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This is an archived USAID document retained on this web site as a matter of public record.
On-The-Record Remarks
by USAID Administrator Andrew S. Natsios
MAKING SUSTAINABLE DEVELOPMENT WORK:
GOVERNANCE, FINANCE AND PUBLIC-PRIVATE COOPERATION
Sponsored by the U.S. Department of State
at the Meridian International Center
Thank you very much for having me and my agency here this morning. I'd like to say a few provocative things.
Next year's summit on sustainable development can be a watershed because we are entering now, as a result of the events of September 11th, a new historical period. The beginning of World War I ended the 19th century and Bismarck era of Europe. The way in which World War I ended was a disaster which, according to many historians, caused World War II. As you go through history there are certain dates of significance, September 11th is such a date.
What the New World will look like is in its formative stage. I ask myself everyday if we are making the right decisions in terms of what we're doing in our relief program in Afghanistan, because they will have implications for the long-term reconstruction and development of Afghanistan. What we do know is that our decisions will affect the future profoundly. We're not always clear what that effect will be. This is my favorite rule of public policy, that of unintended consequences.
So, this is a very appropriate time to have a discussion about the term, "sustainable development." I don't like the term, "sustainable development." I've told people in USAID, you will not hear me use that term in my speeches because other than those of us who do this work, the American people do not know what that term means.
If you go to an African village and ask an average peasant, what is sustainable development, they will look at you and say, what are you talking about? No matter how you translate it, they don't know what you are talking about because sustainable development is an obscure term that's designed to exclude the great bulk of the population who does not understand what it means.
Development in the United States usually means fund raising for a university or a charity. My wife is running a dinner for 900 people for St. John's College High School's 150th anniversary, and she is doing development. No one associates this with sustainable development.
So, if you begin with terms that require books to define them, you've already lost. I prefer more operational terms such as good governance, economic growth, and public health. We know what these terms mean. If you say you're trying to immunize children so they don't die from measles, people know what that means. If you try and increase agricultural production every peasant knows what that means everywhere in the world.
So, let's focus on what we do rather than on terminology. Maybe that can be a contribution next year at the World Summit on Sustainable Development -- to stop using terms that are obscure and start using more operational terms. Of course, that will upset other countries. Americans are too operational, too practical and we're not focused enough, my European friends say, on the theory and the grand principles. I say, yes, and I think that too many people are too much focused on grand principles and not on what works on the ground. No one can eat a concept. It's not edible.
So, let me talk first about good government. I have two careers. One is in the work we do here. My other career is in Massachusetts state government. I was a member of the Massachusetts House of Representatives for twelve years. It is said that no man's life, liberty or property is safe while the Massachusetts Legislature is in session. That is from a Supreme Court ruling, by the way, in the late 19th century. So, the judges knew what was going on.
The reality is good government in Massachusetts means something. I left state government 12 years ago to do the work I'm doing now. I left when the first President Bush was elected and I came here to Washington, and then I went back to state government for two years just before coming to USAID. I saw state government then and I see it now and there were profound changes in the 1990's. Good government has grown in terms of its quality in Massachusetts in a huge way.
The mundane things of government -- that's what I want to talk about on this question of good governance. We use these vague terms such as institution building. What does institution building mean? Let me give you some concrete examples from the developing world. Dr. Mocumbi, Prime Minister of Mozambique is one of my favorite prime ministers. He has put together one of the best groups of technocrats to serve as his cabinet. They are swooping through all of the Mozambican laws and getting rid of the socialist and Marxist laws that remain that hamper the growth of the Mozambican economy.
He's a medical doctor, by the way, although he never talks about medicine. He was first Health Minister, then Foreign Minister and he's been Prime Minister for six or seven years. Dr. Mocumbi likes to talk about agricultural development and economic growth. He called me several weeks ago and was excited to tell me that Mozambique had 14 percent growth in the last quarter. Even when the natural gas industry is factored out, it's still an 11.5 percent growth rate. That's stunning for a country that had two to three million people die in one of the most barbaric civil wars in the world to now be experiencing these growth rates and substantial governmental reform.
He talked about that in another meeting I had a couple of months ago with him on agriculture. He pulled me aside and he said, you know, we have to focus a little bit more on the governance issues. I asked him what does that mean practically in Mozambique? And he said, it means this: when my county administrators give orders, nothing happens. The wells don't work, the roads don't get repaired, the forests get cut down in the wrong areas, the crops are only growing because the peasants do it, not because we are helping them.
I said, what do you mean, "nothing happens?" He said, they assume when they give an order that the order is carried out. I said, it never happens just because you tell someone to do something. You can assume it won't happen.
He said, he's sending his county administrators to public schools of administration in South Africa where they learn to make a list up, tell people what to do and check in two weeks to see if it's been done. It's kind of a simple thing to do, but it's not something that we ever did before. He said, I was a medical doctor and I was never trained as a manager. When I was named the Prime Minister, I took courses in economic development, macroeconomics, and in public administration. When he went from one ministry to another, he felt it necessary to take these classes.
I said, why? He said, because I used to give orders and no one ever did what I said. I'm Prime Minister now and they have to carry these instructions out. So, we teach basic courses in public administration. He said, it's revolutionizing Mozambique's government. That is one principle of good governance.
He said, choosing the right people for the right jobs, not because they're from a particular tribe or because you like them and they're your friends or your relatives, but because they have the skill that's necessary in a particular job, that's good personnel management. He said that we need to do planning and then carry the plan out. People love to do planning and developing, but the plan is never carried out.
So, there is a question of implementation, practical, public management, of creating civil service systems that recruit competent people and reward them for their work.
My final point on good governance is the issue of corruption. This is one of the most severe problems in every single discipline in every single sector. If you run programs and there is a profound level of corruption in the system, you can do all you want and nothing will happen. In fact, the existence of the state itself is a predatory impediment to development --to economic expansion, to protecting the environment -- whatever the discipline is, it is an impediment because interest groups come in, they bribe people, the treasury money never gets spent properly, and people get frustrated. I don't have to explain it, businesses don't want to move into that kind of environment. That's why Transparency International and other NGO institutions that are judging countries by their level of corruption and their level of good governance are extremely important to all sectors.
People don't want to talk about this. Dr. Mocumbi did with me one day -- I didn't ask him, he brought it up to me.
They've had corruption problems, but they have been dealing with them. Some countries try and some countries do not try. Some countries' governments are predatory, impediments to progress. Until that's changed, we're not going to have progress.
Another point I want to make is on the issue of economic development and growth. I like history. I was trained in history and I think history has a lot to teach us -- American History. People in the United States believe in this myth of rugged individualism, America building America. Do you know who owned the United States before World War I? German, French and British bankers. They built the United States in terms of its capital. The railroad system, the industrial infrastructure -- we didn't have all that money. We borrowed it from the Europeans.
Now, there was no Official Development Assistance (ODA) then. There was no World Bank. It was done on a commercial basis. The only thing that changed us from being a debtor nation before World War I to being a creditor nation is World War I. The European countries went bankrupt. They borrowed the money back from us and from a net cash basis, we became a creditor nation, because we had built an industrial infrastructure that was producing wealth.
If there is not economic growth, poor countries will be poor forever. They may be very healthy, but they'll be poor. They may have preserved their traditions, but they'll be poor. Ultimately, all progress in the areas that we care about, whether it be health, environment, or education, is dependent on the production of wealth that can be taxed so that services can be provided over the longer term in a sustainable way without relying on ODA. ODA forever is not an answer to anybody. Dr. Mocumbi knows this, that's why he places such importance on their economy growing.
So, we need to look at these examples. I like to bring up another interesting historical example of growth in 19th century America when we were first agriculturally based. Two of President Lincoln's great contributions were the land grant colleges which built agricultural schools in each state to train a cadre of agricultural scientists to help develop the country agriculturally, and the Homestead Act, which deeded land to people who farmed 100 acres or more. These two laws changed the face of the American economy and built up the agricultural surpluses in the United States that allowed us to export huge amounts of grain to Europe based on this development.
Now, the same thing happened in Russia prior to World War I under Prince Philip. I've asked a Russian friend of mine, who is your new hero? He said, Stolypin is our hero. He was Prime Minister under the Czar, and was assassinated in 1913. He got attacked from the left, he got attacked from the right, but Stolypin created the middle class farm in Russia that was feeding Europe up until 1917.
Russia has still not recovered from the damage done by collectivist agriculture. They produced more grain before World War I, under Stolypin's reforms, than they have since. They still have not recovered. Stolypin created a middle class group of farmers very similar to Lincoln's, and that's why they assassinated him. The Bolsheviks said, if we don't kill him, there will never be a revolution, because there middle class people do not like revolutions, they don't like violence, they don't like instability. They like democratic governments, they like good governance. Aristotle said this in Politics a long time ago.
There is a relationship between political stability and the maturity of the society and social services and public safety. Educated middle class people are the ones who demanded these things in the United States. Why did that happen? Because there was a middle class. How do you create a middle class? You have to create wealth. How do you do it in developing countries? Agricultural development is a large part of it, as well as private sector development.
We need to look at economic development in the private sector as an essential element of what we would call sustainable development in this smaller group. The point, though, of all of this is we're not looking enough at private institutions. I had a conversation with a major software company in the United States which invested $100 million dollars in building institutes in 38 developing countries to train people in how to use the Internet, how to become computer literate.
I said to them, is this corporate charity? Because if it is, I don't really want to have a long conversation with you, because it's not sustainable from your perspective. If you're just giving it away to be nice, it doesn't help very much. Why are you doing this? A representative of the company said, well, it's in our self-interest. We believe the longer term markets for our company and frankly, all the other American companies will be created if these developing countries are on the Internet and their people know how to use the Internet and how to use computers.
That's enlightened corporate leadership. It's visionary leadership. They're prepared to do much more now and, by the way, it's having a revolutionary effect in many of the countries they are doing it in. We put very little money into this initiative. I asked, how did we help you do this? He said, we don't have any offices in the countries we do this in. Our business office was USAID.
The missions told us, these are the ministers you should talk to in the government. They really want this to work. They are competent people. There are businesses in the country -- indigenous businesses -- that can help you do this. Stay away from these other businesses; they've got bad connections, they're predatory and they're corrupt. So, they told us in each country we went into what the political dynamics were, what the regulations were, who could stop you, and who could facilitate for you. He said, there was no project for that. It was, however, using the USAID missions as a way of expanding this brilliant project that has had a profound effect in other countries.
I met recently with the presidents of five of the largest environmental NGOs in the country. We talked about my personal interest, which happens to be theirs too, to attempt to do environmental programming in the developing world understanding it's relationship to economic development.
If you do environmental programming and you ignore economic incentives, you'll fail, wherever you are. Profit motive and economic incentives are signals that are sent by the economy and have a profound effect on the success or failure of any program, because economics is a very powerful force. We talked about the attempt to work into the market system in many countries. We talked about illegal logging. Almost 80 percent of the logging done in the developing world is illegal by their own laws. The logging that is destroying the rain forest of the Congo is all illegal. In fact, other countries have troops in the Congo to make money. The same thing is happening in Indonesia. It's not legal logging. There's a way we can do something about that and we talked about a public-private partnership.
Now, how can we possibly institutionalize this? This will be my last comment. We have created four pillars for USAID's work and I don't want to go into the four pillars, except for one. One of them is not a sectoral pillar, it's called the "Global Development Alliance."
When Colin Powell announced the Global Development Alliance last spring it didn't make any headlines. But I've got to tell you, it may change the face of development, because the kinds of things that we are doing now is to try and get private foundations, private businesses in the capital markets, and universities to invest in the same things we are investing in. This not a grant program. We didn't give this private computer company any money; we simply used a very small amount of money to facilitate the expansion of these computer institutes because we thought it was in the national interests of these countries.
We believe that in USAID we have some very powerful strengths to offer science foundations, universities, NGOs, and private businesses that can facilitate the production of wealth and the creation of good governance. All the things that are necessary for the Third World to become the First World. We believe creating these alliances may change the face of development. So, we raised it to the pillar level within USAID to say this is a new way of doing business. It's just now beginning.
A couple of statistics just to complete. Now, we know what the capital flows are in the private capital markets in the world, where we invest money in different countries. What we have not studied enough is things like remittances. There is one study, I understand, I haven't read it yet, but I understand $30 billion dollars worth of remittances leave the United States each year for the developing world. In some Central American countries, 20 or 30 percent of the gross national product are remittances from the United States.
I've gone to countries that should be in the middle of famines, like Eritrea during the civil war ten years ago, and could not understand why no one was dying. The aid effort was hampered, there were all these problems, and the Eritreans said, everyone of us have relatives in Western Europe and the United States, they are sending remittances back and the merchants simply bribe the soldiers around the conflict lines. The merchants bring the food in and we buy it. As a result, no one died during a time period when there should have been a massive famine, because of remittances.
Private foundations have become a huge potential source of revenue to do projects. My favorite example is GAVI, the Global Alliance for Vaccines and Immunizations. It's a wonderful idea. We put $49 million in it. The Gates Foundation put in $750 million. Bill Gates has -- I don't know if it's a doctor or a public health specialist -- but a medical person whose offices are in USAID, full-time, so that he can invest the money from his foundation -- a $30 billion foundation by the way in their endowment -- in USAID health projects. They don't give us the money, but they go along side and invest in the same sorts of things, using the same approaches, because it's so useful from his perspective not to have to create his own huge bureaucracy.
A private foundation put that much money into GAVI and had a profound effect on that fund. Gates put in more money than any government in the world. We need to talk with each other in the foundations, the corporate sector, the NGOs that have the grass roots networks, and the universities that do research to see if we can find projects to work on together to combine each other's strengths and change the way in which we do our work.
That's my last comment. I think if we can change the agenda, and not just deal with the traditional, we may make progress that in many countries, so far, has been thin.
Thank you very much.
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Last Updated on: January 02, 2009 |
