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BAKER INSTITUTE REPORTNOTES FROM THE JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY OF RICE UNIVERSITY

September 2000Number 14

UNIQUE FORUM FOCUSES ON CHIEF OF STAFF’S ROLE

Former chiefs of staff who participated in the Baker Institute forum are (sitting, from left) Howard H.Baker, Jr.; John H. Sununu; James A. Baker, III; and Richard Cheney; and (standing, from left) ErskineBowles; Thomas F. “Mack” McLarty; Samuel K. Skinner; Jack H. Watson, Jr.; Kenneth M. Duberstein;and Leon E. Panetta.

In November, America will electa new president in a peaceful tran-sition of power as old as the Re-public itself. Yet, one morningshortly thereafter, someone willwake up to realize, as 15 otherAmericans have before, that in avery few weeks he or she will bethe new White House chief of staffresponsible for leading a team,not yet picked, into the most im-portant nerve center in the world.That too is a tradition, but it isonly as old as modern memory–itbarely predates the end of theVietnam War. While everyoneknows that the president runs thecountry, it is a different story in-side the White House. The wheelsof decision-making there dependheavily on the White House chiefof staff.

Helping the new White Houseteam make a successful transitionfrom election to governing is thegoal of a far-ranging, privatelyfunded effort by a number of or-ganizations, including the BakerInstitute. The principal contribu-tion of the institute to that efforthas been to focus attention on therole of the chief of staff in makinga successful White House transi-tion and in eventually keeping theWhite House working effectivelyfor the president and the country.

That contribution culminated inJune when the Baker Instituteconvened an unprecedented gath-

ering of former White Housechiefs of staff to discuss the officeand its operations. The Baker In-stitute Washington Forum on theRole of the White House Chief ofStaff was an all-day event heldJune 15 at the Woodrow WilsonInternational Center for Scholarsin Washington, D.C. The forumwas coordinated by Dr. TerrySullivan, Edwards chair in democ-racy and research fellow at theBaker Institute, and underwrittenby Nancy Crow Allen.

The forum convened 10 of the14 former chiefs of staff: RichardCheney (Ford administration),Jack H. Watson, Jr. (Carter admin-istration), James A. Baker, III(Reagan and Bush administra-tions), Howard H. Baker, Jr.(Reagan administration), KennethM. Duberstein (Reagan adminis-tration), John H. Sununu (Bushadministration), Samuel K. Skin-

ner (Bush administration), Tho-mas F. “Mack” McLarty (Clintonadministration), Leon E. Panetta(Clinton administration), andErskine Bowles (Clinton adminis-tration).

They discussed topics organizedin three panels covering the ten-ure of a White House (starting up,reorganizing, reelection, and clos-ing out) and a final panel on theplace of the White House in thelarger governing community. Theyexchanged experiences and sum-marized lessons they learned aschief of staff. And they com-mented on the current politicalsituation in Washington that theirsuccessors will face.

The second toughest job inWashington: Accomplished asleaders in a wide range of profes-sions–law, business, military

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LETTER FROM THE DIRECTOR

The MiddleEast and theMaghreb are atanother historiccrossroads.While the majorforeign policy is-sues continue topreoccupy press

and media attention–the MiddleEast peace process, Lebanon, con-tainment policies in the Gulf di-rected toward Iraq and Iran, andthe Western Sahara–basic socio-economic forces are at play thatnot only affect these issues, butwill also have an even greater im-pact on the evolution of the re-gion at a time of generationalchange in leadership.

Throughout most of the MiddleEast and North Africa, the rate ofdemographic growth is high, andincreasing numbers of youngpeople are seeking employment ineconomies that cannot createenough jobs to fill the demand. Insome countries more than 50 per-cent of the population is under 25years of age. Foreign direct invest-ment in the Middle East remainsvery low compared to other re-gions of the world, except for Af-rica. Many countries are burdenedwith statist economic structures in-herited from the 1950s and 1960sand the legacy of Arab socialism.Accordingly, economic reformand the transition to private mar-ket economies have proven to behalting and difficult. The educa-tion system, in general, is notgeared to produce qualified en-trants into the marketplace whocan meet these new challenges.

These structural problems are ex-acerbated by endemic corruptionin the public and private sectors ofsociety. Indeed, in certain in-stances the level of corruption isso high that it is a major factor in-hibiting economic and social de-velopment. Further, the large gapbetween rich and poor raises thefundamental issue of social injus-tice in the region. Indeed, it is thisissue more than any other that isthe cause of instability and the riseof extremist groups, either secularor religious.

Another major factor is thegrowing desire for broader partici-pation in the political process ofthese countries. Younger genera-tions are seeking to have theirvoice heard through more repre-sentative institutions. In this re-spect, one of the most striking iro-nies in the Middle East is Iran.Despite the dominant role of theAyatollahs and clerics in this Is-lamic regime, there is a real demo-cratic process of elections wherethe people, especially women andthe young, vote in legislative andpresidential elections and whereinreformists and conservatives viefor power. Across the Gulf inQatar, Kuwait, and Yemen, there ismovement toward broader andmore open local and legislativeelections. In Saudi Arabia, themost conservative of the Arab GulfStates, there is recent recognitionof the need to broaden the role ofthe Majlis as-Shura (ConsultativeAssembly), which is the most im-portant representative and advi-sory body in the kingdom. In thekingdoms of Morocco and Jordan,

doors have been opened to oppo-sition parties to participate in gov-ernment and the parliaments.While these developments offersome hope for the future, thecompelling need for governmentsto be more responsive to theirpeople’s urgent economic and so-cial needs underscores the magni-tude of the challenge to the cur-rent regimes in the region.

In certain countries, the comingto power of a new generation ofleaders (King Abdallah in Jordan,King Mohammed VI in Morocco,Amir Hamad bin Khalifa Al Thaniin Qatar, and, most recently, Presi-dent Bashar al-Assad in Syria) isputting in stark relief the tensionbetween continuity and change.Faced with basic socioeconomicand political problems and theforces of globalization and infor-mation technology, these new andyounger leaders are creating newexpectations for reform andchange. This is a particularly diffi-cult mandate because of the needto consolidate their domesticpower bases and to assure regimecontinuity. At the same time, theyare pressed to strike a new chordfor economic, social, and politicalreforms.

Regional conflict resolution willalso play a key role in the ability ofthese leaders and countries tomeet the rising demands of theircitizens. There is no doubt thatthe heavy burden of defense andsecurity expenditures required inthe absence of the peaceful settle-ment of regional disputes in theMiddle East, the Gulf, and the

Edward P. Djerejian

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Maghreb hinder addressing thepressing socioeconomic issuesthese countries face. It has been astark statistic over many years inthe Middle East (from Turkey toIran) that on average for everydollar spent on education, a stag-gering $166 has been spent onarms and defense. Therefore, con-flict resolution can have an enor-mous impact on economic and so-cial development, and the highestpriority must be given to peacefuland comprehensive settlementson the Israeli-Palestinian, Syrian,and Lebanese fronts as well as asettlement of the Western Saharaissue and the creation of a morestable situation in the Gulf, espe-cially regarding Iraq. The leader-ship of the Arab countries, of Is-rael, and of the internationalcommunity, especially the UnitedStates, must demonstrate the nec-essary political will and determina-tion to bring these conflicts to anend. At the same time, there is arole for nongovernment organiza-tions to help facilitate regionalconflict resolution in a mannersupportive of the efforts of govern-ments. In this respect, the BakerInstitute has been active in initia-tives in the region involving con-flict resolution, specifically in theArab-Israeli conflict and the West-ern Sahara issue.

In one of our earliest Baker In-stitute studies, we suggested thatthe United States should, as a con-sistent policy, urge and work withthe governments of the MiddleEast region to reach out to theirsocieties on the dual track ofbroadening participatory govern-ment and free market forces as ex-

peditiously as their particular cir-cumstances permit. In the finalanalysis, this would be the most ef-fective approach to diminish themanifestations of social injusticethat promote instability and giverise to extremism. In so doing,however, we must be sensitive tothe complexities involved. Themodernization process of the Westis viewed in parts of the world withsuspicion and even hostility and asalien to their culture and beliefs.Even in the United States we haveseen the opposition to globaliza-tion policies at the World TradeOrganization meeting in Seattle.In the Middle East context, per-ceived imposition of secular ideascan lead to resistance. This is cer-tainly the case of those individuals,groups, and classes in these coun-tries who are not sharing the ben-efits of the modernization processand who see themselves as largelydispossessed victims. Such inequal-ity is the breeding ground of insta-bility and extremism. That is whyit is essential in launching and fos-tering modernization programs toensure that the fruits of politicalparticipation, market reforms, andeconomic and social developmentare widely accessible.

Much of the recent history ofthe Middle East has been charac-terized by the accumulation andconsolidation of state power inthese societies. This aspect of con-tinuity in the region has been ex-emplified by the recent spate ofsuccession politics. But regime sur-vival and the aggrandizement ofpower have not been matched byequal success in economic and so-cial development policies, and thecountries of the region find them-

selves ill-equipped to compete anddeal effectively with the forces ofglobalization and to manage theindigenous forces that see mod-ernization as a threat. This iswhere the rising expectations ofyounger generations and theforces of change come into play.With new leaders emerging, a keyelement will be effective politicaldialogue between governmentsand a broad spectrum of their so-cieties. This political track shouldbe coupled with viable economicpolicies that benefit large sectorsof the populations and the cre-ation of strong middle classes.

As for the United States’ role inthis process, we have importantand even vital interests in the re-gion and, therefore, have a stakein its future. Our approach shouldbe tailored to each country withthe understanding that we do nottry to impose Western politicalmodels on many of these tradi-tional societies which have theirown forms of political consulta-tion that can be expanded alongthe lines of more democratic prin-ciples. This is where the leaders ofthe region should place the em-phasis. While we must fully sup-port and help to steward thesechanges, we should be careful toavoid the arrogance of power.

Edward P. Djerejian

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CHIEF OF STAFF

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leadership, and politics–theformer chiefs of staff agreed whenJames Baker, who held the posi-tion twice, noted that “each of ushas held the second toughest jobin Washington. And when you re-alize that that job is just a staffjob–it’s right there in the title–then you know that it is not just atough job, but it is probably theworst job in government.” The av-erage tenure in office of a chief ofstaff is around two years.

Baker emphasized that the chiefof staff stands uniquely at the in-tersection of politics and policy,and they cannot be separated.“It’s the chief of staff’s job to spellout the political meaning of a de-cision while also understandingthe underlying policy implica-tions,” Baker said.

Cheney noted that a strongbackground in history can benefitthe chief of staff “because so muchof what you do is shaped and af-fected by what’s gone before, andthere are valuable lessons to be

learned in experiences of earlieradministrations that you may wantto apply.”

The former chiefs of staff notedthat constant strategizing and de-cision-making make the job verydifficult. “You make hundreds ofdecisions for the president that henever even knows about,” re-marked Watson. “You’re like ashort-stop, cutting short the ballsto keep them from getting . . . allthe way to the president.”

Former Office of Managementand Budget director and formerCongressman Panetta likened thejob to being a “battlefield com-

mander”–turning grand strategiesinto on-the-ground tactics thatlead to bloody battle scenes. Nomatter what the specific vocabu-lary, though, they all agreed it is athankless job.

The former chiefs also con-curred that the high-speed pacedefined the job as it defined fewothers. In fact, many of them com-mented that the pace of WhiteHouse operations dwarfed theirexperiences in business and fi-nance.

“It is so much faster than a dot-com,” remarked businessman andWall Street financier Bowles. “Oneminute, it’s health care,” henoted. “The next minute, it’sKosovo, Iraq, welfare reform, thebudget. And, oh, on the side, youdeal with a little thing called ‘im-peachment.’”

In the end, the decisions madeby the chief of staff further thepresident’s agenda by sacrificingthe chief’s own influence and per-sonal standing. Explained Baker,“You walk around with targets onyour front and back.”

A commitment to lending theirexpertise: The former chiefs ofstaff convened in Washington be-

(From left) Former Indiana Congressman Lee H. Hamilton serves as moderator for a panel that includedJames A. Baker, III; John H. Sununu; and Thomas F. “Mack” McLarty.

(From left) Erskin Bowles, Howard H. Baker, Jr., and Leon E. Panetta socialize at the chief of staff forum.

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cause they wanted to share theirexperiences for the new adminis-tration in Washington in 2001.

“These men are extraordinarilybusy,” Sullivan noted. “Amongthem are former cabinet secretar-ies: secretary of defense, secretaryof state; former members of Con-gress: Senate majority leader,House minority whip, House bud-get chairman. Many of them nowdirect companies, Fortune 500firms, and national law firms.”

Baker confirmed their commit-ment in his opening remarks bynoting that the former chiefs ofstaff had convened in order to fa-cilitate the task for the next mem-ber of their exclusive fraternity.“Every time history repeats itself,”he noted, “the price goes up.Clearly, that aphorism was writtenfor the White House staff. In ourmodern world, White House mis-takes reverberate loud, long, and. . . at the speed of light.”

Lessons learned: Among the les-sons they agreed were central to

governing from the White House:• There are literally hundreds, if

not thousands, of claimants onthe president’s time, and some-body has to say “no.” A big partof every chief of staff’s job iskeeping the White House fo-cused on the president’s agenda.Others in the Washington com-munity, in Congress, among or-ganized interest groups, all wantto add their favorite policy to

the national agenda, and thequickest way to get there isthrough a White House endorse-ment. These issues dilute theadministration’s influence bydrawing off the president’ssparse resources. Preventingthat drain and keeping thepresident’s agenda from driftingoff course is the chief of staff’sresponsibility.

• When people can wander in andout of the Oval Office, it meansthat the president does get in-formation out of context. And,therefore, he doesn’t make asgood decisions, and it takeslonger to make decisions. Thepresident’s decisions depend ona process that guarantees he willget the widest range of opinionpresented to him on any singleissue. Others, of course, want anopportunity to short-circuit thesystem and get the president tocommit to a decision they pre-fer. Assuring the president thathe has seen the range of judg-ment on the decision before

(From left) Former chief of staff Thomas F. “Mack” McLarty and CBS White House correspondent BillPlante meet with Baker Institute scholar Dr. Terry Sullivan, who coordinated the chief of staff forum.

Participating in a panel discussion are (from left) Richard Cheney; Jack H. Watson, Jr.; James A. Baker,III; and Kenneth M. Duberstein.

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Japan should continue to re-structure its domestic energy sec-tor away from intrusive govern-ment involvement to market-conforming regulation.

That is a major conclusion of ayearlong energy study released bythe Baker Institute.

The study also recommendedthat Japan should pursue a multi-lateral approach toward energy se-curity in Asia. Such cooperationcould involve the creation of Asianemergency oil stockpiling systems,a maritime organization for coop-eration on sea lane safety and en-vironmental protection, and pur-suit of major regional natural gasprojects.

Titled “Japanese Energy Securityand Changing Global Energy Mar-kets: An Analysis of NortheastAsian Energy Cooperation andJapan’s Evolving Leadership Rolein the Region,” the study included21 published working papers–more than a dozen by Rice Univer-sity faculty, four from Japan, twofrom the People’s Republic ofChina, and one from the UnitedKingdom. The results of thisfourth major study on energy bythe Baker Institute were releasedMay 18 at a briefing for energy in-dustry executives, representativesfrom the Departments of State,Energy, and Defense, energy ana-lysts, academic energy experts,and media representatives.

The research project, conductedin close cooperation with the Pe-troleum Energy Center in Japan,was funded by the Center for In-ternational Political Economy of

BAKER INSTITUTE ENERGY FORUM RELEASES ANNUALENERGY STUDY

New York. Researchers and repre-sentatives from Japan, China,South Korea, and Russia attendeda workshop held at Rice in Decem-ber to exchange views on theproject. Rice professors Dr. PeterHartley and Dr. Fred von derMehden and the Baker Institute’ssenior energy analyst, Amy Jaffe,joined other U.S. researchers for areciprocal visit to Japan in Febru-ary.

The Baker Institute’s energystudies are multidisciplinary and

provide in-depth analysis of theeconomic, political, social, techno-logical, environmental, and cul-tural factors that will influenceglobal energy markets in the com-ing decades. Topics covered in thisyear’s study include:• Japan’s relations with primary

energy suppliers• Chinese power projection in his-

torical perspective• The future of multilateral secu-

rity cooperation in the Asia Pa-cific

• The U.S.-Japan security alliance• Forecasts on Japan’s and China’s

future energy requirements andenergy mix

• Russia’s potential as a major en-ergy supplier to China, SouthKorea, and Japan

• Japanese nuclear energy policyand public opinion

• Prospects for energy deregula-tion in Japan

• Cultural security perspectives inNortheast Asia.The complete study, including

the Japanese translation of the ex-ecutive summary, is available onthe Baker Institute’s Website athttp://rice.edu/projects/baker/index.html along with previouslyreleased energy studies on the Per-sian Gulf (1997), the Caspian Ba-sin (1998), and China (1999).

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The Baker Institute’s

energy studies are

multidisciplinary and

provide in-depth

analysis of the economic,

political, social,

technological,

environmental, and

cultural factors that

will influence global

energy markets in

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the coming decades.

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A forum for a bipartisan dia-logue on America’s national inter-est in multilateral engagement wascosponsored by the Baker Insti-tute and the Overseas Develop-ment Council (ODC) April 9-10.

The forum was part of an effortby the ODC to place this themeon the agenda of the presidentialcandidates and to prepare for theSeptember 2000 United NationsMillennium General Assembly.This Baker Institute event fea-tured a dinner address byUndersecretary of Defense forPolicy Walter Slocombe and twopanels, one on counterterrorismand the other on internationalpeace and security. In May,Harvard’s John F. Kennedy Schoolalso held a pair of panels that arepart of the overall program.

Secretary Slocombe’s speech fo-cused on the conditions underwhich the United States shouldwork with other countries and in-ternational actors to pursue its for-eign policy. He began by statingthat if it can be shown that U.S. in-terests are at stake, the Americanpeople will support engagement,even with the prospect of Ameri-can casualties. He then noted thatthe specifics of the situation facingthe U.S. should determinewhether (and if so, how) it workswith others. Some problems, suchas terrorism, require a multilateralresponse and a significant involve-ment by the United States. Onother problems, while the U.S.may have an interest, it need nottake the lead, such as the situationin East Timor. But for many issues,

BAKER INSTITUTE AND OVERSEAS DEVELOPMENT COUNCILANALYZE NEED FOR U.S. MULTILATERAL ENGAGEMENT

it is important that the UnitedStates work closely with the UnitedNations. Often the U.N. providesinternational authority and legiti-macy for U.S. actions even if thereis no direct involvement by that in-ternational organization. Slo-combe also noted that it will be acontinual challenge for the gov-ernment to sustain political andpublic support for U.S. engage-ment in the world.

Princeton Lyman of the ODCchaired the panel on counter-terrorism, which featured GrahamAllison of the Kennedy School,Michael Wermuth of the RANDCorporation, Martha Crenshaw ofWesleyan University, and PaulBremer of Kissinger Associates.

Panelists noted that there is abroad spectrum of threats fromterrorism. The most likely eventsare not the “doomsday” scenariosepitomized by incidents such asthe Oklahoma City bombing orthe terrorist attack on the Japa-nese subway system. It is far morelikely that terrorist incidents willbe smaller and use only conven-tional weapons.

In the U.S., extensive resourceshave been devoted to counter-terrorism, but significant prob-

lems of coordination remain, forexample, determining who is incharge and specifying the bound-aries of responsibility betweengroups and organizations. Devis-ing an adequate response is diffi-cult because terrorism is an inter-national problem that does notrespect jurisdictional boundariesand because the nature of the ter-rorist threat changes throughtime.

Compared with the past, thenumber of terrorist incidents isdown, but those that do take placeare more lethal. As well, the differ-ences between international anddomestic terrorism are decreasing.This has significant implicationsfor intelligence gathering and lawenforcement as well as for preven-tion. Finally, the motives of terror-ists have changed through timefrom political goals to goals thatare both more personalized andmore unique. In the 1970s and1980s, terrorists targeted the U.S.because of whom we supported.Now they target the U.S. becauseof who we are. As well, terroristgroups today are less likely to wantto gain political power, and thisleads to fewer self-imposed con-

Graham Allison (left) and Paul Bremer served on the panel on counterterrorism at the forum.

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playing an important role in EastTimor.

Harmonizing U.S. interests inpeace and security with those ofthe broader international commu-nity will remain a challenge. TheU.S. needs a U.N. that can takesome actions in the world (if thesituation does not sufficiently en-gage U.S. interests and values).

straints on inflicting casualties.To deal with these changes, the

U.S. must reassess its concept ofsecurity. More than ever, success-fully defeating terrorism requiresinternational cooperation andsolidarity. Fortunately, the interna-tional climate for confronting ter-rorism has improved. The UnitedNations can play an importantrole in the global struggle againstterrorism, both by playing an ac-tive role in coordination and byproviding international legitimacyfor these efforts.

Stephen Rosenfeld, a formereditor of the Washington Post,chaired the panel on internationalpeace and security. Panelists wereBill Maynes of the Eurasia Founda-tion; Jeffrey Laurenti of theUnited Nations Association of theUnited States; Bruce Jentleson ofDuke University; and GeneralCharles Boyd (retired), executivedirector of the U.S. Commissionon National Security in the 21stCentury.

Panelists noted that the U.S. hasmaintained an ambivalent attitudetoward working with the U.N.Consequently, we have witnessedboth periods when the U.N. takeslittle or no role in internationalcrises, as well as times when theU.N. is a key actor in orchestratingan international response to aproblem. This difference can beseen most recently by comparingSeptember 1998, when the U.N.was not involved in Western ac-tions in Bosnia or Kosovo, to Sep-tember 1999, when the U.N. wasinvolved in peacekeeping inKosovo at the same time it was

OVERSEAScontinued from page 7

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Harmonizing U.S. inter-

ests in peace and security

with those of the broader

international community

will remain a challenge.

The U.S. needs a U.N.

that can take some actions

in the world (if the situa-

tion does not sufficiently

engage U.S. interests and

values). However, the

U.S. is also sensitive

about delegating a critical

role to the U.N. on issues

that do engage important

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U.S. interests and values.

However, the U.S. is also sensitiveabout delegating a critical role tothe U.N. on issues that do engageimportant U.S. interests and val-ues.

U.S. national security strategytypically involves both elements ofstrategic realism (which assumesthat the U.S. should not get in-volved unless the situation clearlyengages U.S. interests) and neo-Wilsonian interventions (whichplaces a heavy stress on multilat-eral initiatives such as those thatinvolve the United Nations). TheU.S. needs a clearer vision of thecriteria for intervention in a worldthat features both of these ele-ments, although it may be very dif-ficult to clearly delineate the con-ditions under which the U.S.should become engaged. None-theless, the U.S. will also continueto have both a need to take actionunilaterally and to work with theinstitutions of the internationalcommunity to advance its interestsand achieve its goals.

While panelists reflected differ-ent points of view, the consensusthat emerged from the conferencewas that the United States is notfaced with a world of simplechoices. The U.S. must remain en-gaged internationally and act inan appropriate manner. Some-times the U.S. should act unilater-ally. Sometimes it should act withthe authority and legitimacy of theUnited Nations. At other times, itshould act in concert with theU.N. Finally, sometimes it shouldstay on the sidelines and let theU.N. and other countries lead theway. A major challenge of the 21stcentury for the United States ismaking the correct choice fromthese policy options.

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Peace in the Middle East canbe achieved only through a justand fair process, the Egyptianminister for foreign affairs toldan audience at the Baker InstituteMarch 22.

Amre Moussa shared histhoughts on “The Middle EastPeace Process” after being wel-comed by Edward Djerejian, direc-tor of the Baker Institute, and in-troduced by James A. Baker, III,61st U.S. secretary of state.

Moussa cited two distinct ele-ments–peace itself and the processof peace–and noted that the pro-cess has its own modus operandi.“That process must not be a zero-sum game,” Moussa said.

“Progress is achieved when thecode of conduct is upheld.”

Past failures have been charac-terized by procrastination and vio-

lation of the principle of land forpeace, and successes have been a

MIDDLE EAST PEACE REQUIRES COMBINATION OFELEMENTS

Amre Moussa (center) spends time with student ambassadors at Rice.

Local organizations need to de-velop the ability to lead the re-sponse to terrorist incidents ratherthan rely on federal resources, ac-cording to Michael Wermuth.

Wermuth is senior policy analystat the RAND Corporation and co-ordinator of the U.S. govern-ment’s Advisory Panel to AssistDomestic Response Capabilitiesfor Terrorism Involving Weaponsof Mass Destruction. He discussedthe work of the advisory panelwith a group of local officials atthe Baker Institute February 17 aspart of the institute’s counter-terrorism policy initiative. Thisinitiative is designed to analyzeand assess the preparedness ofHouston and the surrounding ar-eas to handle major terrorist inci-

dents. It involves the participationof the mayor’s office, the TexasMedical Center, and many localand federal agencies.

Before the ability to respond toan incident can be assessed, acommon understanding of thepossible terrorist threats must bedeveloped. Wermuth’s presenta-tion was the group’s first majorstep toward developing this under-standing.

Wermuth noted that the focus inthe United States has emphasizedthe worst-case scenarios, particu-larly those involving large-scaleuse of chemical, biological,nuclear, or radiation devices. Butthe advisory panel believes thatconventional and/or smaller-scaleincidents are far more likely. The

panel sees a need for more focusand coordination in Congress(there are currently 44 differentCongressional committees ad-dressing the issue of terrorism)and for more information-sharingamong levels of government. Na-tional standards for dealing withterrorist attacks are needed soteams of responders can move eas-ily from their own city to anothercity and have an immediate im-pact on the situation.

Future meetings of the counter-terrorist study group will move toestablish a concrete assessment ofthe threat to Houston, evaluatethe current ability of Houston torespond to the threat, and put to-gether a plan for public educationon this topic.

WERMUTH ASSESSES PREPAREDNESS FOR TERRORISTTHREATS

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MIDDLE EASTPEACEcontinued from page 9

The coauthors of a book aboutthe Vietnam War hope that les-sons learned from that war willprevent the tragic loss of life wit-nessed during the 20th century.

Robert McNamara, U.S. secre-tary of defense during the escala-tion of the Vietnam War, believeshistorians, scholars, and thecountry’s leaders should examinehistory and learn from past mis-takes, especially the Vietnam War.He discussed his 1999 book, Argu-ment Without End: In Search of An-swers to the Vietnam Tragedy, at theBaker Institute February 28.

Coauthors James Blight, profes-sor of international relations atthe Watson Institute for Interna-tional Studies at Brown Universityand director of the institute’s Viet-nam War Project, and Robert James A. Baker, III (left) chats with Robert McNamara, who visited Rice to discuss his book about the

Vietnam War.

FORMER U.S. SECRETARY OF DEFENSE SHARES LESSONSFROM VIETNAM WAR

Brigham, professor of history atVassar College, also were presentto discuss the book.

They explained how they em-ployed a unique approach in de-veloping the book. They drew

American and Vietnamese officialswho were involved in the war to-gether with scholars for a series ofmeetings to probe its causes anddraw lessons from the conflict.

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result of courage. To achieve a justand lasting peace, all elementsmust come together, Moussa said.And the Arab side must be stead-fast in its commitment to peace.

“Egypt is ready to help,” he said.“This is a golden opportunity thatmust not be missed.” To reachpeace, “all matters must be ad-dressed equally,” Moussa said.

A final and important point con-cerning the peace process, hesaid, is that “the role of the UnitedStates is crucial and pivotal. It isinescapable that the U.S. remaininvolved in the process in the

months ahead. The logic and ra-tionale of the process as designed[at the Madrid Peace Conference]are sound if adhered to.”

A hopeful Moussa also lookedbeyond the peace process to otherconcerns of the region. “How-ever peace in the Middle East isachieved, the success must not bethe end of the road but a start,”he said.

The post-peace process effortswill include regional security andeconomic growth in a global mar-ket, he said, singling out arma-ments as one of the most impor-tant matters that must be resolved.

“Any security will not stand un-less the armament issue is ad-dressed,” Moussa said. “We must

ensure equal security, arms con-trol, and weapons reduction.”

An era of interaction and inte-gration must cement the peace,and the region must reach a stagein which there is flow of trade,capital, and investment. “We mustmake it unaffordable for anyoneto threaten peace,” he said.

As minister for foreign affairs ofthe Arab Republic of Egypt since1991, Moussa has played a key roleas facilitator in establishing talksamong Israel, Syria, and the Pales-tinians.

Moussa’s speech was part of theBaker Institute’s Shell Oil Co.Foundation Distinguished LectureSeries.

11

Identifying the optimum policyframework to ensure adequate de-velopment of oil reserves in the21st century was the goal of theWorld Energy Conference held atthe Baker Institute May 19.

Titled “Running on Empty?Prospects for Future World OilSupplies,” the conference washosted by the Baker Institute’sEnergy Forum in cooperation withthe Petroleum Industry ResearchFoundation (PIRINC).

Three high-level panels consist-ing of energy experts from thegovernment and private industryaddressed questions about whichdeterminants–geology, technology,or politics–will play the most im-portant role in determining futureworld oil supplies and whether theinternational political and finan-cial environment will favor timelyresource development.

Bruce Riedel, special assistant tothe president and senior directorof Near East and South Asian af-fairs at the National SecurityCouncil, gave the luncheon ad-dress on “U.S. Oil Sanctions

Rice economics professor Dr. Robin Sickles makes a presentation at the energy conference.

BAKER INSTITUTE HOSTS WORLD ENERGY CONFERENCE

Policy.” Although many in the au-dience doubted their effective-ness, Riedel argued for the neces-sity of the United States’ policieson oil sanctions. While concedingthat sanctions policies might resultin higher energy prices and canbe detrimental to the global com-petitiveness of American energycompanies, Riedel said that theprice was a small one to pay when

considering the larger picture ofnational security and effective for-eign policy toward states thatsponsor terrorism abroad and areruthless at home. He said that thepresent oil embargo against Iraqwas essential to demonstrating ourresolve to support internationallaw and that relations with Iraqcan never improve so long asSaddam Hussein is still in power.The improving political condi-tions in Iran, however, offer hopethat we might see improved rela-tions and possibly the reestablish-ment of energy cooperation in thefuture. Riedel noted that the sanc-tions policy toward Libya serves asa model of effective sanctionspolicy implementation.

James Bodner, principal deputyundersecretary of defense forpolicy, delivered the afternoonkeynote speech, “Security Issues inthe Oil Market.” He spoke about

Amy Jaffe (left) greets guests at the energy conference.

continued on page 12

12

ENERGYCONFERENCE

continued on page 13

the ability of the United States toprotect and defend its sources ofenergy both at home and abroad.He explained how the U.S. is bet-ter prepared today than ever be-fore to prevent disruptions of en-ergy resource supplies, whether attheir source or in their transporta-tion to market. He noted that theU.S. now has new bilateral agree-ments that give the U.S. militaryaccess to facilities in all the coun-tries of the Gulf CooperationCouncil, unlike the 1980s whenaccess was more limited.

Edward Djerejian, Baker Insti-tute director, and John Lichtblau,PIRINC chairman, welcomed anear-capacity, distinguished audi-ence to the conference, which in-cluded officials from the Depart-ments of State, Energy, andDefense; executives from many ofthe world’s major energy compa-nies; and other international en-ergy experts.

Amy Jaffe, Baker Institute en-ergy program coordinator, opened

the conference with an overviewof the political and economic fac-tors that contributed to a tighten-ing of international oil marketsthis year. She noted that currentspare oil production capacitywithin the Organization of Petro-leum Exporting Countries(OPEC) is the lowest since 1973.Past low oil prices, social pressuresin the Persian Gulf and Venezuela,and U.S. oil sanctions policy havecombined to limit the amount ofinvestment being made in oilexploration in key prolific oilprovinces.

In the first panel, “The Geologi-cal Possibilities,” Dr. ThomasAhlbrandt, project chief for theUSGS World Petroleum Assess-ment 2000, presented a preview ofthe soon-to-be-released report onworld energy reserves. Ahlbrandtreported an increase in undiscov-ered oil of about 20 percent fromprevious reserve estimates, al-though estimates of undiscoverednatural gas slightly decreased.Matthew Simmons, president ofSimmons and Company Interna-tional, warned about the implica-tions of increased demand.

Simmons predicted increasing,perhaps even insurmountable,problems in the energy industry,including shortages of qualifiedpersonnel and equipment andbuilding the massive infrastruc-tures that will be required to sat-isfy the increasing demand for en-ergy resources. Jack Zagar ofMalkewicz-Hueni Associates,Michael Lynch of WEFA, andRoger Anderson of Columbia Uni-versity also made presentations onpanel one.

Dr. Manik Talwani, Rice’sSchlumberger professor of geol-ogy and geophysics, moderatedthe second panel, “The Role ofTechnology.” Art Green, chief geo-scientist, ExxonMobil, presentedpictures of untapped oil and gasreserves from the latest radar im-agery and declared that there areplenty of resources available inreservoirs at 60,000 feet deep justwaiting for the technology to bedeveloped to produce it. Greenquestioned where the energy in-dustry would find the engineersand geologists that will be re-quired to train in the new tech-nologies. B.N. Murali of Halli-burton and Pete Fontana of DeepVision also discussed the increas-ingly difficult and complex drill-ing and exploration requirementsand the rapidly declining knowl-edge base in the energy industry.Everyone agreed that new and ad-vanced technological break-throughs are essential elements toachieve the projected increases inexploration and production.

Panel three focused on the topic“Will It Happen? Political andPolicy Issues in Translating Re-sources into Supply, and Security

continued from page 11

Baker Institute research fellow Joe Barnes (center) shares thoughts with others attending the energy conference.

13

Although spontaneous marketshave arisen in North Korea as thestate distribution system col-lapsed, economic reforms will notsucceed unless they are accompa-nied by the development of social,capital, and legal institutions.

Experts from around the worldshared this observation in Marchat the second conference onNorth Korea convened within twoyears by the Baker Institute.

Organized by Rice economistDr. Suchan Chae, the conferencefocused on a number of issues re-lated to the current and futurepolitical and economic status ofNorth Korea. The main themes ofthe conference were socioeco-nomic development in North Ko-rea, development strategies foreconomies in transition, the eco-nomic integration of North andSouth Korea, long-term strategiestoward North Korea, and U.S. andSouth Korean policies towardNorth Korea.

Participants noted that becauseof the great military and eco-

nomic risk that would be createdby a North Korean collapse, thecountries critical to the future ofNorth Korea should pursue apolicy of gradualism to improveconditions in North Korea. Presi-dent Kim Daejung’s SunshinePolicy is designed to lift externalthreats perceived by North Koreaso it can pursue a policy of open-ing. The success of the SunshinePolicy, however, is not assured be-cause the North Korean leader-ship’s will to reform is still indoubt. Nevertheless, it is hopedthat recent developments, includ-ing a meeting of the presidents ofNorth and South Korea, will helplead to the stabilization of the Ko-rean peninsula and help pave theway toward economic develop-ment and reforms in the North.

The presentations at this confer-ence will be published as a BakerInstitute working paper. TheBaker Institute, the Asia ResearchFund and the Korea Economic In-stitute/Korea Foundation cospon-sored the conference.

CONFERENCE ANALYZES NORTHKOREAN ECONOMY

Policy Implications.” Peter Davies,chief economist, BP Amoco, spokeon the apparent abundance of oilin the foreseeable future due toimprovements in the technologyof exploration and production.Davies cautioned policy makersnot to panic about a lack of re-serves but to base their policiesupon nonintervention by govern-ments in the market while givingsupport to technological advances.Steve Grummon, State Depart-

ment; Martha Brill Olcott,Carnegie Endowment for Interna-tional Peace; and David Epstein,Pentagon, generally supportedRiedel’s assessment of geopoliticalrealities in the energy industry,warning of instability in oil-pro-ducing regions and the impor-tance of keeping shipping lanesopen. Grummon indicated thatkeeping a check on Islamic funda-mentalism would be a key compo-nent in maintaining good rela-tionships with energy exporters in

the Middle East. Nawaf Obaid,Harvard University, noted thatSaudi Arabia is the country withthe largest excess capacity for oilproduction. He said that despiterecent economic troubles, theSaudi regime is well-entrenchedand stable and will be able to pro-vide for the economic well-beingof its citizens by reaping a windfallfrom privatizing its industries, par-ticularly its energy sector.

Mexican Secretary of Energy Luis Tellez engaged ina private discussion with members of the BakerInstitute’s Energy Forum April 12. Tellez reviewedthe recent history of the world energy market,highlighting Mexico’s actions and explaining hiscountry’s perspective. He also related the changes inthe market for energy to world economic conditions.

continued from page 12

14

Former executive chairman of the United Nations Special Commission (UNSCOM) and chief arms inspector in Iraq, Ambassador Richard Butler (right) addressesDr. Richard Stoll (left of Butler), associate director of the Baker Institute, and students December 9, 1999. Butler was at the Baker Institute for a joint program withthe Council on Foreign Relations to lead a roundtable on “Dealing with Rogue States: The Iraq Case.”

Scientists who specialize in childdevelopment discussed the needfor more research on the biologicaland social factors that shapechildren’s development at a work-shop cosponsored by the Baker In-stitute and The University of Texas-Houston Health Science CenterJanuary 18-21.

Dr. Alvin Tarlov, the Sid Richard-son and Taylor and Robert H. Raysenior fellow in health policy at theBaker Institute, said research onthis subject is critical to developingsound public policies, and hecalled for continued support of re-search at a high level.

Among the needs he cited aregreater family planning, prenatalservices for all, parent education,developmental day care, a greaterinvestment in public education, en-

hancing the community’s role inchild development, and a nationalprogram for “brain fitness,” simi-lar to physical fitness programs.

Tarlov called for conversions ofresearch into knowledge andknowledge into action. As a start-ing point, he suggested creating acoalition of scientists who will takeon the task of providing informa-tion in lay terms to the generalpublic and facilitating the trans-formation of research into action.

In discussing the social and bio-logical factors that shape child-hood development, researchers atthe workshop raised issues such asinfluences of developmental tim-ing and the long-term conse-quences of various problems.

One topic emphasized at theclose of the workshop was the

need to conduct more long-termfollow-up studies to determine howfactors such as low birth weight af-fect development over a lifetime.

The workshop included distin-guished faculty from American andCanadian institutions and coveredneuro-biological, behavioral, so-cial, and health policy aspects ofchild development. It was the firstmajor event of the Baker Institute’shealth policy initiative, which isled by Tarlov.

A grant from the National Insti-tutes of Health’s National Instituteof Child Health and Human Devel-opment funded the workshop.

Plans are under way to publishthe presentations from the confer-ence in a special issue of the Jour-nal of Developmental Neuropsychologyin the latter part of 2001.

WORKSHOP ADVOCATES STUDIES ON CHILD DEVELOPMENT

15

Although some “traditional” cul-tures are finding it hard to com-pete with global commercializa-tion, Chinese culture is respond-ing with vigor and in unexpectedways.

That is the conclusion of the dis-tinguished scholars, professionalresearchers, artists, and writerswho came to the Baker Instituteto participate in the spring 2000series of research workshops andpublic lectures organized by theinstitute’s Transnational ChinaProject.

The project examines how thecirculation of people, ideas, val-ues, and technologies among Chi-nese societies affects contempo-rary Chinese culture.

Changing Chinese values: Theopening up of China has createdgenerations and groups who havewidely varying views about nation,culture, and governance. Chineseyouth highly value Western films,technology, and educational de-grees, yet they are much more “na-tionalistic” in their foreign policyorientations than are older gen-erations. Surveys also show theyhave high expectations that theChinese government will be ableto protect and advance their inter-national status economically andpolitically. Overall, however, Chi-nese society is converging in termsof what people expect from gov-ernment–especially public ser-vices–although widely differentviews on which mix of politicaland economic organizations isbest-suited for the task still exist.

These conclusions of research

were presented at the workshop,“Chinese Values and Attitudes inthe Era of Economic Reform: TheState of the Art in Polling and Sur-vey Research in the PRC,” held inMarch at the Baker Institute. Theworkshop advanced the project’srole as a pioneer in multi-disciplinary cultural research bybringing together for the firsttime Chinese and American schol-ars and professional pollsters toshare research analysis and meth-

odologies.Participants included Jie Chen

(Old Dominion), Dr. Steve Lewis(Rice), Stanley Rosen (USC),Dr. Richard Smith (Rice), Dr.Randy Stevenson (Rice), WenfangTang (Beijing Univ. and Univ.Pittsburgh), American pollsterLance Tarrance, Ying Xiao(PricewaterhouseCoopers, Shang-hai), and Yue Yuan (Horizon Re-search, Beijing).

The workshop’s discussion ofsurvey methods also revealed thatpolling in China is much more so-phisticated than is commonly un-derstood outside China. Pri-vatization of the workplace and

housing present polling obstaclesunique to China, but methodolo-gists agreed that these have largelybeen overcome by creative inter-viewing methods and advancedstatistical analyses. The experi-ences of the pollsters also showedthat many segments of Chinese so-ciety, including state enterprisesand government agencies, arenow frequent sponsors of privatesurveys, spurring the developmentof a very competitive and sophisti-cated domestic polling industry.

Redefining culture: In China,the term “culture” is itself chang-ing. Popular conceptions of cul-ture today refer less to traditionalintellectual elite values and moreand more to economic issues andpolicy debates. The establishmentof the 40-hour work week in urbanareas and the introduction ofcompetition from transnationalcapital have facilitated populardiscourse on “leisure culture” and“local tourist culture.”

In her April talk, “The Chang-ing Concept of the Key Word Cul-ture in 1990s China,” Duke Uni-versity professor Jing Wangmapped the ways in which Chi-nese corporations and local gov-ernments have used advertisingand popular media to advancenew “corporate identities” and a“local image culture” that helpthem tap into the newfound lei-sure time and increased consumerpower of the Chinese people. As aresult, Chinese now think of “cul-ture” as being more economic andless elite and intellectual.

TRANSNATIONAL CHINA PROJECT EXAMINES CHANGES INCULTURE

continued on page 16

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Chinese youth highly

value Western films,

technology, and

educational degrees, yet

they are much more

“nationalistic” in their

foreign policy orientations

than are older

generations. Surveys also

show they have high

expectations that the

Chinese government

will be able to protect

and advance their

international status

economically and

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

politically.

CHINAcontinued from page 15

Transnational Chinese publicart: Chinese art is becoming moretransnational in form as more andmore artists circulate among theChinese societies of China, HongKong, Singapore, and Taiwan, butglobalization has actually rein-forced the prominence of certainfundamental Chinese aestheticprinciples.

In his April talk, “Chinese Cul-ture and Public Art,” Singaporeansculptor Yu-Li Sun emphasized theimportance of Taoist principles inthe creation of Chinese art that istruly transnational. He describedhow he uses balance and juxtapo-sition in modern forms to try toinduce viewers to engage in a dis-tinctly Taoist critical process of“sober self-reflection.” Sun ar-gued that this tie to traditionalChinese philosophical principlesexplains his unique success inplacing his pieces in museums andpublic spaces in Beijing, HongKong, Taipei, and Singapore.Sun’s pieces also served as a back-drop to a performance of contem-porary Chinese dance at Hous-ton’s Wortham Center. Sun alsoshared his expertise in art withRice sculpture students and fac-ulty.

Transnational Chinese aestheticsand literature: Chinese critical aes-thetics and Chinese literature arebecoming more and moretransnational. Critics, academics,and writers in the Chinese socie-ties no longer operate within nar-row national borders; instead, theyare interacting with and engagingcounterparts and readers in the

other Chinese societies and theWest. This interaction has led to arichness and diversity in views thatdid not exist before and also tothe creation of a global Chineseliterature marketplace. These

trends were discussed in separateroundtables with two internation-ally recognized experts: Zehou Li,former director of the Institute ofPhilosophy of the Chinese Acad-emy of Social Sciences in Beijing,and Taiwan novelist and scholarHsien-Yung Pai. They discussedthese and other trends in contem-porary Chinese cultural studieswith Rice Chinese literature fac-ulty Dr. Nanxiu Qian, Dr. Chiu-MiLai, and Dr. Marshall McArthur.Both events were cosponsored bythe North American ChineseWriters Association of Houston.

In the next year, the Trans-national China Project will iden-tify the cultural values reflected inadvertising in Chinese societiesand their relationship to atransnational Chinese identity. Itwill also build exchange ties to theUniversity of Hong Kong to facili-tate long-term study of the rela-tionship between culture and capi-tal in Chinese societies. Reports,transcripts, audio files, and imagearchives from workshops andevents can be found on theproject’s acclaimed bilingualWebsite, http://www.ruf.rice.edu/~tnchina/.

The Transnational ChinaProject is generously supported byFord Motor Co. and Pricewater-houseCoopers, and it is directedby Dr. Steven Lewis, senior re-searcher at the Baker Institute; Dr.Benjamin Lee, professor of an-thropology; and Dr. RichardSmith, George and Nancy RuppProfessor of Humanities and pro-fessor of history.

17

The successful introduction of acommon currency, the euro, rep-resents one of the greatestachievements in modern Euro-pean economic history, accordingto Christian Noyer, vice presidentof the European Central Bank,who spoke at the Baker Instituteon “The Euro from A to Z” Janu-ary 11.

“As investor confidence growsand as more European Unionmember states join the euro area,the euro’s role as an internationalcurrency is destined to gain in im-portance,” he said.

Noyer’s presentation was co-sponsored by the Baker Instituteand the European Institute inWashington, with support fromthe Shell Oil Co. Foundation,Barclays Capital, and the Euro-pean Commission.

“The European Union, eventhough it lacks international per-sonality, is characterized by a sub-stantial and growing degree of po-litical cooperation and coordi-nation. This applies to justice andhome affairs as well as to foreignand security policies. The com-mon currency will encouragemore political cooperation andharmony,” Noyer said.

The groundwork for the euro“lay in the ruin following WorldWar II” when six countries signedthe Treaty of Paris in 1951 to es-tablish the European Coal andSteel Community. That treaty ledto the creation in 1957 of the Eu-ropean Economic Community,which fostered the creation of acommon market for goods, capi-

tal, and labor.The European Union is now a

highly integrated single marketwith about 380 million people. Itcombines the economies of 15 Eu-ropean countries. While the Euro-pean Union is composed of 15member states, only 11 haveadopted the euro. The Treaty ofMaastricht led to the creation ofthe necessary framework and time-table for the creation of the Eco-nomic and Monetary Union in Eu-rope with a single currency.

The Eurosystem, a “userfriendly” way of referring to theEuropean Central Bank and the11 national central banks of thosecountries that have adopted theeuro, Noyer explained, is modeledafter the U.S. Federal Reserve.The role of the 11 national centralbanks is the implementation ofmonetary policy and other tasks,including issuing money.

Noyer emphasized the impor-tance of sound budgetary andstructural policies that are now inplace, but he also pointed out thechallenges facing the Eurosystem.

“The most important challengeto the Eurosystem was the defini-tion of the appropriate monetarypolicy of the euro area as a whole.The Eurosystem had to navigateuncharted waters since it couldneither build upon practical expe-rience with policies for the euroarea as a whole nor on any reputa-tion of its own. In fact, apart fromtheoretical considerations andeconometric test runs, we had, in

EURO MARKS WATERSHED IN EUROPEAN ECONOMICHISTORY

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

“The European

Union, even though

it lacks international

personality, is

characterized by a

substantial and

growing degree of

political cooperation

and coordination.

This applies to justice

and home affairs as

well as to foreign

and security

policies. The common

currency will encourage

more political

cooperation and

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

harmony,” Noyer said.continued on page 18

18

The United States must adapt toglobalization and develop newways to fight for a “level playingfield” in international trade, ar-gued James Harmon, presidentand chairman of the Export-Im-port Bank, in a roundtable discus-sion with researchers, faculty, andstudents March 14 at the Baker In-stitute.

Harmon compared the struggleto maintain export competitive-ness with international arms nego-tiation efforts. The United Statesfavors the elimination of all ex-port-import banks, he said, but inthe absence of such “multilateraldisarmament,” the U.S. must keepup with the aggressive export-sup-port institutions of Japan and Eu-rope. On one key “battlefield,” theeffort to force other countries toadopt the stricter environmentalprotection standards used by theExport-Import Bank (commonlycalled the “Exim Bank”) has seenonly gradual progress.

Harmon pointed out that exportsubsidies and promotions are alittle-known yet very importantpart of the global economy, and

HARMON ADVOCATES CHANGES IN INTERNATIONALTRADE

such subsidies exceed World Bankdevelopment projects in value.And with the growth of smaller de-velopment projects, the EximBank has found itself developing aportfolio made of loans and guar-antees to small and medium-sizedcompanies.

Although he argued that theExim Bank has been successful instreamlining its services and mak-ing them user-friendly throughthe use of its online applicationprocess, Harmon said that organi-zational obstacles still hinder thebank’s role in expanding exports.The Exim Bank and other agen-cies of the federal governmentneed much more coordination indealing with other nations, andthe bank itself needs to change anorganizational culture that favorslarge projects and large corpora-tions, Harmon said.

The Baker Institute and theJesse H. Jones Graduate School ofManagement at Rice cosponsoredHarmon’s visit.

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Although he argued

that the Exim Bank has

been successful in

streamlining its services

and making them

user-friendly through

the use of its online

application process,

Harmon said that

organizational obstacles

still hinder the bank’s

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

role in expanding exports.

that sense, to start right fromscratch.”

Noyer noted that recent travel-ers to Europe, having noticed theFrench francs, Deutsche marks,and Italian liras are still changinghands, might have asked them-

selves about the euro currency.“While national banknotes and

coins remain in circulation for thetime being, they are no longer, de-spite appearances, actual curren-cies in their own right. They are,in fact, subunits of the euro, wait-ing to be replaced by euro bank-notes and coins as soon as these

are introduced at the beginning of2002. Only then, I suppose, will wehave finally completed one of thegreatest achievements in modernEuropean history, that is, the in-troduction of the euro,” Noyerconcluded.

EUROcontinued from page 17

19

The Baker Institute Report isprinted on recycled paper.

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Editor - B. J. Almond

Photographers - Tommy LaVergneJeff FitlowCarol Powers

2000 by the James A. Baker IIIInstitute for Public Policy of RiceUniversity. This material may bequoted or reproduced withoutprior permission, provided that ap-propriate credit is given. For fur-ther information about the BakerInstitute, please visit our Website athttp://riceinfo.rice.edu/projects/baker/index.html.

For further inquiries and ad-dress changes, we may be reachedby phone–(713) 348-4683, fax–(713) 348-5993, or e-mail–bipp@ruf.rice.edu.

CHIEF OF STAFFcontinued from page 5

VIETNAM WARcontinued from page 10

“The 20th century was thebloodiest century in human his-tory,” McNamara said. “Roughly160 million human beings werekilled in conflict. If similar con-flicts were to extend into the 21stcentury, the numbers would be farlarger. Is that what we want in the21st century? I think not. If wedon’t want it, I want to suggestthat the first step in our process ofavoiding it would be a better un-derstanding of what happened inthe 20th century.”

The number of deaths that oc-curred during the Vietnam Waralone is staggering. The Vietnam-ese lost 3.8 million and the UnitedStates lost 58,000, according toMcNamara.

After their meetings, UnitedStates and Vietnamese officialsidentified opportunities that weremissed. “We did examine why theywere missed and we did come toconclusions that I think can applyto the future,” McNamara said.

He noted that the United Statesshould learn the following lessonsfrom the Vietnam War:• Understand the mindset of your

adversary.• Communicate with your adver-

sary.• Never unilaterally apply military

power.• Understand that there are some

problems for which there maybe no solution.The Baker Institute event was

cosponsored by the Shell Oil Co.Foundation DistinguishedLecture Series and the FondrenLibrary.

him falls to the chief of staff.• While you are powerful, you are

not a principal. The chief ofstaff must keep a low profile. Hemust brief the press to get outthe president’s message, but al-ways on background. He mustnegotiate with Congress withoutforgetting that they are electedand he is not.

• While the chief of staff must actas an “honest broker” preservingthe system of advice, at the endof the day he must also give thepresident his own judgment onthings. In some instances thechief of staff must have the influ-ence to “walk the Presidentback” from harmful decisions.The chief of staff must be strongenough to tell the president“no.”

• A critical problem in dealingwith the president’s cabinet iswhat is called “Oh, by the way”decisions. These are hasty deci-sions the president makes whencornered at a meeting or a so-cial occasion by one of his cabi-net officers. When faced withthe pressure to say “yes” to “Oh,by the way, Mr. President, don’tyou think it is a good idea to goahead with . . .?” the presidentmight end up supporting ill-con-ceived policies. The chief of staffmust devise a system to stay in-formed about such decisionsand to “staff them out” so thatthe president is protected frombad decisions.

• There are so many advocatespursuing so many ill-advised orspecial interests that a chief of

staff must protect the presidentby clearly identifying such pro-posals.

• Whether domestic or interna-tional in nature, crises threatento bring the White House to agrinding halt, pulling everyoneinto the issue. The chief of staffmust avoid this distraction bywalling off the crisis, and hedoes it by identifying a limitednumber of staff to handle all as-pects of the crisis while leavingthe rest of the staff relativelyfree to act.A Baker Institute study on the

chief of staff forum will be pub-lished, and information about theforum will be posted on theinstitute’s Website at http://www.rice.edu/baker/. In addition,Sullivan, associate director of theWhite House 2001 Project, plansto write a book based on the fo-rum.

20

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PERMIT NO. 7549JAMES A. BAKER IIIINSTITUTE FOR PUBLIC POLICY–MS 40RICE UNIVERSITY

P.O BOX 1892HOUSTON, TEXAS 77251-1892

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Combining modern technol-ogy with an incentive system forcompanies might be a way tokeep the U.S. border open tocommerce while preventing theillegal entry of goods andpeople, according to StephenFlynn, senior fellow for nationalsecurity at the Council on For-eign Relations (CFR) and projectdirector of their Globalizationand the Future of Border Con-trol.

Flynn suggested this approachat the Baker Institute February 7.

He moderated a session on hisCFR paper, “Drugs, Thugs, andTrade: BorderControl in an Era of Hemi-spheric Economic Integration.”

Starting from the premise thatthe U.S. border is essentiallyopen and that this will continueto be the case, Flynn discussed avariety of ways that might beused to reduce the entry of un-desirable individuals (such as ter-rorists) and goods (such asdrugs) without reducing com-merce across the border.

FOREIGN RELATIONS GROUP CONSIDERS FUTURE OFBORDER CONTROL

Texas members of the CFR andseveral faculty from Rice at-tended the closed session, whichFlynn held to get reaction to hispaper that will be incorporatedin a book he is researching aboutglobalization and the future ofborder control.

More information about thisCFR project can be found at theCFR Website: www.cfr.org.