National Security Strategy 2006


Our comprehensive energy strategy puts a priority on reducing our reliance on foreign energy sources. Diversification of energy sources also will help alleviate the “petroleum curse” – the tendency for oil revenues to foster corruption and prevent economic growth and political reform in some oil-producing states. In too many such nations, ruling elites enrich themselves while denying the people the benefits of their countries’ natural wealth. In the worst cases, oil revenues fund activities that destabilize their regions or advance violent ideologies. Diversifying the suppliers within and across regions reduces opportunities for corruption and diminishes the leverage of irresponsible rulers.

3. Reforming the International Financial System to Ensure Stability and Growth
In our interconnected world, stable and open financial markets are an essential feature of a prosperous global economy. We will work to improve the stability and openness of markets by:
• Promoting Growth-Oriented Economic Policies Worldwide. Sound policies in the United States have helped drive much international growth. We cannot be the only source of strength, however. We will work with the world’s other major economies, including the EU and Japan, to promote structural reforms that open their markets and increase productivity in their nations and across the world.
• Encouraging Adoption of Flexible Exchange Rates and Open Markets for Financial Services. The United States will help emerging economies make the
transition to the flexible exchange rates appropriate for major economies. In particular, we will continue to urge China to meet its own commitment to a marketbased, flexible exchange rate regime. We will also promote more open financial service markets, which encourage stable and sound financial practices.
• Strengthening International Financial Institutions. At the dawn of a previous era 6 decades ago, the United States championed the creation of the World Bank and the International Monetary Fund (IMF). These institutions were instrumental in the development of the global economy and an expansion of prosperity unprecedented in world history. They remain vital today, but must adapt to new realities:
• For the World Bank and regional development banks, we will encourage greater emphasis on investments in the private sector. We will urge more consideration of economic freedom, governance, and measurable results in allocating funds. We will promote an increased use of grants to relieve the burden of unsustainable debt.
• For the IMF, we will seek to refocus it on its core mission: international financial stability. This means strengthening the IMF’s ability to monitor the financial system to prevent crises before they happen. If crises occur, the IMF’s response must reinforce each country’s responsibility for its own economic choices. A refocused IMF will strengthen market institutions and market discipline over financial decisions, helping to promote a stable and prosperous global economy. By doing so, over time markets and the private sector can supplant the need for the IMF to perform in its current role.
• Building Local Capital Markets and the Formal Economy in the Developing World. The first place that small businesses in developing countries turn to for resources is their own domestic markets. Unfortunately, in too many countries these resources are unavailable due to weak financial systems, a lack of property rights, and the diversion of economic activity away from the formal economy into the black market. The United States will work with these countries to develop and strengthen local capital markets and reduce the black market. This will provide more resources to helping the public sector govern effectively and the private sector grow and prosper.
• Creating a More Transparent, Accountable, and Secure International Financial System. The United States has worked with public and private partners to help secure the international financial system against abuse by criminals, terrorists, money launderers, and corrupt political leaders. We will continue to use international venues like the Financial Action Task Force to ensure that this global system is transparent and protected from abuse by tainted capital. We must also develop new tools that allow us to detect, disrupt, and isolate rogue financial players and gatekeepers.

VII. Expand the Circle of Development by Opening Societies and Building the Infrastructure of Democracy

A. Summary of National Security Strategy 2002
Helping the world’s poor is a strategic priority and a moral imperative. Economic development, responsible governance, and individual liberty are intimately connected. Past foreign assistance to corrupt and ineffective governments failed to help the populations in greatest need. Instead, it often impeded democratic reform and encouraged corruption. The United States must promote development programs that achieve measurable results – rewarding reforms, encouraging transparency, and improving people’s lives. Led by the United States, the international community has endorsed this approach in the Monterrey Consensus.

B. Current Context: Successes and Challenges
The United States has improved the lives of millions of people and transformed the practice of development by adopting more effective policies and programs.
• Advancing Development and Reinforcing Reform. The Administration pioneered a revolution in development strategy with the Millennium Challenge Account program, rewarding countries that govern justly, invest in their people, and foster economic freedom. The program is based on the principle that each nation bears the responsibility for its own development. It offers governments the opportunity and the means to undertake transformational change by designing their own reform and development programs, which are then funded through the Millennium Challenge Corporation (MCC). The MCC has approved over $1.5 billion for compacts in eight countries, is working with over a dozen other countries on compacts, and has committed many smaller grants to other partner countries.
• Turning the Tide Against AIDS and Other Infectious Diseases. The President’s Emergency Plan for AIDS Relief is an unprecedented, 5-year, $15 billion effort. Building on the success of pioneering programs in Africa, we have launched a major initiative that will prevent 7 million new infections, provide treatment to 2 million infected individuals, and care for 10 million AIDS orphans and others affected by the disease. We have launched a $1.2 billion, 5-year initiative to reduce malaria deaths by 50 percent in at least 15 targeted countries. To mobilize other nations and the private sector, the United States pioneered the creation of the Global Fund to Fight HIV/AIDS, Tuberculosis, and Malaria. We are the largest donor to the Fund and have already contributed over $1.4 billion.
• Promoting Debt Sustainability and a Path Toward Private Capital Markets. The Administration has sought to break the burden of debt that traps many poor countries by encouraging international financial institutions to provide grants instead of loans to low-income nations. With the United Kingdom, we spearheaded the G-8 initiative to provide 100 percent multilateral debt relief to qualifying Heavily Indebted Poor Countries. Reducing debt to sustainable levels allows countries to focus on immediate development challenges. In the long run, reducing debt also opens access to private capital markets which foster sound policies and long-term growth.

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