Remarks of J. Brian Atwood, USAID Administrator

This is an archived USAID document retained on this web site as a matter of public record.
Remarks of J. Brian Atwood, USAID Administrator
to the Woman's National Democratic Club
January 14, 1999
In thinking about my remarks today, it dawned on me as to why six years is long enough to be USAID Administrator. It’s because the job requires you to tell people things they don’t want to hear.
— I plan to do that today.

We stand on the brink of a new century. Our best intentions are to erase the stains of conflict that made the 20^th Century the bloodiest in history.
We know the tools are now available to build an international structure that will enable us to sustain peace and stability.
In the past fifty years, we have created an international legal regime that promotes a common vision of human rights and democratic practice.
We have a UN system in place that is more capable today of enforcing Security Council resolutions.
We are in the process of creating a World Trade Organization that is establishing common rules for trade.
Ideas and technological innovation are flowing more freely around the world than ever before, as is capital.
Why then are we so worried about the future?
Perhaps because governments have yet to learn how to take advantage of these positive changes and, worse, they have taken actions to undermine the very institutions that can be our salvation.
The word most frequently used to define our new situation is "globalization."

A recent World Bank study defined the word as follows: Globalization has reinforced the influence of market forces while attenuating the constraint of geography through advances in communications and transportation. Rapidly falling telecommunications costs are having a dramatic impact on the extent of financial integration, on the possibilities for new types of international trade, on the spread of technology, and on the diffusion of ideas. It has enlarged the role of MNCs, NGOs, and international organizations often at the expense of the nation state. Globalization is bringing about a convergence of roles and standards across countries. And it has heightened the need for international institutions to manage flows of trade, factors, and information and to coordinate national policies in an increasingly interdependent world.
That all sounds very good, but why is it that many nations in the developing world fear that word so much.
Put yourself in their shoes. Many of these nations are attempting to become stable democratic and open market societies. We in the West promise all manner of benefits if one pursues this course. And many developing world leaders strongly believe our message.
They also know that it took the United States over 100 years and a Civil War to build its democracy and they worry that they don’t have that much time.

Their governments are trying to attract foreign capital. They are trying to create the enabling environment — private financial institutions, rule of law, quality workforces — that would engender confidence.

They are seeking the resources to do this, yet, each year their population soars and the costs of providing health care and education soar along with it.

Despite these problems, many of these countries were making real progress until recently.

The Asia Financial Crisis placed the glare of international scrutiny on their yet imperfectly formed economies and political systems.

Some like Indonesia, imploded because of crazy capitalism, phony democracy and weak banks.

Others with fewer problems were victimized by contagion. I define contagion as that irrational impulse of money managers to forgo any and all risk in a time of uncertainty in favor of absolute safety.

Those nations with stronger democratic systems like Thailand and Korea have begun to recover. Russia, as we know, has defaulted on its international loans and has a less predictable future.

The question before us today is whether Brazil can withstand the irrational impulse of money managers. I believe it will, but that is a subject I should reserve for later.

My central point is that it is not an easy time for globalization. Yet, we cannot turn back the clock to a less complicated time.

We should all worry that political personalities in new democracies around the world are looking for their five minutes of international attention. They are advancing dangerous alternatives to the rules of globalization. They have not yet succeeded, but they have done serious damage — and could do more.

These demagogues want to blame the problems of their countries on the West, particularly the United States.

Unfortunately, the case they can bring has a superficial appeal.

Where is the money that is being withdrawn from their central banks going? It is of course heading for safe investments in the United States.

We need to worry about this backlash because it could undermine our efforts to create a stable and even more prosperous global economy.

Countries that are suffering the effects of the global financial crisis need help in fixing their financial institutions. They need help in meeting their social commitments to educate and provide health care to their children. They need our assistance in building their democratic institutions and saving their environment and limiting their population growth.

And the world through a series of UN conferences promised to give them their help.

But what is happening? At a time when billions of dollars of private investment is being withdrawn, official development assistance is also being withdrawn.

In 1996, the bilateral donors of the industrial world and the international financial institutions provided $55.4 billion for development assistance.

In 1997, that number dropped to $47.6 billion. And, while we do not yet have statistics for 1998, the projections are that that number will fall to under $45 billion.

What is the message we are sending? We are urging countries on the one hand to build democracies, educate their children and create an environment for foreign investment, yet we are not able to help them do it.

They see the ravaging effects of global climate change in the form of storms and devastating droughts, but they do not see America reducing its CO² emissions.

They see ever increasing fiscal deficits and they see the U.S. with a $76 billion surplus.

This is a risky business. Who knows what form a backlash will take?

Think about this: in the year 2020 the world’s population will have grown to 7.7 billion people. Approximately 80 percent of those people will be living in the developing world.

Does anyone here believe that our interests will be preserved if 20 percent of the world’s nations control 80 percent of the globe’s wealth?

Terrorism is a growing threat because people are desperate. The rogue states are collaborating with one another and terrorist groups are operating with ample resources and the latest technology.

We need to invest now in development assistance. If we don’t, we will pay later.

This is an archived USAID document retained on this web site as a matter of public record.

Last Updated on: July 12, 2001