U.S. State Department Geographic Bureaus: Latin America Bureau

U.S. Department of State
95/10/31 Address: Thomas McLarty on the Americas
Bureau of Inter-American Affairs

As prepared for delivery

Keynote Address by
Thomas F. McLarty III
Counselor to the President
at the
Energy Ministerial of the Americas
October 31, 1995

Thank you for those kind words of introduction.

Extremely pleased to be here today, to see such a large and enthusiastic gathering of friends of the hemisphere and the Summit of the Americas process. I especially want to thank Secretary O'Leary and Minister Arrieta for inviting me to speak today.

It's especially appropriate this Ministerial is being co-hosted by the Government of Venezuela. Venezuela is a global energy leader, and a secure, dependable energy supplier to the hemisphere. In fact, Venezuela is now the number one oil exporter to the United States, having taking the mantle from Saudi Arabia in August.

Like Secretary O'Leary, who has a long and impressive record of government service and leadership in the electric energy sector, Minister Arrieta brings a sure hand and a lengthy leadership record. Within Venezuela, Minister Arrieta has played a critical role in fostering national consensus to open the energy sector to private investment. His legacy will benefit future generations.

I also note the presence of Minister Julio Sosa, who is with us today from Caracas. Minister Sosa has been a true champion of hemispheric energy cooperation, and his leadership has been crucial as we move together toward economic integration and energy cooperation in the Americas.

I'm pleased also that Luis Giusti, President of PDVSA, can be here today. Luis, I know and respect the job you are doing in Venezuela, and around the world.

Prior to my current position as Counselor to the President, I served as CEO of Arkla, a Fortune 500, NYSE listed company in the natural gas industry. Many of you are familiar with the company. And I was also the fourth generation in a family business, so I know and respect your challenges and opportunities in the energy field. In fact, with all the truly exciting changes we are now witnessing--and, indeed, creating--in the energy sector throughout the hemisphere, I find myself casting a wistful eye at my former industry and wondering why I agreed to come to Washington.

Washington is a tough arena in which to operate, as you know if you've been following the ongoing budget battles we are currently engaged in with Congress. Harry Truman once said, if you want a friend in Washington, get a dog. In fact, I'm increasingly coming to believe a friend in Washington is someone who stabs you...in the chest. So Luis, I applaud your work, and I envy your role.

Incremental Approach

Pursuing economic integration in the hemisphere is one of our highest priority goals, and President Clinton has compiled an impressive record in taking actions designed to usher in a new age of open markets and prosperity hemisphere-wide. Critical actions have included his strong support for NAFTA, the GATT Uruguay Round, and the Summit of the Americas. The President has pursued a building block process, one step at a time, which has added up to a comprehensive strategy to beat down protectionist and other barriers to commercial and investment activity.

By maintaining high external barriers, we do not lock out other's problems; rather, we lock up our own talents and initiative. We cannot go on shackling economic dynamism which will be immediately released once the hemisphere is fully integrated. Our strategy is visionary yet achievable, bold yet practical, dramatic yet fully grounded in the experiences and prerogatives of individual nations. And with your help, we will succeed.

Ministerial Supports Summit

This Ministerial is a forceful statement of support for implementation of the Summit of the Americas agenda. It is testament to the aspirations of our hemisphere for a better, more prosperous future.

We have truly embarked upon a historic period in hemispheric relations. When historians look back on the 1990's, they will be struck by the ongoing, quiet revolution which has occurred to bring about systems of governance and economies which increase individual freedoms and support the dignity of person. Voters and consumers are now king. Choice fostered by free market competition--both political and economic--is now inherently valued, and is leading to the rise of a vibrant and growing middle class across the hemisphere. Our actions are right, and they are just. Now, we must stay the course.

The Summit of the Americas codified and institutionalized these changes by bringing together for the first time the leaders of every democratically-elected nation in this hemisphere, in a spirit of mutual understanding and cooperation. As the Summit recognized, for the first time in history a new consensus of the Americas has formed. Open markets work. Democratic governments are just. And together, they offer the best hope for lifting people's lives.

At the Summit, our leaders called on us to develop our energy sectors. Not in a blind race for increased energy production at any cost, but in a sustainable manner friendly to the environment. Improved access to clean, economic, market-priced energy sources is a critical aspect of hemispheric development. And the Summit also recognized the need to increase trade and financing that can affect large energy investments. As we just heard from Enrique Iglesias, the IDB is prepared to join hands with the private sector to lead the way in energy financing. The United States strongly supports this effort.

As our Summit agenda is implemented, as trade flourishes and sustainable economic growth takes root, energy demand in the hemisphere will increase dramatically. Success in one area--economic development--will be determined in part by availability of market-priced energy resources, as the new middle classes demand the benefits of electricity and the mobility of transportation.

And with each additional increment of economic development, demand for energy resources will increase commensurately. It is a gordian knot which democratically elected governments will be required to untie. In part, our ability to deliver the fruits of democracy--the very legitimacy of governments--will be judged by our ability to develop energy resources in a sustainable manner hemisphere-wide.

Leaders at the Summit recognized this fact, which I cannot overemphasize: universal access to safe, clean, economical and environmentally-sound energy is a critical building block for national sustainable development. It is fundamental to the success of our Summit agenda.

At bottom, the purpose of the Summit was to improve the daily lives of all our citizens. Our presence today advances this goal. We want to improve electricity generation to run schools during the day and provide light for students to do homework at night; to fuel microenterprises and small businesses throughout the region, providing broad-based economic opportunity to those who have traditionally been shut out from the rewards of economic growth; to replace slash and burn energy consumption which irreparably scars the environment with more efficient, eco- friendly energy sources; to reduce choking pollution in our cities through more prudent use of cleaner fuels in automobiles and buses; to revolutionize household management by allowing refrigeration of food and drink; to maintain stable supplies of energy for planning and development purposes without relying on potentially unstable regions of the world. We really are in the midst of a revolution on the demand side.

But there are also unprecedented opportunities on the supply side. Today, nations with unexploited hydrocarbon resources are aggressively moving to fill the vacuum created by the virtual withdrawal from world markets of Iran and Iraq. Together, these two countries control one quarter of the world's petroleum reserves, but their adoption of policies contrary to international norms of behavior have isolated them from vibrant participation in markets worldwide.

Now is the time for others to exploit this opportunity, to expand market share and solidify supply relationships. What an opportunity for wise investors to profit in a sector so critical for hemispheric economic development--to do well by doing good.

Concrete Actions Throughout the Hemisphere

This message is already getting through.

In Mexico, Minister Pichardo is overseeing an overhaul of natural gas distribution, transmission, and storage that will make Mexico even more competitive in the oil and gas sector, already one of the region's largest and most successful industries. And Mexico is also leading the way in rural electrification, renewable energy, and energy efficiency.

Minister Gonzalez is extending Bolivia's electric grid into rural areas, enhancing economic development while curbing the deforestation which results from using wood as a primary fuel source. And this grid is being fueled by natural gas--cleaner burning and locally produced.

In a regional partnership, Minister Gonzalez is working closely with domestic and international energy companies, the government of Brazil, and the multilateral development banks to tap Bolivian natural gas for export.

Brazil is opening its energy sector to foreign investment, and in addition to constitutional reforms to change the underlying economic fundamentals, President Cardoso has pushed through a law providing for the granting of public concessions in areas such as electricity generation, transmission, and distribution.

Argentina is engaged in one of the most ambitious and successful energy sector reforms and privatization programs in history, and is also pursuing energy cooperation with neighboring Chile. Such joint cooperation is a welcome step, not just in energy terms, but also in what it represents for overall cooperation and stability in the Southern Cone. Oil and gas prices have been deregulated, and state-owned companies privatized. Not surprisingly, oil production has risen more than 15 percent.

Abroad, the Argentines are reactivating oil fields in Venezuela, and bringing new management and capital to other companies in the Americas, such as Maxus Petroleum here in the United States.

President Figueres has personally led Costa Rica's efforts to match economic growth and energy development with environmental protection. Nearly 80 percent of Costa Rica's electrical capacity is renewable hydro-based. Costa Rica was the first country to sign a bilateral agreement with the United States on joint-implementation to reduce greenhouse gases, and the Central American countries have also signed a regional agreement with the United States. We are working to expand this partnership throughout the hemisphere.

In the Caribbean, Trinidad and Tobago is reducing its dependence on oil and fostering downstream industries, like fertilizers and methanol, using abundant natural gas reserves. The country is also moving forward on a world-scale liquefied natural gas project to serve export markets.

Revolutionary Times

As these actions across the hemisphere show, we are living and working in revolutionary times. Dramatic changes in patterns of energy production and consumption are transforming the way we conceptualize development possibilities--and probabilities--throughout the hemisphere. Independent power generation has already begun to increase consumer choice, make available "green" alternatives, and lower the costs of electricity, all the while improving our stewardship of the natural world which our Creator has given us.

The opportunities are endless, if only we have the vision, the creativity, and the perseverance to pursue them. Indeed, one of the great benefits of this Ministerial has been the opportunity it has afforded us to share experiences and compare strategies as we address common challenges--and uncommon possibilities.

As we've discussed over the past days, our plans are ambitious, but with a spirit of continued hemispheric partnership, in government and the private sector, in pursuit of common goals, we will succeed. Common sense policies, practical solutions: that's just about where we ought to be. Let us attack insecurity by confidently defining the future.


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