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Rubin Urges U.S. to Embrace Global Economy

Politics: Treasury secretary's comments to London's financial community are directed at congressional GOP.

May 09, 1998|TYLER MARSHALL | TIMES STAFF WRITER

LONDON — In a major speech to the financial community here, Treasury Secretary Robert E. Rubin on Friday set out the opportunities for new growth in the fast-emerging global economy and warned Americans to ignore those who want to push away the outside world.

"There are loud and growing voices urging us to turn inward," he said. "We follow them at our peril."

While his words were delivered to an elite gathering in an international capital of finance, his comments were clearly directed in part at the Republican-controlled U.S. Congress.

Noting congressional refusal to grant President Clinton authority to negotiate "fast-track" trade agreements, its delays in providing more U.S. money for the International Monetary Fund and the current impasse over the payment of Washington's delinquent dues to the United Nations, Rubin noted, "We have much work to do."

He spoke just hours before finance and foreign ministers from the world's leading industrial nations, the Group of 7, gather here to discuss economic matters.

They will be joined by Russian officials and form what has become known as the Group of 8 for political discussions.

Besides globalization, the ministers addressed an array of regional crises--including the growing ethnic battles in the Serbian province of Kosovo and an ominous statement from North Korea's Communist leadership indicating that it may soon resume its nuclear program.

The sessions here will focus, in part, on preparing a summit next weekend of leaders from the eight countries--the United States, Japan, Britain, Germany, Italy, France, Canada and Russia.

While Rubin's comments on globalization addressed the major economic challenges for Europe, Asia and the United States, the deeper significance of the two-day gathering is the degree to which the ministers are concentrating for the first time on the political dimensions of globalization and development--issues previously viewed largely as economic in nature.

U.S. officials cited the political fallout from the Asian financial crisis as an example of the importance of this shift.

Thomas R. Pickering, the U.S. undersecretary of State for political affairs, told reporters that the decision for finance and foreign ministers to meet jointly, as well as separately, underscored the growing interrelationship of economic and political factors.

For the first time, for example, a G-8 initiative aimed at helping poor countries better integrate themselves in the world economy is expected to cite "good governance" and political reform as prerequisites for increased economic aid. The idea follows the shape of a recently developed Clinton administration plan for helping struggling African nations.

The idea is based on two simple principles: Private-sector overseas investment far exceeds government aid; and stable, well-governed countries are the best lures for this capital. Private money directed to poorer Third World countries has jumped from $20 billion to $250 billion over the past decade, U.S. figures show, and "private capital flows . . . are the surest way to create long-term jobs and good health," said Stuart E. Eizenstat, U.S. undersecretary of State for economic affairs.

The foreign ministers also plan to devote a major part of their meetings to environmental issues linked to rapid world economic growth.

They also addressed more familiar issues in their portfolio, including crises in Cyprus, Iraq, Iran, Cambodia, the Korean Peninsula, the Middle East and the Kosovo region in Serbia.

Discussions on North Korea took on greater urgency after a statement from its foreign ministry Friday that it was reviewing a 4-year-old agreement with the United States, South Korea and China.

Under that accord, North Korea agreed to give up its nuclear program in return for deliveries of American fuel oil and construction of two nuclear reactors, built and paid for by South Korea, Japan and others.

Western countries believe that North Korea's nuclear program had a weapons-producing dimension. Now, however, questions have arisen over the commitments to the North.

Much of Secretary of State Madeleine Albright's time in Seoul last week was aimed at trying to resolve difficulties in financing the agreement in the wake of South Korea's recent economic woes and a reluctance on the part of Congress to finance the purchase of new oil supplies.

"Anything that would happen to undermine the integrity of that agreement, either from the North Korean side or from the outside, would be in our view lamentable and regrettable," Pickering said.

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