The White House Briefing Room

September 2, 1998


4:55 P.M. (L)


                               THE WHITE HOUSE

                        Office of the Press Secretary
                               (Moscow, Russia)
For Immediate Release                                     September 2, 1998     

                           BACKGROUND BRIEFING BY 
                       SENIOR ADMINISTRATION OFFICIALS	   
                                Hotel National
                               Moscow, Russia  	     
4:55 P.M. (L)
		SENIOR ADMINISTRATION OFFICIAL:  I thought what I would do is 
give you a little bit more of a sense than would be appropriate on the record 
of the meeting between the Presidents this morning.
		This was originally conceived as a somewhat expanded meeting; 
that is the two Presidents, minister, Secretary of State, Sandy Berger and 
some others.  Shortly before President Clinton went over to the Kremlin, the 
word came from the Russian side that President Yeltsin would like to start in 
a one-on-one format, similar to the one that made up part of yesterday's 
meeting.  And it ended up that that was the main meeting. That was the whole 
meeting.  It ate up the time, in other words, that had been set aside for the 
expanded meeting.  It was a lot more than 15 minutes.  It was an hour plus.  
And maybe we can check and get you some more exact time.
		The location was the presidential study, the same place as 
yesterday.  The setting was the same.  And what I'm going to do is just go 
quickly through the main points that were discussed.  This meeting had 
originally been conceived even when it was a broader format to deal with 
foreign policy and national security issues.  
		By the way, I should say in parenthesis that while the two 
Presidents were meeting, there were counterpart discussions going on parallel.  
That is Secretary Albright and Minister Primikov were meeting over in one 
room, one corner of one room; Sandy Berger and Andrei Kokoshin were continuing 
the good work of their channel over in another part of the same room.  There 
was a lot of kind of mix and match going on there, but a 

lot of business was being done, including some stuff that relates 
to the finalization, of course, of the documents that you've now 

	     The following subjects were raised approximately in 
this order, although they circled back to them a number of times:  
Kosovo, and there, of course, the main point was the two 
Presidents agreeing that the humanitarian crisis has the 
potential of being a humanitarian catastrophe, and President 
Clinton stressing his concern that if the humanitarian crisis is 
not addressed promptly, Kosovo has the potential to explode and 
to be another war of the kind that we had already seen in Bosnia.
	     Iraq, the unacceptability of the decisions that 
Saddam Hussein made at the beginning of August to cease 
cooperation with UNSCOM and the IEA.  President Yeltsin responded 
on that point by saying that he had been very unpleasantly 
surprised -- that's a paraphrase, not a quote -- by Saddam's 
decision, that it contradicted assurances that Saddam had given 
him and that he intends to make his own approach to Saddam to 
stress the need and the urgency of restoring Iraq to compliance.
	     They then discussed a number of European security 
issues, particularly NATO-Russia cooperation.  And President 
Clinton talked about in very broad terms concrete, specific ideas 
that the U.S. has for putting a little more meat on the bones of 
NATO-Russia cooperation.  And these are going to be pursued in 
Brussels, and I think they will become evident as we get closer 
to some NATO-Russia meetings that are going to take place in 
December of this year.

	     Terrorism -- again, a little bit more concrete 
discussion than yesterday about ways in which the United States 
and Russia can work together to combat the threat of terrorism.

	     The Caucasus -- this is an issue of both strategic 
and economic, commercial interest and importance to the United 
States and indeed to Russia.  And here President Clinton used the 
opportunity to argue against a perception and an occasional 
complaint that one hears from the Russian press and elsewhere 
here, and that is that there is a continuation of the great game 
going on in the Caucasus.  President Clinton made the point that 
the United States wants very much for American firms to have 
access to markets, to be able to compete fairly and freely, 
particularly in the energy sector there, but to compete on an 
equal and fair basis with Russian firms, and also to work with 
Russia to bring peace to the region.  And there was some 
discussion about the various conflicts that are going on in the 

	     They then talked a bit about the economy, and I 
think that discussion was pretty well aired in the press 
conference this afternoon, but once again, it was President 
Clinton making sure that, A, he understood the various options 
that the Russian side sees for dealing with the economy, and that 
the Russian side understands the basic precepts that Gene and 
David will be in a position to talk about at greater length in a 

	     I'm wrapping up here.  President Yeltsin then asked 
Sergei Yastrzhembskiy for his notes, his talking points that had 
been prepared for the meeting.  He hadn't been using them up 
until that point, and he kind of flipped through them to make 
sure that he'd covered all the main issues.  And in the end -- 
and this happened in Birmingham	   	      as well -- the 
Russian side simply turned over their talking points so that we 
could study them in more detail because we were running out of 
	     Oh, yes, I'm sorry, there was one other thing.  
President Yeltsin did at the very end of this meeting produce a 
piece of paper, a kind of a non-paper, that made the proposal for 
a joint U.S.-Russian center located on Russian territory to help 
implement the shared early warning initiative that is, of course, 
now been publicized.  And my colleague has just showed me a 
number of factsheets, that you will be getting all that.  But 
that was a last minute suggestion and the paper was sent out to 
work with our Department of Defense and NSC colleagues to make 
sure that the proposal was acceptable to us.  It is.  And, of 
course, President Yeltsin announced it.
	     I think that's about all I've got, although I do 
have -- yes, I'm not going to forget.  I don't know if any of you 
are veterans of the January 1994 -- somebody is nodding -- you 
remember muslips?  Barry Schweid it was, not even a Time Magazine 
reporter, asked me for a little color in the dinner in January 
1994, and there was much interest in the delicacy of muslips, 
which was on the agenda there.  Muslips are back.  Muslip soup 
was served at the head table last night at the state dinner.  And 
I cannot comment on the taste.  I will tell you that Minister 
Primikov was sitting next to Secretary Albright and when the dish 
was served, Primikov said to Secretary Albright, don't ask me 
what that is until after you've finished it.  
	     Of course, we then went to Spaso House.  I think 
you've all -- some of you may know more about what went on there 
than I do because I was off in a corner with a number of the 
guests myself.  But the bottom line and in general, President 
Clinton wanted to use the occasion to meet with as broad a 
spectrum of Russian political figures as possible.  He's made a 
point of doing that every time that he's come here.  
	     His message was, I would say, a more personal 
variant of what you have heard him say publicly on the subject of 
Russian politics, and he also wanted to use the occasion to do a 
lot of listening and to get their perspective and their 
predictions on what's going on here and what's going to happen. 
And the responses were varied.
to take your questions, but let me just sum up by saying that I 
think that the President had a very clear message that he carried 

in all his meetings, and members of the economic team carried in 
our outside meeting, which was that the U.S. wants to be 
supportive of Russia, wants Russia to succeed, but that such 
support, such financial support through the IMF or in any other 
form only makes sense and will only be effective if it's clear 
that Russia is going forward on reform, with a reform plan that 
builds the institution and rule of law aspects that will create 
confidence in investors doing business in Russia; a plan that 
shows forward movement on fiscal management and fixing the tax 
system and strengthening the banking system in a way that does 
not lead to printing money and a surge in inflation.  

	     In all of our conversations, we were struck by the 
degree that that overall perspective was shared, that the overall 
focus was on the Russia solutions to this financial crisis.  And 
that was the dominant aspect of our conversations in virtually 
every forum we were at.

	     So we're available for your questions.  Thanks.

	     Q	  Did Boris Berezovskiy also share your overall 
perspective about not printing money and not bailing out the 
banks and all the other things you want to do?  You said 
everybody did.  Does that include him? 
obviously, people had different aspects as to what would 
constitute reform, but what I meant by "sharing the perspective" 
was that these were not meetings we had where we came in and 
people wanted to talk to us, ask us 10, 15 questions in a row 
about the IMF.  They were talking about what Russia had to do.

	     People had different solutions, but the focus was 
very much on the notion that Russia has to come forward with an 
economic plan that makes sense.  People had different political 
takes on that, different political and economic formulations.  
But that general focus was one that he and virtually everyone 
that we spoke with shared.  One often has conversations in this 
context where the focus is overwhelmingly on what is the outside 
support coming in.  That was not the focus here. 

	     Q	  He shares your prescription for what Russia 
needs to do?  
just made that clear, but I'll try again.  When I said that 
people shared the perspective, they shared the perspective -- I 
said that they had different ideas for what the actual components 
of reform were and what the political elements were that would 
bring on such reform, but that the focus was on what the things 
Russia had to do.  And it was not conversations where the 
predominant focus was questioning of us as to outside or 
international aid.  The focus of virtually every conversation we 
had was on Russian economics and Russian politics.  

	     Q	  President Yeltsin seemed to run out of gas at 
the end of the press conference, after just three questions from 

each side.  In your assessment, was that physical fatigue, mental 
fatigue or had he just had as much fun as he could stand?  
	     SENIOR ADMINISTRATION OFFICIAL:  None of the above.  
I don't share your assessment.  I assume you mean in his --
	     Q	  Well, he gave a very curt, off-handed answer to 
the last question and then basically ended the press conference.
what the ground rules were in advance on the number of questions, 
but it sounds like that was a per pre-agreement.  It was very 
clear to me that he didn't want to answer the question.  And I 
think that he made that very, very clear, that he did not want to 
address questions having to do with his short-, or for that 
matter, middle- and long-term intentions on the Russian political 
	     	  Q Was it a Russian proposal that there only be 
three questions per side? 
talked about four and the Russians cut it back to three this 
	     Q	  Yesterday we were told that Yeltsin was very 
engaged in the meetings.  And that is not what seemed to be on 
display at the press conference at all.  The Russian people who 
we've talked to on the street were struck with how they thought 
he was very incoherent at times --
	     Q	  -- and he certainly did not impress the 
English-speaking people there that he seemed engaged.  
	     SENIOR ADMINISTRATION OFFICIAL:  Well, there were a 
number of English-speaking people there, including in the 
meetings and at the press conference, myself included, who felt 
that he remained thoroughly engaged throughout.  So I think we 
just have a different assessment there.
	     Q	  Would you characterize the tone of the 
discussion on the use of military force?  Did they just basically 
agree to disagree?  I mean, it wasn't clear from what they said 
in the press conference what the final outcome of that dispute 
conference I think vividly and accurately reflected a couple of 
points on which the United States and Russia see things 
differently.  And this one, of course, is very relevant to a 

number of situations that we're dealing with, and the United 
States and Russia simply do not see the question of use of force 
in the same way.

	     The American position, as you know -- and we've had 
several opportunities to reiterate it, not so much at the 
presidential level, it didn't come up a whole lot there, but I 
can assure you that it figured fairly prominently in the much 
more detailed discussion of both Kosovo and Iraq that Secretary 
Albright and Foreign Minister Primakov had starting the night 
before last, if I'm not mistaken.  

	     And the disagreement is this:  Our view is that 
while it may seem paradoxical, in fact, the ability of diplomacy 
to solve these issues is directly proportional to the credibility 
of the threat of force.  And I think we have seen that 
proposition borne out any number of times, both in the positive 
and the negative, I might say.  The Russians have a generalized 
neuralgia to the use of force, particularly when American force 
is very prominently a part of it, particularly when NATO is very 
much involved.

	     That has not stopped us from cooperating 
diplomatically on a number of these issues.  You're going to see 
a joint statement on Kosovo today, which we hope will be of some 
use.  It also figures into the issue of Iraq.  But there are some 
basic principles on which we agree.

	     Another disagreement, of course, which was aired at 
the press conference, is over NATO enlargement.  That's very 
familiar.  We know our positions.  There was absolutely no change 
in our understanding of each other's positions on that, but there 
is plenty that we can do together and we're moving forward with 

	     Q	  You mentioned some U.S. ideas for putting more 
meat on the bones of NATO-Russian partnership.  Can you give some 
more of an idea of what the U.S. thinking is?  And does it react 
to Russia's problems with NATO expansion?  Is it a concession --
	     SENIOR ADMINISTRATION OFFICIAL:  What was the latter 
part of the question? 

	     Q	  The ideas that you put forward today, is it 
some sort of reaction or concession to Russia --

	     SENIOR ADMINISTRATION OFFICIAL:  No, it's certainly 
not a reaction to or a compensation or consolation for.  We're 
not only beyond that, we never got into that.  But the 
NATO-Russia Founding Act specified that over time we would find 
lots of specific and concrete ways, particularly at the 
military-to-military level, to work on projects together, to 
create centers, sort of permanent institutions within the 
institution of the NATO-Russia relationship.  And we have put 
some ideas forward there, and I don't want to preview them right 
now because we have 

more work to do. 

	     Q	   This is sort of two parts.  One is, we've been 
hearing about -- Russian officials have made a number of promises 
over the years in exchange for IMF aid and have never complied.  
That's why we're in the situation where we are today.  What 
specific promises or what is leading you to believe that this 
time will be different? 

	     Secondly, what have you told them, that concrete 
accomplishment that Russia has to make, the first step before 
some element of aid begins to flow and is part of that equation 
either a currency board and our assistance in preparing one, or 
an emergency foreign exchange stabilization, ESF fund, to sort of 
get the building blocks together to help the slide --

	     SENIOR ADMINISTRATION OFFICIAL:  Well, first of all, 
I think your question was, what have we seen that would lead us 
to believe things were different now, or what we've heard.  I 
think that what we've tried to express is that this is a point 
where actions are all that's going to really matter.  And so I 
think that our focus is going to be -- while it is reassuring, 
and there have been a lot of reassuring comments made, I think 
that the focus of the IMF, as well as ourselves, will be on the 
actions that are taken.

	     And I think that there have been pretty direct 
things that I think the IMF Director has spoken about.  
Certainly, the warning against going to a way of fixing the banks 
by simply printing money and leading to hyper-inflation.  I think 
that the IMF Director has been clear that he believes that would 
just lead to capital flight and therefore could not justify going 
forward with the second IMF tranche.  I think that people will 
want to know that they had signed on to an ambitious deficit 
reduction to actually bring their deficit as a percentage of GDP 
down to 2.8 percent.  Certainly, there will be -- I'm sure the 
IMF will take into account new conditions, but I'm sure they will 
want to see that there is an actual commitment to bringing the 
deficit down as a percentage of GDP.  

	     But these are judgments that the IMF will make, 
obviously.  David Lipton and Larry Summers and Bob Rubin, as they 
advise and work on them, will analyze, express, but again, we're 
at a point, as we've said all along, where there is not an 
economic team officially in place with a particular plan.  And so 
that really goes to what the core of what we've tried to do, 
which is to set the overall parameters of what we think will be 
effective.  And really the test is what will be effective in 
giving investors confidence.  If there's not confidence, then, as 
we've seen, putting money into a country -- the IMF putting money 
in a country where the private sector has not decided they 
believe will be a stable situation is not effective, the money 
will not do much good.

	     As to the currency board, I know Deputy Secretary 
Summers was asked about this in our briefing.  Obviously, the 
currency board has been used in places like Argentina, but it's 
been done in a situation where there were a variety of fiscal 
situations that had been put in a lot of conditions that made 
that effective.  I think that certainly in economic circles that 
is one of the ideas that is being thrown out right now.  But I 
think virtually everyone would think it would be a bit premature 
to analyze that right now unless you have a sense of what the 
surrounding economic plan would be.
	     Q	  If Russia is of so great importance 
strategically, economically in the world -- I mean I know there 
are no quick fixes, but in order to keep things together here, 
does the United States have any bandage or band-aid for short 
term to keep things from getting worse?
message has been that there's a conditionality that is implied by 
us, but just the realities of the market that there isn't much 
that we can do if there's not confidence that the system is going 
to be a stable one.  When you have a plan that the market 
believes is effective or can be effective, the outside support 
can come in and bolster that, provide additional reserves.  In a 
situation where the market has no confidence you almost can't put 
enough money into a country in this situation.
	     So the ball I think is very much in their court.  We 
do not have any new or additional aid or plan in our pocket.  I 
think the first order of business for Russia is clearly going to 
be putting forward a plan that would lead to the resumption of 
the current IMF package and the resumption of their second 
tranche and I think that has to be their overwhelming focus.
	     What the President did say today in his comments was 
that he has very strong conviction that if they do the right 
things he's going to be very active, or we will be active, in 
working through the International Monetary Fund or -- I can't 
predict what other type of things; I don't think that we can 
possibly know.  I think what he's trying to express is a high 
level of conviction to help if the right things are done and if 
there's a plan that is capable of being help with outside IMF or 
other support.
	     Q	  The President said he came also to listen, as 
well as to speak.  Based on what you guys have seen and heard, 
including the discussion with the Duma today are you more or less 
optimistic now than you were before you left Washington that the 
Russian government will be able to muster the political will to 
do the proper steps the President is urging --
me just say something about the meeting today, just so you don't 
think any of us are dodging.  The way the meeting happened today 

was the President spoke, and then after he spoke he kind of met 
one -- he kind of just talked with different Duma and Federation 
leaders one on one.  I might have been by him through two of 
those, other people might have been, but I don't think there's 
any of us who actually was there through each of them.  So I 
don't think anyone but the President really knows exactly what he 
heard because it was set up so that they could have some privacy 
as they spoke.
	     I think he was listening.  He clearly was there to 
listen and he started out by giving very much the same message to 
them on the economic reforms and in the conversations I heard he 
did that privately.  But he was also asking them for their read 
on the overall situation and listening.  
	     I don't want to speculate -- I think trying to 
speculate on what the exact political situation is, whether 
you're more optimistic or not optimistic, I just don't know if I 
would feel competent, or I'm not sure anyone honestly could feel 
competent making that.  
	     I think the thing that I thought was reassuring was 
the degree that virtually everyone talked about not wanting to go 
back, that in one way or another everyone spoke about the need to 
go forward with economic reforms, and the degree, as I said 
initially, that everyone's focus was on Russia and Russia dealing 
with their solutions themselves.  That's not to say that it never 
came up, what we thought would be the conditions that would lead 
to resumption of a second IMF tranche.  But the overwhelming 
focus, as it should have been, was on what Russia's solutions to 
Russia's crisis was going to be.  
	     But you asked the right question, which is even if 
you have the right plan, is there a right plan and political will 
to get it done.  And I think that's obviously a question for 
thoughtful journalists to write about.
	     Q	  If there is another -- at the moment to give 
the Russians more money, clearly it's going to make the immediate 
economic situation worse in the short-term, and in the 
medium-term.  What's your latest assessment for growth for Russia 
in the coming year?
	     And the second question relates to whether you have 
any evidence one way or another that the Central Bank is 
producing money to bail out the banks at this moment?
say, first of all, that one thing that is worth recognizing is 
that coming up into '97 there had been some improvements.  You 
had seen inflation, which has been over 202 percent in 1994 had 
gone down to 11 percent and actually dipped into single digits 
prior to the problems.  The privatization in '97 had been 
stronger, the auctions had been stronger.  Obviously -- and 

growth had, I believe -- was projected to be slightly positive 
for the first time.
	     But let me -- do you want to comment?  Why don't I  
have my colleague comment on the overall projections and the 
discussions of the Central Bank.
hard to say.  One of the reasons why we're not here talking about 
a particular plan and, in fact, they're not talking about a 
particular plan, is that right now they're in the process of 
forming a government and trying to decide how to handle a 
situation that has deteriorated very sharply.  They have banking 
sector problems, monetary problems and fiscal problems.  And I 
think that there will inevitably be some time before they put 
themselves put together an approach to handling these and have 
discussions with the IMF, which we'll be having a mission out 
here very shortly.
	     I don't know of any evidence that the money supply 
has expanded terribly quickly.  They do have the problem of some 
withdrawals from banks, including the State Savings Bank.  But I 
don't know of evidence of large infusions of liquidity to banks.  
But they are grappling with the question of how to handle the 
financial problems that banks are facing.
	     I think until they choose a policy course, it's hard 
to make projections about growth.  I think that the message that 
we've been trying to convey and that the President conveyed is 
that continuing the process of reform and restabilizing the 
country is an important priority, and if they go down that road, 
they'll find the international community willing to provide 
support for that.  
	     I don't think that anyone's made any decisions about 
the IMF money that's slated for late September.  I think the 
question is whether they -- when they develop a program for 
responding to their problems and whether it's one that can garner 
	     Q	  Did the two Presidents compare notes about 
their own political problems, the calls in each other's country 
for resignation?  And what was President Yeltsin's reaction to 
the questions at the news conference today about the Monica 
Lewinsky affair?
	     SENIOR ADMINISTRATION OFFICIAL:  The answer to your 
first question is, no.  The second to your second question is, I 
don't know, because basically they said good-bye to each other 
right after the press conference.
	     Q	  There was no reaction?  I mean, Yeltsin didn't 
say -- no comment?  He made no comment about the questions that 
were asked?

made no comment that I know of about the questions asked of the 
President at the press conference.  What happened was, 
immediately after the press conference they went into the next 
room, gathered their advisors around, and basically shook hands 
and said good-bye.  President Yeltsin said he was sorry President 
Clinton hadn't had more time and hoped he could come back, and 
that was it.
	     Q	  Just wanted to go back to the question of the 
meeting of the President with the opposition and with the leaders 
of the Duma.  What has been said is that it's everyone's hope to 
go forward.  So that means that also Zyuganov is taking on the 
challenge of globalization?  We have to read that into it.  Are 
we reassured in that sense?
our discussions, the economic folks, that's what people said.  I 
also said that in the President's conversation he was usually 
talking one on one.  So while I may have listened to one or two, 
I did not listen to that one.  I don't know if anybody does know 
what each particular person said.
	     Q	  The President didn't say anything about that?
	     SENIOR ADMINISTRATION OFFICIAL:  We have not gotten 
a readout -- by the way, it's the Duma and the Federation 
Council.  We all understand that.  Anyway, a number of the 
participants in the meeting I think are feeling less constrained 
than we are about going into the substance of the conversations 
and are making public statements.  Governor Lebed, for example, 
was one of the last to leave, and as we were leaving Spaso House 
he seemed to be holding forth.  So there are going to be a lot of 
comments coming out of the Russian participants.  What we're 
going to be doing is trying to capture for you what President 
Clinton's purpose was here. 

	     Q	  Did the issue of the space station come up at 
any level of discussion? 

briefly, at the very end of the one on one.  And it was 
essentially remanded to experts.  NSC has been working on it, and 
that's one of the points -- yes, I'm certain of this -- that's 
one of the points that was included in the talking points that 
had been prepared for President Yeltsin that were handed over to 
us.  And we're hoping to get back to them on that and some other 
-- particularly some commercial issues that they raised with us.

	     Q	  I have two quick questions, one on the Lewinsky 
issue.  The President mentioned that he'd talked to some foreign 
leaders about the topic and they had urged him to get back to 
work.  Was Yeltsin among them?  And do you have any sense of how 

much he knows or doesn't know about the President's troubles over 
the last months? 

	     SENIOR ADMINISTRATION OFFICIAL:  He certainly seems 
generally well-informed, but as I said in answer to the earlier 
question, it simply did not come up. 

	     Q	  And the other question is about what seemed to 
be some defiance on the part of Yeltsin when he was talking about 
how he's not looking for handouts.  He wanted to stress that he 
wasn't asking for lots of money, that's not why the summit was 
taking place.  He told us not to go writing that.  Did that 
reflect his attitude in talks and other people's attitude, or was 
there some real nuts and bolts talk about how it could -- how the 
United States can support --

	     SENIOR ADMINISTRATION OFFICIAL:  Oh, there was a lot 
of talk about that, and I think that Gene and David and Larry in 
his earlier sessions with you has gone into considerable detail 
on that.  I think what President Yeltsin said in the press 
conference today reflected a number of things that we've heard 
from him and others, and that is an awareness on the part of the 
Russian leaders that essentially this is a set of problems that 
they need to deal with through their own decisions.  We can help 
them if they make the right decisions.  And we have spent a lot 
of time on what we would regard a course of action that we could 


while my colleague is still here, his wry observation about 
Primakov's concern about the soup course and his concern about 
the welfare of Secretary of State Albright was clearly due to 
that well-known adage that moose lips sink dips.  It was better 
when I heard it in the original.  

            END                        5:27 P.M. (L)