Global Leaders Adopt Regimen for Healthy Economies

DENVER — The fast-growing U.S. economy won praise from leaders of the world’s richest industrialized nations Saturday, but their blueprint for promoting global economic growth committed other countries to undertake painful domestic reforms.

At the first such gathering with extensive participation by Russia, President Clinton, Russian President Boris N. Yeltsin and the leaders of Japan, Canada and the four most populous Western European countries issued a 38-paragraph statement at the Summit of the Eight here that also:

* Offered a new compact to the world’s poorest nations, those of sub-Saharan Africa aimed at lifting them out of the poverty traps that have haunted most since independence from colonial powers.

* Pledged to strengthen the stability of the global financial system in an effort to minimize the risk of a crisis similar to the December 1994 meltdown of the Mexican peso.

* Called for an expanded role for key organizations such as the World Bank and the International Monetary Fund to monitor increasingly complex global markets and combat the growing problems of corruption and financial crime.

* Pushed for new steps in the liberalization of global trade in the wake of last December’s World Trade Organization agreement that reduced barriers in the $1-trillion-per-year market in information technology.

“Our goal is to realize the full benefits of globalization for all while meeting the challenges it presents,” the leaders declared.

But they added a warning that “globalization will only be sustainable if everyone enjoys the benefits of the resulting economic gains.”

Treasury Secretary Robert E. Rubin hailed the economic plan drafted at the Summit of the Eight as a success “that will foster a stronger and healthier global economy and in so doing contribute to the economic well-being of the United States.”

As one of the world’s healthiest economies, the United States came off lightly on specific actions that need to be taken if the goals of growth and stability are to be achieved. The Clinton administration was merely asked to guard against any resurgence of inflation and to follow through on commitments to balance the federal budget and promote savings.

The social welfare states of Western Europe, struggling with unemployment rates of more than 10%, face far tougher challenges, the leaders agreed. While the need to heighten labor flexibility and reduce state subsidies is now undisputed in economic terms, these steps mean cutting into the heart of state benefits that Western Europeans have come to see as their birthright.

But French President Jacques Chirac warned, “We shouldn’t adopt the U.S. model. Everyone has their own model. The United States is a great nation . . . but it doesn’t have the same structures and traditions as France.”

When coupled with other fiscal belt-tightening required to achieve the planned European monetary union, the measures agreed to Saturday are part of a politically volatile cocktail that has already sundered the conservative government in France and poses a serious threat to German Chancellor Helmut Kohl, who faces a reelection campaign next year.

The leaders also agreed that Japan should cut its huge trade surplus. According to figures released in Tokyo on Wednesday, Japan’s overall trade surplus more than tripled in May and its surplus with the United States nearly doubled.

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The summit leaders also welcomed Russia’s latest round of economic reforms, which seek to take the largest single chunk of the former Communist empire further toward a full-fledged market economy.

Russia’s elevated involvement at the Denver summit produced more than symbolic benefits for the country still wading through a frustrated transition out of the Communist morass, Finance Minister Anatoly B. Chubais reported after his meetings here with colleagues.

He hailed Russia’s inclusion in international economic discussions as important recognition by the West of Russia’s progress in developing a market economy and its admission to the so-called Paris Club of creditor nations as a move likely to boost his country’s credit rating as well as its coffers.

“Joining the G8 entails a very complicated negotiating process that has been accelerated here and will soon yield important results,” said Chubais, who has been a key architect of Russia’s privatization and reform programs.

Rubin confirmed that the Group of 7 embraced Russia on the merits of its transformation as much as for the political and security benefits of involving the former superpower.

“I must say, I think it’s an encouraging picture,” Rubin said of the Russian economy. “There remain enormous challenges. These things don’t get done quickly. But there’s been a lot of progress.”

During more than six hours of meetings in the blue-carpeted conference room of the Denver Public Library, the leaders also devoted considerable time to the economic and social implications of the aging societies that now characterize most Western industrialized countries.

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The leaders noted that major changes are required to meet the financial burdens of additional pension and health costs inherent in societies where people today routinely live 20 to 30 years beyond retirement.

“We therefore pledge to undertake structural reforms that will address these issues,” they said.

Afterward, U.S. officials pointed to the initiative for African development as the most unusual element of the economic communique.

In return for curbs on corruption, military spending and human rights abuses and the adoption of sound economic policies that can produce economic growth, the leaders pledged debt relief and assurances “that adequate development assistance is available” to those countries in danger of being left behind as the world moves into a new century.

European officials at the summit said that commitments from poor nations, whose leaderships have in the past siphoned off foreign aid money to create vast personal fortunes, are needed to generate the political will to keep aid flowing from the West.

“People are not unsympathetic. They just need to see the connection that they are really helping the poor,” noted a British government official.

In his weekly radio address to the nation Saturday, Clinton defended the Africa initiative as a kind of exercise in enlightened self-interest.

“Helping them to build their prosperity means greater opportunities for American exports,” he said.

As the presidents and prime ministers concentrated on economic issues, foreign ministers of the eight countries issued a progress report on global political issues, including the fight against nuclear proliferation and international terrorism.

“Our joint message to terrorists is this: ‘You have nowhere to run, nowhere to hide,’ ” declared Secretary of State Madeleine Albright.

Times staff writer Glenn F. Bunting in Washington contributed to this report.

* CLINTON IN CATBIRD SEAT

President finds things going his way at summit. A8