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World Bank/IMF Annual Meeting 9/27/89 [OA 4390] [3]
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25
6
5
3
Document No.
WHITE HOUSE STAFFING MEMORANDUM
DATE:
ACTION/CONCURRENCE/COMMENT DUE BY: 2:00 PM Monday, Sept. 25
CONVOCATION, UNIV. OF VIRGINIA,
PRESIDENTIAL ADDRESS:
THURSDAY, SEPT. 28, 11:30 A.M.
SUBJECT:
(9/21/89 - DRAFT FOUR)
ACTION FYI
ACTION FYI
VICE PRESIDENT
MCCLURE
SUNUNU
NEWMAN
SCOWCROFT
PORTER
DARMAN
STUDDERT
BATES
UNTERMEYER
BREEDEN
BROMLEY
CARD
PINKERTON
CICCONI
DEMAREST
FITZWATER
GRAY
HAGIN
REMARKS:
Please forward any comments directly to Chriss Winston, Rm. 122,
x2930, no later than 2:00 P.M., Monday, September 25, with a
copy to my office. Thank you.
RESPONSE:
James W. Cicconi
Assistant to the President
and Deputy to the Chief of Staff
Ext. 2702
THE WHITE HOUSE
WASHINGTON
TO: Kim
FROM:
PETER BRIGHTBILL
Legislative Affairs
The Office of Legislative Affairs has
no comment on:
1) Opening address at the Education
summit
2)
World Bank/IMF speech
Per Rob Portman
Thank you
CC. Jim Cicconi
sinion edits
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
9:35 a.m.
[[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 this 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
Association
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.
#
#
#
THE WHITE HOUSE
WASHINGTON
September 25, 1989
MEMORANDUM FOR CHRISS WINSTON
FROM:
ROGER B. PORTER RBP
SUBJECT:
Presidential Remarks: World Bank/IMF Annual
Meetings
The draft remarks set an extremely positive tone for the
President in building support for the U.S. agenda in the two
institutions. They also complement well the President's UN
remarks. In particular, the Bank/Fund remarks build support
for the debt strategy and environmental efforts, while firmly
resisting pressure to support an increase in IMF quotas. I
suggest changes in the following areas:
-- Page 6, para. 1. We should not characterize the
U.S. role in Mexico's negotiations with its
commercial banks as one of "brokering," since it
feeds the desire on the part of both debtor
countries and their banks to have the U.S. in
the middle.
-- Page 6, para. 4. The reference to the President's
father and Ben Franklin maxims needs a final
sentence applying the point to the international
debt situation.
-- Page 8, para. 5. The reference to the "Group of
Seven" should be to the "Economic Summit." The G-7
is composed of Finance Ministers. The Heads of
State of the G-7 countries, plus the EC, meet at the
Economic Summit.
Alternative language to address these comments is
attached.
Attachment
CC: Jim Cicconi
89 SEP 25 P4 : 06
McNally/Simon
September 22, 1989
Draft Three (B:IMF)
09 SEP 22 P1:08
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.
the Government of
Thanks to these initiatives, the United States was able to
U.S.nole
in
Gober broker an agreement in July between Mexico and its biggest
is well
were able to neach apreament in July.
known,
private lenders. The deal enabled Mexico to make enormous
but we
in reducing
by
adventise it.
shouldn.
progress against 6 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
as a made my way in The world, I was astonophed
spending. We grew up understanding that life isn't an open ended
at how well these basic truths served me. They ever girly
to the world of international finance.
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.
Economic Summit,
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.
#
#
#
THE WHITE HOUSE
WASHINGTON
September 24, 1989
Memorandum to Chriss Winston
From:
Jim Pinkerton of
Subject:
World Bank/IMF Annual Meeting Draft Speech
This is a good speech. Admittedly, there are some places
where we wonder if language from the anti-crime speeches hasn't
seeped in: as when, on page five, we call for "bringing
developing nations and commercial banks back to where they belong
-- the negotiating table." But the environmental language on
page eight, and the de Soto references on page four, are
particularly praiseworthy.
pg. 4, para. 2, line 1 We applaud, and expect that the audience
will too, this page of references to Hernando de Soto, who is
proving that Marxists do not have a monopoly on explaining Third
World poverty.
6,5,1
This graf about Prescott Bush, Sr. seems very much
tacked-on, with no real connection to the previous or succeeding
grafs, or even the speech itself, except for the fact that the
President's father was a banker. We suggest omitting it,
especially because the personal touch seems out of place with
this audience.
8,5,1
The environmental language starting here very
effectively makes the point and continues the powerful
"destruction knows no borders" theme.
###
60 :Ed 25 d3S 68
OFFICE OF THE THE PRESIDENT STATES UNITED
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
NOTICE:
Enclosed are comments from staff members of the Office of
Management and Budget (OMB) Such comments do not necessarily
represent the official position of the Director of OMB or of the
Office of Management and Budget. If you wish to have the
Director's personal comments, please let me know -- and contact
me if you have any questions.
David J. Haun
Executive Assistant
to the Director
89 25 SEP 25 P2: 12
Document No.
WHITE HOUSE STAFFING MEMORANDUM
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:
see comments
James W. Cicconi
Assistant to the President
and Deputy to the Chief of Staff
Ext. 2702
McNally/Simon
September 22, 1989
Draft Three (B:IMF)
SEP22 P1:08 08
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 Dut. 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]]
potentially offenoive? product
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 (right) 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.
#
#
#
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
0
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.
#
#
#
THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release
September 27, 1989
REMARKS BY THE PRESIDENT
TO THE WORLD BANK/IMF ANNUAL MEETING
Sheraton Washington Hotel
Washington, D.C.
9:32 A.M. EDT
THE PRESIDENT: Thank you all very much. Thank you. And
thanks especially to my good friend, our Secretary of the Treasury,
Nick Brady. And thank you, Nick, for your outstanding economic
leadership.
Chairman Lee and President Conable, Mr. Camdessus. It
really is a pleasure for me to be here and to welcome you all to
Washington, D.C. And it's a special privilege for me to be here in
the company of my old friend, former Congressman, now President
Barber Conable.
We in the United States are keenly aware of these annual
gatherings, the importance of them -- you drive the work of all of us
in maintaining a strong international economic and financial system.
And this is my first opportunity to speak to you as
President of the United States. But I've followed the activities of
the International Monetary Fund and the World Bank throughout my
years of public service. And I have visited many of your homelands,
and seen firsthand the problems created by inadequate growth and
development -- problems that your two distinguished institutions are
working hard to solve.
We've 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's 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.
The jury is no longer out. Look at the twó economic
systems and see who has prospered and who has struggled. Let's put
an end to this economic experiment. Because history has decided.
It is not climate, natural resources, or cultural
traditions that make the difference. I said it in my own 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."
In Latin America, in Africa, 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're seeing results.
Even more stunning is the transformation in thinking in
the communist countries -- in both the Soviet Union and in Eastern
Europe. During my recent travels in Poland and Hungary, I was
MORE
- 2 -
impressed by the people. But 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 will welcome the efforts of the Soviet Union to
liberalize and decentralize their economy. I have said many times --
and I want to repeat it here today -- that I want to see perestroika
succeed. A more open and humane Soviet Union can only be in the best
interest of the West. And as we see the evidence of that reform, we
can match it with steps of our own.
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.
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. And yes, 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 our own federal budget deficit and to increase our national
savings rate.
All our nations have a reponsibility to ensure a fair and
open trading system. And we have a tremendous opportunity to advance
that cause now, by making success of this all-important Uruguay round
of trade negotiations.
Making the political commitments necessary to ensure a
success -- look, they 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 -- truly provided new hope for the 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: back to 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
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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 -- almost instantly
-- restore confidence in the Mexican economy. And it's 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, leading to improved growth.
What Mexico has done is not a miracle. It's 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 the debtor countries.
Inefficient, unrealistic, growth-stifling policies simply
must go. Benefits are available to a broad range of other countries
that pursue economic reforms. Several are now actively engaged, I'm
told, with the IMF and World Bank, and with the banking community
itself.
Commercial banks have a special role in making this
process work. And they 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
self-interest. True, success not only will help the debtor nations.
But it will also strengthen the banks, by putting their own
portfolios on a sounder basis.
One of the lessons of the 1980s, 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 very welcome
role in the strengthened debt strategy.
The United States recognizes that the IMF must have
adequate resources to fulfill its critical role. And we will
continue to work with other members, in the hope of reaching a
decision on the quota question on quotas by the end of the year. The
United States has always supported the IMF and we will continue to do
SO.
We also -- we'll 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 absolutely crucial to resolving debt problems. The Bank's
decisions to take on new responsibilities on the debt front are very
welcome.
Also, to address the significant problems of the poorest
countries, the International Development Association, IDA, was
established and will continue to have the support of the United
States.
We have also learned, as I emphasized Monday at the
United Nations, 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. And we must also find ways to
strengthen our environmental and development efforts, through
innovative thinking such as the "debt for nature transactions."
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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 1980s, 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 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 crack down and track down, and confiscate the profits of
drug-related crime.
I am encouraged by the G-7 democracies interested in this
coordinated response to the money laundering menace. But I urge
everyone to join with us to explore new ways to stop money laundering
in its tracks.
And there may be no greater opportunity before us -- all
of us -- today than the challenge of Poland; and then on the broader
landscape Eastern Europe -- the entire 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 the
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.
And I call on the IMF 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.
Today our mutual efforts to improve global growth, to
ease the burdens of developing countries -- their indebtedness -- and
to open markets for trade, have demonstrated anew that progress is
best achieved by facing pressing issues together.
This is a lesson that we must carry with us into the
1990s 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 very much for your hard work. Thank you for
your service. Thank you for your commitment. God bless you and the
nations that you represent. Thank you very much. (Applause.)
END
9:50 A.M. EDT