[Weekly Compilation of Presidential Documents Volume 31, Number 41 (Monday, October 16, 1995)]
[Pages 1806-1811]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
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

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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 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 
em- 

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brace 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.
    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

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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 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

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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 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

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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.
    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.