BROOKINGSINSTITUTION

THE

ANNUAL

REPORT

2004

INDEPENDENTRESEARCH

SHAPING THE FUTURE

1775 Massachusetts Avenue, NWWashington, DC 20036

www.brookings.edu

Editor: Stephen G. Smith, Vice President for CommunicationsWriters: Ron Nessen, Patrick GavinDesign and Print Production: The Magazine Group, Inc.Jeffrey Kibler, Virginia Reardon, Brenda WaughProduction Coordinator: Adrianna PitaPrinting: Jarboe PrintingCover Photograph: Fisher/Folio

8Foreign Policy Studies

20 Economic Studies

16Governance Studies

11China Initiative

14Saban Center for Middle East Policy

15The Poverty and Global Economy Initiative

29Environment and Energy Project

30The Brookings Institution Press

31Center for Executive Education

2 About Brookings

4 Chairman’s Message

5 President’s Message

6 A Week at Brookings

34 Founder’s Society

35 Brookings Council

36 Major Gifts

38 Endowed Chairs

39 Contributors

41 Financial Summary

43 Trustees

44 Brookings by the Numbers

Copyright ©2004 The Brookings Institution1775 Massachusetts Avenue, NWWashington, DC 20036Telephone: 202-797-6000Fax: 202-797-6004www.brookings.eduLibrary of Congress Card Number: 84-641502

CONTENTS

26MetropolitanPolicy

32Support forBrookings

BROOKINGS

2004 ANNUAL REPORT

The Brookings Institution is an independent, nonpartisan researchorganization that seeks to improve the performance and the qualityof U.S. public policies. Experts at Brookings have blue-ribbon aca-demic credentials as well as long experience in business, govern-ment, and nonprofit organizations.Their research, aimed at offeringpractical approaches to policy questions, is presented in languagethat is both engaging and accessible to the general public. ■ Brook-ings has four main research programs: Economic Studies, Foreign

Policy Studies, Governance Studies, and Metropolitan Policy. It also sponsors a variety ofcenters and initiatives devoted to research areas including global poverty, national security,welfare reform, human rights, tax and budget policy, education, public service, regulatorypolicy, and particular regions around the world, including Europe, the Middle East, North-east Asia, and South Asia. ■ A major focus of the Brookings Institution’s efforts is to ensurethat its research is effectively disseminated. Scholars write books, policy briefs, journal arti-cles, and op-ed pieces.They testify on Capitol Hill and hold private, off-the-record meet-ings with policymakers, their staffs, and other experts seeking their advice. Brookings conducts regular press briefings open to the public at its Washington headquarters, which is also home to a television and radio studio. Most Brookings research is available atwww.brookings.edu. ■ Brookings is named for entrepreneur and philanthropist Robert S.Brookings, whose leadership was instrumental in its early development. In 1916, a group ofreformers founded the Institute for Government Research (IGR), the first private organiza-tion devoted to analyzing public policy issues at the national level. In 1922 and 1924,Robert Brookings, one of IGR’s backers, established two supporting sister organizations: theInstitute of Economics and a graduate school bearing his name. In 1927, the three groupsmerged to form the Brookings Institution. ■ Today, Brookings is financed largely throughthe support of philanthropic foundations, corporations, and individuals and by an endow-ment. Funds are devoted to carrying out research and educational activities. Brookings alsoundertakes some unclassified government contract studies, reserving the right to publish itsfindings. ■ A Board of Trustees is responsible for supervising Brookings, approving its areasof investigation, and safeguarding the independence of its work.The Institution’s presidentis its chief executive officer and is responsible for formulating and setting policies, recom-mending projects, approving publications, and selecting staff.

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THE BROOKINGS INSTITUTION

Reporters questionCharles “Jack” Pritchard,a visiting fellow in ForeignPolicy Studies, after hisreturn from a trip toNorth Korea

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N onpartisan public-policy research based on empirical evi-dence is an especially rare and valuable commodity in apresidential election year. In 2004, Brookings’s job was toshed light on the issues that generated so much heat in the

campaign: Iraq,America’s relations with its allies, the federal deficit,taxes, jobs, health care, stem-cell research, same-sex marriage, and education.

As our scholars brought their individual expertise to bear on ques-tions that often polarized the electorate—tough issues on which neithermajor political party has a monopoly on truth or wisdom—they held toa high standard of civil discourse. For example, debating the war in Iraqand its messy aftermath, our scholars kept their minds open to oneanother—and to the facts as they became clearer.Those who hadaccepted U.S. intelligence estimates about Iraq’s weapons of massdestruction as a basis for military action recalibrated their analysis andadjusted their recommendations when no such weapons were found.

Scholars in our Foreign Policy Studies department identified theproblems besetting the reconstruction effort and recommended a seriesof changes, many of which the administration adopted during the year.Our new Center on the United States and Europe helped maintain atransatlantic dialogue at a time of intense strain between the U.S. and itskey allies.

On the home front, our economists’ estimates of the costs and distri-butional effects of the tax cuts proved useful to congressional staffs onboth sides of the aisle. Journalists and editorial writers across the countryrelied on a Brookings report,“Restoring Fiscal Sanity,” for authoritative,objective information about the federal budget. In the last debate withSenator Kerry, less than three weeks before the election, President Bushhimself used the term “fiscal sanity” three times—and promised to halvethe deficit within five years.

Meanwhile, the deficit is forcing a reinvention of the American fed-eral system. Governors, county commissioners, and mayors are underincreasing pressure to look for ways at the state and local levels to bol-ster economic innovation, equitable and efficient public services, urbanregeneration, and balanced growth.They need all the help they can get,and they are getting it from our Metropolitan Policy program, whichover the past eight years has taken sophisticated policy analysis farbeyond the Beltway—to upstate New York, Pennsylvania, Missouri,Florida, Georgia, Missouri, North Carolina, and California.

Our Governance Studies program contributed to public understand-ing of the drama with a series of forums and policy papers that exam-ined everything from the effects of the “permanent campaign” to therole of money and the new campaign finance law. In the weeks beforethe voting, our scholars zeroed in on many of the factors that wouldprove decisive on Election Day, including the impact of all-out efforts tomobilize constituencies and boost turnout.

Once the voters re-elected President Bush, he asked Democrats tohelp him make “this country stronger and better,” and John Kerry,preparing to return to work in the Senate, pledged to reach across the“partisan divide.” Brookings went about its own business in preciselythat spirit all year, and we will continue to do so in 2005, whateverchallenges it holds for the nation at home and abroad. ■

Near the end of the year, I made one of my regular visits toBrookings and got a glimpse of the Institution at its best,from a somewhat unusual angle. I thought I would share thisvignette of Brookings life because I think it captures the

spirit and energy of the Institution.One of China’s new, important regional leaders, Governor Zhang

Wenyue of Liaoning Province, was making his first visit to the UnitedStates. He had agreed to spend a morning at Brookings as part of whathe hoped would be a crash course on American political, economic,and social trends. Richard Bush, director of the Brookings Center forNortheast Asian Policy Studies, and his team organized a five-hourbriefing that gave the governor a good feel for America’s priorities andallowed him to share his own thoughts on the problems and opportuni-ties he faces in trying to reform a region at the heart of China’s rust belt.

Brookings scholars were able to relate their work to many areas ofvital interest to Governor Zhang.Amy Liu of our Metropolitan Policyprogram briefed him on innovative and sophisticated ideas about whatmakes cities successful—essential information for an official who willoversee some of the largest and most rapid urbanization in history. TomMann of Governance Studies briefed him on the intricacies of U.S. pol-itics, providing crucial guidance for someone who hopes to bring hiseconomy into ever-closer alignment with the economy in the UnitedStates. Finally, Richard Bush gathered a high-powered group of Wash-ington policymakers who engaged the governor in a lively lunchtimechat about the future direction of U.S.-China relations.All in all, Brook-ings supplied a coherent framework for the important tasks ahead, andthe governor was so grateful that he was still speaking of it weeks later.

Providing this sort of clear, objective, and useful framework is whatBrookings has always done best.What it does better than ever is respondquickly and on an even wider range of issues. Because 2004 was a presi-dential election year, much of the activity at Brookings focused ondomestic politics. In a steady stream of forums, policy briefs, books, arti-cles, interviews, and website commentaries, our scholars assessed thestate of the economy, the threat of terrorism, the occupation of Iraq, andother issues facing American voters.

We also began establishing the Brookings China Center, which Ihope in coming years will become the leading American source ofhigh-quality, objective research about China. Brookings pushed forwardon other international fronts as well, notably in South Asia, where ourscholars are in partnership with two Indian think tanks.The Saban Cen-ter for Middle East Policy continues to provide indispensable connec-tions to—and within—a region riven by conflict.

I want to thank you for your continued support of Brookings andencourage you to experience firsthand, the way I have, the work of ouroutstanding scholars.At the Brookings website, www.brookings.edu, it’seasy to download our best new research, print it, and review it at homeor while you travel. Like me, you’ll feel invigorated by the quality ofour scholars’ work. It’s original, fact-driven, and fair-minded. Please feelfree to get back to Brookings with your reactions. Our scholars wel-come your feedback, and don’t mind a bit if you challenge their think-ing.The contest of ideas, after all, is what Brookings is all about. ■

C H A I R M A N ’ S M E S S A G E P R E S I D E N T ’ S M E S S A G E

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John L. Thornton Strobe Talbott

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Clinton stressed theinterdependence betweenthe United States and theIslamic world and dis-armed his Islamic audienceby first admitting Ameri-can mistakes and pointingto problems Muslims facein their own countries.

“There are honest andperplexing misunderstand-ings. That’s why this meet-ing is a good thing,” he said.

After Clinton’s speech,the audience, many ofwhom were hostile to theUnited States, gave theformer president a stand-ing ovation. Others praisedhim for his clear, honestexplanation of U.S. inten-tions in the Middle East.

At the close of theweekend, Singer hailed theconference as a powerfulconvening body and a cata-lyst for action. “This hasbecome the meeting placefor U.S. and Muslim lead-ers,” he said. “The fact thatwe saw both agreement aswell as the venting of angerdemonstrates exactly whythis conference was soimportant and successful.”

The forum will follow upthe Doha meetings with aseries of joint initiatives—research, publications, andoutreach—designed tostrengthen ties betweenthe United States and theIslamic world.

MONDAY, JANUARY 12

Back in Washington,Brookings held a press

luncheon to unveil itsRestoring Fiscal Sanityproject so that journalistswould have background forthe next night’s State ofthe Union address and therelease of the president’sbudget on February 2. Con-cerned about the swellingdeficit, Brookings econo-

mists undertook the proj-ect in hopes of finding away to get the budget backin balance. Attending theluncheon were journalistsfrom BusinessWeek, TheNew York Times, The WallStreet Journal, The Wash-ington Post, and othermajor news outlets. Theluncheon proved timely foranother reason, comingthe day after a 60 Minutesinterview with Paul O’Neill,the former Bush adminis-tration Treasury secretary,whose book, The Price ofLoyalty, warned of a loom-ing “fiscal crisis.”

TUESDAY, JANUARY 13

At a standing-room-onlyevent in Falk Audito-

rium, three blue-ribbonpanels discussed the 98-page “Restoring FiscalSanity” report. Panelistsincluded former TreasurySecretary Robert E. Rubin,former Congressional Bud-get Office Director Dan L.Crippen, Urban InstitutePresident Robert D. Reis-chauer, former Congress-man John Edward Porter(R-Ill.), and members ofthe nine-scholar team thathad spent three monthsworking on the project.

Rubin said that theUnited States faced a “hor-rendous long-term situa-tion,” adding that “the risksare severe and they needto be taken very seriously.”

The authors arguedthat achieving fiscal bal-ance would be difficult butpossible, and they pre-sented three options forreducing the deficit overthe next 10 years:■ A “smaller government

plan” advocated lessspending by scalingback business subsidies,restricting entitlements,

devolving responsibilityto the states, andreducing federal pork.

■ A “larger governmentplan” relied both on taxincreases to sustain gov-ernment activity and onnew spending initiatives.

■ A “better governmentplan” called for im-proved governmentefficiency and effective-ness through a combi-nation of spending cutsand revenue increasesthat would balance thebudget while maintain-ing government at itscurrent size. The authors briefed

Congress on their findingson several occasions andmade numerous mediaappearances. The projectgenerated more than 80articles in major daily andweekly publications.

WEDNESDAY, JANUARY 14

Less than a week beforethe Iowa caucuses,

Brookings rang in the elec-tion year with a briefingtitled “‘Front-loading thePrimaries: The WrongApproach to PresidentialPolitics?” Panelists includedBrookings Journalist-in-Residence Ron Nessen, sen-ior fellow Thomas E. Mann,visiting fellow and ColbyCollege Professor AnthonyCorrado, and NortheasternUniversity Associate Pro-

fessor WilliamG. Mayer. Pan-elists discussedthe cascadingprimary andcaucus systemthat has short-ened the nomi-nation processto a sprint. Oneof the pan-elists, Mayer,was co-author

with Andrew E. Busch of anew Brookings book, TheFront-loading Problem inPresidential Nominations.

THURSDAY, JANUARY 15

In his first public com-ments since returning

from North Korea, CharlesPritchard spoke to an over-flow crowd in Falk Audito-rium about his trip and thefuture of U.S.–North Koreadiplomacy. He chose hiswords carefully, putting offmore detailed commentuntil after delegation met-allurgist Siegfried S.Hecker could testify beforethe Senate Foreign Rela-tions Committee.

“The only piece of infor-mation I will give youtoday,” Pritchard said, “isthat the spent-fuel facility—the storage pond—wasempty.” The pond onceheld 8,000 spent fuel rods.Since transporting the rodsto a safe location wouldhave been extremely dan-gerous and impractical,many in the delegationconcluded that the rodshad been reprocessed toextract plutonium from thespent fuel, which couldthen be used to build anuclear weapon. AlthoughPritchard said that thereprocessing center wasnot functioning at the timeof his visit, a five-megawattreactor was operational,

and the North Koreansadmitted to reprocessingplutonium.

Much of Pritchard’sconversations with ViceForeign Minister Kim KyeGwan focused on the pos-sibility of future six-partytalks that would involveNorth Korea, South Korea,Japan, China, Russia, andthe United States. TheBush administration hadconsistently demanded a“complete, irreversible,and verifiable” dismantlingof North Korea’s nuclearprogram and had refusedto deal directly with thecountry or offer any con-cessions besides an assur-ance not to attack it. In themonths after Pritchard’svisit, the Bush administra-tion appeared willing toadopt a more flexibleapproach.

More than 80 membersof the national and inter-national press were inattendance, and Pritchardlater wrote an op-ed arti-cle about his visit for TheNew York Times.

In his Wall Street Jour-nal column that morning,Al Hunt praised theRestoring Fiscal Sanityproject. “If, as politiciansof both parties insist, thelong-term goal is to getback to a balanced budgetin good times, the reportthis week by the BrookingsInstitution is even moresobering….To get to a bal-anced budget in a decade,the Brookings experts fig-ure, would require elimi-nating virtually all federalgrant-in-aid programs foreducation, housing, jobtraining, the environment,and law enforcement. Butthat still wouldn’t do thetrick; $134 billion more intax increases for that yearwould be necessary.” ■

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FRIDAY, JANUARY 9

More than 9,000 milesfrom 1775 Massachu-

setts Avenue, Brookingsscholars joined 150 leadersfrom the United States and37 Muslim countries inDoha, Qatar, for the firstU.S.–Islamic World Forum.The forum—a new initiativeof the Brookings Projecton U.S. Policy Towards theIslamic World, a SabanCenter for Middle East Pol-icy program that was cre-ated after the September11 attacks—targets the needfor constructive dialoguebetween policymakers andopinion shapers in theUnited States and acrossMuslim states and commu-nities. The Doha confer-ence aimed to create amuch-needed venue forcandor and cooperationbetween the United Statesand the Islamic world.

Sheikh Hamad bin Khal-

ifa Al-Thani, the emir ofQatar, opened the week-end’s events with a bluntassessment of the Arab-Israeli conflict and theneed to push harder toresolve the stalemate inthe Middle East. He alsoannounced the opening ofa Brookings office in Dohato help organize theU.S.–Islamic World project.

Al-Thani’s openingaddress set the tone for theweekend. Discussions insubsequent plenary sessionsand working groups weresubstantive but sometimestense, reflecting the chargedpolitical environment.

A particularly interest-ing exchange occurredbetween Fox News Chan-nel’s Tony Snow and AlJazeera’s deputy manag-ing editor, Maher Abdullah,who both spoke on a panelexamining the media’s cov-erage of the Middle East.

MartinIndyk, direc-tor of theSaban Cen-ter and oneof the con-veners of theforum, wit-nessed thedispute andapplauded it.“This is theonly place

where that sort of thing cantake place,” he said. “It’suseful.”

Peter W. Singer, Brook-ings’s national security fel-low, directed the forum. Hesaid that merely holdingthe conference was animportant step. “The factthat we were able to con-vene such a diverse groupof important leaders helpedadvance communication—that, by itself, is progress.”

SATURDAY, JANUARY 10

In Beijing, visiting fellowCharles “Jack” Pritchard

sat in his hotel room,watching the snow fall onthe bustling streets below.He was sorting out conver-sations and impressionsfrom his previous five daysin North Korea.

Pritchard, who left hisBush administration postas special envoy for nego-tiations with North Koreain August 2003, had trav-eled to Pyongyang as partof an unofficial U.S. dele-gation invited by the NorthKorean government. Dur-ing his visit, he met withVice Foreign Minister KimKye Gwan and formerDeputy Ambassador to theUnited Nations Li Gun, andwas briefed by a memberof the Committee for the

Promotion of InternationalTrade on efforts to allowelements of a marketeconomy into North Korea.

Pritchard had beenstruck by the vibrant activ-ity he saw in Pyongyang,whose streets buzzed withbicycles and automobiles.Markets teemed with ven-dors selling clothing, food,and electronics. All of thisdiffered greatly from thestringent conditions duringhis first visit in 1997, sug-gesting that the quality oflife had improved markedly.

As Pritchard looked outthe window, he thoughtabout his recent visit to anuclear facility in Yong-byon and what he wouldsay to the American publicwhen he returned home.On his answering machineat Brookings, more than50 interview requestsawaited his response.

Back in Doha, the con-ference convened severalpanels throughout the dayto examine the Iraq war,the Middle East peaceprocess, free trade andeconomic development,education, and the role ofthe private sector in easingtensions between Muslimcountries and the UnitedStates. Speakers includedMarwan Muasher, foreignminister of Jordan;Mohammed Dahlan, formerinterior minister for thePalestinian Authority;Richard Holbrooke, formerU.S. ambassador to theUnited Nations; Qazi Hus-sein Ahmed, leader of theJamaat-e-Islami Party ofPakistan; Gene Sperling,director of the Center for

Universal Education;Seyyed Camel Al-Keilani,minister of finance in theIraqi interim government;and Edward Djerejian,director of the Baker Insti-tute at Rice University andchair of the U.S. Commis-sion on Public Diplomacy.

The conference schedulewas carefully designed toallow for informal interac-tion among attendees,including extended coffeebreaks and a free Saturdayevening that promptedmany delegates to arrangeprivate dinner parties. Dur-ing the day, roundtable dis-cussions spilled into the hall-ways and participants couldbe seen arguing, nodding inagreement, and swapping e-mail addresses. Amongthe spontaneously organ-ized dinners were ones fordelegates from Israel andPalestinian areas and fromIndia and Pakistan.

The casual get-togeth-ers spurred action on sev-eral fronts: “Track 2” peacediscussions (unofficial, civil-ian diplomacy), a foreignpolicy caucus of AmericanMuslim leaders, and a part-nership between a U.S.foundation and the Egypt-ian government to build anAmerican nursing school inCairo were established.

SUNDAY, JANUARY 11

“Ihave come a longway to spend a short

time because I believe thatthis is an important meet-ing, being held in theproper place,” said formerPresident Clinton in aspeech that closed theDoha conference.

Work at Brookings tends to mirror the pace of official Washington, with slowerperiods when Congress is in recess and during the dog days of summer. As theNew Year’s holiday approached, and with many lawmakers back in their districts,Brookings scholars tied up loose ends and took vacation time with their families.

It was the calm before the storm: When the calendar flips to a new year, especially an election year, Brookings scholars know that business will be briskalong Think Tank Row.

So it was during the second week of January 2004, a week busier than most but less hectic than some. The seven-day stretch provided a snapshot ofBrookings in action.

AWeek at Brookings

Doha: President Clinton and the Emir of Qatar meet atthe January conference

Budget talk: Robert Rubin and Dan Crippen discuss“Restoring Fiscal Sanity”

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In a year when the Iraq war, the nuclear crises in North Koreaand Iran, and continuing concern about terrorism dominatedthe headlines, the Foreign Policy Studies program, directed byVice President James B. Steinberg, once again served as a keyresource for government, news media, and the public.

Brookings scholars offered an informed, objective view ofworld events and innovative policy ideas as they testified before

Congress; advised the executive branch; presented their recommenda-tions and opinions in newspapers, journals, and magazines; and sharedtheir expertise on news and talk programs.

In addition to examining urgent topical events, Brookings expertsresearched, analyzed, and commented on a range of other issues ofgrowing importance in the 21st century, such as America’s strained tieswith Europe, its evolving relationship with China and key partners inEast Asia (Japan, Korea, and Taiwan), and its complex interactions withthe Islamic world. Critical issues such as global climate change, theinternational rules governing the use of force, and homeland securitywere also at the forefront of Brookings scholarship.

These efforts resulted in new and expanded research centers, proj-ects, and initiatives.

Iraq, of course, was a major focus at home and abroad, and ForeignPolicy Studies brought to bear its expertise, drawing on the Saban Cen-ter for Middle East Policy, directed by senior fellow Martin Indyk, for-mer U.S. ambassador to Israel and former assistant secretary of state forNear East affairs, and other Brookings analysts, including Ivo Daalder,Philip Gordon, and Steinberg.

The primary Brookings scholar on Iraq was Kenneth Pollack, direc-tor of research for the Saban Center and former Iraq specialist at theCIA and the National Security Council. He provided keen analysisbased on his government experience and firsthand observations in Iraqafter the war.

The Iraq analysis by Foreign Policy scholars was quoted in morethan 1,500 newspaper and television news reports. Brookings scholarsalso wrote more than 60 op-ed articles on Iraq for major newspapers.

In one of the most innovative examples of Brookings scholarship,senior fellow Michael O’Hanlon, who holds the Sydney Stein Jr. Chair,and senior research assistant Adriana Lins de Albuquerque compiled aperiodic “Iraq Index” to quantify and track progress and setbacks inreconstruction and security during the post-war period.The Index ispublished regularly on the op-ed page of The New York Times.

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Foreign Policy Studies

Senior fellow Ivo Daalder, flanked byRobert Kagan of the Carnegie Endowment,left, and Javier Solana, the EU’s foreignpolicy chief, assesses U.S.-Europe relationsafter Iraq T

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Central to understanding thelarger context of the war and itsaftermath is America’s long-termrelationship with the Islamicworld.The Brookings Project onU.S. Policy Towards the IslamicWorld is a unique research andoutreach program focused on this important issue. Directed bynational security fellow Peter W.Singer, the project is supported by the John D. and Catherine T.MacArthur Foundation, the FordFoundation, the Education forEmployment Foundation, theUnited States Institute of Peace,the Government of Qatar, andindividual donors.

The controversy over the U.S.military intervention in Iraq spot-lighted a growing internationaldebate on the rules and institu-tions that should govern the use offorce.To help inform the discus-sion at home and abroad, Brook-ings has launched a two-year pio-neering project, Force andLegitimacy in the Evolving Inter-national System, led by Steinbergand Daalder.

Brookings scholars, togetherwith their counterparts fromEurope, China, Russia, Mexico,South Asia, and South Africa, willexamine the institutional arrange-ments and rules governing the useof force, and formulate recom-mendations for revising thosearrangements.

“This project is a natural out-growth of our work on alternativeforeign policy strategies for theUnited States,” Steinberg says,“including studies on power andcooperation among nations, andon the future of arms control.”

The project is supported bygrants from the Carnegie Corpo-ration of New York, the Williamand Flora Hewlett Foundation, theMacArthur Foundation, and theRockefeller Brothers Fund.

The war in Iraq also raised

critical questions about prioritiesand strategies to deal with the ter-rorist threat to the United States.Even before 9/11, Brookingsscholars were in the forefront inconsidering homeland security.This work accelerated after theattacks and included reviews ofhomeland security efforts andintelligence reform.The MarkleFoundation supported Steinbergin a research project focused onunderstanding and reducing theobstacles to information sharingacross sectors and borders.

O’Hanlon, along with severalBrookings colleagues, is writing abook-length study evaluating theprogress on homeland security and offering recommendations forimprovement.To help with this

work, the Foreign Policy Studiesteam was joined by visiting fellowRichard Falkenrath, former deputyhomeland security advisor anddeputy assistant to President Bush.

The war in Iraq has strainedAmerica’s relationship withEurope, particularly with long-standing allies such as France andGermany. But other developmentshave also had an impact as Europecontinues to modify traditionalconcepts of sovereignty and thenation-state in favor of economicand political union. Given thestrategic importance of thesechanges for the United States, theForeign Policy Studies programplaced high priority throughoutthe year on analyzing the transat-lantic relationship.

The program launched theCenter on the United States andEurope (CUSE), reflecting a long-term commitment to this issue.Representing an expansion ofBrookings’s Center on the UnitedStates and France, CUSE com-prises separate research programsthat focus on France, Italy, andTurkey.

“The Center significantlybroadens the scope of our workon America’s relationship with itsmost important allies,” says PhilipGordon, director of CUSE.

CUSE’s inaugural conference,held at Brookings in April, fea-tured a panel of guests from theUnited States and Europe, includ-ing Javier Solana of the EuropeanUnion; Pascale Andreani, Euro-

FOREIGN POLICY STUDIES

China—a hugenation, theworld’s mostpopulous. Itseconomy

developing rapidly, itspolitical institutions evolv-ing more slowly. Halfwayaround the globe from theUnited States, it casts alarge shadow across theworld stage.

“The rise of China andits impact on the world isthe most important geopo-litical event of the 21st cen-tury,” says Brookings BoardChairman John L. Thorn-ton. “The U.S.-China rela-tionship is the central rela-tionship of the 21st century.Our two countries mustunderstand each other withmuch greater depth.”

So strongly does Thorn-ton believe in the need forthe two nations to under-stand and cooperate witheach other that he pledged$1 million a year for thenext five years to fund anew Initiative on China. Allfour research programsjoined forces to workunder the direction ofJames B. Steinberg, vicepresident and director ofForeign Policy Studies. Asformer deputy nationalsecurity advisor underPresident Clinton, Stein-berg played a large role inU.S.-China relations.

“We need to do some-thing different from thenormal think-tank focus onU.S.-China relations,”Steinberg explains. “Weneed to seek a greaterunderstanding of internalissues facing China’s lead-ership and the conse-quences of these issuesfor China, the U.S., and theworld at large.”

Working closely withpartners in China, the ini-tiative will develop timely,independent analysis andpolicy recommendations tohelp U.S. and Chinese lead-ers address key long-termchallenges.

“When you ask govern-ment officials and busi-nesspeople in the UnitedStates where to go forinformation and under-standing about China, you get eight differentanswers,” Thornton says.“In China, when you askwho in the West knows themost about China, theyreply, ‘No one.’

“We want the answer in both cases to be ‘Brookings.’ ”

Thornton—who hastaught at Tsinghua Univer-sity in Beijing and else-where in the provinces—says Brookings intends todevelop deep ties withgovernment officials,scholars, intellectuals,business executives, andwhat he calls “the newgeneration of Chineseleaders.” While the initia-tive will be based at Brook-ings, it also will have anongoing presence in China.

“China has an inex-haustible need for goodideas,” Thornton says, “soBrookings is a good partner.”

He points to what hecalls the “applied research”Brookings has conductedfor decades, research thathelped in creating the Mar-shall Plan, the UnitedNations, and many otherimportant post–World WarII institutions.

The Initiative on Chinawill focus on areas inwhich China has specialneeds and Brookings has,

or plans to develop, specialexpertise. These areasinclude energy security,political and economicreform, urban develop-ment—and developing bet-ter understanding betweenthe elites and ordinarypeople in China andbetween China and therest of the world. Brook-ings will also continue tofocus on key issues thatare the subject of ongoingresearch, including China’simportant regional andglobal security interests.

Underscoring Brook-ings’s commitment to theinitiative is the affiliationof highly regarded schol-ars with the project:

■ Jing Huang is a distin-guished professor andaward-winning author on

Asian and Pacific issues. Hebecame the initiative’s firstfull-time senior fellow inJuly and is an expert inChinese military and secu-rity affairs and elite politics.Before joining Brookings,he was associate professorof political science and co-director of the Asian Stud-ies at Utah State University.

■ Kenneth Lieberthal, arenowned Sinologist fromthe University of Michigan,was the National SecurityCouncil senior director forAsia under President Clin-ton. He is taking a sabbati-cal from the university tojoin Brookings as a visitingfellow and help shape theChina initiative.

■ Economic Studies pro-gram senior fellow Shang-

Jin Wei will lend to theinitiative his expertise onChina’s economic inte-gration. Wei has servedas an advisor to theInternational MonetaryFund, a faculty researchfellow with the NationalBureau of EconomicResearch, and a researchfellow with Harvard Uni-versity’s Center for Inter-national Development.

“The addition of theseexperts, plus the continuingcontributions of RichardBush, director of Brookings’sCenter for Northeast AsianPolicy Studies, provides theprogram with an excellentcore group of eminent Sinol-ogists and a solid base fromwhich to launch our newand important work onChina,” Steinberg says. ■

China Initiative

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James Steinberg, director of Foreign Policy Studies, opens the inaugural conference of the Center on the UnitedStates and Europe

The economic bustle of the new China as seen along Nanjing Road in Shanghai

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around the world who have beenforced from their homes byarmed conflict, internal strife, nat-ural disasters, or other crises, buthave stayed within their nationalborders and, therefore, often arenot protected by internationalagreements.

Nigel Purvis, Brookingsscholar on the environment, devel-opment, and global issues and aformer deputy assistant secretaryof state for oceans, environment,and science, worked with col-leagues in Foreign Policy andEconomic Studies to provide aunique perspective on global envi-ronmental issues. During the pastyear, he led research on the conse-quences of global climate change.Purvis’s expertise was augmentedby that of environment scholarDavid Sandalow, former executivevice president of the WorldWildlife Fund and a former gov-ernment official specializing inenvironmental issues (see story,page 29).

Thanks to the generous sup-port of the John D. and CatherineT. MacArthur Foundation, theprogram has added a Science andTechnology fellow to help bridge

the gap between the natural sci-ences and the policy community.The program’s first Science andTechnology fellow was MichaelLevi, former director of theStrategic Security Project at theFederation of American Scientists,who completed a book withO’Hanlon titled The Future ofArms Control; the second isMichael B. d’Arcy, an atomicphysicist who comes to Brookingsfrom the National Institute ofStandards and Technology.

The path-breaking work ofBrookings scholars has beenwidely recognized by their peers.This year, America Unbound:TheBush Revolution in Foreign Policy, byDaalder and former senior fellowJames Lindsay, won the 2003Lionel Gelber Prize for outstand-ing writing on international affairsand received honorable mentionfor the Arthur Ross Prize, whichhonors books that analyze impor-tant current events.

Another book, Corporate War-riors:The Rise of the Privatized Mili-tary Industry, by national securityfellow Peter Singer, was short-listed for the Gelber Prize.Amongthe notable reviews of ForeignPolicy Studies work was “Destinyat 60 Degrees C,” published latelast year in The Economist, review-ing Gaddy and Hill’s book TheSiberian Curse: How CommunistPlanners Left Russia Out in theCold.

In addition to the program’spermanent scholars, each year anumber of extraordinary scholarsfrom around the world join theprogram for project-specific work.Notable additions in the past yearincluded the following:

■ Ammar Abdulhamid, a Syrianauthor and political activist, cameto Brookings as a guest scholar inthe Islamic World project.Abdul-hamid runs DarEmar, a publishinghouse and nongovernmental

organization in Syria that seeks toraise awareness of issues such ascivil society, minority rights, anddemocratization.

■ Abdel Monem Said Aly, anEgyptian journalist, joined theSaban Center as a visiting fellowto write a monograph on U.S.-Egypt relations.

■ Flynt Leverett, former seniordirector for Middle East policy atthe National Security Council,joined the Saban Center as a visit-ing fellow to write a monograph,due for publication in late 2004 orearly 2005, on Syria since thedeath of Hafiz al-Asad.

■ Rizwan Zeb, a research analystat the Institute for Regional Stud-ies in Islamabad, Pakistan, joinedBrookings as a visiting scholar tocontinue his work developing rec-ommendations for resolving theIndia-Pakistan conflict. ■

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pean affairs advisor to the Frenchprime minister; and Klaus Schar-ioth, Germany’s deputy foreignminister.

In spring 2004, the Center alsopublished a major new study oftransatlantic diplomacy concerningIraq,“Allies at War:America,Europe, and the Crisis Over Iraq,”by Gordon and Jeremy Shapiro,CUSE director of research.

Sponsors of CUSE include theGerman Marshall Fund of theUnited States, the Daimler-Chrysler Corporation, the Coun-cil for the United States and Italy,the Luso-American Foundation,and a number of individualdonors.

Although most of the world’sattention is focused on the MiddleEast, Foreign Policy Studies con-tinues to explore other issues oflong-term strategic concern aswell, including the emergence ofChina as a political and economicforce and global power.

Brookings Chairman John L.Thornton has long taken an activeinterest in China’s development,and he provided generous supportto help launch the Brookings Ini-tiative on China.With activities inboth the United States and China,the initiative’s goals are to deepenU.S. understanding of political,social, and economic issues inChina, and to assist policymakersin both countries as the relation-ship evolves (see story, page 11).More broadly, East Asia remains aregion of paramount importancefor the United States.The ForeignPolicy Studies program continuedits commitment to analyzing criti-cal issues in that region throughthe Center for Northeast AsianPolicy Studies (CNAPS).

Under the leadership of Direc-tor Richard Bush, holder of theMichael H.Armacost Chair,CNAPS completed its fifth year ofa program that brings mid-careerprofessionals from countries in the

region to Brookings to con-duct research and networkwith their U.S. counterparts.

The addition to theCNAPS staff of visiting fellowCharles “Jack” Pritchard, for-mer special envoy for negotia-tions with DPRK (NorthKorea) and senior director forAsian affairs with theNational Security Council,deepened Foreign PolicyStudies expertise on Japan andKorea.

The trial of oil mogulMikhail Khodorkovsky, tur-moil in Georgia, and thegrinding war in Chechnyawere reminders that Russiaand its former empireremained important compo-nents of the global politicaland economic landscape.

Senior fellows Fiona Hilland Cliff Gaddy are engagedin an ongoing project that

examines both the foreign policyconsequences and the internaldynamics of a Russia in transition.Hill and Gaddy are documentingthe rise of Russia as an energysuperpower and analyzing theimplications for Russia and itspartners in the international com-munity.The two scholars are alsostudying poverty and emigrationin Central Asia and their effects onthe countries of Central Asia andon Russia—the primary destina-tion of Central Asian émigrés.

The assassination attempt on Pakistani President PervezMusharraf late last year, the peri-odic emergence and capture of alQaeda members in Pakistan, andthe violent chaos on the borderbetween Pakistan and Afghanistanmake Foreign Policy Studies sen-ior fellow Stephen Cohen’s newbook, The Idea of Pakistan, particu-larly timely.

Nearly every day brings areminder that policymakers andthe public in the UnitedStates need to deepen theirunderstanding of the com-plex political, social, andeconomic dynamics of thisregion. In addition to com-pleting his manuscript,Cohen, also an expert onIndia, helped lead theBrookings partnership withthe Observer ResearchFoundation, an emergingthink tank in New Delhi.

Brookings scholars donot merely comment oncurrent events; they alsodiscover and explain thenewest trends and mostcompelling forces underly-ing the longer-term trajec-tory of U.S. foreign policy.

Lael Brainard, the NewCentury Chair in Interna-tional Trade and Econom-ics, directs Brookings’sPoverty and Global Econ-

omy Initiative, shared between theForeign Policy Studies and Eco-nomic Studies programs, whichfocuses on the risks and opportu-nities associated with the newglobal economy and on the pro-found challenge of poverty.

An important related project issenior fellow Susan Rice’s multi-year, multidisciplinary study of therelationship among global poverty,inequality, and U.S. national secu-rity. In addition, senior fellow AnnFlorini examined the increasinglyimportant role of the supranationaland transnational institutions andarrangements that are shapingglobal governance in the 21st cen-tury. She also is looking into theissue of transparency.

Senior fellow Roberta Cohenand nonresident senior fellowFrances Deng co-direct theBrookings-SAIS Project on Inter-nal Displacement, which promotesnational, regional, and interna-tional efforts to help people

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Senior fellow RichardBush assesses thechances of halting anuclear build-up inNorth Korea

Senator Hillary Rodham Clinton (D-N.Y.) describes how trips to Iraq and Afghanistan shaped her views onfighting terrorism

Defense Secretary Donald Rumsfeld discusses astudy of public service by Brookings senior fellowPaul Light

Francis M. Deng, co-director of theBrookings-SAIS Project on Internal Dis-placement, reports on his visit to Darfur

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“Ibelieve that ideas canmove nations toaction. I wanted tobring together the bestminds from the UnitedStates and the MiddleEast to engage in a

creative dialogue, to conduct in-depthstudies, and to generate policy initia-tives that could improve our world,”explains entrepreneur Haim Saban,who founded the Saban Center forMiddle East Policy at Brookings.

“The Saban Center was estab-lished to apply a long view and seri-ous research to the quandaries andopportunities the United States facesin the Middle East—the threats ofwar, the opportunities for peacemak-ing, the scourge of terrorism, and thechallenges of political and economicdevelopment,” says Saban, chairmanof the Center’s International Advi-sory Council and its primary sourceof financial support.

Saban Center Director MartinIndyk, former U.S. ambassador toIsrael and former assistant secre-tary of state for Near East affairs,says the year was a challengingone for his scholars.

“From proliferation ofweapons of mass destruction tothe war on terrorism, from Arabpolitical reform to promotingpeace between Israel and thePalestinians, from the Americanintervention in Iraq to persuadingproblematic states like Iran, Libya,and Syria to change their behav-ior, the Saban Center is at the cut-ting edge of the policy debate,applying its expertise to theimmense challenges confrontingthe United States in this troubledregion,” Indyk says.

The Saban Center’s staff mem-bers, who have both policy andacademic expertise, conduct in-depth research and analysis andpresent innovative ideas for resolv-ing these challenges.The Centeralso brings together major figures

from the region to hash outapproaches to key issues.

With so much governmental,public, and news media attentionfocused on Iraq during the pastyear, it’s not surprising that theSaban Center devoted considerableresources to analyzing the war andits aftermath. Much of the analysiswas done by Kenneth Pollack,director of research for the Centerand a former Iraq expert at the CIAand the National Security Council.

“There is certainly much roomfor argument over how well theUnited States is handling Iraq andwhat we should be doing differ-ently,” Pollack wrote in a SabanCenter policy analysis paper after a trip to Iraq. Pollack frequentlyshares his knowledge and insightswith various U.S. governmentagencies and the military ondeveloping, implementing, andrevising policy approaches.

Looking beyond Iraq, the mostprofound and urgent long-termissue confronting the United Statesis its relationship with the Islamicworld.America must develop poli-cies to reduce the appeal of violentreligious extremism while improv-ing its relations with Muslim statesand communities.

Toward this end, Brookingsestablished the Project on U.S. Pol-icy Towards the Islamic World.Directed by Peter W. Singer,Brookings’s national security fellow,the project is a major research andoutreach program supported byBrookings, the government ofQatar, the John D. and Catherine T.MacArthur Foundation, the FordFoundation, the Education forEmployment Foundation, and theUnited States Institute of Peace.

Early in 2004, the projectstaged the first U.S.–Islamic WorldForum, to promote dialogue andbuild networks of cooperationbetween American and Muslimleaders.The conference, in Doha,

Qatar, broughttogether 165political, busi-ness, academic,media, and civilsociety leadersfrom theUnited Statesand 38 Muslimcountries.

FormerPresident Clin-ton and SheikhHamad binKhalifa Al-Thani, the emirof Qatar, werethe keynotespeakers. Clin-ton, a memberof the SabanCenter’s Inter-national Advi-sory Council, declared:“We can-not understand U.S.-Islamicrelationships unless we understandthe sweeping scope of the interde-pendent world, its enormous ben-efits, and its persistent inequalitiesand instabilities.”

The Doha conference willbecome an annual event.Andworking-group meetings will beheld in other parts of the Islamicworld.The Project on U.S. PolicyTowards the Islamic World alsoorganizes other meetings of high-level policymakers in Washington,hosts visiting fellows from Muslimnations, issues monographs andanalysis papers, and publishes abook series through the BrookingsInstitution Press.

“The rise of extremism andterrorism is directly linked todeeper problems of governance,economic growth, and the securityof citizens,” Singer says.“As aresult, we face new actors, newchallenges, and new threats in the21st century.To deal with them,the United States has to developnew strategies—based on solid

research—that answer these chal-lenges and are able to promotemore positive interaction with theMuslim world.”

The other major source oftension in the Middle East thatdirectly affects U.S. interests is the Israeli-Palestinian conflict.Through the generous support ofS. Daniel Abraham, the SabanCenter has established an ongo-ing, informal dialogue called“Track 2.” Participants haveincluded current and formerIsraeli and Palestinian cabinetministers, legislators, and securityofficials, along with officials of theU.S. State Department and theNational Security Council.

One discussion focused ondeveloping criteria to ensure thesuccessful implementation ofPrime Minister Ariel Sharon’s pro-posal for Israel to withdraw unilat-erally from the Gaza Strip andparts of the West Bank.

At a time when no officialIsraeli-Palestinian exchanges arepossible, the Saban Center has beenable to use its standing as an honest

Martin Indyk, director of the Saban Center, led a wide-ranging examination of challenges facing the U.S. in the Middle East

Saban Center broker to keep both sides talking,informally at least, laying the foun-dation for future reconciliation.

The Israeli-Palestinian conflictand the war in Iraq are not theonly issues that the Saban Centersees as vital to its mission of creat-ing dynamic initiatives to improvethe region and the world.

Research fellow Tamara Cof-man Wittes, an expert in politicaldevelopment, thinks that democra-tizing the Middle East is a nationalsecurity imperative. She has beguna major research project to evalu-ate U.S. aid for promoting democ-racy in the Arab world and toexplore new strategies for encour-aging political and economicreform in the region.

Another major focal point inthe Middle East is Iran.Visitingfellow Shaul Bakhash, a professorof history at George Mason Uni-versity, provides expertise on thatcomplex country.At Brookings, heinitiated the Iran Working Group,which held a series of discussionsabout Iran’s foreign policy and the future of U.S.-Iran relations.Bakhash is working on a bookexamining Iran’s political structureand its reform movement. KenPollack also recently completed abook, The Persian Puzzle: ConflictBetween Iran and America, whichlooks at the history of the coun-tries’ relationship and the future of U.S. policy toward Iran.

The work of visiting fellowFlynt Leverett, former NationalSecurity Council senior directorfor the Middle East peace processunder President Bush, is focusedon states in the Middle East thathave traditionally been viewed as“problematic,” such as Syria, Libya,and Iran. Leverett is writing abook on Syria’s foreign policy, thehistory of its relations with theUnited States, and the strategies hebelieves America should adopt toaffect Syria’s behavior. ■

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The Povertyand GlobalEconomy Ini-tiative is “anincubator for

ideas,” says Director LaelBrainard.

This unique initiative is multidisciplinary—whatBrainard calls “a pioneer-ing approach”—drawingexpertise from Brookingsscholars in areas rangingfrom foreign policy, eco-nomics, and governance to development, law, andenvironmental science.Twenty Brookings scholars,working in collaborationwith experts from 10 coun-tries, are involved in theinitiative.

The goal, says Brainard,the New Century Chair inInternational Trade andEconomics, “is to offercompelling recommenda-tions, founded on fact-based research and soundanalysis. We hope ourwork will materially shapethe policy debate on howto reduce global poverty,lead to practical recom-mendations, and capitalizeon the opportunities pre-sented by globalization inthe areas of trade, invest-ment, and economicdevelopment.”

In the summer of 2004,the Poverty and GlobalEconomy Initiative, theAspen Institute, and Real-izing Rights: The EthicalGlobalization Initiativebrought together morethan 40 international lead-ers from the public, pri-vate, and nonprofit sectorsfor a conference titled“America’s Role in theFight Against GlobalPoverty.”

This event, and otheractivities of the Poverty

and Global Economy Initia-tive, were made possibleby grants from Richard C.Blum, the initiative’s found-ing funder, and the Williamand Flora Hewlett Founda-tion. Other funding camefrom the General ElectricFoundation and the AlfredP. Sloan Foundation.

At the conference, par-ticipants laid out a forward-looking strategy for theUnited States: increasingand restructuring foreignaid; expanding interna-tional trade through multi-lateral agreements whileprotecting workers andfarmers; and directingmore money, from bothgovernment and privatesources, to development inpoor countries.

Such joint governmentand private involvement inaddressing the challengesof globalization is a majorfocus of the initiative. Oneexample is the work ofBrookings scholar MichaelKremer. In his book StrongMedicine, Kremer pro-posed a system of govern-ment incentives that wouldencourage pharmaceuticalcompanies to undertakerisky and expensiveresearch to develop vac-cines and medications fordiseases like malaria andtuberculosis, which prima-rily affect people in poorcountries. Under his plan,governments, internationalorganizations, and privatefoundations would committo buying and distributingthe drugs.

Another initiative proj-ect, directed by visitingscholar Lex Rieffel, wasaimed at strengtheningand expanding the role ofthe Peace Corps. At thebeginning of 2004, the

project found, only 7,500Peace Corps volunteerswere placed in other coun-tries, less than half thepeak strength in the 1960s.

Among the ideas sug-gested by the project werecollaborations between thePeace Corps and otherinternational volunteerorganizations in new areasof assistance, such as com-bating and treatingHIV/AIDS.

Senior fellow AnnFlorini is examining therole that corporations playin achieving—or hindering—the UN’s Millennium Devel-opment Goals in poorercountries. Approximately1,400 companies haveagreed to abide by a set ofprinciples in the areas ofhuman rights, environ-ment, and labor. But criticsclaim that corporations arenot living up to their com-mitments and are, instead,exploiting labor as global-ization advances.

Working with JohnRuggie and Jane Nelson

of the Center for Govern-ment and Business atHarvard’s Kennedy Schooland Ngaire Woods ofOxford University, Floriniis investigating the corpo-rate role in influencingthe rules that governglobalization. She is alsoexamining what incen-tives exist to encouragecorporations to adopt andabide by codes of publicresponsibility.

The Poverty and GlobalEconomy Initiative is alsostudying offshoring—theloss of American jobs tolower-wage countries.

At a standing-room-only workshop, U.S. gov-ernment economists andstatisticians looked atavailable data on off-shoring and identifiedresearch gaps that make it more difficult to developa policy agenda. The workshop followed twohigh-profile forums withmembers of the U.S. Senate on offshoring and U.S. trade policy. ■

Global Poverty

Residents of Manila scrounge for food at a waste dump

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W ith 2004 a presidential election year, the views ofmany Governance Studies scholars—experts onpolling, campaigning, fund-raising, redistricting,media coverage, polarization of the electorate, andother political topics—were much in demand byboth scholarly publications and the news media.

Take Thomas E. Mann, the W.Averell Harriman Chair at Brookingsand one of the nation’s best-known political experts. His writings onthe election appeared in publications ranging from the Election Law Jour-nal to Reader’s Digest. He also gave nearly 1,500 television, radio, andnewspaper interviews in the year leading up to the election.

Stephen Hess, who has served as an aide to presidents dating back toDwight D. Eisenhower and is an expert on the news media’s role in pol-itics, was not far behind with almost a thousand interviews.

By offering their knowledge and insights to a wide variety of audi-ences—from the academic community and policymakers to reporters andthe general public—Governance Studies scholars were fulfilling the Insti-tution’s mandate “to ensure that its research is effectively disseminated.”

Media interviews were but one part of the election year activities ofthe Governance Studies program.

A major undertaking of the program was the Election 2004 project.In a series of public forums and policy papers, the project examinedboth short- and long-term factors surrounding the presidential electionprocess.These issues included the primaries, the post-primary period,the effects of the “permanent campaign,” how impending electionsaffect actions by an incumbent president and Congress, and the role ofmoney and the new campaign finance law in the 2004 election.

The purpose of the forums presented by the project was to “foster aninformed civil dialogue” among scholars, officeholders, candidates, andadvocacy groups.“Our goal was to provide the public, academic commu-nity, and members of the media with accurate, balanced information tohelp them understand and cover the 2004 elections,” says Pietro Nivola,the new vice president and director of Governance Studies.

Other Brookings activities during the run-up to the electionincluded a conference, directed by Mann, to kick off a multiyear projecton the effects of congressional redistricting.

Coincidental with Nivola’s appointment, Governance Studies tight-ened its focus to the study of political institutions in the United Statesand other countries.The Center on Social and Economic Dynamics,and research involving economics in developing countries, were

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GovernanceStudies

Senior fellow Thomas Mann, flanked byvisiting fellow Anthony Corrado, left,and journalist-in-residence Ron Nessen,weighs the impact of “front-loading”the presidential primaries

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Jeremy M. Berg, director ofNIGMS.

Epstein, Burke, and their col-leagues won a $150,000 grant fromthe National Institutes of Health(NIH) to create highly visual, user-friendly computer models of diseaseoutbreaks.The models graphicallydepict what would happen basedon the disease incubation period,

transmission rate, weather patterns,individual susceptibility, and socialinteractions.The models also evalu-ate various methods of containingthe disease, such as vaccination,contact tracing, and quarantine.

“The computer models createdthrough this initiative will help usdetermine the best strategies todetect, control, and prevent the

spread of disease,” says Elias A.Zerhouni, NIH director.

As the year ended, GovernanceStudies began another excitingpolitical project: examining howthe president, senators, and Housemembers read and respond to themandate of the election results.

While budget deficits and thewar on terrorism continue as

major agenda items, new issuesconstantly arise for GovernanceStudies scholars to analyze,including legislative initiatives,the shifting political balance ofpower, the increasingly sharp divisions between conservativesand liberals, and the need toadjust political institutions for the Internet age. ■

returned to the Economic Studiesprogram; global governance issuesmoved to the Foreign PolicyStudies program.

“The purpose of GovernanceStudies,” Nivola says,“is to explainhow and why policymaking institu-tions in the United States andabroad perform as they do, andsometimes to suggest changes thatcould improve that performance.”

Over the years, GovernanceStudies research projects haveexamined national electoral sys-tems, campaign finance, legislativepolitics, executive organization,budgetary procedures, managementof public bureaucracies, the newsmedia, jurisprudence and legal sys-tems, forms of federalism, localadministration of educational insti-tutions, the delegation of commu-nity services to nonprofits, and therole of religious organizations.

“The aim of this body of workhas been to shed light on theimplications of institutionalarrangements and, where feasible,to delineate reforms that couldpromise net benefits to society,”Nivola says.

Carol Graham, who directedGovernance Studies for the pasttwo years, has returned to theEconomic Studies program, whereshe has undertaken a researchstudy on the economics of happi-ness, which measures the interac-tion between government deci-sions and citizens’ well-being (seestory, page 23).

Nivola’s own scholarly workincluded a monograph titled “ThePolitical Economy of NuclearEnergy in the United States” andtwo policy briefs,“Wave of theFuture: Federalism and the NextPhase of Welfare Reform” (writ-ten with Isabel Sawhill and Jen-nifer Noyes) and “Fiscal Millstoneson the Cities: Revisiting the Prob-lem of Federal Mandates.”

As a result of the departmentalreorganization, the Poverty andGlobal Economy (PGE) Initiative,a major undertaking of the Gover-nance Studies program, became astand-alone project that will alsodraw on the work of scholars intwo other programs: Foreign Pol-icy Studies and Economic Studies.Now in its second year, the initia-

tive is supported by a $2 milliongrant from Brookings trustee andSan Francisco investment bankerRichard C. Blum.

One of the program’s mostimportant events of the past yearwas a presentation by PGE Initia-tive Director Lael Brainard andGraham of the findings in theirbook, The Other War: Global Povertyand the Millennium ChallengesAccount.Their appearance in NewYork City was sponsored by theUnited Nations Development Pro-gram and the Ford Foundation.

Another event that drew atten-tion to the problem of poverty in developing countries was theBREAD conference—Bureau ofResearch and Economic Analysisof Development—sponsoredjointly by Brookings and the Cen-ter for Global Development.Theconference brought together lead-ing economists in the develop-ment field.

“Part of the conference wasopen to the public,” says Graham,one of the organizers.“That por-tion was designed to increase theawareness by the public and poli-cymakers of the scholarly researchon third-world poverty issues.”

The annual Brookings TradeForum focused on the links betweentrade, poverty, and inequality.

The worldwide threat of ter-rorism was the ominous backdropfor many of the issues studied byBrookings scholars.The Center onSocial and Economic Dynamicsfocused on the danger that theUnited States might be attackedby biological weapons.

Leading the effort was seniorfellow Joshua M. Epstein, whoteamed up with Johns HopkinsProfessor Don Burke to developcomputerized models of theeffects of such an attack and ofvarious responses. Previously theyhad focused on a hypotheticalanthrax attack.This year, theylooked at what would happen ifterrorists spread smallpox germs inthe United States.

Epstein and Burke wereinvited to become part of a coreteam in an initiative calledMIDAS—Models of InfectiousDisease Agent Study—sponsoredby the National Institute of Gen-eral Medical Sciences (NIGMS).This team is on permanent call toprovide advice and help developresponses in the event of anational emergency caused by anoutbreak of infectious diseases.

“MIDAS is designed not onlyto help prepare us for infectious-disease crises but also to be anactive part of the response,” says

GOVERNANCE STUDIES

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Analysis and testimony byThomas E.Mann, theBrookings Insti-

tution’s resident expert onelections and politics,played an important role inwinning congressionalapproval of the new cam-paign finance law andestablishing its constitu-tionality in a criticalSupreme Court decision.

How does Mann thinkthe new rules worked in thefirst presidential electionsince they were enacted,given what he calls the“staggering” amount ofcash raised by both GeorgeW. Bush and John F. Kerry?

“I am pretty upbeatabout the positive effectsof campaign financereform,” says Mann, seniorfellow and holder of the W.Averell Harriman Chair.“None of the dire warningsby critics about harmfuland unanticipated conse-quences from the law havecome to pass.”

The legislation prohib-ited political parties fromraising “soft money”—con-tributions not subject tofederal limitations on theirsource and size. But theparties, Mann says, adaptedremarkably well by attract-ing record amounts of“hard money” donations.

Outside organizations,

called 527s—after a provi-sion of the tax code underwhich they register—gar-nered a lot of attention forthe ads they ran for andagainst Bush and Kerry.Some 527s spent signifi-cant amounts of moneyand, given their avowedpurpose of influencing fed-eral elections, should havebeen required to register aspolitical committees andabide by the contributionlimits in federal law, accord-ing to Mann.

Nonetheless, the mostinfluential 527s—those chal-lenging Kerry’s and Bush’smilitary records—did notparticularly benefit fromcampaign finance loop-holes. They spent relativelylittle money to broadcasttheir ads; far more peoplelearned about their mes-sages from intense mediacoverage than from seeingthe ads, Mann says. In anycase, he says, the 527 adcampaigns were dwarfed bythe ads run by the candi-dates, parties, and politicalaction committees.

“The point is not to ban-ish or restrict politicaladvertising,” Mann adds. “Itis to ensure that thoseworking for or against fed-eral candidates play by thesame set of rules governingpolitical contributions.”

The key objectives of thecampaign finance law—to

break the unhealthy nexusamong large donors, politi-cal parties, and elected offi-cials and to restore theeffectiveness of a long-standing ban on corporateand union contributions infederal elections—werelargely achieved, he says.

To Mann, the most sur-prising election develop-ment was that Kerry, afteropting out of the publicmatching-fund program inJanuary, raised almost asmuch money in campaigncontributions as Bush did,rather than being outspentfour-to-one as anticipated.

Remarkable unity andmotivation among Demo-crats and an extraordinaryincrease in small donors,many via the Internet, werelargely responsible forDemocrats’ achieving nearparity with the Republicans,Mann says.

“The new law proved notto be the ‘Democratic sui-cide pill’ forecast by someparty insiders,” he con-cludes. “A disparity inresources between the twocandidates and their partiesdid not determine the out-come of the 2004 election.”

Campaign finance issueswere by no means Mann’sonly focus during the race.

In partnership with LarryBartels, a professor atPrinceton’s Woodrow WilsonSchool, Mann organized a

series of forums at Brookingsthat examined partisanship,the role of issues, how cam-paigns affect election out-comes, and voter mobiliza-tion and turnout.

A final forum, shortlyafter the election, analyzedhow election mandates aredefined and promoted, andwhat impact this has onpolitics and policy.

“We wanted to seewhether we could providesome added value to thediscussion of the 2004election by bringing inscholars who have doneserious research on thecampaigns and elections,”Mann says.

Mann also shared hisviews of the election in op-edarticles and media inter-views—sometimes as many as25 interviews in one day. Heprovided regular briefings onthe campaign to the ambas-sadors of Britain, Canada,France, Italy, and Germany.And he took part in on-linevideo conferences with audi-ences abroad through theState Department.

What did Mann considerthe major developments inthe campaign?■ The increasing impor-

tance of the Internet forfund-raising and fororganizing.

■ The growing gulfbetween Democratic andRepublican voters—notjust in their views of thecandidates and theissues but also in their

reading of supposedlyobjective conditions inthe country.

■ The primacy of foreignpolicy and national secu-rity in the campaign.

■ The sudden collapse ofHoward Dean and thespeed with which Democ-rats rallied behind Kerry.

■ The enormous amountsof money spent on TVadvertising in battle-ground states before theparty conventions.

■ The continuing decline inelection and publicaffairs coverage by net-work and local TV.

■ The emergence of TVcomedy programs aslegitimate sources ofinformation about candi-dates, particularly amongyounger voters. Mannthinks these programsoffer better commentarythan many of the cablenews “scream” shows. Mann says he was most

concerned about how ourgoverning institutions per-formed in the past fouryears. The parity betweenthe parties and theirincreasing ideological polar-ization has poisoned rela-tionships within Congressand between both ends ofPennsylvania Avenue.

“Grappling with the seri-ous domestic and foreignpolicy challenges of the nextseveral years,” Mann says,“will require a much lesspartisan and more accom-modative environment.” ■

Mann for Political Seasons

Pietro Nivola, the new director of Governance Studies, discusses the competing imperatives of wartime powers and civil liberties

Senior fellow E.J. Dionne, Jr., and journalistJane Eisner exchange views on national service and the responsibilities of citizenship

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We believe that the nation’s fiscal situation is out ofcontrol and could do serious damage to the economyin coming decades, sapping our national strength,making it much more difficult to respond to unfore-seen contingencies, and passing on an unfair burdento future generations. Our purpose is to documentthe enormity of the problem, to inform citizens

about why budget deficits matter, to suggest the kinds of specific steps that need tobe taken, and to challenge others to do the same.

That was the declaration of purpose for the Restoring Fiscal Sanityproject, the major undertaking of the year by the Brookings EconomicStudies program.The project both sounded a clarion warning aboutfederal budget deficits, which could grow to $700 billion a year within adecade, and offered three options for avoiding that tidal wave of red ink.

“One of our proposals relies primarily on spending cuts to balancethe budget, one primarily on revenue increases, and a third plan includesa mix of the two but reallocates spending to improve the government’seffectiveness,” explains Isabel Sawhill, a Brookings vice president anddirector of Economic Studies. Sawhill, who holds the Cabot FamilyChair, was co-editor, with senior fellow Alice Rivlin, of a book, a policybrief, and a lengthy report outlining the causes, likely effects, and possi-ble solutions to the deficit problem.

“Good budget choices can strengthen the economy,” Sawhill andRivlin wrote.“Bad choices can weaken it.”

They concluded that “not all budget deficits are harmful—indeed,recent deficits have ameliorated the recession that began in 2001.” However,“large, persistent deficits weaken the economy and lower family incomes.”

While Sawhill, Rivlin, and the seven other Brookings scholars whoworked on the project (Henry J.Aaron, Lael Brainard,William G. Gale,Ron Haskins, Michael O’Hanlon, Peter R. Orszag, and Charles Schultze)generally favored the “better government”option, not all agreed withevery aspect of the plan. Some preferred elements of the “bigger govern-ment” or “smaller government” blueprints, some endorsed tougher fiscalpolicy, and others supported less constrained deficit targets.

“Indeed, our disagreements on such matters reflect, in microcosm,the disagreements in the country at large,” Sawhill says.

The federal budget, and the growing deficits, began to dominate thethinking and conversations of the Economic Studies scholars more thantwo years ago.

“We constantly wrestled with this issue,” recalls Gale, deputy director

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Senior fellow Alice Rivlin, left, and IsabelSawhill, vice president and director of Economic Studies, listen to panelists atthe unveiling of their report, “RestoringFiscal Sanity” T

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of the program and the Arjay andFrances Fearing Miller Chair inFederal Economic Policy.

“We realized there was a voidin the public arena,” says seniorfellow Robert Litan.“No one wasproducing a comprehensive alter-native budget that was supportedby serious data-based research andanalysis—spin-free.”

Litan presented the case forlaunching the Restoring FiscalSanity project to Brookings Presi-dent Strobe Talbott and the Brook-ings trustees in the spring of 2003.

Their response, in short:“Godo it.”

The project, which is partiallysupported by a grant from theAnnie E. Casey Foundation, wasdesigned to stimulate an informedand thoughtful national debateabout the dangers of running per-sistent federal budget deficits, andabout ways to restore fiscal balance.

Sawhill, who succeeded Litan as director when he became vicepresident for research and policy at the Ewing Marion KauffmanFoundation, decided that the analy-sis would be most useful and effec-tive if released in January 2004, justahead of President Bush’s State ofthe Union speech, the publicationof the president’s FY2005 budget,and the presidential primaries.

This tight deadline meant thatthe scholars had less than 60 daysto prepare their first drafts.“It wasvery ambitious to try to do this inthe short time frame we had,”Sawhill says.“I admit that I didn’tknow if we’d be able to pull it off.”

But they did.The project’s initialfindings were submitted for com-ment to other experts and then toan advisory board composed ofbusiness leaders and former cabinetmembers from both political parties.

With their suggestions in hand,the scholars went into overdrive to revise their drafts for the finalreport.The 98-page document

arrived from the printerjust one day before aluncheon at which it waspresented to journalistsfrom BusinessWeek, CBSMarketWatch, Congres-sional Quarterly, FinancialTimes, National Journal,The New York Times,National Public Radio,The Wall Street Journal,The Washington Post, andother news outlets.

The authors also pre-sented their findings intestimony to congres-sional committees, dis-cussed their conclusionsand recommendations ontelevision and in newspa-per interviews, and wroteseveral op-ed articles.This publicity blitz raisedthe awareness of policy-makers, the news media,and the public about theneed to confront thedeficit problem and totake action to fix it. Forexample, The WashingtonPost and a number ofother major newspapersdevoted editorials to thereport’s findings and recommendations.

The Brookings schol-ars also teamed up witheight other organizationsrepresenting a broad swath of theideological spectrum—the Con-cord Coalition, the Committee for Economic Development, theCommittee for a ResponsibleFederal Budget, the Center forBudget and Policy Priorities, theHeritage Foundation, the Progres-sive Policy Institute, the NewAmerica Foundation, and theUrban Institute—to sponsor anevent on Capitol Hill to discussthe deficit and possible solutions.

Senators John McCain (R-Ariz.) and Joseph Lieberman (D-

Conn.) spoke at the event, alongwith scholars from Brookings andthe other organizations.

The Restoring Fiscal Sanityproject was the first step in anambitious, long-range Brookingsundertaking to reexamine nationalpriorities, rethink what functionsthe federal government should andshould not perform, and reconsiderhow to pay for such programs.

“We have the opportunity,through our work on this pro-gram, to address our nation’s fiscalfuture in new and more creative

ways,” Talbott says. He cites “acombination of focus and honesty”as necessary to solve America’s fis-cal problem and says that “both arefound in abundance” in theRestoring Fiscal Sanity project.

Much of the data and analysisfor the project was developed bythe Brookings-Urban Tax PolicyCenter—particularly through thework of Gale and Orszag, theJoseph A. Pechman Senior Fellowin Economic Studies, on creatingrealistic fiscal assumptions andexamining the revenue conse-

ECONOMIC STUDIES

Psychologistshave long usedstudies of happi-ness to assessthe state of

their patients. But couldlawmakers use the data toassess the state of theirnations, and even base policy decisions on theresults?

An emerging social sci-ence field pairs traditionalindicators—marital and eco-nomic status, for example—with the factors that affectthe economic climate,including globalization andthe divide between rich andpoor. Researchers say hap-piness data could ultimatelytransform the way govern-ments make decisions, withpolicymakers using well-being indicators to track acountry’s happiness in thesame way they now moni-tor economic conditions.

Several years ago, CarolGraham, a senior fellow atBrookings and the directorof the Center on Social andEconomic Dynamics, wasconducting research inPeru on the effects of glob-alization on income distri-bution when a surveyturned up unexpectedresults: More than half thepeople who had made sig-nificant income gains over10 years were frustrated,while the poorest people inthe sample were largelysatisfied.

To try to understand theresults, Graham turned toliterature on happiness, andin 2002 she wrote Happi-ness & Hardship: Opportu-nity and Insecurity in NewMarket Economies. Thebook charts the relation-ship between “subjectivewell-being”—a term coinedby psychologist Ed Diener—

and the political sustain-ability of market-orientedeconomic growth in 17 LatinAmerican countries andRussia.

Using happiness surveysand economic variables tomeasure how people inthose countries perceivetheir lives and how thoseperceptions are affected byglobalization, Graham andcolleague Stefano Pettinatofound that when individualsassess their own well-being,relative income differencesare often as important asabsolute income gains.

“There’s a big gap,” Gra-ham says, “between assess-ments by technical econo-mists, who evaluate theaggregate benefits of glob-alization on poverty andinequality and generallygive positive appraisals,and the very negativeassessments by the aver-age laymen in poor coun-tries, who tend to focus onmicro-level trends and onthe differences between thewinners and losers.”

Surveys of well-beingprovide a tool that mayhelp bridge this analyticaland conceptual divide, Gra-ham says. In the Peru sur-vey, almost half of the peo-ple who had earned themost money over 10 yearsdescribed their current sit-uation as negative or verynegative compared with thepast. Graham calls theserespondents “frustratedachievers.”

Another group hadearned little or no moneyduring the same period butsaid their situation was verypositive. Graham, who labelsthese respondents “Pollyan-nas,” says members of thisgroup are usually “quiterural people, for whom

income change doesn’t mat-ter as much as other fac-tors, such as harvest yields.”

“Frustrated achievers,”far from being the poorestin the sample, fall in themiddle income levels andtend to be more urban,more aware of their peers’lifestyles, and more subjectto income volatility. Theyalso have a higher fear ofunemployment and aremore concerned about rela-tive income differences,which causes them, saysGraham, to “place them-selves lower on a notionaleconomic ladder.”

That tendency trans-lates to assumptions thatare relevant to decision-makers. Frustrated achiev-ers, she says, are morelikely to support taxing theincomes of the rich and tohave lower prospects ofupward mobility; they alsotend to be less satisfiedwith the market economyand are less likely to preferdemocracy to any otherform of government.

At a June 2004 briefingat Brookings on the eco-nomics of happiness, Gra-ham joined a panel ofexperts to discuss the relevance of happinessresearch to debates on fis-cal and macroeconomicpolicy, social welfare, theinternational economy, andforeign aid.

“Happiness economics,”says Andrew Oswald, aneconomics professor at theUniversity of Warwick, “canactually put a dollar valueon tangible and intangibleforces…. So, for example,we now have dollar valuesfor the…happiness orunhappiness from aircraftnoise, fear of crime, unem-ployment, and inflation.”

The panelists—who alsoincluded Diener, a psychol-ogy professor at the Univer-sity of Illinois; Jeffrey Sachs,director of Columbia Univer-sity’s Earth Institute; andGregg Easterbrook, authorof The Progress Paradox:How Life Gets Better WhilePeople Feel Worse—agreedthat happiness data can pro-vide a fuller picture of theimpact of economic changesand policy decisions on thepublic.

For Graham, understand-ing how people judge theirfinancial status—and itsrelation to that of theirpeers—is crucial in an envi-ronment where national

economies are increasinglyinterdependent.

“Research on happi-ness,” she says, “can helpus explain unsolved policypuzzles…such as theimpact of inequality on individual well-being,and the very contentiousdebate on the effects ofglobalization on povertyand inequality worldwide.And by discovering unex-pected public frustration insome contexts, happinesssurveys may ultimatelyprovide policymakers withpredictive tools or, at theleast, better insights intopotentially unstable socialsituations.” ■

Economics of Happiness

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Senior fellow Peter Orszag testifiesbefore the House Committee on theBudget

Senior fellow CarolGraham studies therelationship betweenfeelings of well-being and economicconditions

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not only changing the size of theglobal economic pie but alsoredistributing pieces of that piewithin and between countries.

“The objective is to set a pol-icy agenda to make America feelmore secure in the internationaleconomic environment while giv-ing India, China, and other devel-oping countries the chance tobenefit from the internationaltrading system,” Brainard says.

“Bob Litan and I published apolicy brief aimed at helpingAmerica to keep its competitiveedge through education, tax, andresearch-and-development poli-cies, while addressing worker dis-placement through wage insuranceand trade adjustment assistance.”

Charles Schultze producedanother policy brief,“Offshoring,

Import Competition, and the Job-less Recovery,” which concludedthat a surprisingly sharp increase inproductivity by American workers,rather than a loss of jobs to workersoverseas, was the real cause of theslow pace of job creation after themost recent economic recession.

“A careful look at U.S. importdata—especially for service imports,where most offshoring growthoccurred—indicates that while thetotal number of jobs affected byoffshoring had increased, that num-ber was still small relative to mil-lions of jobs affected by the pro-ductivity surprise,” Schultze wrote.

The offshoring project eventu-ally will include a conference atBrookings, an edited volume ofessays, a short monograph aimed atthe general public, and a series of

roundtable discussions that bringtogether policymakers, private-sectorrepresentatives, and researchers torefine a set of proposals regardingtaxes, health care, research anddevelopment, education and trainingin the United States and abroad,trade policy, consumer privacy,development, and cyber security.

The economic benefits ofglobalization have been slow toreach some developing countries.In a book titled The Other War:Global Poverty and the MillenniumChallenge Account, Brainard, CarolGraham, and others examineddevelopment assistance issues, par-ticularly the Bush administration’sprogram designed to rewarddemocratization and free marketsand discourage corruption indeveloping nations.

In collaboration with the Cen-ter for Strategic and InternationalStudies, Brainard plans to conductadditional research on ways tomake U.S. foreign aid a more effec-tive instrument of national policy.Ahigh-level bipartisan commissionwill be created to study the strate-gic goals of aid policy and evaluatehow well the current aid programsupports those objectives.

Looking back at this crowdedagenda and ahead to new issues,Sawhill cites two big challengesfacing Economic Studies:■ Making sure that the program

is working on the most impor-tant topics with the potentialto influence policy.

■ Preserving the program’s inde-pendence in an increasinglypartisan environment. ■

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quences of different tax proposals:for example, modifying or eliminat-ing the Alternative Minimum Tax,making recent tax cuts permanent,and adopting a value-added tax.

The Tax Policy Center, fundedat Brookings by the LuminaFoundation for Education, theOpen Society Institute, and Well-spring Advisors LLC, is frequentlymentioned as a source for infor-mation on various tax proposalsand their consequences.The Cen-ter has developed a website calcu-lator that can estimate the effectsof those proposals.

In the longer term, one of themajor trends affecting the federalbudget is the growing number ofolder Americans.The oldest babyboomers turn 60 in just two years,raising urgent questions aboutwhether Social Security and othergovernment and private pensionsare saving and investing enough toprovide comfortable incomes forretirees.

The problem is exacerbated bythe fact that Americans are retiringyounger and living longer.

A number of Brookings schol-ars—including Barry Bosworth,the Robert V. Roosa Chair; GaryBurtless, the John C. and NancyD.Whitehead Chair; Henry Aaron,the Bruce and Virginia MacLauryChair; and Orszag—analyzed thischallenge and offered ideas fordealing with it.

In a book titled Saving SocialSecurity, Orszag and Peter Diamondof the Massachusetts Institute ofTechnology proposed changes inbenefits and payroll taxes thatwould take into account longer lifeexpectancies and the fact that ear-lier generations of retirees receivedmore from the system than theycontributed during their workingyears.These changes, the authorswrote, would eliminate the antici-pated long-term deficit in theSocial Security fund and put it on

a sound financial footing.Coping With Methuselah, edited

by Aaron and William Schwartz ofthe University of Southern Cali-fornia, examined how revolution-ary advances in medicine are likelyto slow or stop the aging process,extend life, cure illnesses, affect thegovernment’s finances, and raisethorny ethical issues for society.This book was funded by a grantfrom the Robert Wood JohnsonFoundation.

In dealing with another govern-ment social program, Congressbecame hopelessly deadlockedwhen trying to extend and improvewelfare reform. Nevertheless, theWelfare Reform and Beyond proj-ect continued to produce importantresearch and recommendations onthe topic, which policymakerspraised and used in formulating leg-islative proposals.This research isfunded by the Annie E. Casey,David and Lucile Packard, CharlesStewart Mott, Ford, John D. andCatherine T. MacArthur, and Harry

and Jeanette Weinberg foundationsand by the Foundation for ChildDevelopment.

Sawhill and Haskins, the proj-ect’s co-directors, produced a pol-icy paper pointing out the need toimprove Head Start. Michael Cas-tle (R-Del.), chairman of theHouse Subcommittee on Educa-tion Reform, said their paperhelped shape his bill to improvethe preschool program.

Sawhill and Haskins also pro-duced new data and analysisdemonstrating the powerful effectsof work and marriage on helpingpeople to escape poverty.

In related analysis, Burtlessconcluded that single mothers aremore likely to work now, since theimplementation of welfare reform.Contrary to expectations, most ofthese single mothers appear tohave maintained their employmentgains through the recession thatbegan in 2001.Additionally, childpoverty rates rose far less than inprevious economic downturns.

Brookings scholars also zeroedin on the economic challengesposed by accelerating globaliza-tion.The Poverty and GlobalEconomy Initiative, directed byLael Brainard, is funded primarilyby Richard C. Blum and theWilliam and Flora Hewlett Foun-dation, with additional fundingfrom the General Electric Founda-tion and the Alfred P. Sloan Foun-dation.The initiative developspractical ideas for capitalizing onthe opportunities that globaliza-tion offers in trade, foreign invest-ment, and economic development.

Brainard, the New CenturyChair in International Trade andEconomics, and Susan Collins areleading a project with otherBrookings scholars, includingLitan and Schultze, to study off-shoring—exporting service jobsformerly performed in the UnitedStates to countries with lowerlabor costs.The project is explor-ing the economic consequences ofthis new phenomenon, which is

ECONOMIC STUDIES

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Senior fellows Henry Aaron, left, LaelBrainard, and Charles Schultze offerways to cut the federal budget

Senior fellows Ron Haskins, left, andWilliam Gale discuss the implications ofsoaring deficits

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The issues closest to home often have the greatestimpact on Americans’ lives: traffic, sprawl, high hous-ing prices, low-paying jobs, lackluster downtowns,and declining older suburbs.

In recognition of that fact, the Brookings Centeron Urban and Metropolitan Policy was elevated thisyear to the Metropolitan Policy program. It is now

one of the four broad policy study programs at Brookings—along withEconomic Studies, Foreign Policy Studies, and Governance Studies—and the first new program created since 1948.

“This change is a powerful affirmation of the importance of metro-politan issues to the domestic and global challenges that Brookings seeksto address through its research, analysis, and public education,” saysBruce Katz, who had directed the Center and is now vice president anddirector of the program.“We look forward to continuing our compre-hensive approach to urban studies with even greater vigor and impact,and with the permanent backing of the larger institution.”

Katz also credits the Fannie Mae Foundation, an early and steadfastsupporter, for the Metropolitan Policy program’s growth and successsince the Center’s creation eight years ago.

The rust-belt state of Pennsylvania served as a major focus for Katzand his staff during the past year.They analyzed the problems of olderdeclining communities and proposed ways to improve the state’s econ-omy.The project, supported by the Heinz Endowments and the WilliamPenn Foundation, culminated in a report titled “Back to Prosperity:ACompetitive Agenda for Renewing Pennsylvania.”

“The report contends that Pennsylvania’s economic future dependson revitalizing its demographic mix and curbing some of the nation’smost radical patterns of sprawl and abandonment,” says Katz, who holdsthe Adeline M. and Alfred I. Johnson Chair.“It concludes that thesetrends are not inevitable and can be reshaped if the state embraces adynamic new vision of economic competitiveness, which also includesreviving its older cities and towns.”

Twenty newspapers across Pennsylvania wrote about the reportwhen it was released. More than 100 follow-up stories covered suchtopics as state spending strategies and practices, the “brain drain” fromPennsylvania, brownfield environmental cleanups, local government con-solidation, and Governor Edward Rendell’s efforts to pass economicstimulus legislation.

Like most of the Metropolitan Policy program’s work, the Pennsyl-

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vania report was intended to be ablueprint for action, not a schol-arly thesis.As the scholars hoped,the report had a galvanizing effecton state officials.

Rendell proposed an $800 mil-lion bond referendum to expandopen-space preservation and revi-talize older communities. Stateagencies began revising infrastruc-ture and economic developmentprograms to create more balancedgrowth patterns and level the play-ing field between older and newercommunities. Leaders in the Penn-sylvania Legislature signaled theirintention to appoint a commissionto identify reforms that deservelegislative attention.

Key constituencies in the state,including 10,000 Friends of Penn-sylvania (an alliance of organiza-tions and individuals that wasBrookings’s principal partner inthe project) and a network ofregional business groups, are usingthe report to build broader coali-tions that cross jurisdictional lines.

The program’s other major focuswas the Transportation ReformSeries, launched in 2003 and hittinghigh gear in 2004 with supportfrom the Ford, Joyce, John D. andCatherine T. MacArthur, CharlesStewart Mott, and McKnight foun-dations. It provided recommenda-tions for establishing the proper fed-eral role in national transportationpolicy, financing transportation proj-ects, expanding transit services, andreducing traffic congestion.

The transportation series hadan immediate impact at the federaland state levels.The U.S. Congressincorporated Brookings’s propos-als—on such topics as transporta-tion needs of the elderly, low-income car ownership, and transitreforms—into federal legislation.Several Brookings scholars whoworked on the series, includingAnthony Downs, Margy Waller,and Robert Puentes, testified

before congressional committees.The series also targeted issues

facing specific state, metropolitan,and local governments. Forinstance, a report titled “SlantedPavement” examined how usingfuel tax revenue in Ohio for high-way construction and repairsshortchanges cities and suburbs infavor of rural areas.“Slanted Pave-ment” prompted The CincinnatiEnquirer to publish an editorialurging the state government torevise the distribution formula, andthe report is being used by interestgroups to lobby for such a change.

Another report,“Washington’sMetro: Deficits by Design,” foundthat Washington, D.C., has theonly subway system in Americawithout a dedicated source offunding, relying solely on fare pay-ers and annual local governmentappropriations to maintain andexpand the system.

That was not the only projectthat focused on Brookings’shometown. Brookings GreaterWashington, directed by senior fel-low Alice Rivlin, studied neigh-borhood revitalization, affordablehousing, poverty in the centralcity, primary health care, and infra-structure maintenance.

“These activities are contribut-ing to better government at thelocal level, while demonstratingthat a good think tank can also bea good neighbor,” Rivlin says.

For her work on such projects, aswell as for her long service in seniorfederal and city economic positions,Rivlin received the LifetimeAchievement Award from the D.C.Chamber of Commerce this year.

“Listening to Dr. Rivlin speakis like being in an advanced col-lege classroom where a top profes-sor offers clear and intriguingviews on a variety of complexsubjects,” said Chamber of Com-merce President Barbara Lang.

The Metropolitan Policy pro-

gram released seven analyses of the2000 Census data, which yieldedsome startling findings: a steepdecline of concentrated poverty incentral cities during the 1990s,growing suburbanization of immi-grants during the same period,sprawl-producing housing con-struction in traditionally slow-growth areas, and a continuingbrain drain from Northeastern andRust Belt metropolitan areas towarmer, faster-growing regions.

In addition to these nationalstudies, the program released thefirst batch of its local analyses ofthe 2000 Census.The databooks,covering 23 locales, assembled keyinformation in an accessible for-mat, with tables, charts, and mapsaugmenting the text.

The program is workingclosely with corporate, civic, andcommunity leaders in Baltimore,Chicago, Kansas City, Miami, andMinneapolis/St. Paul to advance avariety of locally selected reformsbased on the census analyses.

Katz says the MetropolitanPolicy program is making consid-erable progress in finding ways toincrease the incomes and assets oflow-income working families, andto ensure that these householdshave access to quality employmentand educational opportunities.

“A central feature has been ourwork to demonstrate the distribu-tion and impact of the EarnedIncome Tax Credit [EITC], per-haps the most powerful anti-poverty program in the federalarsenal,” Katz says.A study pub-lished as part of this work analyzeshow the EITC is distributedamong cities, suburbs, and ruralareas in all 50 states.

The Metropolitan Policy pro-gram also is working to enhancepublic and private investment in low-income neighborhoodsthrough its Urban Markets Initia-tive, launched during the past year

with support from Living Cities, aconsortium of 17 major financial,philanthropic, and public-sectororganizations.

Because the issues confrontingcities, towns, and suburbs are notunique to the United States, theprogram extended its work inter-nationally.A joint project with theLondon School of Economics is examining the role of majordemographic and market forces inshaping the modern American andBritish metropolis.The aim is toidentify government policies thathelp communities in both coun-tries address economic, social, anddevelopment challenges.

Katz travels regularly to Britainto meet with British scholars, phi-lanthropists, and government offi-cials to discuss mutual concernssuch as revitalizing distressedhousing, rejuvenating older indus-trial cities, and increasing the assetsof the working poor.

Along with British Chancellorof the Exchequer Gordon Brown,Katz was invited to participate inthe 100th-anniversary celebrationof the Joseph Rowntree Founda-tion, one of the largest independ-ent social policy research anddevelopment charities in Britain.

At the event, Katz released thereport “Neighborhoods of Choiceand Connection,” which showedhow community leaders and policymakers on both sides of the Atlantic can embrace a newneighborhood design that willattract residents of all economicclasses and provide access to high-quality education, job training, and other routes to economic opportunity.

Katz’s speech topic at theRowntree anniversary assemblywas “What the U.K. can learnfrom U.S. neighborhood policy.”Few people know the subject bet-ter than Katz and his colleagues atBrookings. ■

METROPOLITAN POLICY

To help policy-makers shapeinnovativesolutions toclimate change

and other environmentalissues, Brookings thisyear inaugurated its Environment and Energy project. The project will search for ways toimprove environmentalpolicies that reflect politi-cal, economic, and globalconcerns. In his strategicplan, Brookings PresidentStrobe Talbott identifiedenvironmental issues asone of the most importantresearch areas for theInstitution.

The project hasreceived seed fundingfrom Brookings trusteesStephen M. Wolf and LouisW. Cabot, and Brookings isactively seeking core sup-port from other sources.The project is workingclosely with valued part-ners, including the PewCenter on Global ClimateChange, the National Com-mission on Energy Policy,and the World ResourcesInstitute.

During the next year,the project will focus onfour areas: climate changeand energy security;oceans governance; taxpolicy and the environ-ment; and poverty and theenvironment.

“We need enduringsolutions to the challeng-ing environmental prob-lems facing the world,”says senior fellow NigelPurvis, who co-directs theproject with Brookingsenvironment scholar DavidSandalow. “Our objective isto craft practical and cost-effective solutions that the

United States can pursueat home and abroad.”

“Brookings’s foreign pol-icy and economics exper-tise, its convening power, itsreputation for rigorous andcredible research—these arepowerful tools for helpingshape sound and practicalenvironmental policies,”Sandalow says.

For its inaugural effort,the project tackled one ofthe toughest environmen-tal issues facing the worldtoday: climate change.While many people acrossthe political spectrumreadily acknowledge theproblem of global warm-ing, there’s little agree-ment on a solution. Envi-ronmentalists and industryleaders have widely vary-ing views, and policymak-ers are caught in between.

To help close that gap,the project organized andhosted “U.S. Climate Pol-icy: Towards a SensibleCenter” in June. The two-day conference drew thelargest crowd of anyBrookings event this year—both in person and on-line,via a live webcast—and fea-tured an all-star lineup ofscience, industry, and gov-ernment representativesfrom the United States andabroad. Panelists includedSecretary of EnergySpencer Abraham, Chair-man of the White House’sCouncil on EnvironmentalQuality James L. Con-naughton, Senators JohnMcCain (R-Ariz.) andJoseph Lieberman (D-Conn.), former CIA Direc-tor R. James Woolsey,World Bank PresidentJames Wolfensohn, BritishEnergy Minster StephenTimms, Exelon Corporation

Chairman and CEO JohnRowe, Science magazineEditor-in-Chief DonaldKennedy, and NationalWildlife Federation Presi-dent and CEO LarrySchweiger.

Just after the confer-ence, Sandalow wrote aNew York Times op-edpiece on global warmingwith Stuart Eizenstat, chiefnegotiator for the Clintonadministration at theKyoto conference.

The Environment andEnergy project also spear-headed three other events.The “Global Challenges forU.S. Energy Policy: EnergyGeopolitics, Global Envi-ronment, and DomesticPolicy Options” conferencegathered national politicalleaders, business execu-tives, and foreign policyexperts to discuss howclean-energy technologiesand energy efficiencycould strengthen the U.S.economy, help protect theenvironment, and enhanceU.S. security. At the“Transatlantic Dialogue onGlobal Climate Change”conference, Brookings wel-comed more than 50American and Europeanleaders to identify areas ofagreement for futuretransatlantic cooperationon climate policy. And inApril the project held aforum on the Law of theSea treaty, with a keynoteaddress by SenatorRichard G. Lugar (R-Ind.).

That event was anexample of the project’sfocus on issues related tooceans governance. San-dalow made the case forthe Law of the Sea treatyin a policy brief, “Law ofthe Sea Convention:

Should the U.S. Join?”According to Sandalow,American approval of thetreaty “would help protectU.S. national security,advance U.S. economicinterests, and protect themarine environment.”

The project is taking aninterdisciplinary approachto its research in order totake into account the com-plex and interdependentweb between nature andgovernment. The projectwill draw on the expertiseof Economic Studies schol-ars Warwick J. McKibbinand Peter J. Wilcoxen,authors of Climate ChangePolicy After Kyoto: Blue-print for a RealisticApproach. Purvis hasteamed with Brookings sen-ior fellow Lael Brainard tolook at ways to make third-world economic develop-ment environmentallysound. Sandalow will teamwith Economic Studiesexperts and others toexamine how to redirectagricultural subsidies sothat they promote environ-mentally friendly biofuels.

Sandalow is working withBrookings Economic Stud-ies senior fellows Peter R.Orszag and William G. Galeon the environmental con-sequences of tax policy.Purvis has partnered withMcKibbin and Wilcoxen tomodel India’s energy sector.

Purvis will spend thenext year writing a bookabout U.S. climate-changediplomacy and pursuingfurther research onenergy security. Sandalowwill write on clean energyand on issues relating to the governance of the world’s oceans, including the impact of new technologies onmarine conservation.

The task could not bemore important. As Talbotthas said: “Because ofhumankind’s mastery oftechnology, we now havethe capacity to destroyourselves. We can do sotoday, and quickly, in athermonuclear war…or wecan do so tomorrow, moreslowly but no less com-pletely, through the ruina-tion of our environment.” ■

Environment and Energy

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At the Russell FiordWilderness in Alaska, icefalls from Hubbard Glacier

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It was a banner season forthe Brookings InstitutionPress, measured by thenumber, quality, and rele-vance of books published,as well as by the number ofawards earned by titles that

appeared during the previous year.The more than 50 books pub-

lished in 2004 covered a widerange of topics, including interna-tional trouble spots, PresidentBush’s foreign policy, and the roleof religion in American life.

Pakistan and India—bothhugely populous, both armed withnuclear weapons, both emergingas strategic players on the 21st-century world stage—were thesubjects of two critically acclaimedBrookings books.

In The Idea of Pakistan, ForeignPolicy Studies scholar StephenCohen offered a panoramic por-trait of that complex country—from former British colony andhomeland for India’s Muslims tomilitary-dominated state plaguedby political chaos, sectarian vio-lence, uneven economic growth,and several nuclear crises with itslarger neighbor and rival, India.

Cohen explored whether Pak-istan can fulfill its promise and jointhe community of nations as a func-tioning partner or whether it willdissolve into a failed state, perhapsdominated by Islamic extremists.

A review in Foreign Affairsdescribed the book as an “authorita-tive work of broad scope and metic-ulous research which will surelybecome required reading on Pak-istan.”The reviewer, Pervez Hood-bhoy, a nuclear physicist in Pakistan,added,“Cohen’s facts are indis-putable, his logic cold and clear…”

Former U.S.Ambassador toIndia Thomas R. Pickering calledCohen’s book “a must read” that“brings together the key threads,analyzes succinctly the challenges,and makes sensible and workable

proposals for U.S. policy.”Robert L. Faherty, vice presi-

dent and director of the Press,says Pickering’s praise perfectlydescribes the kinds of books thatBrookings seeks to publish.

Brookings President StrobeTalbott published Engaging India:Diplomacy, Democracy, and the Bomb,a revealing account of the inten-sive discussions that the UnitedStates conducted with India andPakistan during the two and a halfyears after the two countries deto-nated nuclear devices in May 1998.

As President Clinton’s pointman in the high-stakes talks,Talbottwas able to reconstruct in rich detailone of the most intriguing and con-sequential diplomatic dramas of ourtime:Talbott’s mission was nothingless than persuading the two coun-tries not to escalate their rivalry intoa nuclear exchange.

Talbott described his extensivetalks with Indian Minister ofExternal Affairs Jaswant Singh, inwhich they not only grappled withthe urgent issues of arms controland nonproliferation but also dis-cussed their broader visions ofU.S.-India relations and the poten-tial for economic and strategiccooperation between their countries.

A Financial Times review calledthe volume “an admirably lucidand candid memoir…an excellentbook.”The reviewer, SunilKhilnani, director of South Asiastudies at the School of AdvancedInternational Studies at JohnsHopkins University in Washington,said that while Talbott’s effort toresolve the India-Pakistan standoffseems as if it took place in a distantera of diplomacy,“its lessons res-onate powerfully into the present.”

Less than a month after its pub-lication in India,Talbott’s book hadrisen to the number-two spot onthat country’s nonfiction best-sellerlist.The list, compiled by the BahriBrothers bookstore chain, appeared

in the daily newspaper Asian Age.Among other books published

by Brookings were four in a seriesof Pew Forum Dialogues on Reli-gion and Public Life.These vol-umes, edited by senior fellow E.J.Dionne Jr., Jean Bethke Elshtain,and Kayla Drogosz, broughttogether the voices of scholars,

journalists, and policy leaders whospoke not only from their knowl-edge of important public-policyissues but also from a set of moralconcerns, often shaped by theirreligious commitments.

Three of these books dealtwith welfare reform and poverty,economics and justice, and U.S.foreign policy; the fourth lookedmore broadly at the place of reli-gion in American politics. Itincluded a debate between formerNew York Governor MarioCuomo and Indiana CongressmanMark Souder, who discussed howtheir faith-based convictions haveshaped their careers as public ser-vants.Their debate served as abasis for short essays from dozensof influential voices in Americanintellectual and political life.

Reviewing the book in TheNew York Times, Peter Steinfelsreferred to the “star-studded list”of contributors and applauded the“nearly endless buffet of reflec-

tions” that “bristled with insights.”Among the Brookings books

receiving awards was AmericaUnbound:The Bush Revolution inForeign Policy, by senior fellow IvoH. Daalder and James M. Lindsay,which won the Lionel GelberPrize for the best book on inter-national relations.The Gelber

jury called the book “an incisiveexamination of U.S. foreign pol-icy under President George W.Bush. Anyone who seeks tounderstand America’s role in theworld and the shape of the newglobal order will find this bookinvaluable and compelling.”

America Unbound also receivedhonorable mention for the ArthurRoss Award, awarded annually bythe Council on Foreign Relations.ForeWord magazine, which reviewsbooks from independent and aca-demic publishers, gave the volumeits award for best political sciencebook.And the Economist magazinenamed America Unbound one ofthe outstanding books publishedin 2003.

Three Brookings books werecited by the American PoliticalScience Association (APSA).Senior fellow Sarah Binder’s Stale-mate: Causes and Consequences ofLegislative Gridlock received theRichard Fenno Award for “a work

3130

Brookings Institution Pressthat is both theoretically andempirically strong” in finding“answers to previously unexploredquestions about the nature of pol-itics.”The Urban Politics Awardwas given to Mega-Projects:TheChanging Politics of Urban PublicInvestment, which the Press co-published with the Lincoln Insti-tute of Land Policy.And the LeonEpstein Award went to A Voice forNonprofits, by Jeffrey M. Berry.This award is given to a book“that has made an outstandingcontribution to research andscholarship on political organiza-tions and parties.”

In addition, national securityfellow Peter W. Singer won theAPSA’s Gladys M. KammererAward for Corporate Warriors:TheRise of the Privatized Corporate Mil-itary Industry, published by Cor-nell University Press.

The National Press Club pre-sented its Arthur Rowse Awardfor the best book of press criti-cism to senior fellow StephenHess and Marvin Kalb for TheMedia and the War on Terrorism,which the Press co-publishedwith Harvard University’s Shoren-stein Center on the Press, Politics,and Public Policy.

Choice magazine, published bythe American Library Association,named Shrewd Sanctions: Statecraftand State Sponsors of Terrorism, byMeghan L. O’Sullivan, as one ofthe outstanding academic books ofthe year. ForeWord gave its awardfor best book on business and eco-nomics to May the Best Team Win:Baseball Economics and Public Policy,by Andrew Zimbalist.

“This was an unusually largenumber of awards for a publisherof public-policy books,” Fahertysays. “They reflect the Press’scontinued commitment to pub-lishing quality books that addressan array of important policy issuesand concerns.” ■

The Brook-ings Centerfor Execu-tive Educa-tion (BCEE)

created a timely specialprogram, “Inside Wash-ington: The New PoliticalLandscape,” to prepareexecutives for possiblechanges in the WhiteHouse, Executive Branchdepartments, and Con-gress after the 2004elections.

“This program isintended to help govern-ment and corporateexecutives to understandhow these changes willaffect national policy-making and their organi-zations,” says William M.Goodwin, senior directorof BCEE.

For almost half a cen-tury, BCEE has been pro-viding programs whichoffer executives the real-istic, practical public-policy and leadershipeducation that is relevantto their professional goals.

“Even as new execu-tive education providershave emerged in the pastdecade, executives con-tinue to seek learningopportunities at BCEEbecause they expect—andreceive—programs thatgive them valuableknowledge and insight tocurrent policy issues,”Goodwin explains.

“Our programs alsobroaden the outlook ofexecutives, thus enhanc-ing their decision-makingskills.”

BCEE’s access toexperts—including gov-ernment officials, mem-bers of Congress, politi-cians, lobbyists, andjournalists—and to ven-

ues such as Capitol Hill,the Federal Reserve, theSupreme Court, and for-eign embassies results inan enriching and unpar-alleled learning experi-ence for participants.

“And the BrookingsInstitution’s reputationensures an independentand balanced range ofviewpoints,” Goodwinsays.

The variety of pro-gram offerings, fromleadership and policyissues to customizedprograms, is designed to meet the specificneeds of individuals and organizations.

Brookings scholarssuch as Thomas E. Mann,Michael O’Hanlon, LaelBrainard, Robert Litan,and Paul Light are fre-quent speakers at BCEEprograms. But they arenot the only headliners.Speakers at recent pro-grams included formerSecretary of DefenseWilliam Perry; formerSecretary of StateMadeleine Albright; former White Housespokesman MichaelMcCurry; Supreme CourtJustice ClarenceThomas; former Con-gressman Lee Hamilton,co-chairman of the 9/11investigative commis-sion; and Amtrak Presi-dent David Gunn.

Following the successof programs in the pastyear for such organiza-tions as the Associationof International Educa-tors, the American Coun-cil of Engineering Com-panies, and the CreditUnion Executives Society,BCEE plans to continuedeveloping joint pro-

grams with other leadingassociations to expandits reach and impact.

Major programs devel-oped in the past yearincluded:

“Defense Leadershipand Management Pro-gram” (DLAMP): BCEEreceived a multiyear con-tract from the Defense

Department to designand implement a leader-ship course for civilianexecutives as part of theDLAMP program. ThePentagon established theprogram to develop anew generation of execu-tives to fill the roles ofcurrent leaders who willretire in large numbers inthe coming decade. Theprogram has 1,300 activeparticipants and expectsto admit an additional300 candidates each year.

BCEE’s course forDLAMP is modeled afterits hallmark programExecutive Leadership ina Changing Environment.

One participant in theinaugural course describedDLAMP as “the best sin-gle week of training I’veexperienced.”

Expanded Outreachto Embassies: Lastspring, BCEE offered itsfirst “Inside Washington”program to staff mem-

bers of foreignembassies in the Wash-ington area. The highlysuccessful program drewparticipants from 11nations to Brookings.The program wasrepeated for newembassy personnel atthe request of past par-ticipants. BCEE also hasdeveloped customizedprograms at the requestof a number of embassies.

“Economics Institutefor Judges”: This flag-ship course of the Judi-cial Education Program issponsored by the AEI-Brookings Joint Centerfor Regulatory Studiesand organized by BCEE.The two-week programteaches state judgesbasic concepts in eco-nomics, finance, account-ing, statistics, and scien-tific methodology to helpthem deal with complexcases.

More than 260 judgestook part last year. In thecoming year, BCEEexpects to organize fourmore judicial programs,including a symposiumon punitive damages.

In one of last year’ssessions, the judgesdined at the SupremeCourt, where they heardremarks from JusticeAntonin Scalia and for-mer Solicitor GeneralTheodore Olson. ■

Executive Education

Senior fellow Stephen Cohen, author of ahighly praised book on Pakistan, meets withRobert Faherty, right

BCEE head William Goodwin

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High praise, especially considering the source:United Nations Secretary-General Kofi Annan,who was speaking to the Brookings Board ofTrustees and their guests at UN Headquarters inNew York City.

In the first-ever trustees meeting outsideWashington,Annan congratulated Brookings “on

the priority you have given to international issues and to opening upyour Institution to people and ideas from outside the United States.”

Speaking in the UN Delegates Dining Room,Annan lauded Brook-ings’s “conscious effort to broaden your agenda and to put your skills atthe service of the global community.” He cited, for example, work onglobal poverty reduction and internally displaced persons.

These comments by a UN secretary-general in the setting of theUnited Nations symbolically underscored the fact that Brookingsresearch and analysis now affect policy decisions around the world.

Trustees and friends of the Institution were instrumental in helpingBrookings broaden its international scope.

Brookings Board Chairman John L.Thornton pledged $1 million ayear for five years to fund a new Initiative on China.With offices inWashington and Beijing, the initiative will conduct analysis and makerecommendations to leaders in both countries for meeting policy chal-lenges in the years ahead (see story, page 11).

At their New York meeting, the trustees heard from Mark MallochBrown, head of the UN Development Program, who discussed the direstraits of tens of millions of poor people who live in developing coun-tries. Speaking at a reception in the UN’s West Terrace, Brown said theMillennium Challenge Account, established by President Bush, is “anextremely important strand of development” that rewards countriesstriving toward democracy and free markets.

The trustees mingled with high-ranking diplomats, including JohnD. Negroponte, then U.S. representative to the United Nations and sub-sequently U.S. ambassador to Iraq; two former UN ambassadors,Richard C. Holbrooke and Donald F. McHenry (now an honoraryBrookings trustee); the UN representatives from China, Egypt, andJapan; and Germany’s ambassador to the United States.

FIRST-EVER BROOKINGS STUDY TOURIn September, Brookings President Strobe Talbott led Brookings’s first-ever study tour, to Russia and Estonia. Eighteen travelers, including

33

Support forBrookings

Kofi Annan, his wife Nane Annan, center,and Linda Steckley, Brookings’s vicepresident for development, chat at theBrookings trustees dinner at the UnitedNations.

“Everyone knows that Brookings is the very best prototype of influential Washington think tanks”

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The tour’s final stop inMoscow was the elegant oldSpaso House, the Americanembassy residence, for lunch withAmbassador Alexander Vershbow.The career diplomat talked can-didly about U.S.-Russia relationsand gave a preview of later U.S.government complaints aboutPutin’s handling of Beslan andseizure of appointment power forprovincial governors.

The group then traveled to St.Petersburg, where tour membersvisited the Hermitage Museum inthe former palace of the czars,attended a performance of Giselle,and met with professors at theEuropean University.

The last stop on the trip wasTallin, capital of the Baltic republicof Estonia, an ancient town with avibrant nightlife.At lunch with theBrookings group, youthful andenergetic Prime Minister JuhanParts outlined his vision for thecountry.

Between meetings, the tourparticipants encountered the cul-tural contrasts inherent in a Russiaentering the 21st century: a newIKEA across from a memorial tothe tank traps that helped stopHitler’s invasion; block-long signsin English for Levi’s and flat-screen televisions amid centuries-old Orthodox and Byzantinechurches; MTV competing withother channels programming balletand classical music.

The participants also visited anexample of what Russians see astheir future—a sophisticated brew-ery that hopes to export its prod-uct to the United States to com-pete with Budweiser and SamAdams.

“The Brookings expedition toRussia,”Talbott says,“remindedme of a cardinal lesson that Ilearned in two decades as a jour-nalist, and also one of which I wasreminded as a diplomat:You can’t

sit behind a desk in Washington,reading press accounts or intelli-gence reports, and get a full, tex-tured picture of a foreign coun-try—especially one that is goingthrough transformation.You haveto incur some jetlag and see thesituation.”

INVESTING IN BROOKINGSHelping policymakers, the newsmedia, and the public to moreclearly “see the situation” in foreign policy, economics, gover-nance, and metropolitan life is the mission of the Brookings Institution.

The many worthwhile projectsunder this mission cost more than$40 million every year.The annualdraw from Brookings’s endow-ment covers only about 25 percentof expenses.As a nonprofit organi-zation, Brookings relies on thegenerosity of individuals, corpora-tions, private foundations, andother organizations to contribute asignificant portion of the balance.The Brookings Institution reacheda remarkable milestone during thepast year with more than $32 mil-lion in gifts and commitments—an84 percent increase over the previ-ous year.

“Brookings’s donors ensure theInstitution’s ongoing financialhealth and our ability to continuethe mission of independent, non-partisan public policy research andeducation,” says Linda Steckley,vice president of development.

“Working closely with Brook-ings scholars, the trustees andBrookings Council led the effortto provide the Institution with thefinancial resources necessary toconduct independent research,launch exciting initiatives, andexpand our international reach.”

The President’s Special Initia-tives Fund is key to the Institu-tion’s ability to broaden itsresearch agenda in a timely way.

35

trustees, Council members, andother friends of the Institution,signed up for the 10-day trip.They arrived in Moscow a weekafter the Beslan school massacreand just as President VladimirPutin seized more centralizedpower.

On the study tour, most of theexchanges with government offi-cials, U.S. embassy representatives,and members of the Russian newsmedia focused on the Beslanslaughter and Putin’s power grab.Brookings Russia specialists FionaHill and James B. Steinberg, vicepresident and director of the For-eign Policy Studies program, whowere in Moscow on other busi-ness, joined the tour and addedtheir expertise to the crash courseon modern-day Russia. Hill hadbeen present at a three-hourmeeting with Putin just before the

group’s arrival and described it tothe tour members.

The group heard the media’sview of government press policieswhen it participated in a nation-ally televised discussion with rep-resentatives of Moscow newsorganizations.The Russian pan-elists felt that they had been mis-led by the government about the Beslan hostage crisis.Theyexpressed concern that Russia nolonger has an independentnational television network andworried that government censor-ship could be applied to newspa-pers, magazines, and the Internet.

Later, members of the groupassembled in a Kremlin conferenceroom for a briefing by Russiannational security advisor IgorIvanov.“We were not ready” forwhat happened at Beslan, heacknowledged. He placed much of

the blame on provincial politicalleaders. Ivanov’s comments cameimmediately after Putin had takenover appointment of provincialgovernors, who previously hadbeen elected.

“We need a more unified

framework to confront terrorism,”Ivanov said.“We were foundwanting in this respect.” He alsoconceded that the Russian gov-ernment had not been completelyforthcoming about the incidentwith the public or the press.

34

Cyrus F. Freidheim,Jr.—Brookingstrustee, retired chair-man and CEO of

Chiquita Brands International,Inc., and the Brookings Coun-cil’s current chairman—notesthat Council members “con-tribute over $6.5 million annu-ally to ensure that Brookingscontinues the rigorous, inde-pendent, and practical researchfor which it is renowned.”

Founded in 1984, the Brook-ings Council has been the pri-mary source of general operat-ing funds for 20 years. TheCouncil is a select group ofbusiness and community lead-ers who are actively engagedin the intellectual life of theInstitution.

Council donors enjoy invita-tions to Brookings events thataddress national and interna-tional economic, political, andsocial policy challenges. Eventsheld last year in cities acrossthe country provided Councilsupporters with a first look atBrookings research on a rangeof timely issues.

“Direct contact with schol-ars in small group settings is aunique aspect of involvementwith the Council that distin-guishes Brookings from otherpolicy organizations,” Freid-heim says.

During the past year, Coun-cil supporters participated indiscussions about key policyissues with senior Brookingsscholars, government officials,business leaders, and otherinterested parties.

Economic Studies seniorfellows Isabel Sawhill andPeter R. Orszag led sessionson the federal budget andnational economy in New York,Boston, and Washington. For-eign policy topics such as theMiddle East, U.S.-Europe rela-tions, international trade, and

offshoring were highlighted aswell, with Brookings PresidentStrobe Talbott and Foreign Pol-icy scholars James B. Stein-berg, Philip Gordon, LaelBrainard, and Martin Indykleading Council presentationsin New York and Washingtonlast spring.

“The compelling presenta-tions by scholars, followed bydirect and lively interactionbetween scholars and mem-bers of the audience, are whatdistinguish Brookings eventsand result in Council mem-bers’ vying to host the Councilin their city,” says Brookingstrustee Bart Friedman, a sen-ior partner in the New Yorklaw firm of Cahill Gordon &Reindel.

In addition to the manyopportunities for involvementwith the Institution, includingparticipation in events such asthe Fall Brookings Board ofTrustees/Council dinner, Coun-cil donors also receive compli-mentary copies of newlyreleased Brookings publica-tions, policy briefs and Presi-dent’s Letters, and a subscrip-tion to the Brookings Alerte-mail updates.

“Generous funding from theBrookings Council helps makepossible Brookings’s significantimpact on policymaking,” saysLinda Steckley, vice presidentof development.

“We are pleased to recog-nize the more than 250 corporations and individualsthat make up the Council,”Steckley says (see list, page39). “Brookings is delightedthat the Council has reachedthis significant 20-year mile-stone and looks forward towelcoming many new individu-als and corporate representa-tives who are committed toindependent, nonpartisan policy research.” ■

Brookings Council

Many forward-thinkingdonors, likeBrookings

trustees Charles W. Robin-son and Ralph S. Saul,have made long-termcommitments to theBrookings Institution byincluding a provision forthe Institution in theirestate plans.

Robinson and Saulhave designated Brook-ings as the beneficiary ofirrevocable charitableremainder trusts, whichdistinguishes them asmembers of the Founder’sSociety. The lastinglegacy they provide willhelp ensure that Brook-ings remains a strong andobjective voice in futurepolicy debates.

“I’ve been associatedwith the Brookings Insti-tution for over a quartercentury,” Robinson says.“Today, more than ever, I am convinced of theimportant role Brookingsplays in producing thehighest-quality researchthat has a direct impacton our government’sdomestic and foreign policy.”

He adds, “I am pleasedto give Brookings my sup-port now and to ensurethat it will continue in thefuture.” Robinson hasserved as a Brookingstrustee since 1977 andwas elected an honorarytrustee in 1984.

Robinson has had along and distinguishedcareer in business and

government. He is cur-rently president of Robin-son & Associates, presi-dent and chairman ofDYNA YACHT, Inc., andpresident of Mangia OndaCo. In 1974, he wasappointed undersecretaryof state for economicaffairs and in 1976became deputy secretaryof state during the Fordadministration.

Another importantmember of the Brookingsfamily, Saul has been atrustee since 1982 andwas the vice chairman ofthe Board from 1985 to1991. He became an hon-orary trustee in 1994.

Saul began his careeras a foreign service offi-cer with the U.S. Embassyin Prague, then the capitalof Czechoslovakia. Hejoined the INA Corpora-

tion in 1974 and waselected CEO in 1975, aposition he continued tohold after the companymerged with ConnecticutGeneral to form CIGNACorporation in 1982. Hisaccomplishments in theworlds of public serviceand the private-sectorhealth-care industry areexceptional.

“As the country’s pre-mier think tank, Brookingshas a distinguished tradi-tion of independent, non-partisan analysis of issuesof national importance,”Saul says. “Brookings hasconsistently taken thetime to see that the factsare straight and that theopinions expressed by the scholars are well-documented. I believe this is an important her-itage to preserve.”

Like Robert S. Brook-ings and his wife, Isabel—the Institution’s originalsupporters—CharlesRobinson and Ralph Saulrecognize the vital rolethat planned giving has infortifying Brookings’sfuture financial strength.

Brookings can benamed as a beneficiary of planned gifts—such as bequests, retirementfunds, and insurance policies—and life-incomegifts, such as charitableremainder trusts andcharitable remainderannuity trusts. Someplanned gifts allowdonors, like Robinson and Saul, to enjoy tax and income benefits during their lifetimeswhile making a significant commitment to Brookings. ■

Founder’s Society

Trustee Robert McNamara at a specialBrookings screening of “The Fog of War,” a documentary about the former defensesecretary

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Individuals and organi-

zations that provide

funds to support Brook-

ings research believe in

the quality and impartiality

of its scholarly research.

They don’t contribute

because of the kind of per-

sonal and emotional ties that

graduates often feel toward

their alma maters. They

don’t give to Brookings

because it is an advocacy

group that promotes particu-

lar causes. They don’t con-

tribute because Brookings is

sympathetic to a political

party or philosophy.

Their altruism is of the

highest order, driven by civic

concern and deep engage-

ment with public-policy

issues.

The following are some

of Brookings’s most gener-

ous contributors:

MAJOR INDIVIDUALGIFTS

THE GREENSPUN FAMILYThe Greenspun family is

among the most philan-

thropic in Las Vegas. The

Greenspuns have had a

major impact on the Univer-

sity of Nevada at Las Vegas

and the Nevada Cancer Insti-

tute. This year their charita-

ble commitments extended

to Washington and, through

Brookings, to other parts of

the world.

Brookings trustee and

Council member Brian L.

Greenspun, president and

editor of the Las Vegas Sun,

along with his wife, Myra, and

the Greenspun family, com-

mitted $1 million to the Insti-

tution to support two critical

areas of research and pro-

gramming. Half their gift, to

be dispersed over the next

five years, is designated for

the President’s Special Initia-

tives Fund and the other half

for the Saban Center for Mid-

dle East Policy.

It is often difficult to

obtain funding for cutting-

edge projects. The Special

Initiatives Fund provides

seed money for projects that

the president believes are

important to the future of

the Institution but that do

not have immediate funding.

A gift of this size, to be used

at the president’s discretion,

gives Brookings the opportu-

nity to address strategic pri-

orities and maximize the

Institution’s flexibility to

focus quickly on timely pol-

icy issues.

At a time when the war

on terror must be fought

with ideas as well as arms,

the original thinking and

innovative programming of

the Saban Center are provid-

ing policymakers with fresh

perspectives. Additionally,

the Center brings together

leaders who otherwise would

have no appropriate forum

for civil discourse.

Under the direction of

Martin Indyk, the Center has

become recognized in the

United States and abroad for

its thoughtful and provoca-

tive research and programs.

For many years, the Green-

spun family has supported

efforts to bring peace to the

Middle East. Their support

will enable the Saban Center

to expand those efforts at a

time of intensified violence

and terrorism in the region.

“In the years ahead, the

Greenspuns’ generous com-

mitment will guarantee

Brookings has the resources

to respond to new chal-

lenges and opportunities,

while also ensuring the con-

tinued strength of one of our

most important foreign pol-

icy programs,” says Brook-

ings President Strobe Talbott.

GIFTS TO ENDOW THESABAN CENTER FORMIDDLE EAST POLICYTo further perpetuate the

work of the Saban Center for

Middle East Policy, it was

essential that a substantial

endowment be established.

This year, Roland and

Dawn Arnall of Ameriquest

Capital Corporation in

Orange, California, and Eric

L. Smidt, president of Central

Purchasing, Inc., in Camar-

illo, California, made gener-

ous gifts of $540,000 each

to initiate the endowment

for the Saban Center.

Brookings is also grateful

to Beny Alagem, co-founder

of Packard Bell Electronics,

who contributed $180,000

as part of a three-year com-

mitment to the endowment.

These commitments and oth-

ers to come will provide the

financial security to continue

the work of Indyk and his

colleagues in the years

ahead.

Brookings is grateful for

the leadership of Haim

Saban, a trustee of the Insti-

tution, who developed the

concept and provided the

resources to found a policy

center at Brookings devoted

entirely to the Middle East.

Since its inception, the

Saban Center has been com-

mitted to providing analysis

of events in the region and

to engaging in long-term

research projects on Middle

East policy issues. Saban

Center scholars are regularly

quoted in the news media

and participate in press

briefings, forums, confer-

ences, symposia, and study

groups. These activities pro-

vide an opportunity not only

to disseminate the Center’s

research and policy ideas but

also to significantly affect

the Middle East policy

debate in Washington.

JOHN L. THORNTONAND THE INITIATIVE ON CHINAWhen John L. Thornton

agreed to teach a leadership

seminar for the Management

and Public Administration

schools at Tsinghua Univer-

sity in Beijing, he envisioned

a seminar of 20 men and

women from the next gener-

ation of China’s leaders.

Hundreds of students

applied for admission to his

class.

For Thornton, this also

presented an opportunity to

learn. He interviewed each

applicant before selecting

those who would participate

in the seminar. He asked

questions about their lives

and backgrounds, their

thoughts on China’s role in

the world in the 21st century,

and how each of them hoped

to influence the future of

their country.

The series of conversa-

tions further convinced

Thornton of the importance

of China in international

trade, politics, and econom-

ics in the years ahead. As

the highest-profile American

to join the faculty at

Tsinghua, he is uniquely

aware of how rapidly life in

China is changing. So rapidly,

in fact, that it is impossible

to grasp the dynamics and

scope of the change unless

one is there on a regular

basis.

As chairman of the

Brookings Board of Trustees,

Thornton began thinking

about his goals for Brookings.

He wanted his first project to

benefit his shared passions:

China and the Institution.

The result was a $5 mil-

lion commitment to estab-

lish the Initiative on China

within the Foreign Policy

Studies program, directed

by James B. Steinberg. The

announcement of Thorn-

ton’s gift was made to the

Board of Trustees at its

March meeting.

For Thornton’s col-

leagues on the board, the

gift reinforced the idea that

Brookings’s work has enor-

mous potential but comes at

substantial cost. Thornton

challenged his colleagues to

join him in raising their

sights in regard to financial

support for the Institution.

As Brookings enters a

new era, leading to the 2016

centennial, the chairman has

appropriately raised the

standard for leadership.

FOUNDATIONSThe strong support of Brook-

ings’s foundation partners

was critical to the Institu-

tion’s growing international

presence in 2004, as well as

to its ongoing work on

domestic issues.

The financial resources

that foundations provided to

Brookings enabled its schol-

ars to conduct innovative

research on the critical

regions and issues that drive

American policy. Three foun-

dations deserve special

recognition:

The Carnegie Corpora-

tion of New York made a

major grant to Brookings in

2004 for general support of

the Foreign Policy Studies

program. This two-year,

$800,000 award provides

flexible funding that allows

scholars to conduct long-

term research on the

regional, technological, and

structural issues that shape

the global security agenda.

36 37

This commitment made the

Carnegie Corporation the

single largest foundation

donor to the Foreign Policy

Studies program this year

and underscored the com-

mitment of Brookings and

Carnegie to building a safer,

more secure world.

Carnegie also made

important grants to Brook-

ings projects on U.S. political

issues, including Congres-

sional redistricting and

implementation of the Vol-

cker Commission’s recom-

mendations for reorganizing

the federal government.

The John D. and

Catherine T. MacArthur

Foundation continued its

strong tradition of major

funding for the Institution in

2004. With grants totaling

nearly $1 million, MacArthur’s

support was critical to Brook-

ings’s work on both urban

and global issues.

The Foundation gave sig-

nificant funding for the proj-

ect on Force and Legitimacy

in the Evolving International

System. The project has two

aims: to examine the trends

that are challenging the

effectiveness of the existing

approach to collective secu-

rity and to develop proposals

for adapting the system to

contemporary reality.

The MacArthur Founda-

tion also invested in Brook-

ings’s groundbreaking work

on poverty and politics in

Central Asia, a complex and

increasingly important

region.

MacArthur continued to

be a major contributor to

Brookings’s Metropolitan Pol-

icy program, providing both

general support and funding

for its work on transporta-

tion reform in metropolitan

areas.

Brookings’s growing

emphasis on international

developments has not dimin-

ished its focus on domestic

issues. The Annie E. Casey

Foundation supported

Brookings’s work on a host

of crucial urban and social

policy issues, including ongo-

ing research on welfare

reform, support for low-

income working families,

transportation issues faced

by the poor, and parental

choice in K–12 education.

The Casey Foundation

also provided key funding for

the Urban-Brookings Tax Pol-

icy Center and for Brook-

ings’s Budgeting for National

Priorities project, which

showed how the federal

budget deficit affects pro-

grams for poor and low-

income working families.

In 2004, the Casey Foun-

dation was Brookings’s single

largest foundation donor,

with a dozen grants totaling

more than $1.4 million. It has

been a major partner of

Brookings for more than a

decade.

“Time and time again the

Brookings Institution has

produced results that are

balanced, authoritative, and

relevant to the policy

debate,” says Douglas W.

Nelson, president of the

Casey Foundation. “Our part-

nership not only has allowed

us to benefit from Brook-

ings’s guidance and insight

but, more importantly, has

advanced our efforts to

assure to every child the

core promises of American

life.”

MAJOR CORPORATEGIFTSBrookings’s 2004 fiscal

year brought financial

support from corporate

benefactors across a range

of industries. Several major

gifts this year helped

strengthen the Institution’s

commitment to research

on international issues, from

economics to foreign policy

to governance.

Reliance Industries Lim-

ited of India, one of South

Asia’s foremost companies,

made a $100,000 gift of

unrestricted support to

Brookings in 2004. The

Institution is grateful for

this generous support from

one of South Asia’s fore-

most companies. The kind

of flexible funding that

Reliance is providing is

extremely valuable to

Brookings’s ability to

respond to events as they

occur and to produce top-

notch research and analysis.

DaimlerChrysler Corpo-

ration made a major grant

in support of the Center

on the United States and

Europe (CUSE), which was

launched in 2004. The grant

will support Brookings’s

leading-edge research on

transatlantic relations and

the organization of the

DaimlerChrysler U.S.-Europe

Forum on Global Issues, a

high-level policymaker

dialogue that meets twice

each year. DaimlerChrysler’s

support of Brookings and

CUSE underscores the

global reach of the Institu-

tion’s research.

In 2004, a growing num-

ber of companies in Japan,

Taiwan, Hong Kong, and

South Korea provided sup-

port to Brookings in recogni-

tion of its contribution to

understanding the global

economy and international

affairs. Brookings’s research

agenda touches on many

issues that affect these com-

panies, from international

trade and exchange-rate

economics to China-Taiwan

relations and developments

on the Korean Peninsula.

Brookings thanks each of

its corporate donors for their

support in 2004, not just for

the financial resources they

contributed, but for their

valuable insights and per-

spectives on many issues. ■

Combined Individual/Foundation/Corporate Gifts

Brookings Council members Elbrun and Peter Kimmelman in Moscow during the Russia study tour.

3938

In an environment ofeconomic uncer-tainty, Brookings’sendowment provides

a steady source of finan-cial support and plays anintegral role in helping theInstitution build on itsextraordinary record ofachievement.

The endowment notonly enhances the long-term financial security ofthe Institution, it also pro-vides a way for Brookingsto honor key donors andimportant members of theBrookings community inperpetuity.

We are pleased to rec-ognize the scholars whoheld endowed chairs dur-ing fiscal year 2004 andthe donors who made itpossible.

ENDOWED CHAIRSThe Michael H. Armacost

Chair was establishedthrough the generosity ofnumerous donors tohonor former BrookingsPresident Michael H.Armacost by supportingresearch in foreign policystudies with an emphasis

on Asia. Chairholder:Richard C. Bush, Directorof Northeast Asian PolicyStudies.

The Herman and George

R. Brown Chair was estab-lished by the Brown Foun-dation Inc. of Houston in1994 to support researchin education policy.Chairholder: Diane Ravitch, Governance Studies NonresidentSenior Fellow.

The Cabot Family Chair

was established by theCabot Family CharitableTrust. Chairholder: IsabelV. Sawhill, Vice Presidentand Director of EconomicStudies.

The Douglas Dillon Chair

was established by theDillon Fund to supportresearch in governmentstudies. Chairholder: PaulC. Light, Director of theCenter for Public Service.

The Stephen and Bar-

bara Friedman Endowed

Fellowships were estab-lished by Brookingstrustee Stephen Friedmanand his wife, Barbara. Fellowship recipient: Nigel Purvis, Foreign

Policy, Economic, andGovernance StudiesSenior Fellow.

The W. Averell Harriman

Chair was established bythe W. Averell & Pamela C. Harriman Foundation to support research inAmerican governance.Chairholder: Thomas E.Mann, Governance Stud-ies Senior Fellow.

The Adeline M. and

Alfred I. Johnson Chair

was established by then–Brookings ChairmanJames A. Johnson in sup-port of research on urbanand metropolitan policy.Chairholder: Bruce Katz,Vice President and Direc-tor of Metropolitan Policy.

The Bruce and Virginia

MacLaury Chair was estab-lished in honor of Brook-ings’s fourth president,Bruce MacLaury, and hiswife, Virginia. Chair-holder: Henry J. Aaron,Economic Studies SeniorFellow.

The Arjay and Frances

Fearing Miller Chair wasestablished by Brookingstrustee Arjay Miller andhis wife, Frances FearingMiller, to support researchon federal economic pol-icy. Chairholder: William

G. Gale, Economic StudiesSenior Fellow.

The New Century Chair in

International Trade and Eco-

nomics was established byToyota to support researchon international trade andeconomics. Chairholder:Lael Brainard, Economicand Foreign Policy StudiesSenior Fellow.

The Robert V. Roosa

Chair was establishedthrough the generosity ofnumerous donors to honorformer Brookings trusteeRobert V. Roosa and tosupport research on inter-national economics.Chairholder: Barry P.Bosworth, Economic Stud-ies Senior Fellow.

The Sydney Stein Jr.

Chair was established byformer Brookings trusteeSydney Stein Jr. to supportresearch on internationalsecurity. Chairholder:Michael E. O’Hanlon, For-eign Policy Studies SeniorFellow.

The John C. and Nancy

D. Whitehead Chair wasestablished by Brookingstrustee John Whiteheadand his late wife, Nancy.Chairholder: Gary Burtless,Economic Studies SeniorFellow.

These additional

endowments are greatly

valued by the Brookings

Institution:

The Edward M. BernsteinScholars Fund

The John C. BowenEndowed Presidential Fund

The Carliner Endowmentfor Economic Studies

The Juliet & Lee Merrit Folger/Folger Fund Fellowship

The Robert and VirginiaHartley Fellowship

The Ed Hewett FellowshipFund

The Robert S. Kerr Fund

The Oscar E. Kiessling Fellowship

The Okun Model FellowshipFund for Economic Studies

The Pechman FellowshipFund

The Ralph S. Saul Endowment Fund

The Ezra K. Zilkha Endowment ■

The Fund provides seed moneyfor the Brookings president totake advantage of strategic oppor-tunities by instituting new multi-disciplinary research projects.ThePresident’s Fund also providesBrookings researchers with a headstart on critical projects whenthere has not been time to securefunding.

“We are pleased that we wereable to expand the Special Initia-

tives Fund during 2004, reinforc-ing Brookings’s flexibility andresponsiveness to significant devel-opments at home and abroad,”Steckley says.

The President’s Fund is onlyone type of unrestricted fundingthat enables Brookings to actquickly when global crisesdemand immediate analysis andresponse.

“We are very grateful to our

corporate and individual donors,along with a number of founda-tions, who make these vital giftsto the Institution,” Steckley says.“They support the critical infra-structure that undergirds all of

Brookings’s research and commu-nications activities and enables ourscholars to react to events as theyunfold.”

The following pages highlightkey commitments from individu-als, corporations, and private foun-dations that have propelled Brook-ings forward and solidified itsinternationally recognized role as a source of independent researchthat shapes the future. ■

Endowed Chairs

Richard C. Blum, founding donor of thePoverty and Global Economy Initiative, at a conference in Aspen

$500,000 plusAnonymousRoland and Dawn ArnallRichard C. Blum and Senator

Dianne FeinsteinAnnie E. Casey FoundationDepartment for International Devel-

opment, United KingdomGovernment of Japan, United Nations

Human Security Trust FundClaude R. Lambe Charitable FoundationLiving Cities, Inc.:The National

Community Development InitiativeThe John D. & Catherine T.

MacArthur FoundationCheryl and Haim Saban

$250,000 to $499,000Anonymous (2)Carnegie Corporation of New YorkFannie Mae FoundationArjay and Frances MillerCharles Stewart Mott FoundationThe Pew Charitable TrustsU.S. Chamber of Commerce

$100,000 to $249,999AnonymousS. Daniel AbrahamBeny AlagemBoston CollegeCanadian Department of Foreign

Affairs and International TradeDaimlerChrysler CorporationEstate of Mary Lily DavidGovernment of DenmarkExxon Mobil CorporationThe Freeman FoundationGeorgetown UniversityThe German Marshall Fund of the

United StatesBrian L. and Myra S. Greenspun and

the Greenspun FamilyEstate of Andrew HeiskellThe William and Flora Hewlett

FoundationThe Robert Wood Johnson

FoundationJames A. JohnsonThe Joyce FoundationEwing Marion Kauffman FoundationJohn S. and James L. Knight

FoundationThe Henry Luce FoundationThe Markle FoundationThe McKnight FoundationWilliam Penn FoundationProperty-Casualty CEO RoundtableEmbassy of QatarReliance Industries LimitedRockefeller Brothers FundThe Sandler Family Supporting

FoundationEric Smidt

The Starr FoundationState Farm Insurance CompaniesStuart Family FoundationSwedish International Development

Cooperation AgencyTaipei Economic and Cultural Repre-

sentative OfficeTokyo Club Foundation for Global

StudiesUnion of Chambers of Commerce of

TurkeyThe Harry & Jeanette Weinberg

FoundationThe Vincent Wilkinson FoundationWorld Economic Forum

$50,000 to $99,999American Legacy FoundationAT&TThe Cabot Family Charitable TrustThe Virginia Wellington Cabot

FoundationThe Morris and Gwendolyn Cafritz

FoundationUniversity of California–BerkeleyTimothy C. CollinsAlan M. DachsLawrence K. FishFoundation for Child DevelopmentFreddie Mac Community Relations

Donor Assisted Fund of TheCommunity Foundation of theNational Capital Region

Bart FriedmanGE FoundationJeffrey W. GreenbergThe J.P. Morgan Chase Foundation The Korea FoundationLaw & Economics Consulting Group,

Inc.Estate of Henrietta LockwoodLuso-American FoundationNational Defense UniversityGovernment of NorwayMaconda Brown O’Connor, Ph.D.John M. Olin Foundation, Inc.The David and Lucile Packard

FoundationFrank H. PearlPfizer Inc.Phoenix Satellite Television Holdings

LimitedRutgers,The State University of New

JerseyJohn L.ThorntonThe Tinker Foundation, Inc.U.S. Department of Housing and

Urban DevelopmentThe Urban InstituteWellPoint Health Networks Inc.Stephen M.WolfEzra K. Zilkha

$25,000 to $49,999Robert John AbernethyAlcoa FoundationAmerican Express FoundationAmerican Honda Motor Co., Inc.AventisThe Bank of America Foundation,

Inc.Rex J. BatesAlan R. BatkinThe Boeing CompanyBP America, Inc.Eli BroadCaterpillar Inc.Center for Global DevelopmentChevronTexaco CorporationCitigroup Global Markets Inc.Citizens Bank FoundationRobert A. DayDistrict of Columbia Primary Care

AssociationThomas E. DonilonWilliam A. DunnFord FoundationHarry FreemanCyrus F. and Mitzi Freidheim, Jr.German Institute for International and

Security AffairsRollin M. Gerstacker FoundationThe Philip L. Graham FundWilliam T. Grant FoundationWilliam A. Haseltine, Ph.D.The Heinz EndowmentsSamuel J. HeymanJoel Z. HyattITOCHU International Inc.Johns Hopkins UniversityJohnson & Johnson Family of

CompaniesMichael H. JordanNemir KirdarThe Embassy of the Republic of

KoreaDaniel H. and Sunita LeedsLocal Initiatives Support CorporationMatsushita Electric IndustrialUniversity of MichiganMicrosoft CorporationEric M. MindichAllen J. ModelMario M. MorinoEmbassy of the NetherlandsNew School UniversitySamuel Pisar, Ph.D.Prince Charitable TrustsSteven Rattner and P. Maureen White

Foundation, Inc.RaytheonThe Rockefeller FoundationFelix G. RohatynRalph S. SaulAlfred P. Sloan FoundationVincent J.TrosinoU.S. Environmental Protection Agency

University of Wisconsin–MadisonVerizon CommunicationsVisa U.S.A. Inc.John C.WhiteheadThe World Bank

$10,000 to $24,999Aon CorporationAramco Services CompanyAutomatic Data Processing, Inc.BellSouth CorporationBertelsmann StiftungThe Boston Consulting Group, Inc.Bristol-Myers Squibb FoundationThe Andrea and Charles Bronfman

FundRhoda W. BrownsteinRichard C. BushCargill, IncorporatedThe Carlyle GroupCenter for Policy StudiesCIG International, Inc.CIGNACivil Justice Reform GroupA.W. ClausenThe Cleveland FoundationThe Community Foundation of

LouisvilleCummins, Inc.DoubleClick Inc.The Dow Chemical CompanyMario DraghiEastman Kodak CompanyJulie FinleyRichard W. FisherFord Motor Company FundEmbassy of FranceGeneral Motors CorporationGoldman, Sachs & Co.Jerome H. Grossman, M.D.Marion GuggenheimAgnes GundJames A. HarmonF. Warren HellmanCynthia HelmsHewlett-PackardJapan Bank for International

CooperationThe Kansai Electric Power Company,

Inc.Herbert M. KaplanJames M. Kemper, Jr.Brenda R. KiesslingPeter and Elbrun KimmelmanMarie L. KnowlesKorea International Trade AssociationMichael A. LacherPatrick J. LandersPhilip MallinckrodtMarathon Oil CorporationRobert E. MarksMarubeni America CorporationThe McGraw-Hill Companies, Inc.Robert S. McNamara

HONOR ROLL OF CONTRIBUTORS

DA

NIE

L B

AY

ER

41

Merrill Lynch & Co., Inc.Mitsubishi International CorporationMitsui & Co. (U.S.A.), Inc.Morgan StanleyNEC USANERANetherlands Ministry of Foreign

AffairsDonald E. NewhouseNissho Iwai FoundationNovartis Pharmaceuticals CorporationNTT USANYK LineEiji OnoPACCAR FoundationPepco Holdings, Inc.The Pittway Corporation Charitable

FoundationB. Francis Saul, IIMichael P. SchulhofThe Paul D. Schurgot Foundation,

Inc.Shell Oil Company FoundationThe St. Paul Travelers Companies, Inc.Andrew P. and Patricia SteffanSumitomo CorporationGovernment of SwitzerlandThe University of SydneyTaiwan Cement CorporationTaiwan Semiconductor Education and

Culture FoundationNelson TalbottToshiba America, Inc.Tudor Investment CorporationThe USAA Foundation,A Charitable

TrustU.S. Department of TransportationUnion Pacific Railroad CompanyThe Washington PostHarvey L.WeissJames D.WolfensohnWyethThe Xerox FoundationDaniel H.Yergin and Angela Stent

$5,000 to $9,999Leonard AbramsonAmerican Society of the French

Legion of HonorRonald M.Ansin and Mayor Jim

StorkElizabeth E. BaileyThe Bank of Tokyo–Mitsubishi, Ltd.Bank One Richard A. BartlettErnest A. Bates, M.D.Walter E. BeachGreg BehrmanPeter L. Briger, Jr.John BrockChristopher H. BrowneConrad CafritzWilliam M. CameronCaterpillar Foundation

Ellen Chesler and Matt MallowHong Ching-SonGeoffrey J. ColvinCorning Incorporated FoundationJay and Patrisha Davis CoupeArthur B. Culvahouse, Jr.Alan CurtisKenneth W. DamMarcia W. DamD. Ronald Daniel and Lise C. ScottJudy T. DavisBruce B. DaytonGovernment of the District of

ColumbiaDomitilia M. dos SantosAnthony DownsCharles W. Duncan, Jr.Eli Lilly and Company Foundation Jenfei FanAlan FleischmannThe Lee and Juliet Folger FundJonathan H. FrancisTom FraserDavid FriendAnn M. FudgeThe Furth Family FoundationRichard N. GoldmanLincoln GordonJeffrey C. GoreMorton GoulderVartan GregorianPatrick W. and Sheila Proby GrossJohn H. GutfreundPeter E. and Mimi HaasJames HackettSamuel Hellman, M.D.Robert A. HelmanHarold HestnesMarshall M. and Doris B. HollebRoy M. HuffingtonJohn W. and Pamela HumphreyFrancis O. HunnewellShirley Ann Jackson, Ph.D.Martin JacobsonJanet M. JohnsonThe Fletcher Jones FoundationRobert S. KaplanJames C. KautzThomas L. KempnerThe F. M. Kirby Foundation, Inc.Robert P. KogodHenry R. KravisMarc E. LelandBruce K. MacLauryMichael MaharamStephen MaharamEdward J. MathiasHerbert P. McLaughlin, Jr.Thomas G. MendellClifford L. MichelNational Council of Applied

Economic ResearchAugustus K. OliverJohn E. Osborn

John G. PoppWilliam F. PoundsJ.Woodward RedmondMarie RidderCharles W. RobinsonJames D. Robinson, IIIDaniel and Joanna S. RoseJamie S. RubinStanley M. Rumbough, Jr.Henry B. SchachtLeonard D. SchaefferSheldon and Elinor A. SeevakJohn A. ShaneAlan B. SlifkaRobert E. and Emily L. SmithRobert SolomonHelmut SonnenfeldtJoan E. SperoMyron SponderFrederick StavisJoshua L. SteinerStrobe Talbott and Brooke ShearerAndrew H.TischToyotaU.S. Department of LaborU.S. Department of StateAntoine W. van AgtmaelEnzo ViscusiJames M.WalshHermine WarrenEric WeinmannMalcolm H.WienerWiley, Rein & Fielding LLPJames M.WoottonWorld Zionist Organization

$500 to $4,999Robert E.AsherMartin N. BailyZoë BairdBB & TDaniel J. Callahan, IIIMorton CohenThe Doctors CompanyDouble H Housing CorporationDraper and Kramer FoundationEaton CorporationHenry L. Gates, Jr., Ph.D.Gertrude GreensladeRobert D. HaasLee H. HamiltonRon HaskinsNancy M. Hewett, Ph.D.The Hillman CompanyRoland A. HooverDavid P. HuntThe JBG CompaniesAnn and Vernon E. Jordan, Jr.Kaiser PermanentePhillip KaiserLea KenigDouglas KiesslingMacy’s East, Inc.David O. Maxwell

Donald F. McHenryPriscilla J. McMillanMary Patterson McPhersonNathan Associates, Inc.Henry Oechler, Jr.John F. OlsonWilliam A. OwensPaul L. Peck, Jr.John Edward PorterPrincipal Financial Group Foundation,

Inc.Quadrangle Development GroupDorothy P. RiceRozanne L. RidgwayAlice M. RivlinJudith Rodin, Ph.D.Blair RubleWarren B. RudmanFrancis H. SchottRichard W. Snowdon, IIIS. Frederick StarrLinda G. Steckley and Peter A.WeitzelSunTrust Banks, Inc.John TrainTranswestern Commercial ServicesLaura D’Andrea TysonPaul A.VolckerWalker & DunlopWest GroupKaren Hastie WilliamsYMCA of Metropolitan WashingtonZachry Construction Corporation

Additional DonorsMichele D. BertrandJohn BrownRichard BrownPeter ClementLawrence W. CrispoJean DavisCraig T. EnochHarvey GalperRaymond L. GarthoffGerson Lehrman GroupRobert M. HellerEsther V. HewettRoslyn KaiserBruce KatzKimberly KayGeorge KoltHerbert S. LevineJohn LinkerMark C. MedishRichard MilesBruce ParrottJudyth PendellWilliam B. QuandtCharles B. Saunders, Jr.Andrew SolomonEdwin M.TrumanLloyd UlmanGary Wenell

40

STATEMENTS OF ACTIVIT IESYears Ended June 30, 2004 and 2003 (in thousands)

TEMPORARILY PERMANENTLY 2004 2003UNRESTRICTED RESTRICTED RESTRICTED TOTAL TOTAL

OPERATING REVENUESInvestment return designated for operations $10,503 $10,503 $11,191 Grants and contracts 530 $26,257 26,787 12,107Contributions 3,096 555 3,651 2,586Conferences 3,132 3,132 3,566Brookings Press 2,765 2,765 2,654Information Technology Services 55 55 49Interest and dividends 7 7 27Rental income, net 61 61 300Visiting scholars 375 375 244Other income 358 358 86Net assets released from restrictions-

Grants and contracts 17,137 (17,137) 0 0Total Operating Revenue 38,019 9,675 47,694 32,810

OPERATING EXPENSESOperating programs:

Economic Studies 10,428 10,428 9,765Foreign Policy Studies 7,157 7,157 6,493Governance Studies 4,283 4,283 6,073Other research 771 771 217Center for Public Policy Education 4,010 4,010 3,629Brookings Press 3,337 3,337 3,140Communications 989 989 1,104

Total Operating Programs 30,975 30,975 30,421Supporting services:

Management and GeneralInformation Technology Services 2,156 2,156 2,199Administration 3,761 3,761 3,845Interest expense 111 111 142Post-retirement benefits 746 746 743

Total management and general 6,774 6,774 6,929Development 1,927 1,927 1,875

Total Operating Expenses 39,676 39,676 39,225Operating revenues over (under)

operating expenses (1,657) 9,675 8,018 (6,415)

NON-OPERATING ACTIVIT IESInvestment return in excess of amountsdesignated for operations:

Realized gain (loss) on sale of investments 9,100 9,100 (10,880)Unrealized gain from investments 21,203 21,203 15,192Interest and dividends, net 1,855 1,855 3,261Investment income allocation (10,503) (10,503) (11,191)Contributions-Permanent Endowment 1,669 1,669 215

Change in net assets from non-operatingactivities 21,655 1,669 23,324 (3,403)

INCREASE (DECREASE) IN NET ASSETS 19,998 9,675 1,669 31,342 (9,818)Net assets at the Beginning of the Year 155,096 16,971 44,795 216,862 226,680Net assets at the End of the Year $175,094 $26,646 $46,464 $248,204 $216,862

John L.Thornton Chair of the BoardThe Brookings Institution

Strobe TalbottPresident The Brookings Institution

Zoë Baird President The Markle Foundation

Alan R. Batkin Vice Chairman Kissinger Associates Inc.

Richard C. BlumChairman and PresidentBlum Capital Partners L.P.

James W. Cicconi General Counsel and

Executive Vice President AT&T

Arthur B. Culvahouse Jr.ChairO’Melveny & Myers LLP

Alan M. Dachs President and CEO Fremont Group

Kenneth W. DamMax Pam Professor

of American & Foreign LawUniversity of Chicago Law School

Thomas E. DonilonExecutive Vice President Law and PolicyFannie Mae

Mario DraghiVice Chairman and Managing

DirectorGoldman Sachs International

Kenneth M. DubersteinChairman and CEOThe Duberstein Group Inc.

Lawrence K. Fish Chairman, President and CEOCitizens Financial Group Inc.

Richard W. FisherVice ChairmanKissinger McLarty Associates

Cyrus F. Freidheim Jr.Chairman of the Board and CEO

(Retired)Chiquita Brands International Inc.

Bart Friedman Senior Partner Cahill Gordon & Reindel

David FriendGeneral Partner Orchid Partners

Ann M. FudgeChairman and CEOYoung & Rubicam Inc.

Jeffrey W. Greenberg

Brian L. Greenspun President and Editor Las Vegas Sun

William A. Haseltine Ph.D.PresidentHaseltine Associates

Teresa Heinz (leave of absence)Chairman Heinz Family Philanthropies

Samuel Hellman M.D.A.N. Pritzker Distinguished

Service ProfessorThe University of Chicago

Joel Z. HyattCEOINdTV LLC

Shirley Ann Jackson Ph.D.President Rensselaer Polytechnic Institute

Ann Dibble Jordan

Michael H. JordanChairman and CEOEDS Corporation

Marie L. Knowles Executive Vice President and

CFO (Retired)Atlantic Richfield Company

(ARCO)

Harold Hongju KohDeanYale Law SchoolYale University

William A. OwensPresident and CEONortel Networks

Frank H. PearlChairman and CEOPerseus L.L.C.

John Edward PorterPartnerHogan & Hartson

Steven Rattner Managing Principal Quadrangle Group LLC

Haim SabanChairman and CEOSaban Capital Group Inc.

Leonard D. SchaefferChairman and CEOWellPoint

Lawrence H. SummersPresidentHarvard University

David F. SwensenChief Investment OfficerYale University

Vincent J.Trosino President, COO and

Vice Chairman of the Board State Farm Mutual Automobile

Insurance Company

Laura D’Andrea TysonDeanLondon Business School

Beatrice W.WeltersFounderAn-Bryce Foundation

Stephen M.Wolf Managing PartnerAlpilles LLC

Daniel YerginChairmanCambridge Energy Research

Associates

HONORARY TRUSTEESLeonard Abramson Consultant and Member of the

Boards of Directors Children’s Hospital of Philadelphia

and Johns Hopkins University

Elizabeth E. Bailey Chair and John C. Hower Professor

of Business and Public PolicyThe Wharton School University of Pennsylvania

Rex J. Bates R.J. BATES

Louis W. Cabot Chairman Cabot-Wellington LLC

A.W. Clausen Chairman and CEO (Retired)Bank of America Corporation

William T. Coleman Jr.Senior Partner and Senior

Counselor O’Melveny & Myers LLP

Lloyd N. Cutler Senior Counsel Wilmer, Cutler, Pickering, Hale and

Dorr LLP

D. Ronald Daniel Director McKinsey & Company, Inc.

Robert A. Day Chairman and CEO Trust Company of the West

Bruce B. Dayton

Charles W. Duncan Jr.Chairman Duncan Interests

Walter Y. Elisha Chairman and CEO (Retired)Springs Industries Inc.

Robert F. Erburu Chairman of the Board (Retired) The Times Mirror Company

Henry Louis Gates Jr. Ph.D.Chairman Department of African and African

American StudiesHarvard University

Robert D. Haas Chairman of the Board Levi Strauss & Co.

Lee H. Hamilton President and DirectorThe Woodrow Wilson International

Center for Scholars

F.Warren Hellman Chairman Hellman and Friedman LLC

Robert A. Helman Senior Partner Mayer, Brown, Rowe & Maw

Roy M. Huffington Chairman and CEO Roy M. Huffington Inc.

James A. Johnson Vice ChairmanPerseus L.L.C.

Vernon E. Jordan Jr.Senior Managing Director Lazard Frères & Co. LLCOf CounselAkin Gump Strauss Hauer & Feld

LLP

Breene M. Kerr President Brookside Company

James T. Lynn CEO (Retired)Aetna Life & Casualty Co.

Jessica Tuchman Mathews President Carnegie Endowment for

International Peace

David O. Maxwell Chairman and CEO (Retired)Fannie Mae

Donald F. McHenry Distinguished Professor in the

Practice of Diplomacy andInternational Affairs

School of Foreign ServiceGeorgetown University

Robert S. McNamara Former President The World Bank

Mary Patterson McPherson Vice President The Andrew W. Mellon Foundation

Arjay Miller Dean Emeritus Stanford Graduate School

of Business

Mario M. MorinoChairman and Managing DirectorMorino Group

Maconda Brown O’ConnorPh.D.

Chairman of the BoardThe Brown Foundation, Inc.

Samuel Pisar Ph.D.International Lawyer New York and Paris

J.Woodward Redmond President J.W. Redmond & Company

Charles W. Robinson President Robinson & Associates, Inc.,CBTF Co., and M Ship Co.

James D. Robinson IIIChairmanRRE Ventures

Judith Rodin Ph.D.President Emerita and Fox

Leadership Professor University of Pennsylvania

Warren B. Rudman Of Counsel Paul,Weiss, Rifkind,Wharton

& Garrison

B. Francis Saul IIPresident and Chairman B.F. Saul Company

Ralph S. Saul Former Chairman CIGNA Corporation

Henry B. Schacht Director and Senior AdvisorLucent Technologies Inc.

Michael P. Schulhof Private Investor

Joan E. Spero President Doris Duke Charitable Foundation

John C.Whitehead ChairmanLower Manhattan Development

Corporation

James D.Wolfensohn President The World Bank

Ezra K. Zilkha President Zilkha & Sons Inc.

4342

STATEMENTS OF F INANCIAL POSIT ION

As of June 30, 2004 and 2003 (in thousands)

2004 2003

ASSETSCurrent Assets

Cash and cash equivalents $1,787 $3,038 Accounts receivable 1,416 2,582Grants and contracts receivable, current portion 13,573 6,209Pledges receivable, current portion 523 785Accrued interest and dividends 103 231Inventory 817 778Other assets 337 262Total current assets 18,556 13,885

Grants and contracts receivable, net of current portion 7,185 3,772Pledges receivable, net of current portion 1,087 83Investments, at fair value 219,286 197,114Land, buildings and equipment, net 11,999 12,796TOTAL ASSETS $258,113 $227,650

LIABIL IT IESCurrent Liabilities

Accounts payable and accrued expenses $2,312 $3,406 Accrued compensated leave 1,478 1,351Deferred revenue 695 856Note payable, current portion 450 450Total current liabilities 4,935 6,063

Note payable, net of current portion 600 1,050Post-retirement benefit obligation 4,374 3,675TOTAL LIABILITIES $9,909 $10,788

NET ASSETSUnrestricted $175,094 $155,096Temporarily restricted 26,646 16,971Permanently restricted 46,464 44,795

Total net assets 248,204 216,862

TOTAL LIABILITIES AND NET ASSETS $258,113 $227,650

54%

1%

2%Miscellaneous

7%

8%CPPE

28%

Gifts and Grants

Endowment

Publications

Government

Operating RevenuesProgram Expenses32%Economic Studies

2%Other Research

3%Communications

6%Development

10%Publications

12%CPPE

13%Governance Studies

22%Foreign Policy Studies

Notes:As a nonprofit and scientific organization, Brookings is exempt from federal income taxes under section501(c)(3) of the Internal Revenue Code.The Insti-tution also qualifies as a publicly supported organiza-tion under section 170(b)(1)(A)(vi) of the code.TheBrookings policy is to make an annual investmentspending allocation for the support of operations.Thisamount is calculated based on 70% of the prior year’sspending adjusted for inflation and 30% of 5% of themarket value of the investments as of December 31 ofthe prior fiscal year.A copy of the Institution’s auditedfinancial statements is available by request. Certainreclassifications of prior year balances have been madeto conform to the current year presentation.

TRUSTEES

■ Brookings’s rank among Washington think tanks in press

citations: 1

■ Average monthly total of Brookings mentions in various

print,TV, radio, wire, and web outlets: 1,164

■ Average number of Brookings mentions each month in the

New York Times, Washington Post, and Los Angeles Times: 67

■ Number of op-eds written by Brookings scholars for U.S.

and international newspapers: 188

■ Number of op-eds by Brookings scholars published in the

New York Times, Washington Post, and Los Angeles Times: 57

■ Number of TV and radio interviews conducted in the

Brookings Studio: 1,028

■ Number of subscribers to the Brookings Alert on the web

(as of October 1): 22,500

■ Number of employees at the Brookings Institution’s head-

quarters: 281

■ Number of Brookings resident and nonresident scholars: 147

■ Number of Brookings scholars who are resident senior

fellows: 43

■ Number of Brookings scholars who are nonresident senior

fellows: 44

■ Number of guest and visiting fellows: 44

■ Number of research assistants: 43

■ Number of current Brookings scholars who have served

in the government or in an international agency: 65

■ Number of times that Brookings scholars testified at Con-

gressional hearings: 27

■ Number of Brookings scholars who testified before the

National Commission on Terrorist Attacks Upon the

United States (9/11 Commission): 4

■ Number of languages spoken by Brookings scholars: 14

■ Number of Policy Briefs published: 21

■ Number of books published by the Brookings Institution

Press: 52

■ Number of scholarly journals published by Brookings: 8

■ Number of articles written for the Brookings website: 47

■ Number of public briefings at Brookings: 56

■ Average audience size for a briefing in Falk Auditorium: 107

■ Dollar value of the Brookings Institution endowment (as

of June 30, 2003): $219,286,000

44

Brookings by the Numbers(July 1, 2003–June 30, 2004)

BROOKINGS