Summers on the crisis

Doug Henwood dhenwood at panix.com
Wed Sep 2 12:05:48 PDT 1998


[An excerpt from the Larry Summers portion of a Moscow press conference; White House transcript. Note his description of the Clinton economic strategy - exports, investment, exports, and fiscal discipline, which implies a so-far nonexistent repression of domestic demand and the encouragement of capacity expansion, which is not the way to fight deflation.]

Q Larry, Strobe Talbott spoke about the power struggle going on in Russia right now. I wonder if you come away from these discussions validating that in the end of the day Yeltsin and Chernomyrdin are so committed to those reforms that they would not cut a deal with the communists to undercut them. Or do you still come away right now believing that that's still a possibility?

DEPUTY SECRETARY SUMMERS: I can never remember well enough to repeat it precisely the Churchill comment about Russia, which I think applies to internal politics in most places, about an enigma inside an enigma, or whatever it is.

Q You're right, you can't remember it.

DEPUTY SECRETARY SUMMERS: Right, I've just demonstrated that I don't remember it properly. I don't think at this point that I'm prepared to make a judgment or to try to make a prediction. I think that things are very much in flux. It's clear that there is a lot of discussion back and forth about the course that will be followed, and I think it's clear that there are enormous stakes both for Russia and the United States in the outcome. But I wouldn't want to be in the position of hazarding a prediction at this point.

Q The President and you and other U.S. officials have stressed for some time that this dislocation in world markets in Asia and elsewhere could come home to roost. Is that what we're seeing in the U.S. stock markets in the last three or four sessions? Are we now beginning to be sucked into a worldwide recession?

DEPUTY SECRETARY SUMMERS: Sam, let me first say that the fundamentals of the American economy are strong, and we have a sound economic strategy -- a strategy based on promoting exports, a strategy based on maintaining a high level of investment and capacity creation, a strategy based critically on fiscal discipline. And with that strategy in place, I don't see any reason why these market developments should interfere with the basic momentum of economic expansion, although they will -- obviously, they will have effects on certain sectors of the economy.

I do think that market developments in the United States are in part a reflection of the international forces and strains in other markets around the world, and that really speaks to what I think has been a crucial killer of our policy for the last year, the recognition that the United States has a very strong interest in providing support to countries as they seek to contain these financial problems. And that is not out of any motivation of charity or comity, but because it is very much in our national interest -- in jobs, in markets, in security -- to see these problems contained. And that's one of the reasons why it is so crucial that, as Senator Domenici said, the IMF legislation pass this week -- pass as soon as possible.

Q Is it fair to say the United States didn't bring anything to the table today in terms of financial aid or a guarantee of help in getting the IMF money moving by the end of the month? There wasn't a lot the United States could offer this morning.

DEPUTY SECRETARY SUMMERS: I think it was a very useful discussion in which I think the strength of the U.S. commitment to reform in Russia was very clear. And I think there was a shared recognition that the way it is and the way it should be is that Russia will chart its economic destiny and that there will clearly be a willingness of the international community to respond as appropriate to Russia's economic plans.

Q But we didn't offer them concrete help for their economic emergency today, correct?

DEPUTY SECRETARY SUMMERS: Yes.



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