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Prepared Remarks by U.S. Secretary of Energy Bill Richardson

June 18, 1999
Foreign Affairs

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Note: Remarks as prepared for delivery

When I was U.S. Ambassador to the United Nations, I was often inspired by one of the world’s most-original humanitarians: Dag Hammarskjold.

Each time I return to New York, I’m reminded of his beliefs -- of all that we can do when we grasp the past, respect the present, and use the knowledge from both to clarify a vision for the future. When we do so, we often do our best work.

The Middle East demands our best work -- it did yesterday, it does today, and it will tomorrow. It is one of the great enigmas (why else are there so many of us in this room?). Opinion pages, books, and think tanks run on the sheer volume of inquiry into this region.

We all know this; it underpins much of our work; it’s why we’re here.

OUR GOALS: AN "EYE ... ON THE FAR HORIZON"

The Middle East stands at the middle of our global conscience, a foot in the worlds of East and West. How do we engage this region?

Well, Dag Hammarskjold had an idea. "Never look down to test the ground before taking your next step," Hammarskjold wrote. "Only he who keeps his eye fixed on the far horizon will find his right road."

Now, was he speaking of the Middle East? Not necessarily. But does this logic apply? Certainly. In fits and starts we have progressed, but only by remaining true to the vision we see for the region’s future — peace and prosperity — will we find the "right road" Hammarskjold spoke of.

The Clinton Administration adheres to this vision, fundamentally committed to a lasting peace, continuing the American tradition of engagement in the region. Along this road lie some of the most vital American strategic interests — in trade, for example — and also lies the genesis of so many Americans’ basic beliefs.

It is also a region of great interest to many American companies who also have a long tradition of engagement in the Middle East. For them this road presents many challenges but offers huge rewards. The Middle East is moving in the right direction — toward greater stability, economic integration, and open markets — but the movement is not always smooth.

ENERGY RESOURCES IN THE MIDDLE EAST

The Middle East’s critical strategic importance is shown in its dominant role in the world oil and gas markets.

The Middle East continues to account for 35 percent of the world’s oil production and almost 70 percent of proven oil reserves. And for the foreseeable future — as in the past — fossil fuels will remain an important commodity throughout the world. Yet while this feels familiar, the landscape is changing. Investment in the Middle East region is increasing and is projected to do so for the foreseeable future.

But, in today’s climate, the Middle East — just like Asia, Latin America, or Africa — must compete for capital investment that is available for new projects worldwide. Gulf oil producers are dually conflicted: as investment decisions must be made, they face other unpalatable choices along the conflicting courses of action and reform.

Especially daunting for many of these Gulf states is the basic decision on how to diversify economies to overcome dependence on oil and gas. In the last two years, Gulf economies have suffered from low oil prices; budgets have been squeezed; tough spending choices made. Oil revenues have not provided sufficient capital to meet all investment needs in all sectors.

Diversification can help smooth out these peaks and valleys — and governments can do a great deal to make opportunities feasible and ease into change. Governments that want to come to the table — or stay at the table — need to follow the "house rules" of vibrant and competitive markets. These rules make for an honest game.

Private ownership... the validity of contracts... fair, non-discriminatory dealings with participants... the unhindered flow of resources across international borders... and stable, transparent, legal, fiscal regulatory and trade regimes.

These "rules of the game" are critical to market creation and investment. I am optimistic that the leaders of these states will have the courage and the wisdom to make these difficult choices. Because they must make these choices. Unless rigid governmental structures are reformed and privatization efforts are encouraged, the region will lose out to others whose governments are more transparent to increased foreign investment and more receptive to it. This new investment is a key to growth and sustained prosperity in the future.

OPPORTUNITIES FOR INVESTMENT IN THE MIDDLE EAST

And this new investment will, for the most part, come from the private sector — an integral player in unlocking many of the opportunities in the Middle East.

For some time, the United States has looked to facilitate greater private sector interaction in the economic decision-making in the Middle East. For example, under the Gore-Mubarak partnership is a President’s Council that convenes business leaders from both sides to help facilitate policy reforms that are good for economic growth, good for employment growth, and good for investment.

The U.S. Gulf Cooperation Council Business Group serves a similar purpose in the Gulf — as the nexus from which many business opportunities spring forth. And all of you are familiar with other organizations working hard to promote investment in the Middle East.

And as Secretary Daley has elaborated, the U.S. Department of Commerce is the undisputed lead in bridging U.S. and Middle East business interests.

In my career as a Member of the House of Representatives, as U.N. Ambassador, and now as Secretary of Energy, I have made clear my deep interest in Middle Eastern issues, and I have visited there several times. And I have observed the changing landscape. Opportunities are emerging.

I was in Saudi Arabia in February. There, I discussed with the King, the Crown Prince and Ministers the recent initiative by the Kingdom to open up markets for investment. There are enormous energy resources waiting to be developed by companies with a vision for the future. The Saudis are looking, though a bit hesitantly, for those companies; and many have advanced excellent ideas.

In Kuwait, the government is moving steadily toward opening up the oil and electricity sectors for investment by foreign companies. Companies with the capital and creativity to meet the challenges posed by these countries will be successful. The multilateral peace process, with its emphasis on the economic benefits of peace, will provide opportunities for the private sector, while it breaks down the barriers between countries in the region.

We are working on a regional basis with Jordan, Israel and the Palestinian Authority to address critical water and energy needs. And I expect to sign an agreement with Egypt during President Mubarak’s trip to the United States later this month.

And just last week, I met with the Qatari Energy Minister in Washington. Qatar is the model of a "favorable foreign investment climate" — in that it has opened markets to foreign investment and encourages companies to work closely with state-run companies. Qatar is also building industrial zones to capitalize on energy’s enriching potential. I was particularly impressed with how they’re approaching the challenge of attracting capital.

But while the Middle East offers us these opportunities, it remains a labyrinth demanding endurance. While we use our experience and our vision to break new ground in some Middle Eastern states, there remain many puzzles for which there are still no solutions in others.

CHALLENGES REMAIN

It is in these countries that we must keep our eye on the far horizon with the expectation that, over time, change will bring opportunities. We must work to bring our political and commercial agendas in-line and provide opportunities for all companies, not just some.

A. Israel

Israel is a country in which diverse energy sources will be required in order to maintain its energy security. Israel’s interest in developing a natural gas market will contribute to its energy security, and I am committed to expanding activities under our existing energy cooperation agreement to help in this effort. I also believe we can assist Israel’s efforts to develop solar markets, wind power and the use of clean coal technologies.

B. Libya

Libya, for example, is a country that could provide great opportunities for our companies — as it once did — but the government still has some distance to go. We’ve seen positive action. And while surrender of the Lockerbie bombing suspects is a good development, there are more steps Libya must take before consideration is given to lifting the unilateral sanctions. We understand the concerns of U.S. energy companies with Libyan interests. But we also have a responsibility to uphold our policy on terrorism.

C. Iran

We have also seen some progress in Iran over the past two years. We admired Iran’s management of the 1998 Islamic Summit. We appreciate the developing relationship between Iran and Saudi Arabia. We welcome President Khatami’s declaration for dialogues between his people and Americans.

But there remain Iranian policies, which violate international norms and threaten our interests. We believe the way to address these issues is through an official dialogue with the Iranian government. Iran has, so far, declined. There are terrific opportunities — but the political context must be improved.

Now, let me say a few words about sanctions. I know that many of you would like to pursue investment opportunities in places like Iran and Libya. But U.S. sanctions prevent you from doing so. While we may not see eye-to-eye on the subject, I think we do on the goals. I know that you, too, would like to see these governments adopt policies and practices that denounce terrorism, respect human rights, and spurn the misbegotten conduct of the past.

So let me be clear: it is not our intention to harm U.S. companies. We do, however, have a responsibility to stand firm until these governments demonstrate their readiness to return to the community of nations that respect peace, human rights, and the rule of law. So I’m pleased that this Administration has taken a common sense, deliberate approach and has, under review, the sanctions reform legislation now pending in Congress.

D. Algeria

Algeria is another country with enormous potential. We’ve watched Algeria, hoping that some day the country can set a stable course. Now, the recent election in Algeria was disappointing; but we will continue to press the Government to end its long-running crisis — and commit to democracy, the rule of law, and economic reform. There are hopeful signs, but we will have to watch and wait.

As I said before — the think-tank, book, and op-ed page business survive on the fact that in the Middle East, there are no simple solutions. The entire region demands that we look to the far horizon; that we find the right road.

It is clear to me that energy and trade can provide the cohesive "stuff" we need to bring peace and prosperity to the Middle East. Creating opportunities for investment, and capitalizing on these opportunities, can tie the region together to the betterment of all. But governments cannot sit idle and expect investment to flow into their countries without developing the rules for investment.

As Secretary of Energy, I will continue my work to ensure that these rules are established. You can count on that.