*EPF303 12/15/2004
Bush Warns Neighbors Against Meddling in Iraq's Internal Affairs
(Tells Italy's Berlusconi market should determine currency exchange rates) (630)

By Stephen Kaufman
Washington File White House Correspondent

Washington -- President Bush warned Iraq's neighbors not to meddle in that country's internal affairs and called on them to help Iraqi authorities stop the flow of people and money across its borders.

Speaking at the White House with visiting Italian Prime Minister Silvio Berlusconi December 15, Bush said the United States "will continue to make it clear to both Syria and Iran ... that meddling in the internal affairs of Iraq is not in their interests."

Iraq's neighbors should help it to establish a society in which its people can elect their leaders and in which its different religious groups can live peacefully, as envisioned under the Transitional Administrative Law adopted by the Iraqi Governing Council, the president said.

Bush said he and Prime Minister Berlusconi discussed prospects for peace between Israel and the Palestinians, on which he said Berlusconi "had good advice."

The Italian prime minister also expressed concerns over the U.S. currency valuation and economy, and Bush said he would work with Congress to deal with the U.S. trade deficit and Social Security reform.

Bush called upon other countries to buy more American products to help reduce the huge U.S. trade deficit and improve the strength of the dollar versus the euro.

The president said his administration has a "strong dollar" policy. "We believe that the market should make the decisions about the relationship between the dollar and the euro," he said.

He added that the United States will work hard in the upcoming congressional session "to send a signal to the markets that we'll deal with our deficits, which hopefully will cause people to want to buy dollars." The December 14 decision by the Federal Reserve Board to raise interest rates also sends "a signal to the world" that its chairman, Alan Greenspan, "is also aware of the relative currency valuations between the euro and the dollar," Bush said.

Asked about possible changes in the Social Security system, the president said that one way of meeting the retirement needs of younger people is to allow them to "take some of their own taxes and invest in personal savings accounts under certain conditions."

Bush said he planned to work with Congress on the issue. "[W]e have a problem; let's work together to deal with it," he said.

For his part, Prime Minister Berlusconi said European governments are facing the same challenge, with increased life expectancy due to higher standards of living and medical advances.

"[O]ne thing is for sure that needs to be done, it is we have to extend the working life of the people," he said.

The prime minister also said his government "fully agree[s]" with Bush's planned second term political agenda.

"We share the same opinion as to the need of reforming the United Nations in order to make it an institution which will be able to tackle the problems affecting this century, and with a multilateralism which has to take into account the results to be achieved and complete facts," he said.

The Italian government also agrees on the need to continue to work with the United States to fight terrorism and shares the Bush administration's view that "it is now the appropriate time to solve the Middle East issue."

Earlier, White House Press Secretary Scott McClellan described Berlusconi as "a great friend and strong leader."

"The president values his advice and friendship," he said, and expressed the Bush administration's gratitude for Italy's military and civilian contributions in Iraq

Italy's assistance "certainly follows on the tradition of their contributions to security and democracy in places like Afghanistan, Bosnia and Kosovo," McClellan said.

(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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