[Congressional Record Volume 146, Number 9 (Monday, February 7, 2000)]
[Extensions of Remarks]
[Pages E69-E70]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[[Page E69]]



 AMERICAN ACADEMY OF DIPLOMACY: KEYNOTE REMARKS OF DEPUTY SECRETARY OF 
                     THE TREASURY STUART EIZENSTAT

                                 ______
                                 

                        HON. BENJAMIN A. GILMAN

                              of new york

                    in the house of representatives

                        Monday, February 7, 2000

  Mr. GILMAN. Mr. Speaker, last year on December 7 I had the privilege 
of attending the Excellence in Diplomacy Awards presentation luncheon 
sponsored by the American Academy of Diplomacy. I would like to 
compliment the work of the Academy in helping to maintain the high 
standards of proficiency in our foreign service and to provide support 
for the full range of our foreign policy institutions.
  During the course of the luncheon meeting, the Principal Deputy 
Assistant Secretary of State in the Bureau of European Affairs, E. 
Anthony Wayne, delivered the remarks of the event's Keynote Speaker, 
Deputy Secretary of the Treasury Stuart Eizenstat who was unable to 
attend the event owing to the death of a family member. This member 
would like to commend to his colleagues the following remarks of the 
Deputy Secretary on the lessons learned from the statecraft of economic 
diplomacy.

The Importance of Diplomacy in the Economic, Trade and Financial Arenas

       I am most grateful to the Academy for this honor. I deeply 
     regret not being able to accept it personally, but the death 
     of a beloved member of my family and his funeral today in 
     Atlanta makes it impossible. It is fitting that Tony Wayne 
     will accept the award and read my remarks, because his 
     inspiration and collaboration have been vital to me, both in 
     Brussels and in Washington.
       In my over thirty years in government, I have continually 
     been impressed by the excellence of our diplomatic personnel, 
     both at home and abroad. This Academy is devoted to 
     maintaining this high level of performance, as well as to 
     advocating adequate support for our foreign policy 
     institutions.
       You are very fortunate to have the leadership of Joe Sisco, 
     whose career in diplomacy, especially in the Middle East, 
     made him a model for so many people including myself. You are 
     also fortunate to have Bruce Laingen, who has combined 
     remarkable ability with a very high degree of personal 
     courage.
       The last decades of the century that will shortly be 
     passing have been marked by an expansion of the importance of 
     diplomacy in the economic, trade and financial arenas. This 
     is not to say there was no such activity before. The Marshall 
     Plan, of which Secretary Acheson was a leading architect, was 
     an economic program that required considerable diplomatic 
     coordination to accomplish its historic purpose. And I will 
     remember when Margaret Thatcher came to Washington to plead 
     with President Reagan to lower U.S. interest rates, which 
     were draining investment funds out of Europe. But on the 
     whole, economic matters have traditionally been the stepchild 
     of diplomacy and of the State Department. Today they have 
     become central to statecraft.
       As just a few illustrations, the successful integration of 
     Russia and China into the international community depends 
     heavily upon their economic success and openness. What the 
     IMF does with Russia will be every bit as important to that 
     country's future as the kind of arms control program it 
     accepts.
       Chinese entry into the WTO will require enormous changes in 
     the way that country works economically. The Middle East 
     peace process will have difficulty succeeding unless it 
     delivers economic benefits in real time, particularly to core 
     constituencies in Jordan, the West Bank and Gaza.
       And peace in the Balkans will depend in large part upon the 
     success of economic reconstruction being mapped out by the 
     IPI's donor countries and by the states of the region.
       My observations on diplomacy have been shaped, of course, 
     by my own experience, which has concentrated in the economic 
     area. In this Administration, I have been the chief or a 
     principal negotiator for the following:
       The New Transatlantic Agenda which set the framework for 
     the economic and political relationship between the European 
     Union and the U.S. and which developed a mechanism--the 
     Senior Level Group--to help to resolve differences before 
     they become crises and to make this semiannual EU-U.S. 
     summits more substantive and meaningful.
       The Japan Port Agreement, which avoided retaliatory 
     shutdowns of transportation facilities here are in Japan;
       The negotiations with the European Union and Russia over 
     investment in Iran under the Iran-Libya Sanctions Act are on-
     going. We will review the petroleum sector projects and the 
     Secretary will determine whether they would qualify for 
     waivers. The waivers depend on the EU's continued export 
     controls on high-tech exports to Iran, and to aggressive 
     fighting of terrorism.
       The Kyota Global Warming Protocol to reduce the dangerous 
     buildup of greenhouse gas emissions that threaten our global 
     environment.
       Two extended negotiations with the EU over Cuba sanctions. 
     The first, in 1996, lead to the EU taking a Common Position 
     on Cuba that tied closer relations to an improvement in human 
     rights and democracy in that regime and clearing the way for 
     the series of Presidential waivers of sanctions under Title 
     III of the Helms-Burton Act. In the second, in 1998, the EU 
     nations committed to restricting official government support 
     for investments by companies in property that had been 
     illegally confiscated by the Cuban government, and to refrain 
     from giving export and investment subsidies to any of their 
     companies that were investing in property that Cuba had 
     illegally expropriated. Implementation of this Understanding 
     is contingent on our obtaining waiver authority from the 
     Congress under Title Four of Helms-Burton.
       And, over the last two years, a series of negotiations on 
     assets and claims relating to World War II and the Holocaust 
     including funds in Swiss banks, Swiss gold, life insurance 
     policies, restitution of stolen art, and compensation to 
     survivors for forced and slave labor performed for German 
     industry under the Nazi regime.
       I have been peripherally involved in many other 
     negotiations from the end game of the Uruguay trade round to 
     the WTO meetings in Seattle to the MAI negotiations at the 
     OECD. My observation from these experiences is that the 
     essential qualities that make a good negotiator do not differ 
     between economic diplomacy and political diplomacy.
       Both require patience, persistence, creativity, a command 
     of the facts, the ability to argue persuasively, to know when 
     to speak and when to be silent, to respect the position of 
     the other side and while understanding your own country's 
     bottom line needs, to sense what others really need to stay 
     at the table and enter the end game.
       At times it may be necessary to conjure up phrases which 
     each side can interpret in its own way, although this is 
     hardly desirable. In the end, both sides must be able to 
     proclaim victory, and neither concedes defeat if negotiations 
     are to succeed.
       The chief differences between economic and political 
     diplomacy, as I see them, are in the externals. Since the 
     United States in modern times has never had designs on the 
     territory of other nations, traditional diplomacy could have 
     noble motives: keeping the peace, advancing human rights, 
     improving the lot of poor nations.
       But in the economic sphere, we are competitive with other 
     nations for contracts and markets. Thus economic diplomacy 
     often runs the risk of appearing to impose imposing American 
     standards, culture, and ownership and comes under fire for 
     that reason. Economic diplomacy must also be more responsive 
     to domestic interest groups, because it regularly impacts 
     their concerns and their constituencies in a more direct way.
       For this very reason, Congress tends to take a more direct, 
     more proprietary interest in economic issues than they do in 
     the more traditional issues of diplomacy, in which the 
     President is generally allowed to take the lead under his 
     Constitutional prerogative to conduct foreign relations 
     unless, as in Viet Nam in the sixties or Central America in 
     the seventies, they go very badly. These factors complicate 
     economic negotiations, and limit the leeway the Executive 
     possesses in negotiations.
       Economic diplomacy is going to become even more complicated 
     over the next several decades, for several reasons. First, 
     NGOs have become more visible, assertive and expert in what 
     had previously been an often arcane and elite arena. Second, 
     developing countries are no longer content to have the rules 
     of the game dictated to them by a few large developed 
     economies. The MAI negotiations in the OECD imploded because 
     of NGO and LDC demands.
       The Ministerial in Seattle and the global warming talks in 
     Kyoto were complicated by these factors. We have learned we 
     cannot and should not negotiate around either group.
       We must listen to, respect and attempt to accommodate at 
     least some of their legitimate concerns without compromising 
     our own goals and interests. Allowing them in will help 
     ensure the acceptability and sustainability of whatever 
     agreements can be made.
       Third, the economic sphere will see increasing multilateral 
     negotiations rather than traditional bilateral agreements. A

[[Page E70]]

     global economy requires global, multinational negotiations. 
     However, the continued divisions between Northern and 
     Southern hemispheres will make them excruciatingly difficult.
       I was struck, at both Kyoto and Seattle, by the ferocity of 
     distrust not withstanding the fact that developing countries 
     are almost universally desirous of foreign investment, and by 
     the extent to which many of them are still deeply suspicious 
     of developed countries and see their interests fundamentally 
     different from ours, despite the degree to which we bore the 
     global economy on our shoulders during the recent financial 
     crises.
       Under such circumstances, talks are often unable to 
     construct agreements that rise above the lowest common 
     denominator. I have also learned some hard lessons from the 
     sanctions negotiations in which I have been so deeply 
     engaged.
       Unilateral sanctions rarely work, although they must be 
     resorted to at times to defend U.S. values. Multilateral 
     sanctions, while far harder to fashion, are the only ones 
     likely to achieve the desired results in terms of changing 
     target country behavior.
       Sanctions should be targeted to the state or entity whose 
     behavior we are trying to change rather than to companies 
     from third countries who are investing or trading there, as 
     much as we might oppose their involvement. Third countries 
     see such sanctions as extraterritorial. It is also critically 
     important that sanctions legislation contain a provision for 
     Presidential waiver authority, to protect the national 
     interest and provide negotiating leverage.
       Let me finally say a few personal words, as a non-career 
     politically appointed diplomat to a roomful of men and women 
     who have devoted their lives to the art of diplomacy. I have 
     learned during the Clinton Administration, even more than as 
     President Carter's chief domestic advisor, what a privilege 
     it is to represent the United States both as an Ambassador 
     and in international negotiations around the world.
       The power, the majesty, the moral values, and the influence 
     of our nation gives anyone negotiating for the United States 
     a greater ability to accomplish his or her goals than would 
     be possible representing any other country. These are 
     precious resources, which we must husband, nurture and deploy 
     in ways that do not dissipate our innate advantage.
       I hope in the next century, the United States will, through 
     the art of diplomacy, use its enormous capacity to do good to 
     make this a better world.
       I am especially honored by this award, not because I am 
     receiving it myself, but because it recognizes the work of 
     the economic officers, both in the State Department in 
     Washington and in our embassies abroad. It is a signal of the 
     increasing importance of economics as a diplomatic tool of 
     American foreign policy.
       Thank you for your award, and continue in your important 
     work.

     

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