“Trade and Foreign Policy”
It’s a real honor to be here, you know we say that in my business, it’s an honor to be here, and it’s a polite euphemism, but I mean it sincerely.
Because the truth of the matter is, you are this particular club, and I’ll say it with the press here, you’re not suppose to say these things and make choices, this is the most influential, influential group of people that gets assembles on a daily, on a weekly basis on a regular basis on anything that occurs in the State of Delaware. You all represent everything from the fortune 10 companies in the world to the public service and public organizations that exist in this State. And I want to be very blunt with you, what I would like to do today is try to convince you of something.
Because if I can’t convince you of what I’m about to speak to, quite frankly, I don’t have a chance and people who share my view on both parties will not have a chance to convince the American people. I want to talk to you from my vantage point on the Senate Foreign Relations Committee. And I thought I would spend some time with you today trying to focus on America’s role in the world economically, militarily and politically.
The President has said something that every once in a while Presidents say during their terms, use a phrase that captures and essential truth. One of the phrases that is attributed to him is that he referred to America as the essential nation, the essential nation.
The good news is that America is the essential nation. The bad news is that we are the essential nation. It’s going to require us as a consequence of that position not sought, but arrived at to make some very, very, very difficult decisions over the next decade. Some as early as the next six months. Clearly between now and the year 2005-2010 we will write the script for the future of our country more than any generation has since the end of WWII. It is that fundamental.
Never before has America been position, including at the end of WWII with as much economic, political, and military dominance as they are today relative to any single nation. But never before have we been in the position, and nation been in the position in the modern, since the nation state has been formed, in the last three hundred and fifty years; never before has such a dominant nation in a relative to other single nations been lacking in as much power relative to the world.
In the past when there have been powerful nations that have guided the fate of the world. They have not only been powerful relative to the other power structures but the remainder of the world has been basically powerless. The centers of power are not as diffused. In today’s world, in today’s world that is not the case. So the good news is we are the essential nation. We are by far and away relative to any other single nation or block of nations, the dominant nation in the world.
But the ability of us to be in the jargon of the street, the policemen of the world, is less likely to be able to be done with efficacy than it was even twenty five years ago when there were two super powers.
So, what I want to speak to you today is about a debate that is not found itself into the daily news papers of America, that is not found itself today in the discussion that takes place, even with organizations like yours with well educated women and men who have a world view.
But a debate that is raging among those who will be the architects of public policy for the next decade. And that is, are we going to engage the world or are we going to trying to disengage. Is the neo-isolationist instinct that resides in my party on the left and the republican party on the right — will it become the dominant force in determining American foreign policy? Or will internationalism, internationalist view prevail?
We have a three hundred year history in America. Before we were United States, a three hundred year history of wanting to look inward; concluding that, we can be Fortress America. It has been a constant struggle as to what our role in the world should be. Today, the debate is under way. The heart and soul of both political parties are being debated around that subject. Although, it’s not articulated that way.
In my party, labor unions are against free trade. Labor unions fear loss of American jobs. Labor unions see their security in having protectionist barriers placed. In American business, among the Burgermeisters of the world who employ over sixty percent of all the public. There is the same strong tendency, the same strong tendency. The inability to understand the relevance of whether or not we provide an 18.5 billion dollar commitment to the IMF to bail out a place called Malaysia.
“What in the hell relevance does that have to do, Joe, with whether or not my drug store thrives? What does that have to do with whether or not the GM plant stays open?” As a matter of fact it lends itself to demagogic rhetoric that takes you the other way. It is easy to stand up and say, “Why bail out Malaysia, why bail out state-wide official in the last twenty five years — to the chagrin of many of you — that has had unvarnished, total complete loyalty from American labor. No other Democrat in the state carries that burden or that privilege.
So when I show up they are absolutely perplexed. “Joe, how can you be for fast track? You’re abandoning us!” When I speak to outfits like the New Castle Chamber of Commerce, when I’m not on the ninth floor of this building, there is this overwhelming tendency to say, “What are you doing? Why are you making easy for people to go abroad, why are you for knocking down all these trade barriers?”
Well, more to the point, these days men and women in business have a special stake in foreign policy. Whether your business is large or small, global or located in Delaware, you’re affected in some way by the events that occur around the world more than any time in our history. And today foreign policy is more complicated than ever, it’s effected by technology, economics and even the weather. Consider the Global Warming Treaty that’s being debated around the world now.
So I’d like to spend a few minutes giving you my sense of a few of the key foreign policy challenges we face in this complex environment and the end make the plea to you that we should engage. Because it’s easier not to engage. Engaging as you will soon find out, I can make no guarantees for you, I can not guarantee you that it will work. But I can guarantee you as a student of history, if we do not engage we will be engaged on someone else’s terms.
What are these threats to our security, our economic well being, our commitments around the world — what are they?
Well I believe the biggest threat we face is from weapons of mass destruction: nuclear, chemical and biological weapons. This is a huge problem that shows up in almost every foreign policy crisis we face. We see it in Iraq, we see it in Russia where there are thousands of nuclear weapons left over from the Cold War. And the question is, who controls them? People say to me, “What difference does it make, Joe, if our …economy crumbles?” Well it makes a hell of a lot of difference.
Nicaragua crumbles the warring factions don’t have nuclear weapons. The instability generated by the collapse of the Ukraine means that the third largest nuclear power in the world, a country none of you know anything about, has to settle their differences, nuclear weapons.
The good news in the Soviet Empire collapsed; the bad news is it collapsed. Because the one thing we knew about the old Soviets is that they were incredibly cautious, they did not have any regard for human rights, but they never took any real chances. I always used to point out that when the Soviets put a nuclear battery in East Germany they surrounded it with two Soviet divisions and did not give a key to their allies the East Germans.
When we put nuclear weapons we gave a dual key to whoever the country to which we were dealing. And we did not surround it with other than NATO forces. But now, nobody, nobody, nobody, is in charge.
We also see it in North Korea, whose nuclear weapons program may be back on track. Iraq is the most immediate threat. But getting rid of Iraq’s weapons has not been easy, not will it be. An despite UN inspections and all the other efforts since the end of the Gulf War there is no fool proof way no matter what anybody tells you of eliminating the threat of Saddam Hussein posses and some say, and I’m one of those who say it, the elimination of Saddam Hussein is part of the answer.
But nobody who knows as much about foreign policy as I hope I do, can look at you and tell you we know what, who comes after Sadam Hussein. George Bush is [inaudible] criticized and Larry Eagleburger, the former Secretary of State for not finishing the job. The reason they did not finish the job is that through out the modern history of Iraq, unless there has been a dictator or a foreign power holding the center of Iraq together there has been war in the Middle East.
Iran is no box of chocolates. Iran and Iraq killed one million people between them, fighting over a border that controls a significant portion of the world’s oil reserves. So the answer’s not easy. Make no mistake about it.
If we want to take out Saddam Hussein in fact directly it will take American ground forces. A lot of you are military men. Name me a major campaign that has been sustained with out putting a soldier on the ground with a riffle in his hands. It cannot be done. And I’m the one you read in the paper constantly calling for use of force and use of air power against Saddam, but not because I think it will bring him down …I’ll go in to that later.
I’m not sure how this will be resolved. It’s possible there will be another confrontation over inspections an I predict it will occur within the next month. It’s possible such a confrontation may result in military action. But any military strike we undertake is not going to be enough in and of itself to remove Saddam Hussein. The threat of weapons of mass destruction also plays a key role in the relations with Russia. Russia is in the midst of an economic crisis with Yeltsin’s illness, and at the edge of political crisis and a beginning of a political melt down.
I have been there a number of times, and met with every single major faction leader in Russia and they are a sweet bunch. Keep in mind folks, for eight hundred years there has never once, never once in the territory now called Russia, never once been even the nascent experiment in democracy, never once.
It’s a long road. In the worst case scenario in terms of U.S. national security is that after Yeltsin passes from the scene, which is inevitable in near term, and extremist regime will gain power, and gains control of those weapons. That’s the worst case. It’s not something that I think is likely to happen if the foreseeable future, but it illustrates the dangers we face.
A more immediate danger we face in Russia is a political melt down that results in the need for us to make significant military expenditures relative to what actions they may take form the Crimean to engagements with Ukraine. It’s also the reason why we’re pursing an arms control regime and initiatives with Russia. We made good progress in reducing the stock pikes of left over weapons.
My conservative friends went crazy when I joined Sam Nunn and Dick Luger in putting up six hundred million dollars to pay the Russians to destroy their weapons and why are we giving those old commies that money. If in the midst of the Cold War I said to all you gentlemen and ladies we can buy all their nuclear weapons for six hundred millions dollars so you want to buy them. What the hell would you have done? It’s mindless, mindless this right wing opposition to dealing with nuclear weapons, mindless. But it is prevalent.
We made good progress but there’s a thing called a START II treaty has not been ratified by the Duma. And the reason they haven’t ratified it is because it says that we reduce the number of multiple war head weapons that we have, and only have single war head weapons, we have a lot more single war head weapons then they have. So, even though it’s good we get rid of these Merv ICBM’s it means that in order for them to maintain parity they’ve got to make a major build up in single nuclear war head weapons, they don’t have the money to do that.
That’s why they haven’t ratified START II, that’s why we should immediately leap to START III, in steaded in [inaudible] in the number of nuclear weapons in the thousand. Big deal whether you agree with me or not, it is a big deal how we resolve this and it must be resolved in a matter of months, months, not years. Right now we don’t know what the Duma’s going to do. Next year congress should expand the programs we already have in place to employ Russian scientists.
Joe and I were talking to earlier, you realize they have a nuclear cities program in Russian. Over the past fifty years they have built twelve cities the size of Wilmington. The sole purpose the, the sole environment, the sole thing they undertake is the nuclear war industry. They’re out of the business, there are eighty thousand people employed in those cities. They are laterally starving they have no pay. Thirty thousand of them have left, the non-essential workers who do not have enough where with all to be a danger. But of the remaining fifty thousand, ten thousand of them are the Verner Browns of Russia, and there are people wishing to employee them.
Offering them staggering amounts of money, just come to Baghdad. I’m not joking about this. You know what I’m taking about in Iran. The Iranians have a missile program right now. They are doing everything but kid napping these Russian scientists. There’s at least one more important step to take in controlling nuclear weapons of mass destruction, and that would be to ratify this thing called a Comprehensive Test Ban Treaty.
We of all nations have the best position to do that because we have the ability to know test through computer models whether our existing stock piles are of value. No other nation has that ability. Yet we’re one of the few nations that hasn’t ratified it. It says that there can be no testing. Now you will be able to cheat and do some testing, but what it guarantees is the reason why we want no testing gentlemen and ladies, is because no nation can reliably count on their nuclear arsenal unless they can test it.
No military planner can plan for it’s engagement unless they can test it. And if you can not test it, practically speaking, you can not use it. [inaudible] break out of new weapons systems, of new capacity and capability. Of my good friend and he is a friend, Jesse Helms, says no. He constantly quotes somebody I don’t think ever said it, but I’m very big on quotes myself, says “America’s never lost a war and never won a treaty”, and he could never be more wrong.
Because this treaty is an American interest, but our friends on the right concluded that this is not a good thing to do. Can you imagine us, the people who initiated the Comprehensive Test Ban Treaty, we’re the nation that put it in play, and we’re one of only four nations who has not ratified it. In the countries that signed the treaty, the pledge not to test nuclear weapons, it wont eliminate them but it will vastly cut down on their ability to move to the next generation. And almost every country has signed it, we’re one of the few hold outs.
Skipping ahead because I’m taking more of your time than I should, let me turn to another significant area, and that is the stability of the world economy. There’s something that effects your business even more than nuclear, chemical and biological weapons. We escaped the worst effects of the so-called “Asian flu.” But the larger reality still exits. Our economy, our economic well-being, is tied to the global economy.
Interesting statistic I read, during the economic growth spirt of the last six years, one third of our growth was directly attributable to international trade to exports, one third. Just talked to the folks upstairs here and a few other companies. And they’ll tell you, so what’s happened the economic flu, although seemed to be contained slightly now, means the loss of American jobs, means the loss of American security, means the loss of American opportunity.
Because the good news is, one third of our growth came from exports, the bad news is when there are no exports, our job market will shrink , profits will diminish. Totally as a consequence of the international environment, the projections for the next years GDP, are instead of being 3.5 percent, just over 2 percent. All of you understand what that means to your bottom line.
Whether you own a drug store or the Dupont Company. So what do we so about it? Do we disengage, do we not do as we did and quote bail out Mexico, which I might add we made two billion dollars on? Do we not underpin Brazil’s economy, do we try to build fire walls, do we not spend dollars to avoid that?
Well, that’s a debate we have going on in the United States Congress. Exports this year are down twenty percent here in the state of Delaware. Down twenty percent. Projected deficit for this last quarter, just the last quarter in the United States of America alone is going to accumulatively result in a two hundred and forty billion dollar trade deficit. When it hits three hundred billion, how many years can we sustain that with out it turning out the pilot light on our economy?
Some of you are understandably are sceptics but last time I spoke to you, I remember I told you why we balanced the budget and why the deficit reduction package would do it and why these things would happen and why Bob Dole was all wrong about saying when we did it we would have an economic recession and high inflation. And why Volker is right, the predecessor to Greenspan. It was the single most significant thing we did to balance the budget.
We balanced the budget, we made the hard choices. Like you in businesses have made. We have cut discretionary spending, in fact, in real terms twenty two percent. There’s not much more we can do to get our economy right. But we can do it all right and if the international economy collapses, it wont make a whole hell of a lot of difference. It will make a difference, it will just keep it from being as bad as it could have been.
But what do we do? Remember what we did when we went through the S & L crisis? The tough decisions, and how it caused businesses to slow down. What Japan is going through with their banking industry makes what we went through look like a walk in the park. And I’m not exaggerating that, that is not hyperbole, that is a fact.
So we’re tied, we’re tied in ways we’ve never been before. The Japanese are essentially engaged in denial and deferral, but it’s a great consequence to us whether or not they begin to engage. But remember how slow as I said it took us to turn things around. As I said the trade deficit, the mercantile trade deficit, is twenty two billion dollars for this month alone. The deficit is twenty two billion dollars — and that translates into third shifts in general motors if it keeps up being shut down. That translates into Dupont’s profits, and ICI and Zeneca and the rest. It translates into the stock market.
I predict we’ll continue to hear more voices and louder voices in support of trade restrictions and even retaliation, as the economy restrict and that as seen will be the very appealing, very appealing message. I turned on the television the other day and I saw Barbara Mikulski, an ally of mine, and Paul Sarbanes and Arlen Specter — all my friends – talking about trade restrictions because the steel industry in each of their states is in trouble, and they are, it’s real, it’s not a joke, but the answer is not trade barriers, but it’s going to be very appealing to talk about trade barriers.
There are other countries out there that remain economic basket cases, like Russian who are still sitting on those nuclear weapons, Latin American and so one. So the point I want to make to you is this because I’ve taken too much of your time, and I want to at least leave a little time for questions.
My conclusion is very basic and my plea to you is very basic, and that is; look at this closely. The answer for America as it goes into the twenty first century is to engage, engage. In arms control it means passing the Comprehensive Nuclear Test Ban Treaty, START II and START III, the Nuclear Cities program — where we go in and hire those nuclear scientists, we hire them, with American tax dollars. We provide exchange programs for them, where we allow American corporations to go into those cities and subsidies American corporations if they find it in their economic interest.
To find alternative uses of that talent, for it will not just sit there. It will no just sit there. Any more than you in an economic collapse in the North East would not go to the South West to find the ability to take your talent and put it to use.
Economically, we must continue to support the IMF, the World Bank; we must pay our dues to the United Nations for our own naked self-interest. And we must continue a domestic policy of educating our work force.
Thank you.