War Torn Countries Need Help From International Entrepreneurs

I’d like to thank Leon Trammell and members of this Committee for inviting me to discuss the vital role of the international business community in helping the liberated people of Iraq and Afghanistan rebuild their countries, forge transparent and democratic governments, and ensure the protection of their human rights and individual freedoms.

Freedoms and Markets

You may ask what democracy, rights, and freedoms have to do with your efforts as business to turn a profit.

You know that business leaders owe it to shareholders, employees, and even to the greater good to focus on supply and demand. The profit motive drives the competitive forces that create employment and give incentives to research and development. These fruits are what ultimately offer cause for hope for lifting people out of poverty.

In Afghanistan and Iraq we have opened an opportunity for two of the world’s most oppressed people. But let’s be clear, government cannot do all of the work from here forward. Government can best facilitate. The Afghan and Iraqi people, working in response to the incentives created by their new freedoms, will rebuild their countries and integrate them into the world community.

To do so, the Afghan and Iraqi people need help from the international business community. They, like people in many countries recovering from wars, dictatorship, or breakdown of order, need you to lead by example. They need you to show in word and deed your active support for rule by law. You can show how modern, socially responsible capitalism mobilizes people’s efforts to build better lives.

Before addressing what you can do specifically, let me outline a series of watershed international events which advance our results-oriented approach which is anchored on responsibility, sustainable development, prosperity, and good governance.

From Doha to Seoul

In November 2001, at Doha, the World Trade Organization launched global talks concentrating on trade as an engine for economic growth and development. This approach goes beyond liberalizing trade to focus on helping developing countries build their capacity to trade.

At the March 2002 Monterrey Conference on Financing for Development, developed and developing countries reached consensus on a new bargain on assistance. Donor nations will provide more and better help, and developing countries have committed to creating the domestic conditions to put assistance to good use.

In Monterrey, the President unveiled his signature development initiative -- the Millennium Challenge Account (MCA). The MCA will provide billions of dollars of additional assistance to poor countries to spur economic growth and attract investment, but will help only countries that govern justly, invest in their people, and open their economies to entrepreneurship.

The September 2002 Johannesburg World Summit for Sustainable Development resulted in a comprehensive plan that connects poverty alleviation, economic growth, and environmental stewardship. Johannesburg underscored the key role of all stakeholders -- government, civil society, and the private sector -- in this process.

In Seoul in November 2002, at the second Community of Democracies Ministerial, we sought to expand democracy, equal justice, religious tolerance, respect for women, and limits on the power of the state. The Seoul action plan is hard-headed, results-oriented, and demonstrates that democracy is not a foreign import.

This month, Korea hosts two international anticorruption conferences. We have put fighting corruption as a high Bush Administration priority, especially since its corrosive effects often abet broader lawlessness and rob many of hope for a better life.

So, what have been our fundamental goals in Iraq and Afghanistan?

Freeing Iraqi Creativity

In Iraq, we are putting the kind of principles I described into action to overcome enormous challenges. We are supporting Iraqis’ efforts to rebuild a just and prosperous society after two and a half decades of Saddam’s tyranny.

Meeting human needs is at the top of the list. For example, almost one-third of children in the south and central regions are chronically malnourished, and 5 million people lack access to safe water and sanitation. The education system -- once one of the best in the Arab world -- has deteriorated dramatically, in a country where more than 40% of the population is younger than 14.

In addition to alleviating suffering, we are leading an international effort to rebuild Iraq’s infrastructure and institutions. President Bush requested, and Congress approved, $2.4 billion dollars to begin to address needs including:

• Rebuilding trade capacity;
• Water, sewage, and power plants;
• Medicine, hospitals, and healthcare programs;
• Schools and other education needs;
• Telecom networks;
• Roads, airports, and seaports; and
• Helping Iraqis establish the political and legal foundations for stability.

Iraq has been an entrepreneurial, well-educated, and sophisticated society. Yet Saddam’s misrule left the economy in a shambles. To help Iraqis create jobs and bring goods and services into communities, we need to help build a private sector-oriented market system that can sustain long-term growth, allocate resources efficiently, and spur inventiveness.

The new economic system must rest on rule of law, including legal protections for property rights and foreign investment. We must spur Iraqi commerce, including, when they are ready, encouraging them to apply to join the World Trade Organization. Iraq will also need a modernized central bank and financial system, including ways to provide affordable credit to small and medium enterprises.

Reviving Afghanistan

A year and a half after the overthrow of the Taliban regime, Afghanistan’s transitional Islamic government is making good progress in meeting enormous challenges and improving citizens’ lives, but American and other international assistance remains critical.

The U.S. has rebuilt or is rehabilitating more than 250 schools, and overall enrollment has more than doubled and has increased about tenfold for girls. U.S. and coalition activities have rebuilt over 70 hospitals, clinics, and women’s health centers and have brought basic health care services to about 1.5 million Afghans in rural areas. We are rebuilding the key road between Kabul, Kandahar, and Herat. The U.S. assisted in changing over the Afghan national currency, helping to stabilize the economy.

It is beginning to revive, albeit slowly. The World Bank estimates the economy grew by 10% last year, and the streets and markets are bustling with new commerce.

Reconstructing Afghanistan on a solid foundation requires building respect for human rights and the rule of law. The U.S. supports the Afghan Constitutional and Judicial Commissions and the Independent Human Rights Commission. In addition, we plan to create 14 women’s resource centers throughout the country’s 32 provinces.

With that background, what further, as a practical matter, can international business leaders do?

First, organizations and individuals such as this Chamber and its President, Thomas Donohue, have long provided critical issue leadership on the need to open markets based on transparent rules. I would like to applaud the Afghan-American Chamber of Commerce, the U.S. Chamber and CIPE, which are promoting an open market economy in Afghanistan and invigorating the private sector. I particularly support your special emphasis on the role of women in business in Afghanistan. We now need to tap into those efforts even more, and particularly for Iraq.

This will be complicated. There are dozens of security, economic, and other equities to be balanced. Government can best handle that balancing role with the active counsel of business leaders. So, Chambers of Commerce and like organizations need to extend their vibrant government and public outreach programs even more assertively into the world’s toughest regions and issues.

Second, members of organizations such as the Chamber can reach out to the governments, businesses, international financial institutions, and other partners you work with worldwide. You can make it clear that corruption; weak law enforcement; trafficking in weapons, drugs, and human beings; complacency in the face of epidemic disease; wanton destruction of the natural environment; and repression of worker and human rights threaten global trade and financial systems. You can advise governments like those of Afghanistan and Iraq on how best to protect critical infrastructure.

Third, you can take the message that freedom grounded in responsibility is what breeds hope. Take it to the media, to civic groups and to your employees, suppliers, customers, and shareholders. Demonstrate through good works in the communities where you do business and through encouraging volunteerism among your employees. In Afghanistan and Iraq, support civil society efforts to call for and ensure good governance, civil participation, and human rights. The power of your example as socially responsible private entrepreneurs can influence significantly those societies wanting to advance. In short, you can market new ideas and hope.

The Bush Administration has laid forth its strategy, the National Security Strategy of the United States of America. It calls for expanding the global circle of prosperity and creating more democratic and law-based societies. Private-public partnership is a thread running throughout the strategy. The root of the Bush strategy is to foster freedom and democracy.

As the President put it: “In the 21st century, only nations that share a commitment to protecting basic human rights and guaranteeing political and economic freedom will be able to unleash the potential of their people and ensure their future prosperity.”

Responsibility and Private-Public Partnerships

Around the world, foreign direct investment is a powerful force for development. In less developed economies it can bring critical modernizing influences in rule of law, anti-corruption, labor rights, and related areas. Not only does foreign direct investment bring capital, it brings new technology, management skills, and knowledge of corporate governance and market-based principles.

The State Department sponsors the “Award for Corporate Excellence” to honor exemplary business practices and innovative business leaders. Companies are recognized not only for their business practices but also for their respect for environmental, labor, and human rights standards as well as their contributions to local communities. I hope one of your companies will win this prestigious award by carrying out a socially responsible international business model in Afghanistan or Iraq.

Concluding Remarks

Trade and investment coupled with good governance and responsibility can, and do, create conditions that lift people out of poverty, raise educational and health levels, improve working conditions, and expand human freedom. These improvements then cycle back into increased business as newly empowered customers, suppliers, and financial partners explore their expanded opportunities.

Your practical experience and “can-do” attitude as international business leaders are indispensable to Iraq, Afghanistan, and the world as an integrated whole. As modern, socially responsible business models based on human freedom spread, so does hope for a better tomorrow. Thank you .