Media Center



September 13, 2005 - Washington, DC

Thank you Mr. Chairman and thank you everyone. Let me begin by saying that Alberto Rex said quote: “some of my colleagues have taken literally in their more than eighty years old and they still want to be in power. But that’s not what I was referring to.

I was saying that one should fight all one’s life but not remain in power all one’s life. I’d like to thank you for those kind words Mr. Chairman, Mr. Secretary General, and dear friend. Let me tell you one thing: I don’t lecture; I am very bored by lectures and therefore refuse to lecture and what is referred to in Spain as “lecciones magistrales.”

I’ve had ties with Latin America for over thirty years and for half that period I was President of my government. But I’ve been out of the presidency for nine years and at times, I tell anecdotes that explain what I mean. I’ve had more interviews on TV in Latin America than in Spain, between Venezuela and Mexico. When I was in office after having won by absolute majority, I had fewer minutes on TV to enter government than the amount of TV time I had between Venezuela and Mexico up until 1980.

I am one of those in Spain who believe (and there aren’t that many) that you can only understand Spain when you get to know LA. Many are surprised by this statement and there’s no other way of looking at Spain. As we see it, we don’t understand ourselves very well, what is this thing about Spain, what are the Spanish autonomies? Does Spain exist or not? Is it one nation or not? Only if you understand LA can you understand Spain. Thus, we do share something that is very serious, and it’s a problem of identity. And I thank you Mr. Chairman for your kind words. I’m not sure I deserve them. In fact, I think I don’t because when you say I’m concerned about the Middle East, which is true, and the problems of the world, I remember I said some years ago that the energy crisis was going to be a supply crisis. Incidents such as the Iraq conflict, the tension in Nigeria or the problems in Venezuela, etc. don’t really affect the substance of the problem. For the first time in the history of mankind, the current history of mankind, it seems obvious to me that we just don’t have enough supply to meet the demand, the continuous demand. If the world economy continues to function at the rates of growth that we have today, which I hope will continue and I’m talking about the world economy (I mean examples such as Chile), if that exists, we’re not going to have the necessary fuel to meet the demand so that’s what concerns me, not just in terms of supply and the tension it creates but in terms of prices. It creates problems in development, regional integration and it creates international tension and conflict and people didn’t see it that way but we’re only beginning to see it now that the barrel of oil is 60 dollars and things are becoming tight. There are some problems with that but we’re never going to be able to go back to the past. In fact, there’s not going to be any capacity to respond by providing enough fuel for the demand unless there’s some sort of world conflict, which I hope doesn’t occur.

Let’s go back to Iran; I went there a few months ago, the country of the Persians. And recently I visited Tel Aviv university and my fellow citizens say, “thanks goodness it’s only the Middle East and not the whole East because if not we couldn’t even live there with the amount of problems they have in the Middle East, imagine what it would be like if it were the whole East.” I established diplomatic relationships with Israel 20 years ago and in three months we will be celebrating twenty years. There were no diplomatic relations before my term. After the second oil crisis, oil reached prices whose equivalent price would be that of today’s 80 dollars a barrel. Don’t forget that, we hadn’t reached that figure yet. That was the value of oil in today’s dollar value, 80 dollars a barrel. And to establish diplomatic relations with Israel was difficult. I don’t have passion for power for power’s sake, that for me it has not been a goal but just a tool. So as soon as I was able to get rid of power, in fact I was tired of myself being in power for fourteen years, so I said to myself, I would never go back to government power. And you know what created emotion in me, it was only symbolic (it had symbolic significance) and it was the fact that in 1992, I overthrew the decree that exploited the Jews, that expelled the Jews, which had been decreed by the Catholic Kings five hundred years ago.

Now, I took the pleasure of overturning that decree, five hundred years later. It was great fun to get the Catholic Church to recognize its mistake; the Catholic Church sometimes does that, but I felt great pleasure in doing that but I’m not going to dwell on that, I’m not going to lecture, I’m going to talk about all the problems and I’m very concerned. I’m not seeing LA from the perspective of Europe but rather from the perspective of LA, maybe I’m wrong but I’m seeing it from LA’s point of view. Some years ago at a meeting of leaders, Belisario Betancourt said, “why don’t you suggest that you be appointed Representative of the EU in LA. That post doesn’t exist, but I would never accept it. He asked why. I said, “Would you accept if Latin America asked me to be representative of LA to the EU and not the other way around” and he asked why. “Because,” I said, “it would be the first time that LA would agree on something proactively. And not just to protect itself against aggression and that’s just to give you an idea of who I am so you can interpret me. I’m not a functional illiterate, I have to speak doubly in Spanish because I don’t speak English and because my brain continuous to function in an analog manner and not digitally.

So in order to adapt to the technological revolution, I had to translate from the analog to the digital. And I’m still concerned by basic problems. The debate in LA for the last twenty years has been about economic reforms and there have been many that have been undertaken, not always brilliant or completed, but many economic reforms and the GDP has grown more than the population so the GDP per capita has practically not grown in twenty-five years and I’m talking about the region. I’m not talking about the exceptions that exist everywhere. Unlike twenty-five years ago, the GDP is better distributed than twenty-five years ago and that’s the only success we’ve had and it coincides with the era of greatest democratic cope in LA because democracy is the only rule in LA now, not the exception, of course there are always exceptions. Antonio Machado said there’s never a rule without an exception; therefore the exception confirms the rule. But if we were to take that logic to extreme, our rule, that is well confirmed, would even be more of a rule.

So if we had a world full of exceptions, this would be the stronger rule. But ignore that. Those are just logical arguments. Today, we are living in the only emerging region in the world where we have widespread democratic systems and we see a certain failure in confronting the challenges of development in spite of the successive economic forms that have occurred. So we should ask ourselves why the hell we, the Latin Americans and the Spaniards, share this. Why is this happening? I can’t forget that when I came to government, and there’s a trick to what I’m going to tell you because the dollars we had then were not the same value as today’s. But my country had 4.5 thousand dollars in GDP per capita and today it’s 23 thousand or 22 thousand and its better distributed than when we had 45 hundred per capita.

When I left, we had 15 thousand. I don’t want to say that I’m proud of that figure but rather about the capacity that was created in Spain to identify themselves as people who were able to do something. They could do the same things that the French and the Germans had done and we could never do. And what was the difference? The fact that we did not have confidence in ourselves. We didn’t think we could do it. What’s the difference now? I am sure that we won’t discover any oil. In fact, it might be harmful to our country if we did because oil never leads to social economic development and in none of the models: Arab, African, Latin American has oil led to success. We didn’t even discover oil. All we said was that we could create our own oil; we could create our own wealth. And that was a new discovery and the debate in LA about democracy; many people say to us that democracy has failed. Those from my group, from the left, are saying democracy is failing. That‘s not what is happening. Democracy is not an ideology, democracy does not guarantee at least over the short-term, good governance. All it guarantees is that we can throw out the government that we don’t like, which is not insignificant. Dictatorships never guarantee that, whether they’re good or bad, they have a tendency to do it badly and continue to last and we can never get rid of them. So the only thing democracy guarantees is that over the long-term we can have good government because we are afraid of being thrown out. That is the virtue of democracy; it’s not an ideology and it is always found in democracy. Jose Miguel Insulza said that I was always a moderate. Well, I had the defect of being a moderate even when I was a young man. But since as a young man I was a moderate, as an old man I can continue to be moderate. But when you’re a revolutionary as a young person, when you become old sometimes you change completely. But that didn’t happen to me. To me democracy is not an ideology. Why do I stress this? Because in LA we must make sure that democracy becomes more democratic, in other words, more efficient, more transparent, more able to respond to the needs of the citizens and that there is both more democracy and more development. In the last few years, since I left government, I was often asked about my experience in the government. Why was it that Spain changed from so much to this and why is Spain modernized, etc.? And the older people who have the disadvantage of being older, but also have the advantage of having known Spain more than thirty years ago, look at today’s Spain and can physically see that there is something that is radically and deeply changed. And also, since they think I’m red or a socialist, they most probably think that I’m pink, they shouldn’t exaggerate, I’m not far left. Then they say to me, why don’t you talk about economic growth and social equity? And in Chile this happens to me often. Chilean businessmen are very efficient but very ideological, they agree with what the government of Ricardo Lagos is saying but continue to vote to the right and they say to me I do institutional policy I don’t tell the left what they want to hear and or the right what they want to hear, I tell them what I think. That’s the only way I can function, otherwise, I cannot succeed. So, if in Mexico I’m a leftist and also a democrat I’d be in danger. So they ask me to speak and I say you need to have economic development with equity. And the figures are the same ones I quoted twenty years ago. Twenty-five years ago, GDP did not go by more than one point but there’s worse income distribution. Therefore, there are people who are suffering. This is not the worst continent in the world as some say but it is the most uneven. Some confuse it with the poorest. It’s not the poorest. Africa is despairing poor. But the problem here is that income is not distributed evenly. We don’t have the income that produces growth. So when they ask me to speak I say I don’t want to talk about economic growth and social equity. I want to talk about economic growth and income re-distribution. Because if economic growth is presented as a technical problem and income re-distribution as a moral problem, then you’re really setting a trap for me. And I would say to the Chilean businessmen, about equity, I’m sure the Pope could speak with greater moral authority and can let him speak about equity. I’m going to talk about income re-distribution. I am deeply concerned why. Because after an era of neo-liberal fundamentalism, we have come (we could enter) an era of demagogic populism against fundamental neo-liberalism and both are perverse, whereas in an economic policy, you have to be pragmatic. I know it’s a sin in Latin America to speak about pragmatic things. It seems as if you are renouncing certain beliefs, but if you went back to classic ideas, pragmatic ideas, he who has ideas can convert them into reality. Not he who has ideas that never become a reality. And that is continuously Utopian. You cannot change the reality of a country if you’re not pragmatic. So, I often say in spite of the clash we have with the USA and its economic policy, that we need to be pragmatic and it’s true, the US is very pragmatic in its economic policy but ideological in other things. So when they need a deficit, they have a deficit. You shouldn’t exaggerate but they do allow it. And when they can have a surplus they have a surplus. Their economic policy is very pragmatic. And they have magicians behind them, such as Greenspan, who creates those pragmatic policies, but unfortunately he’s retiring. But instead, we have ideological economic policies. We need to abandon that in order to bring about that. There is no lack of ideas. Believe me, every single time I think about the needs for development in LA and I see the lack of infrastructure, basic infrastructure for development, I discover that every project that needs to be built CEPAL discovered it twenty-five years ago. Everything is in the papers of the IDB, in the papers of the World Bank, in the documents of all LA institutions. The problem is that nobody takes it from paper to implementation; nobody transforms it into an operational and viable project. I realize “nobody” is an exaggeration like any kind of statement of this type, but what we need is democracy plus efficiency. We need to forget about this ridiculous democracy with ideology because I have been a democrat and pragmatic at the same time. That’s why I was never a communist because I didn’t like the options offered to me, neither Franco nor the other options. So, I had democratic convictions and now I see that many of the believers make democracy into an ideology when it’s just a tool for governance and coexistence that can be improved upon. And it can be improved. But look at it: from Rio Grande down to Patagonia. Many Latin American governments have presidents who legitimately enter office with absolute majority and never have twenty percent of the parliamentary true representation. Everything is out of sync. Last year in Latin America I saw president Leonel Fernandez clearly win the election against President Hipólito who was my friend and Leonel Fernandez was as well. And yet when he went to government, he was there legitimately, fully legitimately and he had to bring about reforms in Parliament with PRD having 33, 22 of the party that had just won the elections and two of the PRD and two from other parties against him. And I say, how can you bring about a fiscal reform under such conditions when you have such a limited term in office? So, we have a problem with the functioning of our democracy. I’m very concerned by the fact that when the policy fails, people (very educated, very knowledgeable, political people) say the presidential system doesn’t work, it doesn’t function. We need to have a parliamentarian system. It may be that it’s just the president in power that doesn’t work but presidentialism and parliamentarism are two versions of democracy and both can be completely satisfactory or totally unsatisfactory. We have many problems with governance. We’ve been a bit distracted since the eighties’ crisis. We’ve been distracted by economic reforms and have ignored the functioning of our institutions. In Ecuador, President Gutierrez, who is the fourth up going president in the last ten years came to power with six deputies of his party of the one hundred in Parliament. And however presidential the system may be if he only has such a small group of parliamentarians supporting him somehow or other he’ll have to leave office. So we have a crisis in our democratic institutions and maybe we need to clear some of the cobwebs from our heads. So many years of authoritarianism, which I experienced in my own country, more than half of my life I lived under a dictator, so I understand that we continue to have authoritarianism even though we claim we don’t. We have two faces, the physical and the legal face, and we don’t venture to exercise authority and to change the system so that the vision of power is generally efficient and does guarantee security. There is no freedom without security. You can’t feel free if you feel unsafe. If you can’t feel safe in the streets, if you don’t feel safe that the legal system can protect you, you can’t have freedom. These reforms must occur before or during any successful economic change. You can have a good definition of an economic policy but it will not succeed unless you have good democratic institutions. And if you don’t have that, you are not going to have good long-term sustainable development. And in terms of development, I just talked to you about what concerns me. I was asked to talk about social equity, the fight against poverty and moral problems. Yes, that’s true, but it’s also an economic problem. In Latin America, there will be no development, no relevance, and no notable economic development as long as the level of poverty that exists continues. Some people will say: well, poverty is not a good business if you want to make LA a relevant continent, you can’t have so many millions of people without access to the market or marginally within the market. And given what I said earlier about being pragmatic in terms of economic policies, I’m tired of people saying, well, first we need to accumulate savings and capital during periods of growth. And then, only when we have enough capital, only then can we begin to distribute them on a trickle down basis and once the table is full, the surplus will fall over and trickle down to the people who are living in poverty. But before we reach that period of course, a crisis usually occurs. We therefore do not distribute income because first, we still need to continue accumulating capital. But then the crisis occurs. We say no, during the crisis period we cannot pre-distribute so we spend twenty-five years having a negative re-distribution of income and again let me stress that income and pre-distribution are important. The left talks about the re-distribution of wealth and you know the trick of the leftists. They are considering distributing the wealth among themselves but they are not so concerned about how that wealth can be created. And the far right, the conservatives, are very concerned about creating wealth but they never find the right moment for re-distributing the surplus. I think that it’s a tragedy for development because you need to both grow and re-distribute and given the present globalization panorama, we are not going to be able to re-distribute directly through wages although we should invest to generate jobs. But south-south competition is not going to allow wages to increase and serve as a direct means of re-distributing income and that won’t help us balance income. So POLICY with a capital P has to bring about income re-distribution from the respective State by providing basic health, education, equal opportunities to public services, which the State can provide and developing indirect re-distribution mechanisms which do not harm the competitiveness of their corporations in the economy and yet are indispensable to free up those incomes, those resources of people who do have a job and could then access the market. This isn’t a great discovery; it’s elementary, as I was saying last night. Someone said it’s the most serious things you have to joke about and say the unimportant things in a solemn way or else people will realize it’s a stupidity. So let’s have some humor, Grancchi, an Italian revolutionist, who said he was a communist...Do you remember who he was? He said he was an optimist by will but a pessimist by intelligence. So he could see the will of the communist revolutionaries and he felt that it would be the engine to change history but his intelligence told him it wouldn’t work. But now we have the opposite challenge: intelligence allows us to see and to realize that LA can or does have economic and democratic responses in hand. But when we think about the will, we don’t have the will to do that, to do what is necessary for things to change. There’s no will in each to make national agreements, to join our efforts, not to idealize that which should not be an ideology. We need to create a consensus, we need to do policies for the benefit of the people instead of continuing to say what politicians like to say which is: what you’re doing now is not going to keep you in power, it’s not going to help you instead of thinking is this going to help the people or not because whether it helps you or not is irrelevant. It’s like the doctor who said: What you’re proposing to the patient is not good for you as a doctor. Well, that’s not important. My job as a doctor is to tell the patient what’s good for him, not what’s good for me. That’s why we are exasperated with this situation today. I began talking about fuel and I am going to end by talking about energy. LA has to develop an infrastructure which serves as a bottleneck for its development. But we need to develop telecommunications, we need to develop energy, we need to develop water. If LA does not develop that infrastructure, and does not educate its people to be able to compete in this society of knowledge or digital society or however you want to call it, there aren’t going to be any opportunities. But if you do not develop your basic infrastructures, those that have been in the papers of CEPAL and ECLA for the last twenty years and continue to be there are not going to have any development. You are actually a privileged region in terms of energy. When you look at Katrina decrease supplies in ten percent and that causes a monumental economic impact. And then you think about the amount and the quantity of energy this continent has both renewable and not renewable energy according to our analysts. If you look at the energy in our continent, energy exists everywhere but I am focusing on this country, energy is a strategic variable for development and it’s a strategic variable crucial for regional integration. We despair in say that there are no power links between those countries that have surplus energy and are not exploiting it or are exploiting it in a deficient way and those countries that can develop and don’t have sufficient power or have an insufficient network. So this is a strategic variable that is crucial for economic integration. We cannot waste time if we need the necessary investment in order to extract or develop our energetic resources. It’s also a strategic variable that is crucial for our international relevance, in other words, for peace. Latin America is not a threat and it’s even less relevant in today’s world. But its relevance will be due to the fact that it does not present a threat but it does know what to do with its own resources, with its own strength. Now there is one question which I’d like to address to those that have similar way of thinking to my own, that is, for the left. In regards to government savings, public savings, the State or Government in the foreseeable future will not have the capacity to develop and perform its function that is, to provide justice, security, basic education and basic health. It will not be able to provide that and have enough economic capacity to develop the infrastructures required by LA. So, it will have to resort to any savings available, wherever it can find it. And all the available savings is in private hands. So the State’s function is and will continue to be a regulatory function. Thus, the State must make itself attractive to private savings. It must provide a regulatory framework that allows for infrastructure investment projects to be viable. To resign oneself to the fact that energy will not reach the people because it’s the State’s job. To resign oneself to the fact that drinking water will not reach them because ideologically it can only be done by the State is a huge and dramatic mistake. It is nearly ideology that refutes the capacity this continent has to change. I know I have spoken too long, but believe me, now that Clinton will bring us together in New York to talk about the challenges of globalization and that we have focused our attention in LA, I would say that the diagnosis for LA can be summarized in two words: no more democracy, in terms of having “democratitis”, but more democracy that is much more efficient, much more transparent. A democracy focusing more on serving the citizen rather than serving the leaders. Unless we bring about these democratic reforms required by LA, any economic reform will be a virtual reform but not a real one. It will remain in the textbooks, but it will never be implemented in each one of the countries in our region. But we need to have more development. In Southeast Asian countries, countries that are booming, and where people say they have more conditions for development; in fact they have fewer opportunities. China has to buy most of its fuel abroad for instance, and yet it’s doing so, it’s doing so, it’s buying twenty and thirty years ahead and we can’t reproach them for that. It’s a blessing because it’s solves the problem for a quarter of humanity and in ten years, as it happened fifteen years ago, when we saw the Japanese taking pictures all over the world. In ten years, we will see Chinese people taking pictures all over the world. The only difference is that there are many more of them. There will be millions of Chinese with cameras coming out of elevators in hotels and they will be major consumers in a global market not just an internal market. So I’m not scared about this phenomenon. Instead welcome to the Chinese, but if they can do it, why can’t LA do it. There’s no reason why LA can’t do it. They’ve started at a much lower level, lower point, so why can’t LA start up and develop and have sustained development? But we need to have policies that favor investment and employment. One thing is to say it and the other thing is to undertake a fiscal reform that can’t contradict the needs for investment and employment. We politicians also need to know that a fiscal reform is to have two objectives: one, national priority and second collecting taxes and the other the rest you will have enormous contradictions and it will slow down investment and slow down job creation. The second objective is to develop the fiscal infrastructure and human infrastructure. For fiscal capital infrastructure LA has no money. But we must bring in private capital with the proper regulatory framework and the political will to allow investment to lead to the development of these infrastructures. Otherwise, it will not occur. And we must deal with the other main strategic variables: one was energy as I mentioned before, but the second most important variable for development are its human beings, the men and women of LA. When I see that in Ecuador 25% of the population are under 35 years of age and they leave the country within a four and a half year period, it’s not only biblical exodus, but it’s a problem of hemorrhaging of human capital which is very difficult to recover later on. And if that happened to my country I would say that between 2000 and 2005 eight and a half million Spaniards under the age of thirty-five left my country. It’s the equivalent. Human capital is a fundamental strategic variable. Men and women are the ones that must be given priority and attention by politicians because the medium and long term sustainable development in LA depends on them. So what’s the conclusion we can draw? Some say I’m a pessimist, others an optimist. I am a qualified optimist. But I continue to be an optimist. I sometimes think we know what we have to do but we don’t have the will to do so. And I have often seen that there are many other people that see what I have said. They have the opportunity to do it but yet they don’t do it. And I would like to try and at least convince those who are in power to do so. It’s in their hands to bring about this change. And I think together we can all do it.