Briefing by Senior Administration Officials to Preview Economic Components of the President's Speech on Events in the Middle East and North Africa

Via Conference Call

4:06 P.M. EDT

MR. VIETOR: Thanks, everybody, for getting on. We wanted to do a quick call to preview a portion of the President's speech tomorrow.

First, the housekeeping. This is background. You're joined by three senior administration officials. If you need sourcing information, let me know -- you know, for editors. I can help you with that.

We are talking with a 9:00 p.m. Eastern this evening embargo. You can have this in papers tomorrow, you can have it online at 9:00 p.m., but we would like to give everyone a chance to write as long as they can before anything goes online.

So 9:00 p.m. embargo tonight, background.

Lastly, we would like to talk today about some of the economic proposals the President is going to put forward tomorrow. These are new; they're newsworthy. We're not going to talk about every element of the speech today. I know there are a lot of other issues in the Middle East and North Africa that folks are interested in. We're not going to get into all of those today, just be as straightforward as possible.

So with that, I'll turn it over to our first senior administration official.

SENIOR ADMINISTRATION OFFICIAL: Thanks, Tommy. I'll just say a few things by way of introduction. The President will give a speech tomorrow on the Middle East and North Africa. As we said, this comes at a moment of opportunity in the region and for U.S. policy in the region. We're obviously coming off of a decade of great tension and division across the region, and now, having wound down the Iraq war and continuing to do so, and having taken out Osama bin Laden, we are beginning to turn the page to a more positive and hopeful future for U.S. policy in the region.

And again, that is reinforced, of course, by the peaceful movement for democratic change that has swept across the region for the last six months.

So the President will have the opportunity to speak broadly about the change in the Middle East and North Africa, the implications for U.S. policy, and some concrete proposals for American policy going forward.

This obviously has a range of components, and he'll be discussing a range of issues, but we wanted to focus on one particular portion of the speech, which is the one that is focused on, the promotion of the economic development and support of democratic change.

I think it's important to note that the political movements of nonviolent protests that we've seen are rooted in part in a lack of opportunity in the region. You have very large populations of young people, many of whom -- too many of whom cannot find a job. You have a history not just of political rights being restricted but of economic corruption that has also frustrated opportunity.

So we think it's important to note that some of the protests in the region are deeply rooted in a lack of individual opportunity and economic growth, as well as a suppression of political rights.

We also know from our study of the past that successful transitions to democracy depend in part on strong foundations for prosperity, and that reinforcing economic growth is an important way of reinforcing a democratic transition.

So as we look at the steps that the United States can take to support democracy in the Middle East and North Africa, one of the most important areas for us to focus on is supporting positive economic growth that, again, can incentivize and reinforce those countries that are transitioning to democracy.

So a portion of the speech tomorrow will focus on that. And before I turn it over to my colleague, I'll just note that, in particular, we're focused on those nations that have already begun their democratic transitions, in particular Egypt and Tunisia. And we see this as a critical window of time for the United States to take some concrete action to demonstrate our commitment to their future and to, again, reinforce their democratic transition with support for a broader base of prosperity.

With that, I'll turn it over to my colleague.

SENIOR ADMINISTRATION OFFICIAL: Thanks, thank you. As my colleague just noted, economic modernization is key to building both a stronger foundation for prosperity and showing the fruits of democratic change.

One thing that's clear when you look at this region is that it's a very diverse group of countries with diverse characteristics and economies. You've got major oil producers, but also countries that are dependent on oil imports from their neighbors.

The pace of economic reform across the region is uneven. And even in countries that have had substantial economic growth, the benefits of that growth have not necessarily been widely shared. What all these countries share, though, is untapped potential of its people. A majority of the population is under 30 -- 4 million people entering the labor force every year. In Egypt alone, youth unemployment was estimated to be 30 percent. And so there's a great deal to be done to ensure that the benefits of economic growth and reform are benefitting -- are widely shared and are bringing people into the work force and providing jobs and opportunities.

From the beginning of this -- of the upheaval, representatives of the U.S. government have been in consultations with people in the region. And the President will be laying out a vision tomorrow for the region of what it can be long-term and its role in the world. And as part of that, we'll be announcing a series of initiatives to support that long-term vision.

Our approach is based around four broad pillars, and I'll mention the broad pillars and my colleague will go into further details under several of these. First is support for better economic management. As we've learned from the transition experience in Central and Eastern Europe, it's important to provide support on policy formulation and economic management, along with our support for democratization. We'll use a number of programs to support NGOs, universities, think tanks, and others who can help contribute to economic policymaking in the region.

Second pillar is support for economic stability. Clearly, as part of this -- of the upheaval, there's been a series of economic implications. Growth forecasts have been revised downward. International reserves have decreased. Budget deficits are widening. And the international community will need to come together to take steps in the context of reform to ensure financial stability across the region. And my colleague will go into more details about specific steps that the U.S. is prepared to take in that context.

Thirdly is support for economic modernization and reform. And very much key to the future of this region is the development of a strong private sector, entrepreneurial sector that can create jobs and bring young people -- who I mentioned earlier -- suffer from high unemployment rates into the workforce. There are institutions and experience out there in facilitating this transition, and he'll be taking a number of steps to ensure that the international financial institutions and others are supportive of this modernization.

And finally, fourth, it's important to develop a framework for trade integration and investment. If you take out oil exports, the countries of this region, 400 million people, export about the same amount of goods as Switzerland does with only 8 million people. The countries are not terribly well integrated with each other, nor are they terribly well integrated into the global economy. And we'll be taking a number of step-by-step initiatives to facilitate more robust trade within the region and to facilitate -- do trade facilitation, to build on existing agreements, to promote greater integration with the U.S. and Europe, and to open the door for those countries who adopt high standards of reform and trade liberalization to construct a regional trade arrangement.

With that, let me turn it over to my colleague for further details.

SENIOR ADMINISTRATION OFFICIAL: Thanks. So in terms of specifically how we will stand with the people of Egypt and Tunisia -- as they transform their economies to ensure fairer treatment for all their citizens and to expand opportunities, particularly for the young -- first, we're going to galvanize support from the international community. The multilateral institutions have a huge role to play here. They have a lot of experience to bring to bear, which they gathered during the transitions in Central and Eastern Europe.

And the multilateral development banks -- the World Bank, the African Development Bank, the IMF -- are working with us and with other partners to bring resources to bear and also help these countries develop fundamental transformations of their economy that will allow vendors to provide for their families with dignity, women to get loans to start businesses, and of course that young people should be able to find jobs to build a better future.

As part of this, we're committed to reorienting the European bank for reconstruction development to support the transitions unfolding in the Middle East and North Africa. As you know, the EBRD played a critical role in supporting political and economic transitions in Eastern Europe over the past two decades, in particular by investing in the private sector and promoting important reforms and economic governance that foster stability and opportunity, as well as democracy. And we are going to ask the EBRD to play a similarly transformative role today. And I think that's particularly important because the EBRD has a specific democracy mandate, and so it will create strong incentives for countries in the region to implement reform that provide the economic underpinnings for political freedom and for strong democracies.

In addition, to help Egypt in meeting its critical and very important development needs, the United States is developing a new mechanism. It can essentially channel resources by canceling debts from the past to provide investments for the future.

And that will essentially address dual objectives. It will reduce Egypt's external debt burden and provide important cash flow relief in a period in which that is particularly important.

And secondly it'll channel additional resources to address Egypt's medium-term development needs, in particular building a new inclusive economy that will generate more private sector jobs and more opportunities for young people. And of course we'll ask our partners to join us in this initiative.

As another part of our effort to help Egypt invest in its people and regain access to global capital markets and investment, we will guarantee up to a billion dollars in borrowing to finance infrastructure and support job creation through our Overseas Private Investment Corporation, OPIC.

And finally, we are very supportive of efforts to obtain authorizations to establish an Egyptian-American enterprise fund which also will help with the goals of stimulating private sector investment and promoting projects that generate jobs.

So together we think these initiatives will help Egypt and Tunisia as they undertake the twin challenges of economic transformation and democratization.

MR. VIETOR: Great, thank you very much. And with that, I think we'll take some questions.

Q: Yes, thanks. What is the total dollar estimate of the entire program that you're -- that the President is going to announce? And secondly, one of the briefers mentioned the well-documented history of corruption in these countries. What safeguards are planned to make sure that U.S. funds don't go the wrong way or perhaps end up in the wrong hands of groups or entities that are a threat to the U.S.?

SENIOR ADMINISTRATION OFFICIAL: Maybe I'll say a word about anti-corruption and how this fits into our overall agenda. As you may know, we have been pursuing a broad anti-corruption agenda since the beginning of the administration. That's been evident through the OECD, through the G20, and through a number of bilateral discussions that are making real traction internationally in that effort. I think the President has underscored repeatedly, including going back and talking about the experience of his own -- with his knowledge of Africa about the pernicious effect of corruption and how it can diminish economic growth and demoralize a population.

I think in this regard, I think we'll be doing a number of programs as part of our overall effort on anti-corruption and be working with countries in the region to ensure that new governments there are taking this -- are taking this seriously.

But I would only note that it's part of a global effort that we're doing on open government transparency and anti-corruption.

Q: Thank you very much. I'd like to note that today the President signed an executive order expanding sanctions, to include Syrian President Assad for human rights violations. Yesterday Secretary of State Hillary Clinton said that Assad, through his actions, had made his intentions clear, and of course Vice President Biden has said that a leader who commits atrocities against his people has lost his legitimacy.

I'm wondering, does the President agree with Secretary Clinton and Vice President Biden, and will he call for Assad to step down from power in his speech tomorrow? Thank you.

MR. VIETOR: Hey, Josh, we're going to put that in the category of things you're going to have to wait for the speech tomorrow to get more clarity on. So we're going to have to -- if you have any other questions --

Q: All right, let me try again. Can you please give us some details in terms of how you plan to get money towards Egypt and Tunisia? Has this been coordinated with Congress? What's the scale of it and what types of assistance are you looking at?

SENIOR ADMINISTRATION OFFICIAL: Let me jump in on that. So on -- in terms of the scale of assistance, we are talking, of course, with our authorizers and appropriators, and they have given their thoughts as well in helping to design some of these initiatives.

With regard to the scale, we anticipate that the debt swap, both relief of debt and the investments that would ensue, would amount to roughly $1 billion over a few years, and that the loan guarantees would support roughly an additional billion.

There will be additional financing coming from the multilateral development banks as well, several billion dollars, and just with regard to the earlier questions that were asked, to reinforce my colleague, these funds, these programs will be available in the context of overall economic reform programs put forward by the Egyptian and the Tunisian governments, and of course both the multilateral development banks and we will expect and I believe the governments will want to use those reform programs to put in place very strong safeguards against corruption and also to ensure that the licensing process is much fairer so that the smallest vendors can get licenses much more easily than has been the case in the past and in a much more transparent and fair manner.

So we will be looking for these additional support mechanisms to be put forward in the context of deep economic governance reforms.

Q: Thank you very much for doing the briefing. Just a quick question. General Jones gave a talk to the National Press Club earlier this week where he called for a Marshall Plan for this region. And I'm wondering if you feel what the President is going to propose tomorrow rises to that level. Is this on the scale of a Marshall Plan for the Middle East and North Africa?

SENIOR ADMINISTRATION OFFICIAL: Well, I'll just say a few things and then my colleagues might want to join. I think people ought to be the judge of what are the historical analogies. I think that what we've looked at is how have nations successfully transitioned to democracy in the past? And you of course have the example of post-World War II. You also have the example of the fall of the Berlin Wall and the transitions in Eastern Europe, as well as many other countries around the world.

I think that's what important to note is that this has -- this is a plan that has many different components. It of course has the efforts that we're going to pursue with our international partners in the World Bank and the IMF. It has the debt swaps and the loan guarantees that my colleague spoke about. It has enterprise funds that we're pursuing with Congress that will increase investment in Tunisia and Egypt, as well as the efforts associated with OPIC and the European Bank for Reconstruction and Development, all of which I think draw on that experience of how do we take some of the successful efforts in Eastern Europe and apply them to countries that are transitioning to democracy in the Middle East and in North Africa.

And finally, you have the steps that we'll be taking to advance the integration of markets and the trade relationships between the Middle East and North Africa and the United States and the European Union. So it's a comprehensive approach that, again, is focused on how to foster development that is in service of democratic transition and that enhances opportunity for the people of the region.

It's the beginning of a long-term effort, because obviously these transitions will play out over a period of years. Egypt and Tunisia are at the forefront because they've already undertaken these steps. And of course, it's our hope that there are additional transitions to democracy that follow in the years to come.

And of course, it's just one component of a broader set of tools that the United States brings to bear in the region. And of course, he'll talk a little bit tomorrow -- the President will talk at length tomorrow about our political support for individual rights and democracy in the region and a broad range of U.S. tools that we'll be bringing to bear.

But what we wanted to make sure we are doing, again, is reorienting a number of tools of U.S. power in the region -- diplomatic, political, economic, and otherwise -- to reinforce those nations that take the important step of transitioning to democracy; to show that the international community and the United States will support those transitions; to provide real resources that can make a difference while also encouraging the type of reforms that we know are essential to both stable economic growth and democratic development.

So we believe that this is a very comprehensive and important way to reinforce democratic change. And we're going to continue to look to build upon that progress in Egypt and Tunisia and those other countries that undertake reform in the years to come.

SENIOR ADMINISTRATION OFFICIAL: The only thing I would add is that in the transition of Central and Eastern Europe, the prospect of accession and membership in the EU was a powerful force for encouraging domestic efforts to reform their economies and stay on the right path. And it's important the vision that the President will be laying out tomorrow and then working -- will be substantive discussion in the days and weeks to come -- is about laying out a vision for what this region can achieve in terms of private sector development, job creation, integration among themselves, integration with the world economy, and backing up that vision with very specific steps, as my colleague laid out, that supported on that path.

And so, it is an important step and it may take a number of years to achieve that overall vision, but it's an important vision to keep in mind.

Q: My question is related to Egypt. And I am just wondering that the whole package may be not satisfied through the Egyptian public opinion because of the Egyptian public are waiting for the U.S. as a strategic and as a country with a deep relationship to move further with a real package, including -- that includes cancellation of the whole debt. How do you react to this?

SENIOR ADMINISTRATION OFFICIAL: I would say that, again, I think what's important here is that we're embracing a profound shift and a partnership with Egypt, and we see Egypt really as -- together with Tunisia -- the beacon in this region. And so what we're laying out is a profound multiyear set of engagements with the Egyptian people to help support them. At the end of the day, of course, the future is in their hands, and what we're trying to do is support them here.

Egypt has I think a very good prospect of accessing private capital markets, and that's important to Egypt's future economic vibrancy, and that's something that we know economic leaders in Egypt want to reinforce. So what we're doing here is supporting Egypt by making a very important commitment to debt relief, while also making sure that Egypt remains very attractive in the financial markets and an increasingly attractive destination for private investment by engaging the private sector.

So we've done these elements in a carefully crafted way to both show how deeply and profoundly the American people support Egyptian people, but also to reinforce the strength of Egypt's economy as it grows and attracts private capital into the future to create those jobs.

Q: I appreciate you doing this call. A couple things. On the cancellation of the debt, I thought I heard you say a figure of about $1 billion. Secondly, the multilateral institution funding, I believe that's already pretty much been announced -- the World Bank talking about a $2-plus billion and IMF helping out on the funding cap for Egypt and Tunisia.

I've heard there's talk about boosting resources for EBRD. Is that correct? Are you talking about the money there? And then just secondly, while it's not officially on the agenda, European officials have clearly said that the IMF leadership succession will be talked among leaders, G8 leaders upcoming. I'm wondering if the U.S. has -- can make clear whether they're supporting a merit-based leadership process, or will it back another European?

SENIOR ADMINISTRATION OFFICIAL: So why don't I just quickly talk about the multilateral development banks piece. The World Bank, the African Development Bank, the International Finance Corporation and the IMF, are all working hard together to address Egypt and Tunisia's immediate financing needs that are associated with recovery and medium-term economic reform needs, which are going to create a much more vibrant private sector with much more jobs, rich kind of economy. And the amounts there have not fully been finalized, but they will run in the multiple-billion-dollar-over-several-years scale.

With regard to the European Bank for Reconstruction and Development, there what we're really proposing is a reorientation of the mandate of that institution so that it can play the same role in the Middle East and North Africa with countries that are making that democratic transition that it has played so successfully in Central and Eastern Europe, in particular in creating a much more robust private sector.

With regard to the IMF, why don't we leave that for a separate conversation.

Q: Thank you so much for doing this. I just have a couple of questions. Just to understand the cancellation of debt relief for making the swap with the debt, over what period of time is that? Is that going to mean instead of making the debt repayments they're going to be going into direct investments into Europe?

And secondly, if I can ask, are all the announcements that are going to be made tomorrow directed at Egypt and Tunisia, or is there going to be more detail about the integration for Arab states? For example, FTAs or other possibilities? Thank you.

SENIOR ADMINISTRATION OFFICIAL: Why don't I just speak briefly on the debt swap and then turn it back over to my other colleague to talk about the trade and investment approach.

So with regard to the debt relief, that is -- that will be a two-to-three-year process. And those funds, of course, will become immediately available. The funds that are no longer needed for servicing the debts are funds that the Egyptian government will then be able to use -- local currency, of course -- to invest in priority sectors that we and they believe are likely to center in areas such as youth employment and entrepreneurship.

SENIOR ADMINISTRATION OFFICIAL: On the trade and investment front, what we envisage is a step-by-step initiative initially focused on facilitating more robust trade within the region, building on existing agreements. We have a number of agreements there, as does the EU, to further promote integration with the U.S. and European markets, and then ultimately working with countries in the region who have achieved a high level of reform and trade liberalization on the possibility of a regional trade arrangement. So it's a multi-stage process.

Q: Hi, I wanted to ask if the purpose of these moves with respect to Egypt and Tunisia is to act as a carrot of sorts to encourage other countries to move forward with their democratic reforms in the hope of getting these sorts of benefits?

And in the same vein, if that is the hope, how do we justify, for example, continuing to give substantial assistance to Jordan when the evidence of substantial political reform there is lacking? If countries that haven't shown reforms are still going to get substantial aid, then is there really any linkage to the reforms? Thanks.

SENIOR ADMINISTRATION OFFICIAL: I don't know if our first colleague wants to take that one.

SENIOR ADMINISTRATION OFFICIAL: What was the question again?

MR. VIETOR: Hey, why don't you handle part two? We just had to jump back on. The plane landed.

SENIOR ADMINISTRATION OFFICIAL: No, I think we very much do look at, as my other colleague said, as Tunisia and Egypt being at the leading edge of potential reformers in the region, as potential demonstration cases for the rest of the region. And therefore, we do see their success as a positive incentive for others in the region who are also working on the reform agenda.

SENIOR ADMINISTRATION OFFICIAL: Yes, I'd just add to that, we believe that Egypt and Tunisia are hugely important for a number of reasons. First of all, Tunisia was just a vanguard of the democratic movements that had swept across the region. And Egypt is the largest Arab country, of course, and an important bellwether for the region as well. And one of the things that we know about what's taking place in the Middle East and North Africa is that change is going to be different in every country. And as we've seen, there are going be very difficult circumstances where change is contested and transitions are more difficult.

And so one of the most important things that we can do, in addition to supporting political and economic reform in all countries and individual rights as well, is empowering a positive model, and that if Tunisia and Egypt are able to be successful in their transitions, able to solidify their democratic gains, and able to reinforce those gains through economic development, then that provides a powerful incentive for the nations and peoples of the other regions to pursue similar reforms.

So part of the purpose of this economic program, again, is to reinforce not only positive change in Egypt and Tunisia, but a positive model that can empower and incentivize democratic change and economic reform in other parts of the region.

Q: I guess I'm trying to understand the broader context for all this -- for this briefing -- because you said this would deal with a portion of the speech, and you seem to be discussing only, or primarily, certainly, Egypt and Tunisia. And I'm wondering how -- if you can outline or give a general sense of what other portions the speech falls into, and how -- beyond the discussion of trade briefly there -- how any of these economic proposals affect Bahrain, Yemen, Syria, any of the other countries that are in the region beyond Egypt and Tunisia, or is this just about those two countries?

SENIOR ADMINISTRATION OFFICIAL: I'll take the first part, and then I think my colleague should address the trade portion of the question. Obviously the speech addresses a broad context. It will speak to the political change in the region. It will speak to efforts that we're undertaking to support human rights and democratic reform in the region and a broader interest in peace and security in the region. And the President, of course, will be speaking in length about that tomorrow. We're just not previewing those particular portions today.

But however, with regard to your question, I would reinforce one of the things that I was just saying, which is that when you have a region of many different countries that are pursuing change in their own different pace, part of what we do is going to be using our influence in support of positive outcomes in different countries. But what's perhaps even more important, given the fact that ultimately change is not going to be determined by the United States, change is going to be determined by the people of the region, but one of the most important things that we can do is empower positive models of change.

Already -- and frankly, I think you've already seen that in events, because the protests that began in Tunisia spread to other parts of the Middle East and North Africa, and Tunisia and Egypt have been at the forefront of this. And again, they are all particularly important given Egypt's role, for instance, as the largest Arab nation.

So it is entirely relevant to the other nations in the region and the other transitions taking place in the region to have a positive model of democratic transition and economic development in Tunisia and Egypt that would have a positive impact beyond their borders, because as my colleague said, it incentivizes -- as we learned in previous transitions -- nations are more likely to undertake positive actions if they see incentives for those actions, and that one of the clearest ways to provide those incentives is to see a positive model. But I'll turn to my colleague on the trade question.

SENIOR ADMINISTRATION OFFICIAL: I think on the trade question, the vision is one in which the countries are -- where protectionism gives way to openness, where the countries are further integrated amongst themselves and with the global economy. And one might start with Tunisia and Egypt, but it's a vision that other countries can certainly participate in and join in as they pursue economic reforms as well. So it's broader than Egypt and Tunisia as well.

SENIOR ADMINISTRATION OFFICIAL: I think the examples that were discussed earlier -- if you go back to the post-war engagement of the U.S. and Europe, if you go back to the transitions in Central to Eastern Europe -- in each case, we were crafting institutions that were really designed to provide positive reinforcement to those countries who were kind of moving in the right direction politically as much as economically. So if you look at the reorientation of the European Bank for Reconstruction and Development, that's again -- it's a sort of signal that as countries take these quite ambitious and bold steps, that the international community and the U.S. in particular will be there to help support those transitions.

Q: My question about the level of communication between the American administration and the government both in Tunisia and Egypt -- concerning those financial initiatives, did you speak before with the governments in both countries and on what level? Did you speak with the Supreme Military Council or the government? Thank you very much.

SENIOR ADMINISTRATION OFFICIAL: I'll say a word and maybe one of my colleagues wants to join in as well. There have been meetings and visits in the region by officials from the Treasury Department, the State Department, the White House on the economic issues as well as an important meeting around the World Bank-IMF spring meetings on this issue as well. And so there's been multiple contacts in each of the countries as we have been working on this economic program.

SENIOR ADMINISTRATION OFFICIAL: Yes, and I'd just add one thing. In addition to those consultations, I think just generally at a variety of levels, both governmental and nongovernmental, to include conversations with civil society and nongovernment actors, one of the important messages that we hear from Egypt and Tunisia was how important economic growth and support for economic development would be to the current situation in Egypt and Tunisia, both in part because they did suffer some shocks around the recent upheaval in their countries, but also because as we look to ways in which, again, the United States can use our policy tools to support change, we can obviously do a range of things that speak up for and stand up for the things that we believe in and the rights that we support. And the President will speak to that tomorrow.

But one of the concrete ways that we can demonstrate our support for democratic changes is through this type of economic program. And so this is fully in line with many of the contacts we've had both in the official consultations but also in the types of messages that we've heard from within the government and from within civil society as well.

MR. VIETOR: All right. Thank you, everybody, for jumping on. And as we said before, the embargo is 9:00 p.m. tonight. We'll work on getting you any information we can that would be helpful between now and then in terms of fact sheets, et cetera, and we'll see you tomorrow. Thanks.

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