2002 World Economic Forum

February 2, 2002
Bill Gates, co-chair; Bono, composer and singer; Paul H. O'Neill, U.S. Secretary of the Treasury; Ernesto Zedillo Ponce de Leon, former President of Mexico
 
RICK SAMANS:  Good morning everyone.  Welcome to this morning's plenary discussion entitled, 'Beyond Good Intentions: Building Public Support for Development.' I'm Rick Samans, Director of Global Issues at the forum and a member of its managing board. We're joined this morning by an extraordinarily distinguished panel: Secretary of Treasury of the United States, Paul O'Neill, Bono,
 
BONO: …a couple of exceptions.
 
(LAUGHTER)
 
SAMANS: Mr. Bill Gates, and ex-former president of Mexico, Ernesto Zedillo, and also the chairperson of the high level panel appointed by Secretary General Kofi Amman, for preparations for the Monterey Summit on the financing for development.  As in other planaries here at the forum's annual meeting, this will be an interview style. After setting the stage for discussion, I'll ask panelists questions and we'll facilitate a conversation. During the course of the session, we'll also turn to the audience to take a few questions from the floor.
 
Now before we get underway here with the conversation, I just wanted to lay out some facts, some observations, in a way of setting the scene for this discussion. Many development goals have been established, as we know over the years.  There's been a long-standing target for OECD countries to devote seven tenths of a percent of their GDP to official development assistance. In addition, about a year and a half ago, no less than 189 countries signed onto a series of very important and ambitious international development goals.  Just to give you a few of them: by the year 2015, there is this common goal to have by...to have the proportion of world's people who's income is less than a dollar a day, who suffer from hunger and who are unable to reach...to afford safe, drinking water.
 
Also by 2015, we've all committed to ensure that children everywhere, boys and girls, will be able to complete a full course of primary schooling, mortality would be reduced by three quarters, and an under five child mortality by two-thirds of their current rates. Also we've committed in these millennium goals to halt and have begun to reverse by 2015 the spread of HIV/AIDS, malaria, and major diseases that afflict humanity. Now, it's very clear that these goals, both the OECD targets and the millennium goals, are very ambitious targets–they've been around, they are aspirations of the international community. But what remains very much an open question whether aid levels will rise to meet these aspirations. After the Cold War, in fact, aid levels declined quite significantly rebounding a little bit in the last couple of years. But not nearly enough, not to really meet the reach of these goals. As discussed in the opening plenary session, one has the sense, however, that maybe, just maybe, we have arrived at a special moment in the history of global poverty reduction. Now there's always been an absolutely compelling moral argument for alleviating poverty, we've long known that so much human suffering can be alleviated with, in fact, so little, on our part, indeed, just an infinitesimal sacrifice in the standard of living of those in more developed countries. There's also been a widely acknowledged long-standing clear economic case for greater effort on poverty reduction. We know how important addressing disease, malnutrition, illiteracy, and other facets of absolute poverty would be for the take-off of economic growth and for expansion of markets. But while these arguments are widely recognized, they have not yet been sufficient to spur commitment on the part of other governments and their publics commensurate with the reach of these aspirations by the international community. Recently, however, two new grounds for action have emerged. Only time will tell whether they are sufficient to transform public attitudes and political wills. The first involves the political economy of globalization. 
 
It's commonly said repeatedly, I think, in these corridors and halls that greater action is needed to widen participation in the benefits of global integration.  However, it's no surprise to people that many of the countries that have been most left behind are those that are suffered the highest disease rates, the greatest illiteracy, and the weakest infrastructure institutions—that is to say, that the countries that are in most need of this official assistance. So it's increasingly understood that there really can be no political response—effective political response—to the concerns over global integration, or globalization without making progress on the fundamental poverty issues. 
 
The second new case for action is the one with, perhaps, the greatest potential to change the dynamics of this issue—and we heard about it in the opening plenary the other day, and that is international security. Lately, a big push on poverty reduction has been characterized as an insurance policy against further disaffection, radicalism, terrorism, and war. Since September 11th, and again, here, repeatedly, in this annual meeting, we've been reminding ourselves that to fully address the roots of these issues, one has to confront fundamental questions of poverty and economic opportunity. 
 
Today we're going to discuss with these distinguished panelists whether the accumulated weight of these reasons, is now brought us to a tipping point in the global fight against poverty—whether the stage is set or whether, indeed, it can be set for a new consensus for action. Now this is a matter of leadership, that, of course, in democratic societies, leadership is often driven by public opinion and domestic politics. So we'll focus in particular on what it would take to build public support in donor countries for a qualitatively higher level of funding. Historically in the U.S., and perhaps other donor countries, the public has been skeptical of foreign aid, believing that too much spent on it already, and what is spent all to often fails to achieve satisfactory results. Polls find on average that Americans believe that aid for the world's poor accounts for about 20% of the 2 trillion dollar U.S. budget. In fact, it accounts for only a half of a percent, a 40th of the perceived level. However, there are signs that opinions is shifting.  Yesterday, the forum in collaboration with Environics, a Canadian polling firm, released findings from a poll of 25,000 citizens from around the world, principally in the G-20 countries—the poll interestingly finds that very large majority, and virtually every country, would be willing to pay 1% more in taxes to fight global poverty. In most donor countries, these were extremely large majorities: 92% in Italy, 83% in Germany, 72% in the U.K., and even 63% in the United States.  I'd now like to turn to our panel, and explore whether we are, indeed, at a turning point, or how we could make or mobilize the political will to get there. Mr. Gates, do you think a big increase in development assistance is warranted? And if so, what do you think would be the right goals, and why do you think other citizens, particularly other business leaders, ought to support them?
 
BILL GATES: Well, my involvement in these issues started about six years ago, and I was, really, like a lot of people, not paying much attention to the conditions in the world at large, and was very excited about advances in technology—great things going on, but largely, in the rich parts of the world. And I think one of the key elements here in terms of willingness to give has to do with awareness. If we took the world and sort of re-ordered it, so that your neighborhood was next to a random neighborhood from some other part of the world, you would see the living conditions, the medical problems, the infant mortality, and of course the human spirit would respond to that very dramatically. It's the distance that really allows people to be unaware. And I was completely unaware and it was, I think, somewhat of a surprise for me to realize how urgent these issues were and said to myself, okay I don't want to wait until I'm in my 60's to address things—particularly things that are epidemic, like AIDS, where if you catch it early, the interventions are very dramatic, versus waiting until it's widespread. So I think by raising awareness, and by making people aware that the effectiveness is there. Health aid is not foreign aid in general. You know, some foreign aid—I'm no expert on foreign aid, but I'm sure some of it's effective and some of it isn't. But health aid is very measurable, you can look at vaccination rates, you can look at advances in changing behaviors that'll stop the AIDS epidemic. There are breakthroughs coming, but even in the vaccines that we have today, we're not getting them out there—30 million children are not vaccinated, and that's solvable with pretty modest resources. So, I think, ritual governments should respond to that and when...I'm always interested in this controversy about globalization—is it really that somebody's saying globalization is bad—that the new product advances the new medicine shouldn't be available worldwide, I don't think they're saying that. I think what they're saying is: 'Is the rich world sharing its largest appropriately with the world at large.' And that's why meetings like this and other..., you know people really question what's the mindset—is it just the mindset of the rich world taking care of itself, or is it more of a global perspective. And the skepticism about effectiveness, that's one thing that we really should get the word out, because as I've gotten involved in this, I've seen, you know, great work where the money really does go down to that childhood vaccination or go to that research project on something that the market wouldn't fund and can make an incredible difference.
 
SAMANS: Thank you. Bono, you've...I understand, just returned from a trip in Africa, where you took a look, very specifically, at the results from some of the debt relief that you played such a significant role in bring...about. Can you tell us a little bit about this issue of effectiveness—do you...have you seen that the freed up resources from the debt relief is being effectively used for poverty alleviation.
 
BONO: Yeah, we'll, actually I went to Africa a couple of weeks ago for a few reasons, one of them was inspired by the Secretary here, Paul O'Neill, who said to me in his office, look, there is a desire in the United States to really do something in Africa, but there's also a desire not to waste the taxpayers money. And if you can show me progress, we're, you know, we're ready to gather around it. So I said well, there is progress—I mean, since debt relief program that we all worked on kicked in, for example, in Uganda, three times the amount of children go to school—which is extraordinary. And, but after I said, I left his office, the Secretary said, well look, I want to go to Africa, I want to see and you're going to have to go with me and back this up. So I thought I'll go to..., I'd better go first myself just in case.
 
(LAUGHTER) 
 
I didn't want to be getting off his plane with a red face. So I went with Professor Jeffrey Hack of Harvard and we met various finance ministers and Jeff read their books and just...we went through their numbers.  And it was extraordinary to see just how effective the debt relief monies were being spent. And it's interesting because the World Bank had put in very strict conditions before you could get these debt relief monies...— to be let go of your debt services.  And actually we argued against it a lot of the time—we felt it was very burdensome and very bureaucratic. But I have to say, being in Africa, we met people in civil society in Africa saying, these conditions are really working for us because, you know, corruption was a problem. So there was another senator, Congressman Callahan, who I'm very good friends with him now, but when I arrived in his office, he was...he wasn't very impressed just, I think, by the way I was dressed—I think that might have been the first thing. But he said to me, he just said, this money is going down a rat hole. And I wanted to be sure that it wasn't, and I wanted to be sure that, in fact, I'm bring him a photograph in a couple of weeks of a water hole—and because, that's where actually some of the money—a lot of it went into some water projects. 
 
What I'm talking about is, is credibility. We have to...regain credibility for these...for even the word, 'aid.' And that's why I went to Africa. And just one last thing on that trip, I think it was Malawi, I met like 20 AIDS—25 AIDS workers going from village to village really spreading the word on HIV/AIDS. These are kind of the 'heroes', you know, the firemen, they're the NYPD of the situation. And they were incredible and very convincing. And I asked, why are these people...they're so passionate, and somebody said, well actually, all of these workers are HIV+. And it was a sinking feeling as I realized what they had already worked at, that they could not afford the dollar a day to keep themselves alive. Each one of them had a death sentence on their head and these were the people who were doing our work. And then the thought followed, the next thought was, actually, we can't afford to let them die. And I didn't mean it in motif terms, I meant, actually we may not be able to afford to look after the orphans, to look after...the contributions to GDP, you know, and even cold clinical terms, it indeed, might be more expensive to the developed world to let them die. And I thought, okay, this is a real moment in time here, this is, this is kind of nonsense now, we're really getting...this is a point when history books are looking back, they're going to look at this moment—they're going to remember three things probably about our whole age: the internet, the war against terror, and how we let an entire continent burst into flames and stood around with water in cans. 
 
And I thought, no, this is the time, and I know that the characters are in place, and they're not all...liberals. They're some people very, you know, some very tough-minded people are going to take this on and that's why I'm here.
 
SAMANS: Thank you, Mr. Secretary.
 
(APPLAUSE)
 
SAMANS: In light of the progress on governance, and making sure...accountability, making sure that resources are used to effectively that...Bono has just referred to. In light of the moral imperative he just mentioned, both in health and other terms, in light of the compelling economic and now new security arguments, would you support a significant increase in development assistance.
 
PAUL O'NEILL: Let me tell you my view of this.Yesterday afternoon, I had the privilege of addressing an audience here and talking about these subjects and let me take a few minutes to explain the thought process that I bring to this. In the 25 years before I came back to the federal government, I was involved in running two major multinational companies, and in the last 13 of those 25 years, I was the chairman and CEO of Acura. And when I went there, we had 55,000 employees in 13 countries and when I left there at the end of the year 2000, we had 140,000 employees in 36 countries. And I tell you that, and I said to the audience yesterday, the reason for telling you that is not to be braggadocio. It's to establish the basis for credential that says, I know something about creating jobs and wealth, and I know about living standards and conditions in 36 different countries around the world, including in Africa. 
 
Bono and I had talked about Guinea—it's the place that I know pretty well—what life is like. And I know that their living conditions today are worst than they were when the French colonialists left. And I know what it's like to see babies born in the dust, that have no hope, they don't know it yet, but they have no hope, they have no future, most of them won't get educated. And the observation I made yesterday—it's one that I've been thinking about, for the better part of 40 years, and then with demonstrated experience: Human beings everywhere, without exception, with education and training, and the stable social structure, had the ability to produce economic value that enabled them to be higher earners, and to have the standard of living that we have here. 
 
Everywhere in the world, there's nothing wrong with the human raw material everywhere. And I bring to that observation a question, if that's so, that every human being had this potential to create a high economic standard of living, why is it that the spread between those of us who are privileged and those of are...us who aren't is so incomprehensively large. And my answer to that question is, up until now, we've lacked the imagination to imagine a world where everyone lives at our standard of living. It's really a question of, I think, of imagination and leadership, and the will to insist that the whole world will be raised to a high level—I don't want to avoid your question. But let me make this assertion, that for too long we have measured our compassion in inputs. And so your proposition at the beginning was, we should be spending 0.7% of our GNP on aid, and I tell you, my reaction to that is, I don't know whether that's the right amount or not, because it's not the right goal.  How much money we spend is not the issue. How fast we raise every human being's living standard to our own?—that's the question. And the subsidiary question to that is: how do we do it? And then there's an observation to make: over the last 50 years, the developed world has spent trillions of dollars, perhaps, in the name of aid and assistance—and I would submit to you—we have precious little to show for it. That doesn't mean we shouldn't do it. But in the world that I've lived in, at least, and I think it's a world that Bill shares, we know that if you have imagination, and you have will, and you have persistence, and you have resources, it's possible to change the conditions of life in the world. And I can show you places where I did that, and help to create more than 100,000 jobs, real high-paying jobs, for people who existed in a situation that before our enterprise came, they lived on a dollar a day. So it is possible to do it. 
 
The question is how do we so organize society, so that we rapidly raise the average income of people in Uganda, and Indonesia, not from a dollar a day to $2 dollars a day, which would be a 100% improvement, but the 10,000 dollar a year, or the 20,000 a year, and again, in an analytic world, you look for evidence—where has this been done? There are some really interesting example of societies moving from the 13th century to the 21st century in fifty years—one I would submit to you is South Korea. My friend, Bono, tells me that Uganda is on the track to make significant improvements and together, I think, all of us should have a community of interest in figuring out how we can create the circumstances where the local society creates a standard of living that's worthy of people who call themselves civilized, and then I would separate that from a different issue which is the one that largely you've been talking about. I think we need to provide the resources—compassionate resources—to provide portable drinking water to every human being in the world. And we need to bring the health interventions that we know about—and we need to bring the education interventions. But if we want to do something that's really important, we need to help every society around the world become an income generation organism, not a consumer. I do not think that there's enough compassion in the world to take on everyone in the world as a welfare client, and at least, from the people that I've met, they don't want to be welfare clients—they want to work. They want, every place that I've ever, give me two more minutes to say this, every place that I've ever been in the world and worked successfully in the world, I've found human beings want three things, every human being—even though they may not be able to express it this clearly: they want to be treated with dignity and respect every day of their life—there's no place in the world that isn't true. Secondly...,  
 
SAMANS: Thank you, Mr. Secretary.
 
O'NEILL: Two more thoughts—the other thing that they want is that they want the opportunity and the resources that they need to make a contribution that gives meaning to their life—not that allows them to make a contribution but that allows them to make a contribution that gives meaning to their life. And the third thing people want everywhere in the world—they want someone to notice that they did it. And that's what we should be striving for—is a world where those three conditions are present. And everyone who wants a job has a job and we can move from compassionate giving to reinforcement of an ever-rising living standard for the people of the world.
 
SAMANS: President Zedillo, Secretary O'Neill has talked about things other than resources that are necessary to bring living standards forward. Is it on—he mentioned however, literacy, safe drinking water, etc. Are resources needed—significantly increased resources needed—in order to bring about the vision that he just articulated?
 
ZEDILLO: Well, I will try to express my agreement with a very important part of what was said by secretary O'Neill. Say it in very simple words. Uh, The primary responsibility lies in developing countries themselves. This was the thrust of the report we produced for the United Nations. Fortunately, the so-called Monterrey Consensus, which refers to the declaration that is being negotiated towards this conference in Monterrey, also has very clearly expressed that idea. Well, having said that, I would say that's a necessary, but not a sufficient condition.
We need other things in the world. Number one – we need rich countries to open their markets to poor countries' exports. If tomorrow we could dismantle the shameful agricultural protectionism that still remains in Europe, in Japan and in this country, and we could also get rid of remaining industrial protectionism and open markets—that alone would give us a hundred and fifty billion dollars in income additional for developing countries.
 
(CLAPPING)
 
We also need good global economic governance. And that global economic governance cannot be obtained without the leadership of the highly developed countries. We have been going through all these financial crises over the last few years. There are certainly internal reasons. Bad policies that help in a very decisive way to explain those crises. But it's also true that we haven't updated the international institutions for present, for modern globalization and on that, rich countries have an enormous responsibility.
 
And number three. Even if we do everything else fine. If we have economic growth based on sound domestic policies, even if we have free markets, even if we update our global institutions, the bottom line is that we still need money.
 
For what do we need money? For the very simple thing that secretary O'Neill was saying. We need to empower the people to share the benefits of globalization and right now we have a tremendous polarization in the world. You know, the question is not whether globalization has been good or bad, I think it has been good. I think we would have much more poverty, much more inequality in the world without modern globalization. I think the big question is why there are some people that don't share anything that are left behind. That are left outside that globalization and the answer is very simple. The answer is that they are not free. Why do I say that? They are not free because they don't have education. They don't have health. They don't have nutrition—well in some cases in many cases, unfortunately, they don't have basic human and political rights. So if we want to empower those people, other than free markets, other than trade, we also need to have good sound, social policies, supported by civil society with good domestic governance, but we also need good international assistance.
 
And the point I want to convey is that we could spend a long time speaking about the altruistic, the ethical, the moral reasons for providing aid from rich countries to poor countries, but I think nowadays, it's important to stress the self interest reasons for providing developing assistance. I think we can have a better world economy, I think we can have a more secure world if the rich contribute to the development of the poor, and the bottom line - and I am not so sorry to say it—is that we do need additional taxpayers' money to support the poor countries.
 
(CLAPPING)
 
SAMANS: On that point—clearly an impediment to support for these additional resources that you are calling for, President Zedillo, has been either the apathy or the skepticism or reluctance of the voting public in many of the donor countries. And, Mr. Gates, you have personally taken interest in a very fundamentally important area of development and you have shifted, really the frontier of private philanthropy on health. You're a business leader, however. Uh, how do you—when you speak to other businesses leaders, or other citizens and you explain your rationale and why you think this was a compelling thing for you to do, what is the message that you have—you've been using and if you think it's appropriate to expand that, what are the right messengers in order to compel – to convince the public that in fact, this is something that's worthwhile doing and that would provide the validation for those who would like to do more, to do so in the political arena?
 
BILL GATES: Well, I—I completely agree that this is an issue that to get the size of increase that's really required here, we have to have grass roots support. It can't just be enlightened people in the administration or politicians. They can lead the way—they can help get things going and talk about where this money is being well spent, but we have to get basically voters to say, "I'd like to vote for the politician who thinks of global equity". The US is very proud of dealing with equity issues. You know—Uh—treating women better, dealing with racial issues better.
 
The greatest inequity in the world today is—is—comes geographically with the help of differences around the world, and I think people would respond to that if it was presented to them in the right way. And um, many of the diseases that afflict the poor world are not prevalent here, and so it's hard to get a following for that. Even AIDS has a different nature outside the US. The fact that it's—you know—an epidemic that's going to destroy the fabric of these societies. That's just so different and very hard to get across.
 
I think the—uh recent, if someone is going to read one document in this area I think the Commission for Macroeconomics and Health talking about getting this spending from thirteen dollars a person up to forty dollars per person, and what that brings is probably the best thing to take a look at and we need to make that—you know—dramatic for people. We need to put that in visual form and get the word out there. I do think that the argument can be made on almost any basis you want. There's the economic argument. There's the humanitarian argument, there's now this argument that the rich world giving back to the world at large is going to set the tone for whether people feel like they're getting—they have opportunity, their being treated fairly. And—you know—that should be something very—very top of mind for us because if you have most of the world disaffected, feeling like the rules are tilted against them it's certainly going to generate the kind of hatred that is very dangerous for everyone.
 
So you know—at the Foundation, with some great people we've brought in, we sit around and talk about—how can we get this cause to be top of mind and more central. I think in the last couple of years there's been some progress. Vaccination has been reinvigorated. There's a few things, like Polio elimination, that people do respond to because they remember—most adults remember—that Polio was here and that idea of eradication has a certain finality to it that draws people in. With AIDS we don't have that. We don't have people saying these interventions are very inexpensive, they stop the epidemic, and we have to mobilize resources around that. But I'm optimistic we can do it, but we're going to have to work at all levels.
 
(CLAPPING)
 
BONO: Can I just comment on that...?
 
SAMANS: Yes, I'm going to as you, Bono, you're something of an expert when it comes to getting something to resonate with the people and the Drop the Debt campaign was an unusually powerful effort politically, in that it seems that it brought together different segments of society. Religious leaders, some businesses that were operating in the region, unions, anti-poverty groups, etc. musicians, entertainers. Uh, clearly the message, the brand of advocacy is important, and the messengers as well. Who needs to be from your perspective, in the choir and what do they need to say in order to make this have the kind of impact on the public that will result in a change in political will on the subject?
 
BONO: Um, well...the reason, uh, I started talking to politicians, um was because um, I failed so miserably at getting on TV to talk about these things, and um, I guess my usefulness to the Drop the Debt was that—you know—to help make this a popular issue here in the United States and I though—you know—I'm pretty popular. I'll give it a go, and then I found out something very different, that actually they don't want me on Oprah Winfrey talking about debt consolidation. They don't mind me talking about U2, and it was very difficult to get what you might call the melody line of the argument across. So that's how we went to Washington and started talking to people. We couldn't get the grass roots thing going quick enough and it's now up and moving and we have churches and we have students and we have—you know—what I love about it is we have mothers' unions as well as trade unions, but at the time I went to the politicians because it was just—because I couldn't get on TV, and that's the truth.
 
And so the other thing that I discovered, that we discovered in the movement was that unusual juxtapositions worked very well. So hence a picture of myself and his holiness the Pope got things going a little but and...cause uh...you you you you think a rock star will get onto page one with this, or you think a Pope will get onto the page—you know front page talking about this but they don't really. But you put the two of them together and people start scratching their heads and start thinking what are they hanging out with each other for...
 
(LAUGHTER)
 
...rather like what most of you are doing right now. So that's what we've tried, but the get the United States along further down the road and um...in terms of the movement...um...has happened now and now I think we're really feeling it in the churches, and I think the church, actually has a lot to contribute here in the faith based communities, and uh...because actually without their—without them getting involved, the church is losing meaning for a lot of people. And I often remind my very religious friends in Washington that there are two thousand one hundred verses of scripture pertaining to poverty, and I often say to them, well, you know, Jesus Christ only spoke of judgment once, actually, despite what you think, and it was concerning the area of poverty, and it was concerning—you know—I can't remember the actual scripture, but it was inasmuch as you visit the sick you visit me and inasmuch as you feed the hungry, you feed me. And religious people start to break into a sweat at this point. And and and because—you know—the religious—the churches have wandered away from their central mission. And, but their coming back on this and I think that's how we'll get this onto the mainstream. Them and the students. That's a big tent.
 
SAMANS: Mr. Secretary, reportedly, the United States opposed the proposal by the chancellor by the ex-checker of the UK, Gordon Brown, to double the level of official development assistance over a certain period of time in the negotiations for preparations for this Monterrey Conference in March. Was that in part because of this skepticism that there would be some, exposure, political exposure or danger, if you will, for the legislators who would actually have to vote for this increase, and if so, what do you think—who do you think would be a critical mass of advocates? From what walks of society, what types of messages, in order to change the dynamics on this issue, politically?
 
O'NEILL: I—I hope you can tell from what I said before I'm not charmed by point seven or...or my friend Gordon Brown's uh fifty billion dollars—having a conversation about—of the speed with which we're going to make huge jumps in living standards in the world and then organizing resources to accomplish that seems a far better thing to do than to—than to...do what I suppose has been a political conventional process for a long time, which is to hang numbers and then rally around them.
 
Yeah, I want to say something, though, on what Bono has done with the focusing on the step for business issue, which I think is really extraordinary and very helpful, but analytically, it's important to ask how did they become heavily indebted, it's a really good question.
 
If you look at how we in the world have proceeded over the last fifty years, we've used the international assistance agencies to make loans. Highly concessional long term loans, but nevertheless loans to all these developing countries. That's how they got into big time debt trouble and it's why there tends not to be good social stability and reliable institutions that attract foreign investment capital because the government, through the insistence and recommendations of assistance agencies, have become indebted to the point that they can't survive and they can't service their debt.
 
And so now out of this initiative that Bono's contributed to so greatly, there is a debt forgiveness process that's going on for highly indebted countries, but ironically, two things are going on at the same time.
 
They're being told that they must take the savings that were associated with not having to pay the interest and principal on this debt anymore, and they, the leaders of the country, must invest it as outside observers tell them to do it, which may or may not be the right thing for their people. We're effectively—we're supplementing or supplanting sovereign judgments about a balanced economic situation by the direction they're being given. And it's not to say that they're not being given direction to invest in the right kind of things, but if you were the sovereign of a country and you suddenly had a reduction in your debt load and for the first time, maybe an opportunity to create a stable civil society that will attract capital, one has to wonder—what are we doing? 
 
And then, to add insult to injury, for those of you who don't know this game, 98% of the international aid that's going through IDA is going in the form of loans. You know, so that, yes, we're having debt forgiveness for the heavily indebted and now we're piling on more loans in spite of the fact President Bush has said lets convert half of the subsistence to grants.
 
Is there anybody here who believes that we should be making loans to a country to give Polio vaccinations or HIV drugs at a dollar a days? Is that a loan? I don't think so. You know—so we need to be work on the systems of thought that we have organized about what we are trying to do and again, I would submit to you this—If you go back 300 years in human history, you will observe the state of the world economy. Three hundred years ago look at it today, and I think you can't help avoid—you cannot avoid drawing a conclusion that God didn't create a world with a limited economic product.
 
We have enormously increased the world economic product in the last three hundred years and what that says is that all of these places we're talking about have the potential to live in the kind of economic circumstance that we do and they—we have an in-between question of how we provide potable water and elementary education and HIV treatment and healthcare. But the essential question is how do we help people create the circumstance so they become engines of economic generation and wealth accumulation and not just be the objects of our pity.
 
(APPLAUSE)
 
SAMANS: Mr. Secretary, typically, when - in the developing world—when one talks about the enabling engines of economic growth and progress in living standards, particularly in areas where you have extensive illiteracy, half the chil—uh, half the population of the children not in school, endemic disease, one can't get past that without talking about expanding the resources that are available to put those kids in school and whatnot, so is it sufficient...
 
O'NEILL: I agree with you.
 
SAMANS: Is it sufficient, President Zedillo, to talk about changing systems and ways of thinking when Mr. Secretary, uh, mentioned South Korea and how much progress it made, but isn't it in fact that in Southeast Asia part of the secret of success has been significant domestic investment particularly in human capital. And can this be done without official resources.
 
ZEDILLO: Well, first I think it's important to distinguish that we are speaking about different categories of countries. When we speak about foreign aid, when we speak about official development assistance, I don't think we are speaking about the Mexicos, or if you wish, the Argentinas of this world.
 
We are speaking about the universe that Bono was describing. Sub-Saharan Africa, specifically. As one dramatic, I would say shameful case for humanity. It's the only region of the world that has had its social indicators and economic indicators deteriorated over the last quarter of a century. The question there is can this be improved just by putting more money there? And I would say no, not at all. Probably you would waste the money.
 
You need capacity and institutional building within those countries. Now the questing is can that institutional capacity be created without foreign support? And I would say hardly. We need cooperation that is purely economic, but we also need technical assistance and obviously, this cannot be given without certain conditionality. I think this is unavoidable. But I think there are forms of conditionality that can be pursued in a very positive way.
 
Politicians speak about "aid fatigue", and they say we have aid fatigue because the results have been dismal. But the other side of the story is forgotten. That quite frequently, aid is not given really for development purposes. Aid is given to make national suppliers to sell more abroad. Aid is given for diplomatic reasons. Aid is given even for security reasons.
 
Well, I was taught when I was a young kid that usually one cannot kill two birds with one stone. Those objectives are legitimate. But if you want to help a country to develop, of course you have to tell that country—do the right things, put your house in order, have your fundamentals in the right place. But the bottom line is that for very poor countries, we do need aid, and that aid has to be economic, but also supporting them to build institutions that are capable of implementing the right social policies in education, in health, and in other important social areas.
 
BONO: The health agenda is just unarguable. Immunization is unarguable. And we can't deny for others what we demand for ourselves. And this this this is an unarguable point. Dead people don't make a great workforce. And uh, and I think that if we are to get out of the morass of living off the nipple of aid, you have to have basic health.These people are too poor to get out of poverty. That's the problem.
 
BILL GATES: Yeah, I think it's key to distinguish health aid from aid in general. Aid in general covers a lot of things that—you know—people can agree and disagree with, but there's aspects of health aid that I don't think there's the awareness that it's known how to get these vaccines out. There are 30 million children a year who don't get vaccines. There's a certain amount of money that would cause them to get those vaccines and that would save three million lives a year. Three million lives a year.
 
The one thing that's been discovered about improved health in these countries is as soon as you improve health, you reduce population growth, which means all the issues about the environment, jobs, education, resources, are completely shifted to your favor because you don't have the population explosion working against you. It's paradoxical, but better health does lead to having less children because mothers are sort of thinking in terms of having enough children to have several of them live to support then in old age, and so if they know that they're going to be healthy, they don't need to have as many children.
 
So this part—the vaccination part—or the early interventions relative to AIDS are very proven interventions. And what's being asked here is—to take the United States in particular that it's six dollars per citizen goes on health aid right now. What we need to meet these Millennium Goals that were mentioned at the beginning is to raise that up to about forty dollars per person per year. And if the US doesn't do it, it's not going to happen because the US is the laager.

There are three or four countries—uh, Norway, uh, the Netherlands, um, Denmark, Finland, that are very good on these aid issues. They don't tie their...
 
BONO: Uh, Ireland.
 
(LAUGHTER)
 
BILL GATES: They're good.
 
BONO: Working up to point seven...
 
BILL GATES: But the US has actually gone down, during its period of—you know—increased strength and perhaps now an interest in the world at large, our aid has gone down. And so how do we get the story out that these things are effective and they're necessary. Not—until these countries, and it includes parts of Asia as well as many countries in Africa, unless we do these things, the AIDS epidemic and the infrastructure—you know—it will just never happen.
 
SAMANS: I'd like to take a question from the floor, while we have time here.
 
O'NEILL: While we're doing that, can we put one fact on the floor about what we're saying her and Bill's saying about health.
 
SAMANS: Very quickly...
 
O'NEILL: If we look at what improved life expectancy and reduced infant mortality in this country more than any other single thing it was clean water and sanitation systems and the same value is true in any of the countries that we're talking about. The most important thing we can do is not just vaccinations and other things, but provide clean water and sanitation systems.
 
(APPLAUSE)
 
SAMANS: Thank you. I'd like to take one question from the audience. Yes Senator Patrick Lahey who chairs the senate committee that writes the aid budget.
 
LAHEY: Well, actually, it's a very small aid budget because we're limited by the amount the administration asks for. And no administration in the last 20 years has asked for a realistic amount of aid. President Zedillo said it correctly. We use these aid programs for a lot of policy reasons and very little aid. Bill Gates is absolutely right in talking about how we have to get real money in there. And in fact, get ahead of the curve. Bono knows better than just about anybody here what it's like to form coalitions to get what little bit we get through. But we have to understand what the reality is today.
 
We spend far less than one percent of our budget—the US budget—on foreign aid, and of that less than one percent, we take about a third of it and send it to two countries, for policy reasons. Egypt and Israel. Then we take another significant part of that hoping to sell products overseas, and then we take another significant part of it to carry out a totally failed war on drugs. Something that's not working, never will work, as long as we have multi-billion dollar uh, demand here in the United States.
 
We could close down Colombia, so where does it go next? Ecuador? How many other countries will we destroy for our insatiable desire for drugs? And then we give a little tiny tiny bit to the poorest of the poor countries. It is ridiculous.
 
If we want to do something, what I would urge everybody to do. Bring pressure, and I don't mean this as a criticism to President Bush any more than President Clinton or anybody else. Bring pressure to whoever is president. Bring pressure to every single member of congress in this country and the parliaments of other countries and say for God sakes, show some humanity if you're going to be in the wealthiest nation on earth, you have a moral duty to start doing something and we are not doing it. No matter what you say, we are not doing it.
 
We're not stopping doing the billions of dollars that must go into infrastructure if you are going to work on aid. We spend several months debating in the congress that we're afraid that a few million dollars may go to family planning because somebody is convinced that contraceptives are immoral and we will not give the money to develop new microbicides, I probably mispronounced that, but you know what I mean, but—you know—at some point, we could spend hundreds of billions of dollars to put countries back together after we've gone to war or something. Why don't' we spend a tiny bit of that to stop the kind of stresses that bring countries to war in the first place.  That's all. Thank you very much.
 
(APPLAUSE)
 
SAMANS: Thank you. I think, uh, that's a useful way. Thank you Senator Lahey. I think that's a useful way to sum up the common will up here. There is shared aspiration to try to do a lot more in this area. I think it's still, however, an open question as to whether the political will can be assembled to do some of the concrete things in aid budgets. I want to thank our distinguished panel here today for this - having this conversation here with us in the World Economic Forum, and uh, we look forward to talking to you about practical next steps afterwards, in each of your areas. Thank you very much.
 
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