SECRETARY CLINTON: Thank you very much, Governor, and thanks to you and Mrs. Taseer for welcoming us here to this beautiful home. And I appreciate meeting your family, and please tell your daughter, who is attending college in America, hello from us. I am also pleased to be here with the foreign minister. He and I have worked very closely together over the last months, and I appreciate his strong leadership on a number of issues, including economic and business and investment matters. I also wanted to introduce our ambassador to Pakistan, Ambassador Patterson, and our Special Representative for Afghanistan and Pakistan, Ambassador Holbrooke.
I want to thank you for gathering late on this afternoon to meet with me, because, as the governor was saying, there are many positive signs for Pakistan despite what the headlines tell us every day about the ongoing struggle that your country is waging against the extremists and the terrorists. But as I look at a broader, more comprehensive picture, I see the confidence that the IMF has in Pakistan this year and the ability of your government to meet the conditions that were imposed. The governor has already referenced the investments, the stock market. Those are all very positive signs.
But of course, there is a lot to be done, because the growth rate that you were experiencing up until this year of about 7 percent has been dramatically cut, as we have seen happen in so many other countries because of the global recession. So I am hoping that in our conversation today I can share with you a few ideas, and then I mostly want to listen to hear what is on your mind and what you believe to be profitably done through a partnership between our two countries.
The United States is committed to help. We are proud to be Pakistan’s largest trading partner and the largest foreign investor. We have seen the opportunities for investment and growth, and of course, the Pakistani diaspora that has found a home in the United States is particularly keen on making sure that we look for ways to further economic prosperity here.
I know these are challenging times, and it is challenging not only for your soldiers on the front lines in South Waziristan, but it’s challenging for every Pakistani. Certainly, for the business community, it is difficult to flourish in an unstable environment, to field the phone calls from around the world from people who see the headlines and wonder if you and your family are okay, even though what happened is many miles and hours away.
Yesterday, as we all know, and mourn the loss of life, there was another horrific attack. And yet I see what you do around this table as instrumental in the fight against violent extremists. You are the people who create jobs, create the businesses, make the investments, that will give people in Pakistan a very positive vision of their future and will give livelihoods to many, many of your fellow citizens.
The United States wants to help create more jobs in Pakistan. We see this happening in two ways: one, a direct way through programs such as what we are advocating for the creation of reconstruction opportunity zones which will open market access to the United States. We are working to accelerate this approach because it’s essential that we provide more assistance in trade and investment and help to improve the environment for you to do more business.
We also know, though, that in addition to direct programs like that, encouraging your government to do more in the way of trade agreements, looking for opportunities to open up the Pakistan economy to greater trade access, from not just the United States but from this region and beyond, but there are issues that affect how much business you can do, what kind of capacity you have.
That is why yesterday, in recognition of the impact that rolling blackouts have on economic growth as well as just the nuisance factor that people suffer through, I announced the first phase of a signature energy program. We will, through United States aid, work with your government to help repair facilities, repair dams, improve local energy providers and efficiency, help to refurbish more than 10,000 tube wells so that agriculture has a much more certain system for irrigation.
We know that at the base of any economy are the talents of the people, and there is no doubt that the Pakistani people are incredibly talented. But it is also beyond argument that there needs to be greater emphasis on education and health, on women’s empowerment, in order to realize the full potential of the challenge that exists. I often say that talent is universal, but opportunity is not. And we have to change the opportunity structure and create opportunity ladders.
Last night, I was in Islamabad for the second drawing of the Benazir Income Support Program, and I was privileged to hand out certificates to some of the women who came from very rural areas to accept their certificates, which carried with them the promise of investments, investments in them and in their families, giving them the tools that they then can use to try to improve their lives.
Really, when you look at what it takes for a society in the 21st century to flourish, I believe that it really rests on three pillars. Sometimes I liken it to a three-legged stool. One is a democracy, democratic form of government with accountability, transparency, a commitment to produce results for people, because if democracy doesn't produce results for people, there’s a built-up frustration that can often cause instability. Second, a market economy where people are given the opportunity to flourish and to create their own wealth and spread it around because of the jobs and the other benefits that flow from it. That strong economy goes hand-in-hand with a strong democratic government. And then the third is civil society, the kind of support for society that you get from faith communities, that you get from private associations, that are really what makes life worth living besides being a citizen and being a consumer and a producer in the economy, really fulfilling oneself.
And certainly, when one looks at the results of the decisions that have been made by the kind of people that the governor referenced who have left Pakistan and have moved to the United States or to Europe or to elsewhere in the world, and when I look around this table and look at the names here and realize how much success there is and how many risk-takers there are and how many people have really prospered through good times and bad because of your own hard work and your entrepreneurial skills, I have no doubt that we can expand that and create many more entrepreneurs and successful business people of all size businesses in Pakistan. The United States is ready, willing, and able to help in whatever way is appropriate. But for us, Governor, we want to make a long-term investment in Pakistan. We think it will pay off. And we certainly believe that it is to the best interest of both the people of Pakistan and of the United States to have that kind of partnership.
Thank you very much. (Applause.)
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SECRETARY CLINTON: Well, thank you very much, Governor, and I very, very greatly appreciate your facilitating this, and I heartily endorse your last comment about an action plan, because clearly, it would be very helpful to have some kind of document come out of this meeting that would summarize the points that were made and look to see how they could be realized.
Let me just respond both generally and specifically. On the general point, I think it has been challenging for many businesses, as some of you alluded to, to grow and prosper under difficult circumstances, whether it was the era of nationalization or the era of terrorism. You have faced a lot of challenges. And many of you have seen those challenges through and prospered despite them. But I think we have to start from the premise that anything that can be done to improve the business climate has to be done.
And of course, the points that were made are important. Market access has to be greater. We will certainly work on that from our perspective. The reconstruction opportunity zone is just one approach. You also mentioned free trade agreements and other kinds of possible market opening actions. But there are also steps that could be taken, again, alluded to by several of you.
The government is working on a transit trade agreement with Afghanistan. What is the point of that? To open up Central Asia to Pakistan, to create a transit route from Central Asia to Pakistan (inaudible). I mean, anyone who looks at a map of Pakistan sees how strategically located it is between India and China and Iran and, of course, to the north. This is one of the issues that the government’s been working on. It’s been somewhat delayed because of the inconclusiveness of the Afghan elections. But we’re going to work very hard to get this done by the end of the year, and the business community could help. So let the government know it’s a priority.
Second, trade with India; one of you mentioned trade with India. I know that this is part of a much larger complex of issues. But I have no doubt that opening up trade between Pakistan and India would be a great boon for Pakistani businesses. And if you look at how small the trade is now, the potential is almost unlimited. But, of course, that is a decision that only the people and governments of Pakistan and India can take for themselves.
Unemployment is rooted in lack of opportunity and lack of skills. There’s no doubt about the work ethic, but there is a lot of concern about the education and training of the work force. And that can only be addressed through a system of better education, of training, programs both run by the private sector as well as those in the public sector. And it would certainly be helpful and we would be more than glad to work with you on this if you could see what shortcuts where you’re trying to change educational levels over a generation – what could be done in the shorter term to help prepare people for the jobs that are here today as well as the jobs of the future.
I think it’s very important, as one of you noted, to look for ways to add value to products. And just in my brief review of the economic prospects for doing that, agriculture stands out. To add value to the agricultural product of Pakistan could revolutionize the income of rural people, create a significant additional opportunity for growth in the GDP. There are some good models around to do that. You mentioned the dairy-cotton-wheat, the needles problems, the waste problems, the water irrigation problems. That’s another area that we would be very willing to work with you on because we know that it is income stream for 65 percent of the population. And we know that there are some fixes that could be made. I know that the government is looking at trying to encourage research into heartier feed stock so that the drought and the other conditions would not be as damaging.
But there also has to be some attention paid to storage facilities, the refrigeration facilities who (inaudible) the market roads, the kind of infrastructure that would add the value and increase the productivity. And it could be done in the space of two years. This has a – this is not like building a field plan or some other big capital investment. This requires a sense of organization with many moving parts, but the payoff is much quicker.
And you may have heard that President Obama asked me to head up our government’s food security program, and in our review, what we concluded is that in the 1960s and ‘70s, most of the food aid that not only our government, but other governments and private organizations like the Rockefeller Foundation invested went into agriculture, increasing agricultural productivity. Somewhere in the 1980s or so, we began to shift out of supporting agriculture to supporting emergency feeding programs and aid. It’s backwards, and we need to get back to really investing in agriculture. And I don’t know all the reasons why everybody moved away from that, but we’ve got to get back to it because it is so fundamental. And we’ve done a lot of work and we’d be happy to share that both with the government and with any of you who are interested; definitely one of our follow-up actions.
There is no doubt that energy is at the heart of many of the economic problems that Pakistan faces – the unreliability, the erratic cross-structure, the failure to capture the full load that is produced. It’s just a lot of problems. And one of the things that Ambassador Holbrooke’s team has done is to do an in-depth study of what are the most difficult issues, but what could be addressed in a very systematic way.
So as I said earlier, we made our announcement yesterday. But I appreciate the kind of chicken-and-egg issue that you were talking about – the more access, the more economic development, the greater the energy challenges. And I think that there is no prohibition that I know of internationally, and I asked Minister Qureshi whether there had been any prohibition nationally under developing your coal deposits. Now, obviously, that is not the best thing for the climate, but everybody knows that. But many of your neighbors are producing coal faster than they can even talk about it. It’s unfortunate, but it’s a fact that coal is going to remain a part of the energy load until we can transition to cleaner forms of energy.
So getting the resources to exploit your coal as opposed to being dependent upon imported energy is a choice for you to make, but it is certainly a choice that your neighbors have made. And that’s something that should attract foreign investment and should attract capital investment within your own country. And we don’t know how we’re going to proceed on the climate change issue. We’re working hard to come to some framework before Copenhagen, but coal will be, for the foreseeable future, part of the energy mix. And if you have these kinds of reserves, you should see the best and cleanest technology for their extraction and their use going forward.
I appreciate too the idea of a sustainable, long-term partnership, and to highlight the opportunities that exist and to use the tools that are already at our disposal, tools like OPIC or the Export-Import Bank or making sure that travel visas get issued. These are all the kind of nuts-and-bolts issues that we can address and try to resolve together.
But I think too that it is only fair to take a hard look internally about what Pakistan needs to do. And at the risk of maybe sounding undiplomatic, Pakistan has to have more internal investment in your public services and in your business opportunities. By any fair measure, for example, the percentage of taxes of GDP is among the lowest in the world. The United States, we tax ourselves, depending upon who is in power, somewhere between 16 and 23 percent of GDP, and right now, it usually hovers around the 20 percent. You’re less than half of that.
And so at some point, when you ask for partnership, you have to ask what the equity state is that Pakistan itself is looking to make, because it is difficult to go to our taxpayers and say we consider Pakistan a strategic partner, we consider it a long-term friend and ally, we have supported it since its inception in 1947, we want to continue to do so, and have our taxpayers and our members of Congress say, well, we want to help those who help themselves, and we tax everything that moves and doesn’t move, and that’s not what we see happening in Pakistan.
And I can say that because I think there has to be, in any partnership, but more importantly in any plan for your own economic future, a hard look at where you’re going to get the resources to meet these needs. You do have somewhere between 170 and 180 million people. Your population is projected to be about 300 million as the current birth rates, which are among the highest in the world, continue – 2.6 birth rate. I don’t know what you’re going to do with that kind of challenge unless you start planning right now.
And despite the fact that you have all of these wonderful assets that we have been talking about, Pakistan ranks at about 142nd on the Human Development Index. So as we sit here in this absolutely magnificent building, as we talk to people who are educated and worldly and successful, it doesn’t reflect what I saw last night when I handed out those certificates to the very poor women who had come to collect them.
So I think that it is important for us to do our part, and I am here to make that commitment. But that partnership and that trust deficit that was referred to can only be dealt with by an open and candid conversation. We have been friends and allies. We’ve gone through good times and bad times. As somebody said to me earlier in one of my meetings, it’s like a marriage; sometimes we just get really put out with each other. And I said yes, but we don’t want a divorce. What we want is to keep working to the benefit of our countries and our people, and, from my perspective, to really see the time when Pakistan realizes its destiny. I mean, strategically, geographically, in every sense, it’s all there. But it has to be put together by the people of Pakistan.
We are willing to help, and President Obama and I have a very personal commitment to this relationship that we will carry through on. And I look forward to this kind of conversation and then the follow-up call to action and work – the hard work – that’s translating the hopes into the reality that’s on the ground that will realize the kind of economic prosperity that the people of Pakistan deserve.
Thank you all very much. (Applause.)
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