Embargoed Until 2 AM Contact: Public Affairs

Wednesday November 20, 2002 (202) 622-2960

**United States Treasury Secretary Paul H. O'Neill**

**Prepared Remarks at Lahore University Management School**

**Lahore, Pakistan**

**November 20, 2002**

Good Afternoon. Assalam-u-alaikum. Thank you for a warm welcome to
Lahore University, and thank you for your kind hospitality in this holy
month of Ramadan. I consider it an honor to visit the nation of
Pakistan, to recognize the friendship between the Pakistani and American
people, and to speak with you about the shared aspirations of our
people: peace, security, and prosperity.

My visit to Pakistan is proving a wonderful opportunity to learn more
about Pakistani culture, and it has also been a great opportunity to see
and understand the challenges our peoples must face together, if we are
to speed economic development in this nation, this region, and
throughout our world.

It is also a special pleasure to meet with students today. I believe
that economic growth and prosperity are founded on the exchange and
realization of ideas -- and it is in institutions of education, such as
this one, that so many ideas are created and shared. Even more
fundamentally, exposure to new ideas, discussion of them and reflection
on them, is the basis for the life of the mind that educated men and
women hold dear.

I am not a scholar of Islam, but I know that the Koran makes more
references to "ilm" -- knowledge -- than all but two other words. There
can be no doubt that learning is at the center of all civilization.

As Mohammed Ali Jinnah said in 1941 to a Muslim Students Federation:
\"There are at least three main pillars which go to make a nation worthy
of possessing a territory and running a government. One is education.
Next, no nation and no people can ever do anything very much without
making themselves economically powerful in commerce, trade and industry.
And lastly, you must prepare yourselves for your defense.\"

**PO-3634**

You who are pursuing knowledge, and are specifically pursuing knowledge
of business management, are preparing to contribute to your nation's
strength in both education and industry, combining two of these pillars.
I applaud you for it. In your support for our peoples' shared struggle
against terrorism and terrorist financing, you are contributing to the
third pillar as well.

Today I would like to share with you a few of my observations in the
worlds of business and economic development, and consider how these may
apply to your careers, and the challenges facing your country.

Let me start with the most general observations. As I have traveled the
world over the last quarter century, both as a leader of major
industrial companies and as a leader in the United States government, I
have been struck by two things. First, there can be no question that
human beings everywhere, with education, training, and a stable social
environment, can perform value-adding work at levels that match the best
in the world.

That means they can earn compensation that brings personal independence
and allows them to pursue the good life for themselves and their
families. Human beings everywhere have in them the ability to achieve
the same high standard of living.

My second observation is this: in spite of a common potential for
achievement, the disparity of living standards among the world\'s people
is so vast it defies the imagination of those who have not seen it for
themselves.

I ask why. Why is it, if all people have the capacity to create a good
life, that so many billions live today with little hope for what we know
is possible? I believe this is the question for us and our time, and it
is a question whose answer shall be found not only in the high councils
of governments, but in the institutions of learning such as this one,
and in the companies you will launch and lead.

If you have studied the economic history of the last 300 years it is
easy to see that there is no absolute limit on world economic product.
Every business student should understand that economic prosperity is not
a sleight of hand -- one man or woman taking from another. Economic
prosperity is an act of creation. The world's economic bounty is limited
only by our imagination -- our ability to conceive new ideas for value
creation, and our ability to lead people to work in harmony, to make
those ideas into a productive reality.

Education is clearly one of the keys to business success, and more
broadly, for economic development. It is important not only at the
graduate level, at Lahore University and elsewhere, but at every level
and every age, beginning in early childhood, for men and women alike.
Pakistan must devote resources to schools and curriculum throughout the
nation, in the cities, and in the countryside, especially to improve
literacy among girls and women. Today, over 70% of Pakistani females
over age 15 are illiterate -- one of the highest percentage of female
illiteracy in South Asia. 41% of Pakistani girls ages 11 to 15 are
enrolled in school, a low point among South Asian nations.

I believe that every child should be literate and capable in basic
mathematics by age 10. Early education creates the foundation for
achievement later in life, and allows individuals to contribute more to
the economy and the society.

Of course, education is not the only requirement for a nation to achieve
its economic potential. To unleash the potential of an educated people
and the private sector, the leadership of the nation must make a strong
commitment to ruling justly, encouraging economic freedom, and investing
in people. A just and stable social environment that combines these
elements is not an option, it is a necessity.

Ruling justly means enforcing laws and contracts fairly, respecting
human rights and property rights, and fighting corruption. Encouraging
economic freedom means removing barriers to trade with neighbors,
opening economies to investment and competition, pursuing sound fiscal
and monetary policies, and divesting government from business
operations. Investing in people means providing clean water and the best
possible systems health care, and as I have emphasized, education.

Over the past fifty years the world has seen that these principles work,
as long as a nation's leaders are committed to pursuing them, and as
long as those leaders are held accountable for measurable progress. In
centuries past, enlightened rulers implemented these principles.  For
example, I visited Lahore Fort today, built by Akbar the Great in the
16^th^ Century, the Mughal Emperor known for ruling this land justly,
enforcing its laws fairly, respecting all religions and defending human
rights.  I also visited the Divan --e-Aam, the Hall of Public Audience,
built by Shah Jahan, to encourage the public's participation in how
their empire was run. These examples of tolerance and justice are
relevant even today.

As future business leaders of Pakistan, and students of management, I am
certain that you can appreciate the importance of each of these
principles. For example, any business requires capital to grow. Yet
capital is a coward. Investors are reluctant to put their capital into a
company if it exists in a place where capital, contracts, and property
rights are not respected. Understandably, they will not chance losing
their investments to corrupt officials, or to public or private theft. I
am not only speaking about international investors. I am speaking about
any individual, even in the smallest village, who has savings that he or
she would like to invest and put to work. Families that cannot trust
their local banks, or local officials, will protect their savings at
home when that money could be invested, fueling the economy.

As a result, without just rule, the leaders and entrepreneurs who would
deploy new ideas, create jobs, and raise standards of living cannot
obtain the capital they need, or they must pay an exorbitant cost for
that capital. Economic growth falls short.

Just rule is also important for alternative forms of capital, such as
microfinance -- small loans to entrepreneurs, especially those who are
female, poor, or rural. I had the privilege of attending a world summit
on microfinance in New York last week, which First Lady Begum Sehba
Musharraf attended on behalf of Pakistan, and I believe Pakistan is
making progress on improving access to capital for the smallest
businesses. This morning I visited a women's sewing workshop in Natt
Village funded by microcredit, and their accomplishments were inspiring.
With 5000 inhabitants, Natt has no functioning school and women have
little access to education or income generation. Now, thanks to the
leadership of Shaheen Atiq Ur Rehman, the community offers vocational
skills training and literacy programs. Rehman bears witness to something
I believe very strongly -- that it takes homegrown entrepreneurs and
small businesses to create the knowledge in a community that is the
foundation for economic success.

Economic freedom is the second key element of an environment that
enables individuals, families and whole societies to prosper.
Individuals must have the freedom to pursue new ideas for production,
investment and trade without having to ask permission from a seemingly
endless series of officials in a bureaucratic gauntlet. Laws should
allow competition and creativity, so that consumers free to choose among
products force businesses to innovate and improve the quality of what
they produce, and in so doing improve productivity and create jobs.

Economic freedom also demands lower barriers to regional trade. Trading
costs are naturally lowest with one's closest neighbors. The two largest
trading partners of the United States, for example, are Canada and
Mexico. I hope for a day when Pakistan and its closest neighbors --
Afghanistan and India -- will enjoy more fully the benefits of open
regional trade. Neighbors have much to offer and to gain from each
other.

The third element of a social environment that invites prosperity is
investment in people. Education is an essential aspect of human
investment, as I have discussed. Health care and clean water supplies
are also crucial. Public leaders must dedicate themselves to investing
public monies in the public good and ensuring that those investments are
done right, so they actually make a difference in the lives of citizens.
All of society reaps the returns of such investments.

At the beginning of my remarks, I quoted Mohammed Ali Jinnah, and his
three pillars of a worthy nation. I have spoken of the pillar of
education. I have also spoken of the pillar of strength in commerce,
trade, and industry, and of the close links between these two pillars.
Before I close my remarks, I would also like to mention our nations'
shared interest in the third pillar, of defense.

The freedoms we all enjoy, the rich cultures we each treasure, and the
prosperity we all seek are all threatened by terrorism. Terror is the
enemy of civilization -- of every civilization, regardless of culture or
religion. We in the United States are a friend to all religions and
cultures of the world. We believe that all the civilized people of the
world, whatever their religion or culture, are bound together by their
shared desire to eliminate the threat of terror. The ties of trade, of
history and of friendship make America and Pakistan partners against the
terror that threatens all of our freedom.

We fight together against an enemy that corrupts the language and values
of a great religion, to serve a cause of mindless and heartless hatred.
As we are served by education and the free exchange of ideas, they are
served by ignorance and fear of those who are different. The people of
the United States appreciate Pakistan's commitment to the war against
terror, and the war against those who would knowingly finance terrorist
activities. Just as education -- just as "ilm" -- is the key to
prosperity, it is also the ultimate weapon to ensure that one day soon,
terror is no more. In that spirit, I believe we can bring peace and
security to this region and our world, and with it, prosperity for all.

My travels here and around the world have given me great hope for the
future of economic development in Pakistan. Given the great potential of
the Pakistani nation, I am confident that with a strong commitment to
education and a leadership that is devoted to ruling justly, encouraging
economic freedom, and investing in people, Pakistan will achieve a new
level of prosperity -- not in the next generation, but in this one.

Thank you, and a blessed Ramadan to all.