Number 17 Feru bary 2002 BAKER INSTITUTE REPORT NOTES FROM THE JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY OF RICE UNIVERSITY FORUM OF FORMER SECRETARIES OF THE TREASURY While emergency crews were deal- ing with the aftermath of the Sep- tember 11, 2001, terrorist attacks, the U.S. secretary of the treasury had to deal with a critical related problem: the potential impact that the loss of the World Trade Center might have on the economy. At Rice University’s Baker Insti- tute on October 5, eight former secretaries of the treasury ex- From left: Rice ambassadors Mahek Shah and Kevin Bailey gather with Wall Street Journal editorial page editor Paul Gigot, former treasury secretaries James A. Baker, III, Michael Blumenthal, Nicholas Brady, plained the multiple challenges William Miller, Lloyd Bentsen, Jr., ABC News veteran Sam Donaldson, former treasury secretaries Donald faced by the current treasury sec- Regan, George Shultz, and Robert Rubin, and Rice ambassadors Mathias Ricken and Renata Escovar at the forum on the role of the secretary of the treasury. retary, Paul O’Neill. They were participating in a forum on the “Our current secretary first had marker of what the secretary does, role of the secretary of the trea- to figure out how to get back from Shultz noted that in addition to sury, which was co-hosted by the Japan,” said George Shultz, who having “immense domestic re- Baker Institute and the Woodrow served President Nixon as the sponsibilities,” the treasury secre- Wilson International Center for 62nd secretary of the treasury. Cit- tary also has “tremendous interac- Scholars, Washington, D.C. ing O’Neill’s travels to Japan as a continued on page 18 PUTIN SHARES VISION FOR RUSSIA’S FUTURE Russia, once a communist strong- Russia’s progress and his ideas for hold, today seeks membership in further change with an overflow the World Trade Organization, audience at Stude Concert Hall wishes to forge stronger relation- on the Rice campus. Following his ships with United States busi- visit to Rice, Putin met with Presi- nesses, and welcomes increased dent George W. Bush at his ranch foreign investment. Citing Russia’s in Crawford, Texas, part of the low taxes, a reformed business cli- leaders’ three-day summit meet- mate, and a growing economy, ings. Russian Federation president James A. Baker, III, honorary Vladimir Putin outlined his vision chair of the Baker Institute, wel- for his country’s future at Rice comed Putin and former Presi- University on November 14, 2001. dent George H.W. Bush, who in- In a keynote address hosted by troduced Putin. Bush commented Vladimir Putin discusses the Russian Federation’s progress. the Baker Institute, Putin shared continued on page 3 1 LETTER FROM THE DIRECTOR On September of Crisis”). In 1993, the attack by tiatives dealing with the issue of 11, 2001, the terrorists from the Middle East on terrorism and some of its root heinous terror- the World Trade Center proved causes. ist attacks in the tragically to be the precursor to Approximately a year and a half United States the incidents of September 11, ago, the institute and the Houston showed us the 2001. In the wake of this attack on municipality agreed that the insti- other face of our homeland, President George tute would assume the lead in un- Edward P. Djerejian “globalization.” W. Bush launched a dual-track dertaking an independent and For over a de- policy both to enhance our do- confidential study assessing the cade we have defined “globaliza- mestic defenses against terrorism City of Houston’s response mecha- ○○○○○ tion” in largely economic, finan- ○○○○○○○○○○○○○○○ nisms in the event of a terrorist at- cial, trade, technological, tack, including attacks employing scientific, and information-age There is little doubt that weapons of mass destruction. This terms. But what we seemed to ig- project is a collaborative effort nore are certain concomitant re- the challenges facing the among municipal, county, state, alities: the underestimated role of and federal agencies, with a key religion and culture in world af- role being played by the medical fairs, the global danger of unre- United States and the in- advisory steering committee of the solved political and regional con- Houston Medical Strike Team (see flicts, lack of political participation ternational community in article on page 6). The reports, in many countries of the world, containing findings and recom- and statist and inefficient eco- the campaign against ter- mendations on how to enhance nomic systems that exacerbate so- current capabilities, are being pre- cial injustice. None of these fac- rorism are great and will pared for submission to the tors can in any way justify acts of mayor’s office in early 2002 and terrorism, but we must understand will be followed by a public educa- that extremist groups exploit test our nation’s political tion effort. these realities for their own politi- Since September 11, the Baker cal ends. will, determination, and Institute has been involved with The United States has been other major public policy organi- combating international terrorism ability to sustain a long- zations to provide analysis and rec- for some time, especially since the ommendations to decision-makers 1960s with the hijacking of air- on the challenges posed by global planes and terrorist attacks against term effort on the domestic terrorism. For example, the Baker American personnel and installa- Institute and the Center for Strate- tions overseas. With the end of the and international fronts. gic and International Studies ○○○○○ Cold War in the early 1990s, we in ○○○○○○○○○○○○○○○ (CSIS) in Washington have estab- the first Bush administration rec- lished a joint Task Force on the ognized that after communism, and to launch a coordinated inter- Geopolitical Implications of Ter- the next “ism” that the United national effort enlisting coalitions rorism, with meetings being held States would have to confront of countries to wage a long-term in both Washington and Houston. would be extremism and terrorism campaign against “the global Also, the institute is participating of either a religious or secular reach of terrorism.” in the New York Council on For- cloak (see Baker Institute Study Given these public policy chal- eign Relations Task Force on No. 1, dated 1995, “United States lenges, the Baker Institute has Policy Toward Islam and the Arc been involved in a number of ini- continued on page 17 2 PUTIN SPEAKS AT BAKER INSTITUTE continued from page 1 on the “strong working and per- sonal relationship” between Putin and George W. Bush and said, “I can tell you our president respects your broad vision of where our two countries can go in the fu- ture.” Also onstage were Rice president Malcolm Gillis and Ed- ward Djerejian, director of the Baker Institute. In his speech, Putin pointed to common interests of Russia and the United States, particularly the energy and space industries. “The scope for possible cooperation in George H.W. Bush (front left) and James A. Baker, III (front right), greet Vladimir Putin (center) after his the exploitation of Russian oil and arrival by helicopter on the Rice campus. gas could keep us busy for de- eralize our economy. We have “And perhaps the most impor- cades,” he said, speaking through taken legislative measures to tant thing,” Putin stressed, “is that a translator. “A lot has been done counter the laundering of illicit Russia has reduced the tax bur- already to make sure that relations profits. We have had an open den”—something that has been between Russia and the United struggle with the black market discussed for almost 10 years in States are built, taking into ac- business that has been eroding the Russia with almost no action. “As count each other’s interests.” economy. of January 2002, the profit tax rate Forging the new relationship in- ○○○○○○○○○○○○○○○○○○○ will go down from 35 to 24 per- cludes cooperation in several ar- cent, and all types of preferential eas, including science, education, “A lot has been done treatment will be revoked,” he and business. said. “In other words, we are “Today in Russia we have all the already to make sure strengthening the principle of necessary conditions for effective transparency in our business ac- investments in various fields,” that relations between tivities.” He added that Russia has Putin stated. He pointed to the the lowest personal income tax high rate of economic growth Rus- rate in Europe—13 percent. sia has maintained in recent years Russia and the One of Russia’s priorities is en- as well as their substantial im- tering the World Trade Organiza- provement in the legal conditions United States are built, tion, Putin said. “We deliberately for conducting business. The synchronized this process with our number of business activities re- taking into account domestic reforms, although we are quiring licensing, a practice inher- fully aware that this step is associ- ited from the former plan-based ated not only with benefits but economy, has been reduced from each other’s interests.” also with additional obligations.” 2,000 to 104. “Even that is too Putin noted that the United high a figure,” Putin emphasized, — Vladimir Putin “but we intend to continue to lib- ○○○○○○○○○○○○○○○○○○○ continued on page 20 3 GREENSPAN ASSESSES FUTURE OF ENERGY INDUSTRY Alan Greenspan, generally ac- recipients of the award include ity of energy,” he said. knowledged as the world’s most Nelson Mandela, former president Greenspan said that this impera- influential economist, “confessed” of South Africa; Eduard tive had taken on added signifi- to a Rice audience that he began Shevardnadze, president of the cance in light of heightened ten- his professional career as a musi- Republic of Georgia; Mikhail sions in the Middle East, where cian in a dance band.