Living in a World of Limited Resources

Good evening. Thank you very much for the kind introduction. It is a pleasure to be in a part of the country with such strong global ties. I am especially heartened to see that a new generation of Americans, such as the young people involved in the Students in Free Enterprise Global Leadership Program and the Charlotte-Mecklenberg Schools’ Leadership and Global Economic Magnet Program, is developing the knowledge and skills that will be needed to address the political and economic challenges that confront our own country and the rest of the world. I am also encouraged by the dialogue the Global Summit is facilitating with students and educators from China, South Africa, Russia and Germany.

When I was asked to speak to you, I thought at length about one part of the theme of this conference, and that is “the role and responsibility of developed countries towards developing countries.” I would like to suggest that our focus should also be on partnership and shared responsibility between the developed and developing world. Why? Because after fifty years of experience in providing assistance to the developing world, we have learned that official development assistance given without an investment by development countries in sound policies creates an unhealthy dependency. It runs the risk of victimizing the developing world through the tyranny of low expectations. People in the developing world want a hand-up, not a hand-out. We have also found that progress towards the alleviation of poverty and the achievement of sustainable economic development rests upon a commitment to good governance, the rule of law, sound economic policies and the protection of human rights. Developed and developing countries therefore have shared responsibilities, needs, and interests that form the basis for partnership.

For example, we are forging a partnership with Africa that advances shared interests and values. As Secretary Rice stated in recent Congressional testimony: “We don’t consider Africa to be a target of our policy, but rather, like the rest of the world, very good partners in what we’re doing.” Our increasing engagement in Africa advances U.S. national interests to promote peace and stability, to advance democracy, to combat terrorism, to foster economic development, and to alleviate human suffering.

These priorities reflect the fact that the continent’s problems are, in the increasingly global environment, linked to our broader interests and to those of the international community. There are numerous examples. The progress of democracy in Africa reinforces U.S. efforts to promote freedom throughout the world. Twenty African countries are now members of the Community of Democracies. Africa supplies over 30 percent of UN peacekeeping forces worldwide. Resolution of conflicts in Africa sends a positive message to other conflict-prone areas of the world. Most notably, the achievement of peace throughout Sudan will send a very positive message to the people of the Middle East that even the most intractable conflicts can be resolved.

As we seek to advance American interests by engaging with and assisting the developing world, the United States is collaborating at an unprecedented level with the European Union and its member states, other countries such as Japan, Australia, and Canada, the United Nations, and international institutions to work with African countries and regional organizations. This multilateral approach maximizes the impact of our assistance and influence.

As we engage with developing countries, we have learned that we must mobilize and take advantage of all available resources. Official development assistance is just one part of the potential resources for development. Other resources include developing countries’ own public and private resources, foreign direct investment, the money that foreign workers send back to family and friends in developing countries, and philanthropy. Net U.S. flows from all these sources to developing countries were $346 billion in 2003. We have only to look at the example of the worldwide response to the 2004 tsunami that struck Asia and part of the eastern coast of Africa. The American people are providing substantial support through charitable donations and other endeavors to relieve suffering and to help in the recovery process.

That said, I do not want to leave you with the impression that development assistance is not important. President Bush has said on several occasions, including in the National Security Strategy of the United States, that eradicating poverty and expanding the circle of prosperity are fundamental goals of U.S. Policy. Our approach to economic and sustainable development challenges in Africa and elsewhere in the developing world emphasizes partnerships between developed and developing nations, the private sector, professional organizations, international institutions, and civil society as well as from official development assistance.

Since 2000, the U.S. has nearly doubled its level of Official Development Assistance (ODA), from $10 billion in 2000 to $19 billion in 2004. This is the most rapid increase in US ODA since the Marshall Plan.

I want to focus specifically on Africa. Economic progress and prosperity are essential to Africa’s future, and thus a paramount U.S. goal. We continue to encourage economic reforms and the development of functioning capital markets. American trade and commerce with Africa continues to grow. Our efforts are directed toward a trade and development-based approach that encourages the growth of Africa’s private sector. We will continue to reinforce policies of African governments that promote economic liberalization and successful private sector development.

Since 2000, the United States has quadrupled assistance to Sub-Saharan Africa from a level of $1.1 billion to $4.6 billion per year. We have requested $2.6 billion for the fiscal year that begins in October 2005. It is also important to point out that the United States is the largest donor of humanitarian assistance in Africa. In addition, the United States provides 100% bilateral debt relief to highly indebted poor countries (HIPC). Further, the United States is committed to working with the G8 and other donors on measures to address developing country debt to multilateral financial institutions.

Progress on so many fronts – economic, governance, professionalization of the military, health, education – is threatened by the continuing plagues of HIV/AIDS, malaria and tuberculosis. Over half the people infected with HIV in the world live in Africa. Africa’s most important resource is its people, yet trained professionals and key workers die of this disease every day. Twelve of the 15 focus countries for the President’s Emergency Plan for AIDS Relief (the Emergency Plan) are in Africa. The principal source of funding for the Emergency Plan is the Global HIV/AIDS Initiative (GHAI). At least $1.2 billion from this account is designated for programs in Africa.

Africa is a major beneficiary of the President’s Millennium Challenge Account (MCA) initiative. An independent government corporation, the Millennium Challenge Corporation, administers the MCA, which is intended to work in partnership with foreign governments and the private sector to promote sustainable development. $3 billion has been requested for fiscal year 2006. Eight of the seventeen countries fully eligible for MCA funding and seven of the thirteen countries eligible for threshold assistance are in Africa. The Millennium Challenge Account holds enormous promise for growing Africa’s economies. The MCA funds only countries that have demonstrated a commitment to democracy and good governance, investing in people and economic freedom.

But there are ways other than official development assistance in which developed countries contribute to the welfare of developing countries. In 2003, developed countries invested $193 billion in developing countries, 150% more than the total ODA flow of $77 billion to those same countries in the same year. Foreign direct investment is a powerful impetus for economic growth through the transfer of knowledge and technology and in the creation of jobs. The interactions involved in such investments also encourage entrepreneurship and the will to participate in the global economy.

The trade that takes place between the developed and developing world is also a powerful engine for prosperity. The United States provides preferential access to its markets to many developing nations through programs like the Africa Growth and Opportunity Act. In fact, under AGOA, we are the largest importer of goods from developing countries. During the 2000-2003 period, U.S. two-way trade with Sub-Saharan Africa increased by over 65% to $44 billion in 2004. U.S. imports from all developing countries totaled $604 billion in 2003. AGOA encourages high standards for market-based economies, progress on governance and human rights issues, broader economic reforms, and goodwill towards the United States.

In addition to the progress generated by AGOA, we can point to other signs of positive economic activity in Africa. For example, foreign direct investment in Africa (including North Africa) increased by 28 percent in 2003. U.S. investment in sub-Saharan Africa alone increased by 37.2 percent in 2003. Average real GDP in sub-Saharan Africa reached a record level of 4.5 percent in 2004.
Last year, foreign workers in the U.S. sent home $28 billion of their hard-earned wages to developing countries. At the same time, thousands of Americans working in developing countries sent remittances back to their families in the United States. This two-way flow of remittances is not development assistance. But it is no less significant or beneficial to the developing or the developed world.

How do we mobilize all of our resources -- development aid, foreign direct investment, charitable giving, trade and remittances -- to ensure prosperity and a better future for developing countries? Let me return to two key principles: shared responsibility and partnership.

Many African leaders have embraced a common vision to improve the lives of their people through a commitment to economic reform policies and good governance to put their countries on the path to sustainable development. There is broad agreement among them that this requires an emphasis on combating corruption, on democracy and freedom, and on achieving political stability. In a word, there is consensus that good governance is the foundation for economic development in Africa. Through organizations like the African Union, initiatives like the New Partnership for Africa Development (NEPAD), and through their regional economic organizations, African governments are taking affirmative steps to further economic growth, promote good governance and manage conflict.

The New Partnership for African Development (NEPAD) sets out a vision and a strategic framework by which African leaders have agreed to work together to promote – continent-wide -- the conditions for sustainable development. It includes a number of sectoral action plans such as agriculture, trade, environment, and education that are meant to guide action on the ground, in regional organizations, national governments and international partners.

African leaders are realizing that good governance is a crucial element of the development equation. Responding to the need to root out corruption in their own governments, African leaders under NEPAD have established the African Peer Review Mechanism (APRM). APRM is a voluntary initiative by which members agree to subject their standards of governance and their economic policies to scrutiny by their African peers. Twenty-three nations have already signed up for the APRM and reviews on four countries have started: Ghana, Kenya, Rwanda and Mauritius. These reviews will take some time, but their quality and candidness will be an important test of NEPAD’s commitment to improving governance.

Reflecting the concept of partnership and shared responsibility, at the Sea Island summit, the G8 leaders renewed their commitment to assist developing countries to combat corruption and to improve the transparency of their finances. These commitments included the launching of four pilot partnership programs with Nigeria, Peru, Nicaragua, and Georgia. The G8 will provide technical assistance to these countries to help them fight corruption and achieve high standards of transparency in the areas of budget revenues and expenditure, procurement, and awarding of concessions.

The U.S. also supports the Extractive Industries Transparency Initiative (EITI) by which oil and gas companies and other extractive industries agree to publicly report the royalties that they pay to governments and governments pledge to report the revenues they receive. But EITI is only half of the equation. The other half is independently monitoring the expenditures that governments make from these revenues to ensure that they reach the people. An experiment along these lines is the Revenue Management System agreed to by the Government of Chad in connection with the revenues it derives from the newly opened Chad-Cameroon oil pipeline. These revenues have the potential of radically transforming Chad’s economy, but only if corruption can be tackled and pipeline revenues are dedicated for health, education, infrastructure and other public purposes. An independent body headed by a Chadian NGO leader has been appointed to help monitor the government’s commitments to this important task.

I want to touch on what is perhaps the most significant threat to the effective use of resources in the African continent, and that is conflict. Conflict diverts vital human resources from productive activities and drains national treasuries. As I speak, there are ongoing conflicts on the African continent in the Democratic Republic of the Congo, Ivory Coast, Liberia, Sudan, and elsewhere. But African leaders are helping each other to resolve these conflicts. Just last month, the Economic Community of West African States united to demand that the constitution be respected for the presidential succession when the president of Togo died. President Mbeki of South Africa has recently played a mediating role in Ivory Coast, and President Obasanjo of Nigeria will soon reconvene the talks in Abuja, Nigeria relating to the horrifying conflict in Darfur.

The African Union has recently committed troops to help maintain order in Sudan and individual African nations have in recent years sent peacekeepers to Congo, Liberia and Sierra Leone. U.S. leadership and assistance is playing a crucial role to help African leaders resolve these conflicts. We are training African peacekeepers. We are providing $100 million to support the African Union mission in Darfur, and mobilizing the international community to end the violence there. In Zimbabwe we are using assistance to help restore democracy and good governance. Our assistance is supporting the transition process in Liberia, including through the demobilization and reintegration of ex-combatants. We are providing funding to assist the African Union and other African regional organizations to strengthen their institutional capacities, and their ability to reach and implement regional solutions.

The challenges we and other developed countries face in assisting and forging effective partnerships with developing countries are daunting. Despite the enormous progress being made, for example, Africa will likely not reach the International Development Goals of the Millennium Declaration. Poverty foments conditions that terrorists can exploit. Persistently high HIV/AIDS rates, hunger, drought, and poverty threaten progress that is being made in establishing democratic frameworks and liberalizing economies. We must, therefore, recognize and commit ourselves to sustained engagement.

There is reason to be hopeful. Our extensive engagement in Africa is making major strides in addressing these problems so that Africa can harness the vast potential of its people and natural resources. During the past four years there have been over 50 democratic elections in Africa, and the majority of African economies are growing significantly. It is particularly important that African regional institutions are becoming stronger, and playing more effective roles to mitigate conflict, foster democracy, promote regional integration, and act against terrorism.

We, as Americans, support helping developing countries not only because it is the right thing to do, but also, as I have tried to explain here, because our assistance advances American interests and values. Exciting things are happening. Our embassies in developing countries are engaging community leaders, expanding girls’ education in marginalized areas, and working with moderate local Muslim non-governmental organizations through grants and other means, for example. We are providing scholarships for the study of English, distributing information in local languages, and conducting media training.

By and large, people in developing countries have positive attitudes about the U.S., and we need to build on these. This is particularly the case in Africa, where our histories and cultures are intertwined. We share fundamental values that link us together. That is why the American public supports increased assistance as long as it’s done with accountability for funds and transparency in expenditure.

I leave you with the thought that increasing our engagement now with Africa and the rest of the developing world is a wise investment that will pay dividends for many years to come. I am pleased to be with you to exchange ideas about how this can best be achieved.