1:39 P.M. EDT

SECRETARY ALBRIGHT: Thanks, David. President Clinton is traveling to Europe tomorrow to attend meetings with his Group of 8 and European Union counterparts, as well as the ILO's international labor conference. And he will also visit France and Slovenia and meet with the leaders of those states.

These meetings will cover every facet of America's extensive and essential partnership with Europe, and the President will be discussing labor rights, human rights, the environment and trade, our common fight against terrorism, drug trafficking and crime, and our shared efforts for stability and peace.

My colleagues will put those issue into context as they preview the President's schedule with you. And I will focus on the immediate challenge facing us, which is to ensure that the conflict in Kosovo has truly ended, and on our long-term effort to promote lasting stability in Southeast Europe.

The crisis in Kosovo entered its new phase less than 100 hours ago. In that time, 13,000 to 15,000 Serb forces have departed, 14,000 KFOR peacekeepers have begun to deploy. And this is truly an extraordinary situation. The dangers are considerable; we're working closely through NATO, and with Russia, to ensure that the terms of the U.N. Security Council resolution and the military technical agreement between NATO and the Serb forces are observed.

I know that there is some concern about Russian peacekeeping forces in Kosovo, and I want to stress that we welcome Russian participation in KFOR, and we are in constant high-level discussions with Russia to work out an appropriate role. And we have made real progress today.

President Clinton today has spoken with President Yeltsin; Vice President Gore has spoken with Prime Minister Stepashin. I have spoken to Foreign Minister Ivanov twice. General Jackson and the commander of the Russian contingent are maintaining contacts on the ground in order to resolve the short-term issues. And it has been agreed that Secretary Cohen and Defense Minister Sergeyev will meet in Helsinki in the next few days, and be joined by Foreign Minister Ivanov and I, in order to work out the longer-term issues about the participation of Russians in KFOR.

The coming months will be a period of return and reconstruction. We want to work with all the people of Kosovo to restore order, resume normal economic activity, and resuscitate community institutions. Our goal is a democratic Kosovo, at peace with itself and secure from external threats. And this won't happen overnight. But as President Clinton consults with his colleagues this week, he will do all he can to ensure that the effort is well-launched.

Even as we focus on the next steps in Kosovo, we are also taking a longer view. Our aim is to help a region which has been one of the continent's most violent become, instead, a part of the European mainstream. We and our European allies have recognized, after our experience in Kosovo and earlier this decade in Bosnia, that isolated programs to assist individual countries in this region have been insufficient, and we need to coordinate our resources and encourage real integration within the Balkans, throughout Europe and across the Atlantic. To this end, the United States and the European Union, Russia and other European nations have forged a stability pact for Southeast Europe, which President Clinton and his counterparts will advance this weekend.

Last week, in Cologne, I attended a foreign ministers conference on the stability pact, and I was struck by the great enthusiasm for it among our allies and partners, including those from Southeast Europe. One of the most encouraging developments of the past few months has been the way various nations and European organizations have been working together. And this pact will help ensure that that kind of cooperation continues. And it will work to strengthen democracy, promote human rights, encourage investment and growth, foster regional cooperation and counter trans-national threats.

We welcome the European Union's intention to assume the lion's share of the financial burden and, given the U.S. role in the military campaign, this is an appropriate division of labor. But as President Clinton has said, it is also in America's interest to do our part on the economic side, and we will.

President Clinton will go to Europe with confidence that we did the right thing in supporting NATO's effort to halt and reverse ethnic cleansing in Kosovo. Our focus now is on the even harder job of winning the peace. And the President will consult with his counterparts both on the immediate challenges there and on the larger imperative of establishing stability throughout the Balkans.

We undertake these efforts because they reflect our values and because we've learned from the history of this century that the promotion of democratic values in the Balkans is essential to our own security and to world peace.

Thank you.

MR. BERGER: Let me go through more chronologically the purposes and events in the trip. This trip truly comes at a pivotal moment. Having just completed the most difficult military operation in NATO's history, with I think stunning success, we now have an opportunity to turn to the challenges of consolidating a peace and realizing a vision the President has talked about since 1994 -- that is, a peaceful, democratic, undivided Europe.

As the Secretary said, this stage is no less difficult, and perhaps even no less dangerous, than the one -- 79 days of the air campaign. But it will determine the character of Europe and the transatlantic relationship for the next generation.

Obviously, one of the focuses of the trip will be on these immediate challenges on the ground in Kosovo. As the Secretary indicated, the first few days of the deployment are proceeding generally satisfactorily. The Serbs are leaving on schedule, and we are seeking to consolidate the agreement that was reached with Ahtisaari and Chernomyrdin of all Serbs out, international peacekeeping force in, and then ultimately the refugees returning. And watching the looks and expressions on the faces of the refugees and the people in Kosovo as those NATO forces go rolling down the road I think is truly one of the most extraordinary sights that I have seen.

We will start -- the trip will leave tomorrow night, and we'll start the trip in Geneva, where the President will meet with Swiss President Dreifuss, and address the International Labor Organization. This will be the first time that a U.S. President has addressed this body, and Gene Sperling will have more to say about that in a moment.

On Thursday, the President will travel to Paris for meetings with President Chirac and with Prime Minister Jospin. During the last 80 or so days, we've had the very closest cooperation with the French in the prosecution of the air campaign, and now, of course, the French and the Europeans will play a leading role in the reconstruction period, as well as the peacekeeping period mission.

On Friday we will leave -- move on to Cologne for the annual G-7/G-8 Sumnit. The G-7 will focus primarily on reforming the international financial architecture, something the President has been working on for over two years, and on an initiative for debt relief for the most heavily-indebted countries. Again, Gene will spell that out more specifically.

The G-8, with Russia participating -- we anticipate Prime Minister Stepashin to be representing Russia for the first two days of the meeting. That is Friday and Saturday. And President Yeltsin coming on Sunday for both the end of the meeting and a bilateral with the President.

Despite the disagreements we've had with Russia about the conduct of the air war, Russia has made clear throughout the Kosovo crisis that it sees its future still as part of and a partner with Europe and the West. And in Cologne we have a chance to refocus on our common interest.

We'll be looking for stronger support from our allies for our cooperative threat reduction program. This is the follow-on, in a sense, to the Nunn-Lugar program to help secure nuclear weapons and material in Russia, providing constructive employment for Russian scientists, and assisting in the halting of missile proliferation. The President set this forth in the State of the Union as one of his goals for the year and it's something that we hope to get allied support for it during the meeting.

Finally, as the Secretary indicated, at the G-8 the allies will discuss implementation of a stability pact for Southeastern Europe, which was signed by the foreign ministers this week. And this establishes the long-term political commitment and set of principles that will guide the international effort to promote democracy, security, economic development in the Balkans.

One of the extraordinary elements of the last 80 days has been the courage and steadfastness of the frontline states -- of Albania and Macedonia and Romania and Bulgaria and Hungary -- who have been exposed to the consequences of this conflict in a way no others have. They've had massive refugee flows; they've had their economies choked because of their economic connections with Serbia. And, yet, in all cases, these countries have remained strong supporters of the NATO effort.

And now we must, as the President said so often in the last few weeks, think about this region in terms of the long-term and how we bring Southeastern Europe into an integrated peaceful democratic Europe. And that will also be part of the focus of the U.S.-EU Summit, which will take place in Bonn on Monday with Chancellor Schroeder as the current Chairman of the EU, and the EC President Santer. The focus here will be, I think, not only the bilateral issues that we have with the EU, economic and otherwise, but on our common enterprise of building a new peace for Southeastern Europe.

On Monday afternoon we go to Slovenia. The President will meet with the Slovenian President Kucan and Prime Minister Drnovsek to express our support for Slovenes' aspirations to join Western institutions. Slovenia is one of the countries that really has made quite considerable progress both economically and politically in terms of democracy and openness.

He will address the people of Slovenia, and by extension, the people of the region, in an outdoor square in Ljubljana. And also while he is in Slovenia, he will meet with President Djukanovic of Montenegro to demonstrate our support for the steadfastness that he has shown during this period, and for the democratic aspirations of Montenegro, and the way in which they have held firm during this difficult period.

I'm going to ask Gene, now, to give you the last third of the triad, on the G-7.

MR. SPERLING: As you know, the President has, particularly over the last two years, and clearly since his election, focused on international economic agenda, focused on promoting open markets, promoting global growth and stability, while at the same time putting a human face on the global economy. His trip, in addition to the national security issues you've heard, will also focus on several key international economic issues. Let me focus on just a few.

First, he will travel, as Sandy said, to Geneva. He will be the first United States President to go to Geneva and address the International Labor Organization since its creation in 1919 under the auspices of the League of Nations. He will speak there, as will be discussed during the G-8, on many of the issues related to putting a more global face on the world economy, meaning dealing with the issues of not only growth and stability, but also the impact on the poorest people in each country on labor and environmental standards, and others of the issues that the G-8 and the world have become more galvanized around, in trying to find a proper balance.

There will be a particular focus in his speech, as there was to some degree in Chicago, on child labor and on our efforts and the world's efforts to stem the most abusive forms of child labor. In 1972, there was a convention at the ILO on reducing child labor. It was a very broad convention; it could never -- has not been able to get the full support yet, ratification of countries. And so, in the last few years, there was an understanding that we should try to focus in, the world should focus in on the most abusive forms of child labor -- from child prostitution, child pornography, slavery, the expanding use of indebted and bonded labor for children, the use of children in very hazardous working situations.

We have made this a priority. Secretary Herman herself went with a message to the President in the opening negotiations last year. Secretary Herman and her chief negotiator, Andrew Stamm, have been hard at work at this, as we all have been. And the President, as you know, mentioned this for the second year in a row in his State of the Union, particularly mentioning the importance of passing this convention.

We now feel confident, as today is the last day of which they're going through the reported language, that there will be a convention realized that will be able to get the support of the world, and the President will speak and focus on that in his remarks there.

The United States, it should be noted, is the primary contributor of the ILO's arm on addressing child labor. Child labor is not an issue in which you can simply shut down the factories, go for an easy solution. Chances are too great that you will drive a 10-year-old boy from the factories to running drugs, or a 10-year-old girl from the factories to prostitution. the ILO has focused on partnerships that ensure that there's the income support and focused on going to education.

Right now, the United States supports 62 percent of the full funding for the entire ILO. So this is an area where the United States has stepped up. The President will also stress, as again he called for in the State of the Union, for a new arm at the ILO dealing on core labor standards and has $25 million in his budget. And, again, we believe that that can help replicate some of the success in dealing with child labor that IPEC has.

At the G-7, the President will again focus on the issues that he has focused on, that Secretary Rubin has spoken on over the weekend, the need for a more balanced pattern of global growth, including the need for strong and sustained growth in Europe and Japan, the need for further progress on financial architecture, and an ambitious plan for debt reduction.

On architecture, I think that what we are seeing increasingly is increasing support for the plans that the President and his team have outlined over the last 18 months, focusing on the lessons that have been learned throughout the global crisis; how to help emerging markets still enjoy the benefits of capital flows, open markets and growth, but yet finding ways to have the balance that will prevent the capital flows from leading to periods of boom and bust that are too severe -- to strengthening the regulations and the focus in our country and our own lenders on the proper degrees of risk, of upside and downside risk; on strengthening the financial institutions; on focusing more on the prevention and inclusion of the private sector in the resolution of crisis; and, as I said, on the focus of social safety nets and ensuring that when there are downturns in these countries, that the proper mechanisms are designed to ensure that the poorest of the poor do not bear the strongest burden.

I think that many of the measures that will be discussed there, while often seem abstract, have very tangible applications. I think, for example, had there been the type of transparency revolution or information that will be discussed here, people would have been able to see that Korea had nearly -- that nearly three-quarters of their reserves were not available. If there had been the kind of capitalist standards talking here, banks would not have been able to loan to Indonesians with the same loss reserves as they do to City Bank. These are things that one could look back -- run the clock back and see that if these mechanisms and information were available, that they could have been and would have been helpful in preventing many of the crises that we've seen.

One of the things that the President is most excited about that will be talked about is the debt relief plan -- we think an ambitious debt relief plan. The United States -- as you know, the HIPC, or heavily indebted poorest countries -- the debt reduction plan was started in 1996. And when fully implemented, it could lead to up to $22 billion of debt reduction for the poorest and the most highly indebted countries.

The United States proposal that we have been working on -- Tim Geitner is here -- has been pressing on, along with Larry Summers and Bob Rubin -- calls for a dramatic expansion. Our proposal would more than triple -- more than triple the degree of both debt reduction and annual cash flow savings from debt reduction going to the poorest countries. And there is a special targeting in our proposal now to ensure that the benefits from debt relief would be targeted to alleviating poverty, ensuring more children are surviving, and education in the poorest countries. And again, we are hopeful that there will be progress made on there.

I should say that we believe, to do what's needed, there will need to be an expansion, an expansion of the trust fund for the most highly indebted countries. And the United States and the President will make clear that the United States will do its part and contribute its share to that trust fund.

Finally, the U.S.-EU will certainly also include some economic issues. The United States and EU have a strong interest in a strong launch to the WTO ministerial in Seattle in November. The transatlantic dialogue will continue to make some progress, particularly in reducing redundancy in the biotech products area. And hopefully we will make some success on some prevention -- early warning systems to prevent the unfortunate multitude of recent trade disputes we have had with the EU on such issues as bananas and beef hormones, et cetera.

With that, I will stop, and I'm sure that most of your questions will be on financial architecture. (Laughter.)

Q Secretary Albright, can we just ask you a question about architecture of the Russian -- Secretary Albright, as we understand NATO's position, it has been that there can be no de facto partition of Kosovo through the creation of zones by forces in there -- can have sectors but not zones -- and that all forces there must be under the direct command -- direct command -- of the NATO general. When you meet with the other principals in Helsinki, will that be an irreversible bottom line?

SECRETARY ALBRIGHT: We have made very clear that there has to be unity of command. And it's something that the Russians agreed to; it's part of the Chernomyrdin-Ahtisaari agreement that is now affixed as an annex to the Security Council resolution. Whenever I have discussions with my Russian counterparts, or anybody else does, they understand the unity of command, and that every inch of Kosovo has to be under KFOR.

We do want the Russians to be a part of this. And they have been a very useful part of IFOR and SFOR in Bosnia. And what we're going to be working on now -- as I said, Secretary Cohen and Defense Minister Sergeyev are going to work out the arrangements for Russian participation. And just to remind you, it was really Secretary Perry and his counterpart, Minister Grachev, who worked out the arrangements for the Bosnia aspect of this, so I think that they will work out this longer-term aspect.

Q Let me just follow up. Some of the confusion might be that on June 8th in the Oval Office, in response to a question, President Clinton, when asked whether he expected the Russian troops to be under NATO command, answered, "I do not expect that," but he said -- this is not an exact quote -- he expected some sort of arrangement, similar to the Bosnian arrangement. Is that acceptable here?

SECRETARY ALBRIGHT: The Bosnia arrangement is such that the Russians participate, they report to an American commander who reports to a NATO commander. So I think that I'm not going to predict what kind of an arrangement will be made for KFOR, but the sanctity of the concept of unity of command is something that we have agreed to. We have also agreed that KFOR will, in fact, have responsibility for every inch of Kosovo territory.

Q Given the agreement, does it surprise you that this is still under discussion? This seemed to have been a done deal and, yet, it's not.

SECRETARY ALBRIGHT: Well, first of all, I think that these are issues that we have talked about that I don't think we need to exaggerate this problem. This is something that can be worked out. I believe that it will be. We have said that we want the Russians to be a part of it. They want to be a part of it. I think it does not defy the imagination here to figure out a way to do it.

And I think the important point here is, as Sandy said, I think we need to keep our eye on the ball. And that is to see what's going on. You know, 78, 79 days ago, nobody -- many people here -- did not think that this was possible. And it is. And now we're seeing many of -- this great stream of people coming, the forces coming in, the Kosovars going back. I just had the most incredible experience at Stenkovic camp, where they are so thrilled about the fact that they're going to go home. This is a huge deal. The fact that this part of the crisis is over and they're going to be able to go home, there's going to be civilian implementation. We'll work the Russian part out because there's goodwill and we want to be able to work it out.

Q You said that there was real progress made today in the conversation between the President and President Yeltsin. Can you describe that real progress?

SECRETARY ALBRIGHT: Well, they -- one of the things was this agreement that the Secretary of Defense and the Defense Minister would need, and that some of the aspects and the generals were going to meet -- General Jackson and Stepashin were going to continue to meet to work out the short-term problems.

Q What are the differences themselves?

SECRETARY ALBRIGHT: I'm not going -- do you want to go on to more details?

MR. BERGER: No, not really. I think the Secretary earlier today said we've got some real traction on the problem today, and I think that's a good way to put it.

Q Mr. Berger, could you tell us if you have assurances in all of these conversations with the Russians that in the interim, until there is an agreement on the Russian participation, no additional Russian troops will enter Kosovo?

MR. BERGER: We do not expect any further Russian troops to enter Kosovo until there is an agreement.

Q To follow up on this, the British General has indicated that the Russians probably should stay there, because now they would be involved in the demining period. Is that acceptable to Western Europe?

SECRETARY ALBRIGHT: First of all, let's make something perfectly clear -- we want the Russians to be a part of this. That was part of the deal in the first place. And we've been talking about this for a long time -- that they would be part of the force that went in. Some of the duties, actually -- the Serbs, the small number of Serbs that will go back has something to do with demining. Demining is a huge deal here and we have to sort out -- everybody needs to help on the demining aspects of this.

Q Did the Russian military go in on its own, or was this done at the direction of political leaders in Moscow?

SECRETARY ALBRIGHT: The Russians have told us -- is that President Yeltsin decided that they did want to be a part of the peacekeeping operation and that the military just got out one step ahead.

Q They were just enthusiastic to get there, is that the reason?

Q Do you buy that?

MR. BERGER: Let me say one thing first. Let's bare in mind, this issue has been an unresolved issue, in a sense, from the beginning. The one footnote in the Ahtisaari-Chernomyrdin agreement goes to the question of the command arrangements for Russia. And we didn't have to resolve that at that point, we were not able to resolve it then because it didn't go to essentially the agreement that Serbia had to reach with the international community.

But this has been -- exactly what the nature of the command arrangements have been a sticking point for some time, but I agreement with the Secretary that we're going to resolve this satisfactorily.

Q But if you and the Secretary buy the idea that the military jumped the gun, you're signing on to the idea that the Russian government has no control over its military.

MR. BERGER: I think the Secretary said -- expressed to you what the Russians have said.

Q So you don't really buy it?

MR. BERGER: Well, I will only repeat what the Secretary said. The Russians have said that President Yeltsin in a sense gave an order for the Russians to participate, and the generals took it from there. I'm not going to comment on that.

Q If our generals took it from there, you'd sack them.

Q Madam Secretary, you're the foreign minister of the United States in your post as Secretary of State. If you give assurances in the name of the United States you expect that you're speaking for the government. Secretary of State or Minister Ivanov gave assurances for Russia and they went nowhere.

SECRETARY ALBRIGHT: Well, we have a really good interagency process. (Laughter.)

Q Can you deal with Ivanov now? Can you trust Ivanov, can you deal with him now?

SECRETARY ALBRIGHT: I deal with Ivanov; I expect to continue to deal with him. I think that we have had long, long conversations over the last weeks. As I also said that he and I are going to join Cohen and Sergeyev in Helsinki in order to put all the pieces of this together.

Q What day will those meetings begin?

SECRETARY ALBRIGHT: It hasn't been announced yet; in the next few days --

Q Do you think he was misled? Was he misled himself, or do you think he misled you deliberately?

SECRETARY ALBRIGHT: I can't get into speculation about what is going on in Moscow. Clearly there is some confusion, as I have said previously.

Q Why is President Yeltsin only coming into the meetings on Sunday, instead of participating Friday and Saturday?

MR. BERGER: I don't precisely know the answer to that, Wolf. It could be a question of physical stamina. I think he's indicated that. But he had a very good conversation with the President today. And as I said, without getting into the details, I think we made progress, not only, Terry, in terms of process, but in terms of substance.

Q Is there something that will get rid of this current standoff at the airport? Do you sense that this is about to change?

MR. BERGER: Well, I hope so. I think we're not taking anything for granted, given the nature of the last few days, but I expect that General Jackson will meet with the Russian general on the scenes again tomorrow. Hopefully, that will produce real progress in terms of the immediate airport issues. And then, as the Secretary has indicated, the ministers of defense will meet in Helsinki to resolve the longer-term issues based upon some principles that we've set forth, particularly a unified command for KFOR.

Q So, for the moment, the standoff continues then?

MR. BERGER: I think we're making progress.

SECRETARY ALBRIGHT: I think you should not forget the fact that about 15,000 KFOR forces have been able to go in and are starting to do their work. This has not prevented any action; we're on schedule; the Serbs are leaving on schedule; we're coming in on schedule. And I think -- several hundred Russian forces in Pristina are in no way stopping the progress of this. And we have mechanisms into place now in order to -- how to resolve it and there's traction on this issue. We'll get it down.

Q A follow-up on that, please. Do you know who decided and why they decided that the Russian troops would take control of the Pristina Airport?

SECRETARY ALBRIGHT: I'm not going to speculate on the Russian decision-making process.

Q Could you comment on what you expect the Russian participation in the three-day G-8 Summit to be? Given that Yeltsin is going to only be there the last day and the recent volatility in their decision-making, aren't you going to be hampered in the first two days as you draft a final communique in having a Prime Minister who may or may not reflect the views of his President?

SECRETARY ALBRIGHT: There is no evidence of the fact that anything is being hampered in terms of carrying out the details of the G-8 Summit. There have been political directors meetings, there have been sherpa meetings. The steps leading to a summit have taken place. In order -- we expect that Prime Ministers Stepashin will be carrying on with the authority that a Prime Minister has. They have been moving on their economic reform program. It's very important to them to have a useful G-8 Summit. So I expect that it will be able to go forward.

MR. LEAVY: George, last question.

Q Will you take, either of you take a broader look at --

MR. BERGER: No questions for Gene here?

Q I got one, but I'm deferring. (Laughter.)

Q Well, architecture will follow up on. Can you take a broader look at U.S.-Russian relations heading into this meeting between the two Presidents? How much damage was done to the relationship by the air war? And do you believe that this face-to-face talk can in any way get things started again on START II, disagreements on missile defense -- any of the arms control or financial adjustments?

SECRETARY ALBRIGHT: Let me take START and then you can -- based on the number of contacts that I've had with the Foreign Minister, and the number of subjects that we have to talk about, and very specific mention by both of us of the fact that we have a lot of issues together and that the Kosovo situation should in no way come between us, I think that we continue to have a very productive relationship with Russia.

We do not agree with them on everything. We don't agree on everything with any country, frankly. We have our national interest and we pursue it, and other countries have theirs. But I think on the issues, many of the issues that you've mentioned, we have a common interest in trying to come to agreement. And therefore, as two great countries, we will pursue our national interest, and cooperate where we can, and disagree where it is necessary.

But I am confident that the U.S.-Russia relationship is one that is based on real national interests for both our countries and, therefore, we'll deal with the issues one by one, and that there has not been long-term damage from this.

Q Thank you.

Q Can you talk about one of the themes of the discussion is stability for world growth -- now for the countries that need to get their growth higher, that's understandable. What about U.S. growth? The problem now appears to be that this is a super heated economy that needs to be damped down. How do you merge the two?

MR. SPERLING: Well, if you look at the current blue chip forecasters, you still find the projection for this year, even though being a tremendous 3.9 percent growth, which is enormous -- very strong growth for the seventh, eighth year of an expansion -- the projection for inflation is still at 2.1 percent. And so while I know there will be a lot of inflation and Fed watching over the next month, most of the numbers we see still show very low projected inflation. And I think that almost all the private sector forecasters see growth this year still being very low -- around two percent.

Q -- the debt growth countries -- you mentioned earlier the $22 billion the President is thinking of forgiving?

Q Debt forgiveness.

MR. SPERLING: Right.

Q No, he wants a list of the countries.

MR. SPERLING: Oh, the list of what the countries are -- yes, we can get that to you. I mean, there are several, and if the U.S. proposal for an expanded debt relief plan is agreed to, it would increase the eligibility of countries that would be eligible. There would be several more countries that would come in under the criteria that the United States has put on the table.

Q Are you talking about three times $22 billion, or does the $22 billion reflect --

MR. SPERLING: Well, if three times 22 is 66, it's going to be more than that. That would be in nominal terms.

Q And the World Bank and International Monetary Fund are all going along with this?

MR. SPERLING: Well, what is significant about the entire HIPC -- what is significant about the entire effort that's happened since 1996 is, prior to that, debt relief happened through the Paris Club and bilateral debt reduction. What's been significant about this entire initiative is it's brought in the multilateral debt reduction. So this would certainly be talking -- our proposal, at least, would certainly go into greater debt forgiveness reduction involving the IFFYs -- multilateral and regional organizations.

I should say that, as we have always proposed that it be tied to the governing and the reform and be conditioned on that so it is having the desired impact for the long-term and sustainability for the country.

Q Gene, one of the things that have been said is that there would be some sort of GDP formula for debt relief, where you'd split the difference to figure out who would pay what. Has that been resolved yet?

MR. SPERLING: Tim Geitner is assigned here to make sure I don't say too many details on the --

Q He looks real relaxed.

MR. SPERLING: He looks real relaxed. (Laughter.)

Q Do you know the details?

MR. SPERLING: I do know -- this is a situation where I know more than I can say. (Laughter.) I'm getting these lectures on the kind of etiquette of G-7 and what you can say before and afterwards.

Q Can you give us some detail at all whether this has been agreed to, or whether or not this is something that still needs to be worked out, this GDP formula, or how that's going to work?

MR. SPERLING: You're talking about what the contribution would be?

Q Right. So France and Japan are holding so much of the debt --

MR. SPERLING: I think that all that we wanted to say at this point is to make very clear that we do think the trust fund should be expanded, that we would do our part bilaterally, and that we would contribute our share to whatever multilateral funding is necessary for the trust fund to do this kind of deeper and quicker debt reduction.

Q On the projections, you said, inflation 2.1 percent of your projection, and what was your growth projection?

MR. SPERLING: What I was giving you was what the current blue-chip forecasters were, which is that even though growth was now projected to be 3.9 percent for the year, that inflation was still projected to be 2.1 percent. So we obviously don't discuss Fed policy. There will be enough people doing that over the next three weeks. But we are saying that the projections for inflation still remain low, and so I was saying that in reference to a comment on whether we saw overheating at this moment.

Q No rate hike, right? That's what you were saying. (Laughter.)

Q You said that the growth would slow down to 2 percent annualized, over the next couple of quarters? Is that what you're saying? You said that the blue-chip forecasters --

MR. SPERLING: All I did -- what I did was very boring. I just told you what the blue-chip forecast was, which you all could see, so that you could see what the 50 private sector forecasters were saying at this moment.

Q Can you tell us about the President's conversation with Yeltsin? Did the question of the IMF limits come up?

MR. STEINBERG: The answer is, no.

Q Is there any coupling going on here in terms of the Russia economic situation and Russian --

MR. STEINBERG: There has been no discussion of that. The IMF program needs to go forward and be implemented. This is what they really want me up here for.

Q When do we get Friday's, Saturday, Sunday -- political statement comes out when -- the public statement, when? If you could just run through the schedule.

MR. STEINBERG: I'll just run through the schedule quickly. The G-7 leaders will meet on Friday afternoon. The tradition has been to have the Chairman's Statement after that meeting and I would expect that we would have the Chairman's Statement on Friday.

On Friday night, they will discuss the political issues -- it would surprise me if that weren't largely devoted to Kosovo, but there may be a few others. And I think there's a reasonable chance that we will have some political statement from the leaders Friday evening.

Saturday will be devoted to the full range of the issues on the human face of globalization. There are number of discrete issues that they're going to talk about, including the very important initiative by the G-8 on education. And I would not be surprised to see some kind of announcement coming out on Saturday concerning that. And then finally on Sunday, you'll have the full communique.

Q It seems like one of the trouble spots is of course the Russian debt and the possibility of a Russian debt default. Do you think that will be a main focus of the discussions, especially the discussions in which Russia is being involved at the G-7 meeting?

MR. STEINBERG: Well, I think -- I mean, the principal question with respect to the Russian debt is being dealt in the context of the IMF and the Paris Club. So I think since this is not a forum in which those kinds of decisions will be taken. I would be surprised if there were sort of a specific discussion along those lines.

But I do think that there will be a broader engagement about Russian economic reform. I think there's a very strong commitment by the G-8 to work with Russia to support reform efforts, both in the political and economic sphere. And I'm sure that there is going to be that kind of broader discussion about the long-term development of Russia's politics and economy and what the other G-8 countries can do to help.

Q Two unrelated questions, but foreign policy questions. On the India-Pakistan tensions that have been unfolding, has the President been in direct contact with any of the leaders in recent days? And how concerned is the White House over these tensions between India and Pakistan?

MR. STEINBERG: The President expects to talk to Prime Minister Vajpayee sometime today, and I would expect that that will be followed by a call to Prime Minister Sharif, possibly not until tomorrow. We obviously take this very seriously. We have urged all sides to exercise maximum restraint, to follow up in the spirit of the Lahore Agreement, to try to reach a resolution of this and to intensify their diplomatic contacts.

Q And as you know, Warren Rudman, the PFIAB chairman is about to release his report on the Chinese espionage allegations. Looking at that report, which we haven't seen yet, but you presumably have, what would you have done differently, looking back on the initial suspicions? Are there any lessons that you and the National Security Council staff have learned that will be implemented now as a result of this report?

MR. STEINBERG: Well, the President was briefed by Senator Rudman and several of the members of the panel this morning. We prefer to withhold comment until the PFIAB and Senator Rudman can introduce publicly the report, and then we will have some comments afterwards.

Q When you said that there's no coupling between -- the follow-up on Bob's question -- there's no coupling between financial aid or assistance to Russia, and what's going on in Kosovo -- yesterday, or over the weekend, a British official, in fact, said that there are officials that will be attending the G-8 that will not look kindly on Russia if this standoff continues.

MR. STEINBERG: I'd simply say that, as you've heard probably about fourteen-score times from my previous colleagues, we fully expect to get this issue resolved. We think that it is important to get it resolved. But since we think we're making a lot of progress, I think it's really entirely speculative. We don't see a problem emerging here. We think that the IMF program ought to go forward, but that Russia needs to do what it needs to do to get IMF on track.

Q You said -- Sandy said that we do not expect any further Russian deployment --

MR. STEINBERG: I'm not going to --

Q Can I ask a question, please? If you don't want to answer it, you don't have to answer it, but let me ask the question. We didn't expect the Russians to go into Pristina, but they did. The question is, have we received reliable assurances from the Russians that they will make no further deployments until there's an agreement? Or is that simply our expectation?

MR. STEINBERG: I think we're going over old ground. We expect to work out an arrangement with the Russians that will govern the further deployment of their forces. We expect there will certainly be more than there are now. We are discussing with them in a very specific sense how to get that done, and we would expect that additional forces will come, but they will come pursuant to arrangements that we agree on.

Q But have they assured us that there will be no further deployments --

Q Just to follow a question -- after the President talks with Prime Minister of India and Pakistan today, do you think he has on his agenda to talk about India and Pakistan and Kashmir conflict during the G-8 meetings?

MR. STEINBERG: The tradition at the dinners on Friday night is a broad-ranging discussion, typically focusing on political issues. The agenda is never fixed in advance, but it's really up to the leaders themselves.

As you know, last year the focus of the discussion on the Friday night dinner was the nuclear tests. And so, particularly in that context, I would not be surprised if that topic came up, but there is no agreement one way or the other.

Q Thank you.

END 2:17 P.M. EDT