<html><body>Into Africa: Policy Implications of President Bush's Trip to a Forgotten Continent July 8, 2003 Transcript prepared from a tape recording <TABLE cellSpacing=1 cellPadding=1 width="100%" border=0> <TBODY> <TR> <TD> <DIV class=BodyText> 9:45 a.m.</DIV></TD> <TD> <DIV class=BodyText> Registration</DIV></TD> <TD> <DIV class=BodyText> </DIV></TD></TR> <TR> <TD> <DIV class=BodyText> 10:00</DIV></TD> <TD> Panelists:</TD> <TD> <DIV class=BodyText> Anthony Carroll, Manchester Trade</DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> Thomas Donnelly, AEI</DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> Nicholas Eberstadt, AEI</DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD> <TD> Robert Shapiro, The Brookings Institution</TD></TR> <TR> <TD> <DIV class=BodyText> 11:15</DIV></TD> <TD> <DIV class=BodyText> Adjournment</DIV></TD></TR></TBODY></TABLE> Proceedings: THOMAS DONNELLY: It is great that we have such a large crowd here today. This is a bit of a different subject than we have been spending our time on lately, and especially new to me. In part, my presentation is what the heck is a defense, national security guy doing talking about Africa. I say this because people in my neck of the policy community are woefully uninformed about sub-Saharan Africa. But before I reveal my ignorance, I want to introduce the rest of the panel. To my right is Tony Carroll of Manchester Trade. He is going to speak about U.S. energy security and Africa. To the right of Tony is the distinguished Nick Eberstadt, who will be talking about HIV and U.S. foreign aid to Africa. On the far right is Rob Shapiro of The Brookings Institution who will talk about how the combination of U.S. and European agricultural policy is holding economic and agricultural development in Africa back. I will begin my presentation by giving you a quote from a past Pentagon national security strategy document for sub-Saharan Africa, and the phrase is, I think, is pretty telling. Back in 1995 the Pentagon declared that the United States had very little traditional strategic interest in Africa, and in many ways that has been the case both in the years prior to that, even during the cold war, but certainly since the end of the cold war. One of the trends that we may be seeing now within the Bush administration, however, is a reevaluation of that. Certainly any serious consideration of the prosecution of the so-called war on terror cannot exclude a strategic consideration of not only East Africa but probably a much larger swath of the continent. It is worth nothing that a Combined Joint Task Force Horn of Africa was set up about 7 months ago , prior to the beginning of the war in Iraq, for the twofold purpose of putting a till in the water to see what the reaction would be in Somalia and Sudan, and also as an intelligence-gathering operation against the al Qaeda network and other related terrorist networks. Whether that trail, so to speak, will continue across the traditional trade routes into western Africa is an interesting question. There are other dimensions of this campaign in Africa. Al Qaeda is linked to organized crime networks, diamond smuggling and the like. Again, the intelligence on these kinds of things is sketchy, and we don't know what we don't know. But we should expect that over the long haul networks like al Qaeda will continue to take advantage of weak states and failing states to reorganize, refit and refinance. In addition, there has been a large set of wars across Central and West Africa that have been going on for the past decade that have involved a tremendous loss of life and great slaughter. One hopes that the Bush administration, unlike past administrations of both parties, can now begin to deal with Africa's more or less normal continent, in that we can begin to see the political problems that certainly are closely linked to the humanitarian crises. When we look back on say the Somalia intervention and see how the first Bush administration thought it could intervene as simply an act of mercy, humanitarian food relief mission, without understanding that in the context of the struggle for power in Somalia that food was a weapon, and that nongovernmental organizations were part of the political chessboard in that situation, certainly turned out to be a short-sighted. At the same time, to simply say, oh, well, it was the Clinton administration's willingness to pick winners among the warlords and to try to satisfy the personal quirks of Boutros-Boutros Ghali, I think is also too narrow and too easy an answer. I don't want to go on very much longer, and will close by saying that over the long haul, to think that the United States can continue to regard Africa and sub-Saharan Africa as a strategic backwater, something that we don't need to care about for our own safety and for the larger preservation of the liberal international order, I think is a short-sighted mistake, that may seem satisfying in the near term, but one that will come back to bite us in the end if it has not already done so. So, Tony, over to you. ANTHONY CAROLL: Thanks, Tom. And thanks to the AEI for having me over, and I'm just so pleased that in our inaugural African event here at AEI that we have had such a good turnout. So certainly we have seen a lot of media on Africa in the last week or so, and I think that certainly has raised its attention within the American political environment higher than it's been in some time. But I think there has certainly been a lot of discussion in the context of the President's trip and recent developments outside of Africa as to the interest and relationship the United States has with Africa as a supplier of energy resources. Clearly Africa is now becoming a much more important supplier to America. We are--we don't need to go back and revisit some of the statistics about our consumption and importation as a nation, but we currently import about 14 to 15 percent of our petroleum reserves come from Africa. This, of course, is likely to increase. The National Intelligence Council has made a recent study that said that this statistic will probably rise to about 25 percent by the end of this decade. So clearly the trend is increasing. If you take a look--I have some data here which if you want to give me your card later, I'd be glad to share with you. Africa, from 2000 to 2010, is expected to increase its liquid capacity, meaning that of oil that's able to be lifted, by nearly 100 percent to about 8.2 million barrels by the year 2010. The trend is upward. Americans lead the way in the development of these reserves, and many of these reserves are located in deepwater, offshore Africa. America--the current foreign direct investment in deepwater Africa is about $2 billion. By the year 2005, the Cambridge Energy Research Associates expect that figure to rise to about $3 billion. Americans represent the lion's share of that investment, so clearly the trend is to invest more heavily and particularly in deepwater Africa. Two of the countries that stand to gain the greatest in this new supply relationship with the United States are Angola and Nigeria. Angola currently provides about 900,000 barrels a day to the United States, but by 2007 this will rise to about 2 million. Nigeria will go from current levels of about 2.2 million to about 3.8 million by the year 2007. Clearly it not only is in the form of petroleum and crude that we are seeing this relationship with Africa as an energy supply increase in importance, but also in the area of natural gas. Chairman Greenspan will be speaking later this week, on Thursday, at the Senate Energy Committee on this issue of American natural gas supply. Clearly Africa will be a part of that, and even a larger part of America's energy future than it currently stands or will stand in the area of crude. There are two countries that will be at the forefront of this, Nigeria and Angola, which is expected again to be up to about a third of our LNG, liquidifed natural gas supplies, will be coming from Africa by the year 2010. So our relationship with Africa in both crude and in natural gas is going to ramp up dramatically. Now let's talk a little bit about why Africa has been so attractive to the energy industry, to the American industry particularly. Firstly, let me say that major deepwater reserves are being found. That is in part because of the increases in technological capacity to drill off deepwater. We are now being able to raise oil from the depths of as much as 10,000 feet, and that, of course, has opened up a whole new horizon of off-Continental Shelf reserves, and Africa will certainly be the great beneficiary of that. The reserves that are being explored and the wells being found are massive in size. Average well size is about 35 million barrels per wildcat well. This is about--compared to about 22 million barrels, which is a Gulf-of-Mexico average. So the reserves are large. It's in the early stage of exploration and development. Clearly the environment right now is open. The opportunities for companies are very malleable. You are not dealing with very ensconced institutional type of negotiating environments. I think there is a lot of flexibility. West African oil has a very high discovery ratio. Most discovery ratios, technology has certainly increased discovery ratios from about 20 to about 35 percent on global average, but in Africa about 50 percent of the discovery ratio, so you are pulling a lot of oil when you are finding it in Africa compared to elsewhere. West Africa, particularly the Gulf of Guinea, has benign weather conditions. If you look at the conditions compared to the North Sea, where you have a lot of requirements and technical support and turrets and other support mechanisms, in Africa you can drill and you can drill offshore or you can drill on vessels as opposed to platforms. Because of the benign weather conditions you are able to have more time drilling as opposed to off-drilling because of weather. Sweet crude, Africa's sweet crude is sort of the global standard. It requires less refining and is a preferred crude than other sources. We are also looking at a location of 50 percent closer to the U.S. market than the Middle East. There are no canals or precarious sailing passages that are required. The oil can come directly in from West Africa to Houston and, you know, some are viewing Africa as a safe alternative to the Middle East. Clearly the Middle East, which has 65 percent of the known reserves, is clearly going to be the standard-setter for many, many years to come, but Africa is also willing to produce a lot more, ramp up their production, in part because they need it, in part they want to curry favor with the United States, and they need foreign direct investment in whatever form. Oil is not a large employer, unfortunately. It's a very capital-intensive industry, but nonetheless there are downstream and upstream opportunities that can flow from oil investment, and the Africans are working and trying to find out how that can be best done. So I just thought I'd lay the background on the security--the energy relationship with Africa and the United States, and certainly can talk about various aspects of that relationship during the question-and-answer period. But I would like to turn it over to my colleagues here. NICHOLAS EBERSTADT: Thank you, Anthony. I'm going to talk, I hope very briefly, about economic performance and HIV and the sub-Saharan area and just to summarize my conclusions, first, economic performance in the post-independence period in sub-Saharan Africa as a whole has been utterly disastrous. And the worst may well be yet to come. Let me tell you why I offer such a gloomy prognostication. In places like the World Bank and university economics departments, people have for some time talked about the East Asian economic miracle, and if we are going to frame the proposition in quasi-Biblical terms, I suppose we would have to say that the sub-Saharan performance has been a visitation or a plague or something like that for over 30 years. Since at least 1970 one has seen two very pronounced tendencies for the region as a whole, with some limited exceptions noted. Number one, the sub-Saharan area has become increasingly a center of demographic weight in the world as a whole; and number two, it has become increasingly irrelevant to the world economy as it has been functioning. Statistics on economic performance in the sub-Saharan area as you will know are very spotty, very limited. One doesn't want to push them too far. But I think we can see a couple of really dismaying trends for the region as a whole over this very long period of time. One is the steady decrease in sub-Saharan Africa's share of world trade. Another has been the steady decrease in relative terms and perhaps even the decrease in absolute terms of sub-Saharan Africa's share of direct private investment in the world economy. Correlatively we see an increase in aid dependency for the region as a whole and most of the economies in the region, and most distressingly, I suppose, we see an estimated decrease, long-term decrease in per-capital output. If you believe the World Bank's numbers, and I'm not forcing you to, but if you believe the World Bank's numbers, per-capita output for the region as a whole is lower today than it was in 1970, and that is obviously an extremely anomalous situation for any modern area of the world. It is all the more astonishing since the poor performance seems to be so general. There seem to be so very few exceptions in this very diverse, culturally, linguistically, historically diverse area. I cannot explain to you with one or two hypotheses the reasons for this huge failure. I think it is in some senses a mystery. But the reason that I say that the worst may yet be to come is because although enclave economies can prosper on the basis of resources extracted from the ground or from the forest, the true wealth of nations I think in the 21st century lies in human beings, and the trends for human resources for sub-Saharan Africa now I think are really quite alarming and dire. I would alert you first to the trends in education, which we read about from sources such as UNESCO, from their Education for All campaign. Again, don't take the data too literally, but for the 25 sub-Saharan countries that UNESCO provides comparable decade-to-decade data, of those 25 sub-Saharan countries, 10 of them have lower growth enrollment ratios for primary education in 1999-2000 than they did a decade earlier. That's primary education. But, of course, the real menace here, the real menace is the spread of HIV. As you know, it has stricken the sub-Saharan region with a virulence and a prevalence which has as yet not been seen in any other area of the world. That numbers again for HIV are a bit iffy, but if one takes the estimates given by UNAIDS--and I don't know of any better estimates than the estimates collected by UNAIDS, a joint UN program on HIV and AIDS--roughly one adult in nine is estimated to be sero-positive for the sub-Saharan region as a whole, and there are seven countries in which the prevalence rate is estimated to be over 20 percent for adults; in a couple of countries, over 30 percent; and not incidentally, these include some of the sub-Saharan areas' most productive economies, Republic of South Africa, Botswana among them. Botswana estimated to have an almost unimaginable 38 percent HIV prevalence at this point. Not to put too fine a point on it, there is no known cure for HIV at this point. It is almost invariably lethal. It is invariably lethal unless one is killed by injury or accident or something else in the intervening time, and there is no--medical authorities seem to believe there is no quick hope for an effective vaccine. There may be hope for a vaccine a number of years in the future, but not right now. As a consequence of the HIV catastrophe, life expectancy for sub-Saharan Africa as a whole is estimated by the Census Bureau to be lower today--I should say projected--is projected to be lower in 2003 than it was estimated to be in 1980. It's a long-term decline over almost a quarter of a century. It is unprecedented in the postwar period. It is unprecedented apart from wartime experience in the 20th century. Now President Bush, I think much to his credit, has committed through the President's Emergency AIDS Plan, a total of $15 billion, 10 billion of new resources, to the combat of HIV/AIDS, and most of this money is currently earmarked for sub-Saharan Africa, for 12 countries in particular, including countries that the President will be visiting in the next days. It is a great compassionate gesture, and I think he is much to be commended for it. We have yet to hear an echo of that commitment from our European and Japanese friends. We may hope that we will see some sort of analogous commitment in the period ahead. I hope it will not sound too ungracious and ungrateful to indicate that there are a few problems with the proposal, at least as it has been unfolding, and one of these is something that the President simply cannot help, cannot change, and this is the very unfortunate cost-benefit analysis of antiretroviral therapy treatments, or ART treatments. The ART treatment is just--the cost-benefit analysis is extraordinarily unforgiving to poor people, and I will not go through the numbers with you at the moment. You will have to take it on trust right now, I can talk about it later, but if one does very simple back-of-the-envelope calculations, the social--the level of production per capita which would provide the sort of social output to balance off the health costs expended, the kind of the break-even point, even if the medications were provided on a gratis basis, would be about $1000 per capita income per year, and there are many, many places in the sub-Saharan region which don't come up to that $1000 per-capita output level. Even if they did, however, extending life through antiretroviral therapies by a year for let's say $1000 would be an effort which would immediately have to be judged against other health needs in the region because the region has tremendous health needs, and there are many other sorts of interventions which, if you will, could buy a statistical year of additional life for much, much less. Think about vaccination efforts, or think about clean water. It is a very difficult ethical issue, with ethical arguments, I think, on both sides. One that cannot be ignored, one I think that has to be faced, if I were to get a moment to whisper in the President's ear about this I think magnificent commitment he is making, I myself would argue that a little bit more of the effort should be put towards prevention, since as for now there is no cure, as I mentioned, to HIV, and a little bit more of the resources towards research and development towards the acceleration of what we hope will be a breakthrough on vaccine or eventually a cure for this pestilence. I'll stop here. THOMAS DONNELLY: Rob. ROBERT SHAPIRO: Thank you. It is a pleasure to be here. First I want to say that the research and analysis which I am drawing on today, I did with Kevin Hassett, the much-illustrious head of economic studies here, and with some research assistance from one of the exiled interns, as I mentioned, Eric Krauss. I want to thank him, too. The President this week visits the world's most troubled continent. Across much of the region, as we have just heard, AIDS is a scourge; political corruption is an onerous burden; and thousands are killed or maimed, innocents, millions in the case of the Congo. Yet desperately poor Asian and Latin American companies have overcome comparable burdens and established niches in regional and global markets. They did it by exploiting their comparative advantages. Why not Africa? A burgeoning economics literature increasingly explains the difference by pointing to Western policies, especially agricultural protection. The largest single factor blocking the normal course of economic development for much of sub-Saharan Africa is the EU's common agricultural policy or CAP, followed by our own farm subsidies. Economic development stalls without investment. Investment won't expand unless demand rises first, and in countries--in the countries of sub-Saharan Africa, where more than 60 percent of the labor force works in agriculture, demand won't expand unless agricultural income grows. Western foreign policies prevent much of Africa from developing their agricultural resources sufficiently to amass and attract the financial, technological, and human capital that drive economic and social progress everywhere in the world. If economic development is a ladder with distinct steps or stages from agrarian society to industrial to an industral nation and then to a knowledge and service-based economy, these policies remove several of the early rungs. They have forced much of Africa onto a development path that has never succeeded anywhere. The result is that while once-poor Asians and Latin Americans grow more prosperous, more than 630 million in sub-Saharan Africa--that excludes South Africa--are stuck with annual incomes averaging about $300 a year, life expectancies of less than 50, and little prospect of ever doing much better. We can describe CAP pretty simply. European governments tax their citizens and return a healthy share of the tax revenues--more than half the EU budget, incidentally, goes to these subsidies--to agricultural firms. Most farmers receive checks from the government for their crops since CAP sets price guarantees far higher than either world prices or the cost of production. The natural response is that EU agribusinesses produce as much as they can, far more than required to meet local demand. Then they dump whatever is left over on markets in developing countries. To be certain that low cost countries--that is in the developing world--can't compete with them abroad, that is in third market countries, the European producers also get hefty export subsidies. African and other low-cost producers also aren't allowed to undercut EU growers in their home market since CAP also includes strict tariffs and quotas on food imports. U.S. agricultural supports differ from CAP, not in character or kind, but only in degree. The EU is the prime offender in Africa because more than a century of colonial and postcolonial relations make Europe and Africa natural and efficient trading partners in much the same way as we dominate trade with much of Latin America. We also talk a better game, supporting WTO proposals for deep farm cuts, even as we expand our own farm programs. EU and U.S. subsidies are so extensive that farmers in Finland and Oregon raise sugar beets and compete successfully with sugar cane raised in Kenya. And in defiance of all things related to markets, the EU, with the world's highest sugar production cost, is also the world's biggest sugar exporter. The beneficiaries are not small Dutch or French sugar beet farmers. In either different European countries, one firm accounts for the entire domestic market in sugar, and these protected monopolies are among the most profitable firms in the world. And just to keep the business inside the national family, 140 percent tariffs keep foreign sugar out of the European market, only moderately more restrictive than our sugar quotas and tariffs. The supports for corn, sorghum, wheat, and other commodities are a little less extreme, but the impact is similar. Scores of EU and U.S. farm goods processed by large agribusinesses are delivered to developing markets at lower prices than those offered by their own local farmers, and so the cycle continues. Rural farms shut down and impoverished African farm families migrate to cities where the absence of normal economic development has stunted the growth of nonagricultural jobs, and also incidentally facilitates the spread of AIDS. This cycle persists because enormous amounts of money are at stake for a few interests, and most everyone else ignores the collateral suffering. And, incidentally, it's suffering that's purchased on credit; 33 of Africa's 41 countries are currently classified as heavily indebted nations. The result is that per-capital income in sub-Saharan Africa averages less than $1 a day. The cows in Europe earn more than that. CAP dairy subsidies average more than $2 a day per cow. And that is just the beginning. Under CAP price guarantees, a German or French agribusiness that produces a ton of butter receives more than 3000 Euros for it. That's about $3800. When the wholesale market price of a ton of butter here is less than $1400. It is no surprise the European dairy production far outstrips European demand. Further, CAP export subsidies guarantee that Europe's high-priced spread can compete with butter produced in Botswana or Gabon by making up the difference between the supported domestic price and the world market price. So markets in much of the rest of the world are flooded by Europe's surplus butter mountains and by our own butter mountains, incidentally. Finally, CAP guarantees that African dairy producers never get more than a thin slice of the EU market by imposing a 150 percent tariff on foreign-produced butter. In fact, dairy production costs in Europe are on average about twice as high as world prices for dairy products, yet Europe accounts for 40 percent of world exports of powdered milk and more than one-third of world cheese exports. Without EU and U.S. dairy subsidies, it is fair to say that developing nation producers could dominate many dairy markets in the industrial world, driving their own economic development and progress. When economists examine subjects like these, they usually begin by measuring the effects of policies on countries over time, identifying regular relationships between quantifiable variables like commodity production, tariffs, trade flows, and incomes. We use these relationships to build computer models that simulate the workings of the economy, or at least that we hope and believe they do, and then we see how market or policy changes affect the way this virtual world behaves. Economists have used this approach to understand the effects of trade and subsidy policies and the results are very troubling. For example, the Institute of Economic Affairs in Oxford used econometric modeling to quantify CAP's impact on exports around the world. They found that EU subsidies and tariffs cut African exports of milk products by more than 90 percent; livestock exports by nearly 70 percent; meat exports by almost 60 percent; exports of nongrain crops by 50 percent; and exports of grains by more than 40 percent. And that doesn't include the impact of U.S. farm supports. That's just CAP. Let's assume that the overall net effect of CAP and U.S. farm subsidies on agricultural exports from Africa is to cut them by 65 percent. Now that's a conservative assumption, given the studies. Without these programs, the $10.9 billion in food-related exports from sub-Saharan Africa would be around $32 billion. Additional research by the International Food Policy Research Institute found in empirical studies in five sub-Saharan nations that every new $1 in agricultural income produces an average $1.42 additional increase in GDP over and above the original dollar. That's the multiplier effect. That suggests that the end of these subsidies would raise sub-Saharan GDP by almost $51 billion, and that doesn't count the secondary effects from additional investment and higher productivity. That is from putting Africa back on a normal course of economic development that every other region of the world has enjoyed, and which the EU and the U.S. now deny Africa. $51 billion is enough to raise the annual income of every man, woman, and child in these countries by more than one-fifth. It's easy to look at these terrible policies and despair of ever changing them. When the WTO meets in Cancun this fall, it will not be enough for us to call for cutbacks in agricultural supports, and especially not enough to focus on genetically modified foods. A niche market where our own comparative advantage drives our support for free trade. The one area of agriculture where we support free trade. What a wonderful thing it would be for the President to use this trip to make fundamental reform of agricultural subsidies a centerpiece of our foreign policy for the developing world. THOMAS DONNELLY: Thank you, Rob. Thank you all. I want to exercise briefly my prerogative as m oderator to say that if you step back and look at the connections between the presentations of my colleagues, you could hardly find a more heady recipe for social instability, political violence, and war, be it by local thugs of the Charles Taylor variety, or from outside influences that might seek to exploit these problems for their own purposes. These are wars that quite clearly the United States should not be entirely agnostic about. So I come away with a stronger impression than before that the sort of hands-off approach--that Africa is too hard to deal with, and not worth the effort--is not really tenable. I am very much sobered by the prospect that the combination of these problems presents not only a humanitarian problem and not only a political problem for the United States, but a very significant strategic and military problem. So I would like to now take questions. Please observe the AEI rules. Wait for the microphone, identify yourself, and make sure that you are asking a question and not making a statement. That's our job. Yes, sir, right here. GREGORY SIMKINS: Gregory Simkins, the Whittaker Group. Expanding on what Mr. Shapiro was saying, over the years Western nations have many policies that have discouraged African industrialization, and it has resulted in terms of HIV/AIDS in inadequate systems to create their own drugs or to take the oil and natural gas and develop it. You mentioned Cancun. What do you think would cause the Western nations to change these policies and what about the role of African leaders themselves in being able to press for these policies, since they constitute--the African bloc constitutes the majority or the largest bloc, rather, in the WTO? MR. DONNELLY: Rob, I guess that's you. MR. SHAPIRO: Right. I don't believe that any international pressure can drive support for--can drive reform of domestic agricultural policies. I think these are policies that arise out of domestic special interest politics. The good news, or the most encouraging news, is that the expansion of the EU may make the current regime unsupportable over time, particularly the entry of all the Central European countries. The EU did put forth a reform proposal about two weeks ago. It's largely cosmetic, and it includes some new subsidies as part of the reform-- [Laughter.] MR. SHAPIRO : --new subsidies for energy-efficient crops--read ethanol. So they are matching us on that. And also for quality improvement crops as they propose to cut some other subsidies over time. It is encouraging that they were too embarrassed to not put forth some reform proposal, and the U.S. administration has been much better in browbeating the Europeans about CAP than we have been about reforming our own farm programs, but they have been quite relentless on CAP, as has the World Bank, incidentally. World Bank has taken some leadership. I think these regimes, kind of like the Soviet Union, have to collapse on their own. I mean if you look not only at the U.S. and the EU but at Japan as well, despite the fact that we have case studies in effect of the success, the long-term economic success of rolling back farm subsidies, we have that in both Australia and New Zealand, despite that, I think these systems have to become unsupportable domestically. MR. DONNELLY: Yes, over here. MR. : (Unintelligible) BBC New Online. Can you comment a bit on the proposed intervention in Liberia and what the political risks and benefits might be of that, and more generally whether you think is a shift from the policy of avoiding military interventions in these conflict situations that seem to be established after Mogadishu and, if so, why. MR. DONNELLY: There are certainly a number of aspects to that question, and again it will surely vary what part of Africa you're talking about. The presence in the Horn of Africa obviously is separate or largely separate from the problem of Liberia and more related to the war on terrorism in the Middle East. I would expect also over time that the American military presence, whether it be transitory or permanent, also would increase in West Africa. Tony outlined a compelling set of economic interests related to West Africa and Nigeria in particular that it would be hard for the United States to stay neutral if things went bad. The situation in Liberia is, to use the oxymoron, somewhat unique, but I would say the general pattern is going to be deeper involvement. What the particulars will be is hard to say, but the idea that we will be able to sort of keep out of it over a long period of time I think is probably faulty. Anybody else want to correct me on that? MR. CARROLL: I'd like to add that one has to differentiate the type of interventions. Liberia is a more limited intervention, firstly. Secondly, I don't think there is anyone who would argue against the notion that Charles Taylor has been a troublemaker in many countries in the region. The situation in Cote d'Ivoire, Sierra Leone, and elsewhere have been linked to Charles Taylor, and I think that certainly is an issue that I think many in Africa expect some leadership from us in response to. But I think you have to differentiate that from the situation in the Democratic Republic of the Congo, which offers a magnitude of intervention that's much greater than anybody here would envision compared to Liberia. There I think you are looking at perhaps a more thorough indigenous response supporting African capacity and looking at other maybe nonmilitary interventions to sort of quell that conflict. But I know this will make Nick very--a statistic that will probably show some interest to you. The greatest recipients of American foreign assistance in the 1980s were Sudan, Zaire, now Congo, and Liberia. I guess you could probably say that all of them, although certainly Sudan seems to be heading in the right direction and even last week with the Congo creating its transitional government finally in place--but all of them have various aspects of being failed states, and I think is there a relationship or is that just a convenient statistic? I'm not sure. I'll let you draw your own conclusions. MR. DONNELLY: Just one footnote. It is true, say, that the problems in the DRC are unique, but they are also stunning in their scope. The level of killing is--you can even say it dwarfs Rwanda in some sense. So I think it would be hard to predict over the long haul how that will affect American policy and it is not clear to me that again it's something that we can remain or continue to remain aloof to. MR. DONNELLY: Yes. TAPE CHANGE TO SIDE 2 MS. : . . . at the G8 summit in Evian, France, NEPAT has attempted to position themselves as the answer for development, developmental change in Africa. My question is should the West support NEPAT and how do you foresee the progress that they would make? MR. CARROLL: I'll try to two my cents in here. I think NEPAT, if nothing else, should be respected for a willingness of Africans to take leadership and control over these issues. Until Africans identify in conflict resolution at the very most personal and national levels, I don't think we can accomplish much. So I think that if nothing else, NEPAT evidences a new relationship in problem-solving in Africa which involves Africans at the core, at the center of this, and not just waiting for another imposed solution which they can walk away from whenever it's convenient to do so. So I think if we are willing to hold them to--their feet to the fire on their commitments to NEPAT and work in how we can make that a useful dialogue, I think it can produce some results. Is it a panacea? Is it going to solve all the problems? Is the leadership going to be consistently behind it? I think in the situation in Zimbabwe, we have already seen, you know, some waffling or at least inconsistency in the application of NEPAT's objectives. But do I think it's the beginning of a dialogue, perhaps leading to a new perspective, a new relationship on conflict resolution? I think so. But is it also new wine in old bottles? Perhaps. MR. : Sir. ED O BRIEN: Ed O'Brien from Street Law, Inc., an NGO here in town. I was wondering how important any of you think the development or nondevelopment of democracy in Africa is towards the economic development and towards the United States' interest and links to Africa in the future. MR. SHAPIRO: Well, I'll speak briefly to it just by saying that the normal pattern is that democratization accompanies economic development and doesn't precede it, and it's when people have a stake in the stability of the society that you see a broader demand for democratization. So to a certain degree, the barrier to democratization has been the policies which prevent normal economic development in Africa. MR. EBERSTADT: I have an additional word on that. Democracy is a term which suffers for the great affection that it enjoys, and if one wants to be specific about particular components of the democratic experience, one that I think is quite important to development, economic development and prospects for prosperity is the rule of law, the respect for, if you will, the institutional bases of individual freedoms and individual protections and protection for commerce, and there is clearly some room for improvement in the sub-Saharan environment, and to stick with my statistical attractions, if you take a look at the reports by groups like Transparency, International, or other groups that look at one aspect of what I would say is abuse of rule of law, the corruption in business practices, but those really usually affect the things that--Transparency, International measures usually affect big businesses with officials and employees who are foreign nationals and are safe in their own countries. The impact of abuse of rule of law on little people is much more important and I think in some important ways much more subversive to development. MR. CARROLL: Let me just say that democracy and oil production have been strange bedfellows in Africa. There are, though, some positive trends. Angola certainly is moving in the right direction. Is it a fully free, functioning democracy? It's a long ways from that. Is it better than it was five years ago? Certainly. I think it can be done. Botswana, a country that I was honored to serve as a Peace Corps volunteer in, has shown that using natural resource wealth to fund over development activities certainly can be done and can be done successfully. David Gordon, who is at the National Intelligence Council, and I think one of our leading Africanists in Washington, was making a presentation last week at the Corporate Council on Africa Summit that said that Africa runs the risk of not taking advantage of its oil resources by not having more democratic institutions in place; that there actually is a linkage between the degree in transparency that emerges from democracy and the ability in which tapping oil--and if you take a look at Nigeria, which is a fledgling democracy--it's certainly better than it was seven or five years ago, even, but in certain instances as much as 20 percent of Nigerian product is bunkered or stolen and diverted to the spot market. It's certainly an indication that that democracy, at least in the terms of security of its reserves, has not resulted. MR. DONNELLY: We have educated ourselves in the last couple of years to think a little more thoroughly about what we shove under the broad rubric of democratization in Africa as in Afghanistan as in Iraq. There is a larger state-building project that will certainly have to be ongoing that includes things like establishing a rule of law, eliminating governmental corruption, that is perhaps an enabler for broad-based economic development as well as development of the energy resources. I mean not only in Africa, but elsewhere, oil wealth has been a pretty key tool for dictators in a variety of places, as we have learned to our great sorrow. So I mean that's certainly one of the things that we need to use as a yardstick against which to measure any progress we would want to try to make, and certainly these societies are multicultural. They need some political mechanism that resolves internal political disputes in ways that political participation is based on citizenship and not some other definition of what it means to be, you know, a Nigerian or a Liberian or whatever, and that is to the security interest of the United States as well that we find a way to build some of these mechanisms, of which democratization is surely a part and surely a goal, but is a more complex and broader project than--and it would be measured by other things than simply the ballot box or the mechanism by which national leaders are selected. There's somebody in the back. All I saw was a hand. MS. : Thank you. (Inaudible) from the Australian Broadcasting Corporation. In a preview piece that the New York Times had earlier this week about the President's visit to Africa, there's a paragraph which says there is still considerable skepticism in Washington and in Africa about the depths of Mr. Bush's commitment, diplomats and analysts said. There's concern among some Africa hands that Mr. Bush's interest will wane after he makes the point to the world that he's more than the unilateralist gunslinger he's often, fairly or unfairly, made out to be. Is there any validity to such concerns? MR. DONNELLY: The question is phrased in a sort of "when did you stop beating your wife" way. [Laughter.] MR. DONNELLY: But then so is the article. Look, there's no way to answer that. You know, the administration will speak for itself. But you would have to say that over the course of time it's been more accurate to take the President at his word than to look for the hidden meaning in what he says. I think--I will speak only for my slice of the topic pie today, but I think there is surely a growing recognition within the administration that Africa is an important element in the broader war on terrorism, which is a--you know, sort of existential interest to this President. So what form the commitment will take and how many dollars it will be measured by and what level of Presidential attention on a daily basis it will be measured by is hard to predict. But the thing that I tried to mention earlier about it is that it is a qualitative difference. Again, it seems to me there is a way of now dealing with these things, you know, again treating Africa as a normal continent with political problems, with security problems, as we would deal with, you know, countries in the Middle East, in Europe, and in East Asia, and try to deal with them on their own terms and place them in a context of a larger American security strategy and overall policy. So time will tell, but it does seem to me that all things being equal, you are better off taking the President at his word, and seeing how his concern with Africa fits in with his broader strategy concerns, and as I think Nick emphasized earlier, very clearly with the kind of moral vision that the President has. MR. EBERSTADT: May I say a word about that? MR. DONNELLY: Yes, please do. MR. EBERSTADT: It isn't President Bush or the American administration that has made sub-Saharan Africa economy marginal to the world economy, and the sub-Saharan political situation incident to the world's balance of power. These are cruel facts of our modern condition, and they naturally affect the way that all governments, not just North American governments, deal with the dilemmas that are faced in sub-Sahara. These being the cruel facts of the matter, however, I think we have a couple of modest reasons for optimism with the Bush administration's approach. Number one, as Tom indicated, is humanitarian. President Bush, by all indications and by his own profess ion, is a convinced Christian, and although that's unfashionable in some circles, that does have certain humanitarian implications and implications for moral obligation and feelings of duty. Number two, although I would not say that it is an American imperative, there is certainly a broad preference on the part of the American people that individuals in other countries not live in squalor, not live in misery, if it is possible otherwise. And that preference can be mobilized to action under certain auspicious conditions. And, number three, I think as different panelists have indicated, there is some indirect but important connection between the well being of the sub-Saharan populations and the international security prospect and international economic prospect. And if the alignment of the planets can be coordinated that allows these disparate ingredients to come together, I think we may have some hope for some cautious optimism here. MR. CARROLL: But I think some of the criticism is I would say typical Washington, that no good deed goes unpunished. But I think if you look at the administration's track record on Africa, I think you have to come away saying--reaching some positive conclusions. Firstly, following the HIV/AIDS legislation the President reined in his own political party to make that bill a reality. I think he expended a lot of political capital to make that bill a reality and he has called for the appropriators to appropriate the full amount, which won't happen, that the authorization legislation called for. Secondly, he's called for the expansion of AGOA, the African Growth and Opportunity Act in various ways. This is certainly a stark contrast to the last administration which had to be dragged kicking and screaming into supporting AGOA. Thirdly, I think the administration has shown its willingness to expend political capital where needed. They have certainly taken the Sudan crisis at a very senior and high level, dispatching one of our more senior former senators, John Danforth, to work on that bill and giving him full authority to negotiate a settlement, and I think we are seeing the fruits of that. So I think the administration, this administration should be measured by its actions, not necessarily by some of the rhetoric that one sees in the media. MR. SHAPIRO: I'm a skeptic. I certainly hope my colleagues are right. We have seen in Washington every administration has a period of enthusiasm and interest in Africa. It was true in the Clinton administration, it was true in the preceding administration, the first Bush administration, it was even true in the Reagan administration, and now it's true in this administration. The record is that very strong, both domestic interests and strategic preoccupation with other parts of the world have historically made this interest very short-lived. And, you know, it's--and the United States, for whatever Judeo-Christian impulses, is the least generous of any major nation with respect to foreign aid to poor countries, to a very, very significant degree. So I'm a skeptic. I think that the only way to maintain this interest is to insist that it be maintained domestically, it won't happen on its own. MR. DONNELLY: The pessimism of a guy with farm subsidies is hard to beat. Let's go to the back, please. MR. : (Unintelligible) very short question. Is there a connection in how President Bush treat in the election of next year? MR. DONNELLY: I would say not--you know, not very much of one. It would be hard to see--I mean who knows whether we will be in Liberia or what long-term effects will come out of this trip that would significantly affect the election, and there's a lot of other much larger issues that are likely to be salient in the 2004 campaign. So I would tend to say not, but the question really comes after farm subsidies. MR. SHAPIRO: There's not much chance of that. As the token Democrat on the panel, I can say I think they are much too smart politically to think that--this White House--to think that they can get any domestic political advantage out of this. I don't see any domestic political agenda here. MR. DONNELLY: Yes, sir. MR. : Clarence Behr with LBA Group, telecommunications consultants. Running through this whole mesh of development is essential telecommunications, infrastructure and network, and I'm wondering in terms of addressing the developmental needs in Africa, what have been sort of the successes and failures of those policies in that region to date, and what the group might see as essential needs going forward through the rest of the decade in the several areas expressed here. MR. DONNELLY: First to clarify, do you mean within the telecommunications world, or more broadly about development priorities? MR. : Well, I was speaking in fairly broad terms because of the basic way that that seems to tough everything. It's fairly nonspecific but it's entirely all-encompassing, and so-- MR. DONNELLY: No, I just wanted to be sure. MR. CARROLL: Well, let me just share with you some experiences that I have had in observations from my work in Africa the last 25 years about telecommunications. When I first got to Africa as a Peace Corps volunteer in a remote village, we used to--not that remote. We used to have one of those cranking phones that you used to see from the '20s or the '30s, and it would often take me less time to drive up to the capitol and make my appointment and come back than it would be to place the call from my office 50 miles away. So I mean clearly telecommunications have improved in the last 25 years. Have they improved to facilitate commerce? I think to a large extent yes. Are there still issues, major impediments viewed by--for economic development? Yes. The World Bank had commissioned a study, a very extensive survey of Nigerian businessmen and businesswomen in the year 2000, and they surveyed the Nigerian business community about what they felt were the greatest impediments to economic growth in the country. And many of us expected to see such things as corruption and poverty and health, and number one on the list was access to telephones. So clearly there hasn't been the degree of penetration. Nigeria still stands, I think, among the lowest penetration rates in the world of telephone service. I have just come back from the Congo and there's been a proliferation of various wireless services, often unable to talk to each other, so there certainly ought to be better linkage and regulatory support in how they make them more effectively. But, Lawrence, I think you and I both know that there are new technological developments in wireless communication particularly, which I think will be able to roll out and provide telecommunication service to a greater percentage of Africans than has hitherto been the case. So I think with the advent of new technology that it is going to make telephone service more accessible, and a tool for wireless education capability, I think, will certainly bring much benefit to Africa. MR. EBERSTADT: One other aspect of that. Basically sub-Saharan Africa is offline. Internet connectivity is going to be important to economic prospects for the decades ahead. MR. DONNELLY: Anyone else? Well, we will close then. Thanks very much. Thanks, first of all, to my colleagues on the panel. Again, I think this is best regarded as the first of a certainly periodic series of events that we will do to try to increase understanding and discuss policy options across the entire spectrum of policy issues here at AEI, and again, thanks very much for coming. See you next time. [Whereupon, the conference was adjourned.]</body></html>