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O'Neill says poverty, terror a challenge

Glenn Somerville in New Delhi

Wrapping up a tour of three South Asian nations plagued by poverty and terrorism, US Treasury Secretary Paul O'Neill on Sunday rejected the idea that the two were directly linked but added wealthy nations must help Afghanistan, Pakistan and India deal with both scourges.

After a week in the region that featured a rapid visit to Afghanistan in support of rebuilding efforts in the war-ravaged country and longer stays in the other two nations, the US Treasury chief headed for England to speak to a business group in Manchester Monday before heading for Washington.

Speaking to reporters before leaving India, O'Neill said he was struck by the South Asian region's acute need to stimulate economic growth to deal with a teeming population. Collectively, the three countries account for about a third of the people on Earth, many of them in rags and jobless.

O'Neill's apparent intent included demonstrating Bush administration backing for private sector-led development and for better use of Western aid as well as stiffening the fight against money flows to terror groups. He insisted each had equal urgency.

Poverty only one issue

"I don't think the fact that you are poor causes you to want to go out and kill people you don't know, it takes more than that," O'Neill said, adding the challenge was a larger one to try to bring some relief and protection on both fronts.

"I don't think it's necessary to say we've got to do one and we can't do the other," he said.

"We've got to do both, in fact we've got to do 50 things or a thousand things and the idea that emphasis on one excludes emphasis on the other is just dead wrong."

Afghanistan was a case study in the region's acute needs, its citizens living on an average income of less than $1 a day a year after the United States drove out the hard-line Taliban rulers.

But O'Neill, who met Afghan President Hamid Karzai and squeezed in quick visits to a girls' school and other sites in eight hours in the country, stressed US determination to help the shattered country rebuild.

"Afghanistan will not be forgotten ... the United States is committed to be here for the long term," he told a press conference in Kabul.

Rifles and heavy-duty military equipment were evident around the sandbagged city, but bright spots included a visit to a girls' school where eager students attended in shifts so that a larger-than-expected swell of students could be accommodated.

In Afghanistan as elsewhere in the region, O'Neill preached his faith in private-sector involvement and in trade to foster prosperity, but a bid for a regional trade initiative that would drop barriers to flows of goods between Afghanistan, Pakistan and India met at best measured success.

"I don't know, we'll see, " O'Neill said when asked if he felt he had made progress. "I found in talking with businessmen an unfettered interest in that idea."

Smuggling is rampant in much of the region, especially Afghanistan, and cross-border trade is virtually unregulated with fees and charges taken by warlords or those able to collect them.

In two days in Pakistan, O'Neill mixed visits to schools and high-tech sites with official meetings with his counterpart, Finance Minister Shaukat Aziz and President Pervez Musharraf.

Ways to promote growth

He said Sunday that Pakistan's military leader expressed strong philosophical conviction during a meeting that his main goal was finding ways to promote economic growth.

"He didn't talk to me about tactical maneuvers of tanks and stuff but of where all of the things he has started doing will lead in terms of creating a prospect for a better life for people in Pakistan," O'Neill said.

It would serve the interests of the whole region if the leaders of the three nations had more direct conversations, he added.

That is unlikely soon, with India and Pakistan in a state of continual tension over hotbed areas like Kashmir, disputed by both nations and where Islamic terror groups are active.

O'Neill delivered one of his most toughly worded speeches to a business group in New Delhi, warning that widespread corruption and bribery were "frightening away honest businessmen and investors" and had to be brought under control.

"Respect for property rights and protection against public or private thievery is an essential ingredient for economic success," the US Treasury chief said.

Self-dependence instead of more aid and reforms to create conditions attractive to foreign investors was a common theme of O'Neill's public presentations, especially in India where he said the prospect of its current one billion population growing by 700 million in the next two decades was daunting.

"I don't think the world's economic development problems can be solved by charity," he said Sunday.

"I do think that as governments create circumstances both for their own good and for creating a context in which development can occur, then foreign direct investment will come."

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