22 September 2003
State's Larson Praises Iraqi Decision To Allow Open Investment
No specific amounts of reconstruction aid requested from Arab states, he says
Under Secretary of State for Economic and Business Affairs Alan Larson said the Iraqi Governing Council's decision to have an open investment regime is "a very wise decision."
Larson, spoke September 22 with Abu Dhabi TV in between meetings of the International Monetary Fund (IMF) and the World Bank in Dubai. He said that many countries who had previously decided to allow open overseas investment "found that openness to trade and foreign investment is a very successful pathway to economic growth and to improving the lives of their citizens.
"It makes common sense for Iraqis who are trying to shake off years and years of oppression to try to be better connected with the world, and foreign investment and trade are two ways of doing that," he said.
Larson also said the United States is not asking for specific donations to Iraq reconstruction from other Gulf and Arab states, but is asking all countries to give what they can afford to contribute towards the $50-75 billion the reconstruction is likely to cost. The United States is contributing $20 billion towards the effort, he said.
Looking to the region as a whole, Larson pointed out the connection between political and economic reforms, saying "experience has shown that there are certain [political] factors that are helpful to economic progress."
"[W]e do believe that those that give their citizens a voice in governance and that respect human rights tend to have better performance economically. But those beliefs, he said, "are from relative experience" and not "something the United States is trying to impose."
Larson also took questions on the failed World Trade Organization (WTO) meeting in Cancun, Mexico, and the International Monetary Fund/World Bank meetings in Dubai.
Following is a transcript of the interview:
(begin transcript)
Undersecretary of State for Economic, Business, and Agricultural Affairs Alan Larson
Interview with Abu Dhabi TV at the IMF/World Bank Annual Meetings in Dubai, United Arab Emirates
September 22, 2003
Q: Some people say that Washington sold Iraq after the Finance Minister announced a package of reforms allowing foreign ownership one hundred percent for most Iraqi sectors, what would you say to that?
U/S Larson: I think that the decision by the Governing Council announced by the Iraqi Finance Minister to have an open investment regime is a very wise decision. I think that many countries in the world have found that openness to trade and foreign investment is a very successful pathway to economic growth and to improving the lives of their citizens. It makes common sense for Iraqis who are trying to shake off years and years of oppression to try to be better connected with the world, and foreign investment and trade are two ways of doing that.
Q: Is it allowed for these private companies to enter the Iraqi market and to have broad ownership?
U/S Larson: I think you should ask the Iraqis who are here, the Finance Minister and the Planning Minister, and they can explain what their rules are.
Q: You made clear at these meetings here in Dubai, what did you talk about, what did you ask them for, and is the outcome of them?
U/S Larson: Our conversations with the Iraqi delegation first of all focused on the announcement that they made later that day about foreign investment and trade, and they briefed us on what they were proposing to say. Secondly, we spent a lot of time talking about the importance and the urgency of the reconstruction task in Iraq. My government has said that the reconstruction task could run into $50 to $75 billion. We are contributing, the United States, $20 billion. It's going to be very important to find others in the international community who are prepared to make a major contribution to help the Iraqi people build a better future for themselves.
Q: What is the amount that the Arab and Gulf countries will be requested to donate to the reconstruction of Iraq?
U/S Larson: We are not asking for specific amounts. What we have been doing is describing the magnitude of the task and asking each country to do the most they possibly can.
Q: To what extent are you hopeful to achieve success in the donors' conference in Madrid next month?
U/S Larson: I think it's vital that there be a successful donors conference, that this is the moment for the international community to rally around the Iraqis who have had 25 miserable years of destruction, who deserve all the help we can possibly provide in building a better future.
Q: What is the worst scenario for the American Administration in Afghanistan and the Middle East?
U/S Larson: We were not spending a lot of time worrying about the worst scenario, we spending our time working to achieve the best scenario.
Q: What is the best scenario?
U/S Larson: I think the best scenario is where we are successful working together with countries of the Gulf and others in helping the Iraqi people create a country that is prosperous, at peace with its neighbors, and a responsible player in the international community. I think a situation in which we are successful in promoting the implementation of the Roadmap, in which we see a Palestinian state and an Israeli state living side by side at peace with one another and in prosperity. I think that a Middle East where the countries of this region are better connected to the world economy, where more capital is flowing in to them rather than flowing out of them, and where there's a much greater degree of trade and economic integration among them than is present today.
Q: How do you think Washington will be able to achieve these aims or will be distracted from Iraq by the upcoming elections?
U/S Larson: I don't the elections will impede our efforts in any way. But I don't think we can achieve any of these goals on our own. We're going to need help from many countries, certainly from the United Arab Emirates and other countries in the Gulf as well as countries in Europe and in Asia. But this is a task that is so important and so urgent that it has to continue, irrespective of the elections.
Q: The United States and other states follow free trade procedures, and looking at Cancun in Mexico, the World Trade Organization negotiations collapsed. The United States pays $60 billion annually to its farmers to preserve its farming products. Washington pays about (inaudible) to its farmers which is about four times more than it spends for the entire African continent. How do look at this contradiction in the way America says it follows free trade and way it practices it?
U/S Larson. Very, very simply. First of all, I was in Cancun with Ambassador Zoellick [U.S. Trade Representative Robert Zoellick], and we worked very, very hard for an agreement that would have brought down drastically agricultural subsidies that distort trade, including export subsidies as well as market access barriers. You and your listeners should know that American subsidies are far lower than those in Europe and of Japan. But, we agree that they are not low enough and we would like to have negotiated a very important liberalization of agricultural markets, lower barriers, lower subsidies, and the elimination of export subsidies. Unfortunately, at the meetings in Cancun, there was an atmosphere that was somewhat polarized, and it was only when it was too late that countries realized that there was a deal potentially available that could have made all of us better off. Now we have the assignment to see whether we can recover that deal in the future.
Q: The IMF (International Monetary Fund) and World Bank said that they will not participate in Iraq's reconstruction unless the international concert, meaning Washington, Paris, and Bonn, holds talks. What are you going to do if the next month international donors conference fails in Madrid?
U/S Larson: The conference will certainly be there, and I think that the World Bank and IMF said something a little bit different. They are going to be prepared in my judgment to undertake operations in Iraq and at an appropriate moment when there's an ability on the part of the Iraqis, not only to receive grant assistance, but also receive loans. We believe that the work that is going on towards a Security Council resolution in New York will go a long way towards building a stronger mandate and stronger political base for reconstruction. We think that when countries look at the question -- "Are we prepared to tell the Iraqi people, who have been the victims of Saddam Hussein, we will help them recover their country?" -- we think that they will want to help. Any differences there were over the circumstances regarding the initiation of the war should evaporate when the question is looked at in that light.
Q: What does Washington want to achieve at the meetings in Dubai?
U/S Larson: We have many goals, and I think we are achieving those goals. First of all, we thought it was very important to make the case for increased and accelerated assistance for both Iraq and Afghanistan. We had some very good meetings on both subjects over the course of the last few days. There's important work as well on the standard issues of development. There was a meeting of the Development Committee today that helped focus everyone's minds on the task that we all have to help the poorest countries in the world to help their people have better lives. These are very important institutions. The IMF and the World Bank play a very important role in fostering prosperity, fostering solutions that lead to prosperity. So we support them and think it's been a very good week. We congratulate the United Arab Emirates for hosting these meetings in Dubai.
Q: Does Washington want political reform to be brought before economic progress is realized in the entire region?
U/S Larson: It's not for us to insist on political reforms before there is economic progress. I think that experience has shown that there are certain factors that are helpful to economic progress. We believe, for example, that countries that invest in their own people tend to have greater economic progress. We believe that countries that practice economic freedom tend to have better economic progress. And we do believe that those that give their citizens a voice in governance and that respect human rights tend to have better performance economically. But those are from relative experience not something the United States is trying to impose.
Q: From Washington's point of view, are the Arab countries doing enough to fight terrorism funding?
U/S Larson: We have been very encouraged by the progress that has been made on terrorism funding. I think that the starting point is that terrorism affects all of us. Terrorists don't discriminate. They've attacked the United States. They've attacked Saudi Arabia. They've attacked Indonesia. We all have to be a part of fighting terrorism, and I think that there's been good progress on that over the last year.
(end transcript)
(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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