Number 17 Feru bary 2002 BAKER INSTITUTE REPORT

NOTES FROM THE JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY OF

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, , Jr., ABC News veteran Sam Donaldson, former treasury secretaries Donald faced by the current treasury sec- Regan, , and , 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 ’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 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, , 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. His interest Gorbachev, former president of two-thirds of the world’s proven in economics, he explained, was the Soviet Union; and General oil reserves reside. He noted that sparked by visits to the library dur- Colin Powell. Ken Lay, chairman the Baker Institute is conducting ing band breaks. He enrolled in and chief executive officer of major research on energy supply New York University for graduate , joined James A. Baker, III, and security issues. studies, and the rest is economic the 61st U.S. secretary of state, in Looking back at the dominant history. making the presentation. role played by the United States in Chairman of the Federal Re- Rather than speaking about in- world oil markets for most of the serve since 1988, Greenspan vis- terest rates and the current state industry’s first century, Greenspan ited the campus November 13, of the economy, Greenspan of- cited John D. Rockefeller and 2001, to deliver a keynote address fered an assessment of what lies Standard Oil as the origin of U.S. at Stude Concert Hall hosted by ahead for the energy industry. In pricing power. Following the the Baker Institute. Following his the wake of September 11 and the breakup of Standard Oil in 1911, introduction by James A. Baker, current weakened state of the he said this power remained with III, honorary chair of the Baker economy, he stressed the need for American oil companies and later Institute, and his lecture, policies that ensure long-term eco- with the Texas Railroad Commis- Greenspan received the Baker nomic growth. “One of the most sion, which controlled prices by Institute’s Enron Prize for Distin- important objectives of those poli- raising and lowering allowable guished Public Service. Previous cies should be an assured availabil- output. This control ended in 1971 when rising demand ab- sorbed remaining excess capacity in the U.S. and oil pricing power shifted to the Persian Gulf. “The story since 1973 has been more one of the power of markets than one of market power,” Greenspan said. He noted that the projection that rationing would be the only solution to the gap be- tween supply and demand in the 1970s did not happen. While gov- ernment-mandated standards for fuel efficiency eased gasoline de- mand, he said that observers be- lieve market forces alone would have driven increased fuel effi- ciency. “The failure of oil prices to rise as projected in the late 1970s is a testament to the power of markets Onstage with Alan Greenspan (at lectern) are James A. Baker, III (left), and Rice president Malcolm Gillis. and the technologies they foster,”

4 such as hydroelectric power, en- ergy generated by recycling waste and byproducts, and solar and wind power. Finally, he noted the potential for fuel cell technology and fusion power. “We cannot say with certainty how these technological possibili- ties will play out in the future,” he said, “but we can say with some as- surance that developments in en- ergy markets will remain central in determining the longer-run health of our nation’s economy.” Greenspan closed by reminding the audience that national security and environmental concerns need James A. Baker, III, introduces Alan Greenspan at Stude Concert Hall. to be addressed in setting energy policy but in such a manner so as he said. “It is encouraging that, in doubled the drilling success rate not to distort or stifle the mean- market economies, well-publicized for new-field wildcat wells in the ingful functioning of the markets. forecasts of crises more often than United States during the past de- During the question-and-answer not fail to develop, or at least not cade,” he said. period, when asked to offer advice with the frequency and intensity While the shift away from the to young people just entering a proclaimed by headline writers.” hit-or-miss wildcat oil-and-gas ex- shaky job market and economy, Greenspan touched on recent ploration of the past would indi- Greenspan said he would provide energy shortages in the United cate declining costs, Greenspan the same answer no matter States and how market forces re- cautioned that there remains the whether America were in a tight sponded. He cited the heating oil challenge of overcoming increas- potential labor market or one that shortages on the East Coast, which ing costs brought about by more is less promising. “I’ve been drove up natural gas prices, result- than a century of draining the around for a long number of ing in increased production and more easily accessible sources of years—in fact it’s getting to be a curtailment of demand. Com- crude oil. Also, the potential for long number of decades—and I’ve menting on California’s electric disruptive turmoil exists in many concluded something that is really power crisis earlier this year, he of the areas where the world’s quite simple but I think really pointed out that once higher crude oil reserves lie. quite important: that old saw that prices were passed on to consum- Greenspan touched on the ris- the great baseball philosopher ers, demand slowed dramatically. ing demand for natural gas and Leo Durocher used—that nice Turning his attention to the predicts that higher anticipated guys finish last—is really not the long-term prospects for American needs will force tradeoffs between way the world ultimately works. I energy markets, Greenspan ad- energy requirements and environ- don’t deny that there is an ex- dressed the technological changes mental concerns. As a result, he traordinary amount of activity in in the production side of the in- sees renewed interest in the ex- the business community which is dustry. “The development of seis- pansion of coal, especially with less than exemplary, and I do not mic techniques and satellite sur- new clean-burning technologies, deny that there are innumerable veillance that are facilitating the nuclear power, and nonconven- people who succeed in business by discovery of promising new oil res- tional sources of energy. These in- ervoirs worldwide has roughly clude renewable energy sources continued on page 21

5 HOUSTON TASK FORCE ON TERRORISM EVALUATES CITY’S READINESS FOR AN ATTACK

“In the wake of the terrorist at- tacks in our country on Septem- ber 11, our society and govern- ment—at every level—are seized with the urgent task of enhancing our individual and collective de- fense against terrorism,” Edward Djerejian told journalists at an Oc- tober 3, 2001, news briefing at the Baker Institute. Djerejian, director of the Baker Institute, presented an overview of the steps that have been taken by the Houston Task Force on Terror- ism to prepare the city to respond to terrorist threats and acts. A few years ago Houston mayor The Task Force on Geopolitical Responses to Terrorism, a joint effort of the Baker Institute and the Center for Strategic and International Studies (CSIS), met for the first time in Washington, D.C., in November. Lee Brown and Djerejian dis- Some of the members are (from left) Zbigniew Brzezinski, former national security adviser; Robert Gates, cussed an initiative to have the former director of the CIA; Fred Ikle of the Smith Richardson Foundation and distinguished scholar, CSIS; Ambassador Edward Djerejian, director of the Baker Institute; Ambassador Richard Fairbanks, counselor, Baker Institute assess Houston’s CSIS; and Ambassador Teresita Schaffer, director of the South Asia Program, CSIS. response mechanisms in the event of a terrorist attack. Djerejian ex- resources and funding that will be Eckels and Dr. Ralph Feigin, presi- plained that the Baker Institute is required for a thorough and coor- dent and CEO of Baylor College reviewing the likely chronological dinated response within the city as of Medicine and medical liaison response to a terrorist incident, well as the support Houston can for the Houston Medical Strike from the first report of an event to expect from state and federal Force. Eckels noted that Harris the first response and then to the agencies. County would respond to a terror- request by the city for state and Brown noted that the city has ac- ist attack in the same way it would federal resources. The assessment celerated its efforts to actively plan to a major chemical incident or then focuses on the government/ and prepare for any possible inci- plant explosion. The county has public/private response, particu- dent involving terrorism. Because been working through the Texas larly in the areas of medicine, haz- a multifaceted response is needed, Gulf Coast Emergency Manage- ardous materials, and law, and on the Houston Task Force on Terror- ment Association to review oil- plans to educate the public and ism has evolved into a collabora- safety issues and chemical plants. community leaders. tion of local, county, state, and “We learned some lessons from “For the best response to an in- federal agencies, the City of Hous- Tropical Storm Allison about the cident, the responders, both gov- ton, the medical community, in- ability of our community to re- ernmental and nongovernmental, cluding the Houston Medical spond to an event that has a major must be trained, have adequate Strike Team and the Harris impact on our trauma centers,” equipment and supplies, and County Hospital District, and the Eckels said. Because flooding hin- regularly use their training in Baker Institute. dered access to the Texas Medical their daily work or regular exer- As evidence of “a truly collabora- Center, the emergency plan must cises,” Djerejian said. The task tive effort,” Brown cited the in- address how better to deliver force is now trying to identify the volvement of county judge Robert healthcare services on a broad

6

○○○○○○○○○○○○○○○○○○○○ scale during a crisis, whether it is ers also must become familiar with terrorist-related or a natural disas- “For the best response the appropriate tests to establish ter, he said. diagnosis rapidly and the most ef- Feigin noted that even the most to an incident, the fective treatment methods.” conservative of experts have been Feigin announced the members reassessing the plausibility of a ma- of the medical advisory steering jor biological or chemical attack responders, both committee of the Houston Medi- somewhere in the U.S. Although cal Strike Team and noted that Houston is probably better pre- governmental and Houston is fortunate to have many pared than most major cities for specialists with expertise in treat- such an event because of its expe- nongovernmental, ing patients who have been ex- rience in responding to refinery posed to hazardous chemicals, ra- explosions and hurricanes, no one must be trained, have dioactive materials, biological can ever be as sufficiently pre- agents, and infectious diseases. pared for a chemical or biological adequate equipment and Members of the committee in- attack as they would like to be, clude James H. “Red” Duke, Jr., Feigin said. supplies, and regularly professor of surgery, The Univer- Because symptoms related to a sity of Texas Health Science Cen- biological attack might not show use their training ter at Houston; S. Ward Casscells, up until a few days after exposure, III, professor of medicine and vice all physicians and healthcare president for biotechnology, workers must be trained to con- in their daily work or UTHSC at Houston; Kenneth sider diseases such as anthrax and Mattox, chief of staff and Joint botulism as possibilities and report regular exercises,” Trauma Training Center director, them to the health department Ben Taub General Hospital; John

immediately, Feigin explained. Djerejian said. Mendelsohn, president, the M.D. ○○○○○○

“Physicians and healthcare work- ○○○○○○○○○○○○○○ Anderson Cancer Center; and James Willerson, president, UTHSC at Houston. Feigin emphasized the need to educate the lay public about the realistic assessment of risk. “You can’t confront terrorist events with panic or fear. You have to con- front them with education and training,” he said. The Baker Institute hosted sev- eral news briefings related to ter- rorism during the latter part of 2001 to keep the media updated on the efforts of the Houston Task Force on Terrorism.

Members of the joint Baker Institute for Public Policy-Center for Strategic and International Studies (BIPP- CSIS) Task Force on Geopolitical Responses to Terrorism met at the Baker Institute on December 3, 2001. Participants included (from left) Ambassador Richard Fairbanks, counselor, CSIS; former Israeli prime minister Ehud Barak; Ambassador Edward Djerejian, director of the Baker Institute; Ambassador Marwan Jamil Muasher of ; and Ambassador Nabil Fahmy of Egypt.

7 PRIME MINISTER OF DISCUSSES COUNTRY’S PAST, PRESENT, AND FUTURE

Once known far and wide in the 13th century, at the time of Genghis Khan’s conquests, Mongolia has since slipped into a relatively quiet existence. But now, 800 years later, said Nambaryn Enkhbayar, prime minister of the Republic of Mongolia, Mongolia’s mission is to be known again, this time in a civilized way, as a country of democracy and development. The prime minister’s visit to the Baker Institute November 19, 2001, was co-hosted by the insti- tute and Asia Society Texas. After being welcomed by Charles C. Fos- ter, chairman of the Texas center of the Asia Society, Rice president Malcolm Gillis introduced Enkhbayar as a “dedicated re- (From right) Nambaryn Enkhbayar and Malcolm Gillis meet with Rice students. former” with “forward-looking policies.” 1919 to 1921, it again was a Chi- Enkhbayar attributes his Enkhbayar discussed the rela- nese province, until the Soviet country’s smooth and peaceful tionships Mongolia has with its Russia assisted Mongolia in a revo- transition to democracy to many neighbors Russia and China and lution against the Chinese and factors, including Mongolians’ de- Mongolia’s emergence as a de- Mongolia became a communist re- sire for the “chance to go from mocracy. Geographically squeezed gime. somethings to someones.” Because between those two geopolitical su- In the 1990s, democracy came Mongolians are nomads, they are perpowers, Mongolia has shared to Mongolia under the influence accustomed to adapting to a con- centuries of relationships with its of Russian perestroika, and stantly changing outer world. “De- neighbors. Mongolia decided to make mocracy was inevitable,” he said, Mongolia was a Chinese prov- changes in its political and eco- “and we realized we were too de- ince from 1691 until 1911, when it nomic direction, establishing a pendent on one country with an became an autonomous state un- parliamentary form of govern- unproductive and unhealthy

der the protection of Russia. From ment in 1992. economy.”

○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ ○○○ During this transition a decade ago, then-secretary of state James “This concept of third neighbor is the right concept for us A. Baker, III, who is now the hon- orary chair of the Baker Institute, to develop further,” Enkhbayar said, “to overcome the introduced the concept of a “third neighbor” to Mongolia. The third-

negative impact of having been a totalitarian regime.” neighbor idea is the broad notion ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ ○○○ continued on page 22

8

ALGERIAN PRESIDENT OUTLINES NEW ENERGY POLICY ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ Abdelaziz Bouteflika, president of ○○○○ the People’s Democratic Republic of Algeria, gave a keynote address “The American administration will always be con- hosted by the Baker Institute in which he emphasized that Algeria, cerned with Middle East problems, which from my the third-largest gas-exporting country in the world, wishes to en- point of view guarantees the stability of the Arab people courage increased trade and new foreign investments. To that end, and countries,” President Bouteflika said.

the government has crafted a new ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ energy and mining policy, lifting ○○○○ monopolies and establishing mar- ket rules ensuring equity and Under the new policy, state- tional revitalization policy, which transparency for national and for- owned companies will be merged enables large investment opportu- eign interests. in a transparent legal framework, nities for foreign parties. He de- James A. Baker, III, the 61st sec- and exports and imports of crude tailed how Algeria has reduced retary of state and honorary chair oil and refined products will be foreign debt, stabilized inflation, of the Baker Institute, introduced liberalized. Bouteflika said the and obtained a stable macroeco- Bouteflika to the audience as a changes will take shape through nomic framework. “critical player in the world energy the transformation of the role of “In regard to the reforms under- market” at the November 2, 2001, state-owned companies, which are taken to move toward a market event. Speaking through an inter- solely involved in trade activities, economy and to go from a mono- preter, Bouteflika outlined the Al- and a definition of the role of new lithic society to a pluralist and gerian New Energy Policy, saying state institutions as agencies. democratic society—if you doubt that at its core is a radical change Bouteflika also reviewed it, it should be clear that we don’t in the state’s role. The role of the Algeria’s new economic and na- have a choice,” Bouteflika said. state, he said, is to “define the eco- “This is a challenge that we need nomic policy, assure the means of to meet, and we are ready to do regulating national monopolies, so.” and monitor the balance of funda- Bouteflika reminded his audi- mental indicators, while imposing ence that Algeria produces more on economic operators the re- than one million barrels of oil per spect for the rules of the game.” day and is preparing to reach Bouteflika explained that new 1.5 million in 2005. It also plans to transparent and easy-to-execute double its gas capacities. He also contracts will be set for explora- expressed satisfaction with trade tion and production of hydrocar- relations with American compa- bons and ores, with the goal of nies, particularly in the hydrocar- guaranteeing the upstream and bon sector. “Partnership was and downstream competitive forces of remains an essential link in our the sector while banning any de approach,” he said. “The Algerian facto monopoly. “The aim is to New Energy Policy, thanks to all its gather the necessary conditions prospects for partnership, is a for the good functioning of an clear sign of our determination to open and competitive market Abdelaziz Bouteflika explains the Algerian New economy,” he said. Energy Policy. continued on page 22

9 FORUM FOCUSES ON RELIGIOUS FUNDAMENTALISM AND CONFLICT IN THE MIDDLE EAST

Noting that religion can be a bin Laden, it is necessary to un- cused strike, might prove counter- “powerful force in its own right… derstand “political Islam,” which productive, in his view. sometimes stronger than govern- Esposito calls the “Army of God.” Marc H. Ellis, professor of ment,” William Martin, the Harry It arose during the 1960s and ’70s American and Jewish studies at and Hazel Chavanne Professor of in reaction to secular, Western- Baylor University, argued that Jew- Religion and Public Policy at Rice, style modernization in parts of the ish fundamentalism is not the pri- stressed the importance of under- Arab world. mary problem in the Arab–Israeli standing the religious dimension After the Six-Day War of 1967, conflict. Rather, it is what he of Middle Eastern politics. the Arab–Israeli conflict became called “Settler Judaism.” Ellis pro- His comments were made in the “a worldwide issue” for Muslims, vided a detailed analysis of the ori- introduction to a panel discussion Esposito explained, and soon the gin and development of Jewish titled, “With God on Their Side: dominant reality in the Middle settlements, which, according to The Impact of Islamic, Jewish, and East was “revolutionary Islam,” Palestinian estimates, have Christian Fundamentalism in the which took the form of militant brought more than 400,000 set- Middle East,” held October 30, Jihad groups. Bin Laden, a one- tlers into Palestinian territory 2001, at the Baker Institute. The time ally in Afghanistan, turned through a series of “steady confis- discussion inaugurated the 2001– against the United States, enraged cations of trust.” 2002 Harry and Hazel Chavanne by U.S. policies in the Middle East Timothy Weber, dean of the Lecture Series on Religion and and elsewhere. In Esposito’s seminary and professor of church Public Policy. words, bin Laden “hijacked” Islam history at Northern Baptist Theo- The first speaker, John L. by putting it in the service of anti- logical Seminary, began his talk by Esposito, professor of religion and Western terrorism. The danger noting that Christian fundamen- international affairs and of Islamic now is that any effort to broaden talist groups have given more sup- studies at , the scope of U.S. military opera- port to than American Jews. argued that to understand the al- tions in Afghanistan or beyond, af- According to Weber, Christian Qaeda organization and Osama ter the initial, proportionate, fo- fundamentalists believe that the

Panelists for the forum on religious fundamentalism in the Middle East included (from left) Edward Djerejian, Marc Ellis, William Martin, John Esposito, and Timothy Weber.

10 state of Israel will play a part in TRANSNATIONAL CHINA PROJECT the “Second Coming.” According to the prophetic doctrine known UPDATE as “dispensationalism,” wars, fam- ine, and anarchy in the Middle Transnational China Project schol- project uses a combination of sur- East will set the stage for a great ars at Rice will study consumer veys of advertising campaigns in war against “God’s people”— culture and identity formation in Asia’s urban spaces and surveys of Armageddon. Dispensationalists China with a $150,000 grant from Chinese consumers to explore the believe that for the “Final Game” the prestigious Henry Luce Foun- impact of consumerism on local to begin, the state of Israel must dation. “Consumer Citizenship: identity formation and national- expand. Thus, when Israel was es- Marketing Civil Society in a ism. tablished in 1948, Christian funda- Transnational China” is a three- The Transnational China mentalists regarded this develop- year survey research program that Project examines how the circula- ment as “the most significant will explore the relationship be- tion of people, ideas, values, and prophetic event of the age,” We- tween advertising and local, na- technologies among Chinese soci- ber said. Yet despite their com- tional, and transnational identity eties affects contemporary Chi- mon goal of strengthening the formation in China and Chinese nese culture. Reports, transcripts, state of Israel, Christians and Jews societies. audio files, and extensive image continue to be divided by a theo- archives from workshops and pub- logical gulf. As Weber put it, the lic lectures can be found on the attitude of the fundamentalists project’s bilingual website, http:// seems to be, “Israel sí, Jews no.” www.ruf.rice.edu/~tnchina. The The final speaker, Edward website continues to receive Djerejian, director of the Baker awards and acclaim. Institute, offered his insights on The Transnational China U.S. policy toward the Muslim Project was established with sup- world based on his experience as port from Ford Motor Company assistant secretary of state for Near and PricewaterhouseCoopers and Eastern affairs and as ambassador is directed by Steven Lewis, senior to Israel and . Djerejian researcher at the Baker Institute; pointed out that religious extrem- As China continues to develop a Benjamin Lee, Rice professor of ists and terrorists of either a reli- market economy and open up to anthropology; and Richard Smith, gious or secular cloak exploit is- the global economy, advertisers the George and Nancy Rupp Pro- sues such as unresolved regional are making appeals to middle-class fessor of Humanities and profes- conflicts, the lack of political par- lifestyles. What are the values ex- sor of history at Rice. The Henry ticipation, and socioeconomic pressed in these appeals? Some Luce Foundation supports re- problems for their own political lifestyle advertisements tell Chi- search on a wide range of impor- ends. At the end of the day, these nese to think of themselves as citi- tant public affairs and cultural is- groups are interested in political zens of great cosmopolitan cities, sues. Find them online at http:// power, overthrowing existing re- such as Shanghai or Beijing. Oth- www.hluce.org. gimes, and diminishing their ties ers ask consumers to identify with with the West. To counter this the Chinese nation. Still others ap- threat, he said, a broad and coher- peal to a distinctly unbounded, ent strategy comprising political, transnational Chinese middle diplomatic, economic, financial, class. Are these advertisements af- intelligence, security, and military fecting the way the Chinese iden- options is called for. tify with each other? This research

11 ENERGY TASK FORCE STRESSES CONTINUED NEED FOR NATIONAL ENERGY POLICY

The easing of energy prices last tion—that the world has seen its 3)Implementing, also together summer diverted national atten- last California-style blackout.” with Congress, a more effective tion away from the need for a Echoing their original indepen- program to open a broader area comprehensive national energy dent task force report, Morse and of federal lands for exploration policy. The consequences of this Jaffe reminded policymakers that and production of hydrocar- neglect could lead to a future en- developing a national energy bons, especially in the lower 48 ergy crisis similar to the one Cali- policy will involve hard choices. states. fornia experienced last winter. The United States will continue to 4)Integrating into energy policy This conclusion was made in a re- face the threat of energy short- substantial efforts to foster the port released by two of America’s ages, the report stated, “if we fail development and promotion of leading energy experts, Edward L. to respond to the strategic chal- cleaner energy sources, includ- Morse of Hess Trading Company lenge of merging a concrete plan ing renewable energy, but also LLC and Amy Myers Jaffe, senior for sustainable energy supply with covering new alternative energy energy adviser and project coordi- environmental protection and na- technologies, nuclear energy, nator of the Baker Institute. tional security.” and clean coal technologies. Though acknowledging that the Morse and Jaffe gave the Bush 5)Reviewing the adequacy of cur- energy sector is no longer in the administration credit for taking rent levels of strategic stockpiles, critical condition it was in the the initiative to adopt a compre- mechanisms for financing their spring of 2001—when the Baker hensive national energy policy but expansion, definitions of an Institute and the Council on For- suggested that the administration, emergency that would justify eign Relations released the report and Vice President Cheney’s en- triggering use of strategic re- of an Independent Task Force on ergy task force in particular, serves, and arrangements for co- Energy that Morse and Jaffe should refine their energy propos- ordinating stock draws on an eq- headed—the follow-up report als. The report recommended: uitable basis. warned that it would be wrong for 1)Developing a stronger lead for In light of events in Washington the public or policymakers to as- U.S. diplomacy in the interna- since the release of the Baker In- sume that the energy crisis has tional environmental arena, and stitute–Council on Foreign Rela- been solved or that it was fabri- as a trade-off to enhanced explo- tions Independent Task Force Re- cated all along. ration and production of hydro- port in early 2001, the follow-up Without a national energy carbons in the short term, offer- report stated that the public de- policy, the report stated, “energy ing a serious longer-term bate over the Bush administra- shortages and temporary disloca- commitment to the develop- tion’s proposal to open some tions can easily reemerge for any ment, deployment, and promo- 2,000 acres of the Alaska Wildlife one of a number of reasons: from tion of cleaner energy sources. Refuge “is diverting attention the resumption of accelerated eco- 2)Implementing, together with from other highly prospective nomic growth, to international po- Congress, a more effective and areas that could be opened for litical developments, to the broader use of demand-manage- fruitful exploration and drilling weather, to even an accident.” The ment strategies and technolo- activities.” report added, “It would be unwise gies in order to reduce the to assume—barring interven- country’s reliance on oil.

12 COUNSEL TO PRESIDENT BUSH SPEAKS AT BAKER INSTITUTE

“Serving as the president’s lawyer ing to come work in the White fice can offer only an apology and has got to be one of the best legal House or be a Bush appointee re- a generic explanation like “there’s jobs in America,” Alberto Gon- quiring Senate confirmation, a problem in the background file” zales told Rice students, faculty, you’re going to undergo an FBI without going into detail about staff, and other guests at the Baker background check. I’ll get to re- the specific reason someone was Institute September 7, 2001. “It’s view that, and it’s my decision as turned down for a job or an ap- an incredible feeling to walk into to whether you’re suitable for an pointment. “It’s a true test of dip- the Oval Office to brief the most appointment or employment in lomatic skills trying to tell a cabi- powerful person in the world.” the Bush administration.” net secretary they can’t have that Gonzales, who was appointed Gonzales acknowledged the “tre- superstar that they desperately counsel to President George W. mendous” workload of reviewing need because of a background Bush last January, spoke about the the thousands of appointments problem that occurred 15 years responsibilities of his position, made at the beginning of a ago,” Gonzales said. noting the “rewarding combina- president’s administration. The Because one of the priorities of tion of law, politics, and policy” task is made even more difficult the Bush administration is the ap- that his job entails. He also had when something shows up in a pointment of federal judges, private sessions with Rice students background check that prevents Gonzales has been very involved to discuss the legal profession and someone from being hired or ap- with efforts to fill the more than their career aspirations. pointed. 100 judicial vacancies across the “My office supervises the per- “We have to respect the privacy nation. He chairs the White sonal background checks of every of individuals,” he said, “so we House Judicial Selection Commit- Bush appointee,” said Gonzales, a cannot reveal matters contained tee, which includes senior advisers 1979 Rice alumnus. “If you’re go- in the FBI report.” Gonzales’s of- to the president, senior officials from the Department of Justice, and lawyers from the counsel’s of- fice. The committee reviews names of potential judges, selects candidates for interviews and FBI background checks, and eventu- ally makes recommendations to the president on whom to nomi- nate as federal judges. “The president understands the importance of federal judges in our government,” Gonzales said. “The number of vacancies that ex- ist means that many people who have valid claims and seek redress in our courts do not have the op- portunity to do so because there are no judges to hear the claims.” By the end of August, Bush had made 44 judicial nominations. (left) meets with Rice students at the Baker Institute. “During the first year, we fully in-

continued on page 23

13 PEMEX DIRECTOR GENERAL SHARES MEXICAN PERSPECTIVE AT ENERGY FORUM

Raul Muñoz Leos (center) addresses an audience at the Baker Institute, along with Thomas “Mack” McLarty (left) and Robert Mosbacher, Sr.

Mexican state oil monopoly executives, media, and Rice uni- wake of tight government budgets. Pemex will seek ways to harness versity professors and students. A Light crude oil production has private investment in Mexico’s en- reception and private dinner fol- fallen from 1.5 million barrels per ergy sector, new Pemex director lowed, sponsored by ExxonMobil day (b/d) to only 1.2 million b/d general Raul Muñoz Leos told Corp. and has been accompanied by a members of the Baker Institute Muñoz spoke frankly about the 400,000 million-cubic-feet-per-day Energy Forum during a visit to the need for reform in Mexico’s en- (mcf/d) decline in associated institute on June 22. Muñoz said ergy sector. Already, Mexico is en- natural gas production since 1997, that investment was desperately couraging foreign investment in leaving Mexico increasingly de- needed in order to stave off a pe- natural gas infrastructure, such as pendent on imports. troleum reserve crisis that could proposed projects for the con- Muñoz said it would take more create shortages of natural gas in struction of liquefied natural gas than a $30 billion hike in up- Mexico and possibly even a drop (LNG) receiving terminals in the stream exploration and develop- in export levels. country. Pemex is also hoping to ment spending to allow Mexico to Muñoz was the guest speaker at shore up its flagging petrochemi- raise production to 3.8 million b/ a special Energy Forum event on cal sector and would consider sell- d by 2006 from just over 3.1 mil- “The Mexican Energy Sector” that ing some facilities in the future lion b/d currently. Mexico’s crude also included former White House once better value could be estab- exports total 1.7 million barrels a chief of staff and Washington con- lished from reorganization and re- day. sultant Thomas “Mack” McLarty. form. Secretary Robert Mosbacher, Sr., Mexico is also trying to deter- hosted the event, which was at- mine how to maintain or expand tended by senior energy industry natural gas production in the

14 BAKER INSTITUTE CO-SPONSORS NATURAL GAS ENERGY STUDY

Natural gas is expected to play an portation sector could increase at the most optimistic U.S. de- expanding role in meeting rising substantially. The authors con- mand rate, a surplus of LNG on Asian energy demand, and lique- clude that because 70 percent of global markets will remain, leaving fied natural gas (LNG) will be the increase in international oil plenty of supply to make its way to traded under more flexible, mar- use is expected to come from the Asia and avoiding the kind of buy- ket-linked pricing terms and ar- transportation sector over the ers’ bidding war that could sub- rangements, concludes a new next decade, the ability to utilize stantially raise prices. study by the Energy Forum of the plentiful natural gas supplies in The report authors also predict Baker Institute. manufacturing transportation fu- that the Asian and Western mar- The study, “New Energy Tech- els would greatly contribute to en- kets will begin to look more alike nologies in the Natural Gas Sec- hanced energy security and envi- over time. Already, Japanese cus- tors: A Policy Framework for Ja- ronmental protection. tomers are asking for more flex- pan,” was completed over 18 An expected surplus in Asian ible terms in their arrangements months and was led by Baker Insti- gas supplies is spurring an interest with traditional suppliers. U.S. gas tute senior energy adviser and in other supplemental technolo- consumers and marketers are be- project coordinator Amy Myers gies for additional uses of natural ginning to sign long-term agree- Jaffe. Undertaken as a joint ven- gas. This study investigates the ments rather than depend solely ture with the Petroleum Energy prospects for increased LNG and on spot and short-term arrange- Center of Japan, the study was co- natural gas pipeline shipments to ments. The authors predict that sponsored by the Baker Institute Japan and the policy framework eventually both will adopt portfo- and the Center for International that is needed to promote aug- lio strategies, assembling a blend Political Economy. mented utilization of natural gas of supply and transportation ar- The study notes that use of natu- there. rangements that fit all needs. ral gas as an energy source in Asia The study also forecasts in- Japan, in particular, will be look- in 1999 was 10 percent of total pri- creased demand for natural gas in ing for more flexible terms, to in- mary energy use, which was sub- the United States market, and a clude both spot and term con- stantially lower than the world av- natural gas supply deficit that tracts, to offset unexpected erage of 23 percent, suggesting could grow in the coming decade disruptions in supply and help tremendous room for growth. to as much as six to seven trillion build markets there. Recent technical innovations cubic feet in 2010 under high-de- The full report includes legal, have made LNG processing and mand growth scenarios. The study regulatory, and infrastructure shipping more affordable, result- suggests that the U.S. will have to changes that must be made to fa- ing in increased sales in both turn to more pipeline imports cilitate increased market penetra- Asian and Atlantic Basin markets. from Canada and LNG from a va- tion of natural gas in Japan, in- The end of the Cold War also cre- riety of Atlantic Basin or Pacific cluding new supplies from the ated new natural gas pipeline op- Rim producers to meet the pro- Sakhalin Islands. It also covers in- portunities in Northeast Asia. jected rise in natural gas demand. novative technologies that might Natural gas is mainly used in To fill the supply gap, the U.S. broaden the sectors in which natu- Asia for electricity generation and might be looking at importing up ral gas can replace other fuels. petrochemical feedstock. The re- to four trillion cubic feet, or in The study concludes that port finds that if natural gas can terms that the producers use, 80 Japan’s energy security and envi- be imported after converting it million tons of LNG per year un- ronmental goals would benefit into ordinary-temperature liquid der high-growth scenarios. How- fuels, the use of gas in the trans- ever, the study concludes that even continued on page 17

15 NOTEWORTHY BAKER INSTITUTE ACTIVITIES

Baker Institute director Edward Djerejian met with Rice students at the institute September 20, 2001, for a discussion about terrorism and the challenge to U.S. policy. Students were encour- aged to express their views and concerns in the wake of the na- tional tragedies that occurred on September 11. Neal Lane, senior fellow at the Baker Institute, presented “A View from Rice after Seven Years in Washington” to the Baker Institute Roundtable on October 18, 2001. Former president George H.W. Bush introduced James A. Baker, III (left), honorary chair of the Baker Institute, who presented a keynote address on “Diplomacy and Coalition Building for the Gulf War” Lane served as assistant to the at Texas A&M University’s George Bush Presidential Library Center at College Station, Texas, October 26, 2001. president of the United States for science and technology and as di- rector of the U.S. Office of Sci- ence and Technology Policy be- fore rejoining the Rice faculty in January 2001. He also is former di- rector of the National Science Foundation. A workshop titled “Nano- technology and Environment: An Examination of the Potential Ben- efits and Perils of an Emerging Technology,” which was held at Rice December 10, 2001, included a presentation by Lane. Organized by Rice’s Environmental and En- ergy Systems Institute, the event

brought together experts from Joseph Kabila (left), president of the Democratic Republic of Congo, visited the Rice campus November 2, Rice and the Office for Science 2001, to meet with James A. Baker, III, honorary chair of the Baker Institute. and Technology of the Embassy of Notable events filled the fall 2001 schedule at the France in the U.S. to discuss Baker Institute, and for anyone who was not able whether new nanotechnologies to attend them or would like to view them again, the institute’s website features downloadable video aimed at cleaning up the environ- of the archived events. Speeches and briefings alike are available on the webpage, http:// ment might also harm it. Lane dis- www.bakerinstitute.org. Users will need the free cussed the implications of nano- RealPlayer 8 basic software. For help with downloading the events and software, go to http:// technology for environmental www.rice.edu/webcast/. policy and society.

16 DIRECTOR’S LETTER versity students have been orga- domestic and foreign policy ap- nized after September 11 to dis- proaches that not only address the continued from page 2 cuss terrorism and United States immediate goals of bringing ter- America’s Response to Terrorism. policy options. rorists and those who support The institute’s Conflict Resolu- There is little doubt that the them to justice but also investigate tion Forum continues its work on challenges facing the United some of the causes underlying this Arab–Israeli issues involving schol- States and the international com- phenomenon. It is hoped that ars and officials from both sides in munity in the campaign against public policy institutes such as its deliberations both at the insti- terrorism are great and will test ours will be able to make a contri- tute and in the Middle East re- our nation’s political will, determi- bution to this effort and help fa- gion. Further, the institute has nation, and ability to sustain a cilitate the task of decision-makers hosted a series of workshops and long-term effort on the domestic in the government who bear the panels on the role of religion in and international fronts. There heavy responsibility of planning politics, including a session on will be no decisive victory over ter- and executing the nation’s poli- fundamentalism in the Middle rorism, per se. What is required cies in this critical campaign. East. Special events with Rice Uni- are coherent and well-coordinated

ENERGY STUDY such as gas-to-liquids (GTL) and well as its competitive fuel alter- continued from page 15 dimethyl ether (DME) and the natives, need to be market-based from increased use of natural gas construction of international and transparent such that in the energy mix. A combination pipelines were not considered in interfuel and gas-to-gas competi- of LNG and pipeline gas imports the formation of existing laws tion will establish the most com- would enhance natural gas trade and regulations. An effort to petitive delivered price to the in smaller volume increments, in- adapt these products and the end-user. creasing the number of sectors building of pipelines to present In addition to Jaffe, members of that might use natural gas. It laws will likely result in a good the research team were Dagobert would also increase competition deal of confusion and many de- Brito, the George A. Peterkin Pro- and likely lower costs without lays. Thus, adjustments to these fessor of Political Economy, Rice jeopardizing supply stability and laws, regulations, and proce- University; Peter Hartley, profes- security. Government support of dures should be made quickly to sor of economics, Rice University; research in emerging natural gas enhance the introduction of Ed Jones, coordinator, Lawrence technologies could also help new fuels and facilities. Livermore National Laboratory; spread use of gas to new sectors in • Administration of laws and regu- Robert Schock, nuclear physicist, Japan. lations should be made in a non- Lawrence Livermore National Study recommendations in- discriminatory manner where all Laboratory; Barbara Rhines clude: market players, including new Shook, Houston bureau chief, En- • In order to facilitate the aug- entrants into a liberalized mar- ergy Intelligence Group; and mentation of gas markets, regu- ket, compete on equal terms. Ronald Soligo, professor of eco- latory changes to Japan’s exist- New entrants should be allowed nomics, Rice University. ing gas law are needed. The access to gas infrastructure but The study is available online at preparation of new laws, regula- at a price that includes a fair re- http://www.rice.edu/projects/ tions, and procedures should turn to investors for access to in- baker/. In the Research section, not be allowed to impede the ef- frastructure. Market transpar- follow links to Foreign Policy, En- ficient introduction of new fuels ency and agreed network codes ergy Forum, and scroll to “Baker and the expansion of natural gas can then maintain a level play- Institute Study Number 18.” pipelines. ing field. • The introduction of new fuels • All prices, of both natural gas as

17 SECRETARIES Donald Regan, who served Presi- needed to be in contact with a continued from page 1 dent Reagan as the 66th secretary, multiplicity of avenues to create noted that the treasury secretary confidence and stability,” Miller tion all over the world.” has to look after the money mar- said, adding that members of the Because the economy was al- kets and the stock market. “Those Department of the Treasury prob- ready in trouble before September are the two barometers that the ably contacted their foreign coun- 11, “you could see immediately world is watching—what’s happen- terparts to alert them about the that the trouble would get more ing to the dollar and what’s hap- events and assure them the secre- serious,” Shultz said, and the sec- pening to the stocks,” he said. tary would coordinate a policy to retary of the treasury had to take a Closing the stock market the deal with the markets and avoid lead in helping the president for- rest of the week after the events of any danger of collapse. mulate a program to aid the September 11 was an appropriate Nicholas Brady, who served economy. response, Regan said. “They Presidents Reagan and Bush as Robert Rubin, who served Presi- needed the time not only physi- the 68th secretary, noted yet an- dent Clinton as the 70th secretary, cally, because their plant was other responsibility the secretary said that after the September 11 wiped out and a lot of their com- of the treasury has to fulfill after tragedies, the treasury secretary munications gear was not working, an incident like the destruction of needed to meet with the president but also they needed time to the World Trade Center towers. and his economic team to deter- breathe, to think.” “Something enormously impor- mine the economic impact of the William Miller, who served Presi- tant is to assure liquidity in the sys- events and the changes that the dent Carter as the 65th secretary, tem so the trades that were being secretary would like to make in re- pointed out that the secretary of conducted do settle on time,” he sponse. the treasury also has responsibility said. “The thing that scares people “The other thing you need to do for the Secret Service. In the wake the most is when they don’t get is figure out how to discuss the of the terrorist attacks, the secre- paid and they owe other people economy in the public domain in tary also had to be concerned money.” a way that on the one hand is seri- about protecting the president Because a record-breaking ous and thoughtful, and on the and government property and $80 billion of liquidity—more other hand provides reassurance,” making sure security was in place. than 10 times the amount that Rubin said. “But at the same time, he had ever taken place before—was

Former secretaries of the treasury discussed the economy with regard to the tragic events of September 11, 2001.

18 injected into the system by the opinions about how fiscal policy the boom, putting a bubble in re- Federal Reserve Bank of New York should be managed in the after- verse.” He said monetary policy and the Federal Reserve Board, li- math of September 11. has been “great,” favoring the tax quidity was maintained—“a re- “To suddenly try to do some- cut made earlier this year and ad- markable performance,” Brady thing within a matter of several vocating fiscal spending at the said. weeks or by a deadline of the present time. Michael Blumenthal, who served middle of the month is much too Shultz, on the other hand, had a President Carter as the 64th secre- soon for deep policy that is going different view on spending. “His- tary, said O’Neill’s concern about to have an effect not only on our tory shows that you can’t spend liquidity was not just domestic. immediate life, but on our lives your way out of recession,” he “He had to remember that the for years to come,” Regan said. said. “When it comes to the broad psychological shock was not only “It’s been my experience in Wash- rhythm of economy, the most im- great in this country but equally ington as well as in Wall Street portant arena is monetary policy.” great around the world.” that if you make a hasty decision, Baker offered another strategy: O’Neill most likely contacted his chances are it’s going to be a “Convince the American people principal international colleagues wrong decision.” that we are winning the war on by phone or e-mail in an effort to Miller shared the concern about terrorism both internationally and maintain liquidity not only in the haste. “We shouldn’t act hastily, at home. That is the most impor- United States but worldwide, ac- but be willing to act promptly and tant thing we can do to restore cording to Blumenthal. The secre- make it temporary so we have time our economy.” tary of the treasury had to give to reexamine whether we want Lloyd Bentsen Jr., who served “some reassurance to the global permanent change,” he said. President Clinton as the 69th sec- system that the U.S. is handling Ruben stressed the importance retary, also attended the forum. the problem and doing its job,” he of distinguishing between long- ABC News anchor Sam explained. term and short-term fiscal posi- Donaldson and Wall Street Jour- James A. Baker, III, who served tions. “The more people have con- nal editorial page editor Paul President Reagan as the 67th sec- fidence in our long-term fiscal Gigot served as moderators for the retary and is honorary chair of the well-being, the more flexibility it forum, which gave the former sec- Baker Institute, observed that the gives us to deal with the short retaries a chance to reminisce various comments offered by the term and to put in a fiscal stimulus about the bureaucracies, politics, panelists demonstrate the wide without having a significant ad- personalities, and policies they en- range of functions and responsi- verse impact on interest rates,” he countered during their years with bilities of the treasury secretary. said. the Department of the Treasury “You’ve got to deal with your Blumenthal cautioned policy and express their opinions of tax law-enforcement function, so you makers not to overshoot or overre- reform, recession, and other as- would be talking to the White act in their efforts to restore con- pects of the economy. House on that,” Baker said. “You sumer confidence. He warned that Edward Djerejian, director of would have to deal with the func- many lobbyists might try to use the Baker Institute, Rice Univer- tion of coordinating with the Fed- this emergency as an opportunity sity President Malcolm Gillis, and eral Reserve and injecting liquid- in the fiscal-policy area to fund the Steven Kotler, president of the ity, and you would have to be very same “pet projects” that they’ve Wilson Council, presented intro- diligent in talking to your counter- wanted all along. ductory and welcoming remarks. parts overseas to make certain that Brady observed that the The Carlyle Group and The they understand that the United economy was already headed Shell Oil Company Foundation States is going to deal with this in down before September 11. “You sponsored the forum, which was a rational, reasonable, and suc- have to analyze why we are where the third in a series of joint pro- cessful way.” we are,” he said. “What we’re in- grams between the Baker Institute The panelists also shared their volved with now is reversing out of and the Woodrow Wilson Center.

19

○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ PUTIN ○○ continued from page 3 “We have prepared very serious, qualitative changes

States, in terms of direct invest- ment to Russia, has fallen behind that correspond to the realities of today…. If we act the Netherlands, Cyprus, and Germany. Pointing especially to together, we could make the world a much safer place Germany as an indicator of Europe’s interest, Putin said he than the world we have now.” hopes that Americans will accept this as a challenge. “There are — Vladimir Putin

many stable sectors in Russia that

○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ are becoming an element of sus- ○○ taining the overall security sys- tions] are just a symbol, no one ranch they don’t get stained by tem,” he said, referring to its en- knows of what,” he said. “For our mud, and the same applies to in- ergy resources. “Russia continues part we have already taken steps to ternational relations. Cleanliness to be a reliable and predictable overcome the obstacles of the is a good symbol.” partner as a supplier of world oil past,” he said, “and now we expect During the question-and-answer and other natural resources.” He the constructive steps to be taken period, Putin expressed his keen named the Caspian Sea oil pipe- not just by the U.S. administration interest in NATO, saying, “There line, which involved U.S. invest- but also by the American business is no reason why Russia and ment, as a success story. community.” NATO shouldn’t pull our efforts Yet barriers still remain in the Putin concluded by saying that together, and why we shouldn’t do trade and economic fields, which in the Russian market, “your risks it today.” Russia is currently work- “should be removed definitively,” are much lower than a couple of ing with the alliance through a Putin said. In particular, he men- years ago. I think this is absolutely council framework. “We are pre- tioned the Jackson-Vanik trade obvious.” He then added: “Texas pared to expand our cooperation sanctions, imposed on Russia due cowboys have the heels of their with NATO,” he said. to past oppression of ethnic and high boots slanted inward to make Putin provided his assessment of religious minorities. “[The sanc- sure that when they work at the the situation in Afghanistan and

Vladimir Putin speaks to an audience at Rice in the company of (from left) James A. Baker, III, George H.W. Bush, Rice president Malcolm Gillis, and Edward Djerejian.

20 GREENSPAN continued from page 5

being less than wholly ethical. But I will say to you that those are the rare examples; the best chance you have of making a big success in this world is to decide from square one that you’re going to do it ethically, because what you’re going to find is not neces- sarily that if you are ethical you will succeed, but the probability that you will is significantly greater than if you are not. And I think you will find that if you suc- Edward Djerejian (right) reads questions from the audience to Vladimir Putin. ceed, and probably even if you do not, you will have gone through a outlined Russia’s position just as ballistic missile treaty, Putin said, life in the business world which he had outlined it in a recent “We have prepared very serious, has been a satisfying one, because meeting with the Northern Alli- qualitative changes that corre- you’ve lived by set principles ance leadership: the Taliban must spond to the realities of today…. which you thought were right.” not be represented in the future If we act together, we could make He continued: “I don’t know leadership of Afghanistan, and the the world a much safer place than what the job market is today, but new leadership should be repre- the world we have now.” it’s not important. It will take you sentative of all ethnic groups liv- Lastly, Putin answered a ques- a little longer to get a job but ing there and have support of tion from a Rice student about the that’s all it is, it’s a little longer. neighboring countries and the land-reform effort in Russia, say- “Be sure that irrespective of . He noted that the ing that it is not only a legal and what job you get involved with, U.S. and its allies are attaining political issue but also an emo- that you state right off at square goals of liberating regions from tional one. The lack of “trade one what it is you want out of life,” the Taliban and must now turn at- land” has been a serious impedi- he said. “I’ll tell you it’s been my tention to the problem of a politi- ment to the economy, he said. The experience that it really works to cal settlement. “At this point, the new law passed for free land trade be as ethical as one knows and to situation is being kept under con- in cities and townships is the right define one’s values in a very suc- trol, and indications are that we move, but complicated ownership cinct way. Set up a set of prin- are achieving our objectives,” he arrangements in agricultural lands ciples that you’re willing to live said. “We are coordinating our ef- mean that they must proceed care- with, and that will give you the forts, and we’ll continue to do so.” fully in those areas. greatest success and achievement He also supported continued ef- Putin’s visit was part of the in this world.” forts in bringing in the people re- Baker Institute’s Shell Oil Com- Greenspan’s address was part of sponsible for the terrorist attacks. pany Foundation Distinguished the Baker Institute’s Distinguished When asked whether the United Lecture Series and was co-hosted Lecture Series sponsored by the States and Russia are truly on the by the Baker Institute, the Rus- Shell Oil Company Foundation. threshold of a new strategic rela- sian–American Business Council, tionship in regard to nuclear ar- and the U.S.–Russia Business maments and changes in the anti- Council.

21 MONGOLIA because of their ties to Europe, a BOUTEFLIKA continued from page 8 connection the prime minister continued from page 9 hopes will aid their development that Mongolia can look beyond and ability to serve as mediator to anticipate the change in order to geography to the United States, regional countries. Enkhbayar also be among the prominent actors Europe, Japan, Korea, and other hopes Mongolia will serve as an on the international oil-and-gas countries as “neighbors.” example to other small countries, scene.” “This concept of third neighbor such as North Korea and Afghani- In response to audience ques- is the right concept for us to de- stan: “You have a chance to de- tions, Bouteflika commented on velop further,” Enkhbayar said, “to velop, to be part of the civilized the role of the United States and overcome the negative impact of world. You have a chance to be re- the conflict in the Middle East. having been a totalitarian re- spected by other nations. But to “The American administration will gime.” Enkhbayar is also proud of achieve that, you have to be demo- always be concerned with Middle opinion polls that indicate that cratic, be market-oriented, and East problems, which from my more than 80 percent of Mongo- have the same values as other point of view guarantees the stabil- lians consider the move to democ- civilized countries.” The agenda ity of the Arab people and coun- racy and a market-oriented of smaller nations is becoming tries,” Bouteflika said. It is in the economy to be the right choice very important, he noted, and United States’ interest that the for the nation. “there shouldn’t be any forgotten problems be resolved not only be- Mongolia has increased privat- countries.” tween Israel and Palestine, but ization by changing property laws In response to a question from also between Israel and Syria and and developing a legal system to a member of the audience, Lebanon, he said. “This is the protect private property. Future Enkhbayar pointed out that be- price, and only then will Arabs be plans include a national highway fore the September 11 tragedies, convinced that it’s the right way.” system and development in the oil the United States was spending Regarding his role in the con- and energy sector. Some six bil- $70 million annually in humani- flict in the Western Sahara region, lion barrels of oil might reside be- tarian aid to Afghanistan, but Bouteflika said it is easier to act as neath Mongolia’s surface, and now it’s spending $1 billion per an intermediary in a different re- Enkhbayar hopes to capitalize month to wage a war on the gion from one’s own. He empha- upon this resource, strengthening Taliban and al-Qaeda terrorists. sized that Algeria, the U.S., and both Mongolia’s economy and its “It’s not advice, just a natural con- the United Nations have all relationships with other countries. clusion, that maybe it’s better to worked “day and night” to resolve Mongolia, once considered a spend more before, to spend less the issues in the Western Sahara, “buffer” to China and Russia, is after,” he said. and though it may be difficult, he uniquely situated, Enkhbayar said, Following his speech, as a sign said a solution might exist to the and is learning about being a of Mongolia’s support of the problem there. He firmly con- “buffer state” to other countries. United States, Enkhbayar pre- demned the invasion of the West- The country is helping smoothe sented Gillis and Foster each with ern Sahara. cultural differences among Mus- a commemorative stamp Mongolia The president ended by saying, lim communities to its west, com- issued following the September 11 “We can’t say terrorists in Afghani- munist Confucian China to its tragedies. stan are bad terrorists while other south, Orthodox Christian Russia Enkhbayar’s address was part terrorists in Western capitals are to its north, and within its own of the Baker Institute’s Shell Oil good terrorists.” borders as a Buddhist nation. Company Foundation Lecture Bouteflika’s presentation was Mongolians are sometimes re- Series. part of the Baker Institute’s Shell ferred to as “Asian Europeans” Oil Company Foundation Lecture Series.

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○○○○○○○○○○○○○○○○○○○○ GONZALES Gonzales received a B.A. in politi- continued from page 13 “I ask those students cal science with honors from Rice before enrolling at Harvard Law tend to make over 100 nomina- School and later becoming a jus- tions,” Gonzales said. here tonight, ‘How tice on the Supreme Court of His office is also responsible for Texas. ensuring that members of the big can you dream?’ Gonzales said his dream of at- White House staff comply with tending Rice originated during his ethics laws and regulations. “This childhood years when he was a is an area that is a popular weapon Because that answer boy selling soft drinks at Rice Sta- of choice for opponents of recent dium. “I always felt that to have a administrations to cause embar- dream meant to have hope,” he rassment to the president, because tells me more said. He encouraged Rice students even the appearance of impropri- to hold onto their dreams. “I ask ety can generate a news story or— than anything else those students here tonight, ‘How at worst—a Congressional inquiry big can you dream?’ Because that and investigation,” Gonzales said. answer tells me more than any- “We try to be very diligent in re- about how successful thing else about how successful minding folks about the ethics you’re going to be, because that is rules.” you’re going to be, really the motivation behind your Advising the president about ex- success.” ercise of privilege is another duty Gonzales’s visit was part of the of the counsel. Complaints have because that is really Baker Institute’s Shell Oil Com- been made about secrecy at the pany Foundation Lecture Series. White House. Gonzales described the motivation the tension between the executive branch’s need to keep certain in- Baker Institute Report formation confidential, so that behind your success,” candid and open discussion is not Editors - Lia Unrau and B.J. Almond deterred, and Congress’s need to review the executive branch of de- Gonzales said. Photographers - Tommy LaVergne

Jeff Fitlow ○○○○○ cision making. “My job is to review ○○○○○○○○○○○○○○○ Liz Lynch each case carefully, make an evalu- ation as to when it is appropriate The counsel has a secondary 2002 by the Baker Institute for to release information, and make role in the development of policy. Public Policy of Rice University. that decision,” he said, adding The president’s lawyer also makes This material may be quoted or re- that he tries to find a way to ac- recommendations regarding clem- produced without prior permis- sion, provided appropriate credit commodate both the executive ency requests and provides legal is given. For further information and legislative branches. advice on national security mat- about the Baker Institute, please visit our website at http:// Gonzales stressed that his office ters. “People tend to forget that www.bakerinstitute.org. does not make litigation deci- there are many legal issues relat- For further inquiries and ad- sions—those are left to the De- ing to foreign-policy decisions dress changes, we may be reached by phone (713) 348-4683, fax partment of Justice. But he does made by the president,” Gonzales (713) 348-5993, or e-mail review and provide input on all said. [email protected]. major legislation, especially when Rice president Malcolm Gillis in- constitutional issues are impli- troduced Gonzales at the Baker The Baker Institute Report is printed on recycled paper. cated. Institute event, noting that

23 FROM THE UNITED NATIONS TO THE BAKER INSTITUTE

United Nations secretary-general Kofi Annan, at left on the video screen, addresses an audience at the Baker Institute during a teleconference October 11—one month after the terrorist attacks on the World Trade Center and the Pentagon. Shown watching the teleconference is William H. Luers, chairman and president of the United Nations Association of the United States of America (UNA-USA). Presented in the format of a town hall meeting, the teleconference was broadcast by satellite to 10 cities: Atlanta, Boston, Chicago, Denver, Los Angeles, Minneapolis, Seattle, St. Louis, Tampa, Fla., and Houston. Annan took questions from a member of the audience in each of the participating cities. The event was co-sponsored by the United Nations Association– Houston, the World Affairs Council, and the League of Women Voters and produced by the Better World Campaign, a project of the Better World Fund, which is a sister organization to the United Nations Foundation.

NONPROFIT ORG. U.S. POSTAGE PAID HOUSTON, TEXAS PERMIT NO. 7549 JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY—MS 40 RICE UNIVERSITY P.O BOX 1892 HOUSTON, TEXAS 77251-1892

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