FROM THE OFFICE OF PUBLIC AFFAIRS

It is a pleasure to be with you this evening. Let me start by expressing my deep gratitude for the Global Leadership Award. It is especially rewarding to receive an award from the United Nations Association, a group dedicated to U.S. leadership and engagement in international affairs. Moreover, by honoring me, you honor President's Clinton entire international economic policy team, and most importantly, you honor the President himself, who from the first moment he stepped into the Oval Office in January 1993 he has acted on a deeply held views that we live in a global economy, where our economic well-being is inextricably linked to the rest of the world.

But as we speak tonight, the global economy facing what may be, in many respects, its most serious crisis of the past fifty years. This crisis presents two challenges to the international community. The first challenge is to do all that is sensible to help the affected countries return to stability and growth and to limit contagion. A second challenge, one that must be pursued simultaneously, is to build a new architecture for the international financial system so that we can better prevent crises in the future, or better manage them when they do occur.

At the heart of these challenges is the question of how to reconcile the sovereignty of nations on the one hand with the economic interdependence of all nations and the transnational character and needs of the global economy on the other hand. A couple of weeks ago, I had dinner with Kofi Annan and several of his United Nations colleagues. We spoke of how the United Nations and its supporters have long understood this quandary, and how global interdependence has long underscored the activities of the United Nations in all its activities, most notably promoting peace but also protecting the environment, dealing with refugees, and combating disease. Now, the tension between sovereignty and the need for international cooperation has been heightened as a result of the development of a global economy and global financial markets.

Today, the importance to all nations of each nation pursuing sound economic policies is greater than ever. The global capital markets reward countries that pursue sound policies, and punish those that do not, far more than used to be the case, and the failures of one nation can now affect others to a far greater degree than in the past. Moreover, the international community must devise better ways to deal with the overarching issues of the global economy better.

With respect to dealing with the immediate crisis, the problems developed over many years, there are no easy answers, and working our way through it will involve multiple difficulties and will take time. But, I believe we are on the right track and the key is for each nation and each international institution is to do its part. Moreover, in part stemming from the increased energy and shared concern around this crisis coming out of the various meetings in Washington during the annual fall meetings of the IMF and World Bank, there have been a number of significant developments in the past few weeks, including Congress providing IMF funding, passage of Japanese banking legislation, and greater emphasis on promoting growth in the industrial nations.

At the same time as the international community deals with the current crisis, it is also intensely focused on the complex issues of global financial market architecture. In addition to issues like transparency, where real progress has been made in developing proposals, the international community will have to deal with extraordinarily complex issues around exchange rate regimes, financial system issues in both lending and borrowing countries, overarching surveillance of national financial system regulators, countries that choose to provide safe havens from regulation, and making lenders and creditors bear more of the consequences of the risks they took when crisis hits and so part of the solution, something that is difficult since there is no international bankruptcy law and the debtors are often sovereign nations.

As the international community works its way through these issues, in my view, we must not lose sight of a very important point: the market based system has produced enormous benefits for tens of millions of people around the globe. However, we must greatly reduce the susceptibility to financial crisis, and we must do a better job of seeing that the benefits are broadly shared. This latter point is why it is critically important to provide a strong social safety net and humanitarian aid to those in need, and to promote growth in developing countries. As you well know, these are two areas where the United Nations has long played a key role, and must continue to do so going forward.

I also believe that Africa deserves special focus by the international community. This past summer I visited a number of countries in Sub-Saharan Africa, and I observed first hand many of the challenges--and they are great-- and the opportunities--also great-- facing countries in that region. I left intrigued with Africa, and impressed by many of the people I met and by the untold story of economic reform and success in a number of countries. Helping the nations of Africa attain better education, better health care, stronger legal systems, good governance regimes and the other underpinnings for economic success is not only the right thing to do, it is in the enlightened self-interest of the industrial nations. An Africa that succeeds economically, that is at peace internally, and that protects its environment, will contribute to a better and more prosperous world for all of us.

To return to the global economy, meeting all of these challenges-- addressing the immediate crisis, building the new architecture, and promoting growth in developing countries -- requires difficult political decisions in both the industrial and the developing nations and in the international institutions. That, in turn, depends on wise and strong leadership on what are often complicated and politically difficult issues. We have seen that kind of leadership in the example of Kim Dae-Jung of Korea, who, like Nelson Mandela, spent years in prison for his beliefs, and who is now leading his nation through a period of difficult economic reform. Although there are still great challenges ahead, Korea's short-term interest rates have fallen from 25% to 7% and the currency has substantially strengthened. And we have seen that kind of leadership in the example of people who serve the United Nations, such as Maitre Blondin-Beye, who drove the Lusaka peace process for Angola, and whose untimely death is sorely felt.

Providing strong leadership must be coupled with generating broad public and political support for politically difficult policies, which, in turn, requires broadening public understanding and helping people see that these policies are in their interest. Kofi Annan has set an example for all of us through his activity all over the globe, and this is a critical function of the United Nations Association in the United States, where broad based support for international policy continues to present a very serious challenge.

After a year-long debate, Congress has now approved funding for the International Monetary Fund. This is critical to our capacity to address the current financial crisis, but much remains to be done. Congress has not passed a bill that the President can sign to pay our arrears to the UN. We also lack the authority to negotiate new trade agreements, even though expanding trade is very much in our interest, and protectionist pressure seems to be increasing in our country. After almost six years in government, I have become deeply concerned that public support for forward-looking international economic policies may be waning just at a time when our country's economic, national security and geopolitical interests require the opposite.

In recent years, we have seen both an erosion of the traditional bipartisan base of support for international economic engagement and, at the same time, a re-ignition of one historical strain in American thought, a rejection of the outside world. This has occurred for at least two reasons: anxiety brought by the rapidity of change in this era of the global economy and dramatic technological developments; and the end of the Cold War, which caused the foreign policy consensus to lose its centerpiece -- the effort to contain Communist expansionism.

The history of this century has clearly demonstrated the folly of our turning inward. For our country to achieve the opportunities of the global economy, and not turn inward, we must build greater public understanding of the benefits to our economic well being of a market based global economy and of strong U.S. leadership in that global economy. The United Nations Association has long been at the forefront of efforts to build support for U.S. international engagement, but all of us -- public sector officials, the business community, foreign policy experts -- must redouble our efforts, especially given the greatly heightened importance of strong United States international engagement in an era of a far more interdependent global economy. Our success in meeting this critical challenge is imperative as we approach a new century. Thank you very much.