Remarks by Ambassador Daniel M. Rooney to the Atlantic Council at Carnegie Mellon University
Remarks by Ambassador Daniel M. Rooney to the Atlantic Council at Carnegie Mellon University Conference, Pittsburgh, Pennsylvania.
I want to thank Fred Kempe and Jared Cohon, co-hosts of the Conference for inviting me to speak this morning and open this timely Conference.
For those of you who travelled to get here – I'd like to welcome you to our hometown. – FAILTE. We are thrilled to host the G-20 meeting. I can’t think of a better place for world leaders to come and discuss what to do about the global economy.
Pittsburgh has seen its ups and downs. It was known for steel and manufacturing industries. Then steel and manufacturing stopped – and jobs were scarce and the people and companies left - the city went into decline.
City officials and community leaders made good decisions and now Pittsburgh is doing well again, especially in health care, education, technology, special manufacturing and services. We can learn from the Pittsburgh experience, which has mirrored the changes in the U.S. economy as it moved from manufacturing to service.
I'd like to start out this morning by looking briefly at the global economy and the challenges facing the world's leaders and the people gathered here for the G-20.
Then I'd like to tell you about Ireland, my home for awhile.
Regardless of the make-up of its economy, since the end of WWII – the United States has been the main driver of economic growth globally.
Even today America accounts for -- depending on how you measure it -- between 20 and 25% of the world’s output.
In the last 20 to 30 years, the increased rate of globalization has benefitted our country greatly. However, these benefits have not only been felt in the U.S. – many other countries have seen their economies boosted by increased trade and investments.
For example, just in the past 10 years, the economies of the BRIC countries -- Brazil, Russia, India and China -- have grown rapidly. That said, their lower GDP per capita shows that they still have room to grow. The most important thing for each and every country -- the U.S. included -- is to develop a balanced economy, one that creates sustainable growth and provides equal opportunities to its citizens.
And that brings us to why we are here -- to begin to shape the global economic and financial system following the crisis. At the G-20 Leaders’ meeting last April, the countries agreed to do whatever it took to support recovery and strengthen financial supervision and regulation, so that a crisis of the current magnitude does not recur.
This Pittsburgh meeting is an ideal opportunity to build on the April meeting and adopt policies to move forward on several fronts, including:
-- prioritize jobs and train people for the 21st century economy;
-- further strengthen the global financial system;
-- support initiatives on food security, financial access, and energy in the world's poorest countries;
-- set the contours of a financing framework to combat climate change; and
-- strengthen our energy security by increasing market transparency.
Fortunately, since April clear progress has been made. G-20 output increased in the second quarter of 2009 and growth will continue in the second half of the year.
For 2010, the International Monetary Fund (IMF) expects collective G-20 growth of 3.2 percent, compared to overall contractions of 1.1 percent in 2009.
Despite these positive signs, we can't relax. Consumers won't be spending as much because unemployment is still rising -- nobody's going to spend if they fear losing their job. The IMF noted that the greatest risk is a stalled recovery. We need to continue using all policy tools -- fiscal, monetary, and financial -- to make sure this doesn't happen. Prematurely withdrawing support risks a return to recessionary conditions and instability in financial markets.
That said there will come a point where the recovery is sustainable. Then G-20 countries will need to unwind the extraordinary support measures put in place to overcome the crisis.
As recovery is established, we need to have in place a new framework that will support healthy and a vibrant global economy. We hope to reach agreement on such a framework in Pittsburgh.
The impact of the crisis on workers has been particularly severe. As growth returns, we need to do everything we can to ensure that employment does as well.
The G-20 should commit to implementing recovery plans that prioritize job growth; income support for the unemployed and the quick regaining of employment.
Substantial progress has been made on the commitments made in Washington and London to improve financial supervision and regulation.
In London we reached consensus on a global framework of reform. We can point to many accomplishments, including an expanded scope of regulation to include previously under-regulated institutions, markets and products, strengthened, prudential oversight and enhanced regulation through higher capital requirements on risky assets and off-balance sheet items, improved risk management, strengthened financial integrity by bolstering international standards in three areas – tax information exchange, anti-money laundering/combating the financing of terrorism and prudential oversight – thorough expanded use of peer-review mechanism measures and promote compliance with standards.
Our challenge now is to put the framework in place. The challenges posed by the crisis have highlighted the need to improve our multilateral cooperation in order to further promote global financial stability, foster sustainable development, and lift the lives of the poorest from poverty. Modernizing the international financial institutions and the global development networks will be essential.
I would like to add here that President Obama has energized world leaders to make the commitments to bring global financial stability to the entire world in order to guarantee an economic sustainability in the coming decades.
Now to Ireland
Ireland is a small country about the size of our Pennsylvania.
Even though Ireland is not a G-20 country, it has achieved much over the last 20 years. Some say the main export of Ireland until the 1980’s was people. That changed when the Irish people from all walks of life said enough, and reached a consensus of what to do about the economy – with those good decisions, Ireland caught up to, and passed its European neighbors in terms of living standards.
A critical component of Ireland's resurgence has been its openness to foreign direct investment and trade. Irish policymakers saw that Ireland's future depended on the openness and the country clearly reaped rewards from this decision.
As shown by the steep economic downturn in Ireland, small countries are greatly affected by international economic conditions. However, because the world's economy is so interconnected, it works the other way too. If a small country's economy collapses, the effects are felt well beyond its own borders. So, it behooves the larger economies to remain engaged with countries such as Ireland and offer support as needed. However, Ireland is not waiting for other to make decisions first. The government has taken many steps to put the economy right, including setting up the National Asset Management Agency, NAMA, to take property loans off of the books of the banks in the hope that this will enable the banks to begin lending again.
In a recent speech, former Irish President, Mary Robinson, said the challenges that Ireland faces demands a comprehensive vision of the sort of society the country wants.
She said that to shape a vision of how Ireland hopes to develop as a society, “we need to listen to everyone who has something to contribute, yes the business sector and the financial experts, but also the social entrepreneurs and innovators, the teachers who educate our children and those who have been marginalized in the past."
I mention her speech not just because I personally agree with her, but also because it includes some lessons for those assembled here and later in the week at the G-20. Specifically that we will have a better chance of building a sustainable global economy if we listen to everybody who has a stake. Ireland did it once with great success and I'm convinced they will do it again. I'm equally convinced that the representatives of the G-20 countries will make the right decisions.
This past weekend the Irish government sponsored the Farmleigh Conference. They invited Irish people from all over the earth. At the initial session, Greg Barret, past CEO of Intel, was most critical of Ireland regarding education – especially for the lack of engineers and scientists being graduated from Ireland universities. He also included the US for a lack of engineering graduates – you would know more about that than me.
I agree we should graduate more engineers and scientists. It is important for competition. But I believe we must upgrade the entire curriculum to support a student’s ability to think. There is much down time; instead we could enhance the focus for ethics, literature, history, language – along with math, physics, and chemistry.
Patricia, my wife, was a professor at Robert Morris University. Four of our children were, or are, teachers. One of our daughters is a lawyer but she was not satisfied with the education that her children were receiving and went back to school to become a teacher. There are many things we do but the most important contribution we make is to education.
It bothers me and I am sure many of you – whenever there are economic problems the first thing the politicians consider is cutting the education budget – that is a small-minded approach.
Ireland has a real opportunity to be a world leader in the area of renewable energy. Ireland has some of the best wind, biomass, and ocean energy in the world and, given the government’s commitment to invest in research and development, it could soon become and ideal site for innovation in this sector.
Targeting renewable energy would kill three birds with one stone. It would assist Ireland in reducing its carbon emissions, improve its energy security, and – importantly – build a new domestic industry.
This is just another area in which the US and Ireland can work together cooperatively.
I leave you here – again I could say much more about Ireland – a wonderful country with bright people and excellent leadership. We can use Ireland as a role model and find it as a positive factor.
Thank you for listening and I hope these thoughts will set the stage for the Pittsburgh Summit.
I hope Pittsburgh will not only be the (positive) turning point for the economy but will be known as the place we came together and made a better life for all.
Slainte – God Bless