quinta-feira, setembro 09, 2010

Censura na internet: Big Brother is Wathching You

Por favor, não me diga, não me conte, não me mostre...
Estas poderiam ser as recomendações dos censores nacionais a conteúdos julgados "problemáticos" na internet. O Brasil é líder nesse tipo de demanda, talvez por ativismo judicial.
Paulo Roberto de Almeida

The future of the internet
A virtual counter-revolution

The Economist, September 2nd, 2010

The internet has been a great unifier of people, companies and online networks. Powerful forces are threatening to balkanise it
A fragmenting virtual world

THE first internet boom, a decade and a half ago, resembled a religious movement. Omnipresent cyber-gurus, often framed by colourful PowerPoint presentations reminiscent of stained glass, prophesied a digital paradise in which not only would commerce be frictionless and growth exponential, but democracy would be direct and the nation-state would no longer exist. One, John-Perry Barlow, even penned “A Declaration of the Independence of Cyberspace”.

Even though all this sounded Utopian when it was preached, it reflected online reality pretty accurately. The internet was a wide-open space, a new frontier. For the first time, anyone could communicate electronically with anyone else—globally and essentially free of charge. Anyone was able to create a website or an online shop, which could be reached from anywhere in the world using a simple piece of software called a browser, without asking anyone else for permission. The control of information, opinion and commerce by governments—or big companies, for that matter—indeed appeared to be a thing of the past. “You have no sovereignty where we gather,” Mr Barlow wrote.

The lofty discourse on “cyberspace” has long changed. Even the term now sounds passé. Today another overused celestial metaphor holds sway: the “cloud” is code for all kinds of digital services generated in warehouses packed with computers, called data centres, and distributed over the internet. Most of the talk, though, concerns more earthly matters: privacy, antitrust, Google’s woes in China, mobile applications, green information technology (IT). Only Apple’s latest iSomethings seem to inspire religious fervour, as they did again this week.

Again, this is a fair reflection of what is happening on the internet. Fifteen years after its first manifestation as a global, unifying network, it has entered its second phase: it appears to be balkanising, torn apart by three separate, but related forces.

First, governments are increasingly reasserting their sovereignty. Recently several countries have demanded that their law-enforcement agencies have access to e-mails sent from BlackBerry smart-phones. This week India, which had threatened to cut off BlackBerry service at the end of August, granted RIM, the device’s maker, an extra two months while authorities consider the firm’s proposal to comply. However, it has also said that it is going after other communication-service providers, notably Google and Skype.

Second, big IT companies are building their own digital territories, where they set the rules and control or limit connections to other parts of the internet. Third, network owners would like to treat different types of traffic differently, in effect creating faster and slower lanes on the internet.

It is still too early to say that the internet has fragmented into “internets”, but there is a danger that it may splinter along geographical and commercial boundaries. (The picture above is a visual representation of the “nationality” of traffic on the internet, created by the University of California’s Co-operative Association for Internet Data Analysis: America is in pink, Britain in dark blue, Italy in pale blue, Sweden in green and unknown countries in white.) Just as it was not preordained that the internet would become one global network where the same rules applied to everyone, everywhere, it is not certain that it will stay that way, says Kevin Werbach, a professor at the Wharton School of the University of Pennsylvania.

To grasp why the internet might unravel, it is necessary to understand how, in the words of Mr Werbach, “it pulled itself together” in the first place. Even today, this seems like something of a miracle. In the physical world, most networks—railways, airlines, telephone systems—are collections of more or less connected islands. Before the internet and the world wide web came along, this balkanised model was also the norm online. For a long time, for instance, AOL and CompuServe would not even exchange e-mails.

Economists point to “network effects” to explain why the internet managed to supplant these proprietary services. Everybody had strong incentives to join: consumers, companies and, most important, the networks themselves (the internet is in fact a “network of networks”). The more the internet grew, the greater the benefits became. And its founding fathers created the basis for this virtuous circle by making it easy for networks to hook up and for individuals to get wired.

Yet economics alone do not explain why the internet rather than a proprietary service prevailed (as Microsoft did in software for personal computers, or PCs). One reason may be that the rapid rise of the internet, originally an obscure academic network funded by America’s Department of Defence, took everyone by surprise. “The internet was able to develop quietly and organically for years before it became widely known,” writes Jonathan Zittrain, a professor at Harvard University, in his 2008 book, “The Future of the Internet—And How To Stop It”. In other words, had telecoms firms, for instance, suspected how big it would become, they might have tried earlier to change its rules.

Whatever the cause, the open internet has been a boon for humanity. It has not only allowed companies and other organisations of all sorts to become more efficient, but enabled other forms of production, notably “open source” methods, in which groups of people, often volunteers, all over the world develop products, mostly pieces of software, collectively. Individuals have access to more information than ever, communicate more freely and form groups of like-minded people more easily.

Even more important, the internet is an open platform, rather than one built for a specific service, like the telephone network. Mr Zittrain calls it “generative”: people can tinker with it, creating new services and elbowing existing ones aside. Any young company can build a device or develop an application that connects to the internet, provided it follows certain, mostly technical conventions. In a more closed and controlled environment, an Amazon, a Facebook or a Google would probably never have blossomed as it did.

Forces of fragmentation
However, this very success has given rise to the forces that are now pulling the internet apart. The cracks are most visible along geographical boundaries. The internet is too important for governments to ignore. They are increasingly finding ways to enforce their laws in the digital realm. The most prominent is China’s “great firewall”. The Chinese authorities are using the same technology that companies use to stop employees accessing particular websites and online services. This is why Google at first decided to censor its Chinese search service: there was no other way to be widely accessible in the country.

But China is by no means the only country erecting borders in cyberspace. The Australian government plans to build a firewall to block material showing the sexual abuse of children and other criminal or offensive content. The OpenNet Initiative, an advocacy group, lists more than a dozen countries that block internet content for political, social and security reasons. They do not need especially clever technology: governments go increasingly after dominant online firms because they are easy to get hold of. In April Google published the numbers of requests it had received from official agencies to remove content or provide information about users. Brazil led both counts (see chart 1).

Not every request or barrier has a sinister motive. Australia’s firewall is a case in point, even if it is a clumsy way of enforcing the law. It would be another matter, however, if governments started tinkering with the internet’s address book, the Domain Name System (DNS). This allows the network to look up the computer on which a website lives. If a country started its own DNS, it could better control what people can see. Some fear this is precisely what China and others might do one day.

To confuse matters, the DNS is already splintering for a good reason. It was designed for the Latin alphabet, which was fine when most internet users came from the West. But because more and more netizens live in other parts of the world—China boasts 420m—last October the Internet Corporation for Assigned Names and Numbers, the body that oversees the DNS, allowed domain names entirely in other scripts. This makes things easier for people in, say, China, Japan or Russia, but marks another step towards the renationalisation of the internet.

Many media companies have already gone one step further. They use another part of the internet’s address system, the “IP numbers” that identify computers on the network, to block access to content if consumers are not in certain countries. Try viewing a television show on Hulu, a popular American video service, from Europe and it will tell you: “We’re sorry, currently our video library can only be streamed within the United States.” Similarly, Spotify, a popular European music-streaming service, cannot be reached from America.

Yet it is another kind of commercial attempt to carve up the internet that is causing more concern. Devotees of a unified cyberspace are worried that the online world will soon start looking as it did before the internet took over: a collection of more or less connected proprietary islands reminiscent of AOL and CompuServe. One of them could even become as dominant as Microsoft in PC software. “We’re heading into a war for control of the web,” Tim O’Reilly, an internet savant who heads O’Reilly Media, a publishing house, wrote late last year. “And in the end, it’s more than that, it’s a war against the web as an interoperable platform.”

The trend to more closed systems is undeniable. Take Facebook, the web’s biggest social network. The site is a fast-growing, semi-open platform with more than 500m registered users. Its American contingent spends on average more than six hours a month on the site and less than two on Google. Users have identities specific to Facebook and communicate mostly via internal messages. The firm has its own rules, covering, for instance, which third-party applications may run and how personal data are dealt with.

Apple is even more of a world apart. From its iPhone and iPad, people mostly get access to online services not through a conventional browser but via specialised applications available only from the company’s “App Store”. Granted, the store has lots of apps—about 250,000—but Apple nonetheless controls which ones make it onto its platform. It has used that power to keep out products it does not like, including things that can be construed as pornographic or that might interfere with its business, such as an app for Google’s telephone service. Apple’s press conference to show off its new wares on September 1st was streamed live over the internet but could be seen only on its own devices.

Even Google can be seen as a platform unto itself, if a very open one. The world’s biggest search engine now offers dozens of services, from news aggregation to word processing, all of which are tied together and run on a global network of dozens of huge data-centres. Yet Google’s most important service is its online advertising platform, which serves most text-based ads on the web. Being the company’s main source of revenue, critics say, it is hardly a model of openness and transparency.

There is no conspiracy behind the emergence of these platforms. Firms are in business to make money. And such phenomena as social networks and online advertising exhibit strong network effects, meaning that a dominant market leader is likely to emerge. What is more, most users these days are not experts, but average consumers, who want secure, reliable products. To create a good experience on mobile devices, which more and more people will use to get onto the internet, hardware, software and services must be more tightly integrated than on PCs.

Net neutrality, or not?
Discussion of these proprietary platforms is only beginning. A lot of ink, however, has already been spilt on another form of balkanisation: in the plumbing of the internet. Most of this debate, particularly in America, is about “net neutrality”. This is one of the internet’s founding principles: that every packet of data, regardless of its contents, should be treated the same way, and the best effort should always be made to forward it.

Proponents of this principle want it to become law, out of concern that network owners will breach it if they can. Their nightmare is what Tim Wu, a professor at Columbia University, calls “the Tony Soprano vision of networking”, alluding to a television series about a mafia family. If operators were allowed to charge for better service, they could extort protection money from every website. Those not willing to pay for their data to be transmitted quickly would be left to crawl in the slow lane. “Allowing broadband carriers to control what people see and do online would fundamentally undermine the principles that have made the internet such a success,” said Vinton Cerf, one of the network’s founding fathers (who now works for Google), at a hearing in Congress.

Opponents of the enshrining of net neutrality in law—not just self-interested telecoms firms, but also experts like Dave Farber, another internet elder—argue that it would be counterproductive. Outlawing discrimination of any kind could discourage operators from investing to differentiate their networks. And given the rapid growth in file-sharing and video, operators may have good reason to manage data flows, lest other traffic be crowded out.

The issue is not as black and white as it seems. The internet has never been as neutral as some would have it. Network providers do not guarantee a certain quality of service, but merely promise to do their best. That may not matter for personal e-mails, but it does for time-sensitive data such as video. What is more, large internet firms like Amazon and Google have long redirected traffic onto private fast lanes that bypass the public internet to speed up access to their websites.

Whether such preferential treatment becomes more widespread, and even extortionary, will probably depend on the market and how it is regulated. It is telling that net neutrality has become far more politically controversial in America than it has elsewhere. This is a reflection of the relative lack of competition in America’s broadband market. In Europe and Japan, “open access” rules require network operators to lease parts of their networks to other firms on a wholesale basis, thus boosting competition. A study comparing broadband markets, published in 2009 by Harvard University’s Berkman Centre for Internet & Society, found that countries with such rules enjoy faster, cheaper broadband service than America, because the barrier to entry for new entrants is much lower. And if any access provider starts limiting what customers can do, they will defect to another.

America’s operators have long insisted that open-access requirements would destroy their incentive to build fast, new networks: why bother if you will be forced to share it? After intense lobbying, America’s telecoms regulators bought this argument. But the lesson from elsewhere in the industrialised world is that it is not true. The result, however, is that America has a small number of powerful network operators, prompting concern that they will abuse their power unless they are compelled, by a net-neutrality law, to treat all traffic equally. Rather than trying to mandate fairness in this way—net neutrality is very hard to define or enforce—it makes more sense to address the underlying problem: the lack of competition.

It should come as no surprise that the internet is being pulled apart on every level. “While technology can gravely wound governments, it rarely kills them,” Debora Spar, president of Barnard College at Columbia University, wrote several years ago in her book, “Ruling the Waves”. “This was all inevitable,” argues Chris Anderson, the editor of Wired, under the headline “The Web is Dead” in the September issue of the magazine. “A technology is invented, it spreads, a thousand flowers bloom, and then someone finds a way to own it, locking out others.”

Yet predictions are hazardous, particularly in IT. Governments may yet realise that a freer internet is good not just for their economies, but also for their societies. Consumers may decide that it is unwise to entrust all their secrets to a single online firm such as Facebook, and decamp to less insular alternatives, such as Diaspora.

Similarly, more open technology could also still prevail in the mobile industry. Android, Google’s smart-phone platform, which is less closed than Apple’s, is growing rapidly and gained more subscribers in America than the iPhone in the first half of this year. Intel and Nokia, the world’s biggest chipmaker and the biggest manufacturer of telephone handsets, are pushing an even more open platform called MeeGo. And as mobile devices and networks improve, a standards-based browser could become the dominant access software on the wireless internet as well.

If, however, the internet continues to go the other way, this would be bad news. Should the network become a collection of proprietary islands accessed by devices controlled remotely by their vendors, the internet would lose much of its “generativity”, warns Harvard’s Mr Zittrain. Innovation would slow down and the next Amazon, Google or Facebook could simply be, well, Amazon, Google or Facebook.

The danger is not that these islands become physically separated, says Andrew Odlyzko, a professor at the University of Minnesota. There is just too much value in universal connectivity, he argues. “The real question is how high the walls between these walled gardens will be.” Still, if the internet loses too much of its universality, cautions Mr Werbach of the Wharton School, it may indeed fall apart, just as world trade can collapse if there is too much protectionism. Theory demonstrates that interconnected networks such as the internet can grow quickly, he explains—but also that they can dissolve quickly. “This looks rather unlikely today, but if it happens, it will be too late to do anything about it.”

US Department of State - Secretary Hillary Clinton statement and interview

Remarks on United States Foreign Policy
Hillary Rodham Clinton
Secretary of State
Council on Foreign Relations
Washington, DC
September 8, 2010

SECRETARY CLINTON: Thank you very much, Richard. And it is a pleasure to be back here at the Council with two working arms. That is something that I am very happy and grateful for, and I thank you for referencing what has been the most difficult balancing act of my time as Secretary of State: Pulling off my daughter’s wedding, which I kept telling people as I traveled around the world to all of the hot spots, was much more stressful than anything else on my plate. (Laughter.) It is a real delight to see so many friends and colleagues and to have this opportunity here once again to discuss with you where we are as a country and where I hope we are headed.
Now, it’s clear that many of us and many in our audience are just coming off of summer vacation. Yesterday at the State Department felt a little bit like the first day of school. Everyone showed up for our morning meeting and – (laughter) – looking a lot healthier than they did when they left. And it is also obvious that there isn’t any rest for any of us. The events of the past few weeks have kept us busy.
We are working to support direct talks between the Israelis and the Palestinians, and next week I will travel to Egypt and Jerusalem for the second round of these negotiations. In Iraq, where our combat mission has ended, we are transferring and transitioning to an unprecedented civilian-led partnership. We are stepping up international pressure on Iran to negotiate seriously on its nuclear program. We are working with Pakistan as it recovers from devastating floods and continues to combat violent extremism. And of course, the war in Afghanistan is always at the top of our minds as well as our agenda.
Now, none of these challenges exist in isolation. Consider the Middle East peace talks. At one level, they are bilateral negotiations involving two peoples and a relatively small strip of land. But step back and it becomes clear how important the regional dimensions and even the global dimensions of what started last week are. And what a significant role institutions like the Quartet, consisting of the United States and Russia and the European Union and the UN, as well as the Arab League, are playing, and equally, if not more so, how vital American participation really is.
Solving foreign policy problems today requires us to think both regionally and globally, to see the intersections and connections linking nations and regions and interests, to bring people together as only America can.
I think the world is counting on us today as it has in the past. When old adversaries need an honest broker or fundamental freedoms need a champion, people turn to us. When the earth shakes or rivers overflow their banks, when pandemics rage or simmering tensions burst into violence, the world looks to us. I see it on the faces of the people I meet as I travel, not just the young people who still dream about America’s promise of opportunity and equality, but also seasoned diplomats and political leaders, who, whether or not they admit it, see the principled commitment and can-do spirit that comes with American engagement. And they do look to America not just to engage, but to lead.
And nothing makes me prouder than to represent this great nation in the far corners of the world. I am the daughter of a man who grew up in the Depression and trained young sailors to fight in the Pacific. And I am the mother of a young woman who is part of a generation of Americans who are engaging the world in new and exciting ways. And in both those stories, I see the promise and the progress of America, and I have the most profound faith in our people. It has never been stronger.
Now, I know that these are difficult days for many Americans, but difficulties and adversities have never defeated or deflated this country. Throughout our history, through hot wars and cold, through economic struggles, and the long march to a more perfect union, Americans have always risen to the challenges we have faced. That is who we are. It is in our DNA. We do believe there are no limits on what is possible or what can be achieved.
And now, after years of war and uncertainty, people are wondering what the future holds, at home and abroad.
So let me say it clearly: The United States can, must, and will lead in this new century.
Indeed, the complexities and connections of today’s world have yielded a new American Moment, a moment when our global leadership is essential, even if we must often lead in new ways. A moment when those things that make us who we are as a nation – our openness and innovation, our determination and devotion to core values – have never been more needed.
This is a moment that must be seized through hard work and bold decisions to lay the foundations for lasting American leadership for decades to come.
But now, this is no argument for America to go it alone; far from it. The world looks to us because America has the reach and resolve to mobilize the shared effort needed to solve problems on a global scale in defense of our own interests, but also as a force for progress. In this we have no rival.
For the United States, global leadership is both a responsibility and an unparalleled opportunity.
When I came to the Council on Foreign Relations a little over a year ago to discuss the Obama Administration’s vision of American leadership in a changing world, I called for a new global architecture that could help nations come together as partners to solve shared problems. Today I’d like to expand on this idea, but especially to explain how we are putting it into practice.
Now, architecture is the art and science of designing structures that serve our common purposes, built to last and to withstand stress. And that is what we seek to build; a network of alliances and partnerships, regional organizations and global institutions, that is durable and dynamic enough to help us meet today’s challenges and adapt to threats that we cannot even conceive of, just as our parents never dreamt of melting glaciers or dirty bombs.
We know this can be done, because President Obama’s predecessors in the White House and mine in the State Department did it before. After the Second World War, the nation that had built the transcontinental railroad, the assembly line, the skyscraper, turned its attention to constructing the pillars of global cooperation. The third World War that so many feared never came. And many millions of people were lifted out of poverty and exercised their human rights for the first time. Those were the benefits of a global architecture forged over many years by American leaders from both political parties.
But this architecture served a different time and a different world. As President Obama has said, today it “is buckling under the weight of new threats.” The major powers are at peace, but new actors – good and bad – are increasingly shaping international affairs. The challenges we face are more complex than ever, and so are the responses needed to meet them. That is why we are building a global architecture that reflects and harnesses the realities of the 21st century.
We know that alliances, partnerships, and institutions cannot and do not solve problems by themselves. Only people and nations solve problems. But an architecture can make it easier to act effectively by supporting the coalition-forging and compromise-building that is the daily fare of diplomacy. It can make it easier to identify common interests and convert them to common action. And it can help integrate emerging powers into an international community with clear obligations and expectations.
We have no illusions that these goals can be achieved overnight or that countries will suddenly cease to have divergent interests. We know that the test of our leadership is how we manage those differences and how we galvanize nations and peoples around their commonalities even when they do have diverse histories, unequal resources, and competing world-views. And we know that our approach to solving problems must vary from issue to issue and partner to partner. American leadership, therefore, must be as dynamic as the challenges we face.
But there are two constants of our leadership, which lie at the heart of the President’s National Security Strategy released in May, and which run through everything we do:
First, national renewal aimed at strengthening the sources of American power, especially our economic might and moral authority. This is about more than ensuring we have the resources we need to conduct foreign policy, although that is critically important. I remember when I was a young girl, I was stirred by President Eisenhower’s assertion that education would help us win the Cold War. I really took it to heart. I didn’t like mathematics, but I figured I had to study it for my country. (Laughter.) I also believed that we needed to invest in our people and their talents and in our infrastructure.
President Eisenhower was right. America’s greatness has always flowed in large part from the dynamism of our economy and the creativity of our people. Today, more than ever, our ability to exercise global leadership depends on building a strong foundation here at home. That’s why rising debt and crumbling infrastructure pose very real long-term national security threats. President Obama understands this. You can see it in the new economic initiatives that he announced this week and in his relentless focus on turning the economy around.
The second constant is international diplomacy – good, old-fashioned diplomacy – aimed at rallying nations to solve common problems and achieve shared aspirations. As Dean Acheson put it in 1951, “the ability to evoke support from others” is “quite as important as the capacity to compel.” To this end, we have repaired old alliances and forged new partnerships. We have strengthened institutions that provide incentives for cooperation, disincentives for sitting on the sidelines, and defenses against those who would undermine global progress. And we’ve championed the values that are at the core of the American character.
Now there should be no mistake. Of course, this Administration is also committed to maintaining the greatest military in the history of the world and, if needed, to vigorously defend ourselves and our friends.
After more than a year and a half, we have begun to see the dividends of this strategy. We are advancing America's interests and making progress on some of our most pressing challenges. Today, we can say with confidence that this model of American leadership, which brings every tool at our disposal to be put to work on behalf of our national interest works, and that it offers the best hope in a dangerous world. I’d like to outline several steps we’re taking with respect to implementing this strategy.
First, we have turned to our closest allies, the nations that share our most fundamental values and interests, and our commitment to solving common problems. From Europe and North America to East Asia and the Pacific, we are renewing and deepening the alliances that are the cornerstone of global security and prosperity.
And let me say a few words in particular about Europe. In November, I was privileged to help mark the 20th anniversary of the fall of the Berlin Wall, which closed the door on Europe’s broken past. And this summer in Poland, we marked the 10th anniversary of the Community of Democracies, which looks ahead to a brighter tomorrow. At both events, I was reminded of how far we have come together. What strength we draw from the common wellspring of our values and aspirations. The bonds between Europe and America were forged through war and watchful peace, but they are rooted in our shared commitment to freedom, democracy and human dignity. Today, we are working with our allies there on nearly every global challenge. President Obama and I have reached out to strengthen both our bilateral and multilateral ties in Europe.
And the post-Lisbon EU is developing an expanded global role, and our relationship is growing and changing as a result. Now, there will be some challenges as we adjust to influential new players such as the EU Parliament, but these are debates among friends that will always be secondary to the fundamental interests and values we share. And there is no doubt that a stronger EU is good for America and good for the world.
And of course, NATO remains the world’s most successful alliance. Together with our allies, including new NATO members in Central and Eastern Europe, we are crafting a new Strategic Concept that will help us meet not only traditional threats, but also emerging ones like cyber security and nuclear proliferation. Just yesterday, President Obama and I discussed these issues with NATO Secretary General Rasmussen.
After the United States was attacked on 9/11, our allies invoked Article V of the NATO charter for the first time. They joined us in the fight against al-Qaida and the Taliban. And after President Obama refocused the mission in Afghanistan, they contributed thousands of new troops and significant technical assistance. We honor the sacrifices our allies continue to make, and recognize that we are always strongest when we work together.
A core principle of all our alliances is shared responsibility. Each nation must step up to do its part. An American leadership does not mean we do everything ourselves. We contribute our share, often the largest share, but we also have high expectations of the governments and peoples we work with.
Helping other nations develop that capacity to solve their own problems – and participate in solving other shared problems – has long been a hallmark of American leadership. Our contributions are well-known to the reconstruction of Europe, to the transformation of Japan and Germany. We moved them from aggressors to allies, to the growth of South Korea into a vibrant democracy that now contributes to global progress. These are among some of American foreign policy’s proudest achievements.
In this interconnected age, America’s security and prosperity depend more than ever on the ability of others to take responsibility for defusing threats and meeting challenges in their own countries and regions.
That’s why a second step in our strategy for global leadership is to help develop the capacity of developing partners. To help countries obtain the tools and support they need to solve their own problems. To help people lift themselves, their families, and their societies out of poverty, away from extremism and towards sustainable progress.
We in the Obama Administration view development as a strategic, economic, and moral imperative. It is central to advancing American interests – as central as diplomacy and defense. Our approach is not, however, development for development’s sake; it is an integrated strategy for solving problems.
Look at the work to build institutions and spur economic development in the Palestinian territories, something that Jim Wolfensohn knows firsthand. The United States invests hundreds of millions of dollars to build Palestinian capacity because we know that progress on the ground improves security and helps lay the foundation for a future Palestinian state. And it creates more favorable conditions for negotiations. The confidence that the new Palestinian security force has displayed has affected the calculus of Israeli leadership, and the United States was behind building that security force along with other partners like Jordan. But the principal responsibility rests on the decisions made by the Palestinian Authority themselves. So with our help and their courage and commitment, we see progress that influences negotiations and holds out a greater promise for an eventual agreement.
Now, this is the right thing to do, of course. We agree with that. But make no mistake, it is rooted in our understanding that when all people are given more tools of opportunity, they are more willing to actually take risks for peace. And that’s particularly true when it comes to women. You knew I would not get through this speech without mentioning women and women’s rights. We believe strongly that investing in opportunities for women drives social and economic progress that benefits not only their families and societies, but has a rebound effect that benefits others, including us as well.
Similarly, investments in countries like Bangladesh and Ghana bet on a future that they will join with neighbors and others in not only solving their own rather difficult challenges of poverty, but then helping to be bulwarks that send a different message to their regions. We take into account also the countries that are growing rapidly and already exercising influence, countries like China and India, Turkey, Mexico, Brazil, Indonesia, South Africa, as well as Russia.
Our third major step, therefore, has been to deepen engagement with these emerging centers of influence. We and our allies, indeed, people everywhere have a stake and they’re playing constructive, regional, and global roles. Because being a 21st century power means having to accept a share of the burden of solving common problems, and of abiding by a set of the rules of the road, so to speak, on everything from intellectual property rights to fundamental freedoms.
So through expanded bilateral consultation and within the context of regional and global institutions, we do expect these countries to begin to assume greater responsibility. For example, in our most recent Strategic and Economic Dialogue in China, for the first time, development was on the agenda, something that the Chinese are doing in conjunction with their commercial interests, but which we wanted to begin to talk about so that we could better cooperate and we could perhaps share lessons learned about how best to pursue development. In one country in Africa, we’re building a hospital, the Chinese are building a road; we thought it was a good idea that the road would actually go to the hospital. It’s that kind of discussion that we think can make a difference for the people that we are both engaged with.
India, the world’s largest democracy, has a very large convergence of fundamental values and a broad range of both national and regional interests. And we are laying the foundation for an indispensible partnership. President Obama will use his visit in November to take our relationship to the next level.
With Russia, when we took office, it was amid cooling to cold relations and a return to Cold War suspicion. Now, this may have invigorated spy novelists and armchair strategists, but anyone serious about solving global problems such as nuclear proliferation knew that without Russia and the United States working together, little would be achieved. So we refocused the relationship. We offered a relationship based on not only mutual respect, but also mutual responsibility.
And in the course of the last 18 months, we have a historic new arms reduction treaty, which the Senate will take up next week; cooperation with China and the UN Security Council on tough new sanctions against both Iran and North Korea; a transit agreement to support our efforts in Afghanistan; a new bilateral presidential commission and civil society exchange that are forging closer people-to-people ties; and, of course, as we were reminded this past summer, the spy novelists still have plenty to write about, so it’s kind of a win-win. (Laughter.)
Now, working with these emerging powers is not always smooth or easy. Disagreements are inevitable. And on certain issues such as human rights with China or Russian occupation of Georgia, we simply do not see eye to eye, and the United States will not hesitate to speak out and stand our ground. When these nations do not accept the responsibility that accrues with expanding influence, we will do all that we can to encourage them to change course while we will press ahead with other partners. But we know it will be difficult, if not impossible, to forge the kind of future that we expect in the 21st century without enhanced comprehensive cooperation.
So our goal is to establish productive relationships that survive the times when we do not agree and that enable us to continue to work together. And a central element of that is to engage directly with the people of these nations. Technology and the speed of communication, along with the spread of democracy, at least in technology, has empowered people to speak up and demand a say in their own futures. Public opinions and passions matter even in authoritarian states. So in nearly every country I visit, I don’t just meet with government officials. In Russia, I did an interview on one of the few remaining independent radio stations. In Saudi Arabia, I held a town hall at a women’s college. In Pakistan, I answered questions from every journalist, student, and business leader we could find.
While we expand our relationships, therefore, with the emerging centers of influence, we are working to engage them with their own publics. Time and time again, I hear, as I do interviews from Indonesia to the Democratic Republic of Congo to Brazil, how novel it seems to people that an official would come and take questions from the public. So we’re not only engaging the public and expanding and explaining America’s values and views; we’re also sending a message to those leaders. And as we do so, we are making it clear that we expect more from them and that we do want the kind of challenges that we face to be addressed in a regional context.
Think about the complex dynamics around violent extremism both in Afghanistan and Pakistan and emerging out of those two countries to the rest of the world, or the process of reintegrating Iraq into its neighborhood, which is a very tough neighborhood indeed. Regional dynamics will not remain static. And there are a lot of other players who are working day and night to influence the outcomes of those particular situations.
And we know too that other emerging powers like China and Brazil have their own notions about what the right outcome would be or what regional institutions should look like, and they are busy pursuing them. So our friends, our allies, and people around the world who share our values depend on us to remain robustly engaged. So the fourth step in our strategy has been to reinvigorate America’s commitment to be an active transatlantic, transpacific, and hemispheric leader.
In a series of speeches and ongoing consultations with our partners, we’ve laid out core principles for regional cooperation and we’ve worked to strengthen institutions to adapt to these new circumstances.
Look at the Asia-Pacific region. When we took office, there was a perception, fair or not, that America was absent. So we made it clear from the beginning that we were back. We reaffirmed our bonds with close allies like South Korea, Japan, Australia, and we deepened our engagement with China and India.
Now, the Asia-Pacific currently has few robust institutions to foster effective cooperation and reduce the friction of competition, so we began building a more coherent regional architecture with the United States deeply involved.
On the economic front, we’ve expanded our relationship with APEC, which includes four of America’s top trading partners and receives 60 percent of our exports. We want to realize the benefits from greater economic integration. In order to do that, we have to be willing to play. To this end, we are working to ratify a free trade agreement with South Korea, we’re pursuing a regional agreement with the nations of the Trans-Pacific Partnership, and we know that that will help create new jobs and opportunities here at home.
We’ve also decided to engage with the East Asia Summit, encouraging its development into a foundational security and political institution. I will be representing the United States at this year’s East Asia Summit in Hanoi, leading up to presidential participation in 2011.
And in Southeast Asia, ASEAN actually encompasses more than 600 million people in its member nations. There is more U.S. business investment in the ASEAN nations than in China. So we have bolstered our relationship by signing the Treaty of Amity and Cooperation, announcing our intention to open a mission and name an ambassador to ASEAN in Jakarta, and a commitment to holding annual U.S.-ASEAN summits.
Because we know the Asia-Pacific region will grow in importance and developing these institutions will establish habits of cooperation that will be vital to stability and prosperity.
Now, effective institutions are just as crucial at the global level. So our fifth step has been to reengage with the global institutions and to work to modernize them to meet the evolving challenges we face. We obviously need institutions that are flexible, inclusive, complementary, instead of just competing with each other over turf and jurisdiction. We need them to play productive roles that marshal our common efforts and enforce the system of rights and responsibilities.
Now, the UN remains the single most important global institution. We are constantly reminded of its value: the Security Council enacting sanctions against Iran and North Korea; peacekeepers patrolling the streets of Monrovia and Port-au-Prince; aid workers assisting flood victims in Pakistan and displaced people in Darfur; and, most recently, the UN General Assembly establishing a new entity called UN Women, which will promote gender equality and expand opportunity for women and girls, and tackle the violence and discrimination they face.
But we are also constantly reminded of its limitations. It is difficult, as many of you in this audience know, for the UN’s 192 member-states to achieve consensus on institutional reform, including and especially reforming the Security Council. We believe the United States has to play a role in reforming the UN, and we favor Security Council reform that enhances the UN's overall performance and effectiveness and efficiency. And we equally and strongly support operational reforms that enable UN field missions to deploy more rapidly, with adequate numbers of well-equipped and well-trained troops and police, and with the quality of leadership and civilian expertise they require. We will not only embrace but we will advocate management reforms and savings that prevent waste, fraud, and abuse.
Now, the UN was never intended to tackle every challenge, nor should it. So we are working with other organizations. To respond to the global financial crisis, we elevated the G-20. We convened the first-ever Nuclear Security Summit. New or old, the effectiveness of institutions depends on the commitment of their members. And we have seen a level of commitment to these enterprises that we will continue to nurture.
Now, our efforts on climate change – and I see our special envoy, Todd Stern, here – offer an example of how we are working through multiple venues and mechanisms. The United Nations Framework Convention on Climate Change process allows all of us – developed and developing, north, south, east, and west – to work within a single venue to meet this shared challenge.
But we also launched the Major Economies Forum to focus on the biggest emitters, including ourselves. And when negotiations in Copenhagen reached an impasse, President Obama and I went into a meeting with China, India, South Africa, and Brazil to try to forge a compromise. And then with our colleagues from Europe and elsewhere, we fashioned a deal that, while far from perfect, saved the summit from failure and represents progress we can build on. Because for the first time, all major economies made national commitments to curb carbon emissions and report with transparency on their mitigation efforts.
So we know that there’s a lot to be done on substantive issues, and there must continue to be an emphasis on democracy, human rights, and the rule of law, so that they are cemented into the foundations of these institutions.
This is something that I take very seriously, because there’s no point in trying to build institutions for the 21st century that don’t act to counter repression and resist pressure on human rights, that extend fundamental freedoms over time to places where they have too long been denied.
And that is our sixth major step. We are upholding and defending the universal values that are enshrined in the UN Charter and the Universal Declaration of Human Rights.
Because today, everywhere, these principles are under threat. In too many places, new democracies are struggling to grow strong roots. Authoritarian regimes are cracking down on civil society and pluralism. Some leaders see democracy as an inconvenience that gets in the way of the efficient exercise of national power.
So this world view must be confronted and challenged everywhere. Democracy needs defending. The struggle to make human rights a human reality needs champions.
And this work starts at home, where we have rejected the false choice between our security and our values. It continues around the world, where human rights are always on our diplomatic and development agendas, even with nations on whose cooperation we depend for a wide range of issues, such as Egypt, China, and Russia. We’re committed to defending these values on the digital frontiers of the 21st century. A lot has been said about our 21st century statecraft and our e-diplomacy, but we really believe that it’s an important additional tool for us to utilize.
And in Krakow this summer, I announced the creation of a new fund to support civil society and embattled NGOs around the world, a continuing focus of U.S. policy.
Now, how do all of these steps – deepening relations with allies and emerging powers, strengthening institutions and shared values – work together to advance our interests? Well, one need only look at the effort we’ve taken this past year to stop Iran’s provocative nuclear activities and its serial noncompliance with its international obligations. Now, there is a still a lot of work to be done, but we are approaching the Iranian challenge as an example of American leadership in action.
First, we began by making the United States a full partner and active participant in international diplomatic efforts regarding Iran. We had been on the sidelines, and frankly, that was not a very satisfying place to be. Through our continued willingness to engage Iran directly, we have re-energized the conversation with our allies and are removing all of those excuses for lack of progress.
Second, we have sought to frame the issue within the global nonproliferation regime in which the rules of the road are clearly defined for all parties. To lead by example, we have renewed our own disarmament efforts. Our deepened support for global institutions such as the IAEA underscores the authority of the international system. And Iran, on the other hand, continues to single itself out through its own actions, drawing even criticism for its refusal to permit IAEA inspectors to visit from Russia and China in the last days. Its intransigence represents a challenge to the rules that all countries must adhere to.
And third, we have strengthened our relationship with those countries whose help we need if diplomacy is to be successful. Through classic shoe-leather diplomacy, we’ve built a broad consensus that will welcome Iran back into the community of nations if it meets its obligations and will likewise hold Iran accountable if it continues its defiance.
This spring, the UN Security Council passed the strongest and most comprehensive set of sanctions. The European Union then followed with robust implementation of that resolution. Many other nations are implementing their own additional measures, including Australia, Canada, Norway, and most recently, Japan. So we believe Iran is beginning to feel the impact of these sanctions. But beyond what governments are doing, the international financial and commercial sectors are also starting to recognize the risks of doing business with Iran.
Sanctions and pressures, however, are not ends in themselves. They are the building blocks of leverage for a negotiated solution, to which we and our partners remain committed. The choice for Iran’s leaders is clear, and they have to decide whether they accept their obligations or increasing isolation and the costs that come with it, and we will see how Iran decides.
Now, our task going forward is to continue to develop this approach, to develop the tools that we need, and we have to strengthen civilian power. Now, when I was here last year, we were just at the beginning of making the case to Congress that we had to have more diplomats and more development experts. We had to have greater Foreign Service and Civil Service personnel. Congress has already then appropriated funds for more than 1,100 new Foreign and Civil Service officers. USAID has begun a series of reforms aimed at reestablishing it as the world’s premier development agency. Across the board, we need to rethink, reform, and recalibrate. And in a time of tight budgets, we not only have to assure our resources are spent wisely; we have to make the case to the American taxpayer and the members of Congress that this is an important investment. That’s why I launched the first-ever Quadrennial Diplomacy and Development Review. We call it the QDDR, a wholesale review of State and USAID to recommend how we can better equip, fund, and organize ourselves. I’ll be talking more about that in the coming weeks as this review is completed and published.
But we recognize the scope of the efforts we’ve undertaken. I had a lot of wonderful advice from my predecessors. And one of the most common pieces of advice was: You can either try to manage the building or manage the world; you can’t try to do both. (Laughter.) We are trying to do both, which is an impossible task to start with.
But we’re not trying to do it alone. We are forging a closer partnership with the Defense Department. Bob Gates has been one of the strongest advocates of the position that we are taking, that I am expressing today. He constantly is encouraging the Congress to give us the funds that we asked for. But there’s a legitimate question, and some of you have raised it, I know in print and elsewhere: How can you try to manage or at least address and even try to solve all of these problems?
But our response in this day where there is nothing that doesn’t come to the forefront of public awareness: What do we give up on? What do we put on the backburner? Do we sideline development? Do we put some hot conflicts on hold? Do we quit trying to prevent other conflicts from unfreezing and heating up? Do we give up on democracy and human rights? I don’t think that’s what is either possible or desirable. And it is not what Americans do. But it does require a lot of strategic patience.
When our troops come home, as they are from Iraq and eventually from Afghanistan, we’ll still be involved in diplomatic and development efforts, trying to rid the world of nuclear dangers and turn back climate change, end poverty, quell the epidemic of HIV/AIDS, tackle hunger and disease. That’s the work not of a year or even of a presidency, but of a lifetime. And it is the work of generations.
America has made generational commitments to building the kind of world that we wanted to inhabit for many decades now. We cannot turn away from that responsibility. We are a nation that has always believed we have the power to shape our own destiny and to cut a new and better path, and frankly, to bring along people who were likeminded from around the world. So we will continue to do everything we can to exercise the best traditions of American leadership at home and abroad, to build that more peaceful and prosperous future for our children and for children everywhere.
Thank you. (Applause.)
MR. HAASS: Well, thank you. And I will ask a slightly longer first question than I normally would while you fumble with that.
SECRETARY CLINTON: Thank you very much. (Laughter.) Very kind of you.
MR. HAASS: The old stall tactic, filibuster, and you may recall that from a previous life.
SECRETARY CLINTON: Yes, I do, but I never knew it would be so common. (Laughter.)
MR. HAASS: Yes, it’s – Council on Foreign Relations, we’re trying to keep up. We’re trying to keep up. Touché.
Let me start where – you okay?
MR. HAASS: Let me start where you began – where you ended rather – which was with all these things we want to do, and you called for strategic patience in Afghanistan and so forth. Yet the United States is soon approaching a point where the scale or size of our debt will exceed our GDP. It’s a question of when more than if. Where does national security contribute to the solution to running deficits of $1.5 trillion a year, or do we continue to carry out a foreign and defense policy as if we were not seriously resource constrained?
SECRETARY CLINTON: Well, Richard, first, as I said, I think that our rising debt levels poses a national security threat, and it poses a national security threat in two ways. It undermines our capacity to act in our own interests and it does constrain us where constraint may be undesirable. And it also sends a message of weakness internationally. I mean, it is very troubling to me that we are losing the ability not only to chart our own destiny, but to have the leverage that comes from this enormously effective economic engine that has powered American values and interests over so many years.
So I don’t think we have a choice. It’s a question of how we decide to deal with this debt and deficit. I mean, it is – we don’t need to go back and sort of re-litigate how we got to where we are. But it is fair to say that we fought two wars without paying for them and we had tax cuts that were not paid for either, and that has been a very deadly combination to fiscal sanity and responsibility.
So the challenge is how we get out of it by making the right decisions, not the wrong decisions. There’s a lot of wrong things we could do that would further undermine our strength. I mean, it is going to be very difficult for those decisions. And I know there’s an election going on and I know that I am, by law, out of politics, but I will say that this is not just a decision for the Congress; it’s a decision for the country. And it’s not a Republican or a Democratic decision. And there are a lot of people who know more about what needs to be done and who, frankly, have a responsible view, whose voices are not being heard right now, and I think that is a great disservice to our nation. Whether one is a Republican or a Democrat, a conservative, a progressive, whatever you call yourself, there is no free lunch and we cannot pretend that there is without doing grave harm to our country and our future generations.
So when you specifically say, well, what about diplomacy, development and defense, we will have to take our share of the burden of meeting the fiscal targets that can drag us out of this deep hole we’re in, but we’ve got to be smart about it. And I think from both my perspective and Bob Gates’s perspective, and we talked about this a lot, Bob has made some very important recommendations that are not politically popular, but which come with a very well thought out policy. And what I’ve tried to do is to say, “Look, we’re going to try to be smarter, more effective.” In our QDDR, we’re recommending changes in personnel policies, in all kinds of approaches that will better utilize what we have. But we needed to get a little more robust in order to catch up to our responsibilities.
A quick final point on that. When our combat troops move out of Iraq, as they’ve been, that will save about $15 billion. That’s a net win for our Treasury, and it’s the policy that we have committed to along with the Iraqis. The Congress cuts my budget of the State Department and USAID for trying to pick up the pieces that we’re left with. We now have the responsibility for the police training mission, for opening up consulates that have to be secure. So even though our troops are coming down and we’re saving money, and what we’re asking for is considerably less than the $15 billion that we are saving by having the troops leave, the Congress cuts us.
And so we have to get a more sensible, comprehensive approach. And Bob and I have talked about trying to figure out how to present a national security budget. It’s a mistake to look at all of these items – foreign aid, diplomatic operations, defense – as stovepipes. Because what we know, especially from the threats that we have faced in Iraq and now in Afghanistan, is you have to be more integrated. So let’s start thinking from a budget perspective about how to be more integrated.
So there’s a lot that we can do on our side to help. But the bottom line is that the public and the Congress and the Administration have to make some very tough decisions, and I hope we make the right decisions.
MR. HAASS: Let me just follow up on that because you broached the political issue, and let me do it in the following way. I don’t have a crystal ball any better than anyone else’s, but let’s assume some of the pundits are essentially right and Republicans pick up quite a few seats in the House – whether they have control or not, who knows, they pick up a few seats in the Senate – so government is more divided come the new Congress when it takes office early next year. What does that mean for you? What are the opportunities? What are the problems in that for being Secretary of State?
SECRETARY CLINTON: Well, I won’t answer that as a political question because I don’t want to cross my line here. But I will say that I have found a lot of support for what we’re trying to do on both sides of the aisle in both houses, and I think we will continue to have that. And I’m hoping that we can maybe reestablish something of a détente when it comes to foreign policy that cuts across any partisan divide.
Like, take the START treaty; we have unanimous support for that. Our two chief negotiators, Rose Gottemoeller, our Assistant Secretary, and Ellen Tauscher, our Under Secretary, are here and they did a terrific job. And we’ve had a very positive endorsement of it by former secretaries of State and Defense, of both parties, the Joint Chiefs have come out, everybody’s come out for it. And it’s a political issue. I wish it weren’t because most of these treaties pass 95 to nothing, 90 to 3. They have huge overwhelming majorities in the Senate.
But we know that we have political issues that we have to address, which we are, and talking to those who have some questions. But I hope at the end of the day, the Senate will say, “Something should just be beyond any kind of election or partisan calculation,” and that everybody will pull together and will get that START treaty done, which I know, from my own conversations with Eastern and Central Europeans and others, is seen as a really important symbol of our commitment to continue working with the Russians.
MR. HAASS: Let’s ask one last question, then I’ll open it up to our members. You’re about, as you said, to head back to the Middle East for the resumption of the Israeli-Palestinian talks. The op-ed pages have been filled. I would say a majority of the pieces have been quite pessimistic. Why are the pessimists wrong? (Laughter.)
SECRETARY CLINTON: Well, I think they’re wrong because I think that both sides and both leaders recognize that there may not ever be another chance. I think for most Israeli leaders that I have known and worked with and especially those coming from sort of the right of Israeli politics, which the prime minister does, it’s like Mario Cuomo’s famous line: “They campaign in poetry and they govern in prose.” And the prose is really challenging.
You look at where Israel is and the threats it faces demographically, technologically, ideologically, and the idea of striking a peace deal with a secular Palestinian Authority that is committed to its own people’s economic future makes a lot of sense if it can be worked out. From Abbas, he was probably the earliest and at times the only Palestinian leader who called for a two-state solution going back probably 20, 30 years, and for him, this is the culmination of a life’s commitment.
And I think that the Arab League Initiative, the peace initiative, put the Arab – most Arab and Muslim countries on record as saying that they could live with and welcome a two-state solution. Fifty-seven countries, including some we know didn’t mean it, but most have followed through in commitments to it, has changed the atmosphere. So I know how difficult it is, and I know the internal domestic political considerations that each leader has to contend with, but I think there is a certain momentum. We have some challenges in the early going that we have to get over, but I think that we have a real shot here.
MR. HAASS: So I’ll open it up and what I’ll ask is people to identify themselves, wait for a microphone, and please limit yourself to one question and be as short as you can. Sir, I don’t know your name, but just – pick up.
QUESTION: How are you, Secretary Clinton? My name is Travis Atkins. I’m an International Affairs Fellow with the Council on Foreign Relations focusing on Sudan this year. And my question is if – you mentioned Darfur once in your talk – if you could elaborate a little bit on our ramped up efforts in Sudan as we head towards the referendum there in January.
SECRETARY CLINTON: Well, thank you. Thanks for asking and thanks for your work on Sudan. We have a very difficult set of challenges in Sudan. Some of you in this audience, those of you who were in government before like John Negroponte and others, you know this firsthand – the situation in Darfur is dangerous, difficult, not stable.
But the situation North-South is a ticking time bomb of enormous consequence. So we are ramping up our efforts to bring the parties together, North and South, the African Union, others to focus on this referendum which has not been given the attention it needs, both because the South is not quite capable of summoning the resources to do it, and the North has been preoccupied and is not inclined to do it because it’s pretty clear what the outcome will be. The African Union committee under Thabo Mbeki has been working on it.
So we are upping our diplomatic and development efforts. We have increased our presence in Juba, we have sent a – we’ve opened a – kind of a consulate and sent a consul general there, we are – Princeton Lyman, whom some of you know, is – sort of signed on to help as well with Scott Gration and his team.
MR. HAASS: Until last week, a senior fellow here.
SECRETARY CLINTON: That’s right, and Assistant Secretary Johnnie Carson. It’s really all hands on deck, so that we’re trying to convince the North and South and all the other interested parties who care about the Comprehensive Peace Agreement to weighing in to getting this done. The timeframe is very short. Pulling together this referendum is going to be difficult. We’re going to need a lot of help from NGOs, the Carter Center, and others who are willing to help implement the referendum.
But the real problem is what happens when the inevitable happens and the referendum is passed and the South declares independence. So simultaneously, we’re trying to begin negotiations to work out some of those intractable problems. What happens to the oil revenues? And if you’re in the North and all of a sudden, you think a line’s going to be drawn and you’re going to lose 80 percent of the oil revenues, you’re not a very enthusiastic participant, what are the deals that can possibly be made that will limit the potential of violence? And even if we did everything perfectly and everyone else – the Norwegians, the Brits, everybody who is weighing in on this – did all that they could, the reality is that this is going to be a very hard decision for the North to accept.
And so we’ve got to figure out some ways to make it worth their while to peacefully accept an independent South and for the South to recognize that unless they want more years of warfare and no chance to build their own new state, they’ve got to make some accommodations with the North as well. So that’s what we’re looking for. If you have any ideas from your study, let us know. (Laughter.)
MR. HAASS: We’ll turn to Carla Hills.
QUESTION: Secretary Clinton, first of all, thank you for a really far-ranging, extraordinarily interesting talk. You mentioned strategies that are regional, and I’d like you to just say a word more about this hemisphere. You gave a wonderful speech at the border of Mexico where you asserted that we had responsibility for the drugs coming north and the guns going south. Talk a little bit about how we are implementing strategies to turn that around and also to gain friendships that would be helpful throughout Latin America.
SECRETARY CLINTON: Well, first, Carla, thank you for asking about this hemisphere, because it is very much on our minds and we face an increasing threat from a well-organized network drug trafficking threat that is, in some cases, morphing into or making common cause with what we would consider an insurgency in Mexico and in Central America.
And we are working very hard to assist the Mexicans in improving their law enforcement and their intelligence, their capacity to detain and prosecute those whom they arrest. I give President Calderon very high marks for his courage and his commitment. This is a really tough challenge. And these drug cartels are now showing more and more indices of insurgency; all of a sudden, car bombs show up which weren’t there before.
So it’s becoming – it’s looking more and more like Colombia looked 20 years ago, where the narco-traffickers control certain parts of the country, not significant parts. And Colombia – it got to the point where more than a third of the country, nearly 40 percent of the country at one time or another was controlled by the insurgents, by FARC. But it’s going to take a combination of improved institutional capacity and better law enforcement and, where appropriate, military support for that law enforcement married to political will to be able to prevent this from spreading and to try to beat it back.
Mexico has capacity and they’re using that capacity, and they’ve been very willing to take advice. They’re wanting to do as much of it on their own as possible, but we stand ready to help them. But the small countries in Central America do not have that capacity, and the newly inaugurated president of Costa Rica, President Chinchilla, said, “We need help and we need a much more vigorous U.S. presence.”
So we are working to try to enhance what we have in Central America. We hear the same thing from our Caribbean friends, so we have an initiative, the Caribbean Basin Security Initiative. And our relationship is not all about drugs and violence and crime, but unfortunately, that often gets the headlines. We are also working on more economic programs, we’re working on Millennium Challenge grants, we’re working on a lot of other ways of bolstering economies and governments to improve rule of law. But this is on the top of everyone’s minds when they come to speak with us.
And I know that Plan Colombia was controversial. I was just in Colombia and there were problems and there were mistakes, but it worked. And it was bipartisan, started in the Clinton Administration, continued in the Bush Administration, and I think President Santos will try to do everything he can to remedy the problems of the past while continuing to make progress against the insurgency. And we need to figure out what are the equivalents for Central America, Mexico, and the Caribbean.
And that’s not easy because these – you put your finger on it. Those drugs come up through Bolivia, Peru, Colombia, through Central America, Southern Mexico to the border, and we consume them. And those guns, legal and illegal, keep flooding along with all of the mayhem. It’s not only guns; it’s weapons, it’s arsenals of all kinds that come south. So I feel a real sense of responsibility to do everything we can, and again, we’re working hard to come up with approaches that will actually deliver.
MR. HAASS: Speaking of guns, I’m going to be shot if I don’t ask a question that comes from one of our national members, and thanks to the iPad I have on my lap, I can ask it. Several have written in about the impact of the mosque debate in New York, about the threat to burn Qu’rans. How do – what’s your view on all this from the Department of State? How does this complicate your life? (Laughter.)
SECRETARY CLINTON: Well, I mean, we’re a country of what, 310 million-plus right now and – I mean, it’s regrettable that a pastor in Gainesville, Florida with a church of no more than 50 people can make this outrageous and distressful, disgraceful plan and get the world’s attention, but that’s the world we live in right now. I mean, it doesn’t, in any way, represent America or Americans or American Government or American religious or political leadership. And we are, as you’ve seen in the last few days, speaking out. General Petraeus made the very powerful point that as seemingly small a group of people doing this, the fact is that it will have potentially great harm for our troops. So we are hoping that the pastor decides not to do this. We’re hoping against hope that if he does, it won’t be covered -- (laughter) --
MR. HAASS: Bonne chance.
SECRETARY CLINTON: -- as an act of patriotism. But I think that it’s unfortunate. I mean, it’s not who we are, and we just have to constantly be demonstrating by our words and actions. And as I remind my friends around the world, in the environment in which we all now operate, anybody with an iPhone, anybody with a blog, can put something out there which is outrageous. I mean, we went through the cartoon controversy. We went through the Facebook controversy in Pakistan. Judith McHale, who is our Under Secretary for Public Diplomacy, is on the front lines of pushing back on all of this all the time. And so we want to be judged by who we are as a nation, not by something that is so aberrational. And we’ll make that case as strongly as possible.
MR. HAASS: Time for one more?
MR. HAASS: Okay, let me first of all apologize for the 283 of you who’s questions will not – (laughter) – get answered. And let me also say that after the Secretary completes her next answer, if people would just remain seated while we get you out quickly and safely.
SECRETARY CLINTON: Safely? Do you think they’re going to storm the stage? (Laughter.)
MR. HAASS: This is the –
SECRETARY CLINTON: I don’t know. I’m looking at this audience. There’s a – (laughter) – a few people I think that might. (Laughter.)
QUESTION: Thanks, Richard. Barbara Slavin, an independent journalist. Madam Secretary, it’s a pleasure and I appreciate the responsibility on my shoulders. I have two very quick ones.
MR. HAASS: (Off mike.)
QUESTION: Very easy ones.
QUESTION: Is it the role of the United States to support the Green Movement, the opposition in Iran? And if so, how should we be doing that?
And secondly, you’ve hardly mentioned North Korea. Is U.S. policy now just to let North Korea stew in its own juices until the next Kim takes over? Thank you.
SECRETARY CLINTON: Well, with respect to the first question, it is definitely our policy to support freedom and human rights inside Iran, and we have done so by speaking out. We have done so by trying to equip Iranians with the tools, particularly the technology tools that they need, to be able to communicate with each other to make their views known. We have strongly condemned the actions of the Iranian Government and continue to do so.
I don’t think there’s any doubt that Iran is morphing into a military dictatorship with a sort of religious, ideological veneer. It is becoming the province of the Iranian Revolutionary Guard and in concert with some of the clerical and political leadership. And I don’t think that’s what the Iranian Revolution for a Republic of Iran, an Islamic Republic of Iran was ever meant to become.
So I know there’s a great deal of ferment and activities inside Iran that we do try to support. At the same time, we don’t want to either endanger or undermine those very same people so that it becomes, once again, the U.S. doing something instead of the U.S. being supportive of what indigenous efforts are taking place.
We know that Iran is under tremendous pressure. Early returns from implementation of the sanctions are that they’re feeling the economic effects. We would hope that that would lead them to reconsider their positions, not only with respect to nuclear weapons, but, frankly, the export of terrorism. And it’s not only in the obvious places with Hezbollah and Hamas, but in trying to destabilize many countries in the region and beyond, where they have provided support and funding for terrorist activities as far away as Argentina.
So I think there is a very, very sad confluence of events occurring inside Iran that I think eventually – but I can’t put a time frame on it – the Iranian people themselves will respond to. And we want to be helpful, but we don’t want to get in the way of it. So that’s the balance that we try to strike.
Now, with respect to North Korea, we are continuing to send a very clear message to North Korea about what we expect and what the Six-Party process could offer if they are willing to return and discuss seriously denuclearization that is irreversible. We are in intense discussions about this with all the other Six-Party members and we’re watching the leadership process and don’t have any idea yet how it’s going to turn out. But the most important issue for us is trying to get our Six-Party friends, led by China, to work with us to try to convince whosever in leadership in North Korea that their future would be far better served by denuclearizing. And that remains our goal.
MR. HAASS: As always, thank you so much for coming here, first of all, but also giving such a thorough and complete and serious and comprehensive talk about American foreign policy. And I know I speak for everyone that we wish you Godspeed and more in your work next week and beyond. Thank you so much.

Foreign Direct Investment and US Economic Policies - Unctad conference

Importance of Investment in the Global Economy
Robert D. Hormats
Under Secretary for Economic, Energy and Agricultural Affairs
World Investment Forum
Xiamen, China
September 6, 2010

Over the last quarter century, foreign investment has accelerated at a breathtaking pace and shifts in the flow of this investment are now reshaping the global economic landscape. We have seen inward foreign direct investment stock roughly triple worldwide over the past decade -- and that holds true for developing countries as well as developed economies.
Today more than 80,000 multinational corporations (MNCs) are operating worldwide with more than 800,000 foreign affiliates – compared to 37,000 multinational corporations and 170,000 foreign affiliates active in 1993. Foreign investors not only bring fresh capital, technology, competitive spirit and ideas to new markets; they also bring jobs. They employ nearly 80 million people worldwide, a figure that is roughly twice the size of Germany’s labor pool – and one that has quadrupled over the past three decades. These foreign affiliates also point to a deeper level of economic integration among nations. They show a purpose and commitment beyond one-time sales or market entry into well-established trade patterns. Investment not only drives jobs and innovation, but it also increasingly drives trade.
The global sales of the foreign affiliates of MNCs now equal roughly two times the dollar amount of world exports according to UNCTAD’s World Investment Report 2010. This makes foreign direct investment increasingly important in terms of the delivery of goods and services to international markets. Roughly one-third of world commerce takes place as intra-firm trade. And the bulk of technology that is transferred flows within the framework of the integrated international production system. FDI and the activities of MNCs have become central to the world economy at large, and particularly important to developing countries.
FDI flows also are the vital currents that can help restore global economic growth. We have already seen trade flows come back after the recent global recession. And the WTO estimates that trade will be up by nearly 10 percent in 2010 over the prior year. FDI, however, may not rebound at the same pace: UNCTAD is predicting only a modest and uneven recovery in global FDI this year of $1.2 trillion, after registering a little over $1.0 trillion in 2009, from $1.7 trillion in 2008. Global FDI flows fell very sharply in large part because of a substantial drop in cross-border merger and acquisition activity, due largely to more difficult financing conditions arising from the financial crisis. However, FDI flows have historically been less volatile than portfolio investment. As a relatively stable form of international capital flows that spurs growth and diversifies risk around the world, FDI can help foster global economic recovery.
Investment also drives development. In March 2002, more than 50 heads of state and 200 finance ministers took part in the International Conference on Financing for Development in Monterrey, Mexico. The Monterrey Consensus identified sound policies to attract international investment flows and adequate levels of productive investment as key factors in sustainable development. Since then, nations have broadly recognized that foreign investment is critical to economic growth in developing nations. While valuable and important, official development assistance cannot match the power, velocity and impact of private investment, which is an essential factor for countries to compete in the knowledge economy.

As Secretary Clinton put it, "Aid chases need; investment chases opportunity." It is promising that last year alone, two-thirds of sub-Saharan African nations implemented reforms to improve their business climates, a factor that will be critical to the region’s ability to continue attracting and retaining international investment. Rwanda was the top reformer globally in 2008-09 in the World Bank’s Doing Business Report. As Rwanda substantially improved its investment climate in recent years, its investment stock has climbed from $55 million in 2000 to $412 million in 2009.

We are well into an age when many of our most daunting challenges are global, and greater levels of foreign investment will be necessary to overcome many of them: achieving global food security; mitigating climate change; defeating violent extremism; and, improving conditions for the one-third of the world’s population that lives in circumstances that offer little opportunity to create a better tomorrow for themselves or future generations.

Notwithstanding this consensus, in recent years, concerns have increasingly arisen about the potential for investment protectionism. Even before the financial crisis struck in 2008, researchers David Marchick and Matthew Slaughter had pointed out that a number of governments, representing countries who account for a significant share of total global investment flows, had already considered, or were considering, measures that would restrict certain types of FDI or expand government oversight of cross-border investment. Most of these measures were justified on the grounds of protecting national security interests and sectors deemed to be strategically important.
Key Investment Principles
As foreign investment is contributing more substantially to our economic prosperity, policies designed to foster, protect and fully benefit from it require greater focus. These include improvements to the investment climate that will attract greater flows, stronger intellectual property rights protection, and better investor aftercare and dispute prevention. A rapidly changing global investment landscape brings many new opportunities as well as challenges.

Some of these changes require further examination and may prompt new policy approaches. At the same time many basic principles remain valid. Those that have proven so successful in the effective functioning of open markets will continue to be vital to success in fostering greater economic growth and development. Both UNCTAD and OECD, the two key international organizations focused on investment policy, strongly advocate the benefits of opening economic sectors to foreign investment, fair and equitable treatment for foreign investors, reforms that result in predictable regulatory and legal environments for investors, and the value of Investor-State arbitration to resolve disputes between governments and foreign investors. It is easier to attract foreign investment when foreign and domestic firms can compete on an equal basis and when there are full intellectual property rights protections.

A recent World Bank study of patenting as it relates to economic growth in 92 countries over the period of 1960-2000 found that a 20 percent increase in the annual number of patents granted, wherever the technologies originated, was associated with an increase of 3.8 percent in output. This is an unusually powerful finding: the issuance of patents, which in turn is likely fostered by stronger IPR regimes, stimulates economic output. Another study, conducted in 2004 by researchers at the University of Nottingham, found that strong IPR protections stimulated growth in countries with high per capita incomes, and yielded even greater gains in countries with low per capita incomes, by encouraging imports and FDI from advanced countries.

Policies that discriminate against foreign investors, or mandate technology transfer, or impose other performance requirements, on the other hand, make capital skittish and hamper development. Theodore Moran’s research showed that affiliates of foreign multinational firms tend to be more technology- and capital-intensive as well as faster growing in terms of output and employment when host countries do not constrain affiliate operations through requirements such as local-input sourcing and mandatory technology transfer. Likewise, countries that seek to evade their international obligations by ignoring arbitral investment tribunals or by backing away from commitments to international investment arbitration not only undermine their own investment climates but harm the prospects for foreign investment into developing nations more broadly. All countries – whether capital exporters, recipient nations, or both – have a strong interest in preventing such serious backsliding, which research has shown to be detrimental over time.
To return to sustainable global economic growth, we must keep our countries open for business and sustain a commitment to principles of fair competition in our own markets and global markets. We in the U.S. are strong believers in the importance of foreign investment to our own country. Since the early stages of our Republic, under the leadership of Alexander Hamilton, we have believed in the importance of foreign investment into our own economy and in the importance of a legal and regulatory environment that provides confidence to foreign investors. We continue to believe in that.

Through its network in nearly 80 countries worldwide, the U.S. Government’s Invest in America program promotes and supports inbound FDI to the U.S. This program facilitates investment inquiries, acts as ombudsman for the international investor community, advises on policy related to U.S. competitiveness in the attraction of FDI and provides foreign investor education. Individual U.S. states, cities, towns, and regions also actively promote themselves to foreign businesses as a destination for FDI. Our governors and mayors are especially eager to attract foreign investment to their localities – and many of them travel widely to describe the virtues and attractions of their states and cities.

We in the State Department, as well as our colleagues at the Department of Commerce, fully support them and welcome the opportunity to facilitate contacts and cooperation to attract investment to our shores. The knowledgeable and talented American work force, our laws that provide for a stable and predictable business environment and the highly competitive nature of our economic culture are all positive factors for investors.

We note that many other countries also are eager to attract foreign investment. Amid the financial crisis, the G-20 took on a leadership role for the world community by calling for a commitment by the world’s largest markets not to erect new barriers to investment and trade. All countries need to resist protectionism and economic nationalism. We need to pursue policies that enhance confidence among investors. The path to recovery is not yet assured, and we need to remain vigilant against protectionist temptations. But nations have largely met the G-20 call. That the global economy is growing again this year is in large part due to the G-20’s leadership – and the partnerships to strengthen the system that include large emerging and industrialized nations.
Changing Investment Patterns
Yet there are many other challenges resulting from the changing investment landscape. There is little doubt, for instance, that the growing importance of emerging economies in the global economy has a major impact on the contours of international investment. Since World War II, the largest flows have occurred between developed economies, with the single largest bilateral investment relationship existing between the U.S. and Europe. Investment relationships between developed and developing economies had largely been characterized by outflows from developed economies to developing countries.

This pattern has changed and will continue to change. A number of the large emerging economies – particularly Brazil, Russia, India, China and South Africa but others as well – are now increasingly important overseas investors. In 2009, FDI flows from emerging and developing economies into other markets approached one-quarter of a trillion dollars. These countries held overseas investment stock of nearly $2.7 trillion – more than three times their total a decade earlier. This means that these countries now have a greater stake in the global system of rules and practices that govern investment. It also means that there is likely to be a growing convergence around similar sets of principles and practices.

It is fitting that we come to Xiamen to discuss these changes given the important and growing role that China and other advanced emerging economies are playing in the global investment picture.
Since I traveled with Henry Kissinger to China as a young White House economic adviser in the early 1970s, the investment relationship between China and the United States has burgeoned. U.S. investment stock in China has grown from $49 million in 1982 to more than $49 billion in 2009. OECD studies show China’s outward investment increasing significantly; in the United States alone, Chinese investment stock roughly doubled from $385 million in 2002 to nearly $800 million in 2009. The Peterson Institute of International Economics recently noted that “China’s OFDI has reached commercially and geo-economically significant levels and begun to challenge international investment norms and affect international relations.”
China is not alone in bringing new dynamism to investment patterns. As many of the large emerging economies, notably Brazil, Russia, India, China and South Africa, become more significant outward investors, they share strong interests in protecting their own foreign investment. Many are reconsidering some of their own long-standing restrictions on investment and changing policies that have left important sectors closed to foreign investment.

Developing countries, emerging economies and countries in transition have come increasingly to see FDI as a source of economic development and modernization, income growth and employment. They recognize that FDI triggers technology spillovers, assists human capital formation, contributes to international trade integration, helps create a more competitive business environment and enhances enterprise development. All of these contribute to higher economic growth -- which is a potent tool for alleviating poverty and fostering political stability in developing countries. As world leaders gather to discuss progress on the Millennium Development Goals (MDGs) in New York later this month, let us not forget the important contributions that FDI can make to helping the world achieve the MDGs and other important development goals.

Moreover, FDI may help improve environmental and social conditions in the host country by transferring “cleaner/greener” technologies and leading to more socially responsible corporate policies. Here in China, for example, the question arises about whether China’s environment is being sacrificed as a result of the country’s boom in inward investment. Researchers Judith Dean and Mary Lovely analyzed the latest data on air and water pollution from China’s State Environmental Protection Agency and found that the pollution intensity of Chinese exports actually fell dramatically between 1995 and 2004, both because foreign investors introduced cleaner production techniques and because these investors have induced a shift to cleaner products. So deeper global engagement is reducing the environmental cost of Chinese income growth. Rather than facilitating the migration of dirty industries to the developing world, FDI flows to China are making the production of Chinese exports cleaner over time.

There is a growing understanding that corporate social responsibility is increasingly insisted on by consumers in industrialized and developing countries alike. They demand transparency, accountability and quality products to meet their health, safety and environmental expectations. Consumers, using the Internet, are increasingly focused not just on the actual products they buy, but also on the conditions under which these products are made. In order to compete, and win the allegiance of consumers, companies have to adhere to global standards of corporate social responsibility, such as the OECD Guidelines on Multinational Enterprises.
Challenges to Global Investment Flows
The emergence of new players also highlights the prominent role of state-owned enterprises and sovereign wealth funds, their public financing, and its impact on the competitive landscape. The principle increasingly known as “competitive neutrality” suggests one way that governments can address these challenges. Governments can create frameworks to ensure competitive neutrality between large state-owned enterprises and private firms to preserve competition and avoid crowding out of, or discrimination against, private initiative. To ensure competitive neutrality, several techniques or policy measures can be employed: reshaping management incentives within state-owned enterprises; effectively applying competition law to avoid creating an uneven playing field; intensive evaluation of the taxation, financing and regulatory provisions that exist for state-owned enterprises; and implementing corporate governance reforms within these enterprises.
As nations attract foreign investment from a more diverse array of sources, investor credibility is growing in importance. Longstanding guidelines for model corporate conduct are being updated to reflect the current challenges. For example, the OECD Guidelines on Multinational Enterprises are being updated this year. Discussions are currently underway with respect to possible guidelines regarding conflict minerals. The OECD’s Anti-Bribery Convention and the recently adopted Recommendation for Further Combating Bribery of Foreign Public Officials in International Business Transactions are particularly significant tools for promoting responsible investor conduct, propriety, integrity and transparency worldwide. We seek partnerships with many nations to implement them. Non-OECD member countries are free to accede to this Convention; several have done so and we encourage other major trading nations to join them.
The changing patterns of FDI flows also pose other challenges where the solutions may be less clear. With the importance of innovation to the success of firms competing in national and global markets, questions are arising about national policies to promote innovation by domestically based firms using discriminatory or exclusionary methods – and government procurement tests – that adversely impact foreign-owned firms.
For the United States, protection of our intellectual property is a core national economic interest. Methods to promote innovation around the world that are based on proven practices of tax credits and similar techniques can be and have been quite successful. But discrimination or exclusion against the products of foreign companies on the basis of where technology was developed or who holds the patent, or similar measures, are harmful to many foreign firms and in the final analysis makes them less inclined to engage in real collaboration on cutting edge innovation. Moreover, as emerging countries develop their own innovative technologies, they should be insistent on fair treatment of their companies that have produced those technologies and of the products they sell.
Another challenging issue relates to competition for natural resources. Firms owned by governments, or acting on the basis of government policies, are playing a greater role in global natural resources investment and trade. When they invest in new and alternative supplies, they often expand global resource supplies for all nations. Where they concentrate on securing existing sources of supplies, they are perceived to potentially limit access of other nations and therefore raise concerns. Theodore Moran’s recent analysis of resource-oriented investments suggests a differentiated picture: that foreign investments in small, independent resource producers will likely lead to expansion of supplies and increasing competitiveness of industries while investments in major producers which put foreign governments in a position to control or constrain production are more concerning.
Then there are security-related issues. Technological innovation, new sources of capital and other factors affecting the nature of security threats are evolving rapidly. We all share the need to protect legitimate security interests. In the U.S. we have very clear laws and procedures to do that. These are fully consistent with our open investment policy for the vast majority of investment that does not adversely affect our security and our eagerness to attract such overseas investment.

The OECD’s Guidelines for Recipient Country Investment Policies Relating to National Security, adopted in May 2009, provide excellent guidance for how governments can approach some of these national security concerns. The Committee on Foreign Investment in the United States (CFIUS), which reviews notified foreign investment transactions for national security concerns alone, demonstrates a very strong alignment with these guidelines. Thomson Financial estimates that there are an average of 2,000 merger and acquisitions involving foreign acquirers in the United States annually. According to the 2009 CFIUS Report to Congress, an average of 135 transactions came before CFIUS annually from 2006 to 2008. Substantially fewer (65) were reviewed in 2009.

Questions also are arising about the combined impact of thousands of bilateral investment treaties on countries’ capacity to understand fully the scope of their commitments and to manage their risks. A number of countries are reviewing their approaches to investment agreements altogether based on factors such as: their desire to balance protecting investors and preserving the appropriate level of flexibility to regulate in the public interest; and, the inclusion of specific provisions to advance other policy interests, such as the protection of labor and environmental interests. For example, the U.S., Canada, and Mexico have reviewed and modified their practices based on experiences gained since the advent of NAFTA. And the EU is reconsidering its approach to investment rules based on the Lisbon Treaty. Japan also has changed its approach in recent years. South Africa, Brazil, and other major emerging economies are also reflecting on the changing investment landscape, their evolving interests, and how it might affect their approach to such agreements.
Multilateral Response to Challenges and Opportunities
The growing importance of investment and these new opportunities and challenges suggest the need for greater analysis of the changing landscape, continuing reflection on our changing interests, greater engagement in our bilateral relations, and a revaluation of how to improve our multilateral engagement. The work of UNCTAD and OECD has played a unique and important role in combining a forum for intergovernmental dialogue on policy best practices, with analysis of emerging issues, and advice to governments seeking to undertake policy reforms to improve their ability to attract and reap the economic benefit from international investment, and we strongly support their work. We should constantly look for better ways of utilizing these institutions and strengthening cooperation between them and with other international groups.
OECD and UNCTAD bring great strengths and complementary perspectives. The OECD, whose members account for 90 percent of global investment flows, has, since its creation, had an active agenda on international rules and best practices for investment, which is pursued through its Investment Committee. UNCTAD is a universal body and its Investment & Enterprise Division is sensitive to the development dimensions of international investment. Its Investment Commission and expert groups seek to build broad intergovernmental consensus on core challenges related to investment and development facing the international community.
Together UNCTAD and OECD do the research and analysis that provides the backbone necessary for sound policymaking on investment. UNCTAD recently issued its “World Investment Report 2010,” the latest in a highly regarded series of annual reports that track global trends in investment flows and stocks as well as international investment agreements, and studies the impact of foreign investment on developing nations. Like UNCTAD, the OECD produces high quality reports, such as the International Direct Investment Statistics Yearbook. They conduct analytical work on bilateral investment treaties which will be critical to evaluating the impact of a diverse array of over 2,500 agreements.

One of the most valuable contributions these two organizations make is their policy advice on investment to national governments. The OECD’s investment policy reviews and advice has helped those countries aspiring to membership, or to adherence to relevant OECD instruments, as well as other emerging economies and developing countries. It also has played an important role in assisting their efforts to improve their investment climates. The OECD’s Policy Framework for Investment continues to provide a valuable diagnostic tool for governments in this regard. The Freedom of Investment Roundtables provide an important forum for member and non-member countries to discuss developments relevant to their pledges to avoid protectionism and expand international investment flows as we seek to recover from the economic crisis. It also discusses emerging issues with respect to international investment and the policies necessary to address them.

UNCTAD also provides complementary advisory and technical assistance to support developing countries’ policy reforms, negotiation of international investment agreements, and investment promotion capabilities. UNCTAD has assisted developing countries in tackling the practical challenges related to investment. It also has helped to spearhead a promising effort among Latin American countries to establish an advisory center that could help them to avoid investment disputes and better manage them when they do occur, potentially benefiting both the recipient countries as well as the investors. The United States has high regard for and actively participates in UNCTAD’s Investment Policy Reviews of developing countries, which focus attention at the highest levels of developing nations’ governments on the steps needed to succeed in competing for investment.
2009 saw a new level of collaboration emerge between UNCTAD and OECD as the G20 called for them to jointly monitor and produce quarterly reports on measures relevant to their pledge to avoid protectionism. Identifying and evaluating investment-related measures is critical to governments’ efforts to hold one another accountable. Those countries that have been most successful in attracting investment have a special role to play in supporting and guiding these institutions’ efforts and in sharing their own national experiences with those nations who aspire to match their success.
UNCTAD should be congratulated on its excellent work at this Forum to focus high-level attention on how much of our shared prosperity depends on foreign investment, by attracting senior officials from governments and a broad set of stakeholders. The United States hopes that the serious issues identified by our discussion today will encourage both UNCTAD and OECD to deepen their collaboration, and also to organize a single international meeting of this caliber to continue our high-level discussions next year.