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NEWS BRIEFING WITH LAWRENCE SUMMERS, SECRETARY OF THE TREASURY RAYMOND OFFENHEISER, PRESIDENT, OXFAM

Questions from IPA appear below in bold

HEADLINE: NEWS BRIEFING WITH LAWRENCE SUMMERS, SECRETARY OF THE TREASURY RAYMOND OFFENHEISER, PRESIDENT, OXFAM

DEBT RELIEF TO POOR COUNTRIES AND OXFAM EDUCATION NOW AWARD

INTRODUCTION: MARTA ARIAS

LOCATION: NATIONAL PRESS CLUB, WASHINGTON D.C.

BODY:

MS. ARIAS: Good morning. My name is Marta Arias, and I would like to welcome you all here and say a few words on behalf of Oxfam International.

This jubilee year has seen the most reluctant international institutions accept the need for delivering faster and deeper debt relief. And that has resulted in additional resources for education, badly needed in the poorest countries, as well as for all the poor country priorities such as AIDS prevention. The IMF and World Bank’s speed to get more countries accepted for debt relief by year’s end may be aimed at an arbitrary target, but it sows this welcome sense of urgency about debt. That sense has trickled up from millions of religious and citizen campaigners in rich and poor countries through the national governments to the multilateral banks. And Secretary Summers’ work with this coalition here in the U.S. is a striking but not singular example.

At Oxfam we would argue that the way the massive call to action to lessen the debt burden of the poorest nations has been acted on by political actors and institutions is the most promising part of the debt relief campaign. We believe that the Heavily Invested Poor Countries Initiative provides some of the funding desperately needed to achieve goals like getting every child into school. And the coalition that passed debt relief is a model for how to mobilize support for international policies to reduce poverty.

So we are here today to mark progress. But we are not yet at a permanent conclusion to the debt crisis — not even with the acceptance of 20 countries into the debt relief framework and these countries’ plans to use the new resources to invest in social services as education.

National budgets in poor countries will still be under pressure because of debt service costs. We think that countries should pay less, and we also think that they should make more. Trade barriers have a massive impact on their ability to pay. The U.N. estimates the poorest countries lose more than $14 in export earnings from every dollar they gain in debt relief or in aid.

So in the case of debt relief there is a plan, but persistent resource challenges. In the case of education, there are new resources coming from debt relief, but there is a persistent need for a global action plan to tie all the resources together. One hundred and eighty-eight countries at a U.N. conference Dakar in April this year committed themselves to adopt an immediate global initiative, but eight months later, nothing is moving yet.

The G-8 agreed on this in Okinawa, and Secretary Summers could describe better than I the difficulties of convincing them to live up their promise in Prague just a month later, when the poverty-focused meetings of the World Bank and IMF were distracted by the price of oil and the Euro crisis.

A global initiative on education is still needed to ensure that resources coming from debt relief and aid go where needed. And it is needed to ensure that the international community actively promotes access to education and doesn’t undermine those efforts with an insistence on cost recovery frameworks that ultimately mean imposing formal and informal fees for grade schools.

Next year will be critical to progress on education, to implementing debt relief, and to building on existing support for a wider effort against poverty. The political climate will be different, but the desperate need will surely remain.

Thank you.

MR. OFFENHEISER: Good morning. My name is Raymond Offenheiser. I’m the president of Oxfam America. It’s great for me to be here today, and I thank you all for joining us. I especially would like to welcome Secretary of the Treasury Lawrence Summers, who is our special guest this morning and our honoree.

The holiday season is a time for celebrating and for giving thanks, and this year we have a lot to celebrate. As you know, in November, the Republican Congress and President Clinton enacted a bill that included $435 million for international debt relief funding. This victory was the culmination of much hard work by many people and many organizations, yet it is also just one step on the road to poverty reduction.

International debt relief funding has the potential to transform the lives of millions of people in the poorest countries by supporting efforts like the provision of universal basic education. And as people who focus on huge problems like poverty and illiteracy, Oxfam America has a responsibility to speak out when something goes right.

The United States government helped create the debt relief program and it is a reality because President Clinton and Secretary Summers, along with congressional leaders like Senator Hagel and Congressman Baucus and Congresswoman Waters, and even Senator Helms, have taken risks to support it.

We think they’ve started something really big and really important. Americans, we believe, will support more international aid, especially if it’s going to something they believe in, like schools, vaccinations, or HIV AIDS prevention.

Our strategy, along with those of our colleagues in the Worldwide Jubilee Coalition, was to act as if Republicans and Democrats, Congress and the White House, would come together on funding for debt relief. And in fact they did. And at Oxfam we’re optimistic this will continue, given the president-elect’s support for responsible debt-relief programming.

If the world meets its goal of providing universal education for every child by 2015, as something like 190 countries have agreed, it will be because of a lot of planning and investment by poor countries and modest contributions from rich countries, brought together through efforts like debt relief.

When school fees are dropped, as Tanzania, Uganda, and Benin have done, a great thing happens: All the kids go to school. We thank these countries for showing the way, and we recognize this morning, the Ambassador of Senegal who’s joined us this morning for this event. Honduras has used the benefits of debt relief to improve their social contract. And as a result of their savings, children will get nine years of free education, not just six.

Aside from praising the benefits of debt relief and universal education, we’re here today to honor Secretary Summers for his contributions to helping further these goals. It’s quite rare that we have a Treasury secretary who has thought at all about the developing world before taking office. But we’d like to focus on something specific Secretary Summers helped us focus on.

Oxfam chose to tackle the issue of universal basic education with a global movement because we believe that no child on the planet should be denied an education; not because of the cost of school and books and uniforms, and not, most importantly, because she’s a girl. And it turns out in most places that there is a direct relationship between gender and cost. Parents really want every single child to learn to read. They start with the boys because they can’t afford to send all the kids. It is by now well-accepted that the best public investment for a poor country is basic education, particularly for girls because they will run more productive farms, businesses, and raise healthier children later.

We owe this realization first to Secretary Summers, and understand the transformative nature of something now so obvious — you have to remember that he wrote about this issue more than 10 years ago, when he was chief economist at the World Bank.

At that time the best public investment you could make to develop a poor country was generally thought to be a very large hydroelectric plant or project, a belief that was reflected by the Bank’s lending policies during those years.

So there was some irony when we asked Secretary Summers to convince the G-8 to commit to a global initiative to put every child in school. But it is no surprise that he and the president delivered on that, and that he has kept supporting a drastic increase in World Bank lending for education as part of that initiative, or that U.S. support for international education will increase by more than 40 percent this coming year.

Mr. Secretary, for making us all think about the critical role of education in the developing world, especially for girls, and for doing something about it, I’m pleased to present you with Oxfam America’s Education Now Award. Mr. Secretary, could you step forward?

(Award is presented, applause.)

Stand there just one second, Mr. Secretary? That’s not all we want to give you this morning. Oxfam also would like to give you a special gift in recognition of your advocacy for the role of education. It was made by one of our West African partners, and we’ll know — we’re sure that you’re going to agree with the sentiment.

Marta? (Gift is presented, applause.)

The secretary will now offer some remarks.

SEC. SUMMERS: Ray, thank you very much for this honor. It means a lot. Mr. Ambassador, it’s good to be here with you. It’s good to be here with Oxfam. You all do remarkable things.

As I said in a ceremony where we celebrated the passage of the debt relief legislation at the White House, there are many lobbyists and many people trying to get legislation passed who are better paid than those who worked on the debt relief issue. But there are none who are more informed and more committed to their cause. And there are none who are more effective.

This is not something that anyone would have thought likely two years ago.
There was not an enormously hospitable political environment, and it was your hard work, your persistence, and the rightness of what you were trying to do that is the reason that the United States is on the right side of this bit of history. I think it’s going to make a difference.

We’re coming to year end. Twenty-two countries — let me say that again — 22 countries, nearly two-thirds of those in the initial potential universe, will have qualified for debt relief by the end of the year. That debt relief will save them a billion dollars a year in the next several years that would have gone for the sterile objective of paying interest or principal. That is a billion dollars a year to educate children in countries where an extra child can be educated at a cost of $40 or $50 a year. That is a billion dollars a year that can be made available to support immunizations in countries where lives can be saved for dimes, through the spread of immunization. That is a billion dollars a year that can be available to make sanitary water a birthright.

But you know, as I also said at the White House, as important and as significant as this initiative is, as significant an initiative as this is for the United Stats and for the world, what ultimately will matter is how it is implemented and what actually happens in countries. Will civil society be involved in the right way? Will there be sufficient safeguards that funds are not diverted to the wrong uses? Will accountable and effective public institutions come into being, or will the proceeds be squandered on conflict and division, as assistance efforts too often have been in the past? These are questions for Africa, these are questions for all the countries involved. These are questions for those involved in providing assistance. These are questions for the international institutions, and these are very hard but very, very important questions.

I am particularly grateful to see the emphasis in this presentation on the issue of education because I suspect that the calculations that I did ten years ago will be even stronger if they were repeated today.

At that time I estimated that educating girls was the highest return investment available in the developing world because of the pecuniary benefit in terms of higher wages, because of the reductions in maternal mortality that resulted, because of the changes that it made over the next generation in the way children were brought up, because of what it meant in terms of the way people farmed, because of what it meant in terms of the way the environment was protected, because of what it meant in terms of the spread of sexually transmitted diseases, because of what it meant in terms of the openness to the rest of the world.

If we have seen a decade in which global integration is more important than it used to be; in which the knowledge economy is more important than it used to be; in which AIDS is a more serious threat than it used to be; in which the challenge of raising healthy, happy children has become more important than it ever was in the past, all of those things are reasons why what was true ten years ago is even more true today about the importance of encouraging girls’ education.

The world economy is richer than it has ever been. Our country has more resources available to it than it ever has before. The costs of universal education are measured at the level of small numbers of power plants or dams. We do have the capacity to meet this challenge, and it is a challenge that should be met.

It is not about hands-out, it is about hands-up. It is not about whether you are for or against the market, it is not about partisan divides. No one, whatever their political persuasion, should doubt that educating children is a good thing to do and a good thing for the United States to support.

And I hope and trust that this will be a continuing passion of the United States. And I believe that, thanks to your efforts, it is now something that is very much on the agenda of the international community. I certainly hope it will be a preoccupation of the international institutions going forward.

Let me say finally that while I personally am honored to accept your reward, award, and to take advantage of this occasion to speak about some issues that I think are very very important; any success that we have had in this area is not my success. It is the success of a broad coalition that has come together to push these issues. It is a success of the president and the vice president in their leadership, and it is the success of many many people at the Treasury, in the White House, in the international institutions, who have worked so very very hard on these issues, and I think of myself as accepting this award on behalf of all of them. For it is them that you really should be thanking.

Let me say just two final things. You know, there is another thing that I think is very very important about what has been accomplished on the debt relief issue, and that is it has shown that the system can work. The system can make real and dramatic change. More countries are getting debt relief this year than have gotten debt relief in the history of concern about poor countries because of what you’ve done. There’s going to more emphasis in the next twenty-four months on health and education than there has been in the last twenty- four years. Working with the system can make a difference.

I think that it is terribly terribly important for the future of the poorest people on this planet, that those who care passionately about what happens to them not descend into the kind of nihilism that we saw too — we’ve seen too often in the streets, but figure out what’s right, what’s constructive and push for it, because that is the way you can make a very, very large difference.

Let me say just finally, on a personal note, that it’s been an enormous privilege to serve in the Treasury Department for these eight years and an enormous privilege to work and in some small way affect our nation’s policy, and perhaps even what happens in the world, on a range of issues. There are issues that may have a higher profile than this one. There are issues that may involve more billions of dollars than this one. But there is no issue of more moral significance and no issue that provides more moral satisfaction for those who work on it than the set of issues related to debt relief and to the development challenge. It has been an enormous privilege to have an opportunity to serve on these issues.

Thank you once again for this recognition. (Applause.)

MR. OFFENHEISER: I’d like to thank the secretary for his remarks. And maybe picking up on his closing comment, I think for those of us who have been involved in this movement over the last four or five years and feel great satisfaction at the passing of the bill and seeing this whole initiative move forward, while I’m grateful for the secretary’s willingness to share this award with us, I think for us in the movement it’s been extremely gratifying, encouraging and inspirational to see a Treasury secretary taking on the moral content of the argument that’s been put forward about basic education and debt and linking that to U.S. policy in the world and driving a policy like this through discussions at the international — in the international community. So, this for us, I think, was a novel experience. And I think that, going to your point about helping to link movements more effectively with policy reform, the extent to which we have leaders like yourself who are able to take on such complex moral questions and at the same time link them to highly technical issues like debt relief and move an agenda forward in the way you have I think is an inspiration to us. So I’d just like to thank you on behalf of all of us who have been a part of this movement over the last few years.

What I’d like to say now is that we’d like to open the floor to questions on debt relief and basic education. But I’d like to say with all the focus on domestic politics that has been dominating the news in recent weeks, we’re particularly delighted to have this opportunity to re-focus public attention a bit on larger issues that affect the well-being of billions of people, particularly children, around the world.

So we’d like to ask, for those of you who would like to put forward questions, that you address those questions to those topics, to issues of debt, education and international development.

And with that, I’d just like to open the floor to those of us from Oxfam or directly to the secretary.

Sam Husseini: Sam Husseini from IPA Media. I’m frankly a little bit puzzled. I’ve been looking at some numbers from the Center for Economic and Policy Research and they’re contending that many countries still under this program are going to be spending more under this program on debt servicing than on healthcare, than education and that under this program they would be spending more on debt servicing than they were last year, because these were bad loans anyway. Zambia’s payments will actually go up under this arrangement. Aren’t you sort of betraying the call of the religious community? As well as the Meltzer Commission which called for 100 percent debt cancellation. This falls far short of that, doesn’t it?

SEC. SUMMERS: That’s a very good and thoughtful question. It is terribly, terribly important that as part of making sure this program is effective as it possibly can be, that there be careful analysis and examination of the projections to assure that there are real and concrete benefits in terms of increased health and education.

I would say to you, though, that debt relief has to be seen in the context of a holistic development effort that includes foreign assistance, that includes concessional lending, that includes attracting private-sector investment that lays a basis for economic growth. And it seems to me simplistic and unconstructive to simply focus on ideas like the immediate elimination of all debt rather than focusing on what types of debt relief can make the greatest contribution to achieving the kinds of sustained resource flows that maximize the capacity for increasing health and education spending.

These issues will need to be continually examined. And I do not preclude in any way the possibility that further steps will have to be taken in the future. But I am firmly convinced that by getting debt relief on the agenda and getting countries qualified for debt relief in this jubilee year, we’ve made a very, very important difference.

As someone said, politics is the art of the possible. And I think we can take satisfaction from the fact that what has been possible is making a real difference.

Q A question for the secretary. Are you going to be returning to your career in education, or perhaps your career in development — (off mike)?

SEC. SUMMERS: I’m not sure that question precisely fits within the rubric of the constraints that are offered. I’m going to take some time after January 20th to do some thinking about many things, including what my next steps are going to be. But I’m sure that whatever set of choices I make, I will be very concerned to maintain an involvement with issues relating to development because of their overwhelming importance. And I look forward to continuing my relationship and my friendships with many of the groups that have worked very hard on these issues.

Mr. Ambassador?

Q Thank you, Mr. Secretary, for your work, your action and the action of President Clinton and his administration. We are very, very — (off mike) — by this and very grateful. I have a question of, you know, Africa is paying each day something like $75 (million) or $80 million a day each year, seven days a week, extra. We have the impression that now that — (off mike) — the powerful countries, the G-8 or something like that. Thank you.

SEC. SUMMERS: I think there’s a great deal that needs to be done in terms of following through effectively on this initiative. And as that takes place, a great deal can, should and will (happen ?).

But let me say to my friends in Africa and my friends who work so hard on assistance issues, if I have learned one lesson in the last eight years, it is that nations shape their destinies; that assistance policies, debt relief, a supportive international and global environment can and does make an enormous difference; but that ultimately, choices that a people and their government make determine how successful their economy will be and what their opportunities will be.

So my hope would be that we will see a coming together in the years ahead, a greater commitment on the part of countries to use resources well, matched by the greater provision of resources.

But I think it is very dangerous because it is just not right to suppose that the fate of Africa is the fate of development assistance, as tempting as that belief may be. Enormous volumes of resources, resources relative to incomes, dwarf anything that took place during the Marshall Plan, recipient incomes, dwarf anything that happened during the Marshall Plan, have been provided over the years without generating the necessary results. And so it is enormously important to focus on national policy and the choices the countries make.

Those arguments about national policy are made so very often by those without generosity, and they are made so very often by those who want to blame victims, and they are made so very often by those who oppose assistance. But sometimes they are discredited. The fact that they are often made in support of morally unworthy causes does not mean they are wrong. And so I hope that all of us, as we focus on what is the very real need to provide more assistance, are also very much aware of the crucial obligations of those who benefit from the assistance.

Q Do you believe that the future — (off mike) — of these issues will be driven mostly by government or maybe by NGOs, such as Oxfam and others and those who — (off mike)?

SEC. SUMMERS: I think Oxfam has made an enormous contribution to this issue. I think the religious community has made an enormous contribution to this issue. I think nongovernmental organizations of all kinds have made crucial contributions in the delivery of assistance. I think political action organized by nongovernmental organizations has given voice to the voice of hundreds of millions of people who otherwise would have been voiceless.

So there is an enormous role for nongovernmental organizations.

At the same time, I would caution that it is very important to understand that a democratically elected society needs — democratic society needs ultimately to be governed by those who are democratically elected, and that in the urge to support pluralism, it is essential that the international community not take steps that delegitimize or erode the authority of democratically elected governments in the name of popular participation.

There is — there are reasons, strong and traditional reasons for the creation of representative democracy around the world — (inaudible) — than popular referenda or mass rule. And as important as popular participation is, as valuable as it is to give voice to the voiceless, it is also essential that we remember the central imperative of seeing a process happen in more countries that is really the special genius of America, which is the establishment of legitimate democratic government.

Yes?

Q It’s quite clear that you share a passion and Oxfam and national — (off mike) — programs. Can you tell me how you will help to get the new Treasury Secretary-elect, Paul O’Neill on board with this program? And does he share the passion that you do as well?

SEC. SUMMERS: Let me just — I don’t think at this juncture that’s an appropriate question for me to answer. Let me just say that I’ve known Paul O’Neill, though not well, for some — for some years, and he has been a business leader and a public servant of very great distinction and is the leader of an international business. He’s a man with very extensive knowledge of financial and economic affairs. And I look forward to working with him to facilitate a very successful transition, and hope and trust that he will continue to — he will strongly uphold American interests.

Q: I want to give you a couple of — (inaudible). For instance, they have been telling us for so many years that — (inaudible) — when there are some NGOs from the north who started helping NGOs from the – (inaudible) — observe the climatic change, for instance, in the field of health, and I believe that if that same process is used, there is a great thing that will occur in the field of education. And sometimes we think that the program irresponsible. But what we realize with the help of the NGOs from the north in the field of health will also be applied to the field of education. And now that the there will be — (inaudible) — it’s very important that you also target some NGOs who are really working, because if sometimes the debt relief is given to the political authorities, you will never know if that aid, given sometimes the fact that the democratic process has been built in our countries, and there are still some problems, you don’t know if something can be achieved if we don’t target NGOs to work with it.

SEC. SUMMERS: Fair enough. I agree with that. I agree with the sentiment you’re expressing, and I think that NGOs can make a very large contribution in the education area, as they have in the health area.

Yeah? Last question. Yes?

Q [Sam Husseini]: I’d actually like Raymond to answer the question about his religious constituencies. You’re giving an award to somebody who’s implemented policies that have been a pittance of what your own constituencies have asked for. Why? – And on the matter of — you said ‘the on the art of the possible,’ Mr. Secretary. But there was a bi-partisan consensus in the Meltzer commission for 100 percent debt cancellation. Why was that was not implemented? There’s clearly another hand at play.

MR. OPPENHEISER: I don’t argue with basically that — and I think it was echoed in some of the sentiments in the remarks that were made through the course of the morning, that basically we think the HIPC debt initiative was — it provides a framework. Gets this kind of the logic of a program underway that provides a way out of the debt trap. I think we’ve also indicated that we don’t see it as the end of the discussion or the end of the kind of level of funding we’d like to see for debt relief down the road.

We’ve worked very closely with the church constituencies — and some of them I think are even represented here this morning — to get, I guess what we viewed the best deal we could get, given the politics of this issue on a global level. This has been a very very hard struggle, and I don’t think from our point of view it’s over. And I think you’ll see the Jubilee Campaign committees globally continuing their work in the coming years and building on the agenda and the success that we have achieved to this point. So, I don’t think we’re saying this morning we’re celebrating the end of the road here. I think we think we’ve got a framework for dialogue and discussion with senior policy makers and decision-makers around the world, and we can go from there. I think that’s really the — that’s what we’re here to celebrate.

Mr. Secretary, I don’t know whether you want to add to that.

SEC. SUMMERS: Only just to say, I think most of those with experience with these issues feel that a very substantial start has been make. I think that it is important, as I suggested in my other comments, to look at these questions of debt relief in a holistic way that recognizes implications for future assistance flows, for future concessional lending, and it seems to me, as I have said in the past, that while it is a thoughtful and serious effort, it is my judgment that the recommendations of Meltzer report, if implemented in their collectivity in the way that it was intended by its authors, would do very serious damage to the economic and financial interests of the United States, and would in a meaningful and important way undermine the prospects for successful economic development around the world. That’s not to say that the judgments were not made by those who made them in a serious and thoughtful way, but they are for reasons that we have spelled out, they are judgments that if you look at the collectivity of that program, we believe would very much not be in the national or in the global interest.

Q: Oh, so that’s the issue. The economic interests of the United States.

SEC. SUMMERS: I think you didn’t listen very carefully, frankly, to what I said. I think I referred at each stage to the economic and global interests, and I think referred at each stage to the success of the development agenda.

MR. OPPENHEISER: I’d like to thank everyone for coming this morning, and wish you a good holiday, and I’d like to say to the secretary, we wish you well. God speed in your new career, whatever that might be, and we look forward to working with you in the future. Thank you very much, Mr. Secretary.