Sam Altman:
Look, when we decided to launch ChatGPT, we thought it was going to do well but we had no idea how well it was going to do. We knew they were going to be great eventually, but we didn’t think they were good enough to resonate like Chat GPT and GPT 4 have. This technology, even with all of its current limitations, is far more useful than we thought and can integrate into our lives in a much more valuable way than we thought. Now that we know that, as we think about launching the next much better models, we come with a different perspective. I learned something about important and urgent problems and not letting the important but not urgent ones fester. Here’s the thing I’m going to go get done in 2024.

Interviewer (Ina Fried):
What I found fascinating was that clip was actually circling around Twitter and I think people did kind of miss the mark on what Sam Altman meant when he was talking about this because there have been some key changes in how Sam talks about the AI. And when I say AI, I’m talking about GPT 4 and GPT 5. I think what Sam is trying to do is downplay GPT 4’s capabilities. The reason that I think he’s doing this, and this is just a hunch, but hear me out, I think that Sam Altman knows that these OpenAI’s companies are catching up to GPT 4’s level. Meta has even said that they publicly are going after the GPT 4 Benchmark. Google has previously gone after the Benchmark with Gemini. But I do believe that Sam Altman saying that, for example, GPT 2 was good, GPT 4 was okay, is basically saying that GPT 5 is going to be pretty incredible.

Sam Altman:
But of course, as we do know, something that you do need to remember is that it might be a GPT 4.5 release because if these systems are as even good as some of the internal people have claimed to be, then I think the shock would be a bit too much for the industry. Essentially what that would mean is that they might face scrutiny from regulators and AI safety teams because, of course, as you know, with every iteration in the models, there’s a significant jump in ability and also emerging capability.

Interviewer (Ina Fried):
I’m going to just play this bit again because he says even with all of its current limitations, and I mean think about it like this, right? If you’re a company of an AI company like you’re the CEO of an AI company, you’re not going to be out there publicly saying that even with all of its current limitations. But GPT 4 does have limitations, and you have to remember this is a model that has been out for quite some time. So I think the fact that he talks about the fact that it’s far more useful than what we thought and this is why I say okay it’s pretty different because he said okay now that we know and we think about launching the next much better models, we come with a different perspective. So that is why I say it’s going to be more fascinating and even in the recent video we did talk about the fact that Sam Altman and when he talked to Bill Gates was essentially saying that GPT 5 might be a more personal AI system.

Sam Altman:
If you don’t believe that that is the route that they’re taking, you may have missed the secret update in which they did a memory update. Now, if you don’t know what that is, I’m going to show you guys a quick screenshot. Essentially, if you’ve used Chat GPT for quite some time, you may or may not have seen this screenshot right here. This screenshot is not a leak, it’s not a false, it’s not fabricated. This is 100% real because even Greg Brockman has tweeted about this. The OpenAI employees have tweeted numerously about this and essentially what we have here is the memory update. So essentially it says your GPT can now learn from your chat to keep the conversation going. It’s going to carry what it learns between chats so even if you start a new chat, it’s going to know what happens before. It’s going to also improve over time which means it’s going to remember details, remember preferences on how you like to be spoken to on certain things,

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GLOBAL AGENDA What do you think are the main risks associated with the growing US current account deficit? LARRY SUMMERS It’s never the acceleration that kills. It’s the deceleration. And the question goes to the sustainability of the US current account deficit at a time when it is large, it is financing consumption rather than investment and is primarily pointed towards and relying on official rather than private sector finance.

GA How sustainable and desirable is the current arrangement of foreign official creditors financing the deficit, what you call the international vendor finance arrangement?

LS In the short run it has its attraction. But in the long run it’s not sustainable and there are likely to be costs associated with its unwinding. My own judgment would be the sooner it’s unwound the better.

Necessary measures for its unwinding include an increase in US national savings, an adjustment of undervalued currencies and, politically, measures to stimulate domestic demand in the world to offset the consequences of reduced domestic demand in the United States.

GA Is there a strong reason to believe that Asian central banks will start to diversify away from the dollar in the near term?

LS I don’t want to predict the actions of other policy-makers. Experience in financial life suggests that things take longer to happen than you think they will, and then when they happen, they happen faster than you think they will. That may be relevant to thinking about this.

GA How much of a role do you think international politics might play in such a scenario?

LS There’s surely a political element. One of the uncomfortable elements of our system is that there’s an element of a balance of financial terror involved in the magnitude of US dependence on foreign central bank holdings. That’s a little problematic.

GA What do you think the current US administration’s policy on the US dollar is?

LS I didn’t say much about the dollar when I was US treasury secretary on the observation that a strong dollar is very much in America’s national interest. No nation can devalue its way to prosperity, and the American economy is strong enough not to require currency-induced adrenaline. But as for judging the intentions of policy-makers, I’d rather leave that up to them.

GA Is a falling dollar likely to have a positive impact on the deficit?

LS It’s much better not to think of currency values or flexible exchange rate systems as policy instruments. Currencies move with fundamental conditions of supply and demand, in terms of the level of interest rates, in different countries. An approach that works towards strong fundamentals and recognizes that strong fundamentals are likely to lead to strong currencies is probably the healthiest one. GA How big do you think the risk of global recession actually is?

LS There is a substantial risk of a disruption associated with what’s happening in the US, associated with working off the current kinds of imbalances. Whether it’s a 25% risk or a 75% risk is hard to say, but I think that we are running real risks and that the unwinding of the US current account deficit will be associated with substantial disruption.

GA Some economists suggest that emerging markets are now playing such a key role in determining international patterns of growth, inflation and financing that this constitutes a new paradigm in the international economy.

LS I just turned 50, and I’m old enough to have seen half a dozen new paradigms in the world economy, so I’m a little sceptical every time I hear the words “new paradigm”, but there’s no question that the importance of emerging markets to the overall global economy steadily increases, for two reasons. One is that the fraction of GDP and global products that comes from emerging markets has trended upwards, and the other equally important reason is that the fraction of the goods that are potentially tradable increases year by year. My guess is that just as emerging markets are more important to the global economy than they were a decade ago, barring some very sharp discontinuity, I’d be very surprised if they weren’t even more important to the world economy a decade from now.

GA Everyone agrees that education is essential to economic development, but when it comes to higher education there’s not much consensus. The UN doesn’t even mention higher education as being an instrument for meeting any of its millennium development goals, and the World Bank downplays its importance. Does this concern you? LS We’re likely to see some swinging of the pendulum in the years ahead. There have certainly been abuses and excesses of misallocation of resources in developing countries towards tertiary education and towards tertiary healthcare. On the other hand, it’s very difficult for a country to succeed without a cadre of leaders, and without a cadre of entrepreneurs. And that requires sophisticated higher education institutions. And just as at a time, relatively early in our history, when the land grant universities in the United States played an important role in driving economic growth – even when the substantial majority of American children weren’t completing secondary school – there’s going to be an increased recognition in the years ahead that a limited number of high-quality, meritocratic academic universities are an important component of a national growth strategy. My sense is there was a need to emphasize primary and secondary education, but that the pendulum has probably swung too far on that. Watch what happens in development thinking over the next few years.

GA But at present there is a sense in which neglect of this sector threatens development, especially since the need for higher education in many developing countries is largely unmet.

LS Whenever I’ve travelled in developing countries since becoming president of Harvard this is something I’ve talked about a lot. It’s very important that developing countries develop strong meritocratic universities. I think, though, that the investment needs to go with the reform. If universities are run for the benefit of the children of the elite, or if universities are run as cooperatives of those who are employed at them, or if universities are run as bureaucratic entities of the state, then they’re not going to succeed, and so the commitment to increased investment has to come with the commitment to increased reform, and that’s a complicated challenge in any country.

GA With their wealth, institutions like Harvard are able to lure many of the very best faculty and students from other institutions and countries. Are you at all concerned about the brain drain that this might encourage, especially in the developing world?

LS International understanding is promoted when students study with students from other cultures. That’s why we’re so glad to have foreign students at Harvard, and we’re so glad that we’ve been able to extend the concept of need-blind aid to students from all parts of the world. It’s also why we’re making a big effort to ensure that as many of our students as possible study abroad, because international understanding is a two-way street. My guess is that as economies in the rest of the world improve, you’re going to find a higher fraction of students who come and study at universities like Harvard, and who return to the country they came from. From my perspective that’s fine.

GA Do you think institutions like Harvard have a responsibility to help combat that trend, the brain drain? LS It’s really not for us to try to judge where people live. In some cases, countries that provide funds will establish expectations that their students return as part of the understanding that came with those funds, and that’s a reasonable thing to do. But it’s not for us to decide where people are going to live. It’s for us to provide the best education we can and the most insightful programmes we can.

GA What are the main steps to be taken if the developing world is to produce graduates who are better able to participate in and compete in today’s ever more globalized world?

LS Academic excellence is a complicated thing. My sense is that the strength of the American university system derives fundamentally from three things. It derives from a basically competitive environment among universities. We’re always kept on our toes by competition for the best faculty and for the best students. It derives from pluralism, the fact that some institutions are public and some institutions are private.

Different institutions are run in different ways. There’s no single model of what constitutes an appropriate educational model, and so there’s a kind of evolutionary progress that’s made and it derives from the culture of American institutions. Too often universities around the world are either governmentally run like the Department of Motor Vehicles, with a bureaucratic sense of restrictions and rules, or are run like utopian cooperatives where the leaders are chosen by vote of faculty, staff and students. The right culture for a university is one that is based on the authority of ideas rather than the idea of authority, where there’s a careful balance maintained between the need for leadership and the need for creativity.

GA Assuming you agree that knowledge is a public good, would you also agree that allowing free access to a privileged private university’s learning materials is a sound way of ensuring that knowledge is actually treated as such?

LS If you look, there’s a vast amount from Harvard on the university’s website, you can find full course materials for literally dozens, if not hundreds, of Harvard courses. You can find a substantial majority of the scholarship of Harvard professors on their website, you can find substantial volumes of materials from the Harvard libraries there, and there’s no question that as information technology develops universities will increasingly be making their knowledge more freely available.

GA Curriculum reform is widely recognized as one issue that needs to be addressed by developing countries in trying to build competitive economies. What’s your approach to curriculum reform at Harvard, and is there a sense in which that would serve as a model for other institutions around the world?

LS I hesitate to prescribe too closely because every institution is different. At Harvard we’re revising our curriculum, and we’ll be placing increased emphasis on science and technology as part of the basic literacy that every graduate should have. We’ll be increasing our expectation of a global study, including the expectation that all our students travel or study abroad at some point during their undergraduate years.

We’ll be emphasizing, more than we have traditionally, the need to find structures where our students and our faculty are in close and individual contact with each other, and I suspect that we’ll be stepping back a bit from the humility of the 1970s when there was a sense that all we could do was to provide perspectives, and that there was no basic knowledge that we could impart in the course of a basic curriculum. But this is a very complex transformation and one that’s very much under way at Harvard as it is at many other universities.

GA Why the current extra emphasis on science and technology? And why now?

LS It’s central to living in the modern world. It’s just as important to know the difference between a gene and a chromosome as it is to know something about the plays of Shakespeare. All of us are now in a world where we can’t escape some of the basic developments in the life sciences or some of the basic developments in information technology. The role of quantitative reasoning has increased in everything from banking to baseball.

larry summers
president, harvard university

Education
BSc, Massachusetts Institute of Technology; PhD, Harvard University.
1982-83 Domestic policy economist, President’s Council of Economic Advisers
1983-93 Professor of economics, Harvard University
1987 Nathaniel Ropes Professor of Political Economy
1991-93 Vice-president, development economics, chief economist and member, Loan Committee, World Bank
1993-95 Undersecretary of the Treasury for international affairs
1995-99 Deputy secretary of the Treasury
1999-2001 US secretary of the Treasury
Since 2001 President, Harvard University

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GLOBAL AGENDA Shell made a public commitment to sustainable development in 1997. To what extent was this due to pressure from NGOs and to what extent was it due to Shell developing a social conscience?

SIR PHILIP WATTS Shell has always been a values-driven organization based on our core values of honesty, integrity and respect for people. These values are the foundation of Shell’s Business Principles first published in 1976. Since then they have been revised five times as the expectations of society have changed. A commitment to contribute to sustainable development was added in 1997 along with human rights. What our experience has taught us is that the way values are expressed in our behaviour needs to be constantly refreshed to reflect changing public expectations.

GA How much of an impact did the Brent Spar and Ken Saro-Wiwa events have on Shell’s thinking?

PW Both issues had a significant impact on our thinking – and on the subsequent actions we took. They made us think deeply about how society’s expectations of companies like Shell had changed; how society had changed from a “trust me” or even “tell me” world into a “show me” world; and how we had not changed at the same pace.

The events convinced us of the need to review our positions on human rights, sustainable development and engagement with the world outside Shell on issues such as these.

GA Today, Shell is committed to corporate social responsibility. What, in practice, does this mean?

PW Our commitment to contribute to sustainable development boils down to us doing five main things on the ground. First, we are helping meet the global energy challenge. In this respect, sustainable development means getting the world the extra energy it needs to develop.

We aim to provide access to oil and clean burning gas. By providing clean burning gas to replace coal for power, or lowering sulphur transport fuels, or building the world’s first hydrogen refuelling station, we can help to reduce the impacts from energy use.

We are also helping the world make the long-term shift to lower carbon alternatives, like biofuels for transport, and wind and solar energy for power. We produce 14% of the world’s solar panels and 3% to 4% of oil and gas.

Second, we are continually improving our environmental performance. This year, for example, we underlined our commitment to biodiversity with a pledge not to explore or develop oil and gas in natural world heritage sites.

Other examples are our focus on energy efficiency programmes in our business and our commitment to stop flaring by 2008 in support of the World Bank Gas Flaring initiative.

Similarly we look to improve continually our social performance. One current example of this is our hard work to rebuild trust with fence-line communities around our plants and operations. In support of this, our oil products and chemicals businesses are conducting social performance reviews at all major sites.

In reporting these activities and our performance we try to be transparent. The Shell Report, which goes to more than two million people, continues to be a leading example of such transparency.

And, finally, we do endeavour to live by our core values of honesty, integrity and respect for people in everything we do.

GA How can you assure people that a company like Shell is doing more than just paying lip service to sustainable development issues?

PW For us sustainable development is not just lip service. If it were we’d be missing a trick, because we firmly believe contributing to sustainable development makes us a more competitive and profitable company, lowering risks, cutting costs and enabling growth.

To make sure we capture the business value from sustainable development, we are hard wiring it into our core processes and systems. This means that sustainable development is factored into investment decisions.

For example, we make projects pay for the greenhouse gases they emit, to force them to develop designs for lower emissions. Sustainable development is integrated into leadership training and into our scorecards – my bonus is impacted by our performance. We monitor how we are performing. On an annual basis all countries and businesses must assure that the Business Principles have been followed. At a higher level, a social responsibility committee has been established, made up of executive and non-executive directors, who report to Shell’s supervisory boards.

GA Which NGOs do you work with and how?

PW Shell is committed to engaging with stakeholders with a constructive interest in our business and the issues we face.

We engage with NGOs ranging from international industry groups, such as the World Business Council for Sustainable Development, to NGOs in fields such as human rights, the environment, anti-bribery, and corruption and local interest groups.

Engagement will typically focus on specific business issues or projects, or broader themes of common interest, such as climate change, human rights and integrity. Regular engagement in, advance of major investment proposals is now routine and part of our road map for development.

Wherever we work, we are part of a local community, and while we continue to understand our role and develop our skills in this area, there are many examples where we successfully engage with local NGOs and communities.

For example, the Malampaya Deepwater Gas-to-Power project in the Philippines won a Partnerships award last year, sponsored by the UN Environment Programme and International Chamber of Commerce, for our NGO engagement activities.

In this instance, two elements – open and ongoing dialogue with stakeholders commencing at an early stage in the project’s development, and the partnership programmes to improve socio- economic and environmental conditions – have been key both to gaining local acceptance and to making the project a success.

Recent dialogue between the World Conservation Union and Shell on protected areas helped us to develop our pledge that no oil and gas exploration would be conducted in any natural World Heritage sites. I am proud that we are the first energy company to make such a commitment.

GA Do you consult NGOs on each of your projects?

PW We aim to consult stakeholders relevant to a particular project. In many projects these include NGOs, but that is not always the case.

GA How real is the relationship between NGOs and big business?

PW There is such a range of non-governmental organizations that it is impossible to generalize on such a relationship. We believe that the contribution arising from dialogue with responsible, transparent and constructive non- governmental organizations can assist us in addressing specific business issues where we have a societal impact.

GA What’s the ultimate aim of your commitment to sustainable development? Can companies like Shell really reduce poverty and empower local communities?

PW We aspire to be a leader in the economic, environment and social aspects of everything we do – for our stakeholders, customers, employees, shareholders, those with whom we do business, society and future generations. Sustainable development is everybody’s responsibility. Governments, civil society and companies – everyone has a part to play.

It’s also a matter of partnership, as recognized by Kofi Annan at the World Summit on Sustainable Development. There are some things that governments only can do or do best such as establishing good governance and the rule of law, or creating the right environment for investment. It may be that the role of business is to support these.

GA Is commitment to your shareholders compatible with commitment to your stakeholders?

PW Yes – absolutely compatible. Stakeholder engagement is essential for gaining and maintaining the licence to operate, and thus for achieving our business objectives.

A robust engagement process helps us to do many things: identify key stakeholders; ensure transparency and openness in and outside the company; provide a conduit for expressing opinions and resolving issues; build external and internal understanding and trust; promote our values and develop relationships; identify risks and opportunities; shape and improve business decisions; and improve the design and implementation of projects, thereby adding shareholder value.

We will, therefore, continue to promote engagement as a key business tool at all levels across the group, building awareness and competence.

GA A recent global opinion poll found that a large number of people believe globalization has a negative environmental impact. How can businesses like Shell convince people that this needn’t necessarily be so?

PW Globalization has accelerated since the 1980s with advances in communications and the opening of major developing economies to trade and investment.

At Shell, we recognize that people everywhere are concerned about the effects of globalization on the environment, social cohesion, their cultural heritage or their ability to hold the powerful to account.

However, we firmly believe that globalization, the liberalization of economies and open markets, operating according to responsible business practice, is a way of bringing greater prosperity to all and offering societies the economic resources to follow – and fund – their own priorities.

We believe that a responsible business like Shell, working in partnership with communities and bringing investment, technology, employment and training will be a positive force in society. The real problem is not globalization, but exclusion from globalization.

GA Does Shell still have an image problem regarding human rights abuse and environmental degradation? If so, how can it overcome this?

PW Over the past few years, we have built a solid reputation for our stance on human rights. We speak out in defence of human rights when we feel it is justified to do so, either publicly or privately, depending on the circumstances.

We engage in discussion on human rights issues when making business decisions, and we have established a regular dialogue with groups that defend human rights. One such dialogue is with Amnesty International and Pax Christi together.

We have developed an inclusive approach to our interaction with local communities that has enabled us to build relationships and address complex challenges in partnership with them.

To help our employees address the unique challenges that might face them in their own work we have developed management primers on human rights.

We have included a specific reference to human rights in our Business Principles and developed processes to ensure their implementation. In this way we stated our support for human rights.

This includes an annual assurance letter process through which our country chairs report on the implementation of the Business Principles, including human rights issues.

We publish an independently verified report, which includes human rights issues. As I mentioned earlier, our underlying corporate values of honesty, integrity and respect for people determine our principles. Within the societies in which we operate we strive to live up to our responsibilities – financial, social and environmental.

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PERVEZ MUSHARRAF There is no short-cut solution. There are some radical elements in Pakistan who I believe are angered by what is happening in our region – the Kashmir issue, and also what is going on in Afghanistan. The core of the issue is the resolution of these political disputes. That is the core solution for controlling radicalism and extremism everywhere.

But other than this, while we are trying our best to resolve these disputes, we need to take certain internal actions, and that is what we are doing. We need to address the issue of sectarian and religious extremism within our country.

We look for where this sectarian and religious extremism lies. Some of the country’s religious groups are fanning religious extremism and hatred against each other – they need to be curbed. Action needs to be taken when anybody misuses our mosques and madrassas to fan religious hatred against different sects.

As I keep saying, the vast majority of the population is moderate. So most of all we need to make this moderate majority stand up and be counted. They should be speaking out against extremism, and I know the vast majority in this country think like I think. We want to make them aware that they ought to get up there and speak against it. The vast majority needs to be mobilized to stand up and suppress this extremist minority.

GA Pakistan has recently witnessed the most profound twist in its political history: the empowerment of radical Islamists, previously at the political fringes. They have been propelled into the centre and are now governing two provinces, while having won more seats in the national parliament than ever before. How do you account for their unprecedented political gains?

PM Let me say that those gains are gradually sliding down. They may be thinking that they are going upwards, but I know that they are sliding downwards, because of their poor performance. Their gain was a result of certain events around the world and in our region. Their sudden surge in popularity was because of what was happening in Afghanistan and then Iraq – the hostile statements and actions against Iraq – and also the issue of Palestine. All these facts led to an anti-western, anti-US sentiment. This was one of the major reasons for the sudden popularity of the religious radicals.

GA Might another reason have been that you had sidelined most mainstream political parties, that you did not allow them a platform during the elections, so that the only alternative was the radical Islamists, whose popularity you had miscalculated?

PM That’s what many people say, but they are just equating political parties with two personalities. I wouldn’t do that. There was no problem in either of those [mainstream] political parties as such. They had all the rights to go around and do their election campaigning, which they did. Our reservation was about two ex-prime ministers who had looted and plundered this country, not against their parties at all.

But unfortunately people try to give this wrong perception that there was something happening against their parties as such. Not at all. It was these two individuals only. Now if their parties do not have the capability to have alternative leadership – they suffer from a vacuum of leadership, they don’t have anybody other than those two – then it’s very poor party organization, I would say.

GA Pakistan is playing a central role in the US-led war on terrorism. Does growing internal radicalism actually complicate this effort?

PM Yes it does. Certainly it does complicate matters, but we are trying to play a very active role in this. This strategy of enlightened moderation that I have been proposing exactly targets this issue.

When you’re talking of radicalization, extremism, terrorism, militancy and so on, you have to get to the core of it. And the core of it is not killing or arresting al-Qaeda or Taliban members. You can call them the leaves of a tree. They will grow. But the root to that tree is political dispute, or rather the resolution of political disputes.

So therefore the strategy of enlightened moderation that I’ve proposed is a two-pronged strategy where one prong is to be delivered by the Muslims of the world – rejecting extremism, joining the path of socio-economic development.

The other prong is to be delivered by the west, by the United Nations, and by the United States: the resolution of political disputes. Now if both are in sync, that is the way forward.

As far as the prong of the Muslim world is concerned, we have already taken the first step. At the OIC (Organization of the Islamic Conference) summit in Kuala Lumpur, I proposed this.

I said that the OIC in its present form is not structured to meet this challenge and therefore we need to restructure it for the strategy of enlightened moderation, for the socio-economic emancipation of the Muslim world. We are going to form a commission now that is going to propose a special OIC summit that will take place in 2004, so that we continue on this path.

If we can do this, we have taken a big leap towards rejecting extremism, and towards socio-economic emancipation. Now we are looking for the world to take a step forward on the other prong – the resolution of political disputes.

The starting point is the Palestinian dispute. That must be resolved. Failure is not an answer. I’ve said this to everyone, including president Bush, and all the EU leaders. Failure is not an answer; we do not have a choice. That’s the only way forward.

GA Ever since its creation, Pakistan has grappled with the question of what role Islam should play in the state. What is your view?

PM Well, basically we are an Islamic republic. Pakistan is a state that has been created on the two-nation theory, on the basis of a separate identity and homeland for Muslims, so our basis, our core, is Islam. So therefore constitutionally no law repugnant to Islam can be enacted. This is our basis. I wonder what your question is getting at.

GA Well, Pakistan’s founding father Jinnah had a vision of the country as a modern, tolerant and democratic Islamic state – as opposed to the ideologically, or even dogmatically, Islamic state that one might argue it seems to have become.

PM I have a different view of this. Some people think that there is a dichotomy between Islam and modernism, and between Islam and democracy. There is no dichotomy. My belief is that this is a misperception.

Islam doesn’t mean the extremism that you see – that these billboards ought to be removed and we ought to have some extremist Islamic thoughts like the Taliban of Afghanistan. Not at all. I don’t think those are the real values of the teachings of Islam.

Islam is very forward thinking, Islam is modern, Islam is progressive. So whatever policies that the state makes that I’m trying to follow are by no means anti-Islamic. They are Islamic. Islam is for all times to come. And it believes in formulating views through consensus, based on the environment, based on the time. That is how it is forward looking.

So anyone who tries to anchor Islam in the history of a particular place, and tries to impose that on all countries of the world, is not actually understanding the meaning of Islam. So I don’t think at all that there is a conflict between Islam and modernism, and between Islam and modern, progressive, dynamic government.

GA So would you argue that those who claim that there is a clash of civilizations between Islam and the west are in fact just manufacturing this notion?

PM Yes. Yes indeed. Because I think they are taking Islam to be what some clerics are talking about, preaching extremism and militancy. That is not what Islam is about. So if one thinks there is a clash of civilizations, certainly there is not. If you take the true Islamic values, the right teachings of Islam, then there is no clash whatsoever.

Every religion teaches good, preaches love and affection. There is no religion possible which would teach hatred and killing others. The only aspect that could be different is the methodology of running governments. Certainly Islam has specific tenets that are to be adhered to, but they are not in conflict with any modern system.

GA Clearly for any country to function well it has to maintain a workable relationship with its neighbours. The recent thaw in relations with India has been encouraging, but what is the next move? How do you envisage a solution to the continuing stand-off with India?

PM I think quite clearly the next move is the initiation of a dialogue. That is the next move. We must meet and talk. And having initiated this process of dialogue, having addressed all these issues, including the core issues of Kashmir, unfortunately that is where the dichotomy comes in.

When we say we need to discuss all issues, we certainly include Kashmir. When India says we should discuss all issues, they are being insincere. At the back of their minds is to avoid talking about Kashmir.

Now they have to face reality – that all issues include Kashmir. Then having realized that and having accepted this reality, we can move forward towards a realistic resolution of this dispute.

As a win-win for all. That is the way forward.

GA But how does one actually address the Kashmir issue? What sort of agreement do you think is most workable in practice?

PM I generally avoid discussing the resolution, or what kind of solution is possible, because I feel that if we start to jump to that end, we will slide back. There are people with extremist views in both India and Pakistan who would like to keep sticking to their states’ position of 50 years back.

What I had proposed was a four-step solution. Step one, start talking. Step two, accept the reality, or centrality, of Kashmir. Step three is a process of elimination: eliminate whatever is unacceptable to India and Pakistan, and to the people of Kashmir. And then finally come to step four: there are a number of solutions acceptable to these people, so select or modify any one of them, as a win-win for all.

All that I would like to say is that India is allergic to any violation of their secular moorings. I know how secular they are. It is only in writing. They are more fundamentalist than Pakistan. Certainly they have projected themselves to be secular around the world.

But a solution needs to found which is geographical in nature. I can’t get into the details now.

GA Your government has made significant inroads in macroeconomic reform – streamlining the economy, increasing transparency and speeding up privatization, while improving the country’s standing with international creditors by increasing revenue collection and restraining the fiscal deficit. Yet a growing concern of many potential investors is what sort of mechanisms you have put in place to ensure the sustainability of these structural reforms. How have you actually guarded against slippage?

PM Well basically you have to strategize. A strategy has to be formulated which everyone follows. A strategy has to be clear. Also the team which is implementing the strategy should be competent and committed to that strategy. In our case both are ensured. We have strategized. We know exactly what has turned our economy around. All the macroeconomic indicators are positive. And now we have to continue on this path, and the team has to do that.

GA But weren’t the boost from the United States in terms of financial support for Pakistan – as a key ally in the war on terrorism – and massive capital repatriation pivotal in turning these figures around?

PM I won’t call it pivotal. I would certainly give credit to my own team, who tightened the belt and reduced the debt. Nobody paid us money to reduce the debt. I’d also like to give credit to the United States and all the Paris Club members who have rescheduled about $12.5 billion of our debt. This includes Japan, the US, France, Canada and a number of other countries. The US role was that they wrote off $1 billion and reprofiled the rest. And I believe we are trying to write off some more at present.

GA A key concern is that, despite what are seemingly impressive reforms, there simply hasn’t been the boom in investment that Pakistan desperately needs, especially in major export industries. Foreigners continue to shun both portfolio and direct investment. Why do you think this is the case and how will you combat this?

PM I would first of all say that there has been a very substantial increase in investment. Last year the investment was about $800 million. This is up from about $470 million. So there’s an increase of about 80%, which is important to note.

GA But the bulk of that was in the oil and energy sectors, not in key sectors that need the investment.

PM Yes, the investment has also come to oil. But the base was so low initially that even if there were a 100% increase it would not be substantial. I would say it’s actually about a 500% increase.

But it’s not the macroeconomic indicators alone that attract investment. Any investor first of all looks for security of his investment. That comes through the country’s macroeconomic indicators. So therefore we provide the security to any investor coming here. The other issue is creating an investor-friendly climate.

GA Some would say judicial reform is one area that has lagged.

PM A good investment climate requires a strong judiciary and sound laws and regulations; they must assist and be investor-friendly. We have certainly modified our rules and regulations, making them investor-friendly. Law and order also play a very important role. If there are travel advisories against certain countries, then people don’t want to come to those countries.

Lastly there is the issue of profitability. I think there is tremendous profitability for an investor in Pakistan. What we need to correct is the law and order environment. We need to bring harmony to the society. It should be seen by the outside world. That will attract attention.

GA There is also concern about the stability of your government, given the constitutional stalemate with the elected national assembly which has effectively stalled the government. The opposition has refused to accept that you remain both president and chief of the army. How do you intend to resolve that impasse to allow the government to function effectively, while safeguarding the country’s return to democracy? Will you relinquish being both head of the army and president at the same time?

PM Let me first add another point to your earlier question. An investor also wants to see whether the cost of doing business in a country is high or low. In our country the cost of doing business used to be quite high – interest rates were about 16% to 17%. We have reduced that to about 7% or 8%. In fact a good investor can draw money from our banks at about 2% to 3%, which is excellent.

Also the cost of energy here is a negative. We need to reduce that. We are looking into ways in which the cost of energy can be reduced so that the cost of doing business in Pakistan can be reduced further.

Now coming to your other question, I wonder whether an investor is really interested in democracy. After all, which part of the world really has democracy? There’s a lot of investment going on in Dubai, I wonder whether they think there’s democracy there, or in any one of these places.

As far as we’re concerned in Pakistan, or that anyone else is interested in the political side, yes, they could be interested in this question if they think the political impasse will lead to national instability.

GA That is what I was implying.

PM Would that [impasse] lead to an instability in governance of the country? Would people come out into the streets with violence erupting? Let me assure you that there is nothing of that sort. Whatever you see in the assembly, I am extremely positive, it cannot be translated into any effects in the streets, in the cities and towns of Pakistan.

So one should be totally assured that whatever political friction you see on the television or read about in the news, it cannot be translated into a movement by the people because I do know that people are with me and they do understand that we are trying to do a good job. That doesn’t mean that I wouldn’t like to address this political impasse at all.

GA But how will you do that?

PM Let me say that we are in a process of negotiations, trying to put this issue of the constitutional amendment that I’ve made through the legal framework order behind us. And that’s all I would like to say at this moment. I’m reasonably sure that this will be done soon.

GA Who do you admire on the world stage today?

PM I wouldn’t really like to put one against another. There are many good leaders. I’ll reserve my thoughts on that.

GA Historically, then, what leader do you look to as a role model?

PM Generally I’ve been impressed by the Chinese leadership, by their understanding and their vision. Other than that, I am obviously a great admirer of our own founder, Qaid-i-Azam. I think he was a man of such great character and vision. It’s the misfortune of this nation that it lost him in one year. He was the greatest man.

GA Related to that, what principles have guided you while you’ve been in power?

PM I think one principle – and that is Pakistan. Pakistan comes first. All my actions are guided by Pakistan’s interests, whether it is foreign or local. I engage through what is in national interest, so much so that even in my personal life, I try to rise beyond self.

In the political areas, I could have been self-seeking, or I could have been thinking of myself, and there could have been different actions from my side, if I was trying to get comfort for myself as a person.

But I thought that bigger issues are involved. Comfort for myself is not a big issue. The bigger issue is Pakistan. Therefore the basic principle in all decisions is what is in the interest of this nation.

GA What role do you see for yourself in Pakistan in the future and what are your aims for the next few years?

PM We have achieved certain targets, as you’ve pointed out, in the economic field. We have then initiated certain strategies. Right at the beginning we concentrated on four areas: economic revival, good governance, poverty alleviation and political restructuring.

We have initiated strategies in all four. I would certainly like to see them maturing. They are maturing gradually, but they cannot be implemented in a few months or a year. They take time. I would like to see them maturing myself.

I certainly want to transmit the good economic revival of this nation to the people. I always keep worrying how that will happen. How does it get permeated down to the poor? But I know that the mega-development projects that we have initiated are all for the purpose of poverty alleviation and economic growth for the country.

All the strategies for health and education that we have put in place which are happening – all the political restructuring at the grass roots level of local governments – all these will only start maturing two years from now, and will continue up to five years from now.

I would like to see these maturing, in five years. That’s my ambition, because I know they will bring about a major change in this nation if they mature.

So I will make sure that these mature, and give the benefits to the nation and the people of this country. I don’t know what role I will play – but I will keep playing a role. But my decisions will be based on Pakistan’s interests and I will not shy away from my responsibilities. It’s in Pakistan’s interest. Whatever actions I have to take, I will take. I will keep my options open.

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