    [Public Papers of the Presidents of the United States: William J. Clinton (1995, Book II)]
    [October 11, 1995]
    [Pages 1566-1571]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks to the International Monetary Fund and the World Bank
    October 11, 1995

        Mr. Chairman, Mr. Secretaries, Mr. Camdessus, President Wolfensohn,
    to the governors of the International Monetary Fund and the World Bank
    Group, honored guests: On behalf of the United States, it's an honor to
    welcome you to Washington for your 50th annual meeting. And I am
    especially pleased to have the opportunity to speak to this group at a
    moment when you can see the fruits of your labors.
        Ordinarily, accomplishments of great institutions like these come
    slowly. Yet, today the visit of President Zedillo of Mexico reminds us
    that in only 9 months, with the help of the international community,
    Mexico has pulled back from the brink of financial disaster. After one
    of the most severe financial emergencies in the postwar era, Mexico
    again is on the road to stability and growth. The Mexican stock exchange
    has recovered. Inflation is stable. Interest rates are down.
    International markets have been reassured. And most impressively, in
    only

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    7 months, Mexico was able to return to private capital markets.
        As you have heard, President Zedillo has announced that Mexico will
    begin repaying its short-term debt with a $700 million installment this
    month, well ahead of schedule.
        Mexico's success is a tribute first to President Zedillo's
    leadership, his courage, and his government's steadfast commitment to
    carry through tough economic reforms, though they have required great
    sacrifices from the Mexican people. They have borne these sacrifices,
    the austerity, the increased unemployment in the short run, with the
    hope that they will pay off in long-term growth and the better lives
    that ordinary Mexican citizens deserve.
        That of course is the hope of people throughout the world, the hope
    we must address, the hope to which we must give reality as we move into
    the next century.
        The international financial institutions, the IMF, the World Bank,
    the Inter-American Development Bank, all your swift and decisive support
    for the stabilization package played a vital role in bringing this
    hopeful moment to pass. I particularly want to thank Mr. Camdessus for
    his leadership.
        The United States also acted decisively. We acted decisively for
    Mexico and for America, for helping Mexico helped to protect one of our
    biggest export markets and 700,000 jobs that depend upon our trade with
    Mexico. It helped to prevent an economic collapse that could have caused
    serious dislocation along our 2,000-mile border and had a grave impact
    on our common efforts to limit immigration to legal immigration. But
    more importantly, it was the right thing to do, because the United
    States and Mexico are neighbors.
        The truth is, in the global economy of the 21st century, we are all
    neighbors. Helping Mexico not only prevented a national crisis, it
    prevented this national crisis from turning into a multinational
    catastrophe by arresting the spread of uncertainty throughout the
    world's emerging markets. At that time, which many of you will remember
    well, every sign on exchanges in South America, in Asia, in Europe,
    registered a looming disaster for the developing countries. Those
    emerging markets support more than 3 million American jobs. They're
    essential to our economy and to the well-being of our people, but
    they're more important for our common commitment to a more peaceful,
    more democratic, more free world.
        In many of the nations embracing free enterprise for the first time,
    the very ideas that underpin market economies were thrown into doubt,
    into severe doubt, by the Mexican crisis. Open markets, privatization,
    deregulation: these things came under a cloud of suspicion. The decision
    of the countries in the developing world, Central and Eastern Europe,
    the Newly Independent States of the former Soviet Union, and other
    nations, to embrace these ideas has been one of the great achievements
    of this century. No American leader could allow one setback in one
    nation to undermine this tremendous wave of history.
        But I ask you to remember also that the Mexican crisis put into high
    relief tensions that are less evident in many, many emerging economies
    throughout the world in the new realities of the 21st century. It
    therefore provides for us a powerful reminder of why we must continue to
    lead in the face of these extraordinary new challenges and these new
    opportunities.
        History will look back on us and judge how well we responded to this
    time of intense economic transformation. It is the most intensive period
    of economic change since the industrial revolution. The revolutions in
    communications and technology, the development of nonstop global
    markets, the vast currency flows that are now the tides of international
    business, all these have brought enormous advantages for those who can
    embrace and succeed in the new global economy.
        But these forces have also made all our societies more vulnerable to
    disturbances that once may have seemed distant but which now directly
    affect the jobs and livelihoods in every nation in the world, from the
    richest to the poorest. The unbridled forces of the global market make
    it more difficult for every nation to sustain the social contract, to
    sustain individual opportunity for all citizens, to keep families
    strong, to keep communities thriving, to keep hope alive.
        The truth is, in this new world there are powerful forces of
    integration and powerful forces of disintegration. And as we approach
    the 21st century, we must adapt our thoughts and our actions to this new
    reality. No nation can turn its back, and we will all have to work
    together if we want the promise of the 21st century to outweigh its
    peril in every nation in the globe.

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        The trend toward globalization, after all, has far surpassed
    anything the great figures of Bretton Woods could have imagined.
    Interdependence among nations has grown so deep that literally it is now
    meaningless to speak of a sharp dividing line between foreign and
    domestic policy. In the United States, when we think of economic policy,
    we can't divide that which is domestic from that which is global. When
    we think of security policy, we know that our efforts to combat
    terrorism, whether it's in the World Trade Center incident or in
    Oklahoma City, have very much in common with our efforts to help our
    friends around the world to deal with a bus blowing up in the Middle
    East or a vial of sarin gas being broken open in a Japanese subway or in
    so many other instances that all of you can well relate to.
        We simply must adjust the world's financial architecture to these
    new conditions. We must forge a system strong enough, yet flexible
    enough, to make the most of the historic opportunities and the historic
    obligations before us.
        Billions of people, after all, in Asia, in Latin America, in Africa,
    in Europe, who are turning to democracy and free markets need to see
    that there can be tangible benefits from their decision and a better
    life after breaking the shackles of the past.
        Today, a child born in Bangkok or Buenos Aires or Johannesburg
    enjoys the possibility of a vastly better life than his or her forebears
    could ever have imagined. But to redeem that promise, we must work to
    exalt the forces of integration and to overcome the forces of
    disintegration that globalization brings. We must see that a future
    crisis like Mexico's does not rob children of the better lives before
    those lives ever get started.
        Fifty-one years ago, at another moment of historic change, President
    Roosevelt urged our Congress to approve the Bretton Woods agreements. He
    drew a dark picture of--or a clear picture of stark contrast. The
    choice, he said then, was, and I quote, ``between a world caught again
    in a maelstrom of panic and economic warfare or a world that will move
    toward unity and widely shared prosperity. This point in history,'' he
    said, ``is full of promise and of danger.'' Today, as we stand on the
    verge of a new century and confront a radically new international
    economy, I say to you that we are at a point of history full of promise
    and of danger.
        To master the challenge before us, we must focus our efforts on
    expanding trade, improving investment and capital flows, and promoting
    sustainable development here. And we must do it in the context of our
    devotion to human freedom and democracy.
        In the last 2\1/2\ years, our administration, working together with
    many of you in this room, has taken tremendous strides toward opening
    world markets and promoting global growth. First, we tried to become a
    better international citizen by putting our own economic house in order.
    When I became President, our Government deficit was $290 billion a year,
    claiming capital from around the world that needed to be properly put to
    other uses and keeping interest rates unnecessarily high. In 3 years,
    that deficit has been reduced to $160 billion a year, and we are working
    in good faith to bring our budget into balance across the party lines
    here in America.
        Second, we promoted a higher rate of growth, led by investment and
    free of inflation, with the result that we now have the best combined
    rates of unemployment and inflation in the United States in 25 years.
        Third, we worked with like-minded people throughout the world to
    advance the cause of global trade. We have worked to increase our
    exports, to create high-wage jobs, to improve our own standards of
    living and those of other nations, and to sustain growth. We brought the
    Uruguay round into force. We made NAFTA a reality. Our trade Ambassador,
    Mr. Kantor, has negotiated over 80 other separate bilateral trade
    agreements to expand trade. We are forging agreements with the Asia-
    Pacific region and with the Americas that mean that early in the next
    century trade will flow freely over most of the Earth.
        The best way to grow our economies is to expand trade. Our
    experience shows that. In the last 3 years, there has been a stunning
    explosion in American exports, up 4 percent in 1993, 10 percent in 1994,
    16 percent in 1995. At the same time, global trade has increased over 12
    percent over the last 3 years, and the United States, as we have sold
    more, has been in a position to buy even more from other countries all
    around the world.
        This is not an abstract concept. This makes a difference in the real
    lives of people throughout the entire globe. Opening markets has helped
    to create almost 2 million American jobs

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    here in our own economy. But as barriers fall elsewhere, our ability to
    trade, our ability to purchase others' exports, our ability to invest in
    others' countries have created many, many more jobs in other nations
    around the world.
        We have to do more, of course. We have to maintain our efforts to
    resolve trade disputes and to fight protectionism. I am pleased to say
    that with the establishment of the World Trade Organization, we have
    made real progress toward removing barriers and preventing conflicts.
        Ironically, just when the advantages of expanded trade have become
    so dramatic, we are again hearing the voices of retreat here in our own
    country. There are those who say that America should simply erect a wall
    and live within its own borders economically and, when it comes to
    foreign policy, we should just go it alone. But my fellow citizens of
    our shared planet, economic interdependence is a fact of life. The goal
    must be to have it benefit all people, consistent with our shared vision
    for a world of freedom and peace and security and prosperity, consistent
    with shared values of responsibility and opportunity for all people, of
    stronger families and stronger communities, of nations with sustainable
    levels of economic growth that preserve our common environment.
        That is what is happening all over the world today. I could just
    give you one example that coincides with President Zedillo's visit. We
    have a company called U.S. Filter in Palm Desert, California, with only
    50 workers. But they have jobs because the Mexican city of Cuernavaca is
    buying a water treatment system from their company. We are fostering
    growth, trade, jobs, and sustainable development. We must do more of
    that, and turning away from one another is not the way to achieve that
    objective.
        Mexico understands this. When the trouble hit earlier this year,
    because of NAFTA Mexico did not turn back and close its markets as it
    did during its 1980's crisis. Back then it took Mexico almost a decade
    to recover. But because Mexico has stayed on course, it is on the way to
    recovery now. There will be no lost decade for Mexico because of its own
    policies and because of the work done in the international community to
    assist it to recover. This can now be a decade of opportunity springing
    from short-term sacrifice.
        Mexico's troubles and the other recent events have shown that
    reforms in the international financial system have to continue. We don't
    have this all worked out as it needs to be. We should spread the
    benefits of financial integration around the world so that more and more
    borrowers have access to capital markets. We have to devise better ways
    to prevent financial crises and to cope with the crises that inevitably
    occur. People will turn away from free markets if they feel helpless, if
    they feel that they are simply pawns in a global game of winner-take-
    all, rather than partners in a global endeavor that seeks to make it
    possible for all to win.
        Since the peso crisis, we have moved from crisis management to
    institutional reform. At the G-7 summit in Halifax, we put forward far-
    reaching proposals to help the international financial institutions meet
    these new needs. They aim to increase disclosure of nations' financial
    information and identify possible crises early, before they rock the
    world economy. And they include steps to mobilize the international
    community quickly when future crises occur. Next time there's a problem
    like Mexico's, the system will be better prepared. I'm pleased that over
    the last few days the broader membership of the IMF has endorsed these
    proposals, made them more concrete, brought them closer to
    implementation. I thank you for that, and I congratulate you for it.
        Fulfilling the hopes of this moment demands that we also renew our
    efforts to help those who still suffer the curse of poverty. Development
    that improves standards of living, strengthens democracy, conserves
    resources, and restrains population growth; development that lifts
    people up and builds societies of citizens and consumers, not victims
    and dependents, these, these objectives benefit all nations, rich and
    poor.
        To succeed, we must change the approaches of the past to meet the
    demands of the future. The international financial institutions, the
    multilateral development banks must continue to sharpen their focus on
    giving all people the chance to make the most of their own lives. That
    means investing in education, in health care, in other programs that
    attack the roots of poverty. It means responding to the problems that
    were highlighted in such stark and clear relief at the Beijing
    conference on women. It means encouraging private sector development. It
    means that our development programs must support democracy,
    accountability, and the rule of law. It means we must have a common
    global

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    commitment to environmental protection and sustainable development.
        Developing nations must shoulder their own responsibilities,
    sticking to sound economic policies, liberalizing trade practices,
    creating financial markets that work, and above all, being the primary
    investor in the human capacity of their citizens. Achieving these goals
    will require the banks to continue reforming their own operations and
    striving for greater efficiency.
        Jim Wolfensohn is devoting all of his famous energy to that task. I
    thank him for it and for carrying forward the work of his fine
    predecessor, Lew Preston. I applaud Jim's progress and look forward to
    further accomplishments in the months and years ahead from the World
    Bank.
        Before closing, I'd like to say just a few words about the United
    States commitment to helping the poorest nations of the world help
    themselves through our partnership in the International Development
    Association. It is simple: The IDA is essential. Its loans provide a
    crucial tool for nations that seek to escape from poverty to sustain
    growth. It serves our fundamental values, as well as our economic
    interests, by lowering trade and investment barriers, supporting private
    sector growth, opening the markets of tomorrow, and giving people a
    chance to succeed.
        A lot of people don't remember this, but the IDA was the brainchild
    of President Eisenhower. He believed deeply that when, as he put it,
    ``people despair that their labor will ever decently shelter their
    families or protect them against disease, peace and freedom will be in
    danger, and the seeds of conflict will be sown.''
        For decades, Democrats and Republicans shared President Eisenhower's
    sentiments, and they supported IDA. Unfortunately, that is no longer
    always the case. Many in the Congress have forgotten that IDA recipients
    of yesterday, countries like South Korea, Indonesia, Turkey, China,
    Chile, are today among America's most important trading partners, are
    among America's most important strategic partners working for global
    security. Those who are reminded of this perhaps will be tempted to
    change their position. But I want to say clearly that those who are
    determined to make reckless cuts in the funding of the United States for
    IDA should look at the facts. They should remember the vision of a great
    Republican President, Dwight Eisenhower.
        Today's despair breeds tomorrow's conflicts. Resolving the funding
    for dealing with today's despair will save the world and the United
    States a lot of money and perhaps even precious lives in the future.
    Restoring funding for IDA is one of our administration's top priorities
    because it is the right thing to do. Of course, it serves our interests,
    but it is the right thing do to.
        And let me assure you, if you believe as I do that balancing our
    Federal budget will permit higher levels of growth in the United States
    and throughout the world, then this is a good investment. And it is not
    necessary--not necessary--for the United States to walk away from its
    commitment to balance the national budget. Don't let anybody tell you
    that it is.
        When these two institutions opened for business, the IMF and the
    World Bank, there were 38 nations standing behind them. Even then, John
    Maynard Keynes likened the affair to the Tower of Babel. Well, today,
    there are 179 nations represented here. But even though we are larger in
    number and some of us are larger and more wealthy than others, this
    increase in numbers does not mean that any one of us, including the
    United States, can afford to detach itself from the business at hand and
    hope that others will take up the slack. More than ever, we must all
    participate in the reform of the international economic system, and we
    must all do our part.
        In a world that grows rapidly closer, every one of us is called upon
    to help harness the forces of integration for the benefit of our people
    and to make the forces work for all our communities and for the
    community of nations that is increasingly bound together. Only then can
    we fulfill the potential of the advances in technology and trade and
    knowledge. Only in that way will we defeat the forces of disintegration,
    extreme nationalism and ethnic strife, isolation, and protectionism.
        I believe that the 21st century will be the period of greatest
    possibility in all human history. I hope it will be a period of
    unparalleled growth, achievement, prosperity, and human fulfillment. It
    certainly has the potential to be.
        What these institutions do in the next 20 years will have a large
    say in what the 21st century looks like for all the people of the world.
    What we do individually, as nations and as leaders, will have a large
    say in what that world looks like.

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        The institutions that we honor today and that you participate in
    deserve and require our support. They also deserve and require our best
    efforts to make constructive changes to meet the new opportunities and
    the new challenges we face.
        We must, we must, lay the foundation for prosperity, security, and
    freedom that will benefit all the people of the world well into the next
    century. These next few years are a critical point, an historic turning
    point. And if we do our job, the history of the next century will be
    less bloody than the history of the 20th century and even more filled
    with prosperity and freedom and common human decency.
        Thank you very much.

    Note: The President spoke at 11:15 a.m. in the Grand Ballroom at the
    Sheraton Washington Hotel. In his remarks, he referred to Paul Dossou,
    chairman, 1995 IMF/World Bank annual meeting; Timothy Thahane, Vice
    President and Secretary, World Bank; Leo Van Houtven, Secretary and
    Counsellor, IMF; James D. Wolfensohn, President, World Bank; and Michel
    Camdessus, Managing Director and Chairman of the Executive Board, IMF.