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. Last Updated: 07/27/2016

Russia Calls for Action From G-7

TOKYO - Japan and the United States cited progress Tuesday in resolving a trade dispute threatening the success of the Group of Seven leading industrialized nations summit, and Russia summoned the G-7 to back its reforms with deeds, not words, in Tokyo.


President Bill Clinton flew in on the eve of the summit and immediately met for an hour with Prime Minister Kiichi Miyazawa, hoping to smooth ties ruffled by persistent huge Japanese trade surpluses.


The two leaders said negotiators would continue discussions in the hope of hammering out an accord over the next few days as the leaders of the G-7 meet to discuss global economic issues. The summit - grouping Britain, Canada, France, Germany, Italy, Japan and the United States - is opening Wednesday.


President Boris Yeltsin, who arrives in Tokyo on Thursday, will Join the G-7 leaders during their final day of talks on Friday. He will meet separately with Clinton and Miyazawa.


"Of course, we expect a great deal from the summit", the Russian Foreign Ministry spokesman, Sergei Yastrzhembsky, told a news briefing in Moscow on Tuesday. "Above all we expect action and practical decisions".


He added: "We believe the time for declarations of support has passed. If something is going to be done, it is time to do it now".


The spokesman said that Moscow expected the G-7 to confirm pledges made at a Tokyo gathering of foreign and finance ministers in April, where the West offered $43 billion in financial help and debt relief.


Yastrzhembsky said some in the West seemed to think that the need for aid to Russia had grown less urgent since Yeltsin's victory in a national vote of confidence in April.


"I think that the Yeltsin team is coping, and will cope", the spokesman said, cautioning however that this did not remove the need for investing now rather than later in Russia's reforms.


Finance Minister Boris Fyodorov said on Monday that Yeltsin would press "quite firmly" for freer access to world markets and membership of the General Agreement on Tariffs and Trade, the world trading body.


The Kremlin leader is also expected to report on Russia's progress in stabilizing the ruble and bringing monetary policy under control, and to discuss how promised aid will be used.


In Tokyo on Tuesday, attention focused on the long-running U. S. -Japanese trade dispute.


"We had a very good meeting", Clinton said after his talks with Miyazawa.


But U. S. Secretary of State Warren Christopher sought to douse hopes of a ground-breaking accord.


"I want to play down expectations", Christopher told reporters. "We'll have to see if something is accomplished this week or thereafter".


A top European Community official said the EC had warned Japan not to discriminate against Europe in its eagerness to placate the Americans by buying more U. S. goods.


"We very strongly urged that in future programs the EC should get fair treatment", said External Relations Commissioner Sir Leon Brittan after talks with Miyazawa.


The summit will hear pleas to cut budget deficits, slash subsidies and scale back the welfare state, according to a draft report obtained by Reuters.


The report, by G-7 finance ministers, says that rising public debts, the threat of long-term unemployment and a looming explosion of spending for health care all make a round of fiscal belt-tightening urgently needed.


Large public deficits are fostering inflation, crowding out productive private investment and grabbing scarce public funds for debt servicing, the report said.


"It is essential for the G-7 countries to strengthen their medium-term efforts for fiscal consolidation at all levels of governments", said the confidential document.


Cost-cutting should aim to "keep the government's involvement in the economy at an appropriate level, to create room for private investment, to help keep the stock of public debt manageable and to maintain scope for fiscal manoeuvre".


The draft report urged more cooperation among the G-7 but made no detailed proposals for new common growth initiatives.


It was clear in Clinton's remarks to reporters that the two sides remained far apart on how to measure progress in reducing Japan's $50 billion trade surplus with the United States.


The United States wants to establish specific targets and is pressing Japan to cut its current surplus to under 2 percent of Gross Domestic Product in three years from 3-4 percent now.


Japan is resisting the demands, accusing the Americans of seeking "managed trade".


Clinton and Miyazawa disclosed that they had a personal exchange of letters over the last few days to help move the talks forward.


"I remain convinced that we can conclude an important agreement on this issue", Clinton said. "The negotiations have not been free of difficulty, but, frankly, some significant progress has been made".


With most of the summit leaders in political difficulties at home - Miyazawa, the host of the conference, is a lame-duck prime minister facing perilous general elections in two weeks - expectations of the Tokyo summit have been uniformly low.


Clinton, who despite his own domestic worries is arguably the least vulnerable of the current participants, flew to Tokyo after voicing a ringing call for a new vision to meet the challenges of the post-Cold War era.


"Now our generation must craft a new vision, and forge new agreements among the world's nations, to guide us through a new era", Clinton declared.


"This new global economy is here to stay", he said. "We can't wish it away. We can't run from it".