Algeria is one of those complicated countries that forces the United States to balance our interests and values. It has been an important ally in the fight against al Qaeda and was a potential stabilizing force in North Africa as Libya and Mali descended into chaos. But it also has a poor human rights record and a relatively closed economy.
Both because we need to continue our security cooperation and because it’s the right thing to do, the United States sought to encourage improvements in human rights and a more open economy in Algeria. When the government decided to solicit foreign bids to build power plants and modernize its energy sector, I saw an opportunity for advancing prosperity in Algeria and seizing an opportunity for American business. General Electric was competing for the more than $2.5 billion contract. Too often I had seen risk-averse U.S. corporations avoid emerging or challenging markets, while Asian and European companies scooped up contracts and profits. State-owned or -controlled enterprises were especially difficult competitors because they played by their own rules, with unlimited resources and little compunction about violating international norms on bribery and corruption. With growth at home still too slow and unemployment still too high, we couldn’t afford to leave good opportunities on the table or put up with unfair competition. So GE’s move to compete in Algeria represented a bold step by a flagship American company, with the potential to yield economic benefits back home and strategic benefits in North Africa.
In October 2012, I went back to Algiers to urge the government to continue political reforms, expand security cooperation in Mali, and consider the GE deal. President Abdelaziz Bouteflika greeted me on a red carpet outside the Mouradia Palace, a sprawling white villa with Moorish-style arches. Behind him rows of Algerian cavalry stood at attention, in their traditional red tunics and green pants. After the seventy-five-year-old Bouteflika walked me past the honor guard into the palace, we spent three hours together, in a wide-ranging dialogue that touched on subjects ranging from the effects of climate change to threats from al Qaeda. I also asked about GE and I left Algiers optimistic that the company would be given a fair shot to win the contract.
Less than a year later GE won the contract to help build six natural gas power plants, which are expected to increase Algeria’s electricity-generating capacity by about 70 percent. Over the next few years GE will build generators and giant turbines for these plants in Schenectady, New York, and Greenville, South Carolina, supporting thousands of manufacturing jobs. As a local union representative in Schenectady told the Times-Union, “It shows the world we are still No. 1 in world-class power manufacturing.” To me, it also reconfirmed an insight that guided much of our work at the State Department over the previous four years: Because energy and economics are increasingly at the heart of our strategic challenges, they must also be at the heart of American diplomacy.
When I became Secretary in 2009, I focused on two big questions about the global economy: Could we sustain and create good jobs at home and help speed our recovery by opening new markets and boosting exports? And were we going to let China and other relatively closed markets continue to rewrite the rules of the global economy in a way that would surely disadvantage our workers and companies? The answers would go a long way toward determining whether America would continue to lead the world’s economy and whether we would restore prosperity for our own people.
Traditionally trade, energy, and international economics have not been priorities for Secretaries of State. After all, we have a U.S. Trade Representative and Secretaries of Commerce, Energy, and the Treasury. But the global financial crisis made that division impractical. It was clearer than ever that America’s economic strength and our global leadership were a package deal. We would not have one without the other.
I called our efforts “economic statecraft,” and urged our diplomats around the world to make it a priority. We had diplomatic posts in more than 270 cities around the world, many of them with resident economic officers. I wanted to use these resources to create new opportunities for growth and shared prosperity. Over the next four years we stood up to protectionism and mercantilism, went to bat for American companies and workers, sought to attract more direct foreign investment into our country, and worked to capitalize on the energy revolution that was helping to drive our domestic recovery and reshape the global strategic landscape.
America had worked for decades to create a global economy of free and fair, open and transparent trade and investment, with clear rules of the road that would benefit everyone.
The current global trading system doesn’t fully meet that standard. It is distorted not only by barriers to entry in developing and emerging economies, but by the power of special interests in developed countries, including the United States. Just as it isn’t fair for other countries to keep our products and services out of their markets, or to demand bribes or steal our intellectual property in return for access to them, it isn’t fair to use our patent laws to deny life-saving generic medicines to poor people in low-income countries. (The work of the Clinton Health Access Initiative to lower prices and increase volume for AIDS medicines proves that there are ways to save lives and protect legitimate economic interests.) To make trade fairer as well as freer, developing countries have to do a better job of improving productivity, raising labor conditions, and protecting the environment. And in the United States we have to do a better job of providing good jobs to those who are displaced by trade.
Currently the United States is negotiating comprehensive agreements with eleven countries in Asia and in North and South America, and with the European Union. We should be focused on ending currency manipulation, environmental destruction, and miserable working conditions in developing countries, as well as harmonizing regulations with the EU. And we should avoid some of the provisions sought by business interests, including our own, like giving them or their investors the power to sue foreign governments to weaken their environmental and public health rules, as Philip Morris is already trying to do in Australia. The United States should be advocating a level and fair playing field, not special favors.
Despite all its problems, a more open trading system has lifted more people out of poverty in the last thirty-five years than at any comparable time in history. And there is less imbalance in our trade with the countries we do have agreements with, like Canada and Mexico, than with those we don’t, like China. Making an open system work better will help more people than state capitalism, petro capitalism, currency manipulation, and corrupt deal making ever will.
Meanwhile, I was determined to do everything I could to help American businesses and workers seize more of the legitimate opportunities already available. We faced strong headwinds from countries that wanted a different system altogether.
China had become the leading exponent of an economic model called “state capitalism,” in which state-owned or state-supported companies used public money to dominate markets and advance strategic interests. State capitalism, as well as a range of new forms of protectionism involving barriers behind borders—such as unfair regulations, discrimination against foreign companies, and forced technology transfers—posed a growing threat to the ability of American businesses to compete in key markets. These policies ran directly counter to the values and principles we had worked to embed in the global economy. We believed an open, free, transparent, and fair system with clear rules of the road would benefit everyone.
Though China was the largest offender when it came to new forms of protectionism and state capitalism, it was hardly alone. By 2011, sovereign wealth investment funds, which are owned and run by governments, often with revenue from exports of oil and natural gas, had grown to control roughly 12 percent of all investment worldwide. Increasingly, state-owned and state-supported enterprises were operating not just in their home markets but around the globe, sometimes in secrecy, often lacking the transparency and accountability that shareholders and regulations ensure. We were seeing hybrid companies masquerading as commercial actors that were actually controlled by states and acting with strategic consequences, such as Russia’s Gazprom.
As a Senator I warned that China, a member of the World Trade Organization, “needs to be convinced to play by the rules in the global marketplace,” and I was concerned that the Bush Administration’s laissez-faire philosophy led them to take a hands-off approach. In 2004, I was approached by executives at a storied New York company, Corning Glass, with a problem that highlighted the challenges we faced. Established in 1851, Corning, a glass manufacturer headquartered in Corning, New York, was famous for supplying the scratch-resistant “gorilla glass” used by more than thirty-three major brands of smartphones, tablets, and notebooks, including Apple’s iPhone. Corning also produced advanced liquid crystal displays in computer monitors and televisions, as well as optical fiber and cables for the communications industry, clean filters for diesel engines, and a wide range of other innovative products. They spent more than $700 million a year on research. Their technology and products were so good that competitors in China felt they needed an unfair advantage to compete. So they asked their friends in the Chinese government to either block Corning from entering the market altogether or slap their fiber optics with absurdly high tariffs. There were also blatant attempts to steal the company’s intellectual property.
This wasn’t fair, and it was also a threat to the future of a company that employed thousands of New Yorkers. In April 2004, I invited the Chinese Ambassador to my Senate office and sent a pointed letter to the Chinese Minister of Trade. I also made every attempt possible to enlist the Bush Administration to back me up. After failing to get much attention from the White House, I raised the Corning matter directly with President Bush at the dedication of my husband’s Presidential library in Little Rock, Arkansas. “This is a great American company being threatened,” I told him. “Your administration needs to help me help them.” President Bush agreed to look into the problem, and he did. In December China dropped the discriminatory tariff. Allowed to compete on a level playing field, Corning’s business thrived.
Other American companies face similar challenges. In October 2009, new Chinese postal laws came into effect requiring domestic operating permits for express delivery service companies. The move was widely seen as a plan for the Chinese government to expand its own express delivery service by the state-controlled China Post. The major American delivery companies, FedEx and UPS, had been doing business in China for years. Before 2009, FedEx had permission to operate in fifty-eight locations there, and UPS in thirty. Both companies feared that the Chinese government would issue them severely restrictive licenses. Our U.S. Ambassadors in Beijing, first Jon Huntsman and then Gary Locke (as a former Commerce Secretary, Gary understood exactly how important this was), raised the issue with the Chinese government, but to no avail. Fred Smith, the CEO of FedEx, eventually called me to ask for my help.
I brought the matter up directly with Wang Qishan, the Vice Premier responsible for the economy and someone I had come to know and respect. Secretary of Commerce John Bryson and I followed up in a joint letter. After our efforts the Chinese informed FedEx that they had finally granted licenses, but only to eight cities in China, and just five for UPS. That was a start, but nowhere near good enough. I delivered another message to Vice Premier Wang. Eventually the Chinese pledged that over the course of a three-year interim period, they would grant permits for the remaining cities. The embassy reported back that the Chinese officials were surprised by the sustained U.S. government response to the issue at such a senior level. As of this writing, both companies have been able to maintain their operating status in China. The Chinese have stood by their promise to increase licenses, but both companies remain concerned about the potential for growth in the future.
I was prepared to keep fighting for individual American companies, but given the scope of the challenge, we needed to think bigger. In the summer of 2011, I decided to make it clear that the United States intended to stand up for a fair global economic system. I headed to Hong Kong, an island of entrepreneurial capitalism attached to China’s still evolving state-dominated economy. Hong Kong seemed like the perfect place to make the argument for a level playing field and a common set of global economic rules. I had first visited the city in the 1980s, when I accompanied Bill on a trade mission to promote Arkansas’s businesses and exports. This time I was trying to sell more than soybeans. I was selling the American model of free markets for free people. It had taken a beating in the eyes of the world during the financial crisis, and a growing number of nations were giving a fresh look to the Chinese model of state capitalism and autocracy, which continued to produce impressive economic growth at home. In a speech at the Shangri-La Hotel, in front of a large crowd of business leaders from across the region, I made my case.
“We must start with the most urgent task before us: realigning our economies in the wake of the global financial crisis,” I said. “This means pursuing a more balanced strategy for global economic growth.” Developed nations like the United States would need to build more at home and sell more abroad (which would create jobs and jump-start our recovery and help increase growth in the rest of the world), while rapidly developing countries in Asia and elsewhere that had accumulated large savings would need to buy more—and strengthen and update their financial and trade policies to ensure a more level economic playing field and greater stability in global markets.
I acknowledged the challenges faced by developing economies that still had to lift hundreds of millions of people out of poverty. China often argued that this imperative outweighed any obligation to play by established international rules for business, labor, and human rights practices. But I countered that China and other emerging economies had benefited greatly from the international system the United States had helped create, including their membership in the World Trade Organization, and now they needed to take their share of responsibility for upholding it. Besides, that was actually the best way to ensure continued growth and prosperity and to help even more people climb out of poverty and into the middle class in developed and developing countries alike.
After all, Malaysian manufacturers wanted access to markets overseas as much as American manufacturers did. Indian firms wanted fair treatment when they invested abroad, just as we did. Chinese artists wanted to protect their creations from piracy. Every society seeking to develop a strong research and technology sector needed intellectual property protections because, without them, innovation would entail higher risk and bring fewer rewards. And I explicitly rejected the idea that there could be one set of rules for the major industrialized economies like the United States and another for emerging markets like China. “Enough of the world’s commerce takes place with developing nations that leaving them out of the rules-based system would render the system unworkable,” I said. “And ultimately, that would impoverish everyone.”
Unfortunately, much of the attention that day was not on trade but on a drama unfolding thousands of miles away, back in Washington, one that threatened to undermine my argument and the world’s confidence in American economic leadership.
In mid-May 2011, the U.S. government had reached its debt ceiling, and the President and Congress had only a limited time to raise it or risk defaulting on America’s debts, which would have catastrophic consequences for us and the global economy. Despite the high stakes, this was a difficult issue for many to understand. To many Americans, it sounded like Congress was debating whether to give itself permission to spend a lot of money and rack up new debts. But that wasn’t it at all. The real question was whether Congress would vote to pay debts it had already run up in spending bills it had already passed into law. The vast majority of countries don’t require an extra step like this, so it was also hard for people around the world to comprehend what was happening.
Some in Congress were actually arguing that, for the first time in history, we should refuse to pay our debts and let our country default, despite all the consequences for the global economy and for America’s credibility and leadership. From every continent, foreign leaders were expressing grave concerns. China, which had invested more than a trillion dollars in U.S. government securities, was particularly nervous. The state-owned newspaper Xinhua reflected the prevailing attitude when it wrote: “Given the United States’ status as the world’s largest economy and the issuer of the dominant international reserve currency, such political brinksmanship in Washington is dangerously irresponsible.” When this scenario played out a second time, in 2013, the Chinese went further. They started talking about a “de-Americanized world” and suggested it was time to look for a different reserve currency besides the dollar. Of course, because China owned so much of our debt, they were in a strong position to make that outcome more likely.
When I arrived in Hong Kong, the crisis had reached a fever pitch. I awoke to the headline “US Debt Talks Down to Wire as Parties Battle” in the local English-language newspaper. At the Hong Kong Government House, Chief Executive Donald Tsang greeted me with his customary smile and bow tie but asked the questions that were on everyone’s mind in Asia and around the world: What is going on in Washington? Could they still trust the U.S. economy? I heard the same questions at a reception with business leaders before my speech.
The answer I gave was, of course, yes. I said that I was confident a deal would be reached. Privately I crossed my fingers and hoped it was true.
The entire experience was a reminder of how closely the rest of the world watches how we make decisions at home and how central America’s economic strength and political resolve are to our global leadership. The full faith and credit of the United States should never be in doubt, and the Secretary of State shouldn’t have to publicly reassure people in other nations that we’ll pay our debts. Period.
My toughest sell, however, was still ahead. I drove across the bridge into China’s Shenzhen Province, to meet with my Chinese counterpart, State Councilor Dai Bingguo. The Chinese were following our political dysfunction with a mix of bewilderment, concern, and anticipation. Of course, they didn’t want anything truly awful to happen because they understood how interdependent our economies had become. But the more paralyzed the United States looked, the better China would look to the world. The Chinese could say to potential partners, You can’t count on the Americans, but you can always count on us. Dai seemed to enjoy dwelling on America’s fiscal woes, adopting a somewhat sardonic tone about our political gridlock. I wasn’t having any of it. “We could spend the next six hours talking about China’s domestic challenges,” I countered. I left my meeting with Dai even more convinced that America had to avoid these self-inflicted wounds and get our own house in order.
Despite the ongoing drama in Washington, I used my speech in Hong Kong to put down a marker about the importance of following globally accepted economic rules of the road. But we needed to do more than talk. In his 2012 State of the Union address, President Obama declared, “I will not stand by when our competitors don’t play by the rules.” The administration was already bringing trade enforcement cases against China at nearly twice the rate of the Bush Administration. Now there would be a special new Trade Enforcement Unit to go after unfair trading practices wherever they damage our interests and the operation of free markets. And when other nations provided unfair financing for their exports, the United States would offer matching support to our firms.
A lot of good American jobs depend on a level playing field with rules that are clear, fair, and followed. On average, every $1 billion of goods we export supports between 5,000 and 5,400 jobs, and those jobs pay between 13 and 18 percent more than non-export-related jobs. In 2010 President Obama set a target of doubling America’s exports over five years. The administration worked hard to improve and ratify trade agreements with South Korea, Colombia, and Panama that were negotiated under President Bush, and also launched new trade talks with many of the nations of the Pacific Rim, as well as with the EU.
I made export promotion a personal mission. During my travels I often made a pitch for an American business or product, like GE in Algeria. For example, in October 2009, I visited the Boeing Design Center in Moscow because Boeing had been trying to secure a contract for new planes with the Russians. I made the case that Boeing’s jets set the global gold standard, and, after I left, our embassy kept at it. In 2010, the Russians agreed to buy fifty 737s, for almost $4 billion, which translated into thousands of American jobs. And our efforts weren’t just on behalf of big companies like Boeing or GE—we also advocated for small and medium-sized businesses across our country trying to go global.
We got creative with initiatives like Direct Line, which allowed our Ambassadors to host phone calls or video chats with American businesses eager to break into new markets. The U.S. Ambassador to Spain hosted a call with thirty companies to discuss the protection of intellectual property rights, for instance, while our Ambassador to Chile hosted one on renewable energy opportunities there.
The State Department worked with the Commerce Department as well as state and local officials on a program called SelectUSA, which President Obama launched in June 2011, to attract more foreign direct investment into our country, which already supported more than 5 million American jobs, including 2 million in manufacturing. The early results were encouraging. In October 2013, President Obama highlighted 220 new jobs at an Austrian company’s auto-parts plant in Cartersville, Georgia, and a $600 million investment in Wichita, Kansas, by the Canadian company Bombardier.
One little-noticed but quite effective tool was State’s aviation diplomacy. During my four years, our experts negotiated fifteen Open Skies Agreements with nations all over the world, bringing the total number to more than a hundred. These agreements opened new routes to U.S. air carriers. According to independent estimates, the direct connection between Memphis and Amsterdam had a $120 million annual impact on Tennessee’s economy and supported more than 2,200 local jobs. And when American Airlines started flying direct to Madrid, it had a $100 million annual impact on the Dallas–Fort Worth economy.
Since 2009, U.S. exports have increased by 50 percent, which means they’ve grown four times as fast as the economy as a whole. All these sales overseas have contributed about $700 billion to our total economic output and are responsible for as much as a third of our economic growth, supporting an estimated 1.6 million private-sector jobs. Though millions of Americans are still out of work, these are meaningful results.
Lowering barriers to access for American companies was a big part of our efforts. So was raising standards in foreign markets on key issues like labor rights, environmental protection, the behavior of state-owned enterprises, and intellectual property. Companies in the United States already met these standards, but those of many other countries didn’t. We needed to level the playing field and improve a lot of lives around the world along the way. For too long we’d seen companies closing factories and leaving the United States because they could do business more cheaply in foreign countries where they didn’t have to pay workers a living wage or abide by U.S. rules on pollution. Using diplomacy and trade negotiations to raise standards abroad could help change that calculus.
I felt particularly passionate about improving working conditions around the world. Over the years I met workers, many of them women and even children, who labored under atrocious conditions. The most heartbreaking were victims of human trafficking and forced labor that amounts to modern-day slavery.
One day in July 2012, I met with a number of women workers and activists in Siem Reap, Cambodia, along with a local representative of an organization called the Solidarity Center, which is funded in part by the AFL-CIO to improve labor rights around the world. The Cambodian women told me about the many challenges they faced. Too many employers used various forms of coercion to force workers to stay on the job for long hours, sometimes under unsafe conditions. Many children were still forced to tend fields, bake bricks, and beg in the street. Children from rural villages were being trafficked to cities for sexual exploitation, often by foreign men who might pay thousands of dollars for virgin girls or to engage in other forms of child sex tourism. Too many police at every level were poorly trained, if at all, to address these problems or to protect survivors, and too many public officials looked the other way or, worse, profited from the trade in human beings.
When I was in Siem Reap in 2010, I visited a shelter and recovery center for survivors of human trafficking run by a courageous woman named Somaly Mam. Trafficked into a brothel as a little girl, she was raped and abused repeatedly before finally escaping. In 1996, she started a movement to rescue other trafficked girls and support them as they rebuilt their lives as she had. By 2010 her organization, funded in part by the State Department, operated three shelters across Cambodia that provided safety and caring, along with rehabilitation and vocational training, to reintegrate survivors into society.
The girls I met were shockingly young to be survivors of such terrible crimes, but I saw how the love and nurturing they were receiving had put light back in their eyes. Some eagerly showed me around, while others, who were shyer, cautiously watched to see what the fuss was about.
The crime of human trafficking is not limited to Cambodia, or Southeast Asia. Nearly 30 million people around the world are in modern-day slavery of one form or another, trapped in prostitution or laboring in fields or factories or on fishing boats. The United States is not immune. In 2010 six “recruiters” were indicted in Hawaii in the largest human trafficking case ever charged in U.S. history. They had coerced four hundred Thai workers into farm labor by confiscating their passports and threatening to have them deported if they complained.
As Secretary I appointed Lou CdeBaca, a decorated former federal prosecutor, to ramp up our global antitrafficking efforts and to produce reports on enforcement of antitrafficking laws in 177 countries. I also asked Lou to take a look at our own country, something the Department had never done before, because I thought it was important to hold ourselves to the same high standards we expected from others. By law, the findings of those reports triggered sanctions on countries failing to make progress, so they became a powerful diplomatic tool to encourage concrete action.
In addition to trafficking, I was also concerned about the unscrupulous, even criminal employers, aided and abetted by governments, who exploited their workers, adults and children alike. That’s one of the reasons I strongly support the right of workers to organize unions. After decades of struggle, workers in America formed unions strong enough to protect their rights and secure such advances as the eight-hour day and the minimum wage, achievements that helped create and sustain the American middle class.
In many countries around the world, unions are still suppressed and workers have few, if any, rights. This is bad for them and it’s bad for American workers too, because it creates unfair competition that drives down wages for everyone. Contrary to what some governments and employers might think, research shows that respecting workers’ rights leads to positive long-term economic outcomes, including higher levels of foreign direct investment. Bringing more workers into the formal economy and giving them fair protections has positive ripple effects for society. Inequality declines while mobility increases. Taxes are paid. Countries and communities are stronger and better able to meet the expectations and aspirations of their people. The flipside is also true: Denying workers their rights costs societies dearly in lost productivity, innovation, and growth. It undermines the rule of law and plants the seeds of instability. And it’s bad for us when foreign workers are too poor to buy U.S. products.
Back in 1999, I explored some of these questions in a speech at the Sorbonne in Paris called “Globalization into the Next Millennium.” Would greater economic interdependence lead to greater growth, stability, and innovation for people around the world? Or would it merely lead to a “race to the bottom” of the economic ladder for billions of people? Would it help to expand opportunities for all citizens, or reward only those of us already lucky enough to have the skills to navigate the Information Age? I suggested that it was time to tackle “runaway global capitalism’s worst effects” and “put a human face on the global economy, giving workers everywhere a stake in its success, equipping them to reap its rewards,” while providing “social safety nets for the most vulnerable.” A decade later the urgency of these concerns had only heightened.
The State Department had long had a bureau dedicated to democracy, human rights, and labor, although the last part sometimes was neglected. I wanted to change that, and so did my Assistant Secretary, Michael Posner, a human rights activist who had helped found the Fair Labor Association in the 1990s. Under Mike’s leadership, the United States stepped up its support for training programs and workshops on international labor standards for union organizers, employers, and government officials. We sponsored exchanges so that labor academics from around the world could learn from one another, helped police and prosecutors go after human trafficking and forced labor, launched new diplomatic dialogues with labor ministries, and signed agreements with key countries like Vietnam and China to provide technical assistance on a range of labor issues, from mine safety to social security.
In a town hall meeting in Dhaka, Bangladesh, in May 2012, a labor activist asked me what Bangladeshis could do to improve rights and conditions for workers, especially in their country’s booming garment industry. “We face all kinds of obstructions with the police, goons, thugs, and false allegations in court,” she said. “And, in fact, one of our leaders, Aminul Islam, was very brutally murdered.”
This was an issue I had raised forcefully with the Bangladeshi government because I thought that the case of the murdered trade union leader was a real test for the country’s justice system and the rule of law. In responding to the question, I also turned to the broader question of labor rights in a developing economy:
There are strong forces that oppose workers being organized. We have this in my own country. You go back to the 19th and the early 20th century when labor unions were just getting started, there were goons, there were thugs, there were killings, there were riots, there were terrible conditions. We passed laws at the beginning of the 20th century against child labor, against too many hours for people to work, but that took time. It took time to develop a sense of political will to address those issues. So you are beginning that, and it’s a very important struggle. . . . You are doing very important work. Do not be discouraged or intimidated. You deserve to have the support of your government and your society.
Then I explained some of the efforts we were making around the world to stand up for labor rights:
We have worked from Colombia to Cambodia with the owners of factories and other enterprises to help them understand how they can continue to make a very good profit while treating their workers right. . . . It’s a part of becoming a middle-class country. Workers deserve to have their labor respected and fairly paid for. Factory owners deserve to have what they pay for, which is an honest day’s work for the wages that they pay. So there is a way to accommodate those interests, and we’ve seen it, and we can continue to work with you to try to achieve it.
One area where economics and geopolitics come together most potently—and where U.S. leadership is most needed—is energy. Many of the international challenges I dealt with over my four years directly or indirectly sprang from the world’s insatiable hunger for energy and the shifting dynamics created by new sources and supplies coming online. Consider how often energy played a role in the events discussed in this book: the bitter dispute over oil between Sudan and South Sudan; competing claims in the South and East China Seas that were as much about control of resources under the seafloor as commerce on the water’s surface; the extensive effort to sanction Iran’s oil exports; and, of course, the international effort to cut greenhouse gas emissions and address the challenge of climate change.
Energy has always been an important factor in international affairs, but a number of developments have lent it new significance in recent years: growing economies in China, India, and other emerging markets have generated huge new demand; technological innovations have opened up previously inaccessible sources of oil and natural gas and made renewables like wind and solar cost-effective, creating new energy players to compete with traditional petro-powers like Russia and Saudi Arabia; and the urgency of combatting climate change has provided an incentive to develop clean alternatives to fossil fuels and improve efficiency.
The scramble for new energy resources had the potential to lead to more conflict or more cooperation around the world. I thought that, with the right strategy and tools, the United States could help steer away from the former and toward the latter. To help us do that effectively, I created a bureau at the State Department dedicated to energy diplomacy, and asked Ambassador Carlos Pascual to run it. He and his team worked closely with the Department of Energy, which had invaluable technical expertise but less of a global reach. Much of our energy diplomacy was focused on five broad challenges.
First, we tried to help resolve disputes between countries that either laid claim to the same resources or had to cooperate to utilize them. For example, recall that South Sudan has extensive oil reserves while its northern neighbor Sudan does not. But Sudan does have refining and shipping facilities, which the South lacks. That means the two countries, despite ongoing hostility, need to work together.
Second, we worked to discourage the use of energy supplies by one nation to dominate or intimidate another. Russia’s bullying of Ukraine and other European countries with natural-gas price gouging and supply cutoffs is a good example.
Third, we implemented sanctions targeting Iran’s oil industry and worked with partners around the world to significantly reduce their imports of Iranian crude oil and bring new supplies online elsewhere.
Fourth, we promoted clean energy sources like solar, wind, hydro, geothermal, and natural gas (which isn’t perfect but is cleaner than coal) that could help us slow the effects of climate change.
Fifth, we worked to prevent or mitigate the so-called resource curse by promoting transparency and accountability in extractive industries, and working with partner governments to invest resource income responsibly and avoid corruption. No country has suffered more from the resource curse than Nigeria. When I visited in 2009 and 2012, I stressed the urgency of Nigerians tackling corruption and investing revenues to improve millions of lives, not swell personal fortunes. Nigeria could be a G-20 member and an influential global voice if it made the hard choice to overcome the curse.
While we were pursuing all this work abroad, there were also exciting developments at home. American innovation was at the forefront of unlocking new energy supplies, whether it was hard-to-reach oil and gas or cutting-edge renewables. In 2013, the United States reportedly surpassed both Saudi Arabia and Russia to lead the world in oil and gas production. And electricity generation from wind and solar more than doubled between 2009 and 2013.
The boom in domestic energy production, especially in natural gas, created major economic and strategic opportunities for our country.
Expanded energy production created tens of thousands of new jobs, from oil rigs in North Dakota to wind turbine factories in South Carolina. Cheap and plentiful natural gas is helping drive down costs for energy-intensive manufacturers and giving the United States a big competitive advantage over places like Japan and Europe, where energy prices remain much higher. Researchers project that all the ripple effects from our domestic energy revolution could create up to 1.7 million permanent jobs by 2020 and add between 2 and 4 percent to our annual gross domestic product. The shift to natural gas is also helping lower carbon emissions, because it’s cleaner than coal. Greater domestic production is reducing our dependence on foreign oil, easing a major strategic burden, and freeing up supplies elsewhere to help our European allies lessen their dependence on Russia.
There are legitimate climate change concerns about the new extraction practices and their impact on local water, soil, and air supplies. Methane leaks in the production and transportation of natural gas are particularly worrisome. So it’s crucial that we put in place smart regulations and enforce them, including not drilling when the risks are too high.
If we approach this challenge responsibly and make the right investments in infrastructure, technology, and environmental protection, America can be the clean energy superpower for the 21st century. That means creating a positive environment for private-sector innovation and risk-taking, with targeted tax incentives, a commitment to research and development, and policies that encourage rather than undercut the transition to clean, renewable sources of energy. And it means investing in the infrastructure of the future, including next-generation power plants to produce electricity more cleanly, smarter grids to deliver it more effectively, and greener buildings to use it more efficiently. China and others are already racing forward with big bets on renewables. We cannot afford to cede leadership in this area, especially since American innovation holds the key to the next generation of advances, and our capacity to employ them at home and in our hemisphere is almost limitless. Our economic recovery, our efforts against climate change, and our strategic position in the world all will improve if we can build a bridge to a clean energy economy.
When grappling with some of these big global trends in energy and economics, it can be easy to forget how much they affect the daily lives of individuals and families around the world. One example that really brought this home for me was the simple but overlooked issue of cookstoves. It combined concerns about energy, the environment, economics, and public health at a local level. And it demonstrated how a creative, 21st-century approach to development and diplomacy could solve problems and improve lives in unexpected ways.
If you’ve ever built a campfire or tried to cook outdoors, you likely know what it feels like when the wind changes direction and black smoke fills your lungs. It can bring tears to your eyes. Now imagine if, instead of being a rare outdoor activity, this was something you experienced daily, inside your own home. That’s what happens to 3 billion people around the world who gather every day around open fires or old and inefficient stoves in small kitchens and poorly ventilated houses. Women labor over these hearths for hours, often with their babies strapped to their back, and they spend hours more gathering wood for fuel. The food they prepare is different on every continent, but the air they breathe is the same: a toxic mix of chemicals released by burning wood or other solid fuel that can reach two hundred times the amount the EPA considers safe. As the women cook, smoke fills their lungs, and the toxins begin poisoning them and their children. The black carbon, methane, and other “super pollutants” released in this smoke also contribute to climate change.
The results of daily exposure are devastating. The World Health Organization released data in March 2014 showing that household air pollution was responsible for 4.3 million premature deaths in 2012, more than double the number of deaths from malaria and tuberculosis combined. That makes this dirty smoke one of the worst health risks in the developing world. Although people have cooked over open fires and dirty stoves for all of human history, we now know that it is slowly killing millions of people.
I asked Kris Balderston, my Special Representative for Global Partnerships, to lead an effort to tackle this under-the-radar but deeply troubling and consequential challenge. And in September 2010, at the annual meeting of the Clinton Global Initiative, I launched the Global Alliance for Clean Cookstoves with nineteen founding partners from governments, business, international institutions, academia, and philanthropy. The Alliance decided to pursue a market-based approach to persuade companies to build clean, efficient, and affordable stoves and fuels. We set an ambitious goal: 100 million homes adopting new clean stoves and fuels by 2020. We knew how difficult this would be, from the technical challenge of designing cheap, safe, clean, and durable stoves to the logistical challenge of distributing them all over the world and the social challenge of convincing consumers to actually embrace them. But we hoped that technological breakthroughs and growing private-sector engagement would allow us to succeed. On behalf of the U.S. government, I announced a pledge of $50 million to get the effort going.
I was delighted by the speed and scope of the progress we made around the world. More than 8 million clean cookstoves were distributed in 2012, more than double the number in 2011 and ahead of projections toward the goal of 100 million. By the end of 2013 the Alliance had grown to include more than eight hundred partners, and the U.S. government had boosted its commitment to $125 million.
Since leaving the State Department, I have continued my work with the Alliance as an Honorary Chair. There are projects in Bangladesh, China, Ghana, Kenya, Nigeria, and Uganda, with efforts beginning in India and Guatemala as well. The Alliance now supports thirteen testing centers across the world and has spearheaded new global standards for cookstoves, giving manufacturers, distributors, and buyers guidelines for cleanliness, safety, and efficiency standards. This is a crucial step in building a viable market that will deliver clean stoves to consumers who will actually use them.
In difficult economic times, there is an inherent tension between our desire to lift other people around the world out of poverty and into the middle class and our need to protect our own hard-pressed middle class. If global economics were a zero-sum game, then the rise of other markets and the growth of other countries’ middle classes would always come at our own expense. But it doesn’t have to be. I believe our own prosperity depends on having partners to trade with and that our fortunes are inextricably linked to those of the rest of the world. And I am convinced that, as long as the competition is fair, the more people around the world who leave poverty and join the middle class, the better it will be for America.
This belief is rooted in my own experiences growing up in a middle-class American family. After World War II my dad, Hugh Rodham, opened a small drapery fabric business. He worked long hours and sometimes employed day laborers. He often enlisted my mother, my brothers, and me to help with the silkscreen printing. My parents believed in self-reliance and hard work, and they made sure we kids learned the value of a dollar and appreciated the dignity of a job well done.
I had my first paying job, other than babysitting, when I was thirteen. I worked for the Park Ridge Park District three mornings a week supervising a small park a few miles from my house. Since Dad left for work early in our only car, I had to walk to work, pulling a wagon filled with balls, bats, jump ropes, and other supplies back and forth. From that year on, I always had summer and holiday jobs. They helped pay my college and law school costs. I was grateful for the sacrifices my parents made to give us opportunities they never had, and Bill and I worked hard to pass on to Chelsea many of these same values, including a strong work ethic. We felt this was particularly important because she was growing up in such unusual circumstances, first in a Governor’s Mansion and then in the White House. If my parents were alive today, they’d be incredibly proud of what a strong, principled, and hardworking woman their granddaughter has become. I know I am.
The world has changed a lot since I was growing up, but the American middle class remains the greatest economic engine in history and the heart of the American Dream. Its success is rooted in the basic bargain that if you work hard and play by the rules, you will prosper; that if you innovate, if you create and build, there is no limit on what you can achieve. The middle class has always been defined as much if not more by the values and aspirations we share as by the goods we purchase.
My time as Secretary of State coincided with another great movement of people into the middle class, but this time it was happening in other countries, as hundreds of millions climbed out of poverty for the first time. The projections are staggering. The global middle class is expected to double in size by 2035, to as many as 5 billion. Two-thirds of all Chinese, more than 40 percent of all Indians, and half the population of Brazil are all expected to make it into the middle class. For the first time in history most people on earth are projected to be middle class rather than poor by 2022.
This explosive growth raises questions about our planet’s capacity to sustain the level of consumption we’ve come to identify with middle-class life, especially when it comes to automobiles, energy, and water. Climate change, scarce resources, and local pollution will force us to make dramatic changes in patterns of production and consumption. But if we do it well the changes will create new jobs, new businesses, and a better quality of life. That means the rise of a global middle class will be good for the world. It will also be good for Americans. As wages and incomes rise elsewhere, there’ll be more people able to buy our goods and services and less incentive for companies to outsource our jobs. After years of stagnant incomes and declining social and economic mobility, we need it.
Middle-class people around the world are also more likely to share our values. People everywhere typically want the same things out of life: good health, a decent job, a safe community, and the chance to provide education and opportunities to their children. They care about dignity, equality of opportunity, and due process before a fair judicial system. When people manage to climb into the middle class, and the immediate needs of survival are less pressing, they also tend to demand accountable governance, efficient services, better education, better health care, a clean environment, and peace. And most of them find the siren song of political extremism less appealing. The global middle class is a natural constituency for America. It’s in our interest to see it grow to include more people. We should do everything we can to expand it at home and around the world.