FROM THE OFFICE OF PUBLIC AFFAIRS

I appreciate this opportunity to speak with a group that is playing such an important role in promoting closer ties between our two countries. Today, I would like to comment briefly on the U.S.-Saudi economic relationship -- and the importance of working together as we move into the future.

The United States and Saudi Arabia are strategic partners, both in the Middle East and in the global economy. And just as we have expanded our strategic relationship which began with the historic meeting of Franklin Roosevelt and King Abdulaziz on the U.S.S. Quincy in 1945, we are today expanding our economic relationship through means such as the US Saudi Business Council. You, collectively, represent trade, investment, manufacturing and finance and these are the basic sectors of both our economies.

The US-Saudi Arabia relationship is based on many interests and goals that we share.

We both have an interest in the security of the Middle East. We cooperate in important ways to maintain stability and encourage peace.

And in the economic arena, we have a vital, important and growing relationship. It, too, is based on common interests and common goals.

We both face the issue of fiscal order. In the United States, President Clinton has made this a high priority, with the result that we have reduced our budget deficit by 60 percent in the last three and a half years, after twelve years during which the federal debt quadrupled which has led to very favorable economic conditions. Saudi Arabia faces a budget deficit challenge similar to the one we faced a few years ago. I recognize how painful it can be to rein in spending, but I believe it is the right path over the long-term to strong economic conditions.

As two countries where economic prosperity at home is inextricably linked to the strength and stability of the global economy, we share a common interest in policies and institutions that promote a healthy global financial system. We both prosper through active engagement in the global economy. Saudi Arabia and the United States have worked together closely in the IMF and in other international financial institutions. Recently, Saudi Arabia, with strong U.S. support has moved to expand its multilateral ties, for example, by joining the Bank for International Settlements, by contributing significantly to the expansion of the General Agreement on Borrowing, and by taking steps toward joining the World Trade Organization on fair and equitable terms.

As you are well aware, not so long ago, the U.S.-Saudi relationship was based predominantly on oil. Saudi Arabia is still the world's largest exporter of petroleum, but now, we have a much more complex and dynamic relationship. Saudi Arabia is our fifteenth largest trading partner. And American businesses making everything from nails to flat glass view Saudi Arabia both as a partner and as a strong potential market--as well as a gateway to the Middle East. Indeed, U.S. companies constitute the largest block of joint ventures in Saudi Arabia.

This new relationship brings opportunities and challenges, challenges which I am confident we can meet by working together. At the same time, each of our countries faces its own economic policy challenges.

For the United States, the challenge is to continue on the President's path of promoting growth by reducing the deficit and investing in areas critical to future productivity, such as education and training.

For Saudi Arabia, the challenge is to take the bold steps necessary to create the conditions for long-term growth and to continue playing an economic leadership role in the global economy, particularly with regard to the Middle East. The economic performance of Saudi Arabia, a nation dependent on exports for prosperity, is linked to overall growth in the global economy. Further liberalization of the Saudi economy, particularly in the areas of investment and financial services, will be a crucial step towards a stronger Saudi economy. After all, Saudi Arabia competes for capital, as does every country, and reducing barriers to investment will benefit Saudi Arabia in that regard.

Our framework for cooperation is already strong. The U.S. Treasury and the Saudi Ministry of Finance have been working together closely to address bilateral issues. The best example is the U.S.-Saudi Arabian Joint Economic Commission which has been jointly managed by the Saudi Ministry of Finance and the U.S. Treasury since 1974. The Joint Commission is the largest that Saudi Arabia has with any country. Over its almost 25 year history, it has administered thirty different projects and employed several hundred U.S. citizens at a cost of about $1.7 billion, all of which has been paid by the Saudi government. Most of these projects have been the kind where one could point to tangible results as in highway transportation, environmental protection, emergency medicine, and hospital planning. You are all aware of the tremendous efforts of the late Secretary of Commerce Ron Brown to build greater business ties between our two countries.

Our latest effort of cooperation is, of course, the U.S.-Saudi Business Council, which has received strong encouragement from the Department of the Treasury and the Ministry of Finance. This organization, while only two years old, holds a great deal of promise and provides an important forum to discuss issues that affect the ability of businesses to do business with each other. In particular, you can play a key role in encouraging small and medium sized businesses to be active in the trade, investment and financial relations among our two countries.

As you are aware, this week we have had meetings of the G-7, IMF and World Bank in Washington. While cooperation in multilateral fora and work on the global financial system are both important, these efforts can seem somewhat abstract to our average citizens. They need to see concrete benefits from growing openness, trade and investment, and I hope that is what the Council can help generate. After all, when it comes to building economic cooperation, governments can only do so much. Ultimately the measure of success of how well we grow and prosper together comes from how well businesses succeed and consumers and markets prosper. Governments can only offer an open door and create an environment for healthy competition.

I believe if we continue to work together and cooperate on these issues, we can promote strong economic growth and prosperity for both our nations in the years and decades ahead. Thank you.