New Hope for Prosperity Through Economic and Political Reform in the Broader Middle East and North Africa

Thank you, David, for your introduction. I also want to thank the Government of Jordan, the Export-Import Bank of the United States the Overseas Private Investment Corporation, and the U.S. Trade and Development Agency for inviting me to speak to this remarkable group of people you have brought together. The leaders of the G-8 and countries of the Broader Middle East and North Africa (BMENA) launched the Partnership for Progress and a Common Future -- a blueprint for how the G-8 could support indigenous calls for reform -- nearly a year ago. This conference is exactly the kind of event that these heads of government envisioned taking place, where leaders of government, business and the financial sector come together and address head-on the challenges that face the region today.

These challenges reach across economic, political and educational boundaries. This complexity can be hard to grapple with, and it can be tempting to segment our discussions in venues like this and look only at those issues we traditionally address. But leaders in the region recognize that they must consider the challenges of reform in a comprehensive way, and that the overarching need in the region is to create opportunities -- especially for the fast-growing youth population – opportunities that engender a sense of a better tomorrow.

From Afghanistan, through Iraq, to the West Bank and Gaza, President Bush has set promoting freedom and democracy as our top priority. The United States and our partners around the world recognize that victory in the war against terrorism can only be finally achieved if we address the underlying causes of strife and conflict. When people are free to express their economic and political interests, they seek resolution of differences through peaceful means, not through destruction and terror. Working to build stable, free and prosperous countries from Morocco to Pakistan is not only the right policy, but the only way to replace frustration with hope.

Governments have a critical role in providing their citizens the political and economic freedom to achieve a more prosperous and rewarding future. The World Bank just released its fourth annual report on governance, "Governance Matters," which stated unequivocally that good governance leads to higher standards of living and poverty alleviation. It is a point worth stressing: providing citizens with the ability to voice their concerns, making governments accountable to the people, reducing corruption and improving the regulatory environment lead to economic growth.

In his speech at the National Endowment for Democracy on the Broader Middle East last November, President Bush stated, "As we watch and encourage reforms in the region, we are mindful that modernization is not the same as Westernization . . . There are, however, essential principles common to every successful society, in every culture." One such principle is that, when governments provide economic and political space for individuals to express themselves, individuals and societies achieve much more of their potential.

This is how economic and political reform are inherently linked, both reinforcing one another. Political freedom leads to exchanges of ideas that can spark economic growth, while engaging in commerce across borders forges new understandings and mutual incentives to seek consensus. In both cases, a government that provides the space for these interactions is essential to unleashing the potential of their country and its citizens.

It is individuals, in the form of the private business sector, who form the main engines of economic growth. Business leaders know better than any of us about the challenges and opportunities of doing business in the region. It was this sentiment that was at the heart of the creation of the BMENA Business Dialogue at the Sea Island Summit. The Business Dialogue is intended to be a forum where businesses from the region and the G-8 inform their governments of impediments to economic growth and the reforms needed to address them.

Business can act as a reforming agent for many segments of society and on key social issues -- such as education, women's empowerment and civil society participation. The business dialogue will feed into several of BMENA activities this year, including the Education Ministerial taking place in several days. We are extremely fortunate to have some of the best business minds from the G-8 and the BMENA region here at this conference. The discussions that happen here can be translated into real progress in the form of increased business transaction on the ground.

Reform Has Momentum

We are beginning to see strong signs of political and economic change:

• Iraqi voices have been heard with three crucial steps in Iraq’s democratic reform process – the January 30 elections, the creation of the Iraqi Transitional Government cabinet, and the establishment of the Constitutional Commission;
• Egypt has reduced tariff rates, accelerated the pace of privatization, introduced legislation that would slash personal and corporate income tax rates, and increased exchange rate flexibility – exactly the kinds of policies needed to attract foreign investors encourage domestic entrepreneurs and boost growth;
• Syrian troops have departed Lebanon, and the United States is working closely with the UN and the European Union to help the Lebanese people conduct free and fair parliamentary elections beginning later this month; and
• Free Trade Agreements between the U.S. and Morocco, Bahrain and Jordan respond to those governments' commitment to the privatization of state-owned enterprises, efforts to increase the transparency of government decision-making, and the liberalization of trade policies. The U.S. is also working with Saudi Arabia in support of its bid for WTO accession; and
• The U.S. and Pakistan have just concluded the second round of negotiations for a Bilateral Investment Treaty (BIT). A robust BIT would improve investors' rights, decrease investor uncertainty, and enhance Pakistan's investment climate;
• Here in Jordan an ambitious reform program is well underway aimed at creating a sure foundation for long-term prosperity. Jordan's strong growth in GDP and exports show the result.

Governments in the BMENA region increasingly understand the challenges that lie ahead, and want to respond to the thirst for opportunity that now characterizes the region. The process of reform can be slow, but should always be urged forward. The changes needed to create more political and economic space for individuals to succeed in the BMENA countries are not always easy. The U.S. stands with our G-8 colleagues and the international community to support the region's efforts to make those reforms.