Kissinger Kissinger - Hume Horan obituary in WP

Mr. Horan served in the Army from 1954 to 1956, graduated from Harvard College in 1960 and joined the Foreign Service. He received a master's degree from Harvard's Center for Middle Eastern Studies in 1963.

Mr. Horan requested a first assignment in Baghdad, a choice unusual enough that the undersecretary for management remarked, "I don't get many volunteers for Baghdad." Mr. Horan studied Arabic in Beirut and later in Libya. From 1966 to 1970, he served as Libyan desk officer in Washington during Moammar Gaddafi's coup and congressional fellow to Rep. Brad Morse (R-Mass.) and Sen. Edmund S. Muskie (D-Maine).

In 1970, Mr. Horan was assigned to be a political officer in Amman, Jordan, and from 1972 to 1977, he was deputy chief of mission in Jeddah, Saudi Arabia. After a stint in Washington, culminating in an assignment as principal deputy assistant secretary of state for consular affairs, Mr. Horan was named ambassador to the Republic of Cameroon in 1980 and non-resident ambassador to Equatorial Guinea.

He became ambassador to Sudan in 1983, a time that included the rescue of Ethiopian Jews and their transport to Israel, terror attacks against the embassy and the overthrow of President Nimeiri.

He spent 1987 as a diplomat-in-residence at Georgetown University and then was assigned to Saudi Arabia. After the incident in Riyadh, he was recalled to Washington.

In 1992, Mr. Horan was named ambassador to Ivory Coast, which he described as "a pleasant and stable country, at least until the death of the country's founder." Upon returning to the United States, Mr. Horan spent a year at Howard University as diplomat-in-residence, directed the African training program at the Foreign Service Institute and retired in 1998.

Mr. Horan retained an optimism and idealism about the diplomatic corps. In a 1992 article for The Washington Post's education issue of Book World, he wrote that Foreign Service officers "are the infantry of American diplomacy. We'll never be able to dispense with them. Consistently to work at our national purposes, someone has to be on the scene, speak the language, meet with the leaders, make the argument and report back -- saying what he or she thinks we should do."

For his work with the Coalition Provisional Authority in Baghdad in 2003, he received the Department of Defense's Distinguished Public Service Award, the Pentagon's highest honorary award for private citizens.

Mr. Horan was an enthusiastic cyclist, having toured in France, New Zealand and many parts of the United States. His other interests included French, German, Spanish and Arabic literature -- he translated a novel and several short stories from Arabic into English. He was the author of a novel about the Foreign Service, "To the Happy Few."

He was a longtime member of Chevy Chase Presbyterian Church and was deacon and elder more recently at Georgetown Presbyterian Church.

His marriage to Nancy Reinert Horan ended in divorce.

Las Vegas SUN: Ambassador Who Specialized in Mideast Dies

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# Ambassador Who Specialized in Mideast Dies

By WILLIAM C. MANN

ASSOCIATED PRESS

WASHINGTON (AP) - Hume A. Horan, a U.S. diplomat in the Middle East through some of the region's most turbulent times, has died of complications from prostate cancer, his wife said Saturday. He was 69.

Horan's last diplomatic posting in the region, as ambassador to Saudi Arabia, ended after six months when King Fahd told him to leave. The State Department attributed the abrupt departure to a personality conflict.

Early in his career, Horan was:

- A Libyan desk officer in 1969 when a 27-year-old army officer, Moammar Gadhafi, led a coup that ended the rule of King Idris and installed Gadhafi as Libya's ruler.

- A political officer in 1970 in Amman, Jordan, when Yasser Arafat's Palestine Liberation Organization began and lost a bloody rebellion against King Hussein.

- Deputy chief of mission in Jiddah, Saudi Arabia. He held that job in 1973, when OPEC ordered an oil boycott after that year's Arab-Israeli war, quadrupling the price of gasoline. And Horan still was in Saudi Arabia in 1975 when King Feisal was assassinated by his nephew, a Muslim religious extremist.

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7/26/2004

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Horan died Thursday in a Virginia hospital, said his wife, Lori Shoemaker.

Horan's last Middle East assignment was his second in Saudi Arabia. His problems began with King Fahd after the United States learned in 1988 that the Saudis had bought from China medium-range missiles that could reach Israel.

In an obituary Horan wrote for himself, he said the State Department told him to protest strongly to Fahd that the missiles were unacceptable; he received word later that "a message different in tone and substance" had been given to the Saudi Embassy in Washington.

"Having incurred the King's anger, Horan was recalled to Washington," Horan wrote.

The State Department denied media reports then that the missiles caused Horan's departure. An official contended the ambassador and Fahd had a personality conflict.

Before that assignment, Horan had been the ambassador in Arab-ruled Sudan, where his embassy brokered the agreement with then-President Gaafar Numeiri to facilitate Israel's 1984 airlift that evacuated up to 15,000 Ethiopian Jews to Israel through Sudan.

His first assignment for the Foreign Service was in Baghdad. He retired in 1998 but returned to Iraq for six months last year to be senior counselor to the now-defunct Coalition Provisional authority, dealing mainly with religious and tribal affairs.

He also served as ambassador to Cameroon, Equatorial Guinea and Ivory Coast.

Besides Shoemaker, survivors include their two small children, three adult children by a previous marriage and four grandchildren.

--

7/26/2004

CONSULATE GENERAL OF THE REPUBLIC
OF HUNGARY

223 EAST 52nd STREET
NEW YORK, NY 10022

TEL: (212) 752-0669 FAX: (212) 755-5986

Email: titkarsag.nyf@humisny.org www.kum.hu/newyork

APR 5 2004

New York, April 2, 2004

Dear Distinguished Friend of Europe,

In my capacity as Co-Chair of first **Grand Europe Ball** to be held in New York, it gives me great pleasure to invite you to the **Pre-Ball Reception** at 7.00 p.m. on **Wednesday, April 14, 2004**, at the Hungarian Consulate (227 East 52nd Street, New York).

Coinciding with the historic enlargement of the European Union (EU) to 10 new members, and celebrating a Europe "whole and free", the first Grand Europe Ball will be held at the prestigious Waldorf-Astoria Hotel on May 1, 2004.

The key goal of the Grand Europe Ball: to firmly convey the message, through this great event in New York, that the enlarged EU continues to attach the utmost importance to a mutually beneficial, cooperative and reliable partnership between Europe and the United States. Also, the enlarged EU will be a stronger and more capable partner for the US in responding to the challenges facing both sides of the Atlantic. The Grand Europe Ball aims to reinforce this on the basis of our common heritage, shared values and mutual aspirations for the good of our world and mankind. There is no reasonable alternative to a constructive Transatlantic relationship.

In this spirit, the first Grand Europe Ball is to become a regular event in the years to come, promoting better understanding between decision-makers in politics, business, arts and education, and between the people of the US and Europe.

I sincerely hope that you will join us at the Pre-Ball Reception, where we can discuss the current status of the event's organization. The organizers and supporters of the Ball now must continue to mobilize the broad professional interests already engaged with -- and the versatile ethnic communities with bonds to -- Europe, and to make the first Grand Europe Ball more widely known in New York. The Pre-Ball Reception will also provide an

Kissinger Kissinger - John Howard on Iraq in WSJ

**From:** "Academy of Diplomacy" <academy@academyofdiplomacy.org>
**To:** "Academy" <aadiplmcy@aol.com>
**Date:** Mon, Mar 29, 2004 9:45 AM
**Subject:** John Howard on Iraq in WSJ

MAR 29 2004

Stand Firm
BY JOHN HOWARD

Wall Street Journal
March 27, 2004

Mr. Howard is prime minister of Australia.

CANBERRA, Australia--In the shock that followed the Sept. 11, 2001, attacks on the U.S. the world united to condemn terrorism. When 88 Australians were among the dead in the bombing atrocity committed in Bali in October 2002, there was, amid the grief and anger, an overwhelming unity in our resolve to stand against terror.

Yet in the wake of the indiscriminate slaughter of almost 200 commuters in Madrid, global commentary seems as much focused on the political implications for Western governments as on the perpetrators.

It will be doubly tragic if mass murder is rewarded with even the perception that our resolve has weakened. At the very least the victims--those killed and injured--deserve an absolute assurance that this outrage will make all of us more determined to stand together against terror. Now is not the time for us to be diverted from this global mission.

Words are weapons in the information age and there is a need for vigilance to ensure we are not signaling weakness in the face of this ongoing threat. There can be no excusing the inexcusable. The messages we send, whether as leaders of governments or leaders of opinion, must be that we will stay the course and finish the job.

One of the front lines in this unconventional war is Iraq where terrorists seek to destroy the freedom offered by the overthrow of Saddam Hussein. Whether you agree with the decision to invade Iraq or not, there is no denying that there is a job to be done to ensure that the Iraqi people have a future.

Currently Australia is one of 35 countries that have troops deployed in Iraq. The work they are doing is vital and practical. They are helping to secure essential services for the people of Iraq and to train the new Iraqi police force and army. For the most part, the Iraqi people understand and appreciate the role these foreign forces are playing. It is not surprising that an Oxford Research International Poll commissioned by the BBC found that only 15% of Iraqis want the coalition forces to leave.

Of course, they do not want them to stay indefinitely, and none of the governments that have contributed to the coalition want their troops there any longer than is necessary. But right now we do not know when the essential job being done by coalition forces in Iraq will be finished. Talk of an early withdrawal, or arbitrary deadlines, undermines their role and gives comfort to those who seek to thwart the creation of a free and

Page 2

democratic Iraq.

It sends precisely the wrong message at a time when we need to be
underlining our resolve to stay until the job is done. It sends the wrong
signal to the people of Iraq and to terrorist groups operating in Iraq at a
time when we need to demonstrate maximum unity.

One of the freedoms we want for the people of Iraq is the political freedom
we enjoy in Western democracies. It is the same freedom that ensures a
healthy and robust debate on issues of national security and foreign policy
in Australia, the U.S., the U.K. and throughout Europe.
But that freedom will never be delivered in Iraq if groups like al Qaeda
have their way. Their mission is to overthrow moderate Muslim governments
and replace them with repressive, Taliban-style regimes. In Iraq they seek
to choke off freedom before it can take hold.

I recall, as though it was yesterday, being in Washington on Sept. 11, 2001. I remember the sense of outrage and disbelief. But most of all I recall the immediate and resolute determination to stand together against this global threat.

The threat remains.

The need for unity in the face of that threat is as important now as it was
then.

Kissinger Kissinger - Spires on Terrorism in Vermont Rutland Herald

Page 1

**From:** "Academy of Diplomacy" <academy@academyofdiplomacy.org>
**To:** "Academy" <aadiplmcy@aol.com>
**Date:** Fri, Mar 26, 2004 4:58 PM
**Subject:** Spires on Terrorism in Vermont Rutland Herald

MAR 29 2004

Terrorism: How do you know when you win?

by Ronald Spiers

Vermont Rutland Herald

March 24 2004

The writer is a retired American ambassador who lives in South Londonderry.
He is a member of the American Academy of Diplomacy.

A war makes the role of Commander-in-Chief more dramatic. Our
Commander-in-Chief seems smitten with the so-called "war" on terrorism.

The "war" began quite straightforwardly. Al Qaeda took responsibility for
9/11 and, with its global reach unambiguously aimed at the United States,
was appropriately identified as the enemy we had to deal with. Al Qaeda is
an ideologically driven conspiracy that can't be deterred or appeased; it
can only be destroyed.

But as time passed the conflict began to morph into a generalized,
undefined, abstract "war", losing its focus and discipline. It has now
become another slogan, like the "wars" on poverty, crime, or drugs.

Others nations jumped on the bandwagon and conflated their own particular
adversaries as enemies in this wide but undefined war: the Russians in
Chechnya, the Israelis in Palestine, the Indians in Kashmir, and so on, in
hope of eliciting wider political support in their conflict. These conflicts
involve groups with limited political objectives, amenable to solution, and
not threats to our civilization.

"War", though, is a misnomer that should be avoided, however politically
useful it may be in rallying popular opinion to your leadership. The
metaphor is neither accurate nor innocuous, implying as it does that there
is an end point of either victory or defeat. This conflict will not end in
a peace treaty or victory parades and ticker tape. President Kennedy's
inaugural image of "a long twilight struggle" is more apt.

President Bush, however many times he talks of terror or terrorism, has
never been clear as to what he is talking about. Confusion has reigned: Who
is the adversary? When will it be over? How do you measure success? How do
you decide you have won?

The problem is that terrorism is a tool - a weapon - not an actor. Like
war, terrorism is the use of violence by groups or individuals to advance a
political objective, most frequently when non-violent paths to action appear
closed. As in war, innocent by-standers are often the victims, indeed
sometimes the targets. It is a weapon used by the weak against the strong,
the colonial subject against the imperial power, the occupied against the
occupier, and the dispossessed and disenfranchised against the oppressor.
It is as old as history and is not likely to disappear soon. Suicide
bombers are a contemporary version of an old phenomenon. Centuries of

Page 2

authoritarian rulers have used terror to intimidate and control their own populations. Saddam joins a long line stretching from Caligula to Stalin and was not alone among contemporary political leaders.

But how do you win a "war" against a tool that, like war itself, is a method of carrying on politics by other means? A "war on terrorism" is a war without an end in sight, without an exit strategy, with enemies specified not by their aims but by their tactics. Relying principally on military means is like trying to eliminate a cloud of mosquitoes with a machine gun. "Terrorism" by its nature can't and won't be eradicated or abolished as long as there are grievances that the aggrieved believe cannot be resolved non-violently. The cliché "One man's terrorist is another man's freedom fighter" illustrates the problem.

The President has found this "war" useful as an all-purpose justification for almost anything he wants or doesn't want to do; fuzziness serves the administration politically. It brings to mind Big Brother's vague and never-ending war in Orwell's 1984. A war on terrorism is a permanent engagement against an always-available tool.

We have not as a nation defined our objective in the specific terms that might make it winnable. Until we do, we risk the diversions that come from being in a struggle against an abstraction. The enemy was and still is Al Qaeda and its ideologues and operatives, and we need consistent and focused effort and a full range of weapons - defensive, financial, investigative police work, strengthened intelligence among them - to defeat the threat. We have had a costly distraction in Iraq due to our own confusion over what we are fighting. Whatever the merits of disposing of the band of Tikriti thugs - and they are many - it had little to do with the fight on terrorism however much the administration tries to present it as such. In fact, as many predicted, it has strengthened the appeal of terrorism's recruiters. Al Qaeda is metastasizing. The inevitable capture or death of Osama bin Laden or his deputy will not end the threat, as it might earlier have done. Our exaggerated and often rude, ineptly bellicose rhetoric has diminished US credibility and support around the world. Last week's Pew polls showing widespread disaffection with US policy should not have surprised anyone.

In truth, the misery and poverty, the oppression, injustice and despair in which most terrorism is spawned and simmers can only be overcome through protracted political, economic and social efforts on the part of the whole international community. Leadership that is ready to work with the rest of the world - not unilateral action - is what is required. This, I am sure, is the true path to defeating terrorism.

"An Alternative Vision"

A speech by Michael Howard, Leader of HM Opposition, to News International Cancun, Mexico Friday 19 March 2004

Thank you very much for inviting me to speak to you today.

The War on Terror

We meet today under a dark shadow, cast by last week's appalling atrocity in Madrid – the worst terrorist attack on European soil since Lockerbie. It was carried out with apocalyptic symmetry, 911 days after 9/11, on the 11th March – 3/11.

Like those who attacked the Twin Towers, the people who carried out this barbarity
showed that there is no limit to the suffering they are prepared to inflict. After the
attacks on New York and Washington, the bombs in Iraq, Turkey, Bali and Morocco,
we can have no illusions. We face a threat which knows no moral limitation and no
territorial boundary. How we now cope will decide the future not of governments, nor
even of states, but of civilisation itself.

The scale of this terror is new. But, of course, the use and the purpose of terror are
not. We in Britain have long been familiar with both. And let us not imagine either
that this evil is irrational or that we lack the means to deal with it.

Today's militant Islamic fanatics know what they want, even if what they want seems
to us beyond easy comprehension. Their starting point is that democracy and freedom
of thought are obstacles in the way of their hideous journey. They have a warped
ideology, masquerading as religion, which they intend to thrust on other Muslims,
while waging war on the West and its allies. They cannot be appeased. They can only
be defeated – or they will win. And that would send half the world back into a new
Dark Age – with the other half cowering in dreadful trepidation.

Let me use this occasion to make one point absolutely clear. If the terrorists hope
they can gain their ends by perpetrating in Britain a similar outrage to that in Spain,
their wickedness will be in vain. Whatever my disagreements with Tony Blair, any
government that I lead will not flinch in its determination to win the War against
Terror, wherever it has to be fought.

It would be a terrible thing indeed if last week's murders in Madrid led the terrorists
to conclude that attacking America results in retribution, but attacking Europe results
in victory.

Countries cannot insulate themselves from terrorist attack by opting out of the War on
Terror. We cannot buy ourselves immunity by changing our foreign policy. Apart
from the moral cowardice of that position, it can never work in practice.

We must remember that it was not the overthrow of Saddam that spawned terrorism and instability. Quite the reverse. It was the failure of the West to act decisively, again and again in the late 1990s, in the face of threats and provocation, that emboldened the terrorists and the rogue states. That failure must never be repeated.

It is of course crucial that we reach out to the moderates in the Muslim world, the vast majority of whom share our common human values and abhor this violence. But we must face down terrorism and extremism wherever it comes from. We must act against rogue states, the breeding ground of international terrorism. And we must be ready to take pre-emptive military action, in exceptional cases, as a last resort.

The British Conservative Party has been consistent in its support for the British Government, and for our armed forces, over the war in Iraq. Indeed Tony Blair would not have won last year's vote in the House of Commons - a year ago yesterday - which gave him the mandate to go to war, without the support of the Conservative Party. Our reasons for doing so were absolutely clear.

Iraq was a real threat to the peace of the region. It was in gross and manifest breach of UN resolutions, including those which brought the first Gulf war to an end. Saddam Hussein had used weapons of mass destruction against foreign states and against his own people. There was every reason to believe that given the opportunity he would do so again.

What would have been the consequences if we had waited until a direct threat was real and imminent until we acted? Would we have been in a position, militarily as well as politically and diplomatically, to counter it? How could we take the risk that we would find ourselves impotent? The war against Iraq was necessary. It was just. It was, indeed, arguably overdue. And, let us not forget, it was overwhelmingly successful – a judgement which subsequent difficulties do not change.

Of course, there is still a hard road ahead. Iraq has become the frontline in the War against Terror. A stable and free Iraq is the greatest threat that the terrorists face. That is why they will do whatever they can to stop its creation. I have no doubt that if the West maintains its resolution, Iraq will be a much better place than it was under Saddam.

Iraq now has a free press – the most important building block in a democracy - and is trading again with the West. It has agreed an interim constitution. And an opinion poll carried out this week showed that Iraqis are very optimistic about their future – as I saw for myself when I visited Baghdad and Basra before Christmas. Seventy per cent of Iraqis feel that things are going well or quite well in their lives. Fifty six per cent say that things are better now than they were before the war, and almost half believe the invasion of Iraq by the US-led coalition was right. I have absolutely no reason to doubt the veracity of that poll...it was commissioned by the BBC!

So we must be resolute and finish the job we've begun.

2

## Europe and America

We won the Second World War because we fought side-by-side with America. We won the Cold War because we stood side-by-side with America. And we will win this war on terror if we wage it side-by-side with America.

The terrorists who murdered innocent people in New York and Madrid would like nothing better than to see the western alliance splinter and break apart. They must not achieve that victory. The relationship between North America, Europe and Australasia will be crucial, not only in dealing with the War on Terror, but crucial to progress in the world in general. So long as we remain partners, great strides can be made in dealing with those problems. If we were to become rivals the challenges we face become much more difficult to overcome.

The relationship between Europe and America is under serious strain. Even before the tensions created by September 11th, there was cause for concern. That is why I established the non-partisan Atlantic Partnership, a think tank that seeks to promote close relationships between Europeans and Americans.

America increasingly looks to the Pacific and beyond, to Japan and to China - a huge market for the US and the only potential rival superpower on the horizon. Demographic trends in America are important too. The growing Hispanic population in the United States in particular tends to look south, here to Mexico and the rest of Latin America beyond, rather than east to Europe.

And in Europe too there are trends at work that would undermine that partnership. Some argue that the movement towards political unity in Europe need not be an impediment to the partnership. And it is true that there are some who see a European State as a partner of America. But many have as their main motivation the desire to establish a rival pole of power in Europe. If their views were to prevail many of the achievements we value would be at risk. I shall do all I can to resist their ambitions.

## Free Enterprise

Only a strong western alliance can defeat the terrorists, just as we defeated communism. But we do not just have the force of arms at our disposal. We also have the force of ideas on our side. There is no better system for spreading the fruits of man's labour to the many than free enterprise. No better system to lift people out of poverty. No better system to advance human achievement. No wonder the terrorists hate it so much.

There are still too many countries in the world where people have yet to benefit from the open market economy which is at the heart of free enterprise. These are societies where the rule of law, the right to own property and a stable economic system have yet to take root.

These are absolutely fundamental. As Hernando de Soto puts it so vividly:

> "Imagine a country where the law that governs property rights is so deficient that nobody can easily identify who owns what... Consider not being able to use your own house or business to guarantee credit. Imagine a property system where you can't divide your ownership in a business into shares that investors can buy... Welcome to life in the developing world, home to five-sixths of the world's population."

The lessons are, though, being learnt. Since the 1970s, China has concentrated on strengthening property rights, liberalising prices and creating internal markets. India has also set in train far reaching reform. In these two countries, India and China, two countries which are home to more than a third of the world's population, growth has averaged 4% and 8% respectively over the past decade or so. As a result, the proportion of people living on less than $1 per day in China has declined from a third of the population in 1990 to less than a fifth (16%) in 2000. The progress in India has been less dramatic, but still significant, with the proportion falling from 42% to 35% between 1994/5 and 2001.

This is a huge achievement. In the last decade hundreds of millions of people have escaped the grinding degradation of poverty – more than in any other decade in the history of the world. Yet hardly anyone mentions it. It is surely an achievement which should be proclaimed and celebrated – and one for which the governments concerned are entitled to much credit.

The key to greater wealth for any country and its people is a successful free enterprise economy. The key to ensuring that emerging free enterprise economies are able to put down roots and to grow lies in free trade. And the key to the growth in free trade lies with us, the developed nations of the west.

## Free Trade

Ancient Athens prided itself on its openness, its international markets and its capacity for adaptation. In ancient Greek, the verb "to trade", *katalussein*, also meant "to turn a stranger into a friend".

For the west to win hearts and minds, it must spread its values and show their benefits. Above all it must be consistent in its attitude to free trade.

Protection by developed nations at the expense of developing nations has to come to an end. It is wholly inconsistent with our leadership position in the world.

It was here in Cancun in September last year that the Doha round of trade talks broke down. It has been estimated that if an agreement is reached it could increase global income by about $500 billion in just over a decade. With most of that gain going to poorer countries, it could lift almost 150 million people out of poverty.

The breakdown of these talks is very bad news for all of us who support free trade. The world of globalisation - by which I mean the world of freer and increasing global trade - has produced tremendous benefits for its inhabitants. It has contributed hugely to the fall in poverty to which I have referred.

4

So politicians should cherish free trade. They should champion it.

With the World Trade Organisation, we now have a rules-based system governing world trade in which trade disputes are not decided simply on the basis of which countries have the biggest muscle power. But, all too often, poor countries have not been able to take full advantage of this system because they lack the necessary expertise.

A practical solution to this problem would be for the rich countries of the world to set up and pay for an advocacy fund which would pay for the necessary expertise – economic as well as legal – to help poor countries realise the enormous potential of the new trade regime. I have been calling for this reform for some time now. I hope it will be accepted.

The importance of free trade was recognised by President Reagan, who resisted siren calls for increased trade protection in America. As only Ronald Reagan could, he remarked, in response to calls to increase tariffs in retaliation against the Japanese: "if one partner shoots a hole in the bottom of the boat, does it make sense for the other partner to shoot another hole in the boat?" Reagan was fond of reminding people that "America's open market is its strength, not its weakness".

America should be at the forefront of persuading the West to work together to open our markets to the developing world. America has created the most successful form of capitalism in the free world, and so it should set an example to us all.

## *The Two Models of Capitalism*

I say that America has adopted the most successful form of capitalism. In fact Western nations have developed two competing models of capitalism. For several decades, the governments of mainland Europe have chosen not to emulate the more liberal economic policies of the United States. They have chosen to adopt a much more regulatory, and in some cases corporatist, approach. This has sometimes been referred to as the 'German' model, although Germany is far from unique in adopting this approach.

European governments have adopted this approach with the laudable aim of seeking to protect the weakest in society. But the result of their approach has, more often than not, been quite the reverse. It has made the European economies less flexible and therefore less competitive. This has had a real cost in terms of jobs and growth. Labour costs and taxes are much higher in Europe than in the US. Growth and job creation is much lower. There are more unemployed people in Europe and they are out of work for longer. In fact, if Europe had followed the American model, it would have created 28 million more jobs and its workers would have produced £5000 more a year in output.

It takes a great act of political will for governments to sweep away obstacles to a free economy and free trade but that political will must be provided. That is the only way to make it possible for people's potential to be fulfilled. And that is what political leadership should always seek to achieve.

Europe has to wake up to what is happening in the real world. We face a challenge not just from America but also from the Pacific. The average tax burden in the Pacific region is 29.6 per cent; in America it is 28.9 per cent; and in the European Union it is 41 per cent. The EU was designed to free up our markets so that we could compete globally. But the weight of tax and regulation it has introduced has had almost exactly the opposite effect - damming the flood of enterprise that should be sweeping across Europe.

## *The Third Way in Britain*

The great irony in Britain is that while Gordon Brown, Britain's Finance Minister, urges his European counterparts to become more like America, he is actually making our economy more and more like theirs.

To be sure, on the macro level Gordon Brown has made the right decisions. He was right to give the responsibility for setting interest rates to our central bank, the Bank of England. But that loss of day-to-day macroeconomic control seems to have left Mr. Brown and his mandarins with too little to do. So they have put their energies to work in micro-managing the British economy. And we are all suffering as a result.

We know from survey after survey that UK business is affected more and more by tax and regulation. The Confederation of British Industry estimates the additional cost of tax and red tape to British business to be £15 billion a year. Cumulative business tax since Labour came to power will be £54 billion higher by the time of the next election.

There have been more than 60 tax rises since Labour came to power. This means that we are paying nearly £42 a week more in tax for every man, woman and child in the United Kingdom than we were in 1997.

But despite these very significant tax rises, the Chancellor is still having to borrow greater and greater amounts. He has borrowed £37.5 billion this year – a sum four times greater than he predicted at the general election just three years ago – and he has just announced that he plans to borrow more than £140 billion over the next five years. All this is happening when the economy is doing well. Imagine what borrowing would be like if the economy was doing badly.

Much of the growth in the British economy has taken place in the public sector. Public sector inflation is running at around 6 per cent. The number of public sector jobs has risen by more than 500,000 between June 1998 and November 2003. Yet in sharp contrast, last year private sector employment actually fell by 130,000.

The welfare system has grown vastly more complex. Gordon Brown loves tax credits. Since October 1999, the Government has introduced a new tax credit for families every six months. This has had three damaging consequences. More and more people suffer the indignity of means testing. Many of those who need it most fail to take up the help to which they are entitled because the system is so Byzantine. And there are now swathes of middle class people who qualify for tax credits. The amount of people on 60 per cent marginal rates has doubled since Labour came to power. Gordon Brown appears to want everyone to live on a hand out from the State.

6

All of this is hugely expensive. In fact, between 1996 and 2004, social security spending, if credits are included, has grown more than either health or education, at a time of falling unemployment. Social engineering costs money.

I am absolutely clear about this. Britain is following the wrong path. Business is becoming less competitive. More people are being forced into dependency on the State. And taxes are too high.

In a world more fiercely competitive than ever before, when marginal advantages in price, delivery dates or quality decide which firm gets the order and creates the jobs, these extra burdens make it more difficult for British firms to compete. The consequences are not always immediately apparent. The UK is still benefiting from supply-side reforms which Margaret Thatcher introduced and which transformed the British economy. But slowly but surely those advantages are now being eroded and undermined. The detrimental consequences of Gordon Brown's approach may take a little time to work their way through but Britain will suffer unless we change direction.

## *The Conservative Approach*

Our economy needs to become more like America's again. We must get a grip on public spending, cut back on waste, reduce regulation and cut taxes.

First regulation. On day one a Conservative Government will freeze civil service recruitment, which is currently running at 511 new officials a week. Fewer officials will mean fewer regulations. We will ensure that the total regulatory burden imposed by government falls each year. We will introduce sunset clauses in new regulation. And like America, we will exempt small businesses from regulation.

Next, spending. We will ensure that, over the medium term, public spending does not grow as quickly as the economy. Under a Conservative Government the State would consume a smaller share of GDP than under Labour.

Third, we will cut waste. The Government's own waste auditor has identified savings of between £10-15 billion. Our own waste buster, David James, the man brought in to tackle the fiasco of London's Millennium Dome, is also looking at where we can cut waste. We already know that the cost of running government – that is, just central government administration – has increased by £7 billion since Labour came to office.

Our overall approach to economic reform is based on clear principles. It is designed to set business free. But it will also stop us having to implement Labour's Third Term Tax Rises, which are an inevitable consequence if they win a third election. And it will get us to a position where we can actually start to reduce taxes.

Low tax economies are the most successful economies. They create more jobs, they attract more investment and they generate more resources to pay for the public services we all use.

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## Public Services

The other great battleground at the next election in Britain will be the future of our public services – health and education. Labour's approach has been to increase public spending without introducing significant reform. The result has been wasted expenditure. For example, in the National Health Service, while spending has gone up by 37.5 per cent, hospital treatments have risen by only 4.8 per cent.

In other words, increased public spending without reform has failed to deliver the improvements Labour promised. That is the lesson we have learned from this Labour government.

So we must introduce reform. We want to learn from other countries, which do not have waiting lists for operations, or which have higher standards of public education. We want to pass control down to the people who can best use it– parents and patients.

Tony Blair sometimes sounds as though he understands that. But he is unable to deliver this kind of change. His party, and its union paymasters, are wedded to a philosophy which puts producers before customers. Too many of them still believe fundamentally in equality of outcome rather than equality of opportunity. Too many of them still think “if everybody can’t have it, then nobody should”.

My attitude to public services is different. I ask “if some people already have it, why can’t everyone?”

## The Nation State

I began this talk by discussing the war on terror. And I have concluded by analysing Britain's economic difficulties. The two issues are linked by the age of globalisation in which we live. Two wholly different worlds – that of commerce and that of terror – which know few boundaries. Our response to the first phenomenon, the global business environment, must be to be open and more competitive. Our response to the second, a global terrorist threat, must be to be stronger and more united.

But while the fast moving world of globalisation provides great opportunities it also undoubtedly increases uncertainty. Uncertainty can breed anxiety and resentment. People need to feel some sense of solidarity with one another and with the institutions which serve them as the waves of change crash around them. They need some sense of security in their lives.

The institution which can best provide ties of loyalty and solidarity in this age of change is the nation state. Without a strong and independent state, no modern democracy is possible. The nation state is the organism that binds people together. It gives people a sense of identity. They remain stubbornly attached to it. They think of it as home.

So I reject utterly the notion that the growth of globalisation means the death of the nation state. What Burke said at the end of the eighteenth century remains true today: “we begin our public affections in our families…we pass on to our neighbourhoods…To love the little platoon we belong to in society is the first principle of public affections. It is the first link in the series by which we proceed towards a love to our country and to mankind”.

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The nation state remains the bulwark of security in an uncertain world. We should sustain it. We should cherish it. We should do nothing to undermine it. That is one of the reasons why I am so hostile to proposals which would transfer more power from my country to the European Union.

## Conclusion

I have enjoyed the opportunity of coming here, to Mexico, to speak to journalists from America, Australia and Britain.

We are three nations strung across the globe that march in step together, bound together by our history, our culture and what is now the world language of economic and social progress – English.

We are nations whose prosperity and freedom have been built on tolerance, the rule of law, and free media, on an open economy and the ability to trade with our neighbours. We are proud of these achievements. We shall defend them and encourage others to accept them. That is the best way to increase the health and happiness of humanity.

I thank you for giving me this fine opportunity to discuss these things with you here today.