spect this would be one of those topics in those discussions? sen. roberts: undersecretary scuse. mr. scuse: i defer to my colleague. sen. roberts: senator stabenow. sen. stabenow: thank you, mr. chairman. i had the same conversations with the secretary of agriculture about the process. they were indicating about 80% of the farmland is owned by the government. about 20% by the private sector. i said, can we sell to the 20%? no. it has to all go through the same process. there's a lot of change that needs to occur. i do want to stress that we have tremendous opportunities. senator leahy was talking about products in new zealand. they are getting powdered milk from new zealand.

milk producers would be happy to abide. others would as well. we are a whole lot closer. potatoes and beans and a whole range of things are available. apples seem to be a delicacy at christmas time. i said, we can give you christmas every day. we have a lot of opportunities. let me ask undersecretary scuse. there is an expression that says, the first step to achieving success is showing up. i think that is really true on trade. also, our ability to market. you mentioned the market access program and the other tools at the department of agriculture. i wonder if you might speak more to what -- how would you envision the usda's programs going forward, creating opportunities and tools for american agriculture? mr. scuse: again, if we were

allowed to use our marketing programs, such as our market access program, it is an area where we work with operators to go in, to do the trade missions, to look at ways to develop markets and what the actual needs are through the market assistance program. help our producers, helped the commodity groups make inroads into establishing markets in that country. the development program was where we worked with cooperators to do studies on what the demands are for different products. if we were allowed to use these products as well as do a trade mission to cuba, i think it would go a long way in getting back much of the market that we have lost in the past. the lack of the ability to use these programs as well as our

inability to extend credit is the main issue why we've lost market share since 2008. the economists at the university of florida did a study, and what their study showed was that the biggest loss, the reason for the most loss in our market share was our inability to extend credit, as our competitors are doing. the playing field right now is not level. a level playing field, they are going to buy the best products from the united states. sen. stabenow: we heard that over and over again when i spoke to the minister of agriculture in cuba. we heard the same thing with the foreign minister, talking about the lack of credit. when we look at how we get through that, i wonder if anyone wants to comment further on the specifics of what we need to do

to make sure that process is open. the president has taken the first step, taking out the intermediary, being able to allow payment when it is in process and arrives. but we all know that the issue of credit opportunities, other credit opportunities, is a serious issue for us. what do we need to do? is this all about lifting the embargo completely, or are there other things we should be doing? mr. smith: i could start out. at least one provision that is at issue is the statute that prohibits any financing of goods to go to cuba other than third country financing or payment by cash in advance. we are not allowed to offer any payment deals other than going

through a third country to receive that financing, or to pay the cuban importer in advance of the goods being turned over. i think that is what my colleague has indicated is necessary to be able to extend credit. we would need to remove that prohibition. mr. borman: i would also add clarity on the provision that appears to require individual license for any ag export to cuba, to change that, or make it clear that we could facilitate ag exports to cuba. sen. stabenow: and undersecretary scuse, is that those two things specifically, or is there anything from the usda standpoint that we need to be changing to create opportunities? mr. scuse: i think those are the biggest changes that we need to have made so that we could use our marketing money, as well as the commodity groups.

they are not allowed to use their checkoff funds in cuba either. those changes would allow us to do marketing in cuba as well as give us the ability to extend credit, to put us on a level playing field with our competitors. sen. stabenow: thank you. mr. chairman, there's a hearing going on. i'm going over there for a moment, and then i will come back. be on your best behavior. sen. roberts: i will try to do that. i would urge you to do the same on behalf of the fair trade bill. senator goes in. >> thank you, mr. chairman. thank you all for holding this important hearing. i believe that the way to change the world is through personal relationships. if you are serious about bringing change to cuba, we need to expose the cuban people to america. we are not only trading our

products, we are trading our democratic ideals. cuba represents a remarkable opportunity for cubans to gain access to safe affordable, and high-quality agricultural products from the united states. i'm encouraged by recent steps to reform the relationship. boosting our commercial ties would have significant benefits for our economies. easing finance and travel restrictions will result in an increase of over $35 million in agricultural exports from arkansas annually. mr. scuse, let's talk again about what percentage of the food that cuba consumes is actually grown in cuba. mr. scuse: according to the world food program, 80% of their food is imported. sen. boozman: and what countries

-- you mentioned vietnam. mr. scuse: vietnam is supplying half their rice. corn is coming from brazil and argentina. wheat is coming from the european union and canada. our sales, currently 50% of our sales are poultry. 25% of our sales are soybean meal and soybeans. that makes up three quarters of the sales from the united states. sen. boozman: what about the quality of a vietnam rice compared to american rice? mr. scuse: senator i'm partial to u.s. products. i said earlier, i think our farmers and ranchers produce the best products in the world. i'm going to stick to that. sen. roberts: said very well. sen. boozman: exactly. i think that is important in the sense that it is not only an

opportunity, but it is an opportunity for the cuban people. mr. smith, you've talked about easing financing and things like that. out of the things we are doing what is the most important thing we need to be doing? mr. smith: i think when you started out you talked about travel between the american people and cubans. i think that is right. as the president said, the best ambassadors for america can be ordinary americans going to travel and embodying our ideals. i think we have authorized travel within the 12 categories that we've had. congress has prohibited any further opening for tourist travel. we also have a statutory prohibition with respect to private assistance to cuba for

exports, but also for u.s. government exports. sen. boozman: do you agree with that mr. borman? mr. borman: i certainly do. there's also a prohibition on u.s. government export promotion for trade with cubans. that limits the commerce department's ability to carry out the work that it does in virtually every other country. sen. boozman: even with the changes we've made, is it fair to say that the majority of restrictions regarding trade are still in place? mr. smith: it is true that most other transactions remain prohibited. sen. boozman: so we've got a good step in the right direction but we've got a long way to go. we've talked about financing. are you aware of any other

countries that go through the financing scheme that americans go through? mr. borman: i'm not aware of any other country that has those type of restrictions. we do trade in approximately 200 countries around the world. sen. boozman: so america is unique in that regard. in dealing with the cubans, how does cuba differ from other major export markets, in terms of how normal commercial operations work? mr. scuse: as i pointed out earlier, we are restricted to dealing with one state owned corporation, alimport for access for our u.s. products. that is unique.

it does present its own problems. sen. boozman: mr. borman. mr. borman: my understanding as that for virtually all imports they have to go through some import agency. mr. smith: the other difference is the financing terms. in most other contexts, the exporter could get financing of some kind from the u.s. or the importer. sen. boozman: thank you, mr. chairman, and thank you all for being here. sen. roberts: senator donnelly. sen. donnelly: thank you. i'm a big supporter of increasing exports to our markets and i'm intrigued to the possibility of opening the cuban market. the concern is, i want to make sure that the cuban people actually benefit from it. what can we do from a policy

perspective to better ensure that the benefits of trade reach the cuban people, as opposed to all the products going into one agency and then being divvied out? what do you see as the keys to making sure the cuban people benefit from this? mr. scuse: senator, i think that by normalizing relations, by breaking down the restrictions we have, the cuban people are going to benefit from that right away. if you look at the cost of transportation rice coming from vietnam, corn coming from argentina, wheat coming from the european union, we have a tremendous advantage in logistics and being able to supply them top-quality products at what i would believe would be a more reasonable price than what they are currently paying for shipping from those

countries. i would think there would be an immediate benefit. could there be additional benefits if we are treated like other countries and don't have the go through one state owned corporation for our products, which i hope would happen -- i think there would be additional benefits. sen. donnelly: one of my concerns is going through alimport, the state agency. we talk about the higher quality. i have been to my friend senator boozman's home state. the products produced in my home state and all of us, we talk about the benefits of lower price, easier transportation. the question is, how do we make sure that lower price gets passed on, so the cuban people are not paying the same, and this group -- who will set it, in effect?

mr. scuse: i understand the concerns. hopefully, once relations are normalized and trade is liberalized, i would hope that we would be treated like the other countries that are currently trading with cuba, so they don't have to go through one state owned corporation. sen. donnelly: and this would be for any of you. what canadian products are sent to cuba, how are they entered into the country? who are they distributed through? do you know? do they have to go through alimport? mr. scuse: to the best of my knowledge, no. sen. donnelly: one of the points i would like to make is, as you move forward with this, one of my concerns is that we be treated the same as everybody else.

that is the way the cuban people benefit, that our products are able to go directly to the cuban people, that we are treated the same and much of what we look at as we move forward will be dependent on that being incorporated into any agreement that comes through. thank you, mr. chairman. sen. roberts: senator hoven. sen. hoven: thank you. i want to pick up on a point that senator donnelly is making. there has to be a carrot and a stick to what we are doing here. we want to expand trade. that is good for our farmers. at the same time, we want to put more pressure on the cuban government to change its policies on human rights. what can we do as we work on trade to make sure that we are doing that? how do we get these products down to the small businesses and the entrepreneurs that are trying to make something happen

in terms of free enterprise in cuba? and how do we create some pressure on the cuban government, on the castro regime, to change in regard to human rights? senators -- mr. scuse: senators, you well know agriculture throughout history has been a way to break down some of the barriers that we have faced. if we can open up trade for cuba and because they are only supplying 20% of what they currently consume, but the demand is there there is a way to help build the agricultural sector in the country, which would create jobs, income, more demand.

as that happens, i think you are going to see an awareness. just opening the country and normalizing relations, there will be an awareness of the people that i don't believe currently exists. i think this is a really good first step to helping the cuban people. our policies over the last 50 years have not been one that has provided that openness, that transparency, and the education about the united states that i think normalizing relations and opening trade well. sen. hoeven: mr. borman, you and i talked about how to make sure these restaurants and other small businesses that people in cuba are trying to get going -- how do we support that effort? mr. borman: several ways. one is, the folks who make the exports from the united states

know who they are intended for and they know those individuals because they are often relatives. if the items don't get to them, they will hear about that. we have a good working relationship with a lot of the exporters to make sure the items go way they are supposed to go. sen. hoeven: now you are starting to help people, entrepreneurs, the kind of things that hopefully will create some pressure for a change. do you have a way to enforce that? if we have products going in there, to make sure they are getting to these small businesses? the other thing is payment. how are you going to make sure that people get paid for products they ship into that market? mr. borman: so far, we have not heard any complaints of u.s. exporters not getting paid. sen. hoeven: that's because the old policy was cash in advance. mr. borman: it is still cash on delivery. sen. hoeven: cash when you change title.

the product is delivered. it is there. which limits your ability to go get it. mr. borman: if that happens, we will find out quickly. sen. hoeven: getting it to those small businesses, how do you enforce that? mr. borman: we make sure that the folks who want to make exports understand who the small businesses are. two, the cuban people are very aware of these changes. if they don't see changes, that is going to create more pressure on the government internally. we have seen exports in the private sector. we have seen that in the trade data. mr. smith: i think we can continue to focus on the cuban people. the changes we made were focused on the ability of the cuban people and the strength of the cuban people. we increased their ability for communications internet, other things. we also increased the limits on

remittances, the financial amounts that u.s. citizens can give to cubans. we increased amounts for other things that would help agricultural development as well. those were very much focused on the individual cubans, the small cuban development businesses that might want to grow. that was the focus for our change. sen. hoeven: i think it is important that you are focused on that area, including putting information into that market every way you can. provide people with more information. i think that also helps with their efforts to force change from the inside. final question for mr. scuse what food products do you see as opportunity areas? you said three fourths of our exports now our poultry and soybeans. mr. scuse: i think we've got a

great opportunity to increase our exports of corn. there's no reason why the european union and canada have the wheat market. that should also be ours. i think there's a great opportunity to have the rice business in cuba. as i pointed out earlier in this meeting, there's a great opportunity for dairy. sen. hoeven: thank you. sen. roberts: i thank the senator and thank the panel for responding. >> thank you, mr. chairman. we've asked you three or four times about alimport. y'all said you hope that will see this restriction lifted. i can remind you, hope is not a strategy. we are hopeful that you will take the concern that is being expressed today about alimport

back to your smaller groups as you discuss opportunities going forward. we have long been concerned about the extension of credit for ag transactions and trade. hopefully, tomorrow, we are going to take a move in the right direction. i think you have highlighted the number one thing we think we can deal with, which is 908. i support lifting the embargo entirely. that may be a bridge too far for this congress. so we've got to take these baby steps. i have a couple specific questions for you undersecretary. the federal checkoff dollars have not been used for promotion of trade with cuba. the assumption is that this is due to the language of psra, which precludes the use of the united states assistance.

the checkoff dollars are not taxpayer dollars. they are producer dollars. the checkoff program is set so that farmers elect a board who decides how those dollars are used. it is not tax money. as a result, usda recognizes the difference between your government assistance programs and producer-raised and controlled checkoff funds, and can producers utilize their own checkoff dollars for promotion for activities in cuba? if not, why not? mr. scuse: my understanding is that the federal checkoff funds cannot be used for trade promotion in cuba. sen. heitkamp: i'm asking why. mr. scuse: my understanding is, because the current law that is in place. sen. heitkamp: maybe the current law is being broadly interpreted and you might want to go back and take a look to see if we can

make that change without legislative changes. mr. scuse: ok. we will do that. it is my understanding that if there is state checkoff money that can be treated differently. but the federal checkoff money cannot be used. again, we will go back and look at what the law says and if it can be used. sen. heitkamp: i think just to re-examine that policy. mr. smith, i want to go back to the cash in advance, the original definition, and the other changes you are making to facilitate a more efficient and affordable exports to cuba. do you feel like the administration has gone as far as legally possible in terms of the definition, to open up opportunities? were there other things on the table that -- as you discussed

the changes that you did make that you said maybe we can't do that? are there other policy things that were abandoned that we should re-examine? mr. smith: in terms of the restrictions on financing, the definition we used had been in a bill from congress that had been as far-reaching as i had heard in terms of transfer of title and control. it is hard to imagine you could interpret "cash in advance" far beyond transfer of title. it is the last step before you turn over the goods. there has been no other definition that i've heard that could meaningfully interpret that term. sen. heitkamp: so cash in advance means cash in advance. mr. smith: that is what i mean. sen. heitkamp: finally mr. scuse. i know you don't have any boots on the ground in cuba, but you do have folks who follow exports closely. we believe we grow the highest quality products.

cuba has a huge opportunity from my states and the states that are represented in the ag community. given that exports funding is prohibited, are you still allowed to place someone within the have an embassy that makes those contacts and begins to do that groundwork without crossing the boundary, and are you intending to do that at usda? mr. scuse: i don't believe we have an embassy just yet. sen. heitkamp: we are hopeful. mr. scuse: so am i. we can put individuals in there on a short time basis for whatever assistance may need to be needed to look at different projects or help them with different regulations that we may need. that's only short-term. long-term, i would hope that when the day comes, that we have

an embassy there, that we work with the state department, and we would be able to put staff in that embassy to facilitate trade and move american products. sen. heitkamp: how many staff do you have currently in cuba? mr. scuse: to the best of my knowledge, we don't have any at usda. sen. heitkamp: do you believe that you are prohibited from having staff in cuba right now? mr. scuse: i don't know, to be quite honest with you. again, to have full-time staff in cuba, i don't believe we would have the need right now to have any full-time staff until trade is opened. sen. heitkamp: i think you get my intention. we think this is going to happen sooner rather than later. we want to hit the ground running. we would appreciate it if you would look at what opportunities you can avail yourself of today that could, once we get things lined up, can in fact facilitate

further trade. mr. scuse: senator, i believe when that day comes, we will be able to act for a quickly. sen. roberts: senator klobuchar. sen. klobuchar: thank you. mr. scuse, we love you in minnesota. [indiscernible] exactly. as you know, we discussed at that forum, you did a great job about the potential for the u.s. to export products to a country that is just 90 miles off our shores. 11 people -- 11 million people when i went there with senator warner they received the newport that is being built which is a very big ports. it is going to replace the port of havana. when i saw that, i thought, if they are going to sell things in

cuba, we want them to be american goods. i am carrying the bill to lift the embargo. i appreciate the support of the senators. there's other senators that are interested. we know it is going to take a while, but that is truly the way to have some trade with cuba and sell our goods. could you talk about the effect it would have we were to actually lift the embargo? mr. scuse: it would have a tremendous impact on our ability to sell products and greatly increase the amount of product we are selling to cuba. we are looking at about $300 million worth. the study by texas a&m believe that normalize relations and lifting of trade restrictions, that number could be in excess of $1 billion.

with this would also mean to the cuban people, would be the ability to purchase agricultural inputs fertilizer, chemicals and equipment. it would give them also the ability to have agricultural businesses produce more of what they are actual -- their actual demands are in the country, and to create revenue throughout the countryside. and help the cuban people, especially that live in rural areas. it is win for both of us. sen. klobuchar: some argue cuba is a small market and has a lot of poverty. why would this be such a benefit , are there other reasons outside of selling that this could be a benefit to american agriculture? mr. scuse: it is not just selling commodities, but agricultural equipment. it is about the job it will also be creating.

here in the united states. when you look at our exports and hundred $52.5 billion supporting almost one million american jobs, any increase that we are going to be having in sales is increased and american jobs. i think it is also a win for the cuban people, supplying them with the best products that can be purchased. and an opportunity to create jobs there as well. sen. klobuchar: another argument that you don't need to get into but that i have heard that it is often thrown in our country situation with cuba. some believe it could help open up markets for agriculture and other products. i want to ask about foreign competition. we were with the number of investors like to sell and pain. -- brazil and spain. i detected that they might start

taking up as they see the potential for the u.s. coming in. do you think other countries are going to continue to expand their market share? i will never forget being at the port and they said they got computers from china because they could not use u.s. computer companies like most ports. mr. scuse: again, there is opportunities there. but yes, we are going to face competition from those countries that are currently doing business there. if you go back and look at the business that -- the train we had in 2008, 600 $58 million down to $300 million last year. look at the reason why. other countries were able to extend credit we were not. the result of that was substantial us in the cuban market for u.s. product. we are going to face competition from continued -- continued

competition from countries like brazil argentina, canada. sen. klobuchar: one last question. what do you see as the biggest obstacle on the cuban said to increasing american agricultural exports? we clearly have issues with human rights, and it is our hope that as negotiations go forward, it will be part of negotiations. i saw the double currency issue. what do you see as the obstacles to trade? mr. bowman: just more generally the cuban bureaucracy's ability to freely let goods into the country. i think that is historically not the way they have done things. sen. klobuchar: -- mr. smith: also the development of private business. there are money for private businesses and individuals to be

able to import your sen. klobuchar: exactly, i think there are 600,000 entrepreneurs now who have their own currency, but there is still a long way to go. i will say, i saw such a spirit of entrepreneurship there with the people. the people are ahead of the government. i want to thank the chairman for holding this hearing and really being willing to hope that the hearing, as we know this can be controversial, i appreciate you doing it. thank you. >> thank you. senator brown, you might want to put your microphone up. that is senator leahy. what happened to mr. brown? anyway. we will -- >> he lost my train of thought.

two questions. talk to me about what this means what the trade restrictions means to a state like ohio in terms of agricultural exports? mr. scuse: 4s they like ohio what do current restrictions mean? it means it is difficult to get agricultural products into the state -- in from the state into cuba. we are at a tremendous disadvantage. the playing field is not level because we are not allowed to do marketing programs like other countries. we are not allowed to extend credit. the playing field is not level and it creates a great deal of difficulty for us to compete here it against those countries. senator: but tell me what it will mean. mr. scuse: as we eased restrictions, it will be easier for us to get products in there. i went through the list.

right now courtney is coming from brazil and argentina. i think that we should be the number one supplier for recording. we is coming from the european union and canada. that is no reason why that should not come from the united states. 50% of rice is coming from vietnam. we should be the ones supplying rice. there are opportunities for us to ship dairy and dairy products to cuba. when these current restrictions are gone, i think there's a lot of opportunities for those product as well as a lot of others. fruits apples would be another good example of a product that there is a demand for that we could ship down there. i think there is a lot of opportunity, but we need to get the current restrictions lifted and be able to use marketing programs. we need to be a will to extend credit. senator: mr. smith, in light of

the treasury policies changes there was not interest shown by u.s. banks willing to do this trade. has there been issues and problems with establishing correspondent accounts with cuban banks? can you give me your assessment on what is happening? mr. smith: there has been tremendous interest from u.s. financial seasons in terms of engagement in cuba. as far as i'm aware, no u.s. financial institutions have opened accounts there. number of them have decided to begin engagement on the credit card and debit card front. many institutions have talked about concerns over the state sponsor of terrorism designation that still exist, that may be changed. senator: would that be the on switch for correspondent accounts once that is lifted? mr. smith: it could be. we have authorized a but it is up to individual financial

institutions risk appetite and whether there concerns will be ameliorated by the removal of the state sponsor of terrorism designation remains to be seen. senator: one of the things that has changed in today's banking system from 10 years ago but began five years ago with the financial crisis is increasingly have elevated stature their risk offers to make sure they sit at the table to be part of decision-making. is this too risky for bank engagement. in the past, that was -- and look what happened. is treasury talking to risk officers about this issue of risk? injecting data into the conversation in boardrooms, at least in the larger banks, to

help them think through issues of risk? mr. smith: yes almost on a daily basis we are talking to financial institutions and particularly risk officers to make sure they understand the changes we are making. what our policies are and what the requirements are, so they have a chance to dialogue with us. we have had a number of open outreach events where we have financial institutions present but also one-on-one conversations. senator: thank you. mr. chairman. >> i'm going to add one place -- one quick question. director smith, in view of the questions asked by senator brown, i like that term, risk appetite. where did you come up with that? to date have any u.s. financial institutions set up

correspondence accounts with the financial institutions in cuba? how many businesses do you expect to utilize this type of account? mr. smith: i'm not sure where i came up with risk appetite, and sure i heard it somewhere. senator roberts: to unveil little bit. -- two on that a little bit. mr. smith: i will. what we do is authorize certain negativities that we don't require activity -- institutions to engage. senator roberts --: how many? mr. smith: the more u.s. industry wants to trade with cuba, the higher the trade goes the more demand will be on the banks from their clients. to say, we need you to be in their servicing us. i think they treat increase --

as trade increases, the more we increase trade. senator roberts: this concludes the portion this morning. thank you for taking time from your busy schedule to share your perspectives and insights about the opportunities and challenge we placed in expanding trade to cuba. any additional chance be submitted to clarification. be submitted today are by 5 p.m. next tuesday. he invite the second panel to come to the table. thank you very much.

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sen. roberts: i would like to welcome the second panel of witnesses. mr. michael beall. he joins us today on behalf of the national cooperative business association where he serves as the president. and ceo. before joining ncba he served as the missouri credit union association and president and ceo of the maryland district of columbia credit union association he held positions at the council of credit unions and

the north carolina credit union leave. -- read. anybody need credit, see him. welcome, we will wait to introduce the second panelist after you include trade feel free to summarize your comments. mr. beall: good morning chairman roberts. ncba works to bring technical advocacy that helps cooperatives thrive and survive in today's economy. my remarks will focus on the new day in u.s. cuba relations and ways forward to foster better and more productive, positive relationships 22 countries notably through agricultural trade. i want to convey to thoughts regarding u.s. cuban cooperative development. first the u.s. should qqq been corroborated as a fundamental to building market-based economy in cuba that incorporates a business model for member

owners. cooperatives are functioning successful businesses that provide tangible economic ownership and benefits consumers wherever they are found. ncba's optimistic that you cooperatives will be no exception. second, u.s. cooperatives here are ready to assist now. he had already begun to build ties with cuban cooperatives and we can hit the ground running whenever the law permits. the message is simple. put u.s. cooperatives to work with cuban cooperatives. there are 29,000 member owned co-ops in the u.s. including 2 million people. one in three american consumers does business with a cooperatives. consumers and produces -- producers benefit greatly from cooperatives. as well as housing, credit unions, co-ops work.

businesses where members of the enterprise is well-suited for the cuban people and especially in this. of transition, ownership combined with business transition that you process for benefit of -- a form of governance were each member gets one vote are all features that will special appeal as a grow in cuba. understanding is that cuba has begun to change its cooperative laws starting in 2011. making lots of businesses become cooperatives and changing the ownership structure. this is a welcome departure from the other types of event or state owned enterprises. ncba, we had been told by cuban cooperative officials, there are about 5200 currently operating in cuba that contribute 80% of all fruits and vegetables consumed. i all appearances, this cuban

agriculture sector is the foundation for their economic stability and growth. we have taken preliminary steps to a list -- make stronger ties here we established the u.s. cuba cooperative working group last year to explore opportunities and engage. we sponsored a trip last year of co-op leaders, establishing connections. we are hosting a group of leaders the first week of may. in terms of what i have seen, there are challenges. lot of focus on the 19th of these era cars -- 1950's era cars. in the forms we visited, the agriculture equipment is from that area as well. it would be considered vintage. one of the main concerns i saw is none of the cooperatives produced financial statements. they are not able to verify how profitable ar. what are the expenses. more importantly what is the treatment of the state owned

equipment that is being delivered over to co-ops. what is the treatment on the balance sheet of the land that cooperatives are operating on? as cooperatives build relationships with cuban cooperatives, this is where we want to see progress. we want to see proof that the cooperatives are independent and able to manage these assets and not with interference with from the cuban government. i did return very optimistic about the future of our cooperative endeavors. furthermore, the challenges facing co-ops there are educational obstacles. the exact kind of issues that can be addressed by americans. we stand with u.s. co-ops ready to provide this as soon as the legal and governmental issues are resolved. u.s. co-ops are incompatible development tool that can make a difference in developing healthy

and vibrant cooperatives in cuba and that can over time become valuable to both the american and cuban consumer. the legal issues are real and something for us to look to policymakers like you to resolve . ncba is a business group focused on consumer empowerment and economic results, we leave diplomacy to the diplomats. as the new relationship takes shape, we respectfully but forcefully want to remind congress we are here and cooperatives are ready to get to work. cooperatives are an ideal democratic structure and operation that can produce results on the ground. cooperatives are going to help the cuban people develop financially viable member owned is this is that -- businesses that assist in economic empowerment of cuban entrepreneurs. doing so we provide consumers with marketplace choices and

further u.s. interests by demonstrating the benefit of democracy and financial independence. sen. roberts: thank you. now i introduce mr. harris. mr. harris: thank you chairman. i'm here to love them before the committee thank you for the standing invitation to this distinguished witness. he has worked since 1975 and is currently the senior vice president for marketing and risk management mr. harris has struggled to cuba more than 20 times and he has a wealth of knowledge on the practical challenges that america's armors and ranchers face -- farmers and ranchers eighth. he lives in stuttgart arkansas the dub capital of the world. i look forward to hearing his testimony. thank you for being here. mr. harris: thank you senator bozeman.

thank you for the opportunity to appear before the committee. the family owned cooperative was formed in 1921. there are approximately 6000 members in arkansas and missouri the cooperatives markets about a third of the rice grown in the southern united states and 25% of national production. it is a direct exporter. our staff is very well schooled of every day management and logistics and finance. rice land foods is proud to be a member of the u.s. federation. rice is grown in seven states including arkansas, california, louisiana, texas, missouri and florida. nearly half of the groups -- consular grown in arkansas. -- crops are grown in arkansas. we are a member of the u.s.

agriculture coalition for cuba. my objective today's to discuss the past and potential trade relationships between the u.s. and cuba. the future that i believe holds great promise for u.s. rice farmers. united states exports about half of the rice produced annually. kentucky companies to success. -- new markets are key components to success. prior to the u.s. embargo, the island was the number one export destination for american rice. annual shipments reached as much as a quarter of a million metric tons and the u.s. accounted for more than half of cuban rice imports. when u.s. agriculture and food exports were granted what many

believed a broad extension from the embargo. in november 2001, i had the opportunity to make the first cell of u.s. rise in cuba since the embargo was imposed here it --. we developed contract terms for a country which at that time did not purchase goods from the u.s. in more than four years. i found out leadership informed shrewd, and professional. i also witnessed the first shipment of u.s. rice into havana. it was an unforgettable experience to see how excited they were with the quality of rice they had been able to purchase. i thought what can happen when there is are removed and people are allowed to meet common ground for trade. the success of rice in other agriculture products with seriously curtailed following a change by the office of foreign assets control, and the definition of cash in advance in

2005. that exports dropped to zero following this change. currently most imports come from vietnam to cuba. even though we are -- because we are less than 700 miles from havana, we are more convenient. the lifting of embargo and restoration of trade we estimate that the u.s. can gain 20%-30% of cuban rice business within two years or hundred 75,000 tons of rice. we would anticipate the u.s. share of this market which would exceed 50% in five years and could reach as high as 75% or more in 10 years. on january 15, 2015, opec made changes to regulations that allowed the definitions of cash advance to lead to the pre-2005 wording. he applied this measure.

-- we apply this measure. however there are still obstacles. as stated earlier we are seeking normal commercial relations with cuba. this allows u.s. citizens to cap travel and spend money in cuba without restrictions and allows cuba to export goods, as they do with most countries. so they can gain resources and increase demand for u.s. food. it also means permitting the full range of commercial banking and financial relationship to facilitate trade. u.s. rice industry is committed to building product. we have made numerous trips. u.s. rice has spent under $900,000 in rice industry promotion funds since 2003 to promote the high quality and efficient yet u.s. rice in the cuban market. we continue those activities.

to get u.s. rice a chance, the rice industry seek the ultimate lifting of the embargo and the elimination of restrictions. this requires congressional action. thank you. senator: thank you mr. chairman. i'm very pleased to introduce mr. rolf -- ralph kaehler. he has the unique perspective of someone who understands how modernizing our country's relationship with cuba impact farmers at home here at he also understands how i could impact cuba's culture and people. in february is one of the panelists at the cuba forum under secretary's views came out for. it is good to see them here. i look forward to his testimony. thank you. mr. kaehler: thank you chairman

robert and all the members of the committee. thank you for holding this panel. sen. roberts: i understand you have two goalies -- two boys and two girls. i like to take a moment. witness. mr. kaehler: two boys and one daughter-in-law to be. half right. [laughter] sen. klobuchar: these were the trick russians we warned you about. -- questions we warned you about. [laughter] sen. roberts: please proceed. feel free to summarize your comments after my remarks.

mr. kaehler: my two sons are the fifth generation to be operating our family farm in st. charles -- in the southeastern part of the state. we produce traditional crops and livestock. we are nationally recognized beef breeding livestock producers, whose claim to fame includes the first livestock to cuba in 2002 since the enactment of the trade embargo. our youngest son is going to be married in november. he is actively involved in the cattle operation and will be taking over export activities. mildest son -- my oldest son returned from wall street to start a solar company. we are proud to bring a kickback from wall street into rural minnesota. we went to an exposition in

2002. over 180 exhibitors from 30 states, our farm display was the only one with live animals effectually known as the cuban art. the display was intended to discredit -- distribute the example of u.s. livestock producers. we returned motivated to do more. since then, we have led over 10 trade delegations to cuba. these missions have included over seven states and a bipartisan mix of state lawmakers and officials. today some of the most six successful include the shipments of the first livestock, dry

grains, powdered milk, the first animal milk replacer, and the first cap seed which was made by a local co-op. given the opportunity, u.s. farmers do well in cuba. we have an advantage over other major exporters. in addition, cuba can take advantage of our sizing options which brings benefits to smaller, privately owned businesses like ours or the edible bean producers in the midwest. on top of this, u.s. producers offer a wide variety of affordable and safe products for the cubans. unfortunately some of the policies diminish the advantages american agriculture enjoys over competitors. for instance, requirements using third country thanks for finances take up paperwork

time, and personalities to every transaction. there was a restricted cash advance program. as a family operation, trying to build our business through exports, this self inflicted inefficiency can be difficult. what i do hope to see for farmers in the debate, first, i hope farmers can work with congress to improve trade financing for cuba. the inefficiencies -- efficiencies gauge would be beneficial. it would make shipping cheaper. second, i have to in -- mention the accordance of the usda to exporters. large companies have plenty of resources, that small firms like ours do not have the lecture he

of extra available cash or shareholder off that. -- offset. we need marketing support to figure out what is going on in the markets a broad. i hope to see these resources available soon for our small and mid -- midsize producers. finally, i hope that congress will expand the universe of people involved in u.s. cuba trade while allowing a variety of goods and services to be traded. i do not know much about politics, but i have spent a lot of time in cuba and have a strong relationship with them. our farm has weathered many ups and downs, including a recession,, and commodity and financing rules. we have never been shortchanged. i can only imagine having more interactions like these, will help build a better

understanding between our two countries and build a better quality of life on both sides. i look forward to any questions. thank you for this opportunity. senator roberts: thank you. i apologize to the oversight in regards to adopting a different family. mr. raemer: no problem. senator roberts: doug and his wife grow alfalfa on their fifth-generation farm. they have two boys, two girls the whole point is i would like to take a moment to wish a happy

birthday to elsie, a happy one week birthday. you better get back home. mr. kayeesling: thank you for the opportunity. an particular, i would like to thank chairman roberts. my name is doug keesl;iling, i have been able to travel because i have been on the commission. i was part of the u.s. agriculture coalition for cuba. the primary reason is to establish cuba as a primary market. the week industry fully endorses that goal. there were nearly 100 per dissidents are presenting a wide range of companies. from what i see, there is a lot of potential in cuba.

as a kansas wheat farmer, that potential was obvious every time a meal included bread. cubans eat a lot of it, and they are the largest wheat importer in the caribbean. to the tune of nearly 30 million bushels per year, 10% of all of the week in kansas, going to this one island. cuba is the largest country in the caribbean and the largest wheat importer. cubans are not only buying -- today, the wheat imports have a upward potential of a whole 30 million rituals, that is because cubans are not buying any from the united states trade they modify a of it from canada and europe. u.s. ports are closer. when congress lifted some of the restrictions on u.s. exports early in the last decade, we were excited there would be an opportunity to reestablish cuba as a consistent wheat market for

american farmers. for a while it looks like it may happen. they peaked at 18 million rituals in 2008. exports tanked in the next couple of years, eventually dropping to zero. that has nothing to do with economics. it is difficult for cubans to import wheat from cancer, and apparently much easier to import wheat from canada or france. i could keep -- put my wheat in kansas, put it on a ship, but my wheat will still lose out to wheat that is on a boat for two weeks from france. the problem is rules and laws. the law requires exporters receive cash before unloading on the cuban port. selling on credit is not an option for them. there is also shipping research that prohibit docking and the united states if the ship has

been in the cuban ports within the last six months. as a farmer, i have to evaluate all of the costs they go into wheat, including compliance and financing. if it is too expensive, i have to give up and plant a competing crop. that is what the cuban face when they try to purchase my wheat. they are not going hungry, they are just buying wheat from other countries. it is a better value because there are not massive compliance costs that accompany each purchase. it does not make sense that if someone wants to buy my wheat they have to jump through hoops. if cuba is to become a successful, export market for u.s. farmers, these regulatory obstacles need to be repealed. more than that, we need trade sanctions lifted. cuba has enormous economic potential.

the sanctions are not justified. u.s. agriculture is never going to realize its full potential as long as the trade sanctions are in place. if they cannot sell us their own to resume services like cigars, rum, fruit, and other products where they have an advantage, we will always face an uphill battle of selling a american products. it is time to see how far this free-trade relationship could go. i suggest congress carefully consider if there is a compelling reason for americans to engage in the freedom to trade. in conclusion, i would like to reiterate the support of the kansas wheat and a broader kansas act community for normalizing trade relations with cuba. agriculture and subsidiary industries will stand to benefit if we can open trade with cuba.

thank you for the invitation to testify and your attention. senator roberts: say hello to elsie for me. >> thank you. senator roberts: joining us today from texas a&m university, dr. rawson is professor and department head of the economics department. he focuses on international trade and marketing. he however is not responsible for texas a&m leaving the big 12 and going to that other football conference. dr. rawson received his phd masters, and bachelors all from texas a&m. he was a captain in the u.s. army reserve. we thank you for your service, sir.

i believe you are joined by your wife, is that correct? dr. rawson: no sir. senator roberts: migy gracuious. dr. rawson: it is my pleasure to be here today, i want to thank you for inviting me to testify on the challenges and opportunities associated with trade cuba. i have been studying the cuba market for about 15 years i have been there a number of times. we continue to monitor what happens in cuba and exporters in fact our work at texas a&m indicates that one u.s. job is created for every $76,000 in u.s. exports to cuba. we think that makes it worthwhile for us to engage in

this issue. a little bit about background, our exports have averaged $300 million annually, since 2002, but fluctuated widely from a hundred $40 million in 2002 up to $709 million in 2008. that has been a problem for our businesses. over the last decade of our experiences with cuba, we exported a wide variety of products such as corn, sardines, animal feed, cotton, along with processed foods such as pork beef, dry beans, snack foods can't fruit, vegetables, bottled water, grapes, pears, and treated telephone poles. a broad array of until 2012. the more recent export

categories have been concentrating in three areas frozen leg quarters, soy complex, and corn. last are those three accounted for 96% of our exports. in my mind that is precariously risky. we do not have the diversity of our marketing base to withstand the kind of declines we have seen in the last two years. -- few years. there is a number of things that have happened that have contributed. one is cuba has moved away from u.s. exporters roddick's such as rice, wheat, and higher value foods, to lower price competitive competition like mexico, spain, and vietnam. i have seen some of those products rice is 25% cracked and broken. it may be cheap when it gets there, but by the time they get

through fulling with it, the quality deteriorates. no doubt, the strong dollar over the last several years has put some downward pressure on our exports. it has made our products more -- higher price products to cubans also have diversified away from us to lower price competitions. during the global recession, cuba's earnings from tourism declined, along with declines in the value and volume of their nickel and cobalt exports. remittances from cuban-americans also declined. there are to purchase products from the u.s. was limited. the term market today is a miss out number -- misnomer.

i am of the opinion that from time to time, the cuban government is directly involved in some of these decisions. they influence what is purchase, how much, and from whom. despite these constraints, cuba has some potential, we have been looking at this for a long time. it could be a much larger market for u.s. exports. it could be about a billion dollar market over the last five years -- next five years. with a population of 11 million people 99.8% of which are literate, cuba has a highly trainable workforce of more than five my people. -- 5 million people. these characteristics are very similar to the democratic -- dominican republic to which we

exported 1.4 billion and few -- food products last year. for this potential to be realized, we must say gains in cuba. we must see improvements in infrastructure and logistics. we need to see more stable policy regimes, policy environment that would stimulate interest on the part of u.s. businesses. the cuban market for u.s. food has potential to exceed $1 billion annually. this would create 6000 new jobs in this country. to be realized, we need to see positive changes in income, infrastructure, and regulations. thank you very much. senator roberts: dr., thank you very much for that most informative testimony. doug, you mentioned the rest of the caribbean region, the market

share for wheat is over 80%, if cuba resumes the purchases, what is your estimation of the market share for u.s. wheat in cuba? doug: first of all, i see it there is no reason for it not to go up. senator roberts: dr. rawson, you have worked on projects in nicaragua, costa rica, ecuador australia, japan, iraq indonesia, philippines, and thailand did you sing that country-western song "i've been everywhere man." you are a tiger as well as an aggie, thank you for your

testimony. you have an impressive background. we have a opportunity to expand our position of u.s. agriculture in the cuban market. i know that the senator from arkansas does as well, but when farmers and ranchers explore a business opportunity, they examine the costs. what are some of the factors that could impact our agreement with the cuban market? >> we have -- we don't have service out of our local ports to move directly. we have to go to florida, trans

load, and then go into cuba market by barge. that takes a next her several days to move the cargo. it raises the cost, and endangers the products. improving our only just a goal system is one thing, a second thing is within the cuban market, the times i have been there and then with companies that have been trading perishable products, we have had trouble with reliable electric power both at customs and hotels and restaurants. if you have a frozen dessert going that long without power it is not exactly what you would come in with. those logistical requirements are an issue. the other thing is simply the capacity of refrigerated warehouse space needs to be

enhanced. that would allow us to move more products into the market on a more reliable basis. senator roberts: i appreciate that. all of you have traveled to cuba over the years, what are some of the challenges? any of you like to pitch in? mr. beall: i think in terms of some of the issues, i think you are going to see that cooperatives will have to figure out ways to create some of the relationships that we are talking about. those relationships we think are the piece that will bridge some of these problems and gaps. frankly i think we need the government to be a will to get off of that so that these are solutions. senator roberts: mr. harris? mr. harris: we made the first

sale of rice to cuba in 2001, we took advantage of their lower cost labor. we actually had the rice bagged on the docks in cuba. one of the benefits that we see is that when cuba buys rice from vietnam, they have to buy it and extremely large vessels, because of the proximity to the u.s. we can actually run small vessels not only to the port of havana that go to other ports, it helps them on their storage to warehousing industry should. senator roberts: mr. kaner? >> they need access to more of our products, such as farm equipment. we have had limitations on what

we could ship. we took two gifts of wrenches, some of the professionals were not sure if that was a good gift. when we took it to their farmers, they had tears in their eyes. they showed us all of the fence is built with our tools because we understood their needs. as we get some efficiencies and are shipping, and bring our farmer to farmer interaction, we will improve their productivity which will increase the demand for u.s. goods. senator roberts: doug, do you have any thing to add? doug: i think our biggest restriction might be us, not them. i think as far as what i saw there and numeral ship -- entre

their entrepreneurship stood out. i think they will make anything we do work. senator roberts: senator kavanaugh? kavanaughsenator kavanaugh: they are positive they have created cooperatives. there are is more to do as you say. it was interesting to me as you are talking about what they are interested in in terms of equipment and tools. we talked a lot about farm equipment and tractors. the fact that there is the new decision, to allow farm equipment.

in fact they had cooperatives, most of them did not have one tractor. they were making decisions as to who got the tractor, and how many. there is a lot of opportunities for us to be able to expand. i'm glad to hear your testimony. i am wondering, because you've been to cuba so much and have had the opportunity to really navigate both from agriculture but looking also at cuba upon economy from a broader trading relationship beyond exports in terms of commodities, when you think about how to more fully the develop the farm equipment in cuba, what would you suggest? what products or services are we leaving out of the conversation? what should we be focused on?

>> when we went on the first trip in 2002, the nutrient come compendium was old. things have changed from their time of closeness with the soviet union their professionals are all willing to get u.s. technology and get access to the internet. we took in, when we took grains down, they are a grass rate -- grass-based economy. in a drought, one farmer lost two thirds of his livestock. the quote from the paper was he

reached in a bag and scooped up nor gold, he said without this product he would've lost all his cattle. we are providing technology to get farm equipment. we are giving them access to modern milking equipment. it will only help our u.s. products as we improved production and efficiency for their farmers. there is a lot of poverty in cuba. we didn't see a lot of hunger, but they are looking to increase their supply of food for their families. senator: we talked about the fact that the small group of a products we are exporting now, we are going to do more and we need more diversity. how do you see the president's

new rules governing trade and financing between the u.s. and cuba and creating more opportunities for the underrepresented cuban market. what more could we be doing? i know ultimately it is lifting the embargo. we hope they will do that. what more could we be doing? >> the encouraging thing is the allowance for remittances to quadruple. 80% of it ends up in the hands of cuban consumers or small businesses. those remittances represent about 60% of the households. they can be quite important in in terms of stimulating consumption. part of that consumption would be food products from this country. they can also be used for other business. in private business ventures,

the cuban people are entrepreneurial. remittances play a critically important role. if those could be expanded, i think that would be positive. senator: thank you. senator roberts: senator? senator: there has been concern by some members of congress in terms of what would happen, who would be obligated if the cuban buying organization failed to pay. some have concerns that perhaps the united states government would be on the hook. the question is for you and the others the cuban buying

organization fails to pay for a shipment, would you expect the u.s. government to compensate for the shipment? >> in my opinion, no. that is my job with the company it is risk management. we assess that every day. we assume, as we take that risk . >> i would expect, it would be the same requirements for any other country and business. as a business owner, it is a transaction between buyer and seller. as we mentioned, that is the risk we take, we have to analyze our business as we do it as producers.

we are asking for less government interaction, not more. senator: i agree totally. i think there has been a misconception and want to clarify that. your testimony was excellent. the bottom line is, has the recent administrative changes regarding trade, are they going to help your business with what is going on right now? mr. harris? mr. harris: i can respond on behalf of ricin food, no. it is a small step. after the announcement, i contacted alan port and they think me for the call, but had no interest in purchasing u.s. rice. i think they are looking for an

illumination of the embargo so they have the ability to create foreign exchange by selling their realm and cigars, and citrus to the u.s. and the tourism that they need so badly. i really think that small incremental moves are not swaying them to try to work closer with us. senator: would you all agree that that is the major barrier? what is the major barrier? >> i agree. as a wheat farmer from kansas i am looking at june for my crop. if the embargo is lifted, we could be selling in july. this is what is holding it up. senator: dr. rossen? dr. rossen: there was a lot of

optimism early on that we were going to change the rules, of course that has not happened. i think in about 2011, 2 thousand 12, they came to the realization that the carrots they had been offering in terms of purchasing products from 38 different states in the u.s. they began to diversify to other countries. in our perception, this is a strong signal, in their minds it may not be strong enough. i believe they are still waiting to see what we will do. senator: thank you all again for being here. i do appreciate your testimony. it is helpful.

you are all on the ground floor and no one understands it better. thank you very much. senator roberts: in my view it is access to credit. in my view it is whether or not the bank in question and the customers of those banks have an appetite for risk. that is to be seen. i want to assure you all that this committee stand firmly behind our efforts to see if we cannot clear up obstacles that you have talked about. thank you so much for coming. this will conclude the second panel of our hearing. thanks to each of our witnesses for being part of government in action. that is two words.

[laughter] . to my fellow members who are not present earlier, we would asked any questions being submitted to the committee clerk. thank you so much. the committee is adjourned. [indiscernible] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] announcer: coming up on c-span former president bill clinton share stories of his life as a public servant. then a briefing with press secretary josh earnest.

and later, a look at expanding u.s. trade cuba. announcer: this first lady provided a unique window into colonial america into personal life. abigail adams, on c-span's original series, first ladies. it examines the public and private lives of the women who were first ladies. sunday, at 8:00 p.m. eastern. c-span3. as a companion, the book is also available. it provides a lively stories of these fascinating women, creating an illuminating, and

attaining, and aspire -- inspiring read. it is available as a hardcover or e-book. announcer: tune in thursday evening for more about our nation's first ladies. carl anthony, carl cannon, edna medford, and washington post reporter, kristin thompson. live coverage starts at 7:00 p.m. eastern on c-span. announcer: now, former resident bill clinton speaks to students about the importance of public service. his remarks at georgetown university are part of a fork part -- four part series called the clinton lectures.

[applause] >> and good morning. it is my pleasure and privilege to welcome you to georgetown. i wish to think all of you for being here and to offer a special word of work -- welcome to artist in question guest and attendance. including tom hill sachs, the secretary of agriculture, and congressman john delaney, we are honored to have you with us this morning. we have had the privilege over the course of the last decades to welcome president clinton back to georgetown on a number of equate -- occasions. he was here in 1991. he was on these steps in 1993

just days before his inauguration. and now, for this series, in his first lecture of this series, president clinton spoke of the significance of those 1991 lectures, now known as the "new covenant speeches" on responsibility and rebuilding american community, economic change, and american security. not only to his campaign, but also for his vision, were our future. he explained these lectures enabled him to "think about where we were, where we wanted to go, and how we propose to get their peerre." we have come together to engage the wisdom and insights of one of the most accomplished leaders of our time. as president, he presided over the longest economic expansion

in american history, including the creation of more than 22 million jobs, the reform of the welfare and health care systems, new environmental regulations peacekeeping missions in places such as bosnia, and a federal budget requests. in the years since his two-term presidency's, the first democrat since franklin delano roosevelt he has focused on improving global health, education and economic element around the world through the bill, hillary, and chelsea clinton foundation which he founded in 2001. in these lectures, he brings to bear these experiences, and those of his youth and early political career. an alumnus of our school, a rhodes scholar, a you law graduate, attorney general, and then governor of arkansas.

a former instructor who taught clinton during his first year has described him as someone who "thinks deeply." he says when people are connected, that gives them a freedom to listen to a wide spectrum of opinions. quentin was not a man who was closed and his thinking, because he thinks deeply great it is only fitting for this lecture on the theme of purpose, father hence will serve as our moderator during the question and answer session that will follow president clinton's remarks. with this theme purpose president clinton turns to each of us, as he did during those formative new covenant speeches to speak to all of you, future leaders of our nation, to think deeply about our own responsibilities, about where we

are, where we want to go, and how we propose to get -- together to get there. he asked, what is required of us? had we compose and live a life where service is important? today we come together to consider in during questions how do we understand our purpose and are responsibilities, our service to the common good and to each other. ladies and gentlemen, it is now my privilege to welcome to the stage, the 42nd resident of the united states, and a true son of georgetown, president bill clinton. [applause] bill clinton: thank you very much. thank you.

thank you. [applause] thank you president to joya, for having you back. thank you father hence for agreeing to asking questions. i'll give better answers than i did 50 years ago, i hope. thank you all for coming. students, faculty, friends of georgetown, secretary, thank you very much for being here and for your long career in public service. congressman john delaney, who is a shining hope for the possibility of bipartisan cooperation. he has a bill to repatriate all of this loose cash hanging around overseas that has as many

republican and democratic sponsors, some people think there is something wrong with that, i think it is a good idea. i want to thank mike classmates -- i want to thank my classmates and friends who are here. two years ago i came here on in april, intending to give a series of three or four lectures on composing a life and public service. whether or that is an elected or appointed office, or in the right of sector, or nongovernmental organization. in a first talk, i said there were four essential elements to any successful service. the focus on people, policy, politics, and purpose. in that first lecture i was primarily focused on the importance of people centered service. under the necessity of understanding how different people view themselves in the world they are living in.

without understanding people it is hard to develop the best policies and build and maintain support for them. as i said then, i grew up in a storytelling culture. so i told you stories about people who taught me that everyone has a story and kept me focused on how to help other people have better stories. i told you stories about my family, and my teachers beginning in junior high and running through georgetown about people i had worked with through the years. people i met who were dealing with their own life struggles. the second lecture covered policymaking and the compromises involved when trying to do what machiavelli called, the most difficult thing in all of human

affairs, to change the established order of things. we discussed how policy meeting was done when i was president of the economic plan in 1993 which reserved -- reversed 12 years of trickle down economics. it gave us the only. of 50 years when all sections of the economy were robust. we talked about grafting the welfare reform bill of 1996, what compromises were acceptable, what has worked over the long run, what still needs to be changed. we talked about the pursuit of peace in the middle east. i hope that talk convinced you that policy actually matters. that ideas, when implemented have consequences. different ideas have different

consequences. a great deal of political rhetoric is devoted to blurring that. to pretending that if something good happens in the other guy did it it was an accident, if something bad happens and you did it, it couldn't have been because he pursued the wrong policy. because of so much of our voting habits today are determined by the culture in which we live and the conditions in which we experience the world, we tend to blur all of that. i hope i convinced you that when ever you are trying to evaluate policy, you should try to asker self, is there a difference between a story and the story line? always look for the story. sometimes it is in the story line, sometimes it is not. there is a difference between the headlines, and the

trendlines. for perfectly understandable reasons, bad news makes better news than good news. sometimes the trendlines are much better. we might revisit that. today want to talk about the purpose of public service. i wanted to talk about the politics of turning concern into real changes that fulfilled your purpose for it. it is important to remember there is plenty of politics when the election is over. you are trying to implement policy, and there is plenty of

politics if you are not elected to office. if you are working in a private business or an ngo, that is the kind of politics i want to talk about. how do you have the skills to actually turn your ideas into actions. in every public service success leadership requires the vision of a better future for the purpose a public service is made plain in the circumstances of the moment. a clear understandable plan to realize that vision, and the ability to limit changes, if it all possible by the conclusion of all stakeholders in the process. this is becoming more important than ever before. in an independent world, whether we like it or not, inclusive politics is necessary to have inclusive economics. inclusive discussion with various stakeholders is

necessary to effect positive social changes. asia has three different interesting leaders of the moment. the president of china, who is trying to grow the chinese economy internally more by resuming population growth by modifying the one child policy and trying to elevate some of the corruption that has been endemic to the system. the prime minister of japan is trying to overcome his own country by allowing widespread immigration by putting more women in the workforce and enabling people to work longer. prime minister modi of india has written a book called, "inclusive politics, inclusive government's." he recognizes his country's big

problem in his country is it has grown like crazy. only 35% of the people are being reached by that effort. india needs to develop the ability to aggregate and employee capital so that 100% of the people have a chance to benefit from the enterprise that is now driving dramatic prosperity for just 35% of them. this inclusion issue is going to become bigger, and bigger, and bigger in the lifetime of the students who are here. what we try to -- let me try to illustrate the pitfalls and success of leadership with a few recent examples, recent in my terms not the students.

helmut kohl was the chancellor of germany when the berlin wall came down. he had a vision. born of a lifetime of experience that included obviously living through world war ii. of a united, peaceful, and prosperous germany in the united democratic peaceful europe. both of these developments may seem normal to you. they were virtually unimaginable for most of european history. germany was not a separate country, but a collection of city states and united under bismarck. he became a second longest-serving chancellor of history, second only to bismarck. he had a strategy, which he

pursued with extraordinary discipline. it was first, to unite germany after the wall came down, which required very large transfers of money from west to east germany to begin the long process of equalizing economic opportunities for both sides. second, to expand and strengthen the union, he wanted all of central and eastern europe to come to the eu so germany would be in the middle of europe, not on the edge where it had been a source of instability and conflict throughout the 20th century. third, he wanted to expand nato and strengthen the ties to the united states because he thought that was important to building a prosperous democratic future for june -- germans and the rest of europe. fourth, he became the most vigorous supporter of russia

after the end of communism. it is economic recovery democracy building and increasing cooperation with the eu and the u.s.. it is hard to believe given the headlines today, that was the order we were trying to build in the 1990's, and it worked for quite a while. in the beginning it worked, very well, but there were two central problems with implementing his vision after he left office. one is that much of the european union, although not every member and they had a eurozone the currency, which was adopted before those in the eurozone had a common economic policy of -- common social policy and common public investment policy.

which meant it worked great when europe was growing well, and greeks could borrow money at german interest rates, essentially. when the economy turned down, it no longer work for a well partly because the german voters did not understand how much gain they had gotten out of all of those good years when greece spain, portugal, and italy got to borrow money at common interest rates and by german exports. germany is by the way still the number one rich country in the world in percentage of its gdp tied to exports and manufacturing. no small measure, but a good lesson for the united states because of that it dramatic success involving middle-class businesses in the export market, having a continuous lifetime training program, and having a program that pays employers to

keep people working, instead of paying unemployment benefits to unemployed employees. it works fine, but when greece failed, and ireland failed, and spain had skyrocketing unemployment, all for slightly different reasons. basically it was just a real estate boom going bust in ireland and spain. portugal and italy had their own troubles. the automatic response of the eu was to try to impose austerity on greece because they had -- made promises they cannot keep. they had a country in which rich people did not pay taxes. constitutionally be shipping companies are expected -- exempted from taxes.

so if you are a cab driver in athens, or a fisherman in the agn come a you felt like a chump if you did say -- did pay taxes. they started in 1999, their public debt was lower than it is today. the fundamental laws of economics has not been repealed. if inflation is lower than interest rates, there is insufficient demand, and more austerity will get you into a deeper hold, not out. that happened. there was no provision made at the creation of the eurozone for how to get out without collapsing the hold or without speaking markets. -- spooking the markets.

that was probably an error. they should have made an exit strategy part of the beginning then the hazards would not have been so great. the typical thing for a little country in the kind of trouble greek is in is to do value and start trying to grow again. iceland's did that. iceland had more self-made millionaires mostly in tech and retail businesses than any other european country. they devalued and started holding again, and got out of this mess in a hurry. that does not mean that kohl's european idea was wrong. for many older europeans, even

be boring and bureaucratic nature of the cumbersome machinery of brussels in the eu is a godsend. it is far better than the uncertainty of war. the other thing that happened to his vision is that russia took a more unilateral and authoritarian turn, as manifest vividly and what happened in the ukraine, and what continues to happen there. but, on balance you would have to say he was the most important european level -- leader since world war ii. i still believe, over the long run, we will return to the path that he advocated for so long. second example the prime

minister of singapore recently passed away at 91. i was asked along with henry kissinger, and representatives of the human states at his funeral. i had known him and had a lot of contact with him. i went. when lead took office more than 50 years ago in 1962, he was the leader of a small, city state of a few million people with a per capita income of under $1000 a year. it had recently broken off her malaysia -- it had recently broken off from malaysia. there were two things, one was whether this city state was a minority and a smaller, but still noticeable indian minority , and filipinos and others, and

two, whether a state that small could withstand the debilitating consequences of the corruption which was an endemic to most of the rising asian countries, lee had a strategy. his vision was to have a prosperous, unified, secure nation. he knew that singapore had the most important thing of all at the time he came of age -- location. it was located at a critical juncture for all the major sea lanes. he wanted to be there. his strategy was to govern singapore on terms of equal treatment for all its citizens without