Briefing on the Establishment of the Office of the Under Secretary for Economic Growth, Energy, and the Environment

Special Briefing
Robert D. Hormats
Under Secretary for Economic Growth, Energy, and the Environment 
Washington, DC
December 8, 2011

MR. TONER: Good afternoon, everyone. Welcome to the State Department. First, I just want to give – before we get into our special briefing, a brief shout-out to my friend Mike Singh and the folks from the Institute for Near East Policy that – who have joined us in the briefing room today.

Under Secretary Bob Hormats is here this morning to brief us on the establishment of the Office of the Under Secretary for Economic Growth, Energy, and the Environment. This office replaces the office that Under Secretary Hormats previously led, and this changes the result of the Quadrennial Diplomacy and Development Review, the so-called QDDR, that Secretary Clinton initiated, and reflects a critical role that these issues play in the Secretary’s 21st century statecraft agenda.

As Under Secretary Hormats will explain, this office is designed to promote new synergies and greater efficiencies in the State Department between and among those – the issues of economic growth, energy, and the environment. So I’ll turn it over to you, Bob, to --


MR. TONER: -- discuss in greater detail.

UNDER SECRETARY HORMATS: Good morning. Welcome to everyone. This is, for me - and I think for many of us who are working in environmental issues, economic issues, energy issues, science and technology issues - a very exciting day in the sense that now, we are going to actually be implementing and fulfilling a vision that Secretary Clinton had articulated months ago and was encapsulated in one of the key recommendations of the QDDR, and that is we’re announcing the Office of the Under Secretary for Economic Growth, Energy, and the Environment.

And this is going to focus on, as I noted, some very important priorities for the United States, for the President, for Secretary Clinton, and for the entire Department, and for myself and my colleagues, and that is a very proactive set of approaches on the environment, on economics, on energy, and on science and technology issues.

Before I get into the organizational details of this, I just want to emphasize that there are organizational changes that are going to be made in terms of a new bureau, for instance, for energy – what’s going to be called ENR. But let me just emphasize this is not just about bureaucratic reorganization. This is really about utilizing our resources in the Department more efficiently, focusing more directly on these issues, establishing a cross-fertilization of ideas among these various functions that I’ve mentioned, and finding ways in which the energy area, the environmental area, and the economic area and the science area can mutually reinforce one another, and we can, as a result of this, utilize our resources more efficiently, and also direct these resources in a more focused way on the kinds of issues that I’ll be describing, and also to break down silos. Having been in government before and now coming back to government after 25 years out, one of the things that I think is very important – and it’s really a key point for the Secretary of State – is to break down silos and have a lot more interaction among various parts of the Department so they can work together on similar objectives.

So what this is going to look like as a result of this process that we’re undertaking is there’ll be a – under the – in the E family, there’ll be the Bureau of Oceans and Environmental and Scientific Affairs, OES, led by Assistant Secretary Kerri-Ann Jones. And while we’re announcing this today, Kerri-Ann and I have been working together for many months now in anticipation of this, and she has been giving me a lot of briefings on environmental issues and I’ve been very actively involved in a whole number of things with environmental groups and on environmental priorities in the State Department. So Kerri-Ann will continue to be the assistant secretary there and will be the leader of the effort in this bureau.

Then the Bureau of Economic and Business Affairs – it was EEB, but now it’s EB because the energy function has moved to another bureau – that’ll be led by Assistant Secretary Jose Fernandez, who is currently Assistant Secretary of EEB. And the Bureau of Energy Resources, which will be called ENR, will be led by the Secretary’s Coordinator for International Energy Carlos Pascual, who has done a fabulous job in standing up this bureau in, I’d say, record time for creating a new bureau. And then we have the Office of the Science and Technology Advisor, which is known as STAS, S-T-A-S, led by a very distinguished scientist named Dr. Bill Colglazier, who has really been quite helpful in strengthening the capabilities of this Department in the area of science and technology. And we’ve worked very closely with him in trying to inject science and technology more directly into a number of aspects of our policies.

And then finally, we’re going to establish the Office of the Chief Economist of the State Department. We haven’t selected the individual yet, but this will be a person who both understands economic issues, financial issues, and how they relate to our broader foreign policy. As the Secretary put in her speech in New York at the New York Economic Club, she wanted to have people in the State Department who can read a Bloomberg terminal and can also read Foreign Affairs magazine and understand both of them and how they relate to one another, so that’s the kind of person we’re looking for. And we hope to make some announcement soon, but we’re undergoing a search process.

Again, this announcement today really is a culmination of an effort that we’ve been developing over a period of time to implement the Secretary’s commitment to economic statecraft, to environmental sustainability, to energy security as fundamental elements in our overall foreign policy. And our goal here in each one of these is to really do two things: One, we want to use these to strengthen our capability to serve the interests of the American people abroad, and that is we’re emphasizing, for instance, export promotion – the President’s National Export Initiative – we’re emphasizing attracting foreign investment to the United States which creates a lot of jobs. Energy is critically important to the American people. It’s quite obvious when oil prices go up or there are disruptions in supplies, they have an effect which is geostrategic, but it also has a major impact on the American economy. And of course, the environment has become an increasingly important issue for Americans, and indeed, for people around the world.

So we’re trying to look at all these. And what we’ve found as we’ve been developing this process is that there are a lot of synergies, there are a lot of areas of cross-fertilization among them. And I think that’s part of the reason – the goal here, as I say, is not just to move boxes around, but we’re going to have regular meetings between the heads of these various bureaus and experts in these bureaus with one another. Just to give you one example – there are a lot more that we’ve developed – but one that I think really makes a lot of sense where you combine all three of these is in the area of working with American business and with the American environmental community.

Because increasingly, we’ve found that American businesses that look for ways of saving energy and saving raw materials in their production and their factories and the way they produce their goods and services and the way they build their buildings can do a number of things to, one, improve their bottom line – that is to say, make higher profits. And they do it by utilizing resources more efficiently – utilizing energy more efficiently, raw materials more efficiently, and other things.

So it’s good for the environment, it reduces our dependence on energy, and it enables them to be more profitable. So we’re looking for more and more ways of cross-fertilizing the work of these various departments. The – you can go back to the QDDR of December 2010 and see a little bit more of the details of what we’re doing and how it was spelled out in the QDDR, but this is basically the organizational framework that we’re going to be pursuing.

And one of the points that I made – and I just want to emphasize again – we understand that we’re in a resource-constrained world, and therefore, when we look at this and we look at the kind of world we’re facing, it’s particularly important that we use our resources in the most efficient way. This is a very high priority for the Secretary. Coming out of the private sector, it’s something I have focused on as well. And we think that this combination and the cross-fertilization and the mutually reinforcing elements of this is going to be a good way of utilizing our resources – our human resources more efficiently, our financial resources more efficiently. We’re not creating any – we’re not adding any people within the State Department to do this.

We’re reprioritizing, we’re restructuring, and we’re creating synergies so that we use the human resources we have, which are really quite substantial in this building – a lot of expertise – and utilizing this expertise in the most effective way to accomplish our foreign economic objectives, our international economic objectives, and fundamentally, and the bottom line is how do we best serve the interests of the American people and do the kind of things in our international economic policy that serve their interests in terms of economic growth, in terms of energy stability and security, and in terms of improving the global environment in ways that benefit the United States in a very direct and a very sustained fashion.

So this is my quick introduction. I’m very happy to answer any of your questions, and if you have some now, great. If you don’t and want to follow up later, happy to talk to any of you.

MR. TONER: Andy, you want to --

QUESTION: Yeah. Hi, Andy from Reuters.


QUESTION: Where there are people reading Bloomberg terminals, you’ve also got people –

UNDER SECRETARY HORMATS: You could put Reuters in there, too.

QUESTION: --reading Reuters terminals. (Laughter.)

UNDER SECRETARY HORMATS: You could put Reuters in there, too.

QUESTION: Thanks. Just a couple of quick questions. I was wondering if you could –

UNDER SECRETARY HORMATS: When I was in the private sector, I read both, so --

QUESTION: How Todd Stern’s operation fits into this, if it does at all?


QUESTION: And how that climate change --


QUESTION: -- part fits in? And --


QUESTION: -- I have a second one too.

UNDER SECRETARY HORMATS: Yeah, great point. What we’re doing – Todd and I have worked very closely. He works very closely with OES, as you know – a lot of people in OES. His job and the people who support him will not be changed at all in this process. The people who supported him in OES will continue to do that, and so there will not – his – he will continue to do exactly what he was doing. He will continue to get very strong support from people in OES and other parts of the Department who were supporting him now. And certainly, he has very strong support from me and from my immediate team. So we’re – this won’t affect what he’s doing or the procedures or the structure for Todd’s efforts.

QUESTION: Okay. So is that a standalone bureau? Does that count as – or --

UNDER SECRETARY HORMATS: Well, it’s separate. He reports to the Secretary, but he can call on other people in the building to support him as he does his work, which he’s, as you know, doing right now.

QUESTION: Okay. Right. And the second question was: I was hoping you could talk a little bit more in depth about the ENR part of this.


QUESTION: And specifically, what sorts of issues you foresee that group taking on --


QUESTION: -- and how you’re going to actually promote something as sort of amorphous as energy security in a diplomatic way.

UNDER SECRETARY HORMATS: Sure. Let me just go through a few elements of that.

One is we want to work with other countries around the world. We have, as you know, the International Energy Agency that attempts to strengthen cooperation among oil-consuming countries, but also work more closely with energy-supplying companies to – countries – in order to get greater transparency, greater information about global energy markets, to work with countries to help them – help encourage diversification of energy. We’ve been working on things like how do you develop new sources of energy, new ways of transmitting energy to greater diversification, both for the United States and for other countries as well.

So one is the energy security part, which is encourage more production in countries that have more leeway for producing more oil, but also improving things like pipeline systems so that there can be greater diversification of supplies around the world, which help us and help other – our allies and friends, say, in Western Europe. So the strategic part’s very important.

The second part is to help with governance in the sense that a lot of countries, as you doubtless know, have large amounts of energy resources, and making sure there’s transparency in the way the financial returns on those resources are utilized. Transparency accountability is very important. The Secretary’s spoken to this, and this is another area that will – that the new bureau will be working on.

And third is with respect to energy development. As you doubtless know, in many countries – Afghanistan and many countries around the world, delivering energy – in some cases, even countries that produce live energy – getting it to people in rural villages, distributed energy is very complicated. And what we’re trying to do, and Carlos Pascual and his team are trying to do, is work with developing countries in order to find ways of helping them to develop energy resources that support the development effort. And those can be better grids or distributed energy or solar or hydropower or wind energy, so that you can get more energy to the people or the parts of the country that need it for their development. So those will be the several areas that this bureau will work on.

But in the past, we’ve had an energy function. It’s been under the economic bureau, which was then EEB, but the Secretary thought that – and I think it’s a – it was a very important point – that it needed more visibility and it needed more prioritization and it needed a more direct focus. So by pulling all these things together – energy security, energy stability, dealing with energy governance issues, for instance, we’ve got several of those and then also dealing with development – we have something called the Extractive Industries Transparency Initiative, which is designed to help countries build in transparency and accountability in their – in the way they use the resources of their energy, and also in the way contracts are led, blocks are auctioned off, and things like that.

So that’s what this is going to do, and then the development side.

QUESTION: Thank you.

MR. TONER: Jill.


QUESTION: Thank you. I just wanted to check, with the Keystone Pipeline and in that issue, how will this – will this office have responsibility for that? And –

UNDER SECRETARY HORMATS: Well, as you know, OES has been working on this very actively. The procedures that have been put in place before will be the same procedures we’re going to follow. This won’t change those procedures at all. The way the process has been conducted in the past will continue. This will have no effect on the process that’s underway for addressing the Keystone at all.

MR. TONER: Any other questions? Go ahead.

QUESTION: I apologize for coming in a bit late.

UNDER SECRETARY HORMATS: No, that’s all right.

QUESTION: I just wanted to ask you a separate question, if that’s okay, dealing with economic policy.


QUESTION: In India, the United States has long been asking for an opening of the retail sector. This week, the Indian Government --


QUESTION: -- has postponed the decision to allow 51% FDI, foreign direct investment. How does the United States see that, how does the United States want that to be – to go?

UNDER SECRETARY HORMATS: Well, we’ve been having these discussions with India for some time, and the Indians are working it through their process. And I think the Indians know our position. We know – they know the benefits that we think would result from allowing this multi – grand retailing to take place in India.

But I think they have to work through their domestic political process, how to get there, and I don’t want to comment on their internal affairs at this point. I think they know our view that it would be very beneficial to Indian farmers, Indian citizens, Indian consumers in general. But the details of how the Indian Government and the Indian Parliament and the Indian officials work this through, I think I’ll leave to the Indians and not try to advise them on how to proceed.

MR. TONER: Is that it? Any other questions?

UNDER SECRETARY HORMATS: If you have any more, we’re happy to answer them. But I just want to emphasize again that we’re deeply appreciative, all of us who work on these, to Secretary for her leadership and moving this through. It never would have happened but for her, but I think all of these areas will be well-served by this combination.

I think we utilize the taxpayers’ resources more efficiently; we utilize our resources here more efficiently. And these are all these sort of 21st century diplomacy statecraft issues, and we have to, first of all, address them with a high degree of purposefulness and a lot of energy in terms of the way we address these issues, utilize the resources we have in the most effective way. And the bottom line is: How do we serve the interests of the American people? They expect us to address these kinds of issues which are important to them, and I think this will enable us to do that in an efficient way, and in a way in which each of these areas can reinforce the priorities of the other.

So – and I look forward to this an as important challenge, and more importantly, an important opportunity to demonstrate to the American people that we are utilizing their resources efficiently and that we are pursuing our economic, our energy, and our environmental goals in a mutually supportive and very effective way. And I look forward to working with our environmental people, our economic people, and our energy people in accomplishing this objective. So, thank you very much.

PRN: 2011/2090