Thank you very much, Mr. Chipman, and thanks to all of you for being here today. I also wish to acknowledge and thank Mr. Ronnie Chan, chairman of the Asia Society, and Mr. Norman Chan, chief executive of the Hong Kong Monetary Authority.
And I am so pleased to be here and to have this opportunity to speak with you today, and it was made possible by the U.S., Hong Kong, and Macau chambers of commerce and the Asia Society. And I thank the chamber very much on a personal level for its support of the U.S. Pavilion at the Shanghai Expo. I have been called the mother of the pavilion, which is actually one of the nicer things I’ve been called – (laughter) – during my very long public career.
And I am delighted to be back in Hong Kong, a city I have admired ever since I first visited about 30 years ago when my husband, who was then governor of Arkansas, led the first ever trade mission to East Asia from our small state. Hong Kong stood out then, as it does today, as a symbol of the open exchange of goods and ideas. People were drawn to this place from every part of the world, even far away Arkansas, as evidenced by a good friend of ours from Arkansas, Nancy Hernreich Bowen, who is here with us today.
Now, since that time, Hong Kong has changed a great deal. Certainly, the skyline attests to that. And after all, few things have stood still in East Asia. But one thing about Hong Kong has not changed – the principles that find a home here. Under the “one country, two systems” policy, this remains a city that bridges East and West and looks outward in all directions, a place where ideas become businesses, where companies compete on the merits, and where economic opportunity is palpable and real for millions of people, a place that defines the fierce and productive economic competition of our time.
That is why businessmen and women continue to flock to Hong Kong, and an opportunity to meet some of the Americans who have called Hong Kong home for 20, 25, even 30 years. And it is why I have come here today to talk about how the nations of this region and the United States can intensify our economic partnership on behalf of ourselves, each other, and the world, and how together we can work toward a future of prosperity and opportunity for people everywhere.
But before I talk about where we need to go together, let’s consider how far we’ve come. The economic rise of the Asia Pacific region is an astonishing historic achievement that is reshaping our world today and into the future. In Hanoi, bicycles and water buffalo have given way to motorcycles and internet cafes. Small Chinese fishing villages like Shenzhen have become megacities with their own stock exchanges. And while much work remains to improve labor practices and expand access to the formal economies, the numbers tell a powerful story.
Thirty years ago when I first came to Hong Kong, 80 percent of the people of this region lived on less than $1.25 a day. By 2005, that number had dropped to 20 percent. In the Lower Mekong Region countries, per capita GAP has more than tripled in the last 20 years. And in Thailand alone, the poverty rate fell from 42 percent in 1988 to 8 percent today. Never in history have so many people climbed so far, so fast.
And though this progress is largely due to the hard work and ingenuity of the people of Asia themselves, we in the United States are proud of the role we have played in promoting prosperity. Of course, we helped Japan and South Korea rebuild, patrolled Asia’s sea lanes to preserve freedom of navigation, promoted global shipping, and supported China’s membership in the WTO. Along with our treaty allies – Japan, South Korea, Australia, Thailand and Philippines, and other key partners like New Zealand and Singapore – we have underwritten regional security for decades, and that in turn has helped create the conditions for growth.
And the U.S. continues to contribute to Asia’s growth as a major trade and investment partner, a source of innovation that benefits Asia’s companies, a host to 350,000 Asian students every year, a champion of open markets, an advocate for universal human rights, and a guarantor of stability and security across the Asia Pacific. The Obama Administration has made a comprehensive commitment to reinvigorate our engagement as a Pacific power – shoring up alliances and friendships, reaching out to emerging partners, and strengthening multilateral institutions.
These efforts reflect our optimism and enthusiasm for what is happening in Asia today. Of course, countries in this region are grappling with challenges. We all are. But we are bullish on Asia’s future, and while the United States is facing its own difficulties, make no mistake: We are bullish on America’s future too.
America remains an opportunity society – a place to excel, a country of possibility and mobility where a brilliant idea hatched in a college dorm room or a product invented in a garage can find a global market and grow into a multibillion dollar company. Our workers are the world’s most productive. Our inventors hold the most patents. And today, we are reinvesting in our fundamentals – infrastructure, clean energy, health, and education. And we are doing the critical work of shoring up our financial system so that it protects investors and curbs excesses.
Now, as I have traveled around the region, a lot of people have asked me about how the United States is going to resolve our debt ceiling challenge. Well, let me assure you we understand the stakes. We know how important this is for us and how important it is for you. The political wrangling in Washington is intense right now. But these kinds of debates have been a constant in our political life throughout the history of our republic. And sometimes, they are messy. I well remember the government shutdown of the 1990s; I had a front row seat for that one. But this is how an open and democratic society ultimately comes together to reach the right solutions. So I am confident that Congress will do the right thing and secure a deal on the debt ceiling, and work with President Obama to take the steps necessary to improve our long-term fiscal outlook. Through more than a century of growth, the American economy has repeatedly shown its strength, its resilience, and its unrivaled capacity to adapt and reinvent itself. And it will keep doing so.
As we pursue recovery and growth, we are making economics a priority of our foreign policy. Because increasingly, economic progress depends on strong diplomatic ties and diplomatic progress depends on strong economic ties. And so the United States is working to harness all aspects of our relationships with other countries to support our mutual growth. This is an issue I recently addressed at the U.S. Global Leadership Coalition, and will again in a larger speech about America’s strategic and economic choices this fall. But economic issues have been front and center in my travels during the past two weeks – to Greece, which is working to put itself back on the path to economic stability, and to four rising centers of economic growth: Turkey, India, Indonesia, and then China.
Now, naturally, much of our economic diplomacy is focused on East Asia and the Pacific. The American Chamber in Hong Kong represents 1,200 companies, and thousands more looking to this region for new customers and markets. Last year, American exports to Hong Kong totaled $26 billion – that’s more than the Indonesian export amount of $20 billion — and our exports to the Pacific Rim were $320 billion, supporting 850,000 American jobs.
Now, numbers like these reflect how closely America’s future is linked to the future of this region. And the reverse is true as well. Because the future of the Asia-Pacific is linked to America’s. We are a resident power in Asia—not only a diplomatic or military power, but a resident economic power. And we are here to stay.
Now, while the U.S. economy and those in the Asia-Pacific are well positioned to grow together, our success — neither of ours — is preordained. Prosperity is not a birthright, it’s an achievement. And whether we achieve it will be determined by how we answer a defining question of our time: How do we turn a generation of growth in this region into a century of shared prosperity?
The United States approaches this question with great humility, and with hard-won lessons learned from overcoming difficult economic challenges throughout our history.
We must start with the most urgent task before us: realigning our economies in the wake of the global financial crisis. This means pursuing a more balanced strategy for global economic growth – the kind that President Obama and President Hu Jintao have embraced, and the G20 is promoting.
This demands rigorous reform by all nations, including the United States and the countries of Asia. We in the United States are in the middle of a necessary transition: we must save more and spend less. And we must not only save more and spend less, we must borrow less, as well. Our partners must meet this change with changes of their own. There is no way around it: Long-term growth requires stronger and broader-based domestic demand in today’s high-saving Asian economies. This will raise living standards across the region, create jobs in America, improve business for many in this room, and help stabilize the global economy.
For years, my image of the global economy was an inverted pyramid resting on the shoulders of American women, since we are the primary consumers in the world. And therefore, it seems to me that that is no longer a sustainable model. And so we have to change how we do business internally and externally. And, above all, we must reach agreement on the rules and principles that will anchor our economic relationships in the coming decades.
Last March in APEC meetings in Washington, I laid out four attributes that I believe characterize healthy economic competition. And these are very simple concepts, easy to say, hard to do: open, free, transparent, and fair. Hong Kong is helping to give shape to these principles and is showing the world their value.
First, we must seek an open system where any person anywhere can participate in markets everywhere.
Second, we must seek a free system, one in which ideas, information, products and capital can flow unimpeded by unnecessary or unjust barriers. That is why President Obama has mobilized a government-wide effort to attract foreign investment to America. Now, in the past, foreign investment has been seen as controversial. But today we know it helps create growth and jobs, and it can attract American dollars held overseas back into the U.S. economy. As we welcome investors to our country, we hope that all investors, including those from America, will receive an enthusiastic welcome overseas.
Third, we must seek a transparent economic system. Rules and regulations need to be developed out in the open through consultation with stakeholders. They must be known to all and applied equally to all. Hong Kong is a testament to the power of transparency, good governance, the rule of law, freedom of the press, an independent judiciary, and a vibrant civil society, all of which help to explain why so many people choose to do business here.
Openness, freedom and transparency contribute to the fourth principle we must ensure: fairness. Fairness sustains faith in the system. That faith is difficult to sustain when companies are forced to trade away their intellectual property just to enter or expand in a foreign market, or when vital supply chains are blocked. These kinds of actions undermine fair competition, which turns many off from competing at all.
A growing number of countries in Asia are proving the value of these principles. And the United States deeply believes in them, because their value has been proven time and again, not only in times of prosperity but also in times of hardship, as well. At the end of the Vietnam War, there was a thriving commentary around the world on the idea of America’s economic decline. That seems to be a theme that kind of repeats itself every couple of decades. But all the while, then and now, these principles were nurturing a system of entrepreneurship and innovation that allowed two college students to found a small tech startup called Microsoft. And today, they are helping power companies like Solyndra, a green-energy startup in California that began producing solar panels in 2007 and now installs them in more than 20 countries worldwide.
Every time in history when the United States has experienced a downturn, we’ve overcome it through reinvention and innovation. Now, these capacities are not unique or innate to the people of the United States. They are activated by our economic model, which we work hard to keep open, free, transparent, and fair, a model that has its imperfections but remains the most powerful source of prosperity known to humankind.
Of course, no nation is perfect when it comes to safeguarding these principles, including my own. We all recognize the temptation to bend them. And we all recognize the inevitability of human nature’s capacity to look for ways around them. Some nations are making short-term gains doing that. Some developing countries—admirably focused on fighting poverty—might be slow to implement at home the same rules they benefit from abroad. And a number of nations, wealthy in the aggregate but often poorer per capita, might even think the rules don’t apply to them.
In fact, all who benefit from open, free, transparent, and fair competition have a vital interest and a responsibility to follow the rules. Enough of the world’s commerce takes place with developing nations, that leaving them out of the rules-based system would render the system unworkable. And that, ultimately, that would impoverish everyone.
The businessmen and women of Asia seek the benefits that these principles offer. Malaysian manufacturers want access to markets overseas. Indian firms want fair treatment when they invest abroad. Chinese artists want to protect their creations from piracy. Every society seeking to develop a strong research and technology sector wants intellectual property protections because, without them, innovation comes with a much higher risk and fewer rewards. People everywhere want to have the chance to spend their earnings on products from other places, from refrigerators to iPods.
Now, these four principles are easily uttered and embraced, but they do not implement themselves. So our challenge is always to translate them into practice. And my country is hard at work doing that, and we encourage other governments to join us in this effort.
The United States is taking steps to promote these principles around the world through multilateral and regional institutions, new trade agreements, and outreach to new partners, to enlist us all in the quest for inclusive, sustainable growth. These steps are connected to and build upon the work we are doing to revitalize our own economy.
First, we are working through regional and international institutions to achieve balanced, inclusive, and sustainable growth. That starts with our commitment to APEC, the premier organization for pursuing economic integration and growth in the Asia-Pacific region. And President Obama is pleased to be the chair and host of APEC this year in Hawaii.
We want APEC to address next-generation trade and competition challenges, like strengthening global supply chains; empowering smaller companies to connect to global markets; promoting market-driven, non-discriminatory innovation policy. We are pursuing a low-carbon agenda by working to reduce barriers to trade in clean-energy technologies, and we hope to reach agreement on implementing transparency principles to promote economic growth and the rule of law on a 21st century field of play.
Because burdensome regulations and incompatible sets of rules in different countries can hold back trade and growth every bit as much as tariffs, we are also working at APEC to find common ground on transparent, effective regulation, with broader public consultation and better coordination. The quality of the rules we put in place is just as important as our willingness to enforce them.
And I have to mention that discrimination against women is another barrier to fair competition and economic growth. A 2007 United Nations study found that the Asia-Pacific loses at least $58 billion of economic output every year because of restrictions on women’s access to employment and gender gaps in education. So, as host of APEC, we are organizing a high-level Summit on Women and the Economy in San Francisco this September.
We are also working though the World Trade Organization to address continuing challenges to fair competition. Take government procurement. The purchases that governments make represent an important part of the global economy, and citizens everywhere deserve to know that their governments are getting the best product at the best prices. Consistent with the WTO Government Procurement Agreement that we signed, America lets companies from other nations who have signed that same agreement compete for appropriate American Government contracts. We would naturally expect countries that want access to our government contracts to offer our companies genuine access to theirs in return.
Across the full spectrum of international institutions—the G8 and G20, the IMF, OECD, ILO, WTO, and others—we are working to level playing fields and encourage robust and fair economic activity. Just as the WTO eliminated harmful tariffs in the 1990s, today we need institutions capable of providing solutions to new challenges, from some activities of state-owned enterprises to the kinds of barriers emerging behind borders.
We also support innovative partnerships that develop norms and rules to address these new concerns. We should build on the model of the Santiago Principles on sovereign wealth funds, which were negotiated jointly by host governments, recipient governments, the World Bank, IMF, OECD, and the sovereign funds themselves. This code of conduct governing sovereign investment practices has reassured stakeholders – investor nations, recipient nations, and the private sector. And it may prove a useful model for other shared challenges, like ensuring that state-owned companies and enterprises compete on the same terms as private companies.
As a second step, we are pursuing new cutting-edge trade deals that raise the standards for fair competition even as they open new markets. For instance, the Korea-US Free Trade Agreement, or KORUS, will eliminate tariffs on 95 percent of U.S. consumer and industrial exports within five years. Its tariff reductions alone could increase exports of American goods by more than $10 billion and help South Korea’s economy grow by 6 percent. So, whether you are an American manufacturer of machinery or a Korean chemicals exporter, this deal lowers the barriers to reaching new customers.
But this trade deal isn’t simply about who pays what tariff at our borders. It is a deeper commitment to creating conditions that let both our nations prosper as our companies compete fairly. KORUS includes significant improvements on intellectual property, fair labor practices, environmental protection and regulatory due process.
And let me add that the benefits of KORUS extend beyond the economic bottom line. Because this agreement represents a powerful strategic bet. It signals that America and South Korea are partners for the long term—economically, diplomatically, people to people. So, for all these reasons, President Obama is pursuing congressional approval of KORUS, together with necessary Trade Adjustment Assistance, as soon as possible. He is also pursuing passage of the Colombia and Panamanian Free Trade Agreements as well.
Now, we have learned that, in our system, getting trade deals right is challenging, painstaking work. But it’s essential. We consider KORUS a model agreement. Asian nations have signed over 100 bilateral trade deals in less than a decade, but many of those agreements fall short on key protections for businesses, workers, and consumers. There are a lot of bells and whistles, but many of the hard questions are glossed over or avoided.
Beyond that, there is now a danger of creating a hodgepodge of inconsistent and partial bilateral agreements which may lower tariffs, but which also create new inefficiencies and dizzying complexities. A small electronics shop, for example, in the Philippines might import alarm clocks from China under one free trade agreement, calculators from Malaysia under another, and so on—each with its own obscure rules and mountains of paperwork—until it no longer even makes sense to take advantage of the trade agreements at all. Instead, we should aim for true regional integration.
That is the spirit behind the Trans-Pacific Partnership, the so-called TPP, which we hope to outline by the time of APEC in November, because this agreement will bring together economies from across the Pacific—developed and developing alike—into a single trading community.
Our goal for TPP is to create not just more growth, but better growth. We believe the TPP needs to include strong protections for workers, the environment, intellectual property, and innovation. It should also promote the free flow of information technology and the spread of green technology, as well as the coherence of our regulatory system and the efficiency of supply chains.
We are working to ensure that the TPP is the first trade pact designed specifically to reduce barriers for small and medium-sized enterprises. After all, these are the companies that create most of the world’s jobs, but they often face significant challenges to engaging in international trade. So, the TPP aims to ensure fair competition, including competitive neutrality among the state-owned and private enterprises.
The idea is to create a new high standard for multilateral free trade, and to use the promise of access to new markets to encourage nations to raise their standards and join. We are taking concrete steps to promote regional integration and put ourselves on a path over time to bring about a genuine Free Trade Area of the Asia Pacific.
Finally, we need to pursue strategies for achieving not just growth, but sustainable, inclusive growth. Now, it is a maxim of mine that foreign policy must deliver results for people. Because ultimately, our progress will not be measured by profit margins or GDP, but by the quality of people’s lives – whether men and women can work in dignity, earn a decent wage, raise healthy families, educate their children, and take hold of the opportunities to improve their own and the next generation’s futures.
The United States supports a number of endeavors to promote inclusive growth in the region. Our Millennium Challenge Corporation, for example, makes large-scale investments in partner countries to reduce poverty through growth. We have a compact with the Philippines to invest in roads, community development projects, and more effective tax collection. We are negotiating a compact with Indonesia to promote low carbon development, and we began a threshold partnership with Timor-Leste earlier this year to fight corruption and improve children’s health.
Across the region, we are partnering with governments to encourage and help them uphold their commitments to inclusive growth by practicing good governance, providing public goods like health and education, and creating tax systems that improve revenue collection and ensure that everyone pays their fair share. We are supporting civil society and citizens alike in holding governments accountable, supplying job training and networking, and being a strong voice for bringing opportunity to places where it is scarce.
And we are working very closely with the private sector. Two years ago, I created a Global Partnership Initiative to support a new generation of public-private partnerships focused on everything from protecting and developing the Lower Mekong region to helping more families gain access to clean cookstoves, to protect them from the harmful smoke that kills two million people worldwide every year, and puts black soot carbon into the atmosphere.
We also launched the Global Entrepreneurship Program, to identify promising entrepreneurs, training them, linking them with mentors and potential investors, advocating for supportive policies and regulations, helping spread best practices. And we are supporting initiatives like Partners for a New Beginning, which supports economic opportunity, education, science and technology exchanges between the United States and Muslim communities worldwide, and we just opened a chapter in Indonesia.
We are connecting entrepreneurs with Diaspora communities in the United States that are eager to help fund new projects in countries where they have family ties. And we are looking to the private sector to help us. There are so many ways that we are grateful to the private sector. After all, it drives what we are talking about today. But we do need to try to consider, even within the constraints of modern financial practices and expectations, not just short-term benefits but long-term consequences. The work that each of you do in your businesses can help lift people’s lives, promote human rights and dignity, and create new markets, creating a virtuous cycle. Or it can further ensnare people in poverty and environmental degradations, creating a vicious cycle.
So that’s our agenda, and you can see why I’ve come to Hong Kong to talk about it, because here, we have a perfect example of what can be done and how important it is to lead in the economic realm with the kind of principles that Hong Kong has developed on. Now, we know very well that the future is arriving at a breathtaking pace, and the choices we make today will define what is possible economically for so many millions of people
And so while the specifics are forever changing, many of the ideals that guided us in the 20th century are the same ones we need to embrace in the 21st – a belief that a good idea is a good idea no matter where it comes from or from whom, a willingness to embrace change, a culture driven by marriage, faith in the notion that a rising tide of economic growth and innovation can improve everyone’s quality of life whether they live in Hong Kong or Appalachia. It is up to us to translate those enduring principles into common practice, shared prosperity, the opportunity for as many people as possible on both sides of the Pacific to live up to their God-given potential.
And what is standing in the way of achieving that vision? Well, there are many issues and challenges we can enumerate, but ultimately, it comes down to leadership – leadership in both the public and the private sector. We were blessed over the last part of the 20th century with farsighted and effective leaders in many parts of the world, leaders who set the rules that created the economic growth that we enjoyed in the 20th century, leaders who changed course in their own nations and catalyzed the extraordinary growth that we have seen in a country like China, leaders who had visions, private sector leaders who were able to look over the horizon and understand the consequences of not just this quarter’s results but the decades. We need that leadership again. We need it everywhere. And we need it both in governments and in business. That’s why the partnership between the public and private sectors is so essential.
Sitting in the office of the Secretary of State and knowing that I’m here in this position after so many luminaries in my own country have held it, it is a very humbling experience. And I often marvel at what they achieved. And I think a lot about George Marshall and Harry Truman and the Marshall Plan. What an amazing decision – to rebuild former enemies with an eye toward the future. And I think about it in very personal terms, because at the end of World War II, my late father had served in the Navy, so when he left service as so many men of that time did and returned to private life, the last thing he wanted to hear his president or secretary of State say was, “Guess what? We’re going to still be taxing you to send money to Germany, to Europe. We’re going to rebuild Japan because we believe it is in the best interests of your children.”
But it wasn’t only our public leadership who sounded that note. It was also our business leadership as well who basically said, “Okay, we get it. And we’re willing to do our part as well.” In fact, when support for the program was flagging, the White House and the State Department called the heads of large corporations and universities and asked them to fan out across the United States making the case. So the United States invested $13 billion over four years, which in today’s money would be about 150 billion.
Imagine leaders today in either government or business going to their people and saying something similar. When the Berlin Wall fell, Helmut Kohl said, “We’re going to pay what it takes to reunify Germany and we’re going to rebuild our neighbors because the wall is gone,” and people said, “Oh, what a incredible investment of our money. We won; we should be the ones getting all the benefits.” But no; it was a decision that was supported by both government and business.
We face a lot of similar challenges today, and we need visionary leaders in both government and business. But those leaders need to be guided by these principles. Whether we’re talking about politics or economics, openness, transparency, freedom and fairness stand the test of time. And in the 21st century, every citizen who is now potentially connected with everyone else in the world will not sit idly by if those principles do not deliver, and if governments and business do not make good on when we’ll provide long-term opportunity for all.
This agenda is good for Asia, it’s good for America, it’s good for business. Most importantly, it’s good for people. And I absolutely believe it will help us create more a peaceful, stable, and prosperous world for the rest of this century. Thank you all very much. (Applause.)
TRADE MINISTER PANGESTU:
We have heard some exciting news that, for instance, Google is evaluating coming to Indonesia, and Facebook, who came to Indonesia a few weeks ago, may also be interested. And yesterday, it was mentioned that the entrepreneurship delegation from the U.S. who came a few days prior to this summit, many on their first visit to Indonesia, felt that the potential here was 10 times more than expected. So all good news, and it is really – coming and seeing and believing, I think, is the key word. And some of our winners already got some investors, so this is not just a summit, but there are real results.
I think our hard work is just beginning – that is to provide the right environment and ecosystem for entrepreneurship to ensure that the potential is realized, that the young entrepreneurs who are our future are provided access to walk the first mile and be sustained to reach the last mile. Not all will become billionaires, but as Tarun Khanna from Harvard Business School said, it is not about the few billionaires that is important; it is better to create billions of entrepreneurs.
It now gives me great pleasure to invite our distinguished keynote speaker. She is someone who truly understands what entrepreneurship means, and more importantly, the power and potential of women-run small and medium-sized businesses to drive economic growth. She and I share the same belief that when women progress, countries progress, and when women progress, we achieve economic development, reduction of poverty, and the human race takes a great leap. We believe real and strategic action must be done, and I believe this is something that is a commitment of Secretary Clinton. Women comprise more than half of the world’s population, yet they are also 70 percent of the world’s poor and two-thirds of those who are not taught to read and write; that women get much less of the loans available despite the fact that they are better at payback of these loans.
Her commitment is clear. My intelligence tells me that no matter how busy or tight your schedule is, she always finds time in her travel to meet with women who are advancing their societies and growing their countries’ economies. Some said that the number of times she has visited has been up to 85 countries in the 232 days since taking office in January 2009. This is from Bloomberg. And that is why she has become a champion of women’s access to credit, to markets, to communications technology, to training and mentoring and so much more. Her passion and commitment were instrumental in the many initiatives and public-private partnership programs to grow women’s business leaderships in the Middle East and many other programs, including the one that launched at APEC last year. We hope that such initiatives can also be launched in this region.
So please welcome the U.S. Secretary of State, a champion for social and economic entrepreneurs everywhere. Secretary Hillary Rodham Clinton, may I invite you now to the podium, please. (Applause.)
SECRETARY CLINTON: Well, I cannot tell you how happy I am to be here. I’ve been looking forward to coming this afternoon, and I want to thank all of you for being part of this exciting ASEAN Entrepreneurship Summit running simultaneously with the ASEAN Summit and the ASEAN Regional Forum. I want to express my appreciation to Minister Pangestu. She has been a terrific leader and host for this summit. I’m very grateful to her. I also want to thank our Indonesian hosts as well because so many of you have done a lot of the heavy lifting, so to speak, in order to make this a success. And I want to thank the Global Entrepreneurship Partnership Initiative chair, Chris Kanter. I want to thank our team from Washington who have been tireless in their promotion of entrepreneurship, and all of the Indian, Indonesian officials and others from across the ASEAN region.
Before I begin, I want just to express my heartfelt sympathy and solidarity with the people of Norway. The United States strongly condemns any kind of terrorism no matter where it comes from or who perpetuates it, and this tragedy strikes right at the heart of the soul of a peaceful people. Norway is well known for its efforts to resolve conflicts, bring people together, it sets a high example for social entrepreneurship. And this terrible event is especially heartbreaking because so many of the victims were young people under the age of 25, and our hearts go out to their families and to the Norwegian people and government. And this just reminds us what a precious gift we all have of our lives, and I think we are called to make the most of it for ourselves, but also for our communities, our countries and humanity.
I am delighted to participate in this first ASEAN Regional Entrepreneurship Summit. And I congratulate all of you, the entrepreneurs and investors, the government officials and development experts who are exchanging ideas, sharing best practices, creating new opportunities and even making investments. Now, Indonesia is the natural choice to hold this first summit. This is, as you know, one of the three largest democracies in the world in a dynamic region that is increasingly at the heart of global commerce and growth.
Like so many other countries, Indonesia is also home to an enormous population of young people. Almost 75 million Indonesians are under the age of 18. Now, those young people are growing up in a world very different than the one I grew up in, and they are connected in ways that I could never have imagined even 10 years ago, let alone a long time ago when I was that age. And the jobs and opportunities that they need and deserve cannot and will not be created by governments alone no matter how large a public sector grows. And while traditional corporations and established industries are very important, the fact is they too are unlikely to create all the jobs needed for the future.
So what we need to do is what you have been doing – tap the creativity and innovation of citizens, men and women alike. I like to say that talent is universal but opportunity is not. We can begin to change that if we find ways to unleash people’s potential, help good ideas take root and flourish. And potential entrepreneurs are all around us. They are anyone with the imagination to conceive of a new product, process, or service, the ability, persistence, and sheer hard work to turn that idea into something real.
Now, my father was an entrepreneur. He had a small fabric printing business and he employed one or two workers to help him, depending upon the level of his business orders. But he also enlisted my mother, my brothers, and me. One of my earliest memories as a little girl is standing at a very long table on which a very long roll of cloth is laid and helping to lift a screen, a silk screen, from place to place and then helping to hold the squeegee of the paint to push it over the screen and then lift it up and continue down the table.
So my father, who was a man of modest means – he didn’t have a lot of money, he had no personal connections of any sort – it was just his sheer hard work, his shoe leather as well as his brain power. And he made his business succeed. Now, he did not become a millionaire or a billionaire, but he supported his family, he sent us to college, he gave us a very comfortable life through his own persistence, his self confidence, and a willingness to take risks.
Now, when I was growing up, we called that the American dream and it attracted tens of millions of immigrants to our shores and still does. Entrepreneurship has been written into the DNA of the American people. But I have now traveled enough to see that there are people all over the world with the talent and the drive to achieve the same goals. So I have learned that this is also a universal dream.
Earlier this week, in Chennai in Southern India, I visited the Working Women’s Forum, a community organization that provides microfinance loans, training and support so that very poor women can start their own small businesses and participate in the formal economy. I met a woman there who had come with her family as a refugee from Burma. She stood up in front of a very crowded room, including television cameras, and told her story in a very confident presentation.
She talked about how when she arrived, she and her family had nothing, that there were predatory lenders charging high interest rates for what she wanted to do, to start a small business to support herself and her family. She talked about the pressure she was under from her family members to stay home, but her answer was, “Well, who is going to put food on the table? Who is going to provide the means for us to send the children to school if we do not all work?” And she ran into other obstacles that would have really paralyzed someone who was there all alone.
But fortunately, the Working Women’s Forum was there to help her. She had none of the advantages that allow entrepreneurs to thrive. But when she joined this women’s group, the door was finally open and now, she is supporting her family. She and her husband are sending their children to school and they’re following their own dreams.
That’s really what this summit is about. I mean, it talks about entrepreneurship, but it’s really about dreams, isn’t it? Because this story can be told millions of times over in every country on every continent, and we’re here today because we believe in the power of opportunity and entrepreneurship to transform lives and lift up communities. And we’re committed in the Obama Administration to helping entrepreneurship grow further and faster all over the world, and this summit is evidence of that.
But we need to tackle the obstacles. It’s not enough just to bring together in one place experienced entrepreneurs and business leaders with young people with good ideas even who have already started their businesses. We need to tackle the obstacles that entrepreneurs face – cumbersome government regulations, corrupt officials who demand a bribe before issuing a business permit, and for women like the woman I met in Chennai, cultural norms that might prevent her from handling money or owning land.
The United States wants to work with you to bring down these barriers. That means reducing the time it takes to open a business here in this region. It means connecting entrepreneurs with investors, not only in their own countries, but outside them, as has happened here. Improving the business climate by protecting intellectual property rights; if you come up with a good idea, it should be protected so that you can then make the most of it and spin it off into who knows where it might go, and of course, making it easier for foreign investors to find local projects worthy of support.
And we particularly want to encourage women entrepreneurs, because, as the minister said, no economy can thrive if it leaves half the population behind. In fact, a recent United Nations study estimated that in the Asia Pacific region, the untapped potential of women has cost the region more than $40 billion in lost GDP over the last decade. So we’re supporting new microfinance projects, building peer networks, and offering mentorships with American businesswomen.
This really builds on what President Obama emphasized in his 2009 speech in Cairo and that we reaffirmed at the entrepreneurship summit last year in Washington – American became a global economic power by nurturing a culture of creativity and innovation, by setting the conditions in which entrepreneurs like my father could thrive and ideas could flourish. And we believe other countries can do exactly the same by embracing this model.
That’s why we created the Global Entrepreneurship Program and why we are supporting initiatives like Partnerships For a New Beginning, which recently opened a local chapter here in Indonesia. With a network of public and private partners, we are identifying promising entrepreneurs like all of you here, helping to train them, connecting them with mentors and potential investors, while advocating for supportive policies and regulations and always, always talking about what actually works in the real world. We have led delegations of businesspeople and investors to Lebanon, Turkey, Egypt, where they met with entrepreneurs. And we are connecting entrepreneurs all over the world with Diaspora communities living in the United States who actually want to support projects back in their ancestral homes.
I am pleased to announce that Indonesia is one of the five countries around the world in which the United States will work to foster angel investor groups and connect them with startups and entrepreneurs. And there is no shortage here in Indonesia, which is why we chose Indonesia. In the run-up to this summit, 500 Indonesians entered our business plan competition, running the gamut from high-tech innovators to more traditional brick-and-mortar entrepreneurs.
And many of them are here with us today. One of the prizes went to Indomog, an online payment gateway that offers vouchers for internet gainers. Another went to Gojek, which offers a motorcycle, taxi, and delivery service to Jakartans frustrated by traffic gridlock, which sounds very familiar for someone who comes from New York. Finalists have found new customers and new investors and, as the minister said, some have already received investments. One has received pledges for a million dollars’ worth of startup capital. And everyone, all 500 of you – (applause) – drew up a plan and took a chance on it. And I’d like all of the 500 who are still here who were chosen to please stand up so that we can applaud all of you, because you’re really what this is all about. (Applause.)
We want to see stories that are successes repeated here in Indonesia, across the ASEAN region, and around the world. Now, why would the United States be doing this? I think it’s fair to ask. Why are we doing this? Well, partly because we really come from a culture that thinks if we can help other people do better, that’s good for them and it’s good for us. It makes for a more prosperous, peaceful, stabler, more secure world. If people are given the opportunity to live up to their own God-given potential, they are more likely to make a contribution to their families, communities, countries, and indeed the world.
We’re also doing it because we think it works. We think that our own experience demonstrates that. And we have seen over now 235 years, but particularly in the last 150 years, we have seen people come from many of the ASEAN nations to our country with nothing in their pocket except a big dream that they hope to be able to realize. And yes, they worked hard, but they had worked hard back home. What was different is they now had the opportunity to profit from their work.
So when I travel around the world and I go to countries that are still not democracies, still putting up major barriers to women, still interfering with both men and women starting businesses, it breaks my heart because since I know people from practically every country on earth who have come to my own, I know that there are millions and millions more back where they came from who could be just as successful as that businesswoman or that doctor or that academic or whoever who came to the United States. And it wasn’t that they worked harder; it was they had a chance to profit from their work.
So we know this works, and we know too that free and open societies are more likely to benefit more people over a longer period of time than any other kind of society. And it’s not only a chance to vote in elections, as important as that is. It’s not only a free press, as critical as that is, or democratic institutions in a government that is transparent and accountable and produces results for people. It is whether there’s a free market and an economy that works for people who get up every day and work hard.
Now, not everybody is going to invent Google or Facebook, but they can be like my dad was. They can have their own small business, their own piece of that American dream or that Indonesian dream and they can do well for themselves and they can make a difference to the next generation. My mother never went to college. My father went to college on a football scholarship. He was a great athlete, not a great student. But because he could build a business, he was able to make our lives more and give us education and greater opportunity.
So we may come from different places and we certainly have different histories, different cultures, ethnicities, religions, all the things that too often separate human beings. As opposed to making us more interesting to each other, it too often provides gaps or gulfs, even, between us knowing one another and working with one another. But if you really look at what many of us know to be true, that the power of the individual, that the person with the good idea who is willing to work hard can do much more than grow a business.
As an entrepreneur, you literally can help shape the future, not only with your product or your service, but with your dream. So thank you for dreaming, thank you for being part of this first ever ASEAN Entrepreneurship Summit, and please know that the United States believes in you, believes in your dreams, and wants to do whatever we can, working with you to help you realize them for the betterment of yourselves, your families, your communities, and a country like Indonesia. Thank you all very much. (Applause.)
Her Excellency Secretary Hillary Clinton, distinguished guests, ladies and gentlemen, and especially all of you young Indonesian and ASEAN entrepreneurs who will chart the next big chapter of the future of the region. Let me first of all welcome Her Excellency Secretary Hillary Clinton and thank her and the State Department, especially those from the Global Entrepreneurship Program, for the support in organizing this regional entrepreneurship summit. I would also like to thank the Global Entrepreneurship Program Indonesia and partners for all their hard work and passion and commitment. You can all pat yourselves in the back because you can literally feel the buzz of excitement in the room about the potential of Indonesia and the region.
Press briefing by Senior Administration Officials to Preview Economic Components of the President’s Speech on Events in the Middle East and North Africa
MR. VIETOR: Thanks, everybody, for getting on. We wanted to do a quick call to preview a portion of the President’s speech tomorrow.
First, the housekeeping. This is background. You’re joined by three senior administration officials. If you need sourcing information, let me know — you know, for editors. I can help you with that.
We are talking with a 9:00 p.m. Eastern this evening embargo. You can have this in papers tomorrow, you can have it online at 9:00 p.m., but we would like to give everyone a chance to write as long as they can before anything goes online.
So 9:00 p.m. embargo tonight, background.
Lastly, we would like to talk today about some of the economic proposals the President is going to put forward tomorrow. These are new; they’re newsworthy. We’re not going to talk about every element of the speech today. I know there are a lot of other issues in the Middle East and North Africa that folks are interested in. We’re not going to get into all of those today, just be as straightforward as possible.
So with that, I’ll turn it over to our first senior administration official.
SENIOR ADMINISTRATION OFFICIAL: Thanks, Tommy. I’ll just say a few things by way of introduction. The President will give a speech tomorrow on the Middle East and North Africa. As we said, this comes at a moment of opportunity in the region and for U.S. policy in the region. We’re obviously coming off of a decade of great tension and division across the region, and now, having wound down the Iraq war and continuing to do so, and having taken out Osama bin Laden, we are beginning to turn the page to a more positive and hopeful future for U.S. policy in the region.
And again, that is reinforced, of course, by the peaceful movement for democratic change that has swept across the region for the last six months.
So the President will have the opportunity to speak broadly about the change in the Middle East and North Africa, the implications for U.S. policy, and some concrete proposals for American policy going forward.
This obviously has a range of components, and he’ll be discussing a range of issues, but we wanted to focus on one particular portion of the speech, which is the one that is focused on, the promotion of the economic development and support of democratic change.
I think it’s important to note that the political movements of nonviolent protests that we’ve seen are rooted in part in a lack of opportunity in the region. You have very large populations of young people, many of whom — too many of whom cannot find a job. You have a history not just of political rights being restricted but of economic corruption that has also frustrated opportunity.
So we think it’s important to note that some of the protests in the region are deeply rooted in a lack of individual opportunity and economic growth, as well as a suppression of political rights.
We also know from our study of the past that successful transitions to democracy depend in part on strong foundations for prosperity, and that reinforcing economic growth is an important way of reinforcing a democratic transition.
So as we look at the steps that the United States can take to support democracy in the Middle East and North Africa, one of the most important areas for us to focus on is supporting positive economic growth that, again, can incentivize and reinforce those countries that are transitioning to democracy.
So a portion of the speech tomorrow will focus on that. And before I turn it over to my colleague, I’ll just note that, in particular, we’re focused on those nations that have already begun their democratic transitions, in particular Egypt and Tunisia. And we see this as a critical window of time for the United States to take some concrete action to demonstrate our commitment to their future and to, again, reinforce their democratic transition with support for a broader base of prosperity.
With that, I’ll turn it over to my colleague.
SENIOR ADMINISTRATION OFFICIAL: Thanks, thank you. As my colleague just noted, economic modernization is key to building both a stronger foundation for prosperity and showing the fruits of democratic change.
One thing that’s clear when you look at this region is that it’s a very diverse group of countries with diverse characteristics and economies. You’ve got major oil producers, but also countries that are dependent on oil imports from their neighbors.
The pace of economic reform across the region is uneven. And even in countries that have had substantial economic growth, the benefits of that growth have not necessarily been widely shared. What all these countries share, though, is untapped potential of its people. A majority of the population is under 30 — 4 million people entering the labor force every year. In Egypt alone, youth unemployment was estimated to be 30 percent. And so there’s a great deal to be done to ensure that the benefits of economic growth and reform are benefitting — are widely shared and are bringing people into the work force and providing jobs and opportunities.
From the beginning of this — of the upheaval, representatives of the U.S. government have been in consultations with people in the region. And the President will be laying out a vision tomorrow for the region of what it can be long-term and its role in the world. And as part of that, we’ll be announcing a series of initiatives to support that long-term vision.
Our approach is based around four broad pillars, and I’ll mention the broad pillars and my colleague will go into further details under several of these. First is support for better economic management. As we’ve learned from the transition experience in Central and Eastern Europe, it’s important to provide support on policy formulation and economic management, along with our support for democratization. We’ll use a number of programs to support NGOs, universities, think tanks, and others who can help contribute to economic policymaking in the region.
Second pillar is support for economic stability. Clearly, as part of this — of the upheaval, there’s been a series of economic implications. Growth forecasts have been revised downward. International reserves have decreased. Budget deficits are widening. And the international community will need to come together to take steps in the context of reform to ensure financial stability across the region. And my colleague will go into more details about specific steps that the U.S. is prepared to take in that context.
Thirdly is support for economic modernization and reform. And very much key to the future of this region is the development of a strong private sector, entrepreneurial sector that can create jobs and bring young people — who I mentioned earlier — suffer from high unemployment rates into the workforce. There are institutions and experience out there in facilitating this transition, and he’ll be taking a number of steps to ensure that the international financial institutions and others are supportive of this modernization.
And finally, fourth, it’s important to develop a framework for trade integration and investment. If you take out oil exports, the countries of this region, 400 million people, export about the same amount of goods as Switzerland does with only 8 million people. The countries are not terribly well integrated with each other, nor are they terribly well integrated into the global economy. And we’ll be taking a number of step-by-step initiatives to facilitate more robust trade within the region and to facilitate — do trade facilitation, to build on existing agreements, to promote greater integration with the U.S. and Europe, and to open the door for those countries who adopt high standards of reform and trade liberalization to construct a regional trade arrangement.
With that, let me turn it over to my colleague for further details.
SENIOR ADMINISTRATION OFFICIAL: Thanks. So in terms of specifically how we will stand with the people of Egypt and Tunisia — as they transform their economies to ensure fairer treatment for all their citizens and to expand opportunities, particularly for the young — first, we’re going to galvanize support from the international community. The multilateral institutions have a huge role to play here. They have a lot of experience to bring to bear, which they gathered during the transitions in Central and Eastern Europe.
And the multilateral development banks — the World Bank, the African Development Bank, the IMF — are working with us and with other partners to bring resources to bear and also help these countries develop fundamental transformations of their economy that will allow vendors to provide for their families with dignity, women to get loans to start businesses, and of course that young people should be able to find jobs to build a better future.
As part of this, we’re committed to reorienting the European bank for reconstruction development to support the transitions unfolding in the Middle East and North Africa. As you know, the EBRD played a critical role in supporting political and economic transitions in Eastern Europe over the past two decades, in particular by investing in the private sector and promoting important reforms and economic governance that foster stability and opportunity, as well as democracy. And we are going to ask the EBRD to play a similarly transformative role today. And I think that’s particularly important because the EBRD has a specific democracy mandate, and so it will create strong incentives for countries in the region to implement reform that provide the economic underpinnings for political freedom and for strong democracies.
In addition, to help Egypt in meeting its critical and very important development needs, the United States is developing a new mechanism. It can essentially channel resources by canceling debts from the past to provide investments for the future.
And that will essentially address dual objectives. It will reduce Egypt’s external debt burden and provide important cash flow relief in a period in which that is particularly important.
And secondly it’ll channel additional resources to address Egypt’s medium-term development needs, in particular building a new inclusive economy that will generate more private sector jobs and more opportunities for young people. And of course we’ll ask our partners to join us in this initiative.
As another part of our effort to help Egypt invest in its people and regain access to global capital markets and investment, we will guarantee up to a billion dollars in borrowing to finance infrastructure and support job creation through our Overseas Private Investment Corporation, OPIC.
And finally, we are very supportive of efforts to obtain authorizations to establish an Egyptian-American enterprise fund which also will help with the goals of stimulating private sector investment and promoting projects that generate jobs.
So together we think these initiatives will help Egypt and Tunisia as they undertake the twin challenges of economic transformation and democratization.
MR. VIETOR: Great, thank you very much. And with that, I think we’ll take some questions.
Q Yes, thanks. What is the total dollar estimate of the entire program that you’re — that the President is going to announce? And secondly, one of the briefers mentioned the well-documented history of corruption in these countries. What safeguards are planned to make sure that U.S. funds don’t go the wrong way or perhaps end up in the wrong hands of groups or entities that are a threat to the U.S.?
SENIOR ADMINISTRATION OFFICIAL: Maybe I’ll say a word about anti-corruption and how this fits into our overall agenda. As you may know, we have been pursuing a broad anti-corruption agenda since the beginning of the administration. That’s been evident through the OECD, through the G20, and through a number of bilateral discussions that are making real traction internationally in that effort. I think the President has underscored repeatedly, including going back and talking about the experience of his own — with his knowledge of Africa about the pernicious effect of corruption and how it can diminish economic growth and demoralize a population.
I think in this regard, I think we’ll be doing a number of programs as part of our overall effort on anti-corruption and be working with countries in the region to ensure that new governments there are taking this — are taking this seriously.
But I would only note that it’s part of a global effort that we’re doing on open government transparency and anti-corruption.
Q Thank you very much. I’d like to note that today the President signed an executive order expanding sanctions, to include Syrian President Assad for human rights violations. Yesterday Secretary of State Hillary Clinton said that Assad, through his actions, had made his intentions clear, and of course Vice President Biden has said that a leader who commits atrocities against his people has lost his legitimacy.
I’m wondering, does the President agree with Secretary Clinton and Vice President Biden, and will he call for Assad to step down from power in his speech tomorrow? Thank you.
MR. VIETOR: Hey, Josh, we’re going to put that in the category of things you’re going to have to wait for the speech tomorrow to get more clarity on. So we’re going to have to — if you have any other questions –
Q All right, let me try again. Can you please give us some details in terms of how you plan to get money towards Egypt and Tunisia? Has this been coordinated with Congress? What’s the scale of it and what types of assistance are you looking at?
SENIOR ADMINISTRATION OFFICIAL: Let me jump in on that. So on — in terms of the scale of assistance, we are talking, of course, with our authorizers and appropriators, and they have given their thoughts as well in helping to design some of these initiatives.
With regard to the scale, we anticipate that the debt swap, both relief of debt and the investments that would ensue, would amount to roughly $1 billion over a few years, and that the loan guarantees would support roughly an additional billion.
There will be additional financing coming from the multilateral development banks as well, several billion dollars, and just with regard to the earlier questions that were asked, to reinforce my colleague, these funds, these programs will be available in the context of overall economic reform programs put forward by the Egyptian and the Tunisian governments, and of course both the multilateral development banks and we will expect and I believe the governments will want to use those reform programs to put in place very strong safeguards against corruption and also to ensure that the licensing process is much fairer so that the smallest vendors can get licenses much more easily than has been the case in the past and in a much more transparent and fair manner.
So we will be looking for these additional support mechanisms to be put forward in the context of deep economic governance reforms.
Q Thank you very much for doing the briefing. Just a quick question. General Jones gave a talk to the National Press Club earlier this week where he called for a Marshall Plan for this region. And I’m wondering if you feel what the President is going to propose tomorrow rises to that level. Is this on the scale of a Marshall Plan for the Middle East and North Africa?
SENIOR ADMINISTRATION OFFICIAL: Well, I’ll just say a few things and then my colleagues might want to join. I think people ought to be the judge of what are the historical analogies. I think that what we’ve looked at is how have nations successfully transitioned to democracy in the past? And you of course have the example of post-World War II. You also have the example of the fall of the Berlin Wall and the transitions in Eastern Europe, as well as many other countries around the world.
I think that’s what important to note is that this has — this is a plan that has many different components. It of course has the efforts that we’re going to pursue with our international partners in the World Bank and the IMF. It has the debt swaps and the loan guarantees that my colleague spoke about. It has enterprise funds that we’re pursuing with Congress that will increase investment in Tunisia and Egypt, as well as the efforts associated with OPIC and the European Bank for Reconstruction and Development, all of which I think draw on that experience of how do we take some of the successful efforts in Eastern Europe and apply them to countries that are transitioning to democracy in the Middle East and in North Africa.
And finally, you have the steps that we’ll be taking to advance the integration of markets and the trade relationships between the Middle East and North Africa and the United States and the European Union. So it’s a comprehensive approach that, again, is focused on how to foster development that is in service of democratic transition and that enhances opportunity for the people of the region.
It’s the beginning of a long-term effort, because obviously these transitions will play out over a period of years. Egypt and Tunisia are at the forefront because they’ve already undertaken these steps. And of course, it’s our hope that there are additional transitions to democracy that follow in the years to come.
And of course, it’s just one component of a broader set of tools that the United States brings to bear in the region. And of course, he’ll talk a little bit tomorrow — the President will talk at length tomorrow about our political support for individual rights and democracy in the region and a broad range of U.S. tools that we’ll be bringing to bear.
But what we wanted to make sure we are doing, again, is reorienting a number of tools of U.S. power in the region — diplomatic, political, economic, and otherwise — to reinforce those nations that take the important step of transitioning to democracy; to show that the international community and the United States will support those transitions; to provide real resources that can make a difference while also encouraging the type of reforms that we know are essential to both stable economic growth and democratic development.
So we believe that this is a very comprehensive and important way to reinforce democratic change. And we’re going to continue to look to build upon that progress in Egypt and Tunisia and those other countries that undertake reform in the years to come.
SENIOR ADMINISTRATION OFFICIAL: The only thing I would add is that in the transition of Central and Eastern Europe, the prospect of accession and membership in the EU was a powerful force for encouraging domestic efforts to reform their economies and stay on the right path. And it’s important the vision that the President will be laying out tomorrow and then working — will be substantive discussion in the days and weeks to come — is about laying out a vision for what this region can achieve in terms of private sector development, job creation, integration among themselves, integration with the world economy, and backing up that vision with very specific steps, as my colleague laid out, that supported on that path.
And so, it is an important step and it may take a number of years to achieve that overall vision, but it’s an important vision to keep in mind.
Q My question is related to Egypt. And I am just wondering that the whole package may be not satisfied through the Egyptian public opinion because of the Egyptian public are waiting for the U.S. as a strategic and as a country with a deep relationship to move further with a real package, including — that includes cancellation of the whole debt. How do you react to this?
SENIOR ADMINISTRATION OFFICIAL: I would say that, again, I think what’s important here is that we’re embracing a profound shift and a partnership with Egypt, and we see Egypt really as — together with Tunisia — the beacon in this region. And so what we’re laying out is a profound multiyear set of engagements with the Egyptian people to help support them. At the end of the day, of course, the future is in their hands, and what we’re trying to do is support them here.
Egypt has I think a very good prospect of accessing private capital markets, and that’s important to Egypt’s future economic vibrancy, and that’s something that we know economic leaders in Egypt want to reinforce. So what we’re doing here is supporting Egypt by making a very important commitment to debt relief, while also making sure that Egypt remains very attractive in the financial markets and an increasingly attractive destination for private investment by engaging the private sector.
So we’ve done these elements in a carefully crafted way to both show how deeply and profoundly the American people support Egyptian people, but also to reinforce the strength of Egypt’s economy as it grows and attracts private capital into the future to create those jobs.
Q I appreciate you doing this call. A couple things. On the cancellation of the debt, I thought I heard you say a figure of about $1 billion. Secondly, the multilateral institution funding, I believe that’s already pretty much been announced — the World Bank talking about a $2-plus billion and IMF helping out on the funding cap for Egypt and Tunisia.
I’ve heard there’s talk about boosting resources for EBRD. Is that correct? Are you talking about the money there? And then just secondly, while it’s not officially on the agenda, European officials have clearly said that the IMF leadership succession will be talked among leaders, G8 leaders upcoming. I’m wondering if the U.S. has — can make clear whether they’re supporting a merit-based leadership process, or will it back another European?
SENIOR ADMINISTRATION OFFICIAL: So why don’t I just quickly talk about the multilateral development banks piece. The World Bank, the African Development Bank, the International Finance Corporation and the IMF, are all working hard together to address Egypt and Tunisia’s immediate financing needs that are associated with recovery and medium-term economic reform needs, which are going to create a much more vibrant private sector with much more jobs, rich kind of economy. And the amounts there have not fully been finalized, but they will run in the multiple-billion-dollar-over-several-years scale.
With regard to the European Bank for Reconstruction and Development, there what we’re really proposing is a reorientation of the mandate of that institution so that it can play the same role in the Middle East and North Africa with countries that are making that democratic transition that it has played so successfully in Central and Eastern Europe, in particular in creating a much more robust private sector.
With regard to the IMF, why don’t we leave that for a separate conversation.
Q Thank you so much for doing this. I just have a couple of questions. Just to understand the cancellation of debt relief for making the swap with the debt, over what period of time is that? Is that going to mean instead of making the debt repayments they’re going to be going into direct investments into Europe?
And secondly, if I can ask, are all the announcements that are going to be made tomorrow directed at Egypt and Tunisia, or is there going to be more detail about the integration for Arab states? For example, FTAs or other possibilities? Thank you.
SENIOR ADMINISTRATION OFFICIAL: Why don’t I just speak briefly on the debt swap and then turn it back over to my other colleague to talk about the trade and investment approach.
So with regard to the debt relief, that is — that will be a two-to-three-year process. And those funds, of course, will become immediately available. The funds that are no longer needed for servicing the debts are funds that the Egyptian government will then be able to use — local currency, of course — to invest in priority sectors that we and they believe are likely to center in areas such as youth employment and entrepreneurship.
SENIOR ADMINISTRATION OFFICIAL: On the trade and investment front, what we envisage is a step-by-step initiative initially focused on facilitating more robust trade within the region, building on existing agreements. We have a number of agreements there, as does the EU, to further promote integration with the U.S. and European markets, and then ultimately working with countries in the region who have achieved a high level of reform and trade liberalization on the possibility of a regional trade arrangement. So it’s a multi-stage process.
Q Hi, I wanted to ask if the purpose of these moves with respect to Egypt and Tunisia is to act as a carrot of sorts to encourage other countries to move forward with their democratic reforms in the hope of getting these sorts of benefits?
And in the same vein, if that is the hope, how do we justify, for example, continuing to give substantial assistance to Jordan when the evidence of substantial political reform there is lacking? If countries that haven’t shown reforms are still going to get substantial aid, then is there really any linkage to the reforms? Thanks.
SENIOR ADMINISTRATION OFFICIAL: I don’t know if our first colleague wants to take that one.
SENIOR ADMINISTRATION OFFICIAL: What was the question again?
MR. VIETOR: Hey, why don’t you handle part two? We just had to jump back on. The plane landed.
SENIOR ADMINISTRATION OFFICIAL: No, I think we very much do look at, as my other colleague said, as Tunisia and Egypt being at the leading edge of potential reformers in the region, as potential demonstration cases for the rest of the region. And therefore, we do see their success as a positive incentive for others in the region who are also working on the reform agenda.
SENIOR ADMINISTRATION OFFICIAL: Yes, I’d just add to that, we believe that Egypt and Tunisia are hugely important for a number of reasons. First of all, Tunisia was just a vanguard of the democratic movements that had swept across the region. And Egypt is the largest Arab country, of course, and an important bellwether for the region as well. And one of the things that we know about what’s taking place in the Middle East and North Africa is that change is going to be different in every country. And as we’ve seen, there are going be very difficult circumstances where change is contested and transitions are more difficult.
And so one of the most important things that we can do, in addition to supporting political and economic reform in all countries and individual rights as well, is empowering a positive model, and that if Tunisia and Egypt are able to be successful in their transitions, able to solidify their democratic gains, and able to reinforce those gains through economic development, then that provides a powerful incentive for the nations and peoples of the other regions to pursue similar reforms.
So part of the purpose of this economic program, again, is to reinforce not only positive change in Egypt and Tunisia, but a positive model that can empower and incentivize democratic change and economic reform in other parts of the region.
Q I guess I’m trying to understand the broader context for all this — for this briefing — because you said this would deal with a portion of the speech, and you seem to be discussing only, or primarily, certainly, Egypt and Tunisia. And I’m wondering how — if you can outline or give a general sense of what other portions the speech falls into, and how — beyond the discussion of trade briefly there — how any of these economic proposals affect Bahrain, Yemen, Syria, any of the other countries that are in the region beyond Egypt and Tunisia, or is this just about those two countries?
SENIOR ADMINISTRATION OFFICIAL: I’ll take the first part, and then I think my colleague should address the trade portion of the question. Obviously the speech addresses a broad context. It will speak to the political change in the region. It will speak to efforts that we’re undertaking to support human rights and democratic reform in the region and a broader interest in peace and security in the region. And the President, of course, will be speaking in length about that tomorrow. We’re just not previewing those particular portions today.
But however, with regard to your question, I would reinforce one of the things that I was just saying, which is that when you have a region of many different countries that are pursuing change in their own different pace, part of what we do is going to be using our influence in support of positive outcomes in different countries. But what’s perhaps even more important, given the fact that ultimately change is not going to be determined by the United States, change is going to be determined by the people of the region, but one of the most important things that we can do is empower positive models of change.
Already — and frankly, I think you’ve already seen that in events, because the protests that began in Tunisia spread to other parts of the Middle East and North Africa, and Tunisia and Egypt have been at the forefront of this. And again, they are all particularly important given Egypt’s role, for instance, as the largest Arab nation.
So it is entirely relevant to the other nations in the region and the other transitions taking place in the region to have a positive model of democratic transition and economic development in Tunisia and Egypt that would have a positive impact beyond their borders, because as my colleague said, it incentivizes — as we learned in previous transitions — nations are more likely to undertake positive actions if they see incentives for those actions, and that one of the clearest ways to provide those incentives is to see a positive model. But I’ll turn to my colleague on the trade question.
SENIOR ADMINISTRATION OFFICIAL: I think on the trade question, the vision is one in which the countries are — where protectionism gives way to openness, where the countries are further integrated amongst themselves and with the global economy. And one might start with Tunisia and Egypt, but it’s a vision that other countries can certainly participate in and join in as they pursue economic reforms as well. So it’s broader than Egypt and Tunisia as well.
SENIOR ADMINISTRATION OFFICIAL: I think the examples that were discussed earlier — if you go back to the post-war engagement of the U.S. and Europe, if you go back to the transitions in Central to Eastern Europe — in each case, we were crafting institutions that were really designed to provide positive reinforcement to those countries who were kind of moving in the right direction politically as much as economically. So if you look at the reorientation of the European Bank for Reconstruction and Development, that’s again — it’s a sort of signal that as countries take these quite ambitious and bold steps, that the international community and the U.S. in particular will be there to help support those transitions.
Q My question about the level of communication between the American administration and the government both in Tunisia and Egypt — concerning those financial initiatives, did you speak before with the governments in both countries and on what level? Did you speak with the Supreme Military Council or the government? Thank you very much.
SENIOR ADMINISTRATION OFFICIAL: I’ll say a word and maybe one of my colleagues wants to join in as well. There have been meetings and visits in the region by officials from the Treasury Department, the State Department, the White House on the economic issues as well as an important meeting around the World Bank-IMF spring meetings on this issue as well. And so there’s been multiple contacts in each of the countries as we have been working on this economic program.
SENIOR ADMINISTRATION OFFICIAL: Yes, and I’d just add one thing. In addition to those consultations, I think just generally at a variety of levels, both governmental and nongovernmental, to include conversations with civil society and nongovernment actors, one of the important messages that we hear from Egypt and Tunisia was how important economic growth and support for economic development would be to the current situation in Egypt and Tunisia, both in part because they did suffer some shocks around the recent upheaval in their countries, but also because as we look to ways in which, again, the United States can use our policy tools to support change, we can obviously do a range of things that speak up for and stand up for the things that we believe in and the rights that we support. And the President will speak to that tomorrow.
But one of the concrete ways that we can demonstrate our support for democratic changes is through this type of economic program. And so this is fully in line with many of the contacts we’ve had both in the official consultations but also in the types of messages that we’ve heard from within the government and from within civil society as well.
MR. VIETOR: All right. Thank you, everybody, for jumping on. And as we said before, the embargo is 9:00 p.m. tonight. We’ll work on getting you any information we can that would be helpful between now and then in terms of fact sheets, et cetera, and we’ll see you tomorrow. Thanks.
Thank you all for coming to the Embassy. As someone who has worked on civil society issues for decades and as a former member of the U.S. Helsinki Commission, I am well aware of the hardship that many of you experience because of the work that you do. I applaud your dedication to protecting human rights and fundamental freedoms and to building a better society.
The United States supports your efforts – and we support you. We are encouraging governments throughout this region to partner with civil society, because human rights, economic development and state security are intrinsically linked. You know better than anyone that the countries with vibrant civil societies are best poised to make progress in the 21st century.
Your nation and your people are important in your own right. You face the challenge of building a sovereign, democratic and prosperous Uzbekistan. And other countries, including my own, have a stake in your success, because your security, prosperity and freedom enhance our own.
No country has a monopoly on wisdom in this area, including the United States. So, when we speak to your Government about issues such as religious and media freedom, torture, or child labor, we do so in a spirit of mutual respect. We raise these issues in all our interactions with the Government and will continue to make improvement of human rights in Uzbekistan an integral part of expanding our bilateral relationship. We will also continue to make cooperation with you, and all the others who are working tirelessly for the betterment of their homeland, an integral part of our agenda here.
President Karimov, in a recent speech to Parliament, expressed a commitment to building an open, democratic state in which individual rights and freedoms are valued “not in words but in practice.” We now look to the Government of Uzbekistan to do just that — to translate words into practice — and we are prepared to support and assist in that effort. I met with President Karimov. I urged him to demonstrate his commitment through a series of steps, to insure that human rights and fundamental freedoms are truly protected in this country
Despite the difficulties and challenges that persist, I that you will continue to work on the issues that matter most to your people. And we will continue to work with you. Together, we can build the bright future that everyone in Uzbekistan deserves.