global economy of tomorrow.
We each must do our part. The industrial countries have a
special responsibility. We must coordinate economic policies to
help provide sustained growth with low inflation, reduced trade
imbalances, and greater stability in exchange markets.
We in the United States are working especially hard to
reduce the federal budget deficit, and to increase our national
savings rate.
All our nations have a responsibility to ensure a fair and
open trading system. We have a tremendous opportunity to advance
that cause now, by making a success of the Uruguay Round of trade
negotiations.
Making the political commitments necessary to ensure a
success will not be easy in any of our countries. But it must be
done. We must strengthen the GATT, and allow our markets to open
in a mutual, step-by-step fashion.
6
As we seek to extend and expand growth in the world economy,
the debt problems faced by developing countries are central to
the agendas of the IMF and the World Bank. Over the past year,
the international community's strengthened approach to these
problems has provided new hope for debtor nations.
America's Secretary of the Treasury, my good friend Nick
Brady, has helped direct the focus on debt reduction as a
complement to continued new lending -- bringing developing
nations and commercial banks back to where they belong: the
negotiating table.
Quick action by both the IMF and the World Bank has given
this new strategy vital support. By making clear the terms under
which they will support the reduction of debt burdens -- and by
working with countries to develop the necessary economic reform
programs -- these institutions have made it possible to reduce
debt burdens and provide a solid foundation for growth.
Thanks to these initiatives, Mexico reached an agreement in
July with its creditor banks. The deal enabled Mexico to make
enormous progress in reducing its debt burden. It also helped
restore confidence in the Mexican economy which has already
resulted in a return of flight capital and new foreign
investment.
This agreement underscores the benefits other debtor
countries stand to realize from this approach. Mexico's savings
from this package will free resources for productive use in the
economy, leading to increased investment and improved growth.
7
What Mexico has done is not a miracle. It is a product of
hard work and sustained commitment.
The strengthened debt strategy is flexible enough to address
the unique needs of each country. But the strategy will not work
without sound economic policies in debtor countries.
Inefficient, unrealistic, and growth-stifling policies must
go. Benefits are available to a broad range of other countries
that pursue economic reforms. Several are now actively engaged
with the IMF and World Bank, and with the banking community --
Costa Rica, Venezuela, Totand, and Morocco, to name a few.
Commercial banks have a special role in making this process
work. It is important that the banks follow through on efforts
made with Mexico and the Philippines, and broaden their efforts
with other countries.
We encourage these efforts not as self-sacrifice -- but as
self-interest. True, success not only will help the debtor
nations. But it will also strengthen the banks, by putting their
portfolios on a sounder footing.
One of the lessons of the 1980's, especially the debt
crisis, is that we're all in this together. And when we
cooperate, we all come out winners.
The IMF and the World Bank are at the crossroads of our
cooperative efforts. They are distinct institutions, even though
their work is complementary and their objectives often overlap.
The IMF must continue to foster the sound economic policies
necessary for sustained growth. As part of that responsibility,
8
the Fund has assumed an important and welcome role in the
strengthened debt strategy.
The United States recognizes that the IMF must have adequate
resources to fulfill its critical role. We will continue to work
with other members, in the hope of reaching a decision on quotas
by the end of the year. The United States has always supported
the IMF and will continue to do SO.
We all look to the World Bank to help build the foundation
for a future global prosperity that reaches all our citizens.
Its efforts to promote structural reform and development are
crucial to resolving debt problems. The Bank's decisions to take
on new responsibilities on the debt front are welcome.
In order to address the significant problems of the poorest
countries, the international community established the
International Development Association (IDA) within the Bank as a
means of providing concessional resources to those countries.
I.D.A. will continue to have the support of the United States as
it has had in the past.
We have also learned, as I emphasized Monday at the U.N.,
and last summer at the Paris Summit, that environmental
destruction knows no borders.
The twin problems of crushing debt levels and a
deteriorating environment threaten the development of our
neighbors in Latin America, Africa, parts of Asia and even
Europe. And global warming and rapid deforestation pose a threat
to all humankind.
9
We face unprecedented problems. We need -- and we can find
-- unprecedented solutions.
To make growth truly sustainable, we must weigh
environmental considerations more heavily as we make economic
decisions. We must also find ways to strengthen our
environmental and developmental efforts, through innovative
thinking such as "debt for nature transactions."
Over the years -- as we've come to understand the crippling
effects environmental destruction can have on the long-term
growth of developing countries -- the World Bank has increased
the priority it assigns to environmental concerns. We applaud
the efforts made thus far. But there is more to be done. In
particular, we need to work more cooperatively to develop
constructive solutions to global warming, including measures to
promote energy efficiency and conservation and greater protection
of forest resources.
In addressing the challenges of the 1980's, we have come to
a deeper understanding of the importance of cooperating as a
community of nations to address common problems.
I can think of no better current example than the need to
work together to deal with international drug trafficking and
money laundering. It is a worldwide problem. Drug money
undermines honest businesses, corrupts political institutions,
and even threatens the security of nations. To conceal their
obscene profits, drug barons must wash their money by cycling it
10
through financial institutions and illegitimate shell
corporations.
The United States renews its call upon all countries to
ratify the United Nations Vienna Convention, and make money
laundering a criminal and extraditable offense. We need tough
measures to track down and confiscate the profits of drug-related
crime.
I was encouraged at the 1989 Economic Summit, when the G-7
industrial democracies demonstrated an active interest in a
coordinated response to the money laundering menace. My country
will host next year's summit, and I guarantee that the United
States will be pushing for further progress and bold action. I
urge everyone to join with us to explore new ways to stop money
laundering in its tracks.
msent Poland
This, too, is a matter of returning to basic truths More
than thirty years ago, President Eisenhower spoke to this group
about his experiences in wartime. He recalled working with
groups that had to develop real cooperation among themselves --
or there could be no success.
Ike noted, as I do now, that there were people in the
audience who were our allies in that grand effort. He said:
"We early found one thing: without the heart, without the
enthusiasm for the cause in which we were working, no cooperation
was possible. With that enthusiasm, subordinating all else to
the advancement of the cause, cooperation was easy. "
11
Today our mutual efforts to improve global growth, to ease
the burdens of developing country indebtedness, and to open up
markets for trade, have demonstrated anew that progress is best
achieved by facing pressing issues together.
This is a lesson we must carry with us into the 1990's if we
are to pass on to future generations a global economy that is
strong and resilient, and able to provide for the aspirations of
the citizens of all our countries.
Thank you for your hard work, your service, your commitment.
And thank you for coming to Washington. Godspeed you in your
efforts here, and God bless you and the nations you represent.
#
#
#
Document No. 015337
WHITE HOUSE STAFFING MEMORANDUM
9/26/89
DATE:
ACTION/CONCURRENCE/COMMENT DUE BY:
PRESIDENTIAL REMARKS: WORLD BANK/IMF ANNUAL MEETING
SHERATON WASHINGTON
SUBJECT:
WASHINGTON, DC
WEDNESDAY, SEPTEMBER 27, 1989
(9/25 - draft four)
ACTION FYI
ACTION FYI
VICE PRESIDENT
MCCLURE
SUNUNU
NEWMAN
SCOWCROFT
PORTER
DARMAN
STUDDERT
BATES
UNTERMEYER
BREEDEN
ROGERS
CARD
PINKERTON
BOSKIN
CICCONI
WINSTON
DEMAREST
FITZWATER
GRAY
HAGIN
REMARKS:
The attached has been forwarded to the President.
RESPONSE:
James W. Cicconi
Assistant to the President
and Deputy to the Chief of Staff
Ext. 2702
THE WHITE HOUSE
WASHINGTON
25 P8:
September 25, 1989
INFORMATION
MEMORANDUM FOR THE PRESIDENT
THROUGH:
CHRISS WINSTON CW
FROM:
EDWARD McNALLY They
SUBJECT:
REMARKS FOR THE WORLD BANK/IMF ANNUAL MEETING
I. SUMMARY
Attached for your consideration and review are draft
remarks for Wednesday morning's address to the annual meeting of
the World Bank and the International Monetary Fund.
II. DISCUSSION
At 9:35 a.m. on Wednesday, September 27, 1989, you are
scheduled to arrive at the Sheraton Washington Hotel to address
the annual meeting of the World Bank and the International
Monetary Fund.
You will be introduced by Treasury Secretary Nicholas
Brady. An audience of approximately 3,500 international bankers
is expected to attend.
The attached remarks were originally developed in a
draft prepared by the Treasury Department, after being re-worked
here by Stephen Farrar, Associate Director for International
Economic Policy in Roger Porter's Office. The remarks emphasize
your belief in the power of free markets and free choices to
bring about national prosperity for any country, offer your
support for the Brady Plan for debt relief, and underscore your
commitment to safeguarding the environment even while promoting
economic development abroad.
McNally/Simon
September 25, 1989 7:30 pm
Draft Four (B:IMF)
PRESIDENTIAL REMARKS: WORLD BANK/IMF ANNUAL MEETING
SHERATON WASHINGTON
WASHINGTON, D.C.
WEDNESDAY, SEPTEMBER 27, 1989
9:35 A.M.
Thank you. And thanks especially to my good friend Nick
Brady, for those warm words, and for his outstanding economic
leadership -- both at home, and abroad. [[PAUSE]]
Chairman Lee [TYU KYU SUNG LEE, CHAIRMAN, WORLD BANK BOARD
OF GOVERNORS] 1, President Conable [ [BARBER CONABLE, WORLD BANK
PRESIDENT] Mr. Camdessus [[KAHM-deh-SOOs]] [[MICHEL CAMDESSUS,
IMF MANAGING DIRECTOR]]
It is a pleasure for me to be here this morning, and to
welcome you to Washington.
And it is a special privilege for me to be here in the
company of my old friend, Barber Conable.
Almost 20 years ago, when Barber sat next to me in the House
Ways and Means Committee, we had a bet about who would be first
to become President. [[PAUSE]] We never said, "President of
what" -- so now Barber claims he beat me by two years. [[PAUSE]]
Remember the reaction when Barber was named bank president?
The headlines all said: "BARBARA WHO?" [[PAUSE]] That's okay.
Until this year, the same thing happened all the time to Barbara
Bush. [[PAUSE]]
We in the United States are keenly aware of the importance
of these annual gatherings, and we are proud that we can be your
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hosts, as we have been for over 40 years since these institutions
were created. We regard these meetings as key events -- events
that drive the work of all of us in maintaining a strong
international economic and financial system.
This is my first opportunity to speak to you as President.
But I have followed the activities of the International Monetary
Fund and the World Bank throughout my years of public service. I
have visited many of your homelands, and seen first-hand the
problems created by inadequate growth and development -- problems
that your two distinguished institutions are working to solve.
But today, we're here to talk not about problems -- but
about solutions.
We have witnessed a dramatic shift over the past few years
in the debate over how to achieve sustained growth and
development.
And although I am not a banker, you should know that I do
have a degree in economics. It taught me one simple lesson:
When you're standing in front of the world's greatest
concentration of financial genius -- don't talk about economics.
[[PAUSE]]
Let's talk instead about FREEDOM.
All across the world, there has been an almost simultaneous
rediscovery of the power created when individuals are given the
freedom to decide -- the freedom to act in their own best
interests.
3
True, we're here today mainly to discuss economic freedom.
But make no mistake. In the end, both economic freedom -- and
political freedom -- are essential and inseparable companions on
the road to national prosperity.
The jury is no longer out. Look at the two economic systems
and see who has prospered and who has struggled. Let's put
an end to this economic experiment. VV Because history has
decided. [[PAUSE]]
It is not climate, natural resources, or cultural traditions
that make the difference. I said it in my inaugural address:
"We know what works: Freedom works. We know what's right:
Freedom is right. We know how to secure a more just and
prosperous life for man on Earth: through free markets, free
speech, free elections, and the exercise of free will unhampered
by the state." [[PAUSE]]
In Latin America, Africa, and elsewhere, courageous leaders
are turning away from state control of their economies. Through
economic restructuring and deregulation, they are opening the
door to private initiative. And already they are seeing results.
In Mexico, for example, sound economic policies adopted by
the Salinas government -- coupled with their recent agreement
with creditor banks -- are leading to increased capital and
foreign investment, and reduced domestic interest rates.
Even more stunning is the transformation in thinking in the
communist countries -- not only in the Soviet Union, but in
Eastern Europe.
4
Our recent travels among the people of Poland and Hungary
led to many dramatic and stirring encounters. But almost as much
as we were impressed by the people, we were impressed by the
almost universal acceptance of the free market as the best hope
-- indeed, the only hope -- for reversing the economic fortunes
of these two proud countries.
The rediscovery of these basic truths in the East has been
matched by a recommitment to them in the West. Today the members
of the European Community are dedicated to eliminating internal
barriers to economic activity by the end of 1992. And, Europe's
leaders assure me that this will not be at the cost of new
external barriers to trade with the E.C.
The Peruvian economist, Hernando de Soto, has helped us
understand this worldwide phenomenon by documenting the process
in Latin America.
De Soto was raised in Peru, and educated there and in
Europe, where he lived until 1979. But the chronic privation of
his homeland haunted him. Rather than analyzing flow-charts or
official statistics for the answer, he began walking the streets
of Lima.
He found that the poor of Latin America -- who have never
read Jefferson or Adam Smith -- ran their affairs democratically,
outside the formal economy, organizing their private, parallel
economy in a free and unregulated manner.
De Soto's great contribution has been to point out what, in
retrospect, may seem obvious: People everywhere want the same
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things. And when left alone by government, people everywhere
organize their lives in remarkably similar ways.
De Soto's prescription offers a clear and promising
alternative to economic stagnation in Latin America and other
parts of the world. Governments must bring the "informal"
workers into the regular economy -- and then get out of the way,
and let individual enterprise flourish.
The wider application of these principles within our
economies is critical to achieving the stronger, more prosperous,
global economy of tomorrow.
We each must do our part. The industrial countries have a
special responsibility. We must coordinate economic policies to
help provide sustained growth with low inflation, reduced trade
imbalances, and greater stability in exchange markets.
We in the United States are working especially hard to
reduce the federal budget deficit, and to increase our national
savings rate.
All our nations have a responsibility to ensure a fair and
open trading system. We have a tremendous opportunity to advance
that cause now, by making a success of the Uruguay Round of trade
negotiations.
Making the political commitments necessary to ensure a
success will not be easy in any of our countries. But it must be
done. We must strengthen the GATT, and allow our markets to open
in a mutual, step-by-step fashion.
6
As we seek to extend and expand growth in the world economy,
the debt problems faced by developing countries are central to
the agendas of the IMF and the World Bank. Over the past year,
the international community's strengthened approach to these
problems has provided new hope for debtor nations.
America's Secretary of the Treasury, my good friend Nick
Brady, has helped direct the focus on debt reduction as a
complement to continued new lending -- bringing developing
nations and commercial banks back to where they belong: the
negotiating table.
Quick action by both the IMF and the World Bank has given
this new strategy vital support. By making clear the terms under
which they will support the reduction of debt burdens -- and by
working with countries to develop the necessary economic reform
programs -- these institutions have made it possible to reduce
debt burdens and provide a solid foundation for growth.
Thanks to these initiatives, Mexico reached an agreement in
July with its creditor banks. The deal enabled Mexico to make
enormous progress in reducing its debt burden. It also helped
restore confidence in the Mexican economy which has already
resulted in a return of flight capital and new foreign
investment.
This agreement underscores the benefits other debtor
countries stand to realize from this approach. Mexico's savings
from this package will free resources for productive use in the
economy, leading to increased investment and improved growth.
7
What Mexico has done is not a miracle. It is a product of
hard work and sustained commitment.
The strengthened debt strategy is flexible enough to address
the unique needs of each country. But the strategy will not work
without sound economic policies in debtor countries.
Inefficient, unrealistic, and growth-stifling policies must
go. Benefits are available to a broad range of other countries
that pursue economic reforms. Several are now actively engaged
with the IMF and World Bank, and with the banking community --
Costa Rica, Venezuela, Poland, and Morocco, to name a few.
Commercial banks have a special role in making this process
work. It is important that the banks follow through on efforts
made with Mexico and the Philippines, and broaden their efforts
with other countries.
We encourage these efforts not as self-sacrifice -- but as
self-interest. True, success not only will help the debtor
nations. But it will also strengthen the banks, by putting their
portfolios on a sounder footing.
One of the lessons of the 1980's, especially the debt
crisis, is that we're all in this together. And when we
cooperate, we all come out winners.
The IMF and the World Bank are at the crossroads of our
cooperative efforts. They are distinct institutions, even though
their work is complementary and their objectives often overlap.
The IMF must continue to foster the sound economic policies
necessary for sustained growth. As part of that responsibility,
8
the Fund has assumed an important and welcome role in the
strengthened debt strategy.
The United States recognizes that the IMF must have adequate
resources to fulfill its critical role. We will continue to work
with other members, in the hope of reaching a decision on quotas
by the end of the year. The United States has always supported
the IMF and will continue to do so.
We all look to the World Bank to help build the foundation
for a future global prosperity that reaches all our citizens.
Its efforts to promote structural reform and development are
crucial to resolving debt problems. The Bank's decisions to take
on new responsibilities on the debt front are welcome.
In order to address the significant problems of the poorest
countries, the international community established the
International Development Association (IDA) within the Bank as a
means of providing concessional resources to those countries.
I.D.A. will continue to have the support of the United States as
it has had in the past.
We have also learned, as I emphasized Monday at the U.N.,
and last summer at the Paris Summit, that environmental
destruction knows no borders.
The twin problems of crushing debt levels and a
deteriorating environment threaten the development of our
neighbors in Latin America, Africa, parts of Asia and even
Europe. And global warming and rapid deforestation pose a threat
to all humankind.
9
We face unprecedented problems. We need -- and we can find
-- unprecedented solutions.
To make growth truly sustainable, we must weigh
environmental considerations more heavily as we make economic
decisions. We must also find ways to strengthen our
environmental and developmental efforts, through innovative
thinking such as "debt for nature transactions."
Over the years -- as we've come to understand the crippling
effects environmental destruction can have on the long-term
growth of developing countries -- the World Bank has increased
the priority it assigns to environmental concerns. We applaud
the efforts made thus far. But there is more to be done. In
particular, we need to work more cooperatively to develop
constructive solutions to global warming, including measures to
promote energy efficiency and conservation and greater protection
of forest resources.
In addressing the challenges of the 1980's, we have come to
a deeper understanding of the importance of cooperating as a
community of nations to address common problems.
I can think of no better current example than the need to
work together to deal with international drug trafficking and
money laundering. It is a worldwide problem. Drug money
undermines honest businesses, corrupts political institutions,
and even threatens the security of nations. To conceal their
obscene profits, drug barons must wash their money by cycling it
10
through financial institutions and illegitimate shell
USE
corporations.
The United States renews its call upon all countries to
ratify the United Nations Vienna Convention, and make money
laundering a criminal and extraditable offense. We need tough
measures to track down and confiscate the profits of drug-related
crime.
I was encouraged at the 1989 Economic Summit, when the G-7
industrial democracies demonstrated an active interest in a
coordinated response to the money laundering menace. My country
will host next year's summit, and I guarantee that the United
States will be pushing for further progress and bold action. I
urge everyone to join with us to explore new ways to stop money
laundering in its tracks.
This, too, is a matter of returning to basic truths. More
than thirty years ago, President Eisenhower spoke to this group
about his experiences in wartime. He recalled working with
groups that had to develop real cooperation among themselves --
or there could be no success.
Ike noted, as I do now, that there were people in the
audience who were our allies in that grand effort. He said:
"We early found one thing: without the heart, without the
enthusiasm for the cause in which we were working, no cooperation
was possible. With that enthusiasm, subordinating all else to
the advancement of the cause, cooperation was easy."
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Today our mutual efforts to improve global growth, to ease
the burdens of developing country indebtedness, and to open up
markets for trade, have demonstrated anew that progress is best
achieved by facing pressing issues together.
This is a lesson we must carry with us into the 1990's if we
are to pass on to future generations a global economy that is
strong and resilient, and able to provide for the aspirations of
the citizens of all our countries.
Thank you for your hard work, your service, your commitment.
And thank you for coming to Washington. Godspeed you in your
efforts here, and God bless you and the nations you represent.
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