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Clinton calls for leadership
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September 14, 1998: 3:10 p.m. ET
President echoes Greenspan remarks stressing weight of U.S.'s global role
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NEW YORK (CNNfn) - Hoping to refocus on the work at hand, President Clinton emphasized that U.S. leadership has an "inescapable obligation" to help stabilize global economies, urging the House of Representatives to approve new financing for the International Monetary Fund.
"Maintaining economic growth is the best thing we can do right now not only for the United States but for the global economy," Clinton said in his speech at the Council on Foreign Relations. (333K WAV) (333K AIFF)
Clinton's remarks echoed the comments by Federal Reserve Chairman Alan Greenspan, who on Sept. 4 warned that the U.S. economy could not escape the effects of international market turbulence, which last week engulfed Latin American trade partners, Mexico and Brazil.
In addition, the President has called central bankers and finance ministers from the Group of Seven nations to convene in Washington within the next 30 days with Greenspan and Treasury Secretary Robert Rubin to study ways to strengthen global economies, reform markets and help the IMF adapt to meet the challenges of the new financial crisis.
The request appears to be a concession by the Clinton administration to reform the lending practices of the Fund. Four days ago, the House Appropriations Committee denied the administration's request seeking roughly $18 billion to fund the IMF. Instead, the panel approved just $3.4 billion -- calling for reforms prior to the release of additional funds.
However, at a news conference at the Waldorf-Astoria Hotel, Rubin cautioned that his boss's request for a preliminary report will do very little to address long-term issues.
"These are extraordinarily complex issues. These are not matters that will get resolved quickly," the Treasury secretary told reporters. (261K WAV) (261K AIFF)
Responding to speculation, Rubin also explained the administration was not asking the Fed to ease monetary policy. In his Sept. 4 speech at the University of California in Berkeley, Greenspan remarked that the risk of rising inflation had become more "balanced" since the Federal Open Market Committee's August meeting, suggesting a more neutral stance on interest rates.
"His (Clinton's) view -- and it has been his view since the beginning of this administration -- is to respect totally the independence of the Fed," Rubin said.
Indeed, the Fed's preoccupation with inflation has been the principle reason for strong economic growth at home and abroad, Clinton remarked.
But the "great irony" -- as he called it -- was the strength of the U.S. economy in the wake of global turmoil. The balance of risk has shifted now to less-developed nations. One-quarter of the world's population lives in nations characterized by declining economic growth, he said.
"In the face of this new challenge, America can and must continue to act and to lead to take the urgent steps needed today to calm the financial crisis, restart the engine of growth in Asia and minimize the impact of financial turmoil of other nations in Asia," the President said.
Although the U.S. has a responsibility to aid troubled economies abroad, those governments also must accept the obligation to re-ignite growth by addressing weak links in their economies, Clinton said, referring to nations such as Japan.
The President plans to meet next week with Japanese Prime Minister Keizo Obuchi to discuss new fiscal policies and banking reform as well as reduced trade barriers and open markets.
Clinton also called on the IMF and the U.S. Export-Import Bank to increase financing activities, especially if Latin American trading partners are affected.
To stem some of the currency fluctuations that caused last week's huge capital flows out of Mexico and Brazil, industrialized nations should stand ready to utilize the IMF's $15 billion worth of emergency funding, he said. (242K WAV) (242K AIFF)
"Now it is time for us to rise to our responsibility, as America has been called upon to do so often so many times in the past," Clinton said.
-- by staff writer Robert Liu
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