Earl Anthony Wayne Interview: Conversations with History; Institute of International Studies, UC Berkeley

U.S. Economic Policy after 9/11: Conversation with Earl Anthony Wayne, Assistant Secretary for Economic and Business Affairs, U.S. Department of State; December 13, 2004, by Harry Kreisler

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Economic Issues after 9/11

I want to explore some of the interesting tasks that come under your portfolio as a result of 9/11. Your job as Assistant Secretary of State for Economic and Business Affairs, over and above the difference between a Democratic and a Republican administration, would have been very different in the nineties. Talk a little about that. You didn't hold the position then, but what are the important differences that somebody with the economic portfolio would see because of 9/11?

There are two differences that are very important. There are a couple of continuities, which is that global growth is very important; economic prosperity was always important. Trade and investment were very important already in the nineties; they're very important now.

After 9/11, as we were thinking about some of the things we had been doing and some of the new tasks, we came to the realization that we needed to call some cluster of issues "economic security." That means some of the things that are clearly tied to 9/11, like going after the financing of terrorism, or tightening aviation and maritime security in a way that still allows transportation and communication to go forward, but in a more secure way. At the same time, it reminded us of the importance of energy security. How many sources of oil and gas are there in the world? Can we develop more sources? What do we need to do to improve the investment climate in some places or to increase the capacity to produce?

Also, we were reminded that for countries that are in the front lines of terrorism, this isn't just a political and security challenge; it has an economic effect. What can we do to help bolster them economically? One very simple example of that was Pakistan, when we decided that we needed to respond to the Taliban in Afghanistan. Pakistan not only had some political choices to make, but they had the prospect of some of the trade being ended, and trade with us. They were selling us a lot of textiles, so an American textile buyer might have said, "Uh-oh, this is a war zone. We'd better shift our production elsewhere."

We quickly realized if that happened, it would create more unemployment in Pakistan. That would undermine the government, that would make it harder for them to adopt the right kind of tougher anti-terrorist approach that we wanted. So we started finding ways both to help maintain that textile trade, and to help them in economic reform, help them deal with some of their outstanding debt problems. And we did that in several other places around the world. So that's a bit different.

The other area where there's a difference is in development policy. Now, this is not solely due to 9/11, but I think you remember in the 9/11 Commission Report, they pointed out the importance of having hope for young people in the Islamic world -- job creation and prosperity, trade, investment. That meant that we needed to think differently about development policy. It's not that there's a direct link of development policy and prosperity to terrorism, but [people who] don't have the hope of a prosperous life may often be enticed more easily to other, more radical options.

So we started some very serious rethinking of our development policy, requesting authorization for some really pretty radical new programs in development and for new monies. In the first three years of President's Bush's administration, we increased our development assistance by 60 percent. We have a new program called the Millennium Challenge Account, which is aimed at reinforcing those countries who are doing the best possible with their existing resources. So there's been a lot of rethinking going on in that area, realizing that it is important for America and the world.

President Bush has a two-pronged agenda. One falls under the notion of preemption or prevention, acting before the terrorists act; the other is transformation. Let's talk a little about how somebody with your portfolio deals with preemption in this agenda of stopping the financing of terrorists. Once you are given that job and you roll up your sleeves, what are the things that you come up against -- the privacy laws, the unwillingness of corporations to disclose the movement of funds? Or is it, rather, traditional organizations, the way Islamic charities do their financing and operate different from modern institutions? I've thrown a lot at you, but I want to help people understand the nuts and bolts of implementing this.

It's those things and a bit more. One of the items to remember about in the financing of terrorism is it doesn't take a lot of money to finance terrorism. It's not like the drug trade, where all of a sudden you've got millions and millions of dollars floating around that you can find. It is small amounts of money getting to certain individuals at the right time and the right place. So it is a much more complex challenge, where you need to bring intelligence information, law enforcement information, together with financial information, and then diplomatic and other means, to talk to other governments and get cooperation to act in a timely way.

Since most of this money is not flowing through the United States, you need a coalition of countries and good partners who are willing to work with you and make some of the same hard organizational shifts that are required to track the money and track the individuals. In doing that, we have discovered that there are certain institutions that need to be changed. In a lot of Islamic charities, there was no supervision going on. It didn't mean that most of the money going into the Islamic charities were going to terrorism. It wasn't. It was going to good deeds, and there were good people who are trying to disburse it around the world. But some of it and some of the organizations were being abused by people, and there wasn't tight scrutiny. In fact, we learned all over the world there was perhaps not as tight scrutiny as we would have liked in charitable operations, Islamic or non-Islamic. So we needed to look at that.

We needed to look at the rules and the norms and the standards that we set for things like wire transfers, the transparency that was required to know who sent the money to whom. So we started working in an organization called the Financial Action Task Force, which is Paris, with about thirty countries to start defining norms for the wire transfers, norms for charitable oversight, norms for knowing your customer, and building a up a consensus, internationally, of how to go forward.

Now, at the same time, we were going after individual terrorists and individual terrorist groups and their networks to try to cut off that financing. Some of this was public. Some of it we had done through the United Nations. One of the very effective tools that we had was the United Nations resolution which established a list of Taliban and al Qaeda supporters. If your name or group was on that list, everybody in the UN was obliged to freeze your funds, prevent you from traveling, and block the arms sales.

But there were also many things happening that weren't public -- other kinds of actions. It's been a broad-based campaign, a campaign where we've been learning, as I mentioned earlier, as we go forward, to get smarter about doing this; where we've been trying to get more partners to work with us. That sometimes means helping those partners have the capacity to do the same things in their own country that we can do. So there's been a lot of good progress, but there's a lot more to do ahead of us.

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