The text (as prepared for delivery) of remarks by Ambassador Pamela E. Bridgewater, U.S. Deputy Assistant Secretary of State for African Affairs, to the Leon H. Sullivan Foundation Forum on Liberia.
I am pleased to speak to you today on the role of the private sector in Liberia's recovery and development, and what the United States has done and will continue doing to help.
It is appropriate that the Sullivan Foundation is hosting this event, given its four decades of experience in providing vocational education and training to Liberians. We applaud the Foundation's ongoing training program for over 200 youth in skills areas such as carpentry, masonry, plumbing, electricity and tailoring. Dr. Leon Sullivan has left a wonderful legacy. Ken Ross, your father and you have also had a long and illustrious history in Liberia, and we will continue to support you in your efforts to make long-term investments in Liberia-in its people, in its infrastructure, and in its resources.
The United States is pleased to be leading the international community in support of Liberia's reconstruction and will continue to work closely with Liberia and Liberians to promote strategic American investments. The road ahead will not be easy, but the United States is committed to helping Liberia establish an effective and transparent government that respects human rights and the rule of law, provides basic services, and promotes a market economy and opportunities for all. Our partnership should be a model for promoting democratic and economic reforms, prosperity, and U.S. engagement in Africa.
I will add that the United States will work with all concerned to ensure that free and fair elections are held on schedule in October 2005. These critical elections will be well funded, free, and fair. We must adhere to the terms of the Comprehensive Peace Agreement because the Liberian people deserve the direct and prompt right to choose their own leaders and to bring greater accountability upon them. The recovery process has been slow, but the results have been significant in just over one year.
The obstacles ahead for Liberia--and for the international community and potential businesspeople in Liberia - are enormous, and almost insurmountable without full cooperation and strong discipline. Economically, Liberia must overcome an 80% poverty rate, 78% illiteracy, 75% of its infrastructure destroyed, HIV/AIDS, and a legacy of untrammeled government corruption. The development issues confronting Liberia's 3 million people, with a 2-3% annual growth rate and a mere per capital income of $100 per year, will take at least a generation to overcome.
However, Liberia has enormous commercial possibilities. In an environment of peace and good governance, these could result in significant investment, growth and job creation. For example, in minerals, Liberia is one of the least explored and most richly endowed countries in the world. The potential to refurbish and develop its existing rail connections and ports for the benefit of the entire Mano River Union and the West African sub-region is extremely attractive. Liberia's fertile soil and tropical climate are optimal for the development of a myriad of homegrown, "value-added" agricultural products and industries. Its maritime registry, run by American citizens based in Virginia, has a longstanding international reputation for quality, safety, and cooperation with U.S. officials. Liberia is home to the largest remaining portion of virgin rainforest in West Africa and is ripe for the development of a multi-million dollar ecotourism industry and other sustainable development. Other resource-rich developing countries have become well known for corruption and a place where only a chosen few can enjoy those riches. Liberia's history is similar, and the U.S. government wants to be part of a solution that will reverse that trend so that all Liberians have an opportunity to benefit from Liberia's potential wealth.
The United States will face these challenges and opportunities using both public and private sector incentives, as well as sanctions in the broad sense of the definition-a "carrot and big stick" approach, if you will. I would now like to outline how the United States plans to move forward along these lines.
INTERNATIONAL FINANCING AND DEBT INCENTIVES
Liberia's needs for economic stabilization and development are enormous, particularly in terms of necessary infrastructure to support private sector-led economic growth. Such needs are beyond the scope of any one donor to finance and will require that Liberia regain access to financing available from the IMF, the World Bank Group, and the African Development Bank Group (ADBG). However, before Liberia can regain such access to financing, it must demonstrate some track record of economic performance and clear arrears accrued over 20 years of non-payment. Liberia will clearly need donor assistance in clearing these arrears. The Bush Administration is leading this endeavor by encouraging the international financial institutions to find creative ways to help clear the arrears. Our efforts will leverage support from other creditors so that debt relief can be expedited. The leveraging and catalytic effect cannot be underestimated.
Assuming that Liberia's performance continues and economic reform progresses, Liberia ultimately would be eligible for significant debt reduction under the Highly Indebted Poverty Countries (HIPC) program. We are working closely with the International Monetary Fun (IMF), World Bank, ADBG and the G8 on an arrears clearance plan.
WHAT THE NTGL CAN DO NOW:
Liberia needs good corporate citizens so Liberia and the international community can benefit from sustainable development of Liberia's human and natural resources, its port facilities, and geographic location. I encourage the World Bank and the rest of the international community to take the same stance in promoting the international--and Liberian--private sector in Liberia. Significant foreign investment increases government revenue, creates jobs, and builds infrastructure. It also promotes regional peace and stability while it enhances opportunities for prosperity for a country's neighbors. It creates a stronger, tangible rationale for enduring ties between states.
For these reasons, I also call on Chairman Bryant's National Transitional Government (NTGL) to take all necessary steps to liberalize and make fair and transparent trade and investment opportunities in Liberia. There are a number of independent administrative steps that Liberia can take now in order to stimulate trade and investment. I would like to name a few:
* The NTGL should move forward with the privatization of the National Drug Service (NDS) as recommended by the European Union. In order to establish a viable system of providing drugs the NDS should begin to commercialize its operations and then privatize the NDS. In the long-term privatizing the NDS would relieve Liberia from dependence upon donor contributions and would guarantee a source of safe drugs.
* Although the Liberian Constitution prohibits ethnic discrimination, it also provides that only "persons who are Negroes or of Negro descent" may be citizens or own land. This prohibition also makes it overly complicated for many potential U.S. investors, as well as many persons not of Negro descent who were born and live in Liberia.
* Remove the monopoly of the Liberian Produce Marketing Corporation (LPMC) to market cocoa and coffee. The LPMC is a defunct parastatal that has used its powers to prevent the private sector exports of cocoa and coffee. Opening this sector to private sector investment sends a strong signal about NTGL intentions to have the private lead the future development of Liberia. In fact, monopolies in other sectors as well, petroleum in particular, cause price distortions, rent seeking opportunities, and make Liberia a very expensive place to do business. Introducing competition is the best cure for this.
* If the NTGL wishes to get on a "fast track" for an International Monetary Fund (IMF) Staff-Monitored Program and subsequent debt relief schedule, the NTGL must quickly address requests for details on the new supplementary budget, implement cost cutting measures at the Central Bank, and provide details on the military wage bill and overdraft facility at the CBL to finance the fiscal deficit.
Despite the potential for very generous contributions from the international community, there is no way that the donor community or financial institutions alone can address all the immediate and long-term needs of even a relatively small country like Liberia. Ultimately, even with the extension of international goodwill and friendship, Liberia will need a "hand up" and not a "hand-out." The private sector is perfectly poised to provide this type of relationship. The innovative programs that the United States is implementing to create over 5,000 jobs already and to rebuild infrastructure in Liberia are largely modeled on the U.S. government-run "Civilian Conservation Corps," which provided the same necessary but temporary function for needy, unemployed Americans and for a shattered economy during the Great Depression of the 1930's. However, long-term prosperity did not return to America until the engine of private enterprise could stimulate the creation of opportunities for individuals and funding for public-sector enterprises and social programs.
USG INCENTIVES
In order to further kick-start this process, the United States understands that it must play a crucial role with Liberia in providing economic confidence and incentives for U.S. trade and investment. Transparency in fiscal and monetary operations is paramount. Several U.S. Treasury Department advisors consisting of tax, budget, bank supervision, and central bank experts have visited Liberia in recent months and held discussions with their Liberian counterparts. We have already placed several experts in the Finance Ministry, Central Bank, and Budget Bureau to assist Liberian financial institutions and make Liberia more transparent, accountable, market oriented, stable and creditworthy.
Assuming the National Transitional Legislative Assembly first passes appropriate pending legislation, the Department of State intends to help finance Liberia's implementation of a Kimberley-compliant diamond certification regime. We also plan to fund aviation and maritime safety assistance programs and will continue to offer technical assistance to the Forest Development Authority, the Central Bank, and the Finance Ministry in promoting transparency and good governance in those sectors.
The State Department stands ready to help Liberia rebuild its economic and commercial infrastructure and related legal framework , its utilities, and its agricultural base in order to attract significant investment. We will provide appropriate regulatory and privatization assistance within the water, electricity, sewage, railroad, aviation, and maritime port systems. We want to promote the development of small-holder production of sustainable tree crops, like palm oil, cocoa, mango, and rubber. As a conservative example, the World Cocoa Foundation asserts that the average Liberian farmer could earn a net $1,000 per year from harvesting his or her own cocoa from 1,000 trees on a standard 2.5 acre (one hectare) plot. That averages almost $3/day, or three times more-or better-what the average Liberian earns in one day. These are the types of programs that will encourage Liberians to return home to the countryside, and to extend real prosperity beyond Monrovia's real estate market.
The United States plans to help Liberia implement anti-trafficking legislation, to stiffen laws against rape, and to improve laws on labor. Specifically, we will focus on collective bargaining, unions' participation in the political process, and the passage of the equivalent of our "Americans with Disabilities Act" and establishment of a functioning Equal Employment Opportunity Commission (EEOC). Liberia's successful implementation of these steps will trigger the restoration of its Most-Favored Nation trading status and of tariff benefits under our Generalized System of Preferences (GSP). These measures also will enable our Overseas Private Investment Corporation (OPIC) to resume providing loans and insurance to U.S. and Liberian businesses.
Liberia's democratic and macroeconomic performance is inextricably intertwined. The United States will explore how best we can fund Liberian preparation for accession to the World Trade Organization (WTO), and promote measurable progress so that Liberia can access benefits from the Africa Growth and Opportunity Act (AGOA) and our Millennium Challenge Account (MCA).
ATTACKING CORRUPTION; USG's "BIG STICKS"
The more than $520 million pledged by the international community at the February reconstruction conference on Liberia in New York was a great vote of confidence in the government and citizens of Liberia. Liberians must insist that that trust not be betrayed by a greedy few. Liberians, and the National Transitional Government of Liberia in particular, must fight corruption. Corruption undermines donor confidence, investment, and progress across-the-board. Corruption means many fewer jobs and creates a widening gap between the "haves" and the "have nots", and ultimately can disenfranchise Liberians who find that it is impossible to get ahead. Liberia's low level of transparency, accountability, and good governance is troubling and represents the greatest threat to economic, social, and political reconstruction. If Liberia is to stay on course and keep the confidence of its friends in the international community, it must move further against corruption, and deal with corrupt officials. Meaningful and realistic government reform and action to curb corruption is critical to maintain the peace and public trust.
Unless the NTGL and the factions take decisive steps now to curb corruption and wasteful spending, they will lose the faith of both the people and the donor community, and the next elected government may not have the international support needed to be successful. Continued U.S. support hinges on continued reforms. Liberian delays in reform make it difficult for the United States to marshal support. When this Friday donors and the NTGL will meet in Washington for a six month review, we look forward to Liberia's report and its measures to be taken to address reform and corruption. The inability of officials to come to grips with their responsibility to ensure the rule of law at the highest levels is troubling. If appointed leaders cannot keep the rules, why should anyone else?
The United States of America supports strongly Chairman Bryant's clarion call for transparency. This includes U.S. support for actions against corruption at the Ministry of Finance and Port Authority. These initial actions were necessary, but are not enough. Adhering to transparency and accountability in all government institutions is essential for Liberia's economic and political growth, and to maintain the confidence of international donors. Liberia needs to match the commitment of the international community and gain investor confidence. Peace, stability, and honest application of Liberia's resources to the reconstruction and development of Liberia will do the job. Those who steal from public coffers or use their positions to extort must be fired. The United States will do its part to support the fight against corruption in Liberia.
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As Ambassador Blaney stated in a March press conference in Monrovia, under Presidential Proclamation 7750, under section 212(f) of the Immigration and Nationality Act, we will suspend entry into the United States of Liberian public officials, and their dependents, who we find to be corrupt, as well as those who corrupt them. The United States will no longer be a safe haven for corrupt Liberians. If we conclude that an individual is corrupt, or is undermining U.S. assistance goals, or is extorting U.S. businesses, he and his family will not travel to the United States for any reason. If those officials are American citizens violating U.S. laws, they will receive a visit from U.S. law enforcement agencies or the Internal Revenue Service upon their return to the United States. We have already begun freezing assets belonging to corrupt officials from the Taylor government.
We understand that the European Union will audit various Liberian ministries. We welcome this contribution, and expect full Liberian cooperation with those audits. Our mutual aim is not to punish past wrongdoing, but rather to ensure that funds are used transparently from now on.
To help Liberia overcome the economic effects of UN sanctions, we have begun working with the Forest Development Authority on a mutually agreed action plan that focuses on FDA transparency, sustainable development, and community participation by December. However, if the FDA does not cooperate, we will have no choice but to push for renewed timber sanctions in December.
In short, we will have "zero-tolerance."
CLOSING
In summary, let me reiterate that we strongly support Chairman Bryant and the National Transitional Government of Liberia and appreciate the progress and the difficult challenges they face. However, I believe that I can speak for the Chairman in saying that "business as usual" in Liberia must end, and it must end now. We will not ignore corruption and patronage. Transparency and good governance begin at home. "Cleansing the inner vessel" will make it easier to crack down on other Liberians' abuses.
Such policies will generate wildly popular support, increase confidence from donors and investors, and create an enduring legacy for Liberia's current leaders as the true founding fathers and mothers of modern Liberia. From our own sad experience, we reflect upon the fate history has dealt corrupt U.S. administrations under otherwise widely respected presidents Ulysses Grant and Warren Harding.
Liberians must learn that there's more money to be made more legally, respectably, and certainly more easily, in the private sector. Over the years, some shortsighted Liberians have been willing to sell their own birthright for a proverbial "mess of pottage." They have stolen not only money but also the faith of international donors, of U.S. investors, and worst--they have stolen from their own people. Liberians, the NTGL, and the international community will not tolerate this behavior any more. Furthermore, Liberia's encouragement and protection of U.S. private sector trade and investments, such as LISCR, AmLib, Celcom and others, are the foundation for economic recovery. As Liberia practices these lessons, the United States will be there to promote these public-private sector partnerships and ensure our mutual success.
Thank you.
