National Committee on American Foreign Policy

Good evening. I thank the Committee for this award. It is a great honor to receive it. George Kennan has had a major impact on American foreign policy for more than 50 years. He has been our leading expert on the Soviet Union. He not only was alert to the Soviet threat but also formulated the key U.S. response that shaped our foreign policy from the 1940s until the collapse of the Soviet Union.

Today we face a very different set of foreign policy issues no less momentous for the well-being of our country. A nation's foreign policy is determined by its own national interest. Basically our foreign policy is based on security and economic matters.

I want to dwell for a moment on the economic component of our foreign policy or, realistically, geoeconomic matters. U.S. leadership has played a major role in promoting free and fair trade throughout the world. Free trade has also been a clear benefit to the global economy. Free trade and globalization are not without problems. However, these problems should not be a reason for a dramatic change in policy. The world needs more free and fair trade, not less.

In the heat of our election year, when jobs will be an issue, our commitment to free trade will be tested. Outsourcing is already a major issue. The bottom line, however, is that outsourcing has been a benefit to U.S. consumers. Interference in a free choice of business to outsource would undermine trade in services and lead us down the slippery slope of protectionism. We also benefit from "insourcing," which has not been discussed at length. (We have focused only on an incomplete part of the issue.)

Nonetheless, the U.S. trade deficit is real. What is needed is for corporate America to be more creative in developing new industries and products. This calls for managers to be less risk averse. Corporate America has become more reluctant to take risk in response to the new rules and regulations put in place by Sarbanes Oxley. The environment is not conducive to creativity. Companies would rather grow profits by expense reduction.

If we unshackle business, we can create the jobs that are needed without resorting to protectionism. Even in the Middle East and Afghanistan, where there are some significant historic, tribal, and religious conflicts to surmount, no lasting peace will be achievable without a commitment to improving the economic lives of the inhabitants of the region. Not long ago I met with the leaders of Georgia and Azerbaijan. They put their economic needs first. And more recently I was in Iraq and had a chance to meet with some local leaders in Mosul. They expressed a strong desire for foreign direct investment to get their decimated economy moving again. Giving people the hope that they can earn a livelihood and provide for their families is an essential foundation for peace and hence should be an essential component of our foreign policy.

Maurice R. Greenberg is the chief executive officer of American International Group.

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* Remarks made to the National Committee on American Foreign Policy on the occasion of receiving the George F. Kennan Award on March 16, 2004.

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