FROM THE OFFICE OF PUBLIC AFFAIRS

It is a pleasure to be with you tonight to honor three men from different countries and backgrounds, but who are all working to transform their respective nations into stable, prosperous, democracies.

President Constantinescu was elected at a time of profound political and economic challenges in Romania. He has worked tirelessly over the past 18 months for economic and political reform and transformation in Romania so that Romania may take its place among the growing economies of the region. President Constantinescu has also been an effective advocate of inclusion within the political process.

President Shevardnadze is a man of extraordinary vision and has shown great personal courage in his efforts to create a prosperous and democratic Georgia. President Shevardnadze has had to lead his country back from abject economic collapse resulting from the ethnic and civil strife that accompanied Georgia's re-birth as a nation. Under his leadership, Georgia has become one of the few countries of the former Soviet Union that can boast of strong growth, low inflation, and a democratic government.

And Mr. Alekperov is a business leader whose company--LUKOil-- offers a good example of the benefits that Russia can derive from one critical area of reform, the privatization of state-owned enterprises in the energy sector. His company has demonstrated foresight and business acumen in setting up constructive partnerships with Western firms that will help LUKOil develop Russia's natural resources.

Now, I would like to expand briefly on the opportunities and challenges presented by the transition of the economies of Central Europe and the former Soviet Union and what the rest of the world, especially the United States, can and should do to help them.

The ongoing transition of these nations is an unprecedented event in global economic and political history. These are countries attempting a peaceful revolution: the fundamental transformation from one political and economic system -- authoritarianism and state-planned economies -- to another -- democracy and free market economics. Although progress varies from nation to nation, we all should acknowledge the tremendous gains that have been made from where these nations started, while at the same time recognizing the enormity of the challenges ahead.

This transformation is very much in the economic and national security interest of the United States. In the course of less than a decade, the East-West enmity has ended, replaced by economic and political cooperation which hold great promise for the people of both Eastern and Central Europe and the United States.

However, the transition of these countries is far from complete. The nations that took the largest steps towards reform early on, such as Poland, Hungary and the Czech Republic, are the nations that are now performing best. Others have moved more slowly and are not doing as well. But all face difficult challenges ahead in continuing on the path of reform. Georgia and Romania, for example, both face tremendous challenges in building an environment in which private enterprise can flourish.

At the same time, the financial crises in Asia have buffeted Central and Eastern Europe, including Russia, making the challenge of economic reform all the more difficult. With the situation in Russia currently receiving much attention, let me make a couple of overarching points.

First, Russia's recent financial turmoil and continuing problems should not divert attention from the key, which is to continue building on the reform that Russia has already made. That means implementing further fiscal reforms, including revision of the tax code and effective tax collection, completing the privatization program, strengthening the banking sector, strengthening property rights (such as for land), rationalizing the regulatory system, and very importantly combating corruption.

Second, the United States has a strong stake in Russia's economic success. That success would increase Russia's market for our exports, would prompt political stability and political reform and thus our national security, and would contribute to economic growth and political stability in the region.

At a time when so many developing and transitioning countries around the world are turning to democracy and free market economics, the United States has a critical leadership role to play in helping these countries. Yet I am deeply concerned that public support for forward-looking international economic policies may be waning at a time when our country's economic, national security and geopolitical interests require exactly the opposite. At the end of last year, for example, Congress, failed to provide funding for the International Monetary Fund, even though the resources of the IMF are dangerously low as a result of the recent financial crisis in Asia, failed to grant the President fast track trading authority, and we are now being left behind as other countries liberalize trade and investment without the United States, and failed to approve payment of our arrears on dues to the United Nations, and we will lose our vote in the General Assembly by the end of this year if these arrears are not paid.

In recent years, we have seen both an erosion of the traditional bi-partisan 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 response to all of this, however, ought not to be to turn inward, or to futilely try to dismantle the global economy that has benefited so many. Instead, the response should be for the United States -- and all nations -- to provide education and training to equip citizens with the tools to prosper in the global economy; to help the dislocated re-enter the economy successfully quickly and successfully; and to provide an appropriate social safety net.

At the same time, all of us -- public sector officials, the business community, and foreign policy experts-- must work to build broad public understanding of the importance to our economic well being and national security interests of strong U.S. interests of strong U.S. leadership in the global economy. Leadership in the global economy must be grounded in public support for the leadership at home.

And it is critically important that Congress now approve our contribution to the International Monetary Fund. As I said a moment ago, the IMF does not have sufficient funds to deal with a truly major crisis, for example, if the Asian crisis were to worsen or if a new crisis were to develop. Although the probability of such events occurring is low, the effects of such events would be severe and we should not take the risk of inadequate IMF resources to try to respond effectively.

Poland provides a good example of how effective the IMF has been in Central Europe. The IMF helped Poland slash inflation and sustain growth and, with the World Bank, provided almost $5 billion of loans to help it through the harsh years of adjustment that set the stage for its subsequent recovery. GDP in Poland has risen by more than 35 percent in real terms in the past six years. Private investment has now overtaken official sources of finance as the leading source of capital and Poland has repaid all of its outstanding IMF loans of nearly $2 billion.

Our success in providing leadership on critical international issues through the IMF and the UN and on doing our share to fund these institutions, and our success in continuing to liberalize trade while we work to broaden participation in the benefits of the global economy, and on the underlying requisite for all of this of building broader public support for international economic policies, is critical to our country's economic well-being and our national security for the years and decades ahead. We must all work together to meet those critical challenges. Thank you very much.