Presentation to the Euro-Atlantic partnership council seminar
"Ten years of defense economics - Security and stability in
transition"
Bled, Slovenia January 28, 2002
By the Honorable Johnny Young United States Ambassador to Slovenia
Thank you, Mr. Chairman, for that warm introduction.
Distinguish guests, Members of the diplomatic corps, ladies and gentlemen.
I am pleased to welcome you here today to discuss stability and
security at this Euro-Atlantic Partnership Council Seminar. Economic
integration and cooperation yield great benefits. In this regard,
those countries that choose isolation do so at their peril. Economic
integration stimulates trade and investment, which in turn increases
employment, tax revenues, and competition. My message to you is that
Slovenia is a country that has gotten it right. This country is making
the right choices to foster stability in its own economy, and is now
exporting that stability regionally, through trade and investment.
Themes of national interest, collective security, and international
commitment fill newspaper headlines in Slovenia these days. Two weeks
ago the Slovenian Parliament opened its debate over NATO, inviting all
interested citizens and groups to make their comments for the record
before Parliament. The public debate brings up many tough questions
about why Slovenia wants to be part of NATO, and a wide variety of
responses. I think the why of NATO can be put simply: enhanced
stability and security, for Slovenia and her neighbors.
Creating Stability through Economics
Upon arriving in Slovenia last autumn, I was impressed at this
country's accomplishments. What I have seen in my travels around the
country since that time has confirmed those impressions. It is clear
that Slovenia is prospering. Since independence, Slovenia has
averaged annual growth of nearly four percent. Per capita income has
climbed to sixteen thousand dollars at purchasing parity, higher than
at least one member of the European Union. What are the reasons for
Slovenia's success? Governments have a wide range of economic tools at
their disposal: taxes, spending, interest rates, exchange rates,
regulatory mechanisms and foreign direct investment policy, and
Slovenia has used these effectively. Simply stated, Slovenia has used
economic policy to create stability.
Markets hold up a mirror to policy. Robust markets and strong
industries have developed where the Government has exercised good
judgment; letting competition determine which companies best serve the
Slovenian consumers. Slovenia's information technology sector is just
one example where openness to foreign direct investment and the
emphasis on education and competition have catapulted Slovene
companies to regional prominence. The Slovenian Company Hermes
Softlab proved this recently by winning a Macedonia tender in
cooperation with other multinational technology companies.
Integration is the second engine of Slovenia's success. Economic
integration underpins Slovenia's steady economic growth rate,
diversifying trade and investment. Slovenia traded one hundred and
twenty-two percent of GDP last year, linking this country even more
tightly to its neighbors.
Foreign direct investment plays a large role as well. Foreign
direct investment creates jobs for Slovenes and brings additional tax
revenue for the government. Investment brings with it new technology
and innovative management ideas, all contributing to Slovenia's
"national interest". I'm proud that U.S. investments are
contributing to the health of Slovenia's economy, and I will continue
to push for more. But the level of foreign direct investment remains
low, and I encourage Slovenia to open further, and reap the benefits
that accompany foreign direct investment.
In turn, this solid foundation will further enable entrepreneurs to
export that stability throughout the region. Let me give you another
example, this time from the pharmaceutical industry. Slovene generic
drug companies have a long history of cooperation with
U.S. pharmaceutical companies. The Slovene firms license drugs from
the innovators, then manufacture and market the pharmaceuticals in
Eastern Europe. This cooperation benefits both parties, and is not
unique to the pharmaceutical industry. Already, Slovenia is a leading
trader and investor in southeast Europe, providing capital and
employment throughout the region.
Avoiding Destabilizing Measures
Leadership comes with responsibility. Despite its small size, the
Slovene market is an important trading partner in the region. The
health of the Slovene economy directly affects its neighbors, and
strengthens the regional economy. As regional markets become more
integrated, the rewards for pursuing the right policies become
greater, while policy blunders cause severe internal and external
repercussions. Integration focuses attention on those countries that
seek to take a leading role in the region, as Slovenia has done. All
countries should continue to embrace economic cooperation and enjoy
the benefits that accompany it.
Conversely, destabilizing economic mechanisms must be avoided,
including protectionism, corruption, barriers to trade and
investment. Over-regulation and administrative barriers misallocate
scarce resources, limit competition and disadvantage the consumer.
Most destabilizing trends generally can be traced back to economic
imbalances and policy errors.
I do not argue that free markets are the magical answer to all
woes, but rather the alternative of over-regulation is generally
worse. The short-term profits of one or two domestics businesses
should not outweigh the cost to consumers in terms of choice and
price. Openness to trade, foreign investment, and competition are a
large part of the national interest.
Conclusion
The goals of regional cooperation, consultation and consensus
building are important. This seminar is proof that these issues
continuously confront us. Each import or export adds momentum to
regional integration, and each investment creates jobs and expands
government tax revenues. Each barrier to trade and investment moves
the country toward isolation. I want to conclude by recognizing
Slovenia's accomplishments in economic cooperation. Just as hard work
has helped Slovenia become a leading candidate for European Union
accession, market liberalization and reforms are making Slovenia's
economy stronger while also making it a good example for her
neighbors. The discussions and dialogue from this seminar can
contribute to this process in both the local and regional context.
This makes your work here very important and because of that I want to
wish you every success in your deliberations.
Thank you.
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