Keynote Address by David B. Cohen, Deputy Assistant Secretary of the Interior, Annual Conference of the Island Government Finance Officers’ Association, Honolulu, Hawaii, December 4, 2007.
Thank you for inviting me to speak. As always, it is an honor to be here with you. Ever since I took this job in June 2002, we have been consistent in expressing the top two priorities for the Office of Insular Affairs. Priority 1 is helping the insular areas promote private sector economic development. Priority 1-A is promoting accountability, particularly for the Federal financial assistance that we provide for the islands. Normally, when I speak before this group, I speak about Priority 1-A. There is an obvious relationship between Priority 1-A—promoting accountability—and your jobs as government finance officers. Today I would like to speak about Priority 1, because I believe that there is also an important relationship between your jobs and the urgent need to promote private sector economic development in the islands.
Why have we made private sector economic development Priority 1? The reason is that in most of the insular area economies, there is an unsustainable imbalance between the public and private sectors. In a healthy economy, a strong private sector creates jobs and generates income and wealth, which can be taxed at a reasonable rate to fund essential services for the public. The private sector dominates the economy. In many island economies, this model is turned on its head: The economy is dominated by the public sector. Since the public sector generally is a consumer and not a producer of wealth, this type of economy can only be sustained with outside subsidy. I have referred to these island economies as being “upside down in the middle of the ocean”. These economies will have to get right side up in order to get their heads above water.
Many island economies have evolved in this manner for several reasons. For one thing, island communities—and small island communities in particular—face unique barriers to private sector economic development. These communities tend to have small populations, few resources and remote locations. That means that they are heavily dependent upon transportation systems to bring people and goods to and from their islands, and that transportation is likely to be significantly more expensive than it is in more populated areas. This, in turn, tends to make everything else on the island more expensive. The cost of doing business is therefore high.
Many island communities are subject to destructive weather patterns, and in the salty ocean air, the climate often corrodes what it does not destroy.
There are cultural and historical forces in play here as well. Pacific cultures, for example, are sharing cultures. The philosophy is “what we have today, we share today”. Pacific cultures do not have the selfish gene that triggers the generation of wealth in a free market economy. Sharing is a virtue and selfishness a vice, but enlightened self-interest has proven to a useful tool to enable societies to achieve a comfortable standard of living.
Ironically, the Pacific virtue of sharing, when combined with outside financial assistance, has helped to create the bloated public sectors that we see today in many island communities. The island instinct is to share financial assistance from donors in much the same way that food is shared. Since donors generally do not allow island governments to allocate their aid to people in the form of cash, they tend to allocate the aid in the form of public sector jobs. More aid tends to result in more government jobs. Since the Department of the Interior’s Office of Insular Affairs provides more aid to the Pacific islands than any other U.S. agency by far, we have been, inadvertently, the greatest U.S. contributor to this phenomenon.
The result is not only an oversized public sector, but also a public sector mindset where government jobs are deemed to be provided for the benefit of the recipients rather than for the benefit of the public. The public sector budget is not oriented to provide public service, but rather to provide public jobs. This means that the public as a whole tends not to receive good value for public expenditures, and donors tend to get frustrated when we attempt to measure the performance of our assistance.
In many island communities, outside subsidies and other distortive policies tend to make government jobs significantly higher paying than private sector jobs. This tends to encourage the islands’ best and brightest to aspire to public sector employment and look down on private sector employment. In some islands communities, the overwhelming majority of the indigenous workforce is employed by the local government and the lower-paying private sector jobs are filled almost exclusively by foreigners. These communities become two-tiered societies where a largely unproductive local government workforce is kept afloat by outside subsidies and outside labor. This type of arrangement, besides being economically unsustainable, can create tension within the society and give rise to a sense of dependence and helplessness in the indigenous population.
These problems tend to exacerbate themselves in a vicious cycle. A society that cannot sustain itself without outside subsidy generally cannot afford to invest in education, health, infrastructure and other essential building blocks of a strong and prosperous society. This lack of essential investment tends to weaken the private sector, sending the most talented locals overseas in search of opportunity and making the community more and more dependent on imported labor willing to work for lower wages.
These problems do not exist only in the islands. Small island communities are particularly vulnerable to them, however. These problems can be overcome by intelligent policy, strong leadership and a commitment to good governance. Overcoming these problems requires the development and maintenance of a business climate that enables business to create jobs, to foster prosperity and to assume its natural role as the engine that drives the economy.
That is where all of you come in. All of you are responsible for executing policy, and as any sports fan knows, good execution typically is the difference between success and failure. However, most of you also have sufficient stature within your local governments to have an important influence on the formulation of policy, and not merely its execution. When your respective governments consider reforms designed to improve the business climate, you are likely to be involved in the discussion. You might even be the driving force behind the discussion. With so many things beyond your control, it is all the more important for you as government leaders in small island societies to act with wisdom and political courage to address the things that you can control. Small island societies can successfully transcend their limitations, but there is little room for error.
One of the problems that I have observed with the relationship between the public and private sector in insular area economies is an inability of the public sector to get out of the way. That does not mean that island governments should abandon their duty to regulate business in a reasonable manner. It simply means that in some cases, government actions and failures to act needlessly obstruct economic progress. I have come up with a list of Seven Deadly Sins that could cause island governments needlessly to get in the way of the economic advancement of their own societies.
I will introduce the First Deadly Sin by noting something that most of us love about the islands: the unhurried pace. I remember overhearing a Samoan man and a Mexican man talking to each other about their respective cultures. The Mexican man said, “Mexicans are a hard-working people. New immigrants come to the U.S. and take jobs that Americans won’t take. In successive generations, they work themselves up from the working class to the middle class and beyond. Still, with some of my people some of the time, there’s this culture of ‘mañana’—tomorrow. What needs to get done can wait until tomorrow.”
The Samoan guy said, “Yeah, I think I know what you mean. In the islands, we always say ‘fai fai lemu’.”
The Mexican guy asked: “What’s that?”
The Samoan guy responded: “Well, I think it’s like your ‘mañana’, except without the sense of urgency.”
I remember hearing Willie Kostka, a Pohnpeian who heads a conservation NGO in Micronesia, poke good-natured at his fellow islanders. He said, “Haoles come to the islands and they see young men standing around and they think that islanders are lazy. We’re not lazy. We’re just patient.”
Well, the First Deadly Sin on my list of seven what I will politely call the Sin of Patience. Patience is indeed a virtue, unless one becomes excessively and discourteously patient with other people’s time. In business, time is money, and when government officials fail to act responsively in a timely fashion, it can drive away potential investment. Businesses greatly value a bureaucracy’s ability to process permits and licenses expeditiously and to respond quickly to inquiries and requests.
The Second Deadly Sin is the Sin of Complication. Needlessly complicated, protracted, redundant and even contradictory permitting, licensing and other regulatory procedures discourage the formation and retention of businesses.
The Third Deadly Sin is the Sin of Competitiveness. This sin occurs when the government sees a private company succeeding in a new type of business and decides that jumping into that business would be a good way to support its bloated public payroll. This is likely to result in both the private company and the government ultimately failing at the business. The private company is likely to fail because the government will not compete fairly. The government will fail because governments are notoriously bad at running businesses. The best way for a government to generate revenue from a profitable business is for it to get out of its way and tax it—reasonably.
The Fourth Deadly Sin is the Sin of Opaqueness. Government procedures should be transparent in order to inspire the confidence and full participation of the private sector. If good companies cannot be satisfied that they will be competing on a level playing field, they will stay away and the community will miss out on the capital, technology, know-how and economic activity that good companies can bring to the islands.
The Fifth Deadly Sin is the Sin of Favoritism. Favoritism comes in many varieties, including nepotism, where one favors one’s family; cronyism, where one favors one’s friends; xenophobia, where one favors one’s countrymen, and self-dealing, where one favors oneself. By creating an uneven playing field, it scares away businesses that can bring good things to the islands.
The Sixth Deadly Sin is the Sin of Fickleness. Businesses value consistency more than anything else. There is nothing more frustrating than policies that constantly lurch back and forth, to and fro, with the political wind.
The Seventh Deadly Sin is the Sin of Arbitrariness. Decisions made by government officials should be based upon objective standards applied consistently. Government leaders who retain too much discretionary power are in a position to benefit themselves at the expense of their constituents. It is best not to leave government leaders with too much discretionary power, as it is a strong invitation to abuse.
These sins are committed by government officials all around the world, not merely in the islands. They are certainly committed all across the United States by Republicans and Democrats alike. As I noted earlier, however, small island communities have a very narrow margin of error, and hence it is all the more imperative to avoid these sins. Those who commit the sins of Lust, Gluttony, Greed, Sloth, Wrath, Envy and Pride should seek forgiveness from God. Government officials who commit the sins of Patience, Complication, Competitiveness, Opaqueness, Favoritism, Fickleness and Arbitrariness should seek forgiveness from their own people.We all know that island communities face many challenges. It is important to remember that these challenges can be overcome. They can only be overcome, however, if government leaders do everything in their power to discharge their duties with the highest degree of skill, judgment, integrity and vision. Given everything that is at stake for the people of the islands, to do anything less than that would be a sin.
Thank you.
Showing posts with label Economic Growth. Show all posts
Showing posts with label Economic Growth. Show all posts
Tuesday, January 29, 2008
Guam's Military Expansion Must be Good for Guam and Good for the Neighborhood
Remarks of David B. Cohen, Deputy Assistant Secretary of the Interior for Insular Affairs, Public Policy Institute Distinguished Speaker Series, College of the Marshall Islands, Majuro, Republic of the Marshall Islands, November 30, 2007.
Yokwe. It’s a pleasure to be back in the Marshall Islands. Before I launch into the topic that I was invited here to speak about, I would like to offer a few remarks about the forum itself: the new Public Policy Institute of the College of the Marshall Islands.
To me, the fact that the College of the Marshall Islands has established the Public Policy Institute is a sign of the tremendous progress that this institution has made in a very short period of time. Three short years ago, this college was on the verge of losing its accreditation from the Western Association of Schools and Colleges, which would have almost certainly required it to close its doors. Closing the doors to this college would in turn have closed the door on the future to countless young Marshall Islanders for generations to come, depriving this country of its almost exclusive source of locally trained teachers, nurses and other professionals.
In the Fall of 2004, we convened an emergency task force that included the college, the Government of the Marshall Islands, my office, the good offices of the U.S. Ambassador, the Pacific Post-Secondary Education Council, and others. I personally attended the first meeting of the task force here in Majuro in October 2004, and we helped the College put itself on the road to recovery. A crucial component of that plan was an ambitious capital improvement plan to shore up deficiencies in the Colleges aging campus. The Nitijela approved a plan to provide $3 million annually to support this plan with Compact funds and funds from other sources. I had the pleasure of touring this campus earlier today and must say that I am astounded by the progress that has been made thus far and by the progress that is on the way. I toured the site of the future lab school for elementary and junior high school students here in Uliga who were forced to abandon their decrepit and unsafe former school site. This exciting plan will leverage resources in a manner that will simultaneously improve elementary and post-secondary education in the Marshall Islands.
Another urgent priority for our emergency task force was to find effective leadership for the College. A few months after our initial meeting, the College’s Board of Regents was preparing to offer the job to Wilson Hess, who had very impressive credentials as a college president in Maine. I happened to be in Majuro during Mr. Hess’s first visit to the Marshall Islands. He attended a Chamber of Commerce luncheon at which I spoke. I directed a few remarks to Mr. Hess. I essentially said that Mr. Hess, as a statesider, might soon be asked to consider moving his family thousands of miles away to a remote atoll in the middle of the Pacific. That would be a very difficult decision to make. I pointed out to Mr. Hess that in that room with us on that day were a number of bright, talented former statesiders who had made that very same decision and decided to make these islands their home forever. If I recall correctly, former statesiders in the room on that day included Al Fowler, Jack Niedenthal, Jerry Kramer, Giff Johnson, and many others. And I said to Mr. Hess, that if you want to know what’s so special about these islands that would inspire someone from the states to give up everything on the mainland and make this place their home, ask these people. And he did. And I don’t know what they told him, but whatever it was must have been compelling because he’s been here doing a great job for the past two years.
Three years ago, this College was grasping for a miracle just so it could keep the lights on. Today, with the Public Policy Institute, it has shown that it is no longer focused on merely surviving, but is actively seeking to make a contribution to the intellectual life of the Pacific. I don’t know if my speech tonight will advance that objective, but I believe that it’s inspiring that the College has put itself in the position to host such a program. I am very exciting about all of the wonderful things that this College will be able to do, all of the contributions that it will be able to make to this community, when it finally frees itself of the last vestiges of its academic sanction. I am confident that it will do so in the near future, and thank everyone who played a role in making it happen.
I’ve been invited to the Marshall Islands to speak about something that is planned to occur almost 2,000 miles away from here: the military buildup in Guam. That isn’t so strange when you consider the cultural, political and transportation links between the two Micronesian island communities, which are likely to cause events in Guam to be felt here in the Marshalls. That is especially true given the magnitude of what is planned to happen in Guam.
The title of my remarks tonight is “Guam’s Military Expansion Must be Good for Guam and Good for the Neighborhood.” This is a quote from my boss, Secretary of the Interior Dirk Kempthorne.
The Department of Defense is planning to transfer approximately 8,000 Marines and 9,000 family members from Okinawa to Guam at a cost of more than $10 billion. This cost will be shared between the U.S. Government and the Government of Japan. The existing U.S. Navy and U.S. Air Force bases on Guam will also undergo improvements costing additional billions of dollars.
The Department of the Interior has a great interest in these developments. The Department has two responsibilities that connect us to the realignment of Pacific forces. First, the Department of the Interior is responsible for generally administering the Federal Government’s relationship with the United States territories, and for administering the financial assistance that the U.S. provides to the freely associated states, including the Republic of the Marshall Islands, under the Compacts of Free Association. Second, the Department of the Interior chairs the Interagency Group on Insular Areas, which is tasked with coordinating Federal policy with respect to the U.S. territories.
The Interagency Group on Insular Areas, or “IGIA”, was re-established by President Bush on May 8, 2003 when he signed Executive Order No. 13299. The President designated the Secretary of the Interior as the presiding officer of the IGIA, and the Secretary of the Interior has offered the services of the IGIA to the Department of Defense to help coordinate Federal agency participation in this important base realignment project. In this regard, the IGIA has established a Working Group on Guam Military Expansion to address issues related to the military buildup. In addition to Defense and Interior, the Working Group includes the Departments of State, Agriculture, Health and Human Services, Labor, Justice, Transportation, Housing and Urban Development, Education, Veterans Affairs, Navy, the Small Business Administration, Office of Management and Budget, and others. We view the Guam relocation as a project of the Federal Government, not merely the Department of Defense. We are also working closely with the Government of Guam and Guam’s Delegate to the U.S. House of Representatives, and will be working closely with the leaders of other island communities as well.
The Department of the Navy has established the Joint Guam Program Office, or “JGPO”, to coordinate the planning and implementation of the buildup. JGPO is led by Retired Marine Corps General David Bice, who reports to the Assistant Secretary of the Navy for Installations and Environment, B.J. Penn. I work very closely with General Bice on the interagency coordination effort within the Federal Government and on coordination between the Federal Government and the Government of Guam.
General Bice and I host quarterly meetings of the Interagency Task Force, which was formed specifically to identify and address the impacts of the buildup on Guam. The most recent Interagency Task Force Forum was held last week at the Pentagon, and was attended by a delegation from Guam led by Governor Felix Camacho. The Interagency Task Force includes five subgroups that focus on (1) labor and workforce issues, (2) civilian infrastructure needs, (3) health and human services requirements, (4) the environment, and (5) socio-economic issues. Each of these subgroups has been working hard with the Government of Guam to identify issues that we will need to address in order to the buildup to proceed smoothly, and to develop strategies to address those issues. As we have become immersed in these issues, one thing has become abundantly clear to all of the participants: we all have a great deal of work to do.
I would like to speak in a little more detail on labor and workforce issues, since these issues present a potential opportunity for the people of the Marshall Islands.
The relocation of Marines from Okinawa will require the construction of a new U.S. Marine Corps base and other facilities to accommodate 8,000 Marines and 9,000 family members. It is anticipated that such construction will require 12,000 to 15,000 skilled construction workers. Currently, the number of journeyman construction workers that are labor-eligible on Guam is limited. It is estimated that 75 percent of such workers will have to come from outside of Guam.
Where will these workers come from? The fifty states could in theory provide all of Guam’s labor needs. However, because of Guam’s great distance from Hawaii and the U.S. mainland, we have not counted on being able to rely upon labor from the fifty states. Hawaii is by far the closest state to Guam, and its construction industry has been kept very busy recently. If construction workers in Hawaii can find all the work they need in Hawaii, it would be difficult to entice them to Guam. This is especially true because the pay scale on Guam is generally lower than that in Hawaii and the other U.S. states. It will be interesting to see whether the sub-prime mortgage issues that the U.S. economy has been dealing with lately will significantly dampen the availability of credit for commercial construction projects in Hawaii and the Western U.S., including Las Vegas. If this happens, and we hope that it doesn’t, it could result in a significant downturn in construction activity in the fifty states. This, in turn, could motivate more skilled construction workers from the fifty states to consider opportunities in Guam.
Other potential sources of labor for the Guam buildup exist in nearby Asian and Pacific nations, particularly the Philippines. I’m excluding the Marshall Islands and the other freely associated states here, as I will discuss them in a moment. These Asian and Pacific nations collectively, and in many cases individually, have more than enough skilled construction workers to satisfy all of Guam’s needs. Workers from these nations, however, require H-2B visas in order to work on Guam. H-2B visas allow the importation of temporary workers to the U.S. for temporary jobs, and nationally only 66,000 of them are issued annually. The Guam requirement for construction workers alone is approximately 20 percent of this nationwide cap. Clearly, without a change in the law, our ability to get the needed construction labor from these Asian and Pacific nations—again, excluding the freely associated states—will be very limited.
Well, such a change in the law has indeed been proposed. H.R. 3079, legislation that would federalize the immigration system of the Commonwealth of the Northern Mariana Islands, was recently approved by the U.S. House of Representatives Committee on Natural Resources. The version of the bill reported out of committee would exempt Guam from the national cap on H-2B visas, allowing Guam to bring in all of the construction workers that could be demonstrated to be necessary for the military buildup or other projects. The passage of this legislation in its current form is not yet certain. For one thing, the companion bill in the Senate, S. 1634, does not currently include the H-2B visa cap exemption for Guam. Also, the current CNMI administration is funding a vigorous lobbying effort to defeat H.R. 3079, notwithstanding the fact that it would offer the CNMI and Guam unprecedented flexibility within the U.S. system to bring in the workers, tourists and other visitors necessary to build a strong economy. An earlier lobbying effort by the CNMI government in the late 1990’s and early 2000’s resulted in the House defeating a CNMI immigration federalization bill that had been unanimously passed by the Senate. It should be noted, however, that circumstances are drastically different this time around.
The last potential source of labor that I will discuss is the one of most interest to most of you in my audience today: Citizens of the U.S. territories and the freely associated states, including the Marshall Islands. Although there are many legal and cultural distinctions between citizens of the territories and those of the freely associated states, I will discuss them together for two reasons. First, citizens from both the territories and the freely associated states can travel to and work in Guam without obtaining a visa. Second, the number of skilled construction workers from both the territories—especially the nearby Pacific territories—and the freely associated states is rather limited, giving rise to the challenge to train these potential workers as quickly as possible in order to avail of their access advantage for living and working in Guam.
That access advantage may effectively be erased if H2-B visa caps are lifted for Guam. Opportunities for newly skilled laborers from the freely associated states and territories could also be diminished if a downturn in the U.S. construction industry were to attract a higher-than-expected number of experienced construction workers from the U.S. mainland to Guam. In any event, however, if a significant number of workers from the freely associated states could become qualified for skilled construction jobs in Guam, it would be good for the freely associated states and good for the U.S.
As you know, the Compacts of Free Association allow citizens of the freely associated states to travel to the U.S., including its territories, without a visa and stay indefinitely to work, study or simply live. Guam has always received a significant number of migrants from the freely associated states, although most have been from Chuuk, other parts of the Federated States of Micronesia, and Palau. If you look at a map of the U.S.-affiliated Micronesian islands, the Marshall Islands are situated in the northeast corner, poised like an arrow pointing up at Hawaii and beyond to the U.S. mainland. The Compact migration patterns of the Marshallese have traditionally followed that arrow.
Officials from Hawaii have long complained that Compact migration puts a strain on their local resources for social services, law enforcement and infrastructure. For our part, my office has consistently pointed out that Hawaii receives a great deal of benefit from the Compact, and that many Marshallese migrants are contributing to the dynamism of Hawaii’s economy. Also, millions of dollars are paid each year to Kwajalein landowners for the right to use the U.S. Army base in Kwajalein, and it is logical to assume that a significant share of that money ends up in Hawaii. Still, it is true that Hawaii receives a significant number of migrants from the Marshalls and other freely associated states that may not yet have the skills to be net contributors to the economy. For that reason, my office is committed to provide $600 million over 20 years in “Compact Impact” grants to Hawaii, Guam and other Pacific territories that receive migrants from the freely associated states.
It is important to note that “Compact Impact” grants should not stigmatize communities from the freely associated states as being burdens on the states and territories to which they migrate. Thousands of Marshallese, for example, have migrated to Arkansas and Missouri to work for Tysons and other companies. There has been no outcry from those states that the Federal Government should provide them with “Compact Impact” grants. To be fair to Hawaii and Guam, however, Marshallese travel the great distance to Arkansas or Missouri for one reason only: to work. These Marshallese workers are net economic contributors to the communities in which they live. Most citizens of the freely associated states who migrate to Guam or Hawaii also do so to work, but because of the proximity of these places to the freely associated states, they could also be expected to attract a higher proportion, as compared to the U.S. mainland, of citizens who are not yet ready to be net economic contributors. If we could help some of these migrants and potential migrants to acquire the skills necessary to participate in the Guam military buildup, we would simultaneously be furthering a number of objectives. We would reduce the pressure on Hawaii and Guam to address the needs of migrants who do not yet have the skills to be net economic contributors. We would provide citizens of the freely associated states with skills which could be converted into good jobs, which in turn could take pressure off of the social service budgets of their home countries and the places to which they migrate, and create more income for their home countries in the form of remittances. And, not incidentally, it would help us find the labor necessary to implement the Guam military buildup.
Keep in mind that the job opportunities on Guam will not be limited to those 15,000 or so skilled construction jobs. The needs of Guam’s current population have already overrun the capacity of its civilian infrastructure, which will have to be significantly improved and expanded in connection with the military buildup and the population increase that will come with it. That population increase is estimated to be 35,000 to 40,000 people or more, an increase of over 20 percent, mostly civilians. All of these new people will need places to live, places to shop, places to dine, products and services to buy, roads to travel on, utilities to serve them. All of these needs will give rise to business opportunities and job opportunities. These people will also need places to visit for a change of pace, and many nearby island communities will be waiting to fill that need. Majuro is only a four-hour direct flight from Guam.
In order for the Marshall Islands and other island communities to be able to take advantage of this potential increase in tourism, they will have to make the commitment to make their islands pleasant destinations for tourists. Natural beauty is not enough. Tourists today expect good service, good amenities, good logistics, good infrastructure and an overall pleasant experience. In order to achieve all of this, the private sector, not bureaucrats, will have to take the lead. However, the private sector must be supported from the highest levels of government, which must be absolutely commit itself to provide a business climate that will enable the private sector to effectively develop the tourist economy. I have said in the past that Pacific economies are “upside down in the middle of the ocean,” with bloated governments suffocating the private sector rather than strong private sectors leading economic growth. For Pacific economies seeking to capitalize upon opportunities in the region, this model simply won’t do.
A number of citizens of the Marshall Islands and other freely associated states already have the skills to participate in the economic activity that is expected to be generated on Guam or otherwise from Guam, including tourism opportunities. Many more, however, will need to be trained. Clyde Bishop, U.S. Ambassador to the Marshall Islands, has stressed the need for this type of training. We don’t have much time, however. The construction required for the location of Marines is scheduled to start in 2010 and finish in 2014. Since it typically takes an apprenticeship of three to five years to qualify as a journeyman in one of the construction crafts, the time available to train people from scratch is extremely limited. Keep in mind, however, that Guam’s economy will generate opportunities other than those for journeyman construction workers, and there should be plenty of opportunity left over after the people of Guam have been properly taken care of. And in any event, training for the citizens of the freely associated states will be beneficial to the freely associated states and to the U.S. regardless of whether that training is ultimately put to use in Guam, in Hawaii, on the U.S. mainland or back at home.
We’ve been contemplating these issues in Washington, in consultation with our colleagues from the islands. We’re looking at training programs that could be implemented in Guam, the Northern Mariana Islands, Hawaii and the freely associated states. We’re discussing eight-week boot camps that could provide some training for unskilled labor. We’re discussing apprenticeship programs. We’re looking at how the private sector can help. We’re discussing the existing capabilities of the community colleges in the region, and how we can help to expand those capabilities. We’re looking at possible Federal funding sources, although the Federal Government cannot do this alone. The U.S. Departments of Labor and Education are looking at their resources, and my office will almost certainly assist the training effort with technical assistance grants. We can also use funding provided under the Compacts of Free Association, provided that the governments of the Marshall Islands and the Federated States of Micronesia believe, as I hope they do believe, that this is a high enough priority.
We’re still in the process of figuring out who can bring what to the table, and it will take a great deal of communication between the Federal Government and the islands in order to get this right. The colleges are our natural partners in this endeavor, and we need your help to figure out how we can leverage our resources with your resources, expertise and commitment in order to get the most out of our efforts. Those of our partners who are willing to bring the most to the table are likely to get the most out of it, and the people of the islands will benefit.
In June, I had the pleasure of accompanying my boss, Secretary of the Interior Dirk Kempthorne, on a tour of the U.S.-affiliated Pacific islands. Assistant Secretary of the Navy B.J. Penn was with us as well. Our tour included stops in Kwajalein, Ebeye, and here in Majuro. Everywhere we went, people wanted to know about the Guam military buildup. And everywhere we went, Secretary Kempthorne stressed the need to ensure that Guam’s military buildup is “good for Guam and good for the neighborhood.” To remove any doubt, the “neighborhood”, as Secretary Kempthorne envisions it, includes the entire U.S.-affiliated Pacific, and certainly the Marshall Islands. If the project is planned and implemented properly, Secretary Kempthorne’s vision will indeed come to pass, and the military expansion on Guam will be good for this entire neighborhood.
In order for us to realize this positive scenario, we will have to do our homework. We will have to identify critical path items and potential bottlenecks, and find ways to ensure that we address our challenges in a timely fashion. We don’t have all of the answers yet, but we have begun in earnest the task of identifying issues and developing solutions. This effort will take a great deal of collaboration among the Federal Government, the Government of Guam, the people of Guam, the private sector and peoples of the islands, including the Marshall Islands and the other freely associated states. With its central role in providing support to the islands, the Department of the Interior is prepared to do its part to make sure that this massive endeavor is good for Guam, good for the neighborhood, and good for the United States of America.
Kommol tata.
Yokwe. It’s a pleasure to be back in the Marshall Islands. Before I launch into the topic that I was invited here to speak about, I would like to offer a few remarks about the forum itself: the new Public Policy Institute of the College of the Marshall Islands.
To me, the fact that the College of the Marshall Islands has established the Public Policy Institute is a sign of the tremendous progress that this institution has made in a very short period of time. Three short years ago, this college was on the verge of losing its accreditation from the Western Association of Schools and Colleges, which would have almost certainly required it to close its doors. Closing the doors to this college would in turn have closed the door on the future to countless young Marshall Islanders for generations to come, depriving this country of its almost exclusive source of locally trained teachers, nurses and other professionals.
In the Fall of 2004, we convened an emergency task force that included the college, the Government of the Marshall Islands, my office, the good offices of the U.S. Ambassador, the Pacific Post-Secondary Education Council, and others. I personally attended the first meeting of the task force here in Majuro in October 2004, and we helped the College put itself on the road to recovery. A crucial component of that plan was an ambitious capital improvement plan to shore up deficiencies in the Colleges aging campus. The Nitijela approved a plan to provide $3 million annually to support this plan with Compact funds and funds from other sources. I had the pleasure of touring this campus earlier today and must say that I am astounded by the progress that has been made thus far and by the progress that is on the way. I toured the site of the future lab school for elementary and junior high school students here in Uliga who were forced to abandon their decrepit and unsafe former school site. This exciting plan will leverage resources in a manner that will simultaneously improve elementary and post-secondary education in the Marshall Islands.
Another urgent priority for our emergency task force was to find effective leadership for the College. A few months after our initial meeting, the College’s Board of Regents was preparing to offer the job to Wilson Hess, who had very impressive credentials as a college president in Maine. I happened to be in Majuro during Mr. Hess’s first visit to the Marshall Islands. He attended a Chamber of Commerce luncheon at which I spoke. I directed a few remarks to Mr. Hess. I essentially said that Mr. Hess, as a statesider, might soon be asked to consider moving his family thousands of miles away to a remote atoll in the middle of the Pacific. That would be a very difficult decision to make. I pointed out to Mr. Hess that in that room with us on that day were a number of bright, talented former statesiders who had made that very same decision and decided to make these islands their home forever. If I recall correctly, former statesiders in the room on that day included Al Fowler, Jack Niedenthal, Jerry Kramer, Giff Johnson, and many others. And I said to Mr. Hess, that if you want to know what’s so special about these islands that would inspire someone from the states to give up everything on the mainland and make this place their home, ask these people. And he did. And I don’t know what they told him, but whatever it was must have been compelling because he’s been here doing a great job for the past two years.
Three years ago, this College was grasping for a miracle just so it could keep the lights on. Today, with the Public Policy Institute, it has shown that it is no longer focused on merely surviving, but is actively seeking to make a contribution to the intellectual life of the Pacific. I don’t know if my speech tonight will advance that objective, but I believe that it’s inspiring that the College has put itself in the position to host such a program. I am very exciting about all of the wonderful things that this College will be able to do, all of the contributions that it will be able to make to this community, when it finally frees itself of the last vestiges of its academic sanction. I am confident that it will do so in the near future, and thank everyone who played a role in making it happen.
I’ve been invited to the Marshall Islands to speak about something that is planned to occur almost 2,000 miles away from here: the military buildup in Guam. That isn’t so strange when you consider the cultural, political and transportation links between the two Micronesian island communities, which are likely to cause events in Guam to be felt here in the Marshalls. That is especially true given the magnitude of what is planned to happen in Guam.
The title of my remarks tonight is “Guam’s Military Expansion Must be Good for Guam and Good for the Neighborhood.” This is a quote from my boss, Secretary of the Interior Dirk Kempthorne.
The Department of Defense is planning to transfer approximately 8,000 Marines and 9,000 family members from Okinawa to Guam at a cost of more than $10 billion. This cost will be shared between the U.S. Government and the Government of Japan. The existing U.S. Navy and U.S. Air Force bases on Guam will also undergo improvements costing additional billions of dollars.
The Department of the Interior has a great interest in these developments. The Department has two responsibilities that connect us to the realignment of Pacific forces. First, the Department of the Interior is responsible for generally administering the Federal Government’s relationship with the United States territories, and for administering the financial assistance that the U.S. provides to the freely associated states, including the Republic of the Marshall Islands, under the Compacts of Free Association. Second, the Department of the Interior chairs the Interagency Group on Insular Areas, which is tasked with coordinating Federal policy with respect to the U.S. territories.
The Interagency Group on Insular Areas, or “IGIA”, was re-established by President Bush on May 8, 2003 when he signed Executive Order No. 13299. The President designated the Secretary of the Interior as the presiding officer of the IGIA, and the Secretary of the Interior has offered the services of the IGIA to the Department of Defense to help coordinate Federal agency participation in this important base realignment project. In this regard, the IGIA has established a Working Group on Guam Military Expansion to address issues related to the military buildup. In addition to Defense and Interior, the Working Group includes the Departments of State, Agriculture, Health and Human Services, Labor, Justice, Transportation, Housing and Urban Development, Education, Veterans Affairs, Navy, the Small Business Administration, Office of Management and Budget, and others. We view the Guam relocation as a project of the Federal Government, not merely the Department of Defense. We are also working closely with the Government of Guam and Guam’s Delegate to the U.S. House of Representatives, and will be working closely with the leaders of other island communities as well.
The Department of the Navy has established the Joint Guam Program Office, or “JGPO”, to coordinate the planning and implementation of the buildup. JGPO is led by Retired Marine Corps General David Bice, who reports to the Assistant Secretary of the Navy for Installations and Environment, B.J. Penn. I work very closely with General Bice on the interagency coordination effort within the Federal Government and on coordination between the Federal Government and the Government of Guam.
General Bice and I host quarterly meetings of the Interagency Task Force, which was formed specifically to identify and address the impacts of the buildup on Guam. The most recent Interagency Task Force Forum was held last week at the Pentagon, and was attended by a delegation from Guam led by Governor Felix Camacho. The Interagency Task Force includes five subgroups that focus on (1) labor and workforce issues, (2) civilian infrastructure needs, (3) health and human services requirements, (4) the environment, and (5) socio-economic issues. Each of these subgroups has been working hard with the Government of Guam to identify issues that we will need to address in order to the buildup to proceed smoothly, and to develop strategies to address those issues. As we have become immersed in these issues, one thing has become abundantly clear to all of the participants: we all have a great deal of work to do.
I would like to speak in a little more detail on labor and workforce issues, since these issues present a potential opportunity for the people of the Marshall Islands.
The relocation of Marines from Okinawa will require the construction of a new U.S. Marine Corps base and other facilities to accommodate 8,000 Marines and 9,000 family members. It is anticipated that such construction will require 12,000 to 15,000 skilled construction workers. Currently, the number of journeyman construction workers that are labor-eligible on Guam is limited. It is estimated that 75 percent of such workers will have to come from outside of Guam.
Where will these workers come from? The fifty states could in theory provide all of Guam’s labor needs. However, because of Guam’s great distance from Hawaii and the U.S. mainland, we have not counted on being able to rely upon labor from the fifty states. Hawaii is by far the closest state to Guam, and its construction industry has been kept very busy recently. If construction workers in Hawaii can find all the work they need in Hawaii, it would be difficult to entice them to Guam. This is especially true because the pay scale on Guam is generally lower than that in Hawaii and the other U.S. states. It will be interesting to see whether the sub-prime mortgage issues that the U.S. economy has been dealing with lately will significantly dampen the availability of credit for commercial construction projects in Hawaii and the Western U.S., including Las Vegas. If this happens, and we hope that it doesn’t, it could result in a significant downturn in construction activity in the fifty states. This, in turn, could motivate more skilled construction workers from the fifty states to consider opportunities in Guam.
Other potential sources of labor for the Guam buildup exist in nearby Asian and Pacific nations, particularly the Philippines. I’m excluding the Marshall Islands and the other freely associated states here, as I will discuss them in a moment. These Asian and Pacific nations collectively, and in many cases individually, have more than enough skilled construction workers to satisfy all of Guam’s needs. Workers from these nations, however, require H-2B visas in order to work on Guam. H-2B visas allow the importation of temporary workers to the U.S. for temporary jobs, and nationally only 66,000 of them are issued annually. The Guam requirement for construction workers alone is approximately 20 percent of this nationwide cap. Clearly, without a change in the law, our ability to get the needed construction labor from these Asian and Pacific nations—again, excluding the freely associated states—will be very limited.
Well, such a change in the law has indeed been proposed. H.R. 3079, legislation that would federalize the immigration system of the Commonwealth of the Northern Mariana Islands, was recently approved by the U.S. House of Representatives Committee on Natural Resources. The version of the bill reported out of committee would exempt Guam from the national cap on H-2B visas, allowing Guam to bring in all of the construction workers that could be demonstrated to be necessary for the military buildup or other projects. The passage of this legislation in its current form is not yet certain. For one thing, the companion bill in the Senate, S. 1634, does not currently include the H-2B visa cap exemption for Guam. Also, the current CNMI administration is funding a vigorous lobbying effort to defeat H.R. 3079, notwithstanding the fact that it would offer the CNMI and Guam unprecedented flexibility within the U.S. system to bring in the workers, tourists and other visitors necessary to build a strong economy. An earlier lobbying effort by the CNMI government in the late 1990’s and early 2000’s resulted in the House defeating a CNMI immigration federalization bill that had been unanimously passed by the Senate. It should be noted, however, that circumstances are drastically different this time around.
The last potential source of labor that I will discuss is the one of most interest to most of you in my audience today: Citizens of the U.S. territories and the freely associated states, including the Marshall Islands. Although there are many legal and cultural distinctions between citizens of the territories and those of the freely associated states, I will discuss them together for two reasons. First, citizens from both the territories and the freely associated states can travel to and work in Guam without obtaining a visa. Second, the number of skilled construction workers from both the territories—especially the nearby Pacific territories—and the freely associated states is rather limited, giving rise to the challenge to train these potential workers as quickly as possible in order to avail of their access advantage for living and working in Guam.
That access advantage may effectively be erased if H2-B visa caps are lifted for Guam. Opportunities for newly skilled laborers from the freely associated states and territories could also be diminished if a downturn in the U.S. construction industry were to attract a higher-than-expected number of experienced construction workers from the U.S. mainland to Guam. In any event, however, if a significant number of workers from the freely associated states could become qualified for skilled construction jobs in Guam, it would be good for the freely associated states and good for the U.S.
As you know, the Compacts of Free Association allow citizens of the freely associated states to travel to the U.S., including its territories, without a visa and stay indefinitely to work, study or simply live. Guam has always received a significant number of migrants from the freely associated states, although most have been from Chuuk, other parts of the Federated States of Micronesia, and Palau. If you look at a map of the U.S.-affiliated Micronesian islands, the Marshall Islands are situated in the northeast corner, poised like an arrow pointing up at Hawaii and beyond to the U.S. mainland. The Compact migration patterns of the Marshallese have traditionally followed that arrow.
Officials from Hawaii have long complained that Compact migration puts a strain on their local resources for social services, law enforcement and infrastructure. For our part, my office has consistently pointed out that Hawaii receives a great deal of benefit from the Compact, and that many Marshallese migrants are contributing to the dynamism of Hawaii’s economy. Also, millions of dollars are paid each year to Kwajalein landowners for the right to use the U.S. Army base in Kwajalein, and it is logical to assume that a significant share of that money ends up in Hawaii. Still, it is true that Hawaii receives a significant number of migrants from the Marshalls and other freely associated states that may not yet have the skills to be net contributors to the economy. For that reason, my office is committed to provide $600 million over 20 years in “Compact Impact” grants to Hawaii, Guam and other Pacific territories that receive migrants from the freely associated states.
It is important to note that “Compact Impact” grants should not stigmatize communities from the freely associated states as being burdens on the states and territories to which they migrate. Thousands of Marshallese, for example, have migrated to Arkansas and Missouri to work for Tysons and other companies. There has been no outcry from those states that the Federal Government should provide them with “Compact Impact” grants. To be fair to Hawaii and Guam, however, Marshallese travel the great distance to Arkansas or Missouri for one reason only: to work. These Marshallese workers are net economic contributors to the communities in which they live. Most citizens of the freely associated states who migrate to Guam or Hawaii also do so to work, but because of the proximity of these places to the freely associated states, they could also be expected to attract a higher proportion, as compared to the U.S. mainland, of citizens who are not yet ready to be net economic contributors. If we could help some of these migrants and potential migrants to acquire the skills necessary to participate in the Guam military buildup, we would simultaneously be furthering a number of objectives. We would reduce the pressure on Hawaii and Guam to address the needs of migrants who do not yet have the skills to be net economic contributors. We would provide citizens of the freely associated states with skills which could be converted into good jobs, which in turn could take pressure off of the social service budgets of their home countries and the places to which they migrate, and create more income for their home countries in the form of remittances. And, not incidentally, it would help us find the labor necessary to implement the Guam military buildup.
Keep in mind that the job opportunities on Guam will not be limited to those 15,000 or so skilled construction jobs. The needs of Guam’s current population have already overrun the capacity of its civilian infrastructure, which will have to be significantly improved and expanded in connection with the military buildup and the population increase that will come with it. That population increase is estimated to be 35,000 to 40,000 people or more, an increase of over 20 percent, mostly civilians. All of these new people will need places to live, places to shop, places to dine, products and services to buy, roads to travel on, utilities to serve them. All of these needs will give rise to business opportunities and job opportunities. These people will also need places to visit for a change of pace, and many nearby island communities will be waiting to fill that need. Majuro is only a four-hour direct flight from Guam.
In order for the Marshall Islands and other island communities to be able to take advantage of this potential increase in tourism, they will have to make the commitment to make their islands pleasant destinations for tourists. Natural beauty is not enough. Tourists today expect good service, good amenities, good logistics, good infrastructure and an overall pleasant experience. In order to achieve all of this, the private sector, not bureaucrats, will have to take the lead. However, the private sector must be supported from the highest levels of government, which must be absolutely commit itself to provide a business climate that will enable the private sector to effectively develop the tourist economy. I have said in the past that Pacific economies are “upside down in the middle of the ocean,” with bloated governments suffocating the private sector rather than strong private sectors leading economic growth. For Pacific economies seeking to capitalize upon opportunities in the region, this model simply won’t do.
A number of citizens of the Marshall Islands and other freely associated states already have the skills to participate in the economic activity that is expected to be generated on Guam or otherwise from Guam, including tourism opportunities. Many more, however, will need to be trained. Clyde Bishop, U.S. Ambassador to the Marshall Islands, has stressed the need for this type of training. We don’t have much time, however. The construction required for the location of Marines is scheduled to start in 2010 and finish in 2014. Since it typically takes an apprenticeship of three to five years to qualify as a journeyman in one of the construction crafts, the time available to train people from scratch is extremely limited. Keep in mind, however, that Guam’s economy will generate opportunities other than those for journeyman construction workers, and there should be plenty of opportunity left over after the people of Guam have been properly taken care of. And in any event, training for the citizens of the freely associated states will be beneficial to the freely associated states and to the U.S. regardless of whether that training is ultimately put to use in Guam, in Hawaii, on the U.S. mainland or back at home.
We’ve been contemplating these issues in Washington, in consultation with our colleagues from the islands. We’re looking at training programs that could be implemented in Guam, the Northern Mariana Islands, Hawaii and the freely associated states. We’re discussing eight-week boot camps that could provide some training for unskilled labor. We’re discussing apprenticeship programs. We’re looking at how the private sector can help. We’re discussing the existing capabilities of the community colleges in the region, and how we can help to expand those capabilities. We’re looking at possible Federal funding sources, although the Federal Government cannot do this alone. The U.S. Departments of Labor and Education are looking at their resources, and my office will almost certainly assist the training effort with technical assistance grants. We can also use funding provided under the Compacts of Free Association, provided that the governments of the Marshall Islands and the Federated States of Micronesia believe, as I hope they do believe, that this is a high enough priority.
We’re still in the process of figuring out who can bring what to the table, and it will take a great deal of communication between the Federal Government and the islands in order to get this right. The colleges are our natural partners in this endeavor, and we need your help to figure out how we can leverage our resources with your resources, expertise and commitment in order to get the most out of our efforts. Those of our partners who are willing to bring the most to the table are likely to get the most out of it, and the people of the islands will benefit.
In June, I had the pleasure of accompanying my boss, Secretary of the Interior Dirk Kempthorne, on a tour of the U.S.-affiliated Pacific islands. Assistant Secretary of the Navy B.J. Penn was with us as well. Our tour included stops in Kwajalein, Ebeye, and here in Majuro. Everywhere we went, people wanted to know about the Guam military buildup. And everywhere we went, Secretary Kempthorne stressed the need to ensure that Guam’s military buildup is “good for Guam and good for the neighborhood.” To remove any doubt, the “neighborhood”, as Secretary Kempthorne envisions it, includes the entire U.S.-affiliated Pacific, and certainly the Marshall Islands. If the project is planned and implemented properly, Secretary Kempthorne’s vision will indeed come to pass, and the military expansion on Guam will be good for this entire neighborhood.
In order for us to realize this positive scenario, we will have to do our homework. We will have to identify critical path items and potential bottlenecks, and find ways to ensure that we address our challenges in a timely fashion. We don’t have all of the answers yet, but we have begun in earnest the task of identifying issues and developing solutions. This effort will take a great deal of collaboration among the Federal Government, the Government of Guam, the people of Guam, the private sector and peoples of the islands, including the Marshall Islands and the other freely associated states. With its central role in providing support to the islands, the Department of the Interior is prepared to do its part to make sure that this massive endeavor is good for Guam, good for the neighborhood, and good for the United States of America.
Kommol tata.
A Commitment to Sustained Economic Growth: What Does That Really Mean?
Opening statement delivered by Chairman David B. Cohen at both the annual meeting of the Marshall Islands-U.S. Joint Economic Management and Financial Accountability Committee (JEMFAC), held in Honolulu on August 30, and the annual meeting of the Federated States of Micronesia-U.S. Joint Economic Management Committee (JEMCO), Honolulu, Hawaii, August 30 and 31, 2006.
Distinguished cabinet officers, members of the Committee and other dignitaries:
Good morning. I welcome those of you who have traveled to Honolulu for our annual meeting today. I deliver this opening statement not in my capacity as Chairman of this Committee, but as the head of the Department of the Interior’s Office of Insular Affairs, the manager of the grants provided by the United States under the Compacts of Free Association.
This week, the United States has the honor of hosting the annual meetings of both the U.S.-Marshall Islands Joint Economic Management and Financial Accountability Committee, or JEMFAC, and the U.S.-Federated States of Micronesia Joint Economic Management Committee, or JEMCO. In order to save paper, I have drafted a single opening statement to address both meetings. This is what we environmentalists call “recycling.”
I will confine my remarks to what I believe to be the single most important issue that we face today: How will the Marshall Islands and the Federated States of Micronesia achieve the type of private sector economic growth that will enable them to survive as economically viable nations after the Compact grants expire in 2023?
At the Third FSM Economic Summit, the nation’s leaders committed to a strategy of sustained economic growth. In fact, it does not appear that the FSM or the RMI have any choice but to commit themselves to the pursuit of sustained economic growth. The amount of Compact grants in 2023 will be substantially less, in both nominal and real terms, than the amount of Compact grants today. Even with today’s level of Compact assistance, economic growth is negative in the FSM and stagnant in the RMI. The standard of living in both the FSM and the RMI is determined almost entirely by the level of Compact grants and, to a much lesser extent, other aid from the U.S. and other donors. Unless Compact funds are spent in a manner that promotes sustained economic growth, the economic viability of both the RMI and the FSM will be threatened as Compact grants continue to decline.
Both the RMI and the FSM will receive income from Compact trust funds after 2023, but those trust funds in no way alter the urgent need for sustained economic growth. Even the most optimistic hopes for the trust funds would merely have them replace the level of grant assistance to be provided in 2023—a level of grant assistance that is much less than the levels that are producing stagnant to negative economic growth today. There is simply no escaping the imperative for both the RMI and the FSM to do everything in their power to promote sustained economic growth.
Let us then take this opportunity to remind ourselves of what it means to commit to sustained economic growth. First and foremost, sustained economic growth means sustained private sector economic growth. The public sector-dominated economies of the RMI and the FSM are heavily dependent upon foreign aid. A large public sector can only exist by draining wealth that is created elsewhere. Only the private sector can create new wealth, and therefore only the private sector can provide the engine necessary for sustainable economic growth. Additionally, in no particular order:
Distinguished cabinet officers, members of the Committee and other dignitaries:
Good morning. I welcome those of you who have traveled to Honolulu for our annual meeting today. I deliver this opening statement not in my capacity as Chairman of this Committee, but as the head of the Department of the Interior’s Office of Insular Affairs, the manager of the grants provided by the United States under the Compacts of Free Association.
This week, the United States has the honor of hosting the annual meetings of both the U.S.-Marshall Islands Joint Economic Management and Financial Accountability Committee, or JEMFAC, and the U.S.-Federated States of Micronesia Joint Economic Management Committee, or JEMCO. In order to save paper, I have drafted a single opening statement to address both meetings. This is what we environmentalists call “recycling.”
I will confine my remarks to what I believe to be the single most important issue that we face today: How will the Marshall Islands and the Federated States of Micronesia achieve the type of private sector economic growth that will enable them to survive as economically viable nations after the Compact grants expire in 2023?
At the Third FSM Economic Summit, the nation’s leaders committed to a strategy of sustained economic growth. In fact, it does not appear that the FSM or the RMI have any choice but to commit themselves to the pursuit of sustained economic growth. The amount of Compact grants in 2023 will be substantially less, in both nominal and real terms, than the amount of Compact grants today. Even with today’s level of Compact assistance, economic growth is negative in the FSM and stagnant in the RMI. The standard of living in both the FSM and the RMI is determined almost entirely by the level of Compact grants and, to a much lesser extent, other aid from the U.S. and other donors. Unless Compact funds are spent in a manner that promotes sustained economic growth, the economic viability of both the RMI and the FSM will be threatened as Compact grants continue to decline.
Both the RMI and the FSM will receive income from Compact trust funds after 2023, but those trust funds in no way alter the urgent need for sustained economic growth. Even the most optimistic hopes for the trust funds would merely have them replace the level of grant assistance to be provided in 2023—a level of grant assistance that is much less than the levels that are producing stagnant to negative economic growth today. There is simply no escaping the imperative for both the RMI and the FSM to do everything in their power to promote sustained economic growth.
Let us then take this opportunity to remind ourselves of what it means to commit to sustained economic growth. First and foremost, sustained economic growth means sustained private sector economic growth. The public sector-dominated economies of the RMI and the FSM are heavily dependent upon foreign aid. A large public sector can only exist by draining wealth that is created elsewhere. Only the private sector can create new wealth, and therefore only the private sector can provide the engine necessary for sustainable economic growth. Additionally, in no particular order:
A commitment to sustained economic growth means a commitment to identifying and fostering potential competitive advantages for the economy, and a recognition that the Compact itself is an important competitive advantage.
A commitment to sustained economic growth means a commitment to making significant reforms to improve the business climate—not as an end in itself, but as a necessary means of building a stronger and more prosperous society for all of the people.
A commitment to sustained economic growth means a commitment to getting government out of the business of competing with business—that is, getting the government out of commercial enterprise.
A commitment to sustained economic growth means a commitment to privatizing services that can be provided more effectively by the private sector.
A commitment to sustained economic growth means a commitment to nourishing, not stifling, the creative entrepreneurial spirit.
A commitment to sustained economic growth means a commitment to opening up the economy to foreign investment, because in a closed economy, a few well-connected businessmen get rich while everyone else stays poor. Indeed, a commitment to sustained economic growth means a commitment to proactively identifying and pursuing good outside businesses that can, together with local businesses, bring jobs, capital and opportunity to the islands.
A commitment to sustained economic growth means a commitment to making the approval process for foreign investment transparent, objective, fair, simple and quick.
A commitment to sustained economic growth means a commitment to streamlining the regulatory and permitting process.
A commitment to sustained economic growth means a commitment to ensuring that all businesses can compete on a level playing field, free from government favoritism.
A commitment to sustained economic growth means a commitment to tax reform—that is, designing a system that encourages growth and investment and yields sufficient revenue for the government to provide essential services.
A commitment to sustained economic growth means a commitment to land reform—that is, designing a system that protects cultural values but that gives businesses, government and the donor community the protection they need to build the infrastructure that’s necessary for economic growth.
A commitment to sustained economic growth means a commitment to developing a legal system necessary to support commerce and finance, including comprehensive contract law, sales law, secured transactions law and bankruptcy law.
A commitment to sustained economic growth means a commitment to true capacity building, so that government can develop the strong institutions necessary to protect the legitimate rights of those who engage in commerce and finance.
A commitment to sustained economic growth means a commitment to true capacity building, so that government can generate and report the economic statistics necessary to enable both the public and private sectors to make informed decisions.
A commitment to sustained economic growth means a commitment to public sector reform, so that the public sector can support, rather than get in the way of, the development of economic opportunity.
A commitment to sustained economic growth means a commitment to good governance and good financial management.
A commitment to sustained economic growth means a commitment to good infrastructure.
A commitment to sustained economic growth means a commitment to developing a work force that is healthy, well trained and well educated.
A commitment to sustained economic growth means a commitment to spending Compact funds not for short-term political gain, but to build the solid foundation necessary to give our children hope for the future. A commitment to sustained economic growth means recognizing that there is not enough money in the Compact to do both.
A commitment to sustained economic growth means having the wisdom and self-honesty to recognize that we are way behind schedule, and that further delay threatens the future of our children.
Most of all, a commitment to sustained economic growth means having the courage and the political will to face reality and do what’s right.
We now look forward to hearing your vision for fulfilling all of the commitments that are necessary to secure the future of your nation and its people. I’m sure that we will have plenty of questions, but our main questions will be these: What can we do to help? How can Compact funds best be deployed to support your vision? How can we work together to make your vision a reality?
It is now up to you to articulate a credible vision for sustained economic growth, and to take ownership of that vision. We are here to listen and to lend support. The vision is yours. The future is yours. The floor is yours.
Thank you.
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