As delivered

Jonathan Spalter Chief Information Officer

U.S. Information Agency, Washington, D.C. "The High Tech Summit"

Sofia, Bulgaria

July 1, 1998

I am extremely happy to be here in your wonderful and historic capital Sofia and to have an opportunity to meet with so many Bulgarians and make so many new friends here in Bulgaria. On behalf of President Bill Clinton, the Director of the United States Information Agency Dr. Joe Duffey, I want to thank Prime Minister Kostov, the Deputy Prime Minister Mr. Bozhkov, as well as of course Illian Vasilev, and the leadership of the Bulgarian Foreign Investment Agency for inviting me here to Sofia's National Palace of Culture and to be with you here today. Let me also say that in looking around the room I notice some very old friends; one particular is Dr. Paul Sacks, a very old friend and mentor, who has been very engaged in trying to promote investment here in your country’s high-tech sector.

I'm extremely delighted to have this opportunity to meet with you today, and to join with you as we work together to expand opportunity for the Bulgarian people by nurturing the development of high technology in Bulgaria.

While I know this is the first in a series of planned meetings you will be having on high tech sector, it is not of course the first time that my Government and Bulgaria have consulted on these extremely important matters.

Just a month ago the US State Department announced the formation of a US-Bulgarian Economic Bilateral Working Group, co-chaired by Deputy Prime Minister Bozhkov and Under Secretary of State Stuart Eizenstat.

Let me congratulate today Bulgaria's foresight, for participating in this initiative and I am confident this working group will become an integral part of the our joint Action Plan for Southeastern Europe, that was announced February in Washington D.C. at the White House during the visit of President Stoyanov.

Considering the remarkable transformation that has occurred in Bulgaria in the last year -look at the record: your government has reduced inflation, it has brought the fiscal deficit in under projections and it has systematically increased foreign investment- it is clear, that the groundwork for robust investment potential in the high tech sector here in Bulgaria has been laid.

Our challenge now, and the challenge of this Conference, is to move forward together with Bulgaria's privatization, tax reform, and what we in the United States call, "reinventing government," that is, the very simple, but extremely important concept of making government work better and cost less.

There is no doubt in my mind, ladies and gentlemen, that the starting point for all of our efforts must be in the high tech sector.

I applaud Bulgaria for undertaking a new national strategy for and commitment to joining the information society – including integrating plans for international electronic access and trade and providing blueprints for future technological parks. This is very impressive progress. But we all know there is much more hard work ahead of us and many opportunities before us still to seize.

Though I know that the technological focus of this forum and of our intellectual collaborate efforts at this Conference are very broad and very inclusive today I would like to talk about how, together, we can improve the quality of life for our citizens and open up new avenues of democracy and prosperity via what we in the United States call and what my former boss Vice President Al Gore described as the Global Information Infrastructure, or GII for short.

Without doubt the ability to acquire, store, and transmit information has become the most powerful new currency of economic exchange throughout the world. Indeed, in the United States alone, approximately 60 percent of all U.S. workers are what we call "knowledge workers" – they are people whose jobs depend on the information generated and received over our information infrastructure. The figures are truly astounding. Every hour of every day 209 information technology jobs are created in the United States.

As we create theses new jobs in my country, we found that 8 out of every 10 are in information-intensive sectors of our economy. This, too, must happen in Bulgaria and I am confident that it will, as both our national economies, increasingly are driven by the imperatives of the Information Age.

Hundreds of billions of dollars can be added to world

economic growth if we commit to the Global Information Infrastructure. Indeed in 1998 alone , this year, the global IT industry is predicted to reach 500 billion dollars.

But the benefits of the GII are far more than material: I believe as deeply that they are human as well.

We in the United States firmly believe that in order to promote, protect and preserve freedom and democracy, expanding open and unfettered access to telecommunications and information networks must be an integral part of every nation's economic – and social - goals.

By opening markets to stimulate the development of the GII, we open lines of communication. By opening lines of communication, we open minds. So what is the way ahead? Well, we have learned these last few years that the economics of network communications have changed so radically that the operation of markets can - and must -build much of the GII. And here, private investment, the subject of what brings us today and to this Conference, and above all competition are key. This is dependent, however, upon flexible and smart regulatory frameworks that can keep pace with rapid technological changes.

And flexible regulation is also the major gateway to

success in the global arena of electronic commerce, or what we call e-commerce. Let me focus on this point for just a moment.

In this New Global Economy, we know that trade is our future. In the United States we have created nearly 2 million high-paying jobs in the last four years because of export growth. We want our small companies to use technology to trade with the world and to trade with Bulgaria. You do not necessarily need to be next to a port, a major highway or railroad tracks to transport your product in e-commerce. But you do need a phone line and an Internet access. The Internet has created a new entrepreneur-friendly marketplace, a global one, for nearly any product or service, as we will hear here today, from this distinguished panel.

We believe from a governmental perspective that the success of global electronic commerce is due to one unassailable and critical tenet which, put in great oversimplification, is this: Hands off the Internet!

More seriously stated: in this new digital age, we all must try to set a predictable legal environment globally for the conduct of commerce. That means trying to agree upon standards for such things as document authentication, inter-operability, digital signatures, the formation of contracts and of course, what is very important to us, the protection of intellectual property. This approach rests on the premise that in order to realize the full potential of electronic commerce, governments must adopt a non-regulatory, market-oriented approach, one that facilitates the emergence of a transparent and predictable legal environment to support global business and commerce.

Governments must respect the unique nature of networked communications and recognize that widespread competition and increased consumer choice – rather than heavy-handed regulation – should be the defining features of a new digital marketplace.

In the United States we also believe strongly that no nation, in fact, no individual should be without a passport to this global information society. That there be no fence between the wired and unwired, the have-s and have-nots.

Civil society cannot afford such digital divides. Today, wealth is increasingly produced by information. Thus there exists a greater opportunity than ever before to bridge those divides.

The United States Information Agency, has formed a deep commitment to build bridges to aid this growth, progress, productivity and connectivity, and we are doing so bilaterally, regionally and globally through information technology and access to the most up-to-date resources we can provide.

So to sum up: private investment; competition; flexible regulation; open access; and universal service to all members of society: these are the five pillars of the Global Information Infrastructure Concept that was elaborated four years ago by Vice President Gore at his speech to the International Telecommunications Union in Buenos Aires. And they remain the framework for all our efforts here today and in the future.

Of course, we have learned - sometimes the hard way – these past few years that not everything about this new information age is perfect. While we can wax euphoric about its positive potential, and hope for that positive future, we must also have caution and must take care to allow the possibility, probable even, downside of the Information Age– such as invasion of privacy and intellectual property violations. Like any new technology that can advance society, there can also be pitfalls with this Digital Age. For example, children could have access to materials that parents feel uncomfortable about. People's privacy can more easily be violated. If we are not vigilant, the Internet could be used by those wanting to break the law. We have kept a very close eye in my Government on the potential use of Internet for such purposes as terrorism for example. We must be vigilant an we need to address these problems together and to anticipate and minimize them so that we can realize the positive benefits with as little negative fallout as possible.

Yes; this new digital age has many profound opportunities. But it also has challenges. And none among these is more imminent and difficult than the worldwide computer problem – due to happen January 1, the year 2000, just 549 days from today. Let me focus for a moment on this extremely important topic.

Known as the Millennium Bug or by the acronym Y2K, which stands for the Year 2000 problem, simply stated, is that many computers that use two digits to track the year's date will, on January 1 in the year 2000, recognize the double zero not as some other date, as the year 1900 for example. As I am sure you here are well aware, this may mean global cyber-gridlock. An incalculable number of functions could be frozen or disrupted – everywhere on the planet. The problem exists for mainframe, midrange, and PC computers alike and also for in-bedded systems; the two-digit field can be found in microcode, operating systems, software compilers, applications, queries, procedures, screens, data bases, and data.

Indeed, in the United States, some estimates suggest that there are about 180 billion lines of COBOL code that we need to fix. Estimates in my country place correcting the problem in my country at between $50 and $75 billion annually; that means that Y2K remediation may represent from one-thirds to one-half of dollars we spent on information systems.

Given the enormity of the task at hand, we in the United States are committed to step up to this challenge and we are doing so in a number of I believe creative and proactive ways across the full spectrum of our society.

First, our Congress, both the United States Senate and the United States House of Representatives have become vitally involved, creating special committees to bring the full force of legislative attention to the issue. Second, literally scores of industry groups and coalitions have been formed in throughout the United States in recent months to deal proactively with this problem. Third, President Clinton recently - and very creatively I might add- has established a special Council on Year 2000 Conversion – which is being ably led by his former Deputy Director of the Management and Budget Office John Koskinen – to increase awareness of Y2K domestically and internationally – before it is to late. Indeed, I am very proud to have recently been asked to serve as Chair of the President Council's on the Year 2000 Working Group on International Public Diplomacy. Our mission is to help build a broader international consensus on the need for action on Y2K, for as it is quite clear to everybody in this room today, when it comes to Y2K no nation is a digital island into itself. This is a global problem that demands a global solution. And for that solution to work will require from all of us enormous amounts of discipline, vigilance, courage, and yes, both financial and human resources.

Indeed, worldwide, the one U.S. research firm estimates that the total costs for Y2K remediation worldwide may be near $600 billion dollars.

These are daunting figures. So, the time is now for us to gather to work hand in hand to ensure that all nations around the world are harnessing the same energy, enthusiasm and entrepreneurial drive that has given rise to our remarkable high-tech ventures; and to refocus that energy in the direction of Y2K remediation they must be on parallel tracks.

I am pleased that friends and partners around the

world are beginning to catch on. Just last Friday, the United Nations General Assembly took a very important step by passing a resolution calling on member states to take positive action on Y2K. I applaud Bulgaria especially for joining the consensus in supporting this important resolution.

But, quite frankly, we have only just begun to tap in to the infinitely creative policy responses that are available to us to deal with this issue. Countries around the world are beginning to consider - some are even beginning to implement - things like emergency tax

incentives to help at risk enterprises deal with Y2K remediation problems. Low interest government loans are beginning to find a berth. Research and Development tax credits and credit guarantees are being found. Expedited procurement processes are coming on line. We now have

productivity corps to assist small firms and proliferate best practices. Enhanced training opportunities and tax credits related to training opportunities also are beginning to proliferate. This list goes on and on, and in many ways is limited only by the constraints of our imagination and our collective will to act.

That is why I want also to applaud the World Bank – the ITU, the G7 plus one, and other international organizations and institutions – for their pro-active efforts to engage the attention of nations around the world to the dramatic consequences of our failure to act on Y2K.

But at the end of the day, I think we all know this problem will be solved neither by fear, nor legislation, nor government diktat alone. It will be solved by public-private partnerships around the world, by innovation and the collaborative technological dialogue of the sort that we are having today and you are having at this Conference and above all, by the fundamental recognition that not to act, and act quickly, is simply is self-destructive.

I would like to say, with some honesty, that we in the United States offer our President's Council on year 2000 Conversion as a model – and perhaps a catalyst – to the resolution of the vexing and urgent challenge.

And I am also pleased to announce today that our embassy here in Sofia and its United States Information Service is ready to work with you hand in hand as we move forward in finding solutions.

But Bulgaria's high tech community also must be engaged. I urge you to join with nations which are facing the Y2K problem head-on. Confidence in Bulgaria’s high-tech future can and must be tied to the manner in which your nation addresses this matter. And I know that Bulgaria too is ready to step up to the plate and do its part. The human resources and ingenuity that can be brought to bear on this problem right here in Bulgaria truly are impressive. Yours' is a nation of remarkable minds and talent, particularly in the science and technology. The time to engage this talent is now. And by acting forthrightly on this issue, not only will Bulgaria prove to world markets how viable its high tech community really is, but it also will – at the end of the day – contribute to the betterment of life in our global village.

Let me close my presentation today with a short philosophical consideration.

Technology in recent times has brought us what

was once the unimaginable: just last week images of President Clinton and Chinese President Jiang debating human rights in Beijing; satellite images of Boris Yeltsin, standing on the top of the a tank, proclaiming freedom and the dignity of the human in Moscow, and the triumphant scenes of Bulgarians in Sofia and who a short decade ago took their futures as free peoples into their own hands.

It is from these high tech connections – and our ability to overcome some of the difficult challenges they pose – like Y2K - that we will ultimately derive robust and sustainable economic progress, strong democracies, better solutions to global and local environmental challenges, improved health care, and – ultimately – a greater sense of shared stewardship of our small planet.

I am deeply honored to join this journey with you today and I look forward to many years of spectacular progress for the Bulgarian people in the years to come.

Thank you very, very much.