DECISION

Vol. 1 / N° 1 - 1997

LA
CONFÉRENCE

Le compte-rendu de la Conférence de Montréal 1996
# DE MONTRÉAL A report of the 1996 Conférence de Montréal

9 BACK TO THE FUTURE

Who better to lead the Conférence de Montréal through
the new world order than Henry Kissinger, the man
who, as foreign policy guru in the Nixon administra-
tion, straddled the globe with his towering intellect
and shuttle diplomacy.

35 L'EURO EN 1999

Le gouverneur de la Banque de France,
Jean-Claude Trichet, explique les principaux
enjeux de la mise en place de l'Euro.

41 COUNTRIES AS CORPORATIONS?

Competitiveness has been a hot topic lately.
Conferences focus on the subject, and a World
Competitiveness book is published annually. However
the movement also has attracted a prominent skeptic:
Stanford University Economist Paul Krugman.

47 RINGING IN THE NEW

The resulting challenge for Canadians is to create
the conditions for our firms and workers to be more
productive and, therefore, more competitive, noted
Lynton R. Wilson, president and CEO of BCE Inc.

52 LES GOUVERNEMENTS
PEUVENT-ILS GÉRER?

Le directeur du Monde Diplomatique, Ignacio Ramonet, nous expose comment, à l'échelle planétaire, les dirigeants actuels demeurent traumatisés par l'effondrement de l'architecture politique édifiée après 1945.

56 THE CHANGING FACE
OF LATIN AMERICA

Latin America is undergoing its own Quiet Revolution.
Enrique V. Iglesias, a former professor of economic
development and minister of external relations for
Uruguay, is well-placed as president of the Inter-
American Development Bank to explain those changes.

4 LE MOT DU PRÉSIDENT

Gil Rémillard

6 A WORD FROM THE PRESIDENT

Gil Rémillard

27 LA COMPÉTITIVITÉ;
UN CHOC DES IDEES

Yvan Allaire

28 THE ROAD WELL TRAVELLED

John McCallum

45 MON SEUL MOT D'ORDRE:
LA STABILITÉ

John Crow

59 CANADA EN TÊTE

Guy Saint-Pierre

61 LES CRITÈRES D'INVESTISSEMENT

Jacques Bougie

17 THE PRODUCTIVITY
CHALLENGE

In 1991, productivity virtuoso Michael E. Porter delivered a major report, *Canada at the Crossroads*, to the Canadian government. The Harvard Business School professor reviews his report and the progress Canada has made towards becoming more competitive as a nation.

Président-éditeur: Gil Rémillard

Éditeur associé: Daniel Boisvert

Conseillers à l'édition: Peter Scowen et Robert Fisher

Directrice: Marie-Christine DuPont

Administrateur: Guy G. Rhéaume

Rédacteurs: Annie Bourque et Harvey Schachter

Photographe: Pierre Roussel

Directrice de la publicité: Véronique Tremblay

Directrice de production: Patricia Dionne

Illustrateur: Shahid Réalisation:

Magazine Québec Entreprise

Pelliculage: Profilm

Impression: Imprimeries Quebecor inc.

Magazine Décision: 781, rue William, suite 101, Montréal, Québec, H3C 1N8

Téléphone: (514) 283-5142

Télécopie: (514) 283-6680

Internet: http://strategis.ic.gc.ca.ibin (anglais) http://strategis.ic.gc.ca.riia (français)

Dépôt légal: Bibliothèque Nationale du Québec, Bibliothèque Nationale du Canada

Publié pour La Conférence de Montréal

# BACK TO THE FUTURE

## Henry Kissinger maps future global politics and international relations by drawing from the past

BY HARVEY SCHACHTER

World Order. Those two simple words are pregnant with both meaning and mystification. And who better to lead the Conférence de Montréal through that tricky thicket than Henry Kissinger, the man who, as foreign policy guru in the Nixon administration, seemed to straddle the globe with his towering intellect and shuttle diplomacy.

When we talk of world order, Kissinger points out, we really mean that the overwhelming majority of nations which have a capacity to cause a disturbance — economically, politically or militarily — accept the existing system as sufficiently judged and they therefore will not upset it with violence or illegal actions. They will carry on relations in a peaceful manner because they trust the world order. If a significant group of nations feels either disadvantaged or unjustly treated, they will challenge the existing system.

"What makes the problem particularly difficult in the contemporary world is that never before has it been necessary to construct a world order on a global basis. It has never happened before that all the nations in the world could interact with each other simultaneously," Kissinger noted.

Before the advent of Europe, the various parts of the world operated in isolation. In the 17th century, for example, China and France had, for all practical purposes, no contact with each other. In effect, they were not part of the same world. Later, in the 19th century, world politics was essentially European politics. The major decisions sprung from the conflicts and maneuvering between the various European nations. Countries beyond Europe were either ignored or overpowered by the colonial empires.

At the end of World War II, the European central system collapsed. Simultaneously, over a hundred new nations appeared on the scene. Technology allowed them to link together and the world economy suddenly morphed into a global entity.

But Kissinger stressed that is all strictly a modern marvel. In the last century, when one new nation appeared, decades of dislocation usually followed. That happened successively with Russia, then Germany, and to

some extent Japan. "Now, as I said, over a hundred new nations have appeared, dozens of them in a position to disturb the global equilibrium. Moreover, the world economy has become global and decentralized and, therefore, it is possible for dislocations in one part of the world to produce extraordinary dislocations in others," he said.

In addition to traditional dislocations, we now have the potential for shocks wired into the system itself because of the modern financial structure's speculative nature. A trillion transactions take place each day, with only a small percentage commercial. Settlements are carried out simultaneously in different parts of the globe on computer screen, propelled by varying criteria. If suddenly everybody lurches to a similar conclusion and rushes to the same side of the financial boat, it can capsize. "Who would have thought it possible that a middle-level bank clerk could create $27 billion of assets in Singapore in the space of two or three days?" Kissinger asked. "This did not overthrow the system but it shows the potential for dislocation that exists in a global system."

Another problem arises from the link between employment and production. In the past, commensurability was assured between those two economic elements: as production increased, employment also rose. "Today, that is not necessarily the case and in the most advanced technological countries, it is least the case. So it is perfectly possible to have a significant growth in economic activity without a commensurable growth in employment. This gap between production and employment creates the potential for political crises in many countries of the world and, strangely enough, more in the developed than in the less-developed countries," Kissinger said, adding that, in the less-developed countries, it is most likely to strike those nations which have been introduced to more advanced methods of production.

> "Never before has it been necessary to construct a world order on a global basis. It has never happened before that all the nations in the world could interact with each other simultaneously."

DECISION — 9 — Mai 1997

(LC)

the problem of equilibrium. It must apply principles of national interest without expecting to control everything. "When I talk to an American audience, this immediately evokes resistance because of the preference to sweep all before us by the moral superiority of our positions," he said.

Kissinger then offered two seemingly contradictory propositions. It is not possible for Americans to abandon Wilsonianism. It is also not possible for America to apply that philosophy globally. In the western hemisphere and in Europe, up to the Russian border, the principles of market economics and democracy can operate as a unifying force. In those parts of the world, he believes that strategic conflicts are out of the question.

"I cannot foresee any significant war in the western hemisphere or any significant war among the traditional European countries. They might occur at the fringes of Europe, like Bosnia, but not among the major nations of Europe," he said.

"Therefore, it's possible to create structures in which politics and economics can coincide. And therefore, I have been a passionate advocate of NAFTA and I believe that the arguments in the United States that look at NAFTA entirely in economic terms are ridiculous. We have a self-interest, as far as Mexico and Canada are concerned, and especially as far as Mexico is concerned, to be part of the same economic and political system, and we have a long-term interest to have a relationship with the western hemisphere."

If not, other nations in our hemisphere will arrange themselves into common markets and make deals with other regional groupings that, in the long term, will be very damaging to North America. The same approach holds for relations between Europe and North America: "A free-trade area between a western hemisphere unit and an European unit is one of the important goals that we should set for ourselves, and I think it is one way of easing all the debates within Europe on what the exact internal structure of the European Union ought to be."

If the world merges into such a free-trade system, we will avoid the less palatable situation in which regional groupings are forced to guard their own interests in a more competitive manner. That's why he believes the Wilsonian principles can be implemented in the existing democracies. Where he parts company is when that is extended to American missionary efforts towards the rest of the world — Russia and China being the prime examples.

The United States, he noted, tends to view people in the rest of the world as incipient Americans. That outlook is applied, particularly, towards Russia. But Russian history shows that country has followed a very different rhythm.

> The toughest foreign policy challenge in dealing with Russia is to convince the nation with 11 time zones that it should not feel claustrophobic.

> "A free-trade area between a western hemisphere unit and an European unit is one of the important goals that we should set for ourselves."

Dr Henry Kissinger and Haitham Taufiq Al-Najjar, ambassador of the Republic of Iran

Americans also believe in the infinite changeability of human nature. Commonly in Hollywood movies, some man who is an absolute ogre all his life has an automobile accident, gets hit in the head and miraculously emerges with a cloying saintliness. But people — and, more importantly, nations — don't change that dramatically, Kissinger stressed. At best, it is very hard for them to change.

Russia expanded historically from its initial geographical patch around Moscow to the Pacific, into the centre of Europe and towards the Middle East — a territory encompassing 11 time zones. "It didn't get there by plebiscite. I know no people whose government has fought as many wars as the Russians have and have achieved so little for it. The whole system has been subordinated to the service of the state," with a corresponding collectivist outlook compared to the West's individualistic sensibility, Kissinger pointed out.

"St. Petersburg is closer to New York than it is to Vladivostok; Vladivostok is closer to Seattle than it is to Moscow. There is no reason to feel constrained in their territory, and with 20,000 nuclear weapons, nobody's going to attack them. So the problem with Russia is to get them

DECISION — 11 — Mai 1997

As well, we are living through what he believes is "one of the great changes in human consciousness, a change comparable to the transformation from the medieval period to the enlightenment period, which was a change from religion to reason, from memory to books, with the invention of printing. Now we move from the period of reading to the period of viewing. The generation that learns from computers and television and forms its opinion by pictures is different from the generation that was brought up on books. If you're brought up on books, you have to formulate concepts because you cannot possibly read everything that exists and, therefore, the trick is to learn how to relate seemingly disparate events to each other and project them in the future. When you have access to computers, you don't have to particularly train your mind to acquire a lot of information. All you have to know is how to access the computer."

He joked that working with a computer is a skill he has not mastered yet: "They're going to exhibit me in the circus one of these days." This new era marks a fundamental change in human consciousness. To illustrate, he told of asking his secretary to phone a recently-appointed secretary of state who, it turned out, she had never heard of. Kissinger was astounded. Half an hour later, she returned with 40 pages of documentation on the official that she had assembled through her computer. "Now she knew more than I did," Kissinger observed.

As the range of our immediate knowledge expands enormously, he suggested our capacity to project into the future diminishes. We get wrapped up in immediate technical problems while our ability to visualize a goal to which we can move is reduced. But, historically, a great statesmen's talent was leading people to unexplored terrain. "To do that, you need emotional security. You have to have some sense of history and some sense of certitude. This may not be possible in our current political processes and in the current way we look at things," Kissinger warned.

With that backdrop, he turned to exploring the international situation, stressing that he was offering an American's perspective. He opened by noting that the United States has never confronted a powerful neighbour. It has never had to address that issue of security because it has lived secure between two great oceans. Moreover, in America's formative period it was inhabited mostly by immigrants from Europe who departed their native countries with a sense of moral superiority. They felt there was very little to learn from the Old World and much to teach it.

That influenced American foreign policy, which, through much of the country's history, has been

isolationist. Its approach to the western hemisphere was manifest destiny — inspired less by foreign policy, he suggested, than by moral superiority: America felt it was entitled to dominate. That outlook led to the strange situation whereby the United States joined World War I three years late and suddenly concluded that a clash which had started as a cabinet war between the European countries was in fact a moral crusade. To attain peace, the United States concluded the German government had to be overthrown — something which had not occurred to anybody else — and that, afterward, democracy and self-determination must be spread all over Europe.

"The Wilsonian approach to foreign policy has been the dominant American theme for the rest of the century in both political parties. There's no big difference between the political parties on this theme and, therefore, American foreign policy has sort of oscillated between psychiatric and theological elements — between dealing with foreign countries as if they were individuals to which you can apply the normal discourse of human relations or dealing with them as moral outcasts that had to be destroyed. Either conversion or all-out confrontation has been the fundamental American theme, and you see it in the contemporary discussion in America, say, towards China," Kissinger stated.

That worked fairly well during the Cold War because the United States generated 50 per cent of global production, and much of the world was dutifully dependent on its support. As well, he noted, the Soviet Union's challenge contained both a moral and aggressively militant component, which corresponded to the American outlook. But, today, between five and seven countries have the capacity to affect the international order politically, economically, and, some, even militarily.

Many Americans believe their country currently is the only superpower and, therefore, can prescribe what the world order should be. "It is not true. We are a superpower only in the military sense, and our particular military power is not necessarily applicable to most of the crises that are likely to occur in the world," he said. Moreover, fewer and fewer problems will be solved in the future by military means.

America today produces 22 per cent of the world's economic product, making it the most significant, but not the dominant, global factor. That translates into an obvious political equation: if the United States manoeuvres itself into a position of permanent confrontation with the rest of the world, the rest of the world has more economic resources to draw upon than America. For the first time in its history, therefore, the United States faces

"If you're brought up on books, you have to formulate concepts because you cannot possibly read everything that exists and, therefore, the trick is to learn how to relate seemingly disparate events to each other and project them in the future."

American foreign policy through much of the country's history has been isolationist. Its approach to the western hemisphere was manifest destiny — propelled less by foreign policy than by moral superiority.

(LC)

DECISION — 10 — Mai 1997

(L)

for the first time in their history to address the develop-
ment of their own country, which is something they've
never done. They have always subordinated their people
to foreign adventures," he said.

"If that can be achieved, the economy will recover and then they can become a respected and important part of the international community. But today, their strategy seems to be to make the republics that used to be part of the Soviet Union ungovernable by multiplying their economic and internal difficulties so that they come back to Mother Russia. And if they come back, Russia will be right back to where it was before — a colonial empire with subject populations and a permanent sense of insecurity."

Russian policy will not be easy for the West. But there is no reason, he feels, for Russia not to become a more normal member of the international community. As for China, Kissinger, of course, was the first American official to visit that country in 1971.

"I confess I liked the Chinese people enormously, but neither Richard Nixon nor Mao Tse-Tung are going to go down in history as extremely sentimental people. The relationship was opened between China and the United States because it was believed by those two leaders to be in the national interests of those two countries," he recalled.

"It was in our interest because we wanted to make clear to the American public that we were interested in creating a new international system and that the Vietnam War was an aberration and not a permanent feature of our foreign policy. Secondly, we thought it was important in view of the Sino-Russian alliance that still existed on paper to express our preference for a system in which all of Asia and all of Europe was not united in one potentially hostile bloc.

"China opened to us because they were deeply worried about Russia and secondarily worried about Japan and because it had been a Chinese tradition that the distant barbarian is less of a danger than the close-by barbarian. On that basis, we developed a very good relationship, buttressed by a perception of common interests."

In recent years that relationship has been endan-
gered by the inability of many Westerners to under-
stand how China is different. When you ask an
American when an event happened, he or she will give
you a date, Kissinger noted. But a Chinese person will
give you a dynasty. There have been 14 Chinese dynas-
ties, seven of which lasted longer than the entire histo-
ry of the United States and three which lasted about as
long as the United States.

Similarly, when you travel in China every province
you encounter has a larger population than Canada and

many exceed the largest European countries. It is a civ-
ilization with a very different rhythm. It has been
around for 5,000 years, "only 250 of which the United
States has been available to give advice. They have
managed to stagger through all of that and they do not
take it as self-evident that we should prescribe their
internal structures to them," Kissinger dryly noted.

Still, it is possible to develop common interests with
China. Asia differs from Europe. Many of its countries are
inclined to contribute to stability on the basis of equilibri-
um, which fits a more traditional sense of foreign policy.

"There's no question that as China develops, it will become more powerful. That's inherent in the situation. But those Americans who have a nostalgia for the Cold War and who think we should start to contain China will find there are no takers in Asia. I know no Asian country that would join an anti-Chinese alliance and, therefore, we are talking in the abstract. I believe in this period we should make every effort to see whether some common approaches can be developed with the Chinese government and, at the same time, to see what structures in the economic field can be created to accommodate this enormous increase in production that will be sent upon the world," he said.

Promoting free trade is an obvious course. But while free trade is statistically of benefit to everybody, Kissinger pointed out that it is not of equal benefit to all contributors to the free trade system. Countries or areas that receive a lesser benefit will turn to their political system for protection. An international system, therefore, must be developed to handle these tensions. They cannot simply be ignored or dealt with by presenting unilateral demands under the threat of blackmail.

Very rarely, Kissinger concluded, has an international system been created from scratch. There were occasions when the European system was created from scratch. But it has never happened that a global system had to be created from scratch while everything was changing simultaneously. That presents a tremendous challenge, requiring both imagination and restraint.

"When there is turmoil under the heavens, little problems are dealt with as if they were big problems, and big problems are not dealt with at all," he said, quoting from an old Chinese proverb. "When there's order under the heavens, big problems are reduced to little problems, and little problems should not obsess us. I think that's our real challenge. We deal with too many little problems and let too many big problems go by. If we want to talk of global systems, we have to learn to reduce big problems to little problems. That's the great challenge of our period." ☐

"When there is turmoil
under the heavens, lit-
tle problems are dealt
with as if they were
big problems and big
problems are not dealt
with at all."

There have been 14
Chinese dynasties,
seven of which lasted
longer than the entire
history of the United
States and three which
lasted about as long
as the United States.

DECISION -- 12 -- Mai 1997

# LA RÉGIONALISATION PEUT NUIRE À LA MONDIALISATION

## Le nouvel ordre international est tributaire de l'interaction entre les régions du globe

PAR ANNIE BOURQUE

M. Kissinger était l'invité d'honneur à l'ouverture de la Conférence de Montréal. Lors de son allocution, il a décrit le portrait général de la situation mondiale. Après analyse de la situation de certaines régions et nations, il affirme que pour la première fois, un ordre international existe globalement. « Jamais auparavant, dit-il, n'a-t-on connu un degré d'interaction si élevé entre les nations. » Autrefois, les sociétés étaient isolées, séparées les unes des autres. L'ordre international était défini par les limites géographiques. Ainsi, jusqu'à la fin de la Seconde Guerre mondiale, la politique internationale était synonyme de politique européenne. Aujourd'hui, cependant, les développements technologiques et économiques ont modifié considérablement cette situation.

Les principaux acteurs de cet ordre international sont les États-Unis, la Chine et la Russie. M. Kissinger connaît intimement le rôle et la vision des États-Unis dans la conduite des relations internationales. Contrairement aux pays européens, les États-Unis n'ont pas de véritables problèmes de sécurité. Leur isolement continental et leur domination de l'hémisphère occidental en sont les principales raisons. « Les États-Unis, dit-il, se considèrent comme moralement supérieurs. Leur politique étrangère est donc caractérisée par deux éléments fondamentaux qui la transforment en une véritable croisade morale. D'abord, les États-Unis se sont donnés comme mission de s'opposer à tous les gouvernements « rebelles » qui perturbent l'ordre mondial. Deuxième, les États-Unis se sentent responsables de la diffusion de la démocratie à travers le monde. »

Ces approches, qui visent à corriger les nations « déviantes », « malades » et « théologiques », et à répandre la démocratie, sont présentes dans la politique étrangère américaine depuis la Première Guerre mondiale. Pendant la Guerre froide, cette politique a connu encore un certain succès. Il était simple de « démoniser » l'URSS et de s'opposer au communisme. Qu'en est-il aujourd'hui ?

Avec la fin de la Guerre froide, M. Kissinger considère que les États-Unis sont encore une superpuissance sur le plan militaire. Or, la puissance militaire est de moins en moins considérée comme un facteur déterminant de la puissance d'un État sur l'échiquier mondial.

Dr Henry Kissinger, conférencier à la Conférence de Montréal 1996

D'autre part, M. Kissinger pense que la régionalisation peut nuire à l'équilibre mondial. « Le libre échange transatlantique est essentiel pour éviter un système de libre-échange régional. Il est nécessaire pour l'Europe et l'hémisphère occidental de se fixer des buts et des

DECISION — 13 — Mai 1997

objectifs communs. C'est par un système transatlantique que pourra se réaliser un système global de libre-échange. Ce système global est nettement préférable à un système de blocs. Le lien européen est donc la clé de voûte pour un nouvel ordre international.»

Dans d'autres régions du monde, certains pays vivent des problèmes spécifiques. La Russie, par sa nature expansionniste et son instabilité ethno-que, en est un exemple. M. Kissinger pense que la Russie doit mettre un terme à ses incessantes inquiétudes territoriales. «Les guerres survenues dans le passé ont contribué à alimenter le sentiment d'insécurité du

peuple russe. Il est temps que cela cesse. La Russie n'a pas à avoir peur. Elle n'a pas à souffrir de claustrophobie. Elle n'est plus menacée de toutes parts. La Russie doit maintenant s'assumer et penser au développement de son pays. Elle doit cesser de vouloir

solutionner ses problèmes à l'extérieur de ses frontières. En reconstruisant la Russie de l'intérieur, l'économie russe pourra enfin se remettre en marche.»

«Aujourd'hui, l'ordre international ne se limite pas à 15 ou 20 pays; il en englobe plus d'une centaine. «Tous ces pays ont des échanges et des interactions quotidiennes. Maintenant, nous pouvons vraiment affirmer que l'économie internationale est globale.»

D'autre part, la Chine, selon M. Kissinger, représente un défi différent. La communauté internationale doit s'efforcer de comprendre la culture, la mentalité et la réalité chinoises. Il s'agit d'une question de perception. Les Chinois, par exemple, ne tolèrent pas l'interférence de la communauté internationale dans leurs affaires domestiques. «Un peuple qui se gouverne depuis des millénaires n'a pas de leçon à prendre de qui que ce soit. La Chine, par sa population et

par sa longévité, vit à son propre rythme. Les nouvelles relations avec la Chine doivent être axées sur les intérêts communs. Les Chinois comprennent bien la notion des intérêts communs. C'est elle qui leur a dicté un rapprochement avec les États-Unis, il y a vingt ans.» M. Kissinger considère primordial d'accueillir la Chine dans la communauté internationale.

L'ancien secrétaire d'État américain conclut que le libre-échange et la globalisation sont certes des éléments qui contribuent à la stabilité du nouvel ordre international. Toutefois, ils ne sont pas une panacée. «Le nouvel ordre mondial doit être créé de toutes pièces. Les différentes sociétés font face à une tâche colossale où l'imagination et la maîtrise de soi seront des qualités vitales pour affronter l'avenir.» ☐

## Note biographique sur Henry A. Kissinger

Le célèbre homme politique américain est né à Fürth, en Allemagne, le 27 mai 1923. M. Kissinger devient citoyen américain en 1943. Il sert dans l'armée américaine avant d'amorcer une brilante carrière de professeur à l'Université Harvard, où il avait d'abord étudié. Secrétaire d'État américain, de 1973 à 1976, il est une figure de proue dans la conduite des relations internationales. En 1973, M. Kissinger reçoit le prix Nobel de la Paix pour ses efforts de rapprochement avec le Viêt-Nam. Le docteur Kissinger est actuellement à la tête de Kissinger Associates, une firme internationale de consultants. Il siège sur de nombreux conseils d'administration et est aussi conseiller de la Chase Manhattan Bank.

Illustration : Shahid

DECISION

14 Mai 1997