Office of the Vice President
For Immediate Release                                   November 16, 1998


                      Monday, November 16, 1998

     It is an honor for me to address the APEC Business Summit at this
critical time in Asia's economic history.  As all of you know, the
crisis in Iraq has prevented President Clinton from attending this
meeting.  But I can assure you that APEC, and APEC's central mission -
stronger growth, greater integration, and deeper cooperation among the
economies of the region - remain at the very heart of America's agenda.

     Five years ago this month, when President Clinton convened the
first APEC meeting on Blake Island, it was a time of great opportunity
for this region.  Asia had the fastest growing economies in the entire
world.  Living standards had quadrupled in just one generation.
Millions were rising out of poverty and into the middle class each year.

     Today we meet at a very different time - a time of economic
uncertainty.  The high tides of investment that had flowed into this
region have now temporarily ebbed, and millions of families have fallen
back into poverty.  Children are dropping out of schools by the
thousands to seek work.

     One year ago, many thought this was a purely regional crisis; we
now know it to be global - affecting Russia and raising serious concerns
about the economies of Latin America, as well.

     All of us have learned lessons - hard lessons - in the past year.
For one thing, this crisis is clearly not just about weaknesses in
particular nations; it also demands that we strengthen and improve the
operations of the entire international financial system.

     In a very real sense, we are the victims of our own success.   The
international financial system fashioned near the end of World War II
has dramatically expanded prosperity, deepened democracy and freedom,
and reduced hunger, disease, and illiteracy around the world.  But in
the midst of new wealth and opportunity, we have found new risk and

     We can now move capital around the world at the touch of a computer
key.  But when that capital flows into weak financial systems whose
dangers are obscured by poor transparency, the same capital can flow out
just as fast - leaving debt and dislocation in its wake.  The resulting
contagion can then unfairly damage even sound economies.

     And in too many places, democratic institutions have not caught up
with democratic aspirations.  Instead, we find cronyism, corruption, and
social unrest - adding to the problem of attracting world investment.

     But what we have learned also gives us reason to be hopeful.   After
all, we are the nations that, together, created an economic miracle for
Asia and the whole Asian-Pacific region.  From Seoul to Shanghai to
Singapore, from Sydney to Santiago to Silicon Valley, our businesses,
our workers, and our governments had the skills, the creativity, and the
drive to make it happen.  Our people have not lost their abilities or
their energies - and they have certainly not lost their will.
Weaknesses in financial structures have taken a toll, but the solid
backbone - the entrepreneurial spirit, the manufacturing strength, the
dedication of our workforces - remains.

     So I come before you with this simple message: just as our nations
built an economic miracle for this region, now we must build an economic
recovery.  Just as today's economic crises are global in scope, the
solutions must be global as well.  And for my country's part, I assure
you that the United States is determined to remain a strong partner -
both for the sake of jobs and growth in our own country, and for the
sake of freedom and prosperity around the world.

     This much is clear: just as the global financial crisis started
here in Asia, the global economic recovery can and must start in Asia as
well.  Tonight, I challenge the Asian Pacific nations to lead the way.

     I want to discuss what I believe are the three central elements of
renewed economic growth in this region: first, an aggressive recovery
strategy for the short-term, built upon strong action and leadership by
individual nations around the world.

     Second, the steps we must all take together, as a family of
nations, to build a stronger financial architecture and ensure sustained
growth and stability into the 21st Century.  And third, a deeper shared
commitment to the fundamental human and political freedoms that are the
surest foundation of free markets everywhere.

     First, let us begin by recognizing the great progress that has been
made to stem the current crisis - and the crucial next steps that must
be taken toward immediate economic recovery.

     Since the onset of the crisis last summer, we have worked with the
international community to mobilize unprecedented support for countries
in crisis.  The IMF, the World Bank, and the Asian Development Bank have
committed $65 billion to the affected countries in the region.  To date,
some $44 billion of this has been disbursed to the countries in crisis.
These strong reform programs, backed by financial support from the
international community, have helped to restore stability and lay the
foundation for recovery in the region.

     We are seeing progress: for example, interest rates in Korea and
Thailand have now returned to - and in some cases even fallen below -
their pre-crisis levels.  Governments have begun the hard task of
reforming financial systems and restoring banks to health.  There are
real signs that both output and demand may be bottoming out.

     But let us not underestimate the challenge which still confronts
us.  Optimism can be our ally; realism must be our guide.

     In September, President Clinton called for specific, additional
steps to spur growth and help those countries most in need.  I am proud
to report that nations around the world have risen to this common cause.
The United States has now met its obligations to the IMF.  The U.S.,
Canada, Japan, and some nations in Europe have cut interest rates.  The
G-7 industrial nations have agreed to establish a new precautionary line
of credit, anchored in the IMF, to help nations with sound economic
policies ward off global turmoil.  Brazil is addressing its fiscal
problems, and the international community is providing meaningful

     Now, we must advance this agenda, and that means all nations must
redouble their efforts to restore growth right away - to lift the lives
and the livelihoods of both this region and the world.  Tomorrow, I will
discuss with APEC leaders an urgent strategy to stem the financial
crisis - strengthening social safety nets for countries in distress,
promoting trade and investment, and getting the corporate and financial
systems back on their feet.

     To begin with, let us not forget those who have been hit the
hardest by the crisis: the poor and unemployed, children and the
elderly.  After so many years of dynamic and seemingly endless growth in
this region, many nations were unprepared for the human cost of

     While the IMF has allowed for critical increases in social
investment in these countries, we must do more.  That is why I am so
pleased that the World Bank and the Asian Development Bank will more
than double their support to strengthen social safety nets in this
region.  And I am pleased to announce a new U.S. initiative - a social
framework for growth that will combine bilateral assistance, technical
assistance, and micro-credit - so that we can help ease human suffering,
and build the kind of stability and shared prosperity that are essential
to free market economies.

     To achieve a rapid recovery, we must also channel more investment
and trade back into this region - and America will continue to do its

     Tonight, I am pleased to announce that in addition to the $5
billion in short- and medium-term trade financing that our Export-Import
Bank made available in the wake of the crisis, it will now provide an
additional $1 billion in medium-term financing each for Indonesia,
Thailand, and Korea, to augment the existing short-term programs in
these countries and help them meet their needs while at the same time
encouraging trade between our nations.

     I am also pleased to announce that our Overseas Private Investment
Corporation will provide over $2 billion in insurance and financing to
support new private investment in Asia, and will create innovative new
financing products to bring more private capital to this region.  We
want to do all we can to encourage trade and investment here, so
American business can be an active partner in your growth and recovery.

     Next, short-term recovery demands that we revitalize the region's
financial systems.  That means lifting the mountains of bad debt that
are crushing many banks and corporations throughout the region - leaving
them struggling to pay workers and creditors, and leaving them unable to
secure the financing to keep factories open and economies humming.

     I have the honor to announce to you that this evening, President
Clinton and Prime Minister Obuchi are formally launching a joint
initiative - along with the Asian Development Bank and the World Bank -
to help nations obtain the financing to revive their banking systems and
remove obstacles to serious restructuring.

     There is a reason recovery must begin with the removal of obstacles
to private sector growth.  Ultimately, our best hope is to allow free
markets to work their magic.  That is why, six years ago, President
Clinton and I worked so hard to eliminate the chronic deficits that had
blocked our own private sector's borrowing and investment.

     But once the private sector in this region has the freedom to grow,
it must rise to the responsibility that comes with that opportunity.  We
need your active involvement in global economic recovery.  We need your
sustained investment in emerging markets.  We need your support for the
education, training, and workplace conditions that ensure a strong
workforce.  The Asian Pacific region needs a strong and engaged private
sector to replace bad debt with sound investment, once and for all.

     Before I move to the systemic, longer-term issues we must address,
I want to make one further point.  In 1993, other nations rightly asked
the United States to get our fiscal house in order.  We have done so.
And just as the world looked to America then to play a more powerful
role in the global economy, so today the world looks to Japan.

     One of the reasons we do so is that we know what Japan can do when
it is at its best.  After all, Japan's achievements have been
extraordinary - building the world's second largest economy, forging a
broad prosperity and security for its people, and leading the way toward
international development and peace.  Even in the midst of recession,
Japan generates more than two-thirds of Asia's combined GDP.

     The region cannot recover without Japan boldly and strongly leading
the way.  I believe Japan can do so - and I believe it must.  But
Japan's economy has now been stalled for five years.  If Asia is to
prosper in the 21st Century, Japan needs to restart its economy in this
century: by moving promptly on bank reform - as it has begun to do - by
further spurring domestic demand; by deregulating key economic sectors;
and by opening more markets.

     By achieving strong growth, driven by domestic demand, Japan can
provide the spark to restart every economic engine in the region.  If
Japan meets this challenge, it can lead this entire region into the 21st

     While these short-term steps are critical to stem the crisis, we
must also work aggressively to address the broader, systemic causes of
crisis - and that means working together to reshape our world financial
architecture, so that we can build a strong and sustainable recovery for
the long haul.

     We must realize that meeting these twin goals - short-term recovery
and longer-term growth and stability - requires a delicate balance.  For
the irony is that by addressing larger systemic problems too abruptly,
or in the wrong way, we could actually slow the immediate recovery that
is so desperately needed.

     But that doesn't make these broader problems any less urgent.   We
absolutely must adapt the world's financial and trading institutions to
the new and renewed economy they serve.  In other words, we need a
global financial architecture that is as open and inclusive - and just
as robust and dynamic - as today's high-speed, hyper-linked information

     At last year's APEC meeting in Vancouver, President Clinton and
other Asian Pacific leaders launched an international effort that gives
emerging economies a seat at the table as we strengthen the world
financial system.  Our finance ministers and central bankers have been
hard at work on this task; we need their candid assessments and boldest

     Our challenge is to build a foundation for more stable and
sustainable capital flows - not to halt or control the flow of capital,
but to make sure it is used wisely and effectively, in the most
productive ways possible.

     Toward this end, we must give emerging markets more of the tools to
manage risk - and help them to build financial systems that are strong
enough to withstand adversity.

     We must also improve our international financial institutions -
including the IMF - so we can manage crisis more effectively, rely more
upon the private sector for its resolution, and minimize its impact on
the most vulnerable.

     And obviously, it is urgent that we bring greater transparency and
openness to our international economic system.  Forget the gold standard
- today's economy operates on the information standard.  A nation's
economic power comes from votes of confidence cast constantly in markets
around the world that evaluate every government's policies every day,
through billions of transactions.  If investors think you're playing
fiscal games, or if a nation's financial standing is hidden in a dense
fog of secrecy or confusion or distorted by corruption, then interest
rates climb almost instantly.

     Our governments, banks, and businesses - as well as global
institutions like the IMF, the World Bank, and the WTO - must also open
more of their activity to public scrutiny.  Openness, transparency, and
greater disclosure are the surest path to economic strength and
investment from around the world.

     And let me add that while this global financial architecture is
vitally important for its own sake, we need to build confidence in
global commerce and communication across the board.  Together, we must
avoid its pitfalls so we can seize its profound potential.  For one
thing, we must all meet the challenge posed by the Year 2000 problem, to
keep our global computer networks strong.

     We must continue to promote the growth of global electronic
commerce - which is expected to grow to more than $300 billion in just a
few years - and I am pleased that APEC has taken up this challenge.  By
the year 2010, we can triple the number of people who can support their
families because they can reach world markets through the Internet.

     To make even more progress, we should hasten the completion of the
new Global Information Infrastructure, or GII - a network of networks
that sends messages and images at the speed of light, on every
continent.  I hope APEC will continue to work toward this vision - to
build a true global electronic village, to expand access to phone
service and communications, to improve the delivery of education and
health care, and to create new jobs and industries.

     I'm reminded of the prophetic words of one of my country's great
writers, Nathaniel Hawthorne.  In 1851, inspired by the telegraph
invented 16 years earlier, he wrote: "By means of electricity, the world
of matter has become a great nerve, vibrating thousands of miles in a
breathless point of time... the round globe is a vast... brain -
instinct with intelligence!"

     The simple fact is that in today's global economy, we are all
connected.  Global interdependence is not a policy - it is a reality.
As Prime Minister Chuan has said, "no country can avoid being affected
by what happens halfway around the world."

     This is particularly true when it comes to our environment - which
is why we need shared global leadership on challenges such as global
climate change.

     And it is also true when it comes to trade.  One third of America's
growth in the past five years has come from expanding trade with other
countries.  If Asian workers lose their jobs, they cannot afford
American farm products, and our farmers suffer.  If Asian stock markets
drop, American investors feel the tremors, and our families suffer.

     For this reason, expanded trade is a cornerstone of economic
recovery.  We must take great care to ensure that what began as a global
financial crisis does not become a global trade crisis.  I urge you to
consider what has happened to Asian exports to America; they have gone
up dramatically.  And other major industrial economies have not absorbed
nearly as much.

     I want to make one point crystal clear: the United States cannot be
the importer of only resort.  All developed countries - whether in Asia,
Europe, or the Americas - must play a role, and keep tearing down trade
barriers.  In the end, in this global economy, protectionism will only
protect us from prosperity itself.

     In the past five years, the United States has been party to 260 new
trade agreements, helping to open global markets in everything from
agriculture to automobiles.  At the 1994 APEC summit in Indonesia we
resolved to eliminate all trade barriers in the region by 2020.  We have
made strong progress, particularly with the 1996 Information Technology
Agreement, which lowered both tariffs and prices for computer and
telecommunications equipment.  That agreement - a proud moment for APEC
- has now been embraced in other regions, just one example of how our
progress has sparked free trade around the world.

     Following the model of that agreement, just yesterday, APEC trade
ministers agreed to move toward opening trade in nine key sectors, worth
more than $1.5 trillion a year in global trade - and to build broader
support for free trade in these sectors through the World Trade

     These are not easy steps to take; all of us have faced pressure in
our own nations to turn inward; and embracing openness takes leadership
and vision.  But in a tough financial environment, it is more important
than ever.  Each and every APEC economy must do its part.

     And as we open the doors to global trade wider than ever before,
let us build a trading system that lifts the fortunes of more and more
people.  Let us include strong protections for workers, for health and
safety, for a clean environment.  For at its heart, global commerce is
about strengthening our shared global values.  It is about building
stronger families and stronger communities, through strong and steady
growth around the world.

     That is why the future of free and robust global markets depends so
strongly on a third challenge - one that surpasses all the others, even
as it supports all the others.  It is democracy, and the growth of
self-government around the world.

     History has taught us that freedom - economic, political, and
religious freedom - unlocks a higher fraction of the human potential
than any other way of organizing society.

     And that means it is the best guarantee of prosperity in the
future.  As President Kim Dae Jung has said: "Only a democratic society
will be able to take full advantage of the benefits of the information
age."  If governments try to suppress the creative potential of their
people by denying them access to information, they will undercut their
own efforts to build their economies.  Any government that suppresses
information, suppresses the economic potential of the Information Age.

     Some take another view.  They cling to the belief that
authoritarian rule makes it easier to impose the fiscal discipline and
financial sacrifice often necessary to weather economic storms and spark
growth.  The facts refute that view.

     People will accept sacrifice in a democracy, not only because they
have had a role in choosing it, but because they rightly believe they
are likely to benefit from it.  The message this year from Indonesia is
unmistakable: People are willing to take responsibility for their future
- if they have the power to determine that future.  From Thailand to
South Korea, Eastern Europe to Mexico, democracies have done better in
coping with economic crises than nations where freedom is suppressed.
Democracy offers a stamp of legitimacy that reforms must have in order
to be effective.  And so, among nations suffering economic crises, we
continue to hear calls for democracy, calls for "reformasi."  We hear
them today - right here, right now - among the brave people of Malaysia.

     Citizens who gain democracy also gain the opportunity and the
obligation to root out corruption and cronyism; to support fair
regulation that protects consumers and businesses; to press for
sustainable development that protects the environment; to gain access to
education and health care; to uphold impartial justice and the rule of
law.  And the citizens who launch these reforms will help their
countries prosper - as investors put their money and their faith in
democracy, and pull it out of nations where decisions are rigged, where
bloated bureaucracies sustain only themselves, where contracts are not
honored, and where government swallows up tax revenues without working
for the people.

     All who love freedom are obliged to redeem people's faith in
self-government.  Investments move in the direction of strong and deep
democracy - and so, too, has our world history.  That is one reason why
President Clinton and I have worked so hard to make American government
work better and cost less, applying the lessons of private sector
management through a program of streamlining, reform and targeted
deregulation called Reinventing Government.

     In closing, let us realize that more than ever before, the world's
eyes are upon APEC - because so much of our economic future rests in
this region.

     In the coming days, the leaders of APEC will have an opportunity to
meet the challenge of this crisis - to revitalize enterprise; to lift
our citizens to greater prosperity; to not merely heal the contagion,
but to eradicate it.  If we take the right short-term actions, if we
build a 21st Century financial architecture for this 21st Century
economy, and if we find in free markets the more fundamental freedoms
they nurture, I believe we can weather this global crisis together.  But
it will take hard work - and it will take strong leadership from the
Asian Pacific nations, as well as from the United States and Europe.

     Fortunately, across this region, over a generation of extraordinary
progress, you have shown the world what is possible.

     That is why American resolve is unshakable - and we will stand with
you for growth and stability at every step of the way.  So let us
reaffirm the partnership and the purpose upon which APEC was founded.
Let us work even harder to fulfill it.  With so many hundreds of
millions of jobs and families depending on it, we certainly don't have a
moment to waste.

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