International Conference on Financing for Development

Department of Public Information - News and Media Services Division - New York
Monterrey, NL, Mexico
18-22 March 2002

20 March 2002


At a press conference today in Monterrey, United States Treasury Secretary Paul O'Neill laid out in full President Bush's "Millennium Challenge", which would increase aid by $5 billion to the developing world, reflecting his determination to play a useful and significant role in world economic development, while holding both receiving and donating nations accountable for real results.

[A paper distributed by the Treasury Secretary at the press conference
shows the new Millennium Fund figures, as follows: 2004, $1.66 billion; 2005, $3.33 billion; 2006, $5.0 billion; and 2007 and beyond, $5.0 billion.]

Clarifying a report by two newspapers that, in addition to the announced
$5 billion increase in United States foreign aid, there would be an additional increase, he said, that President Bush had said he wanted to provide a substantial increase in aid -- looking towards raising the current level, which was at about $10 billion per year, up to a running rate in fiscal year 2006 of $15 billion per year. That represented a 50 per cent increase. The process would work its way up beginning in fiscal year 2004.

He said that that was a very substantial increase in assistance, but importantly tied to the idea of seeing "real results" in terms of an improving level of living standards in developing countries around the world. That was a very big demonstration of commitment by President Bush and the American people that they were determined to play a useful and significant role in world economic development and hold both receiving and donating nations accountable for real results.

Asked why the United States, to which people were looking to set the pace for increased assistance, was still spending one fourth of what the European Union was spending on development aid and could not do better, Mr. O'Neill said, "we need to demonstrate that we know what we're doing" and that had not meant spending more money, but getting results from money spent.

Charitable giving in America in 1998 was $175 billion, he continued. Americans did not lack compassion or a charitable spirit. Getting results was the issue - meaning, substantial increases in the earned income level of the world's people. "If we can show that we can cause that to happen, plenty of funds will flow", he added.

He said that if there was going to be real economic development globally, most of that development was going to come from capital coming into countries to create private enterprise that, in turn, created jobs and higher levels of living. "We're not going to do it with welfare", he added.

Before turning to a series of other questions, the Treasury Secretary provided brief opening remarks. Earlier today, he said, he had had bilateral meetings with four countries to discuss topics of the Conference and other issues of significance to the world, including President Bush's "Millennium Challenge", aimed at producing "real results" and doing that more quickly than had been the practice over the past decade.

Also discussed today had been the terrorist finance problem, on which all civilized nations of the world were working, he said. Ideas about converting a substantial part of financial assistance from loans to grants, among other issues, were also taken up.

Asked about a report of the World Bank being launched today, he said he had not seen the final version. He still believed there was work to be done to sharpen understanding of past lessons. He was looking forward to the final version of that report.

Replying to a question about whether the United States economic slowdown was over, he said he thought the country was on the road to substantial recovery. Everyday seemed to bring new figures, which confirmed the strength of that recovery. Housing numbers released for last month had shown continuing strength in new housing starts and an increase in the number of permits granted. That was on top of a very impressive set of figures on productivity growth in the fourth quarter, of 5.2 per cent, and that appeared to look good for the first quarter. All of that was good news for the United States economy and the rest of the world.

Asked further about the aid conditions and whether the United States was willing to forgive any debt, he said President Bush had indicated that he would create a set of measures for that purpose. He had instructed the Treasury Secretary and Secretary of State Colin Powell to work together with other nations and international institutes to come to a conclusion about what the right measurement standard should be.

That was aimed at assuring that the receiving countries were moving or had arrived at a condition where the rule of law worked, where contracts were contracts, and where the leadership was taking measures to root out corruption, he said.

The Administration was looking at how to think about outcomes rather than inputs, he added. In education, for example, rather than use the numbers of children enrolled as a measure, the standard could be whether a child aged
10 could read or write. "We want to see success as measured by an improvement in the living conditions and income levels of people in developing nations around the world, and we think the formulation of these measures is a critical part of doing this", he said.

With many countries in Africa down to their last few assets, what steps were being taken to help ensure that those countries were not left with nothing? another correspondent asked. Even before the new initiative, Mr. O'Neill said, substantial funds had been allocated for helping countries worldwide. And President Bush had indicated his own high level of interest in the specific subject of African development.

Asked to elaborate on reports that he had disagreed with President Bush on the decision to impose tariffs on imported steel, he said that that question had come from hearsay.

When the correspondent said she believed it had been written in The New York Times, he responded that yes, that was what he had said, "your story comes from hearsay".

He said that President Bush's value system was deep and positive. When the President had asked him to join the Government, he had not asked him to leave his brain in the private sector. So, when the President asked for his counsel prior to a decision, he spoke from knowledge and experience and told him what he thought. When the President told him what he thought was the right answer for the country, "I am always behind him."

To a question about what the United States was doing about the situation in Argentina, he said that in November 2000, under President Clinton, it was decided that the Argentine situation was critical, and a programme was supported for Argentina through the International Monetary Fund (IMF) that would provide
$43 billion in public and private funds. Then, in April 2001, Argentina was out of money again.

So, he continued, the IMF was presented with a proposition stating that Argentina needed another $20 plus billion. As much as the United States Government was concerned about the sustainability of yet another big allocation of money for Argentina, it agreed to go along. By August, that was all gone, as well. So, it agreed to another programme that was never fully drawn.

"How much was enough and could anyone look at the social disorder on the television and find anything but sorrow over what is taking place in Argentina"? he asked journalists. The question that had been asked of him suggested that it was an act of wilfulness to, in effect, say "too bad" to people. In fact, no one cared more about Argentina returning to a sustainable economic condition than President Bush and the others in his Administration.

He added that the Government detested the social dislocation going on there and had been working daily behind scenes to try to help, as the Argentine Government struggled with those difficult issues. Tomorrow, he would have a bilateral meeting with Argentina's Finance Minister.

On the flow of private money to direct investments, another correspondent had heard from ambassadors of small countries with good governance that no money was reaching them. How could it be ensured that direct investments went in those directions, as well? Also, the world had heard so many United States promises, but fulfilling them sometimes became deadlocked in Congress. Was he safe with the $5 billion?

Mr. O'Neill said there had been a positive response so far from members of Congress to the President's "suggestion". The criteria that would be used was a demonstration of movement towards the underlying principles that could create successful economic development as a device for deciding where money should flow.

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