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Alan Larson, Under Secretary of State for Economic, Business, and Agricultural Affairs Interview on WorldNet "Dialogue" Released by the Office of Broadcast Services U.S. Department of State, June 22, 2000 |
OPIC'S Southeast Europe Investment Fund MR. ROBERTS: On June 13th, 2000, the board of the Overseas Private Investment Corporation approved a loan guarantee of up to $100 million to support the capitalization of its $150 million Southeast Europe Investment Fund. This makes good a promise made by President Clinton at the July 1999 Sarajevo Summit to produce a private investment fund for Southeast Europe within 1-year. The loan guarantee attests to the U.S. government's continued support for the Stability Pact and its objective of stabilizing, transforming and integrating Southeast Europe into the European and transatlantic mainstream. For today's "Dialogue" we are honored once again to have as our guest Ambassador Alan Larson, Under Secretary of State for Economic, Business, and Agricultural Affairs. The Under Secretary serves as the Senior Economic Official at the Department of State. He advises the Secretary of State on international economic policy, and leads the work of the department on issues ranging from trade and aviation to bilateral relations with America's economic partners. Ambassador Larson is also a member of the board of the Overseas Private Investment Corporation. Ambassador Larson, welcome back to "Dialogue." And I understand you have some opening remarks for us. Ambassador Larson: Well, thank you very much. It's good to be here, and greetings to all of our listeners. I just wanted to say a few words at the outset about our shared interests in seeing the integration of Southeast Europe into the European community and the transatlantic community. The Stability Pact, which President Clinton and other leaders launched last July, is really designed to help this region become part of that mainstream. Under the Stability Pact, more than 40 countries have joined together in a partnership to assist reform and democratic transition in Southeast Europe. We have three working tables -- one focusing on democracy and human rights, another focusing on economic issues, and a third focusing on security issues. A few months ago, in March, there was a regional donors conference that really brought together the major donors, and sent a very strong message of support for the region. It was agreed that donor countries would make available quickly $2.3 billion [$2,300 million] for a wide range of quick-start projects in the region. The vast majority of these projects are projects that were actually proposed by countries in the region. As was mentioned, our most recent initiative, which I am very pleased about, is the decision by the OPIC board of directors, of which I am a member, to proceed with a $100 million loan guarantee to support private investment in this region. This fund that is now set up will be making direct investments in private ventures in the region. It will be providing political risk insurance, it will be providing equity finance. In addition, we have the OPIC board at the same meeting deciding to proceed with support for a project in Bulgaria, an energy project. And both of these actions show I think our strong support for private investment in this region. Now that these projects are up and running, I think it's very important for the countries in the region to proceed apace with the political and economic reforms that will make their countries an attractive environment for investment. In this world of private investment flows, the countries that receive capital are not the countries that are necessarily politically chosen to receive it; it's the marketplace that makes those decisions, and those decisions are made on the attractiveness of the opportunities and of the investment climate. Obviously we all understand that one of the major impediments to progress in the region is the anti-democratic Milosevic regime. I think we all have a shared interest in working through the Stability Pact to support a democratic transition there. But the main point of my presentation today is to discuss with our listeners how we can use some of these new private sector initiatives to promote economic growth in this region and to support this region's integration into Europe and into the transatlantic community. So thank you very much, Nathan, for the opportunity to be here, and I look forward to our discussion. Mr. Roberts:Thank you, Ambassador Larson. We would now like to welcome our participants standing by in Sofia, Ljubljana and Tirana. Sofia, will you start with the first question or comment please? Q: Hello from Maria Spasova here in the studio in Sofia. We in Bulgaria really appreciate the U.S. support for the regional development and the cooperation in the Balkans. And in the same time we are very anxious to see the first results from these efforts. So my first question is a very direct one: When will the Southeast investment funds start its operations in the region, and where will it be managed from? Ambassador Larson: One of the strong points about this investment fund is that the fund managers already have a very strong presence in the region. The OPIC management team selected a fund manager that has a great deal of experience in Southeast Europe. It has a very, very good team and a very, very strong proposal. One of the primary reasons that this particular fund manager was chosen is that we believe it is a management team that can get off to a very, very quick start. It will have offices in Romania, Bulgaria and Turkey. But it will have a presence throughout the region. And that is going to allow it to move very, very quickly to start identifying viable private investment projects. Mr. Roberts:We'll be back with you in just a few minutes. But right now we are going to move on and take a first question or comment from Ljubljana. So please go right ahead. Question: My name is Marko Osolnik. I am from Ljubljana, and I have one question, namely, which areas or which domains do you intend to support with this financial aid provided by fund? Do you intend to be mainly focused, let's say, on infrastructure or perhaps you will support the creation and progress of the financial systems in the region, and so on? Ambassador Larson: The fund doesn't have a sectoral approach, so it will be looking for viable private sector initiatives across different parts of the economy. The one thing that the fund will try to do is focus very much on small and medium enterprise. We have seen in our country and in many other parts of the world that small and medium-sized businesses can be some of the best promoters of economic development. They often employ more people in the aggregate than larger companies; they often are able to move quickly to get new business ventures started. So we will have a very strong interest in this fund in focusing on opportunities that are there for small and medium-sized enterprises. Beyond that, the fund managers will be looking at opportunities in different sectors, including light manufacturing, infrastructure projects where those are susceptible to private sector investment, financial sector, and really across the board. Mr. Roberts:Okay, thank you, Mr. Ambassador. And thank you, Ljubljana. Our third interactive post today is Tirana, so let's go ahead with your first question or comment. Question: Good morning, Ambassador Larson. It's Ermelinda Meksi from Albania speaking, minister of economic cooperation and trade. We welcome the presence of Overseas Private Investment Corporation in the Balkan countries, and we are glad to see the U.S. is keeping their promise in time to support the starting of the implementation of some important activities agreed upon when the Stability Pact was declared 1-year ago. We Albanians want to see soon in Albania the first program or investment supported by OPIC. Would you like to explain for us Albanians if OPIC plans to support or guarantee in our country? Ambassador Larson: Well, there will certainly be an interest for OPIC to be working in your country. Specifically how they respond will be dependent a little bit on the types of projects that are presented, and the atmosphere and opportunities that seem to be there. We have put a great deal of stress in the part of the Stability Pact that has talked about the investment compact and the anti-corruption initiatives. These focus on the shared commitment of countries in the region to really press ahead with reforms that strengthen their investment climate, make themselves a more attractive place for investment. I think that's something that is going to be important in every single country in the region. I know that in Albania part of the investment climate will be affected by the upcoming elections, and I think we are all hoping for a very good election process that helps build confidence in the investment climate there. Mr. Roberts:All right, thanks very much for the question, Tirana. We are going to head back now to Sofia for the next few minutes for further discussion, so take over, Sofia. Question: (Off mike) -- in Sofia. OPIC has approved a loan guarantee for us of $100 million. But which company is the private one that will write the other $50 million for the capital of SEIF? Ambassador Larson: The fund manager for the project, which is a Soros-affiliated company, will be underwriting the remaining $50 million. And they will be prepared to diversify that capital base and take on other investors. But at the outset they are prepared to take responsibility for coming up with the entire $50 million that is needed to round out the financing for the investment fund. And that's one more reason why this particular fund management is able to move quickly -- because they have the ability themselves to provide the capital, the start-up capital, for the fund to get underway. Question: Maria Spasova. Ambassador Larson, how will this loan be distributed among the nine eligible countries under the OPIC corporation? Ambassador Larson: The fund is going to operate under guidelines that will say that no more than 30% of the fund can be invested in one country, and no more than 15% of the fund within any one company or project. But beyond that it is really going to depend upon the attractiveness of the projects that come forward. I mean, this is not going to be something that will be administered by me or by the United States government. It is going to be administered by private investors who will be looking at the quality of the projects that come forward, looking for investment support. So we will make sure that the guidelines for the fund are set up in a way that there isn't an over-investment in any one country or company, but beyond that it is going to depend upon the attractiveness of the projects. Question: Miglena Mancheva. Could you tell what kinds of support for SEIF in order to apply Western management practices? Do you mean direct financing for private or privatized companies under certain conditions, or financing foreign consultants that would help in management or financing training events -- (inaudible) -- purchase of know-how? Ambassador Larson: Our philosophy on these investment funds is that we want the funds to be in position to make investments, including equity investments, either in new companies, in restructured companies, in privatized companies. We want them also to -- we want the fund to be in a position to provide management advice and support that will be necessary for these new or restructured companies to be successful. If we see the fund getting involved in a company and making a commitment to a company through a contribution of equity finance or loan finance, obviously the fund has a stake in the success of the company, and that means that we would not imagine the fund to be a totally passive investor that just makes investments as if the fund was putting money in a bank account somewhere. We would expect the fund to be actively supporting these companies, and developing the management know-how that will make sure that they are successful. Question: Maria Spasova. So far Bulgaria has participated in two OPIC projects -- one was in '97 in the fast food business, and one was last year in the beverage production. Could you please tell us what are the priorities of the fund in Bulgaria, and how will the money be distributed among the different branches of the economy? Ambassador Larson: Well, again, I think that's a decision that will largely be made later based on the projects that come forward, and based on how attractive they are to professionals who look at private business ventures. What I can say is that in addition to the projects that you've mentioned, OPIC already has been very active in a number of other ways. First of all, OPIC has had a line of credit of $200 million that has been available to support investors throughout Southeast Europe. OPIC has sponsored a commercial conference in Sofia, along with the Trade and Development Agency and with the U.S. Department of Commerce. And then as I mentioned very, very briefly earlier in my remarks, OPIC has at its very last board meeting approved a political risk insurance proposal to support the privatization of an electric power plant in Bulgaria that involves participation by U.S. Intergy (ph) Corporation. I am a member of the board of directors of OPIC, so I was very pleased at our last meeting to be able to vote for this particular project in Bulgaria, as well as to vote for the establishment of the Southeast Europe Investment Fund. Question: Miglena Mancheva. Could you tell is there any special criteria that will be applied to choose the beneficiary companies? Ambassador Larson: I think the broad criteria will be commercial criteria. That is to say, you know, Is this business a business that can succeed? Do they have a business plan that will work? Is this project going to contribute to economic development in the country, and perhaps throughout the region? We are going to put an emphasis on smaller and medium-sized businesses, because we think that there is a greater opportunity for us to add value in that area. Sometimes our experience has been that sometimes large companies do have access to capital -- they are better known to banks, they have more collateral, they have an easier time getting financing -- and sometimes smaller or medium-sized companies that have very good management, very good business plans, find it harder to get access to capital. And so we do want to give a particular priority to smaller and medium-sized companies that have good business ideas, but perhaps lack access to financial markets. Question: Maria Spasova. During his visit to Bulgaria last November, President Bill Clinton said that the anti-corruption measures are among the priorities for the U.S. support for Bulgaria. And in our country the main source for the corruption is the lack of transparency in the privatization procedures. And you know that one of the ways to solve efficiently this problem is to have a working stock exchange in the country. Do you plan some support for the development of the stock exchange? Ambassador Larson: Well, I think that's a very interesting suggestion, and it's something that we certainly would be prepared to examine as a possibility. I think it's important for all of us participating in this discussion to understand that corruption is really a worldwide problem. When Vice President Gore sponsored a conference on anti-corruption initiatives here in Washington last year, 90 countries came. And I think it is recognized this is a worldwide problem. Next week I will be going to the OECD ministerial meeting, the ministerial meeting for the Organization for Economic Cooperation and Development. And one of the things that will be discussed there will be an American initiative to get all of the developed countries to agree to make it a crime for their business leaders to go out and offer bribes as part of an effort to get business outside their countries. And this really represents our acknowledgement that solving the problem of corruption needs cooperation from all partners, and that we all need to be part of the solution, including companies and countries that participate in international commerce, supply goods and services. I think you are exactly right that transparency is another big part of the solution to the corruption problem in all countries. I think the greatest possible transparency in the way that privatization is conducted is a very good idea. That's why we strongly support things like open tenders; we strongly support the WTO open procurement regulations and procurement transparency regulations. And I think that, while I am not in a position to make any commitments on television this morning about the things that we could support, your idea that we find ways to make things like a stock exchange as strong, successful and transparent as possible, that's an idea that I find very attractive, and we would be happy to look at it. Mr. Roberts:Thanks, Sofia. Now we want to move on to Ljubljana for the next few minutes of questions. Go ahead, please. Question: Thank you. My name is Igor Brstovsek. I would like to know what is the interest rate on the loans. Ambassador Larson: This will be basically commercial interest rates. I am not -- I can't give you the answer to three decimal points this morning, but what OPIC is able to do as a federal agency is that it has been able to be self-sustaining. It is backed by the full faith and credit of the United States government, and that means it has access to capital at fairly attractive rates. So our experience has been that OPIC financial terms are very competitive with the marketplace; plus, because it is backed by the United States' Treasury, it is able in some instances to take on a bit more risk than a commercial lender might be prepared to do. And I think that does give it an advantage in an emerging market area like Southeast Europe sometimes. We expect OPIC to be a leader in moving into markets just before the rest of the financial community understands that there are very, very good opportunities there. We don't want OPIC to be taking wild risks, but we do think that OPIC is in a position to take more risks than a normal private sector firm. Question: Natasa Korazija, Gospodarski vestnik. I have a more general question for you. Do you think the Stability Pact can function well since Serbia is not taking part in it? Ambassador Larson: As I said in my remarks, I think we all understand that it's hard for the region to reach its full potential when there is an anti-democratic, anti-reform element that is ruling Serbia. And we fervently hope that that is going to change, and we do believe that that type of change would be helpful. At the same time, yes, I do think that the region can develop now. We are working -- I think there is a great deal of international support for development in the region that includes international financial institutions like the International Monetary Fund and the World Bank. It includes a very, very strong commitment of public sector resources from the European Union, the United States and other donors. But, most importantly in my mind, there is a strong private sector interest in investment in the region, and we are trying to encourage that strong private sector interest through initiatives like this OPIC investment fund. So I think we need to work on two tracks at once. We need to work very, very hard to maximize the economic potential of the region under current conditions, and that means in part attending to the process of economic and political reform within each of the countries of the region; and then, secondly, it means working together to hasten the day when a democratically-governed Serbia could be part of this process. Question: Marjan Vesligaj. I am a journalist of Slovenija National Radio. Mr. Larson, can you tell us something more about your cooperation with the governments of Southeastern Europe, particularly with the Slovenian government? Ambassador Larson: Well, again, we -- I mentioned briefly in my remarks that we have worked very, very hard with the European Union and other donors to establish the Stability Pact which really is a big part of our framework for cooperation within the region, and it really focuses on the importance of reform across the three areas that I mentioned -- democracy, human rights, economic reform and working together to address the security issues within the region. Within this framework, the United States has been strongly supporting the involvement of the international financial institutions, the International Monetary Fund, the World Bank, the European Bank for Reconstruction and Development. In addition, we have committed a substantial amount of money to these quick-start projects. We think that one of the things we can do fairly well in the United States is to move quickly with resources. So we have looked to the projects the region itself has identified. We have tried to support as many of those as possible, and we have tried to make sure that those projects move quickly so that no time is lost in beginning the process of development and reconstruction in the region. So these are all part of the ways in which we are trying to cooperate with countries of the region to facilitate their closer cooperation with Western Europe, because we think you are a part of Europe, and that those ties need to be strengthened. At the same time, we think there is a important transatlantic community of which you are a part and need to be a stronger participant in, and we hope that the Stability Pact will help strengthen your ties with that transatlantic community. Question: Marko Osolnik from Ljubljana again. Mr. Ambassador, I would also like to ask you how do you -- namely this investment fund tend to coordinate its activities, its investments, with various possible participants from EU countries, both governmental and non-governmental financial organizations? Thank you. Ambassador Larson: This is an investment fund whose management knows the region very well. The management already has a physical presence within the region, and I think is quite familiar with the other major participants in this region, the European Union, the various development banks. And so where there are private sector projects that have a certain synergy, have a certain ability to build on the activities of others, this management team is going to be very, very alert to those opportunities. I do want to stress one more time that this is going to be a private sector-driven exercise. That means that the most decisive factor in deciding what projects to support will be the commercial attractiveness of those projects. But I think what is good about the management team that we have selected is I think this is a team that will be very, very alert for opportunities to cooperate with, say, institutions like the European Bank for Reconstruction and Development, which itself has a mandate to get involved in private sector development. So those opportunities are there, and I think we have got a team in place that will be very alert to seizing those opportunities. Question: Igor Brstovsek again. I would like to know how they intend to cope with different rates of development in the region. Ambassador Larson: You know, we certainly are cognizant of the fact that different countries are at different stages of development. Nevertheless, I think that there are many aspects of what constitutes an effective development strategy that don't really change in accordance with a country's per capita income. We have seen case after case of countries at all stages of development who have been able to succeed because they have had economies that were open to trade and open to investment; they have had economies that were moving in the direction of establishing firmer rule of law, stronger institutions to promote good governance and to fight bribery and corruption. And that's true no matter what is your level of development. So I think while it is certainly the case that some of the things that government needs to do in the area of public sector investment -- investment in education, investment in infrastructure -- will vary depending on the level of development. I think it's very important to understand that the fundamental policy of being open to trade, open to investment, and setting up the sort of institutions and the good governance policies that make a country attractive to investment -- those are things you need to do whether your per capita income is $500 a year, $5,000 a year, or $15,000 a year. Mr. Roberts:Time for us to move on now. And we go for the next few minutes to Tirana. Go ahead please, Tirana. Question: Ambassador Larson, very soon Albania will be a member of WTO, and under the Stability Pact investment compact, our government is working to prepare comprehensive policies and action plans aiming for the facilitation for the creation of the best possible attractive environment for foreign direct investment. What in principle will we have to do more in order to attract as much as possible OPIC attention towards our potential economy? With help we might provide more to our private business -- and what it has to do in order not only to be eligible, but use in practical terms all kinds of support OPIC provides? Ambassador Larson: First of all, congratulations on your progress to WTO accession. I think that's a very significant step and a significant accomplishment, and I think we are all very pleased by that progress. I think that the single most important thing that governments need to do to create an attractive investment climate is to listen to investors. And that includes domestic business as well as foreign business. As the last questioner pointed out, countries do differ. The problems and challenges that they face at any particular point in time differ. What I have found as I travel all around the world is that those countries that make a very serious effort to listen to the business community, foreign and domestic, to hear what the business community thinks are the challenges -- those are the countries that seem to be most capable of attracting investment. I think the basic formula is the same: companies are looking for clear and consistent rules; they are looking for a framework that doesn't involve discrimination between foreign and domestic investors; they want to make sure that contracts once made are honored; they want to make sure there isn't going to be arbitrary government decisions that have a negative impact on their investments. You know, when a company makes a long-term investment it is almost like getting married: you are making a long-term commitment, and that needs to be based on a high degree of trust. The company needs to have trust that the government is going to continue to treat it with fairness, and that rules will be applied. The country obviously wants to have trust that the company is going to carry out its obligations and its commitments in good faith, and that it is coming for the long term. And I think that everything that a country can do to establish that degree of trust is something that helps make it a successful business climate. At the beginning, the first projects sometimes are the very most important ones. We felt very strongly that in Southeast Europe that when companies, including American companies, have made a major commitment of time and effort to work with governments and to consider investments and even make investments, that it is very important that those companies succeed, because other investors will listen to what I say, and they will listen to what governments in the region say about their commitment to good investment policies. But they will make their decisions based on the track record that other American companies have experienced in the region. And so how those first investors are treated and whether they succeed or fail will be the single most important indicator of whether more investment is likely to come. Question: Thank you very much. Today for instance we had a very good discussion in our country economic team in order to adopt our document for investment compact. And I can tell you that we are trying to hard to establish a very good council of business, and to establish a partnership between government and business. We are aware about how important the dialogue between us is, and we are trying to do our best. Another question is does OPIC develop regional approaches for its intervention? In other words, is OPIC able to finance or guarantee big regional investments in the Balkans, like transport corridors -- (inaudible) -- port facilities, et cetera? Ambassador Larson: Well, first of all, congratulations on the work that you are doing, that is being done within the government to address these issues of receptivity to business input and advice about how to get the best possible investment climate. I think that's a very, very good initiative. On the issue of regional projects, I think certainly the United States government has been very supportive of regional projects, including transportation corridors. We supported in particular one initiative for a transportation corridor from Albania to the Black Sea, and that is something that I do think is very important. The involvement of OPIC in a project like that would really depend on whether there was a private investment angle to it, and whether the project itself was commercially viable. We have seen a greater and greater emphasis lately on investment projects that really have an infrastructure dimension. OPIC has been involved in projects that include pipelines that carry natural gas from one country to another, and support for the electric power plants that burn that natural gas. I am thinking in particular of a project structured along those lines here in our own hemisphere. So OPIC has a track record in regional projects. But the emphasis always has to be on projects that are private investment projects that are financeable, that are commercially viable. And if those things are true, then there is no impediment to doing something that is on a regional basis or that involves two or more countries. Mr. Roberts:Thank you very much for your questions. Let's return now for more questioning from Sofia. Go ahead please. Question: (Off mike) -- it's in the energy sector. Could you talk in more details about the first project of the fund in Bulgaria in the energy sector that you mentioned at the beginning? Ambassador Larson: I can give you a little bit more about that. First of all, I should be clear on a technical point. This project in Bulgaria in the energy sector is actually not one that is financed by the Southeast Europe Investment Fund. It is a project that was approved separately by the board in its own right. And it is worth stressing as a general point that we are not restricted in the Overseas Private Investment Corporation to making investments through this investment fund. The investment fund is one tool that we have. We already have moved forward with a separate tool, which is this $200 million OPIC line of credit. And the Bulgarian energy project is one example of a third type of thing that we can do, which is the normal OPIC activities anywhere in the world that support good investment projects. This particular investment project involves a United States company called Intergy, and it's in support of a project that is going to supply cleaner and more reliable electricity, improve health conditions in the surrounding area, and will help bring new technology and management skills to this particular power plant. The form of OPIC involvement is a political risk insurance in support of the privatization of this particular power plant. So it is an example of how OPIC can support privatization and in the process of privatization make a project more environmentally benign, and bring a higher degree of management know-how in support of the economy. OPIC really has two broad types of support that it offers for private investment. One is financing, which can take the form of support for loans or loan guarantees. The other is political risk insurance, which insures companies against the risk of currency inconvertibility or expropriation. And both of these are forms of support for investment that can be very, very helpful. Question: Maria Spasova from Sofia again. This $150 million loan is another -- (inaudible) -- for the U.S. commitment to the stability and cooperation in the region. Could we expect some other initiatives of the U.S. government for the regional stability, this side on the political side? What I do have in mind is the NATO expansion in Southeast Europe. And I would like you to elaborate a little bit on that. Ambassador Larson: Well, I'll be very, very short on that, because it is not my field of responsibility or expertise. I think we made clear that we believe that the door should be open to further expansion of NATO in the future. We have worked within NATO to establish a framework for how that should proceed. And you know I think we have a process underway that will make sure that those decisions will be made in a very open and sensible way that will be based in part on the ability of prospective new members to contribute to the overall role and mission of NATO. If I could take advantage of your question to mention one other initiative that I should have mentioned earlier though that is in the economic area, it is the area of trade and trade preferences. I have stressed several times that I think that trade is one of the important avenues for economic development of the region. We have strongly supported trade preferences for the countries of Southeast Europe. Here in the United States we have initiated our own legislative proposal for one-way free trade -- one-way trade preference arrangement that has been introduced into the Congress, and we are pushing for congressional consideration of that initiative. At the same time, we have supported ideas that are being explored within the European Union now for a similar program by Europe on behalf of Southeast Europe, because we do think that trade expansion is one of the most important ways that you can develop your countries. Mr. Roberts:Sofia, thank you very much for your questions. Let's move back to Ljubljana now for your next question. Go ahead please. Question: Hello, Marjan Vesligaj here again. Do you have any project for Montenegro? Are you going to wait for -- (inaudible) -- of the regime of Slobodan Milosevic? Ambassador Larson: First of all, the investment fund that we have been discussing this morning will be able to operate in Montenegro. We are also supporting other activities in Montenegro. We are working very hard to make sure that the multilateral development banks, the EBRD and the World Bank, will be in a position to play a role in strengthening the economy in Montenegro. We think it's very, very important to support Montenegro's efforts to really be part of the Stability Pact and to be part of the broader effort to promote democracy and to promote economic growth and reform in Southeast Europe. Question: Hello, Marko Osolnik again from Ljubljana. I have one question regarding the promotion of interregional investments and trade, because it is my conviction that the growing amount of interregional investments from one country to another in the region could in a way facilitate this stabilization of the region. And besides this initiative, does the U.S. government also have other incentives to support interregional investment and trade? Thank you. Ambassador Larson: Well, as I mentioned earlier, we have supported some interregional projects, including this transportation corridor from Albania to the Black Sea. I do think that, with all due respect, the major incentives for interregional development need to come from the region itself. That is to say my experience in regions that are trying to integrate is that it is your businesses that are closest to what the problems are that make it difficult for them to trade or offer their services across borders. You are more familiar than anyone with the sort of infrastructure challenges that need to be addressed. I mentioned transportation. Another area of interregional cooperation that I think is very important is the establishment of regional electricity grids, and that is another area that we are being very supportive of through our contributions to the Stability Pact. And I think this is also a very important initiative. But I do really believe that we can't want regional integration more than the region does, and it is really incumbent on the region to work together very, very hard to identify the constraints that prevent a greater degree of regional liberalization, regional integration, and to find ways to get rid of those constraints. And so in one sense I would agree with the thrust of your question, but I would throw part of the answer back on your shoulders. Mr. Roberts:Let's move back to Sofia now for another question. Go ahead, Sofia. Question: Miglena Mancheva. As there is some delay in the financing expected under the Stability Pact, is it possible that some of the projects with respect to financing will be after all financed through the new fund, SEIF? Ambassador Larson: For the most part I think the answer to your question would be no. I believe that the financing under the Stability Pact has been moving ahead fairly well, certainly in comparison to other types of public sector assistance projects that I am aware of. We have made a big push on the part of the United States to emphasize quick start, moving ahead quickly, and getting funds flowing to the region as fast as possible. And that's why we have put so much emphasis on these quick-start projects. And my understanding is that the majority of these are moving along very, very quickly and are ready to move. Many of these are public sector projects, and that's why my answer is no, because I don't think by and large that the private sector fund that we are creating will be a good and effective tool to take over some of these public sector projects. I think the private sector fund is going to have to concentrate on the opportunities that arise in the private sector for projects that are commercially viable, that can make money, but while making money can make a big contribution to development, to employment, and to economic growth in the region. So I think they have two different roles. They are mutually-reinforcing roles, but they are different, and they will probably remain separate. Mr. Roberts:Well, with that we regret that our hour for today's "Dialogue" is just about over. Before we go, we want to thank everyone for their participation in Sofia, Ljubljana and Tirana. And we especially want to thank Ambassador Alan Larson for offering his time and expertise to do this program, to being our guest today. It's been a pleasure working with you, ambassador. Ambassador Larson: Well, thank you, and thanks to all our listeners. This has been a very dynamic exchange. I really appreciate all the questions, and I think I sense a lot of energy and enthusiasm and a desire to make this whole process work, and it's very, very encouraging. So thank you very much. Mr. Roberts:And I sense the fact that they appreciated your answers as well, and your availability.
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