MR BROWN: Hey, everybody. Good afternoon and thanks for joining us for this on-the-record briefing with Under Secretary of State for Economic Growth, Energy, and the Environment Keith Krach and Assistant Secretary for the Bureau of Energy Resources Frank Fannon. They will discuss their recent travel to Latin America and the Caribbean to promote 5G security, expand the Clean Network in the Western Hemisphere, and to discuss regional growth in the critical mineral development sector and energy security.
Both Under Secretary Krach and Assistant Secretary Fannon will have brief opening remarks and then have time to take your questions. As usual, contents of the call are embargoed until the end, and for the sake of efficiency, if you’d like to ask a question, feel free to go ahead and get in the question queue by dialing 1 and then 0. I’ll go ahead and turn it over to Under Secretary Krach at this time.
UNDER SECRETARY KRACH: All right. Thanks, Cale, and hello everyone, and thanks for joining us today on the eve of Thanksgiving. There is so much to be thankful for, and I’m grateful to be home in California for a few days. I’ve only seen my family about six days in the last nine months, so I’m really excited.
And also, as you may know, Assistant Secretary Fannon and I just got back from a trip to Latin America. We want to share some highlights. I’ll give you an update on our progress on the Clean Network, and Frank will give you a brief on energy-related development and the Clean Minerals Network.
So the trip headline is the Clean Network has grown to 53 clean countries with the entry of Brazil, Ecuador, and the Dominican Republic just in the last week. The momentum towards trusted 5G now is undeniable. After my September Taiwan trip which culminated last week in the signing of an Economic Prosperity Partnership with Taiwan, my team and I, we traveled to 25 countries in Europe, the Caribbean, Middle East, Central and South America building out the Clean Network.
And the Clean Network story is one that really needs to be told. Here’s just a real quick summary. Six months ago when our team got the 5G authorities, it looked like it was too late to prevent the Chinese Communist Party’s Huawei from being deeply embedded in the next generation of global telecommunications. At the 2020 Munich Security Conference in February, Speaker Pelosi warned European countries they will choose autocracy over democracy if they let Huawei take part in rolling out 5G technologies.
A few days later at a press conference in London, Huawei announced we have 91 commercial contracts worldwide, including 47 from Europe. It looked like they were going to run the table in Europe and everywhere else. And that’s when the work began, and so from there we grabbed our diverse e-team of a dozen results-oriented executives with some of the State Department’s finest career officers and started a pilot test to build an alliance of democracies. And it was an old play that many of us had run before in the private sector, and it was forming a network of partners based on trust and rooted in internationally accepted standards. It was that formula that resulted in the Clean Network, a coalition of likeminded countries, companies, and civil society with a comprehensive approach to address the long-term threats to data privacy, security, human rights, and trust in collaboration. It was designed to be a bipartisan, enduring strategy in the epic battle of freedom versus authoritarianism.
So if you fast-forward to today, just last week Brazil became the 50th member of the Clean Network, followed by Ecuador and the Dominican Republic, and Jamaica is on the way. So in just six months the Clean Network alliance of democracies has grown to 53 nations strong, and it represents two-thirds of the world’s global domestic product. What’s even more powerful is the participation of the private sector in this initiative. In addition to clean countries, the Clean Network now includes 180 clean telcos and dozens and dozens of leading clean companies like Oracle, HP, Reliance Jio, NEC, Fujitsu, Cisco, Siemens, Softbank, VMware, and many others.
Here’s some of the stats: 27 of the 30 NATO allies are members; 26 of the 27 EU members, 31 of the 37 OECD nations, 11 of the 12 Three Seas nations are now part of the Clean Network. This alliance of democracies also includes technology-savvy nations like Japan, Israel, Australia, Singapore, Taiwan, Canada, Vietnam, India, and the Clean Network partners include a glowing – a growing list of global heavyweights like NATO Deputy Secretary General Geoana, EU Commissioner Thierry Breton, and Chairman of the Three Seas Initiative and Estonian President – President Kaljulaid.
And the Clean Network’s momentum has turned the tide on Huawei and the CCP’s 5G master plan by building an alliance of democracies built on democratic values which are embodied in the trust principles of the network. It’s garnered overwhelming international support and bipartisan backing. As a result, Huawei’s vaunted 90 deals have dwindled to just 12 outside of China. It has proven China, Inc. is beatable and in the process exposed its biggest weakness, and that’s trust.
So let me just give you a few brief highlights from the trip. Our first stop was Brazil, where we launched the first ever Japan-U.S.-Brazil Exchange, a new trilateral forum to strengthen policy coordination. And we talked about 5G security and heard from Brazil’s high-tech innovators and many other Fortune 500 business leaders about the importance of 5G trusted infrastructure. In addition to Ambassador Chapman, the entire team at Mission Brazil worked overtime to make Brazil the 50th country to support the Clean Network.
One of the guys we talked to, Augusto Lins, president of Stone, he’s this famous high-tech entrepreneur. He built a $20 billion company. And what he said was having the Clean Network is very important to fight cyber crime, data breaches, and money laundering, as well as to attract investments to new value-added products and services, which will require innovative solutions. And he said a network is only as strong as its weakest link.
So from Brazil we went on to Chile, where the Government of Chile is getting closer to a Clean Network decision. And as in Brazil, Chile’s private sector leaders understand what’s at stake, with executives from both insurance and banking sectors calling 5G infrastructure security critical in protecting their industries and clients.
In Ecuador, I spoke with President Moreno and many members of the national assembly, as well as the minister of telecommunications, who issued a statement during a joint press release stating that Ecuador has reiterated its commitment to join efforts in pursuit of open and secure global internet based on democratic values and respect for human rights. Ecuador supports the principles of the Clean Network Initiative, and they became our 51st member.
During our stop in Panama, we had the opportunity to meet with Foreign Minister Alejandro Ferrer as well as other senior finance, security, and telecommunication officials. And Panama has positioned itself as an innovation hub in Central America.
All these officials we met with understand joining the Clean Network would send a powerful signal to potential private sector investors looking to expand operations in the region.
We ended the trip with the Dominican Republic joining the Clean Network. After great discussion with the four telco operators there, an in-depth meeting with President Abinader and Foreign Minister Alvarez, and we issued a joint statement welcoming the Dominican Republic as the first Caribbean nation in the Clean Network. And the country has a great opportunity to become la perla del Caribe, the pearl of the Caribbean, in high-tech innovation sector.
And the winning didn’t stop there. Just as we got back in D.C., the Embassy Kingston in Jamaica has agreed in principle to sign the 5G MOU.
So the Clean Network across the Western Hemisphere as with everywhere else, I think one of the big things is to attract more investment from free-market, democratic nations in the private sector. And I think they truly understand that the Clean Network sends a powerful signal to these clean countries and companies that they can trust their country with investments, and we’re working with them in many ways. And one of the great things is that it serves as a security blanket for the 53 likeminded nations against the threat of China’s retaliation with the retaliation and intimidation and retribution playbook.
I think the CEO of Siemens Latin America summed it up when he said, “A clean 5G network is not just about cell phones. It’s about critical manufacturing processes, oil and gas platforms, energy networks, sanitation systems, and the internet of things.” And he also said the Clean Network will help ensure that critical infrastructure, power, transportation, sanitation systems is safe and trusted.
And I think that’s what the Clean Network is all about. It’s all about trust. And I really do believe that trust is the most powerful word in any language, the basis of every relationship, personal or otherwise. You buy from people you trust, you partner with people you trust. And the United States and all our Clean Network partners trust each other and know that we trust each other’s 5G infrastructure, and we can confidently build our economic future knowing that our citizens’ privacy, our businesses’ intellectual property, and our national security is rooted in internationally accepted trust principles like integrity, transparency, reciprocity, respect for rule of law, respect for the planet, respect for human rights, and ultimately respect for each other.
So with that, let me turn it over to Frank Fannon to give you highlights on the energy and mineral work he’s been doing. Frank, over to you.
ASSISTANT SECRETARY FANNON: Yeah, thanks, Keith. Good afternoon, everyone.
It was a fantastic trip. This was a bookend to a trip, another trip I took in September with Secretary Pompeo to Guyana, Suriname, Brazil, and Colombia; had similar themes in terms of energy and minerals component. I think in particular the countries we visited – the IMF was projecting pre-COVID they were going to have a pretty anemic but positive growth. In the post-COVID, they’re predicting nearly a 9 percent contraction in these economies. These countries are facing significant economic dislocation of COVID-reduced impacts.
Part of the objective here was also encourage governments to consistently look to having a favorable, open, transparent investment climate. This is not the time to go backward in terms of their economic progress a lot of these countries have been making in terms of the reforms and opening up their economies, and particularly the energy and mineral sectors.
In Chile, I was proud to represent the United States and give a speech at Latin America’s largest mining conference, Expomin, where we discussed the important role of – minerals have of course in Chile’s economy but also in terms of providing for the energy transition technologies the world is increasingly calling for. Renewables – although oil and gas investments are down globally some 30 percent, renewables are up year on year by 6 percent. Minerals are key to seeing this growth continue, and as a key part of my – of our engagements and my meetings were to speak about ensuring responsible supply chains of minerals and that the minerals that support clean energy are done in a way that empowers communities, respects human rights, and advances environmental sustainability. So that was a key part of that and had an opportunity to underscore some of those points.
In Brazil, met with – also in Chile, met with the ministers, the relative government officials across the board, as well as in Ecuador. In all three countries, met with the private sector as key champions. Our private sector is an extension of our soft diplomacy and is really on the front lines to be the implementers of some of the change and the positive growth message that we’re seeking to facilitate through government-to-government engagements.
Lastly, I would just like to underscore the growing support for the Energy Resources Governance Initiative, which is our minerals-focused work. Was proud to have those engagements in all three – I recently convened 20 countries on the ERGI concept. All three of the countries that we visited – Ecuador, Chile, and Brazil – were participating in that convening.
With that, thank you very much. Look forward to the questions.
MR BROWN: Great. And with that, for our first question let’s go to the line of David Brunnstrom.
QUESTION: (Inaudible) senior State —
MR BROWN: Could you start over?
QUESTION: Okay. This is for the under secretary. I wanted to ask about Taiwan, which you mentioned in your presentation. You became the most senior State Department official to go there earlier this year, the most senior since ’79. I wonder if we can expect any more senior visits in the coming two months of this administration.
And a separate question or related question on economic actions against China: Can we expect any more along the lines of the executive order against investments in military-linked firms? And how confident are you that anything that’s done by this administration will be enforced by the Biden administration? Thank you.
UNDER SECRETARY KRACH: You know what, I didn’t hear the second part of that question. Could you say it again?
QUESTION: Asking whether we could expect any more economic actions against China in the coming – in the last two months of the administration, perhaps following on from the executive order banning investments in military-linked firms. And the follow – and I was also asking how confident you are that such actions will be enforced by the Biden administration.
UNDER SECRETARY KRACH: I think if you look at what we’ve done with Taiwan – and it was – I went over there for President Lee’s funeral. He’s the father of their democracy. We had discussions on an economic dialogue, and then that culminated last Friday when representatives from Taiwan came over to the U.S., and we signed an Economic Prosperity Network. And this covered all kinds of areas of economic collaboration, from semiconductors to 5G to healthcare supply chains, all of that.
And so I think you’ll see a continued partnership there with Taiwan. I’m not going to speculate on who else might go. That would not be appropriate. But I can tell you that the single most unifying, bipartisan issue that I’ve seen on Capitol Hill is this whole issue with regard to the Chinese Communist Party and their economic aggression, as well as other types of aggression. We’ve seen it increase over the last couple of years. We really saw it increase during the time of the pandemic.
I think you’ll – one of the other things that we’ve done is I sent a letter to the – all the CEOs in the United States. I also sent one to all the governing boards of major universities, talking about the threat to – the real and urgent threat to democracy and to schools and to companies with regard to the Chinese Communist Party, in terms of things that they’re doing with regard to human rights. And what we’ve seen is we’ve seen the coercion in places like Xinjiang, where there’s over a million Uyghurs and other Muslim groups, and it’s grown to some of the worst human rights abuses I think of our time. And it’s also grown into forced labor that gets shipped all over China and parts of the Belt Road.
And also their intellectual property theft as well, and this has been a big issue. You’ve seen Chinese companies added to the entity list, and you’ve also seen the President’s working group from a financial standpoint talk about how Chinese companies have to follow general accounting practices.
So what’s been going on is a steady drumbeat, and if you look at the Clean Network, it is an alliance of democracies, based on democratic values. And it’s unifying free nations of the world to stand up to the threat posed by China. And Taiwan’s been a great partner on the Clean Network. All their telcos are clean, and then also right when we kicked off the Clean Network that’s when we announced the 5G trifecta with the export controls on semiconductors for Huawei, the Clean Path, as well as onshoring TSMC, which was the biggest onshore in the United States history – 12 billion state-of-the-art semiconductor fab. So I don’t think you’ll see any slowing down. And I think there’ll be great continuity.
MR BROWN: Okay. Next question. Let’s go to the line of Josh Siegel with the Examiner.
QUESTION: Hi. Thanks for doing the call. This one is for Assistant Secretary Fannon. Yeah, first on the critical minerals piece, I mean, do you see a ton of work in this area, being a potential area of kind of continuity in a Biden administration, given their clean energy goals? I don’t know if that’s something you’ve thought about.
And also on Iran sanctions, obviously one of your main priorities has been to get Iran’s oil sales to near zero as part of the maximum pressure campaign. As oil prices have kind of – they’re up somewhat today and in recent days on maybe hopes for a vaccine. But with demand still uncertain, I know there’s some concern that Iran’s supply can come back if Biden were to take a different approach. So how important is it, do you think, for that campaign to continue and what are your expectations for how Biden might proceed in that area?
ASSISTANT SECRETARY FANNON: Yeah. Thank you. The issue on critical minerals and – as – we formed ERGI, the Energy Resource Governance Initiative, around this concept based on the demand projections for clean energy technologies in the next 30-year time horizon. And it’s not based on my projections or even necessarily the U.S. Government’s, but a variety of international fora, including groups like the World Bank, the International Energy Agency, International Renewable Energy Agency, but also the U.S.’s own assessments. The demand for cleaner forms of energy I see from my vantage point have a global remit. It’s not an issue that’s a dictate from on-high, but very much a manifestation of bottoms-up call by global citizens who want to see cleaner forms – cleaner environment and therefore a call for cleaner forms of energy, and we see governments responding.
But then you start saying, okay, if you anticipate what the growth projection is, what are the implications for mineral demand. And the numbers are quite staggering given the minerals’ intensity of clean energy’s technologies. The World Bank has looked into this, just for example, in the minerals that go into batteries, battery storage technologies, whether for electric vehicles or for power systems to address renewable intermittency. Well, those numbers are projected to increase over 500 percent in the midterm.
So when you see this scale of demand growth, it begs the question: Where are these minerals? How are they being produced? And are they doing it – is their production and is the entire clean energy supply chain something that advances shared principles in support of human rights, environmental quality, and inclusion of communities? And to meet the demand forecasts, what we know is that we have to create a more responsible supply chain given the scale of growth.
We embarked on this journey not alone. We’re very proud of the U.S. record on responsible development of minerals and processing, but we did it in partnership with other leaders, spanning four continents with different regulatory structures, histories. And that includes Australia, Canada, Botswana, and Peru.
So I think that there is a considerable awareness of the need to do – to address this issue, to ensure that this energy transition call is done in a way that’s inclusive. And that’s not just in terms of zero emissions, but all the way to the mine site where things are being produced. Japan is focused on this. The European Commission has recently put out a paper on it. So I think this is something we initiated, but it has caught some real momentum and is being supported on a global basis.
The issue with respect to Iran, our sanctions in terms of our oil, we’ve been remarkably effective, I would say, in terms of the objectives we laid out, in terms of going – in terms of the maximum pressure campaign. I can’t – certainly can’t speculate as to what the next administration would do on that, but would certainly say that in our view, the metrics that we put forth for success, we have exceeded them. And I think it wasn’t too long ago when it was a bit of a – I think a lot of people were questioning whether we could move forward with the maximum pressure campaign the way in which we did, and so I put that as a big success. Thanks.
MR BROWN: Okay. Next question, let’s go to the line of Lara Jakes.
QUESTION: Hey there. Thanks for doing the call. Keith, you spoke a few minutes ago of Chinese aggressions, economic and otherwise, and I – as I understand it, the State Department is looking for ways to punish a Politburo Standing Committee in the CCP for its aggressions against Hong Kong and in Hong Kong. Is this an issue you’ve been working on, and what should we expect to come out of it?
UNDER SECRETARY KRACH: Well, I think that the – just as the citizens of the world have woken up to the truth about China’s – I call it their “three-prong doctrine of concealment, cooption, and coercion” – I mean, they’ve seen that the concealment of the virus was – resulted in the pandemic. And they’ve seen the co-option of Hong Kong eviscerate all its citizens’ freedoms. So I think you’ll continue to see a drumbeat on that one as well.
And I can’t speculate on – yeah, I can’t speculate on the things that will be happening in the future, but I can tell you this: That what we’ve seen is that China just doesn’t honor any agreements that they make unless they’re to their benefit. And certainly, in the case of the Hong Kong citizens, they know that, and it’s just totally eviscerated those freedoms.
And in my Senate confirmation, when I was asked about – I think it was from Senator Coons – what I would – what I would do in terms of this Chinese aggression, I said three things: The first thing is to further strengthen our relationships with our allies and our partners. The second would be to leverage the innovation and resources of the private sector. And the third one is to amplify the moral high ground of our values, our democratic principles, and put those to work. And that’s been the core strategy, and I think the reason behind the core success of the Clean Network, and I think that’s a model that you’ll see in all kinds of ways in the future, from clean minerals to clean infrastructure, clean financing, clean labor practices, clean supply chains, clean energy, in all different areas. And I think that’s a big – yeah, it’s a big, big part of it. And in The New York Times today, there was a piece about the Chinese Government, and it promotes the country’s (inaudible) openness to the world, even as it adopts increasingly aggressive and punitive policies that force countries to play by its rules. The pandemic has exposed that bully.
And you know what? I think the world’s woken up. It no longer – it no longer works, and as I’ve said before, we’ve probably all had experience with bullies sometimes in the past, and all’s I know is that when you confront a bully, they back down, and they really back down if you have your friends by your side. And that’s what the Clean Network does – alliance of democracies – is that it provides that security blanket. And there is strength in numbers and there’s also power in unity and solidarity. I think the – we’re seeing the world – free nations of the world unite, and I think the pivot point has been that Clean Network.
MR BROWN: Great. If anyone else wants to ask a question, if I’m correct, we have – we’re actually over 30 minutes. Right now, I don’t see anybody in the queue.
All right, we’ll take one follow-up question from Josh Siegel and then we’ll call it. Josh, go ahead.
QUESTION: Yeah, thanks for letting me get in another one. Just for Assistant Secretary Fannon, again, I don’t know if you’ve been engaged at all on what happened with the NG and LNG export deal that the French Government got involved with and basically seemed to express some dissatisfaction in how LNG and natural gas would contribute emissions wise, and Europe – how that would affect Europe’s emissions goals and if that’s an issue that you see being more prevalent on the horizon going forward.
ASSISTANT SECRETARY FANNON: Well, I can’t speak to that specific issue. Those are ongoing discussions. I don’t think anything’s been decided, so I think it would be inappropriate to comment on something that’s under continued conversation. What we do believe strongly is that U.S. gas is produced in the most efficient way possible. I know companies are constantly striving to improve their efficiency and inclusive of emissions-related performance. So I have every confidence that the United States industry will continue to innovate to be the lowest-cost and highest-quality producer in the world.
But your question really speaks to a broader issue, and I would turn it more to the historic long-term supplier of gas, which – and that is coming from Russia – and their performance. And I – there’s been various studies that have looked at Gazprom’s, in particular’s production. There’s an organization called the Carbon Disclosure Project that issues reports out. And they rank Gazprom as one of the worst performers in terms of environment. So I would put the question back and suggest a strong evaluation about the current incumbent supplier, and would measure U.S. companies and the transparencies with which U.S. companies approach the way – and the ways in which they conduct business. Hold that up to any company in the world, but especially a state one from an OPEC regime coming from the East. Thanks.
MR BROWN: Thank you to Under Secretary Krach and Assistant Secretary Fannon for your time today, for briefing everyone, and for all who joined the call. As this is the end, the embargo on the contents is lifted. Everybody, please have a great afternoon.