Transcripts
Ambassador Blake’s interview with Benchmark/ LMD; aired on October 5, 2008 on TNL TV
LMD: Mr. Ambassador the life line bill was just not passed stateside and all the markets crash--domino effect across the Atlantic as well. How far will the ripples reach do you think, and what is the effect going to be like?
Ambassador Blake: Well President Bush and Treasury Secretary Paulson express their regret that the Congress was unable to pass the bailout plan, and I can assure all of your viewers and readers that already people in Congress and the Administration are hard at work to try to revise the bill to meet the expectations of some of the lawmakers who didn’t vote for it.
LMD: Do you think Europe will also? How much of an effect will it have across the globe?
Ambassador Blake: I think all these markets are now globally integrated so I think it will have an effect. I think there can also be a positive effect once an agreement is reached and I’m confident that an agreement will be reached
LMD: You know there lots of top corporations like Lehman Brothers, American International Group, Merrill Lynch that have pledged funds for non profit organizations--with them going belly up or saved, so to speak, how much of a crisis will we actually face with maybe not getting the pledged funds?
Ambassador Blake: I think there may be a little bit of an impact but not an excessive impact. Last year I think the figures showed that there were about $300 billion dollars given from private and corporate contributors to NGOs--- a very large amount of money. In fact a record amount of money and that was in the beginning of the financial crisis. There probably will be a modest impact this year because of course Americans have less in their pocketbooks, but I think Americans always give generously, 75% of that $300 billion was from private individuals and they are always very interested in what’s going on around the world and give generously when there is a crisis around the world. So I think there will only be a modest impact, that would be my guess.
LMD: Now given the current scenario, neither Senator Obama nor Senator McCain can expect any help from the Federal Reserve. The dollar is floundering; inflation is well already at 5.4%; the bill doesn’t seem to be seeing any light. So the Federal Reserve may find it impossible to keep cutting interest rates to help stimulate the economy. Would you comment on that?
Ambassador Blake: Well again I think the first priority of everybody will be to try to reach an agreement on this plan. I think there has been a lot of misunderstanding about the plan. Everybody thinks of it as a $700 billion bailout. It’s really going to be an effort on the part of the Federal Government to buy up a lot of these risky assets. I hope that once the markets have stabilized, the value of those assets will rise again and that the government will then be able to sell them and they hope recoup most or all of their investments. So in terms of the impact on the U.S. Treasury, I don’t think it will be that severe and again the hope is to try to restore confidence and stability in the markets and Treasury Secretary Paulson and head of the Federal Reserve Ben Bernanke have said that they then want to work on measures to strengthen you know the long term outlook of United States economy, to strengthen oversight and again to restore confidence in those markets.
LMD: What measures do you feel have been taken to address the scrutiny if it does happen and also these highly likely realities of the US credit standing globally?
Ambassador Blake: Well first of all I don’t think that our credit standing is at risk. All of this money is relatively small percentage of the overall US economy so I haven’t seen anywhere, any suggestions that our triple A rating will be in any way in danger—debt as a percentage of our GDP it is still very low but again I think it is very, very important now to take steps to work in a bipartisan manner with the Congress and also with all of the federal regulators to reach agreement, first of all a stabilization package but then a series of longer term efforts to restore confidence and the resilience and strength of the economy.
LMD: Moving from Wall Street to Main Street so to speak, taxpayers argue that in the long run they have been made to pay for some bad decisions and also maybe even politicians agree. Now how will this effect long-term policy, foreign policy initiative especially in regards to development aid to transitioning economies?
Ambassador Blake: I don’t expect there to be a major impact on foreign aid. Obviously we are at a very crucial time in our elections as well. One of the reasons that this bailout plan was not passed in the first place was that the entire House of Representatives is up for election in 6 weeks and 1/3 of the senate as well so they very much have their eyes and their minds on that re-election and with that in mind they were very worried what the voters in the United States felt about this bailout plan. In terms of the longer term impact on our aid policies, I think that’s going to be part of a larger and broader review that whoever the new president is will have to make about all of our policies, both our domestic policies and our foreign policy. I think in the most recent debate that you saw between Senator McCain and Senator Obama is that both of them made references to the fact that because of this credit crisis they will have to look at some of their policies. For example, Senator Obama said that he will have to take a look at his health care plan. He originally hoped to provide universal access for health care and he understands that’s going to be expensive that he may have to take another look at that
LMD: Representative Newt Gingrich’s survey found that 84 percent of those polled think that the CEO’s are to blame for the current financial crisis. Would you agree?
Ambassador Blake: Well I would certainly agree that that’s what the public thinks. Yes, there’s a lot of anger and part of that is because people feel that they have benefited disproportionately from a lot of the gains over the last 8 years and so now why should they suddenly be bailed out---I think there is quite a lot of anger from the American public but there’s also a sense that homeowners, individual homeowners have to be protected so the administrations has taken some steps in that regard. As I said they will be buying up a lot of these bad debts, if the plan goes through, and failed mortgages and there are some provisions to allow some refinancing of those bad debts but there’s also provisions to help individual homeowners who in fact are doing ok but are at risk. So I think there are number of steps to try to help individuals as well--again that will address many of the concerns particularly of the Senate democrats and House democrats who are, just as you said, angry about support for Wall Street, but what about Main Street.
LMD: Speaker of the House Nancy Pelosi, in a fairly strong message, told Wall Street the party is over. Now is this and indictment of corporate America or will we see it as being guilty of exacerbating the country’s economic woes?
Ambassador Blake: I think that again there is some bitterness about some of the gains that people have made and again of the sense that individual homeowners and individual Americans have not benefited enough and therefore their interests also have to be protected.
LMD: What would be the ultimate fallout in terms of lobbies?
Ambassador Blake: Unfortunately I think lobbies are here to stay no matter what happens. The lobbies are very strong corporate culture in the United States, particularly in Washington and they’re needed quite frankly because they are the ones that express the views of their various constituencies be they foreign constituencies but also business interests. Everybody likes to make the lobbies their favorite whipping boy, but they also help to make the legislative process work and they faithfully represent the views of their constituents--so even though everybody rails against lobbies I think they’re here to stay.
LMD: Now this is an election year and rather exciting one at that what is your opinion about that? How is all this going to affect campaigning funding and also they way big business is viewed in America?
Ambassador Blake: Well there has been record spending this year on campaign funding. Senator Obama in particular has really done extremely well in raising money on the internet and has raised record amounts of money including in the last month. So far it hasn’t had much of an impact but obviously the stock market crash of yesterday will have some impact I think on giving but there’s tremendous interest on this election in the United States as there is around the world. There’s a real sense that it is going to be quite a defining moment for us at the beginning of the 21st century in the choice that we make will have a very important impact on all of us. So I think people will continue to give generously because they understand the great importance of this election.
LMD: Mr. Ambassador let’s move a little bit, to skim over some politics and current affairs. You recently said very strongly that the U.S. would like to see armed cadres in the east disarmed. Why now and why not in the run up to the elections?
Ambassador Blake: Well actually we have always said that they should be demobilized. I gave a speech last year where we were opening up another vocational training centre just about a year ago now. And I said that the TMVP and other paramilitary should be demobilized and I’d like to just make a slight distinction there because some of my comments were misreported. What I said was that they should be demobilized and there’s an important difference. We recognize that there still are LTTE cadres in the East and that they pose a threat to the TMVP but other people as well. So we’re not saying that they should be disarmed, we’re saying that they should be demobilized. That is perhaps some of them should go into the army and then they can perform an effective counter insurgency from within the army perhaps in the form of a regular unit of some sort and then those who are not needed by the army should be given vocational training and demobilized in that fashion and perhaps sent overseas to work in the Gulf following many other Sri Lankans who are working there already. So I think there’s an important distinction to be made between disarming and demobilizing we’re in favor of demobilizing.
LMD: However, do you think this is a realistic expectation, given that the government depends on these militias to, in an LTTE drive, to keep the peace moving clear East as well as in the North which appears to be slowly but surely getting into government hands.
Ambassador Blake: Yes, again I think that they will continue to be used and they should be paid by the army or perhaps by some other element of the security services so, in that sense, they will be able to deal with the security challenges; but if you’re going truly empower the new elected chief minister of the East Mr. Pillayan, he and his provincial councils should really have the authority under the 13th amendment to take care of security and I think he’d like that responsibility and the President certainly has said that he’s in favor of that. So I think that’s the way to go and that not only legitimizes these elected institutions, but also helps get these paramilitaries out of the picture I think that would help to reduce violence and our interest in this is that we want to encourage private sector investment. So we’re spending a lot of our own resources to try to partner with the private sector to generate new livelihoods in the east and business.
LMD: In the current light of the financial crisis state side what is the likelihood of ongoing development programs in the eastern region of Sri Lanka continuing and that what provisions are being made to ensure that continuity?
Ambassador Blake: I don’t think that the current financial crisis will have any impact on our current aid program here--that’s ongoing. Whatever money is set aside for that there will have to be a supplemental of some sort to fund the bailout plan they won’t I don’t think they’ll cut existing programs.
LMD: At the moment the recent sessions of the UN, US Assistant Secretary of State Richard Boucher told our President Rajapaksa that he would like to see a resumption of talks towards a negotiated settlement now could you just unpack that directive a little bit--especially in terms of future power sharing?
Ambassador Blake: Well we believe that the long term answer to the conflict that exists here is a political solution. Certainly the government has made a lot of progress in recent months particularly in the North, but we think that even if the government is able to occupy all of the Vanni it will still be a residual force of one to two to three thousand LTTE Kadar’s who will go underground, they will continue to have the support of the Tamil Diaspora. Therefore, it is very, very important for the government to come forth with a political solution try to drive a wedge between the LTTE and Tamil Diaspora—to give the Tamils in the North, all of the Tamils a sense that they belong in the south that they have a future of respect and of dignity and that they will be able to have a measure of autonomy in the areas in which their population predominates and that’s really what we’re seeking. It’s really up to the president and his team to figure out when they should engage the LTTE and what the elements of that political package would be but that I think the co chairs advice on that particular very important issue.
LMD: Given that the region, our South Asian region, is rather volatile at the moment, what role, if any, does the US see India playing in Sri Lankan politics?
Ambassador Blake: Well, India is the most important power in the region and certainly we work extremely closely with India as a co chairs—but as the United States you know very well of our very, very strong partnership with India. We’re in the final stages of -- what we hope will be approval of the US India Nuclear Deal in Congress, the House has already passed the bill, the 123 agreement as it’s called, the implementing agreement. The Senate we hope will be poised to do so when they come back into session on Wednesday. So that is really quite a symbol of the new and emerging partnership between the US and it shows that we really believe India is going to be a very strong partner of ours across the board in confronting the challenges of the 21st century.
LMD: US interest in South Asia hinge at the transhipment of oil from central Asia to high seas while to Pakistan. Now how will the discovery of oil, if any, what is the effect that will have in this region, if we have oil in this region?
Ambassador Blake: Well as you know there has been some preliminary effort to try to see if there’s any oil in the Mannar basin. So far American companies really haven’t taken an active interest in that. There have been some preliminary bids from some other, Cairns for example, but I don’t expect that the amount of oil, that thus far people are talking about is going to have a major political economic impact certainly not on the world oil markets compared to the vast quantities that exist for example in Russia and in the Gulf—I think it’s a relatively small amount that we’re talking about here Gulf of Mannar but I hope I’m wrong because that would be good to help Sri Lanka to reduce its dependence.