Reward and Risk: Observations on the Present State of the World

29th Annual Plenary Session

Opening Ceremony, 29 May 2011

Québec City, Canada

By Jean Chrétien, Co-Chair

It is a great pleasure to welcome you to Québec City on the occasion of the 29th Annual Meeting of the InterAction Council. Québec City is both one of the oldest cities in North America—having celebrated in 2008 the four hundredth anniversary of its founding—and also one of Canada’s most beautiful cities. 

Situated high above the mighty St. Lawrence, what better place could we find to discuss the global objective of ensuring safe, sustainable water resources for all, one of the key topics of this year’s meeting?

I want to especially welcome the new members of the Council who have joined us in Québec City, and I am looking forward to their full participation in our debates.  I trust they will be inspired—as I am—by having Chancellor Helmut Schmidt in our midst. The Chancellor co-founded the InterAction Council along with his friend, the late Prime Minister Takeo Fukuda of Japan.

In speaking to the Council on its 25th anniversary in 2007, Chancellor Schmidt recalled that Mr. Fukuda had in 1982 conceived the idea of a council of former leaders so that we could, in Mr. Fukuda’s words, “continue making small contributions to threatening global problems.”  Since the first plenary meeting in November 1983, the Council has published reports on a host of issues, including financial services, energy, the role of world religions, arms control and climate change.

This year’s agenda includes a critical subject that has been the topic of many of the Council’s deliberations over the years—nuclear disarmament—and a new topic, which is growing in importance: the necessity to tackle global water problems since safe sustainable water is essential to the achievement of the millennium goals of the United Nations.

The participatory model that Fukuda and Schmidt adopted in 1983 has served us well: the InterAction Council began its first meetings by inviting experts in various policy areas to turn their minds to the world’s problems. Council members know, as politicians, that it is refreshing to be challenged and our intellectual capital needs to be replenished.

But just as valuable was the insight of the co-founders that the combination of expert advice sifted through the reality of political experience would make for reports and recommendations different in kind from the usual offerings from think tanks and NGOs. 

The men and women who make up the Council know that there are many insights, not just one big truth. We are used to balancing competing needs and priorities.  And beyond the reality of competing values and contending interests, we know too that it is essential that ideas gain support from a wider public.  So the distinctive contribution of the Fukuda-Schmidt creation of the InterAction Council is its combination of expert advice, political reality and public education.

Modesty is also one of the Council’s virtues. Fukuda spoke of retired leaders making “small” contributions. But “small” contributions are still real ones, and in this complicated world of ours, we know that most progress is measured in inches, not yards, and almost never miles.  Occasionally, a Berlin Wall comes down or a Nelson Mandela is freed from jail, and the world is never the same. But mostly, global policy is a hard, long slog.

For example, the World Bank recently forecast that Africa`s economic growth rate this year would be 5.3 per cent, a very healthy figure and a marked increase over previous years. Such improvements, however, do not just happen. They are the result of steady improvements over time.

In 2001, African leaders led by President Obasanjo of Nigeria and President Mbeki of South Africa launched the New Partnership for Africa’s Development to improve governance and combat corruption. This commitment included the important innovation of an African Peer Review Mechanism. 

In 2002, I chaired the G8 meeting in Kananaskis, Alberta, at which African development was the centerpiece. President Obasanjo and President Mbeki were invited to the G-8 and we supported their New Partnership initiative, with an African Action Plan that put in place incentives to help the African leaders achieve their goals. Ten years later we are seeing the fruits of that labour. 

My point is that global progress is possible, but it is never easy and it takes time.

In setting out the objectives of the InterAction Council, Prime Minister Fukuda asked “what kind of future is to be left to human kind” after the 20th century, which he described as “the century of glory and remorse.” Fukuda understood, as most leaders do, and many experts do not, that the solution of one problem leads inevitably to the creation of another.

The ancient Romans captured this aspect of life through the god Janus, the god of beginnings and transitions. Janus had two heads facing opposite directions: one head looking backwards, the other forward. As one problem is solved in the past, it inevitably leads to conditions that create fresh challenges for the future.

As Winston Churchill said, “History is simply one damn thing after another.”

Fukuda talked of “glory and remorse.”  I prefer “reward and risk” but the meaning is the same: the policy or solution that succeeds on one level, brings equal risks on another plane and the task of the leader is not to succumb to the hubris that once and for all an issue is settled.

In global policy we sometimes fail, occasionally succeed, but mostly we cope. This “reward and risk” perspective applies to a host of issues in the world today but I will only mention three.

The Nuclear Dilemma

We should celebrate today the successful conclusion of the Russian-American New START agreement on nuclear weapons reductions. Last year, the Council in its Hiroshima Declaration urged the American Senate and the Russian State Duma to pass the treaty. They did so and in February 2011, the treaty was ratified! Over the next ten years, it will slash existing warheads ceilings by 30 per cent from 2,200 to 1,500 and limit each side to 700 deployed long-range missiles or bombers.  The hands of the nuclear doomsday clock have been wound well back.

But if the nuclear threat has been reduced on the military realm, we see its potential risks in energy production all too vividly with the nuclear emergency in Japan.  The earthquake and tsunami, which destroyed the Fukushima Daiichi Nuclear Power Plant, forced Japan to upgrade the level of crisis to seven—as severe as the 1986 Chernobyl disaster.

There are, of course, risks in any form of energy production: coal is plentiful but contributes highly to greenhouse gases; nuclear produces radioactive waste that lasts for thousands of years; renewable energy is expensive; oil and gas drilling and tailing pollutes water resources; and the list goes on.  Every form of energy has a reward but carries a risk.

Human development makes ever greater demands on the planet’s health. Energy development is a large part of the stress we are placing on the earth’s equilibrium. We are seeing the results of this stress in a growing cascade of natural emergencies: hurricanes are erupting more frequently and with greater intensity; earthquakes are more common; tsunamis are more destructive. Japan has estimated that the cost of the March 2011 earthquake and tsunami will be 309 billion dollars making it the most expensive natural disaster in history.  For many years, I was Minister of Indian Affairs and Northern Development, and I recall the wisdom of a tribal elder who said “if you upset Mother Nature, she always pays you back.”

Mother Nature has been paying all of us back recently, with earthquakes in Haiti, tornados in Mississippi, fires in Australia, floods in Pakistan, and tsunamis in Japan. The current crisis in Futaba District demonstrates dramatically the Janus-like face of nuclear power. Looking back, the Japanese knew that nuclear power could destroy. 

As the InterAction Council experienced so profoundly at last year’s meeting in Hiroshima, no people understand better than the Japanese the destructive power of the atom. But looking forward, nuclear power would light homes and heat factories.

Japan therefore welcomed the early initiative of President Eisenhower who called for an “Atoms for Peace” program of civilian nuclear energy. Japan, Canada, France and many others have invested heavily in civilian nuclear energy. Yet today, as the military threat of nuclear weapons is declining, the threats from natural hazards to peaceful nuclear plants is expanding.

How to ensure the highest standard of safety for nuclear energy is an issue for us all, as is the adequacy of international cooperation in general to respond to large natural calamities.

World Debt

Next, on the world economy, the coordinated response of the G-20 to the melt down of the financial system in 2008 to 2009 prevented the world from tipping into depression, though for many countries the recession was hard and not yet over. But disaster was averted!

Yet the stimulus measures adopted and the bailouts of indebted banks and countries have produced in turn a tsunami of debt—a $1.6 trillion annual deficit in the United States in 2010—and countries like Greece, Ireland, and Portugal are straining to meet their commitments. Net debt of all levels of government in the United States is at 75 per cent of GNP—similar to the net debts of Germany, France and Britain, more than Canada’s 36 per cent, but less than Japan’s 113 per cent.

But beyond the absolute numbers are worries that the US Congress will not agree to a plan on how to deal with the problem. Credit-rating agencies are issuing warnings that a downgrade might happen to American credit, even though the United States has the world’s largest economy with the American dollar and treasury bonds central to the world’s monetary system.

The Americans, however have much company in the debt penalty box. In Canada, we managed to balance the budget for several years from 1997 to 2008 but recently our deficit has climbed back to more than $40 billion a year.

Such debt levels inevitably lead to inflation and reduce the flexibility states need to respond to crisis. India, Brazil and China are the engines of the world economy but recent inflation rates have been rising to 8.9 per cent in India, 6.3 per cent in Brazil and 5.4 per cent in China. Inflation is the silent killer of hope: rising prices hurt most the poor and defenceless who do not have strong unions or organizations to protect them.

The lives of the nearly one billion people who live on less than a dollar a day will become even more tragic if they must cope with spiralling prices for food and cooking oil. We have averted the risks of depression by expanding the risks of inflation. How we manage the world economy to reduce debt while avoiding another slump, lifting the poorest from poverty, and balancing between deflation and inflation will call for leadership of the highest order.

Middle East Rising

A third example of the reward-risk ratio is the demand for political change in the Middle East.

Few could be immune to the enthusiasm of the crowd in Tahrir Square, Cairo calling for democracy and human rights, and this cry has been heard in many lands that know only autocratic rule. But if events in the Middle East demonstrate that the desire for freedom is universal, we know too that such dramatic changes often bring prolonged instability in their wake.

Sustained freedom requires commitment to order, the rule of law, and tolerance of dissent. It requires a culture of liberty, not only the formal trappings of democracy. By unleashing the creativity of the young, who have proved so adept at using the new technology of social media, freedom will unlock the talent and drive of the Middle East, the cradle of so many great civilizations. 

But those responsible for this Arab Spring must also teach their publics that compromise is not a dirty word and that no new regime should be motivated by revenge.

But such fruits of freedom will not appear instantly and it will take generations to fully mature. Like my early example of the New Partnership for Africa’s Development, which was an African led initiative, it is the leaders and peoples of the Middle East who must prepare their pathway to reform.

Once they do so, we should support their efforts, but democracy will never arrive on the tip of bayonets. Military interventions can prevent massacres and provide short-term order. But they are no substitute for the hard, long, local learning necessary for democracy’s roots to take hold.

The new regimes in the Middle East could crack open the frozen negotiations between Israel and Palestine or they could intensify passions as formerly excluded publics play an expanded role. Yet, the Israeli-Palestinian conflict is only the most visible of several fault lines in the Middle East. Debates over water use offer the potential for conflict among many different nations, not just two.

Only three per cent of the world’s water is fresh, and most of that locked away in polar ice caps and glaciers. This means only one per cent of the planet’s water can be shared among nearly seven billion people. Nowhere is this pressure more intense than in the Middle East where several states contend over the use of the Euphrates and Jordan River basins. In our meeting, we will specifically examine conflict resolution mechanisms to share water: in North America in 1909, for example, an International Joint Commission to advise on transboundary water disputes and ensure fairness in use was created and was very successful and similar institutions will be vital in making water sharing part of a peaceful Middle East.

Preventing conflict over water was only one of the items discussed in the InterAction Council’s High-Level Expert Group on water held in Toronto in March. Water touches on the widest possible range of interests of this Council.

Water-borne diseases kill millions so better water and sewage infrastructure is critical to global public health. Water is necessary for economic development and central to environmental sustainability.

Reward and risk characterize the present state of the world just as it has characterized the state of the world since the beginning of time. 

There is no infallible formula for how to reduce the risks and enrich the rewards, but my forty years in politics has taught me this—growth in knowledge begins in uncertainty, that questions are as important as answers, that crisis can be opportunities, that judgement is honed by accepting responsibility and that for change to succeed, you need small concrete steps to reduce problems in a spirit that welcomes criticism.

It is to the modest task of suggesting concrete steps to solve real problems that this 29th meeting of the InterAction Council should dedicate itself.