11 September 1998
Source:
http://www.usia.gov/current/news/latest/98091103.alt.html?/products/washfile/newsitem.shtml
USIS Washington
File
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11 September 1998
(USAID admin. comments on future U.S. policy) (3460) WASHINGTON -- Addressing the Council on Foreign Relations on September 10, U.S. Agency for International Development Administrator J. Brian Atwood made plain that "there is no dispute that we must improve the tools we have to thwart international terrorists and mitigate the extensive damage caused by the financial collapse of nations. "But we should also understand," he added in his remarks about "Development and A Dangerous World," that the tools "I have mentioned deal largely with the negative symptoms of these two problems. That is not insignificant. It was after all the symptom that killed all those innocent people in Kenya and Tanzania. It was the symptom that has driven millions of middle class Indonesians and Koreans and Russians into extreme poverty. We do need to treat the symptoms." According to Atwood, "The expanding population of alienated, voiceless poor is creating serious international tension that is now threatening the new consensus in favor of democratic and market-based institutions. Last week's meeting of the Non- Aligned Movement in Durban, South Africa, was a reflection of that tension. The recurring theme at this meeting of 113 nations was that the international system serves the rich, industrialized countries, and that the global economy is leaving the poorer nations behind. "Perhaps in Henry Kissinger's day perhaps we could afford to disregard the anti-West rhetoric of this group of poorer nations," he said. "There was a more prominent battle to be waged, against communism, a battle financed primarily by nations who had access to resources. But today, with serious worries about terrorism and the global financial crisis, we cannot afford to ignore the concerns of nations representing 2.86 billion (2,860 million) people, or 50 percent of the world's population. For it is the masses of poor people today who arguably constitute the greatest threat to global stability." Following is the text of Atwood's remarks as prepared for delivery: (BEGIN TEXT) Remarks of J. Brian Atwood The Council on Foreign Relations "Development and a Dangerous World" Washington, D.C. September 10, 1998 Thank you Julia Taft for your kind introduction and Paula Dobriansky for inviting me to this first Council session of the new season. The topic I have been asked to discuss is "Foreign Aid into the Next Century." That is encouraging to someone who has spent most of his tenure trying to prevent the end of foreign aid in this century. So I will interpret your topic as a positive prophecy. This is a new season for the Council and it is most certainly a new season for American foreign policy. Global forces that were clearly perceptible but not sufficient to create political consensus are now as salient as any foreign policy issues can be. I refer to the dual threats of international terrorism and the global financial crisis. No one in politics today ran ignore issues that impact so directly on the American people. It may be wishful thinking at a time when we have other serious distractions in Washington and elections coming up, but I would suggest that these threats to our interests are so grave that we have a better opportunity today to build a new national security consensus than at any time in the post-Cold War period. That consensus must be shaped, however, by defining the tools we need to combat the enemies we face: these are the perpetrators of international terrorism and the sometimes rational, often irrational impulses that drive the contagion that contributes to the loss of confidence in economies. To combat terrorism, many traditional tools are still needed, but in modified forms. We need an intelligence community that is flexible enough to thwart terrorists that have mobility, ample resources and a range of horrifying new weapons. We need military forces who are as comfortable in nontraditional security-related roles as they are in combat. We need law enforcement agencies that can operate effectively beyond our borders with foreign counterparts. we need a diplomacy that pursues international cooperation aggressively, is quick to confront aberrant behavior and is effective in building international consensus. I am not calling for something new here. I am rather suggesting that we need more support for what we are now trying mightily to do in all these areas. We know we can improve our capacity to deal with terrorism but we will need a strong bipartisan consensus to do it. To stabilize international financial markets, we clearly need a stronger consensus among the largest economies as to the role they can play, as Jim Hoagland suggested in his piece this morning. We need to find ways to influence those who speculate and play the international markets to differentiate among countries whose fundamentals are sound and those that are not. We cannot throw out the International Monetary Fund at a time of its greatest need but we do need to acknowledge that we have pushed it beyond its capacity. We need to reexamine all the Bretton Woods instruments in light of the current challenge. That challenge is globalization. No economy, including ours, can protect itself entirely against fluctuations in the global economy. That global economy -- the same one we worry about today -- holds tremendous promise for the future. But governments and international financial institutions have a hard time influencing private capital flows, banking decisions and the operation of capital markets. One of the realities of the global economy is that the proportion of trade in the total GDP of the world's nations has risen from 9 percent 20 years ago to over 24 percent today. This statistic really captures the extent of our interdependence. Foreign trade and investment are huge factors today. What we have seen this past year is that when investors become fearful of what other investors might do, the danger increases that they will act in ways that can set off a chain reaction of capital withdrawal and currency speculation. We cannot put genies back in bottles and somehow intervene to stop these reactions. But we can reduce the fears by providing more information about the soundness of financial systems. We can provide assistance to countries that have the political will and desire to fix capital markets and banking systems. So there is no dispute that we must improve the tools we have to thwart international terrorists and mitigate the extensive damage caused by the financial collapse of nations. But we should also understand that the tools I have mentioned deal largely with the negative symptoms of these two problems. That is not insignificant. It was after all the symptom that killed all those innocent people in Kenya and Tanzania. It was the symptom that has driven millions of middle class Indonesians and Koreans and Russians into extreme poverty. We do need to treat the symptoms. But let us face the facts, today we are overwhelmed with these problems. If we do not address the root causes, no future Administration is going to be able to preserve American interests in an increasingly volatile world. That is the role for foreign aid into the next century. It is of course never easy to make a case for investments that will pay off on someone else's watch. If we increase our investments in development today, some future Republican or Democratic Administration will be less overwhelmed with problems. But it is time to get above politics. We did that successfully in the past to win the Cold War -- while achieving many other side benefits of development. And that is the case we need to make today to achieve a new bipartisan consensus. We in the so-called national security community have done ourselves no favors in the attitude we have taken toward foreign aid. Often we see it as of marginal importance, necessary as a reflection of our humanitarianism but largely irrelevant to the day-to-day challenge of conducting foreign policy. That attitude is beginning to change today because we are employing some hard-headed analysis of the threats we face. We are recognizing that development is an antidote to terrorism, international crime and financial chaos. When we strengthen democratic institutions, create open and efficient economic systems, introduce the essential elements of law enforcement and judicial review, and assist governments, to service the educational and health needs of their people, we reduce the risks of terrorism and economic chaos. The Secretary of State reflected this approach when she discussed the terrorist threat in a recent Newsweek piece. "...the safety of our people depends on more than security professionals," she wrote. "It also depends on the success of our efforts to promote democracy, sound economic practices and respect for the rule of law. If we make headway with these efforts, terrorists will have a narrower base of material support, fewer places to hide and more difficulty in persuading the gullible and desperate to join their cause." This is the type of clear, prescriptive thinking that is changing attitudes among national security professionals. It can help shape the new political consensus we need. Attitudes are also beginning to change within the national security community because USAID has become more responsive to explicit foreign policy and international economic policy needs. I am not suggesting that we are yet as flexible as we should be -- we still have too few discretionary resources, too many encumbering bureaucratic and legal constraints. But we are a lot better than we were and we have developed a stronger institutional capacity to demonstrate the results of our investments, to anticipate and prevent internal conflict, to respond to post-conflict transitions, to strengthen democracies and to advise and support governments who want to create or strengthen their market mechanisms. We know a lot more today about the forces that are disrupting the international system. We know more about the impact of globalization on marginal, underdeveloped economic systems. We know more about the tensions within societies that can lead to conflict. We know that a combination of unsustainable population growth, severe environmental damage, food insecurity, and weak governance, for example, can produce desperation and exacerbate ethnic tensions. We know that demagogues and terrorists can exploit the conditions of poverty. The global financial crisis has thrown even more people into extreme poverty. The number of people living with less than a dollar a day is now approaching 1.6 billion (1,600 million). That is over 25 percent of the world's population, an unacceptable number not just from a moral point of view but from a practical point of view as well. These individuals, most of them ordinary peace-loving people in search of a better life for their children, constitute a significant potential threat. Why? Whatever their personal motivation, these people are a threat to stable governments when they move from their homes to fragile rural areas or crowded cities. They are a threat when they become desperate. They are a threat when they come under the influence of ideologues, religious fanatics or demagogues. They are an explicit threat when they actually engage in conflict or resort to terrorism. Then they move from the category of humanitarian problem to destabilizing force. How do normal peace-loving people become desperate? They become desperate when they see their children dying of diseases that are easily cured by modem medicines accessible to people with resources. They become desperate when they can no longer plant traditional crops on depleted soils and cannot feed their families. They become desperate when they cannot overcome the squalor of overcrowded cities and when governments cannot provide for their human needs. They become desperate when they are not part of the formal economy, when they hold no title to the property or land they occupy and when they have no access to collateral that the better off utilize to improve their lives. People who are excluded from the formal economy and who have no democratic voice have no stake in society. They inevitably become anti-social. In some newly democratic countries, this fosters support for demagogic, anti-establishment political leaders -- political leaders willing to tear down institutions that serve only a small percentage of the people. In other countries, alienation can translate into active support for terrorism. The expanding population of alienated, voiceless poor is creating serious international tension that is now threatening the new consensus in favor of democratic and market-based institutions. Last week's meeting of the Non- Aligned Movement in Durban, South Africa was a reflection of that tension. The recurring theme at this meeting of 113 nations was that the international system serves the rich, industrialized countries, and that the global economy is leaving the poorer nations behind. Perhaps in Henry Kissinger's day perhaps we could afford to disregard the anti-West rhetoric of this group of poorer nations. There was a more prominent battle to be waged, against communism, a battle financed primarily by nations who had access to resources. But today, with serious worries about terrorism and the global financial crisis, we cannot afford to ignore the concerns of nations representing 2.86 billion (2,860 million) people, or 50 percent of the world's population. For it is the masses of poor people today who arguably constitute the greatest threat to global stability. The NAM communique, as you would expect, is excessively long -- 130 pages -- and excessively rhetorical. It contains prescriptions we strongly reject, but it does send a warning we cannot ignore. In essence, it represents a plea: it says give us a stake in the international system. Help as develop our societies. Give our people a voice. Help us benefit from the trading system you have devised for the global economy. Don't leave us behind. The list of these 113 countries contains a handful that would fall into the rogue state category. These are countries whose purpose is not to strengthen the capacity of the international system to help the poor, but rather to destroy the system as we know it. These countries have no desire to give a voice to their own people. They oppose the United States because we are the most prominent member of the international system. They oppose us because we promote democracy, because we support open markets. Our policy is to contain these governments; to minimize their influence; to prevent them from doing us damage; and to support those who would actively work to transform them into acceptable global citizens. Yes, containment still has a role in the post-Cold War era. But the containment of rogue states alone is not a sufficient response to the threats we face. The vast majority of countries on the NAM list are struggling to make democracy and market economies work. They want to be full members of the international system but they know they could just as easily become failed states if their reform efforts do not succeed. Listen to some of the grievances set forth in the NAM communique: -- "The exports of (the developing countries) continue to be hampered by all forms of protectionism..." -- "...our development efforts remain impaired by inordinate burdens of external indebtedness and restricted and volatile short-term financial flaws..." -- [the result is] ..."an overall net transfer of resources to the developed countries..." -- "...An recent years, there has been a decline in resources made available for international development cooperation. -- "...the gap between the developed and developing countries, especially the LDCs, continued to widen (significantly aggravating) the problems deriving from poverty and social injustices..." I think you get the drift. These are just some passages from a 130-page document. We could debate many of the points made in this communique, but what should concern us is the amount of dissonance reflected. I suggest that degree of dissent is unhealthy as we pursue a more democratic, more market oriented world. The concerns related to flows of official development assistance are legitimate. In 1997, aid to developing countries dropped from $55.4 billion ($55,400 million) in 1996 to $47.6 billion ($47,600 million). This was at a time when private capital flows to the developing world dropped from an all-time high of $286 billion ($286,000 million) in 1996 to $206 billion ($206,000 million). This was largely short-term capital invested in emerging markets, much of it withdrawn when economies began to sour. The least developed countries didn't have to worry as much about capital flight. They received less than $2 billion ($2,000 million) in foreign direct investment in 1997. The reduction of official development assistance at a time when the developing world population is growing by about 80 million people a year constitutes a serious challenge for American leadership. Over the past 30 years we have successfully encouraged the industrial world to share the development burden. During that period the U.S. moved from providing 60 percent of all development assistance to around 12 percent of the total. More importantly, we have succeeded in influencing the spending philosophy of our donor partners. There is, for example, strong consensus today that donors should invest in cooperative efforts to strengthen democracies. In this area we have retained our leadership. In FY-97, USAID spent $322 million on democracy-governance programs -- rule of law programs, elections and political processes, in civil society programs, and governance initiatives. We invest 16 percent of our budget, or 1.1 billion (1,100 million), in the effort to help create "sound economic practices," to use Secretary Albright's words. Unfortunately, this portion of our development assistance budget has been reduced drastically - - from 2.6 billion (2,600 million) in 1994 to 1.1 billion (1,100 million) today. At a time when more countries are attempting to transform their economies and create open markets, we have been forced too often to reject their requests for help. Had we had those resources to spend on strengthening banking systems or capital markets, would we have mitigated the current global crisis? Quite possibly to a large extent, assuming we could work with governments that wanted to embrace reform. The United States has been able to maintain a leadership role in the donor community despite the loss of popular and congressional support for our program. We have helped define the donor community's agenda in various UN forums and in a special declaration released by the Development Assistance Committee of the OECD. The 21st Century goals endorsed in this document were embraced last year by the G-8 Summit in Birmingham, England. They include reducing extreme poverty by half, building democratic and accountable governance structures, securing universal education, reducing infant mortality by two thirds and making family planning services available to all who want them. We want to meet these commitments by the years 2015 or sooner, an ambitious task. I would suggest that achieving these goals would do more to defend the United States against international terrorism and financial chaos in the future than anything else we can do. Development assistance invested over the past 30 years has had a major positive impact on our world. The global economy has expanded about 280 percent as new markets have been formed. We have slowed the rate of population growth measurably. We developed the capacity to feed the world. We reduced infant mortality by half and increased literacy by one-third. Despite the current problems we face, our collective contribution over the past 30 years set the stage for a vibrant and growing global economy. We prepared the way for a democratic revolution. We defeated a system of government that contradicted human nature and the inalienable rights we hold dear. We got a lot done. And we did all this with little international consensus. With poor collaboration. In the midst of a raging debate over economic and political systems. And we did it without the benefit of private capital flows to sustain the development process. Today we have a consensus on goals within the development community. We collaborate actively. We have a new consensus to support market economics and private capital is flowing where development has succeeded. The next century will see enhanced cooperation through new information technology. We have the potential to leapfrog countries over the development continuum and speed up the process. All that means that we will be capable of a bigger bang for the buck if in fact we have the bucks. The real issue is whether we can summon the political will to act in our own interest. I believe we can. The current threats are of such a magnitude that they should compel us to action. I believe we will recapture the bipartisan consensus that won the Cold War. The stakes for Americans are just that high. Thank you. (END TEXT)