Moscow -- The lessons of economic cooperation that APEC members are learning in the Asia-Pacific are lessons that apply well for Russia, according to John S. Wolf, U.S. Ambassador to the Asia Pacific Economic Cooperation (APEC) forum.

"The lessons of how one builds market confidence, what it takes to attract foreign direct investments, how one develops energy resources efficiently, how one puts in place modern clean technologies that are modern environmentally-friendly clean technologies, and how one builds safe and efficient capital markets. All these are areas of APEC activity," he said.

Wolf is in Moscow to consult with the Russian government and others about APEC and to try to get their views of what will be important issues for Russia in APEC.

During a press roundtable at Spaso House for U.S., Russian, and APEC-country Moscow-based press April 15, Wolf commented on what the other APEC economies will expect from Russia when it, Peru and Vietnam join in November.

"We expect of all APEC members that they will subscribe to the vision that leaders have set out over the last four or five years," he said. "That means that we believe in building a Pacific community. That's 'community' with a small 'c.' We are not talking about building something like the Europeans. But we are talking about a community that is built on economic cooperation, where we have a common vision of free and open trade and investment. Where we have a view that not only are we working to open up the market place, but that we are also trying to build the market place. They go hand in hand. We hope -- we expect -- that Russia will play an active part in the process."

More specifically, Wolf said, "Russia will bring an individual action plan which will indicate where it is in terms of trade and investment and where it hopes to go. We hope that Russia will consider the question, some of the liberalization initiatives I mentioned earlier like the information technology agreement and early voluntary sectoral liberalization. We hope they will have some priority areas in which they are working, whether it's energy or transportation or the environment or whatever."

APEC membership does not guarantee an inflow of investment, Wolf said. "But if Russia puts in place the right legal system -- a transparent legal system -- and clarifies the rules of taxation, if there is transparency, openness and predictability, then experience all around the world suggests that investors will invest," he said.

"In joining APEC," Wolf continued, "Russia is agreeing to the vision of free and open trade and investment in the Asia-Pacific by a certain time. To the extent that Russia wants to make itself increasingly attractive to foreign direct investment, there are some lessons learned in the market place and APEC can help to explain -- to clarify -- what those lessons are. How Russia learns those lessons is up to Russia."

During the last set of APEC meetings in Vancouver last November, Wolf said, President Clinton and Secretary Albright both said that Russia over time will be an enormously important and valuable partner in the growth of the Asia and Pacific region. "As Russia is developing, as it is putting in place a market economy, ... the lessons we are learning in APEC are part of the lessons that Russia learns. We think that the future can be very bright."

Following is a transcript of the press roundtable:

(begin transcript)

WOLF: Thank you, ladies and gentlemen, for coming. I am delighted to be here. I am John Wolf and I am the U.S. Ambassador for the Asia-Pacific Economic Cooperation forum (APEC). I've come to Moscow today to have the first of what I know will be a long series of consultations with Russia.

Russia will be one of the three new members of APEC starting from November, when APEC holds its annual meeting in Kuala Lumpur, Malaysia, but Russia is already participating in as many meetings as it wishes as a kind of special guest. I wanted to have a chance today to talk a little bit with people from the (Russian) government and others about APEC and to try to get their views of what will be important issues for Russia in APEC.

I know we look forward to seeing President Yeltsin at the meeting in Kuala Lumpur. It's another important occasion in which Russia will be able to demonstrate its movement down the path towards becoming a major market economy in the world economy. Certainly, it's a significant opportunity to join with the other leaders of the Asia-Pacific in discussing issues that are related to the Asia-Pacific. So that's where we are; I'd be delighted to answer your questions.

Q: What subjects are you going to discuss here in Russia?

WOLF: Well, we were discussing in general what APEC is and how it works. I suggested in my meetings this morning that the Leaders' Meeting is an important opportunity for Russia to make a statement in very concrete terms about how it will be moving with other APEC economies to the goal of free and open trade and investment by the year 2010.

I also was inquiring what priorities Russia will have specifically. APEC covers a wide expanse of economic activities. I suppose it will be important to have some priorities to make sure that a few things start out and are going well, and to expand as Russia's experience in APEC becomes deeper.

I suppose some of those issues could be things like energy or customs administration. They might have to do with transportation, and they certainly have to do, I think, with small and medium-size enterprises which are the heart of all our economies. I got the sense that the government is working hard trying to figure out what those priorities should be.

Q: The questions that you mentioned, customs and so on, were they seen as Russian priorities?

WOLF: Those were some of the subjects we discussed.

Q: What did you hear in reply to your question about priorities?

WOLF: The meetings this morning were with the Foreign Ministry and with the Ministry of Foreign Economic Relations and the Ministry of Fuel and Energy. They said there were 25 other ministries and agencies that would be part of the APEC process. They said they were working on the priorities, but the ones I described sounded to me like areas which they had been doing some thinking about. I had lunch with Deputy Foreign Minister Karasin, who is in charge of East Asian Affairs. One of his guests was Governor Mukha, who heads the Siberian Accord. We'll have a chance to talk a little bit later with some members of the Duma. That will be it for this short visit, but I am looking forward to more opportunities.

An important part of a next visit: I'll look forward to talking to representatives of the private sector. In fact, the private sector plays a critical role in helping to determine the nature of the work that we do.

Q: Among all the countries participating in the World Trade Organization, two major countries, Russia and China, are not members. How can their non-participation in WTO impact on their participation in APEC?

WOLF: China has found they can participate quite effectively in APEC. For instance, one of APEC's great achievements in the last couple of years has been advancing an international agreement for an information technology agreement. This was an agreement to liberalize five hundred billion dollars of trade in information technology, hardware and software.

While China is not a member of the WTO, it announced at the time of the summit meeting between President Zhao and President Clinton that it would agree to adhere to the terms of the WTO. We think that it would be very significant, for instance, if Russia were to announce exactly the same thing. Indeed, we hope that Russia will participate, just as China, and Chinese Taipei, which is the name that it uses in APEC, are participating in the discussions of early voluntary sector liberalization; that Russia will come to the November meetings ready also to cooperate in that effort.

Thank you for asking that question.

Q: Will you possibly help Russia overcome the consequences of the Asian financial and stock crisis? Another question of mine is about cooperation in helping Russia develop the Far East and Siberia.

WOLF: On the first question, Russia has been taking steps to attend to its financial situation, and while there was some fear this winter that the so-called contagion that was affecting Asia would also affect Russia, there is hope that Russia is beyond that. We did discuss at lunch with Minister Karasin what's going on in the financial situation in Asia. We also discussed at lunch and just a few minutes ago with Governor Mukha the Siberian interest and the Far Eastern interest in development. There is a lot that APEC can do to help provide examples of what will make a region attractive.

I related to the Governor, for instance, how his counterpart in Malaysia, the Chief Minister of Penang, described their development over the last 25 years. It's kind of a model of how APEC can develop. The Chief Minister described the so-called "smart partnership" between government and the private sector.

Q: First question is -- will APEC -- (inaudible) -- discussion between Russia and Japan during Yeltsin's visit?

WOLF: We didn't discuss it.

Q: Secondly, regarding Russia's weak economic situation right now and that of some countries in East Asia, is it helpful to both Russia and APEC for Russia to join now?

WOLF: I think the lessons of economic cooperation we are learning in the Asia-Pacific are lessons that apply well for Russia. The lessons of how one builds market confidence, what it takes to attract foreign direct investments, how one develops energy resources efficiently, how one puts in place modern clean technologies that are modern environmentally-friendly clean technologies, and how one builds safe and efficient capital markets. All these are areas of APEC activity. I expect these are all things from which Russia, just like in many cases the United States, can usefully learn.

Q: I have two questions. In which category of countries do you place Russia? Developed, developing? You see, different time periods have been set for different countries to liberalize trade and capital investments.

WOLF: Well, each economy in APEC has to make its own decision. We haven't heard the Russians say they want to enter APEC as a developed country. Now, they are asking to accede to the WTO as a developed country, they are interested in joining the OECD, and they want to be an active member of what was the G-7, but as far as APEC is concerned, they haven't said yet.

Q: What are your general impressions of the state of the Russian economy at this stage? What do you think about the prospects of Russia's trade with Asian and Pacific countries, about the possibility of investments by Asian and Pacific countries in Russia, especially in the Far East and Siberia?

WOLF: At the meeting in Vancouver, President Clinton and Secretary Albright both said to their colleagues that Russia over time will be an enormously important and valuable partner in the growth of the Asia and Pacific region, and that it is important, as Russia is developing, as it is putting in place a market economy, that the lessons we are learning in APEC are part of the lessons that Russia learns. We think that the future can be very bright.

Q: Sir, you met with Grigory Karasin earlier today and Karasin is a key figure in the forthcoming Russian-Japanese summit. Did you discuss the issues that they were going to be discussing with their Japanese counterparts, and specifically the American attitude towards Russian-Japanese rapprochement?

WOLF: We did not discuss those things. I should have been curious, I suppose, but with Governor Mukha there, we discussed somewhat what APEC was and various ideas of economic development. Then we talked about the financial situation, and then, I suppose, we swapped diplomatic stories. Good time had by all!

Q: My second question. I read in ITAR-TASS two days ago that the World Bank and the IMF will have a joint session of representatives of 22 countries, finance ministers and national banks to discuss the consequences of the Asian crisis. I think it starts today. Is this meeting one of the steps towards the Kuala Lumpur meeting?

WOLF: This meeting is the second of a series. They met a couple of months ago in Washington. I suppose one might describe it as an outgrowth of a meeting that took place in Manila last November. At that time, a dozen or so finance ministries and central banks met to discuss how to respond to the Asia crisis. This so-called G-22 is looking at issues, as you say, that come out of the financial crisis and questions related to a new financial architecture. I don't want to overstate the word "architecture," but how should the financial community -- what lessons have we learned and what might we do, looking forward.

There are countries from beyond the Asia-Pacific at the meeting, but on the other hand, to the extent that they reach a set of concrete recommendations on what to do, I suppose it would be logical that the leaders would discuss where these various discussions have taken the world community when they meet in Kuala Lumpur.

Q: You have said that, along with Russia, there are two more new members joining APEC. Could you name them?

WOLF: Yes, Vietnam and Peru.

Q: My second question is broader: what financial requirements does APEC make of its new members? In particular, what can one expect from the organization? What requirements will be made of Russia? What can we say about any prospects for investment in Russia?

WOLF: Well, APEC is a great bargain. The actual membership is quite cheap. There is no large APEC bureaucracy and I think the total budget for APEC as a forum is something like six million dollars split up in 21 ways. And the United States and Japan seem to pay a substantial fraction of that. So the major part of the cost of participation is the cost of attending the meeting, but the benefits are potentially enormous, because what we are talking about is how to attract foreign direct investments. Since, you know, an independent power plant, the so-called IPP, costs 400 million dollars to build, and the whole theory is to get the private sector to invest the money, you can see that the cost-benefit ratio is very high.

But, seriously, what we are talking about is how does one develop a modern market-based economy? And on a larger level, how do we build the kind of community that contributes to peace and stability in the Asia and Pacific?

Q: I would like to hear the opinion of APEC countries on what they expect from Russia. Do they expect anything from Russia or they don't expect anything? What is the atmosphere?

WOLF: First of all, Russia volunteered to join. We expect of all APEC members that they will subscribe to the vision that leaders have set out over the last four or five years. So what does that mean? That means that we believe in building a Pacific community. That's "community" with a small "c." We are not talking about building something like the Europeans. But we are talking about a community that is built on economic cooperation, where we have a common vision of free and open trade and investment. Where we have a view that not only are we working to open up the market place, but that we are also trying to build the market place. They go hand in hand. We hope -- we expect -- that Russia will play an active part in the process.

Q: You have said some general words, but what precisely will the members of APEC expect from the accession of Russia in November this year?

WOLF: We know that Russia will bring an individual action plan which will indicate where it is in terms of trade and investment and where it hopes to go. We hope that Russia will consider the question, some of the liberalization initiatives I mentioned earlier like the information technology agreement and early voluntary sectoral liberalization. We hope they will have some priority areas in which they are working, whether it's energy or transportation or the environment or whatever.

Is that more specific?

Q: Can we expect that Russia's accession in November will ensure the inflow of investment in the short term?

WOLF: It doesn't happen that way. There is no insurance or guarantee. But if Russia puts in place the right legal system -- a transparent legal system -- and clarifies the rules of taxation, if there is transparency, openness and predictability, then experience all around the world suggests that investors will invest. It's a very competitive world and it's not sufficient to say, "Well, I am Russia, therefore everybody come here."

Q: Is it correct to say that APEC demands from Russia a change in its internal legislation in a number of areas, for example, in the development of small enterprise?

WOLF: It's not a question of requesting of Russia. In joining APEC, Russia is agreeing to the vision of free and open trade and investment in the Asia-Pacific by a certain time. To the extent that Russia wants to make itself increasingly attractive to foreign direct investment, there are some lessons learned in the market place and APEC can help to explain -- to clarify -- what those lessons are. How Russia learns those lessons is up to Russia.

Q: What do you consider to be APEC's biggest achievements since its creation? Very briefly. Two words....

WOLF: Leaders' meetings!

Q: Russia and the U.S. have many differing and opposite interests, beginning with bilateral relations and Europe (NATO), the Middle East (strikes on Iraq, sanctions and dual-purpose supplies to Iran). Do you believe that Russian-American cooperation in APEC will be a pleasant exception or will it see a similar clash of interests?

WOLF: Well, I am not an expert on Russia and I defer to Ambassador Collins on the state of U.S.-Russia relations. I am sure there are differences, but he was telling me just a few minutes ago that there is enormously positive cooperation across the whole host of areas. We are looking for an enormously positive cooperation with Russia in APEC.

I suspect we will have differences, but we have a saying in APEC that all meetings end up with hugs.

Thank you all very much.

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