6/16/95: The G-7 Summit and Beyond

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U.S. Global Leadership Responsibilities: The G-7 Summit and Beyond

President Clinton

From the beginning of our Administration I have worked hard to make the global economy work for the American people. We live and work in a global market. Our living standards depend upon our ability to compete and to keep one step ahead of economic change.

In the past two-and-a-half years we have fought at home for a comprehensive economic strategy that would create jobs and lift the incomes of our people, focusing on reducing the deficit but investing in our people--in their education and their future. My new budget proposal continues to reflect these priorities.

At the same time, we have worked to open more markets around the world to our products in free and fair competition with others, through NAFTA, GATT, and our work with the Asia-Pacific countries and with the countries of the Americas. We also have worked hard to encourage the global trend toward market democracy in the former communist countries.

I am pursuing this strategy, above all, for one reason: to renew the promise of America in the 21st century. But I also want to preserve the leadership of America as a force for peace and freedom, for democracy and prosperity.

This G-7 meeting has moved us a step closer to these goals. We've taken concrete steps to strengthen the international financial system--something we promised to do last year in Naples. And let me give you one--and perhaps the most important--example.

Earlier this year, we in the United States were confronted with a serious financial crisis in Mexico. It posed a risk to markets throughout the world, and it certainly threatened our own economic health, as well as our long-term relationships with Mexico, involving a number of other issues. We led the effort to stabilize Mexico, and, from all signs, it seems to be working. President Zedillo and his team have worked hard to live within the discipline the markets have imposed and to move Mexico to a brighter and better future.

We learned two important lessons in dealing with the Mexico crisis. First, the world clearly needs better tools to identify problems such as this so that they can be prevented; and second, the international system must have a stronger way of resolving these crises once they do occur.

We were fortunate in the Mexico instance that the United States had access to a fund which would permit us to make some guarantees and move to put together an international approach to this problem. But the U.S. will not be able to be the lender of last resort in other crises of this kind. So here in Halifax, we have begun to forge the tools to deal with these kinds of problems in the future.

We agreed to create an early warning system that will sound the alarm when nations begin to encounter real problems, before a problem with the severity of the Mexico crisis develops. We call for early and full disclosure of critical monetary and financial information. We'll establish tougher reporting standards for nations so that markets will react more quickly and nations will be pressed to implement sound policies in a timely manner. This may be the best discipline for preventing future crises.

When these problems do occur, we must respond decisively. Leaders of the G-7 have taken crucial steps toward that end. We've called upon the International Monetary Fund to establish a new mechanism to ensure that we can act swiftly when one nation's economic crisis threatens the world economy. We propose to double the funds available for this purpose to more than $50 billion from those nations with a stake in a stable international financial system. That will require loans from the United States which must be authorized by Congress. I know a lot of you are thinking about that, but they are scored as cost-free to the American taxpayers because they're viewed as risk-free because they go to the international institutions.

The G-7 leaders also have agreed that the international financial institutions--the World Bank, the IMF--and the agencies of the United Nations must continue on a path of reform. These institutions have served us well for half a century, and we will continue to support them, but they must adapt for a new era. We put forward new principles that will focus their work on addressing vital human needs--alleviating poverty, supporting private sector development, and promoting sustainable development and environmental protection along side economic growth. The resulting economic growth will bolster democracy and stability in developing nations and, of course, create future markets for American exports.

The leaders at Halifax also are discussing new security threats that no nation should face alone. We'll have more to say about that tomorrow. But let me say that we have agreed that the G-7 must work together far more energetically and comprehensively to counter the growing dangers posed by terrorists, international criminals, nuclear smugglers, and drug traffickers. We must cooperate and work closely to counter terrorism and criminal activities sponsored by states, groups, and individuals. These are among the foremost challenges of the post-Cold War world.

These are issues which affect the lives of the American people in a very direct way. How we deal with them, whether and how we strengthen the international financial system and reform its institutions, and how we fight challenges such as terrorism will in no small way determine our citizens' future prosperity and security, how they feel about themselves, and the future their children will enjoy.

To create new, high-wage jobs, to raise incomes, and to expand economic opportunity, the United States must continue to lead, even as we work hard on these matters at home. We cannot--I will say again--we cannot walk away from our global leadership responsibilities. In Halifax we have taken another solid step along that road. It will make the economy work better for the American people, and I believe it will help us prevent future "Mexicos" and deal with those crises in a much more effective way when they do occur.