[MUSIC PLAYING] VEST: Today, as we honor and as we learn from Kofi Annan, we take

great pride in the small role that we played in his education and in shaping his
early career. But we also bear witness to the importance of maintaining the
openness of our universities to foreign students, scholars, and faculty. We must
guard, even in these complicated times, and protect this fundamental American and
academic value and principle. It is my privilege and honor, once again, to welcome
to MIT the Secretary-General of the United Nations, His Excellency, Kofi Annan.

[APPLAUSE]

ANNAN: Thank you very much.

[APPLAUSE]

Thank you very much. Thank you very much, my dear friends. President Vest, let me
thank you for those very warm and kind words of introduction. And Dean Schmalensee,
I'm really happy that I'm back here with all of you at Sloan. Distinguished faculty
members and students and dear friends, it is indeed a pleasure for me to be back
here and to join you today for this anniversary celebration.

Over the course of half a century, Sloan School of Management has built itself into
one of the world's academic powerhouses. I say world and not just country because
right from the beginning, Sloan looked well beyond the confines of this campus and
encouraged people from many nations, as we heard from the president, to study here
and was eager to find and advance the cause of international cooperation, scholarly
and otherwise. Congratulations on this milestone.

Three decades ago, I was fortunate myself to become part of the Sloan community.
And it is good to see so many familiar faces since I've been down here yesterday.
And an event like this really brings back memories of when I first came here, what
the place was like, and where I myself was at at that stage of my life.

I recall particular that Sloan exposed me to some very interesting work in

organizational culture and psychology and how to manage change. That may sound like
jargon to most of you, but I can assure you that it came in very handy at the
United Nations when I needed.

[LAUGHTER]

Back in 1982 when I was working with the High Commissioner for Refugees in Geneva
and we were trying to grapple with the crisis of the boat people, I invited my good
friend Professor Schein to come to Geneva to help us improve our internal
communication and to review our mission. When we got there and everybody came, we
thought we were going to have a straightforward discussion for one hour. Three
hours later, we were all physically and emotionally drained from what had quickly
turned out to be a frank soul-searching exercise for all of us what it meant to be
working for the United Nations, what were we trying to do with the refugee crisis
of the time, and how best to get different people and people from nationalities
around the world to work better together.

Some frustrations had been bottled up obviously for years. But once the floodgates
were open, we found new ways forward, and a truly new sense of unity and purpose
emerged. This session was so successful that I organized another one in 1990 where
Ed Schein and Lester Thurow came to talk to the group. We gathered about 30 senior
officials from 26 different countries to discuss similar issues, and they all
walked away very enthusiastic.

I like to think that we are replicating that exercise on a global level among
peoples and nations as we strive to build the trust, confidence, and a sense of
shared values and responsibility needed to address the urgent issues and threats of
our time. We are all aware that more and more challenges from environmental
degradation to drug trafficking and the spread of diseases such as HIV/AIDS have a
global dimension. Through work, travel, and trips to the store, we can all see that
trade and communications are stitching human family ever more closely together.

These phenomena have also have to make the 21st century a very troubling times for
our global village. Distrust between cultures and religion often leads to violence
and has been aggravated by the terrorist attacks of 9/11. Concern is mounting
because of global economic uncertainty and because the benefits of globalization
have been shared so unevenly. Confidence in markets has been dealt a further blow
with a series of corporate scandals in the United States and the gathering feeling
that markets by themselves cannot respond to the real needs of society or provide
the public goods that humankind needs to survive.

In an age of interdependence, global citizenship is a crucial pillar for progress.

In a series of global meetings and conferences over the past two years in
particular, world leaders have tried to define what that citizenship means. They
have been trying to build an inclusive, responsive, effective, international system
from which all people can benefit from and in which all feel they have a stake.
Shared responsibility was at the heart of the declaration adopted at the Millennium
Summit in September 2000.

160 heads of states and government gathered in New York. All countries came
together not just to express their general hopes for peace and development in the
21st century but also to give their backing, their backing to a set of very
specific, time-bound objectives, which have since become known as the Millennium
Development Goals. The goals include reducing hunger, providing access to safe
drinking water, and ensuring universal primary education. They will be closely
monitored and measured-- how many kids are in school, how quickly hunger and
extreme poverty are being reduced. And we will advertise the results in such a way
that we hope will galvanize politics and policymaking so that the goals can be met
by the target date of 2015.

Governments faced the first test of their commitment to these goals last November
at the World Trade Organization meeting in Doha. There, trust was the main issue on
the table-- trust, because the developing countries have heard a lot of talk about
free and fair trade but seen too little, far too little, of it. They want to know
that their products will have an equal chance to compete in the global market. That
chance is currently denied them because of tariffs on their goods and because of
subsidies given to their competitors in the rich countries-- subsidies that I might
add also perpetuate unsustainable practices in farming, transport, and energy use.

The new round of negotiations agreed to at Doha offers the prospect that markets
will truly be open. But it is only a promise. And it is too soon to say whether
that trust in the trading system will be achieved. Only time will tell, but I think
we need to work hard and press ahead to open the markets truly for all countries.

Next came the Monterrey Conference on financing for development last March. That
conference was also an exercise in recognizing shared responsibilities. The
conference generated substantial new pledges for official development assistance,
reversing a decade-long decline, and made good progress on issues such as debt
relief, investment, and corruption. Just as important, developed and developing
countries reached a common understanding on their respective responsibilities in
the pursuit of balanced and equitable development.

And finally, last month at the World Summit on Sustainable Development in

Johannesburg, global citizenship once again took center stage. All leaders
committed themselves to a path of development and economic growth that safeguards
resources and ecosystems for succeeding generations. Leaders from rich countries in
particular agreed to reduce their nations' ecological footprint on the planet.

Taken together, these summits and conferences give us a blueprint, a blueprint for
development that puts people, not states, not GDP statistics, at the center of
policy making. The overriding challenge now is implementation. And for that, we
shall need people from all sectors-- the public sector, private sector, civil
society to forge more and better partnerships to implement these schemes.

One of the most welcome developments at the United Nations in recent years has been
the steadily growing engagement of the business community both in policy forums and
in projects on the ground. Though the relationship is not without its difficulties,
there is growing recognition that we must move beyond the politics of confrontation
and that solutions to poverty, environmental degradation, and other challenges can
only be found if the private sector is involved and is an effective partner. More
and more businesses themselves are coming to recognize how they depend on
international norms and standards for the conduct of business on a global scale and
that the United Nations wide-ranging work in peace and development has an impact on
how they do.

In 1999, at the World Economic Forum in Davos, I introduced the idea of a Global
Compact. The Global Compact was based on my belief that markets and human well-
being can go hand-in-hand. Over the long run, human well-being can be dramatically
advanced by well-functioning markets. But markets themselves cannot be sustained if
they do not ensure human well-being.

I asked businesses at that time to embrace nine universal principles in the areas
of human rights, core labor standards, and the environment and to enact these
principles within their spheres of influence and make it part of their way of doing
business. I picked these ideas because I was worried by a severe imbalance in
global rule making. While there are extensive and enforceable rules for economic
priorities such as intellectual property rights, there are few strong measures for
equally vital concerns such as human rights and the environment.

The compact has since become more than a call to action. Today, it involves not
only businesses but also labor federations and nongovernmental organizations. It
has promoted the importance of universal values and encouraged investors to look
harder at opportunities in the least developed countries, particularly in Africa.
The compact has created a learning forum, a worldwide academic network that
examines case studies, trying to determine what works and what doesn't. And I am
pleased that Sloan plays an important role in this forum.

None of this is meant to is meant as a substitute for action by governments or as a

regulatory framework or code of conduct. Rather, the compact is a voluntary
initiative, a platform for showing how markets can be made to serve the needs of
society as a whole. Business may ask why they should go down this path, especially
if it involves taking steps that the competition might not or steps they feel are
rightly the province of governments.

Sometimes doing what is right, for example, [? equity ?] [? efficiency ?] or

creating decent workplace conditions, is in the immediate interest of business.
Sometimes we must do what is right simply because not to do so would be wrong. And
sometimes we do what is right to help usher in a new day of new reforms and new
behaviors.

We do not want business to do anything different from their normal business. We one
business to do their business differently. We want them to continue what they do
but bear in mind these values that touch all of us.
And dear friends, openness is the emerging hallmark of our time. But we need to
make it work. Otherwise, countries and peoples might retreat behind protectionism,
or worst of all, reject global citizenship or globalization in favor of narrow
concepts of national interest not at all appropriate for this interdependent world
we live in, for this global village.

Business is well-placed not only to generate employment, investment, and growth but
also to advance the global citizenship. Sloan is well-placed to teach more than
economics, accounting, and finance and to help define the parameters of corporate
citizenship. And I am delighted to hear that your program is already evolving in
that direction, and there is a great deal of enthusiasm for the program on
corporate citizenship.

And the United Nations is well-placed to promote dialogue that will build trust and
create the multilateral norms and frameworks needed to fulfill our shared
responsibilities. All of us, the private sector, civil society, labor unions, NGOs,
universities and foundations, and individuals like you must come together in an
alliance for progress. Together, we can and must move from value to values, from
shareholders to stakeholders, and from balance sheets to balanced development.
Together, we can and must face the dangers ahead and bring solutions within reach.

Thank you very much, and congratulations to the Sloan community on this important
day. I will now be happy to take your questions.

[APPLAUSE]

Thank you very much.

PRESENTER: Thank you, Mr. Secretary-General. I have a number of questions from the
audience, and perhaps more will be forthcoming. But let me pose one for you. Do you
see a link between corporate responsibility and corporate citizenship on the one
hand and the gulf between haves and have-nots on the other? Do companies have a
positive role to play in creating a sustainable future?

ANNAN: I think from what I have said this morning it is clear that I see a very
important role for the corporate world. And I think corporations that respond and
react to these norms do make a difference in the communities and the societies in
which they operate. Corporations and the leaders of corporations are often very
important personalities in their own communities and can influence policy and
decision making by governments and help steer laws in the right direction.

But they also make a difference in the day-to-day lives of the individual.
Corporations don't have to wait for governments to pass laws for them to know that
their productions should not pollute the water that produces fish for the village.
They need not wait for governments to pay a decent wage. They need not wait for
governments to try and train their people and give them-- take the question of
HIV/AIDS. Corporations have done fantastic things around the world.

Volkswagen [? to ?] Brazil, for years, watched its good managers contract the
disease and die off. And it took the decision, we are going to do something about
this. Came up with a program of education and treatment for their managers and
their families and then begin to see these creative men and women live on, continue
to deliver to their company, and passing the message onto their families and
communities how to protect themselves. So the role of corporations in the issue of
development and their society is extremely important. And some are doing extremely
well [? nowadays ?] [? at ?] [? this ?] to look at what works and what doesn't. And
corporations do have a role.

PRESENTER: Thank you. Another question from the audience is, what can we at MIT, at
Sloan, and those of us assembled do in particular to help realize or advance the
Global Compact Initiative?

ANNAN: I think you're already on the right track by training your students and
discussing the Global Compact Initiative with them. And I'm sure you also have a
chance to advise many corporations, and you would be able to expose them to this
and talk to them about it.

I've had the chance of meeting some of the Sloan Fellows in New York, and I've been
struck by how enthusiastic they are. And I know that quite a few of your professors
are also working on the Global Compact. And so I think apart from teaching it here,
by the learning forum, and what we are going to put on the web to share with others
becomes an important way of spreading the word.

The other thing that we are doing is a learning forums that we've introduced where,
for example, corporations can come together to discuss what their responsibilities
are and what their posture should be if they find themselves operating in areas of
conflict. What is expected of corporations? Whom should they turn to for advice?
And how do they work together to cope?

And all this, I think, is going to be extremely helpful for corporations. And I'm
extremely happy that US corporations are beginning to join the compact. We've had
tremendous response from Europe, from Latin America, Asia, and elsewhere in Africa.
Recently, Hewlett-Packard has joined. Pfizer is coming on board. And I expect many
more will join.

PRESENTER: What responsibilities do American corporations in particular have in the

global community? Do you see a special responsibility because of--

ANNAN: Well, I think, today, it is business and these corporations that have become
the main motor for the creation of wealth. They have technology. They have money.
And they have management. And they also have a global reach.

In some ways, a cooperation is understood faster and better than governments that
we do live in a global world. And they work across borders. And they also know that
in doing that you need to have some rules. And I think the corporations that
operate around the world should see their role not only as a New York-headquartered
or Silicon Valley-headquartered, but they should try and also lift the people in
the countries in which they are operating and also help the societies by passing on
some of the knowledge and some of the technology and the training.

Where they fail to do this, they inadvertently become part of the conflict or the
problem. We've seen this. I can give you an example. Look at what is happening in
Nigeria with Shell, where the villages around the oil production sites feel they
have seen nothing of the benefits that accrue from exploitation of their oil.

The money goes to the central government. The shareholders take their profits, and
they see nothing and continue to live in squalor. I think it was two or three
months ago when a group of women demonstrated and took over one of the site. And
now Shell has indicated it is going to help them, and it is going to put some money
back.

And in fact, even if it is not direct responsibility of Shell, in a way, it could

have pressure the governments. Said, don't you think we should be doing something
for the villages around here? Can we pull together and do something? These kinds of
gestures go a long way. And I know some companies have done it. And I would urge
others to do that-- not only train the local people, pass on technology, but ensure
that we spread the benefits a little bit more.
PRESENTER: I have a one-word question, which I think we'd all be pleased if you
would address briefly. And that question is-- Iraq?

[LAUGHTER]

ANNAN: I thought I was going to get away without--

PRESENTER: Now, hold on.

[LAUGHTER]

ANNAN: --answering.

PRESENTER: It's not a perfect [? scream, ?] no.

ANNAN: No, Iraq, obviously, is a very topical issue. And it's a very difficult
issue for all of us. And the UN has been involved with this problem for over 12
years now. And the inspectors, as you know, were withdrawn from Iraq in December
'98. And since then, we've not had inspectors back in Iraq. Earlier this year, I
got a letter from the Secretary-General of the Arab League saying that Iraqis would
want to sit with you to discuss the return of inspectors without conditions.

So we arranged to meet. That was, I think, in February or March. We met three times
this year. The last meeting was in Vienna. We seem to be inching forward but no
real breakthrough or progress. And then the General Assembly met on the 12th of
September. And at that time, the US government had become very focused on the Iraq
issue.

I spoke, and President Bush spoke. We both demanded Iraq to comply. In my

statement, I made several point. But there are two I would want to share with you,
arguing that any country when attacked has an inherent right of self-defense under
Article 51 of the UN Charter.

But when that country decides to deal with a broader threat to international peace
and security, the approval and support of the Security Council is required, that we
need to have that basic understanding. Otherwise, we will face major difficulties
down the line. So we were all delighted when President Bush spoke and informed the
world that he is going to refer the Iraq issue to the United Nations.

I also indicated to the council that in such situations, they would also have to
have the will and live up to the responsibilities. The Security Council, you know
what has happened in the Congress. And so I'm not going to comment on that.

But in the Security Council, there is a debate going on now as to the circumstances
under which the inspectors should be sent back. There is a sense that the
disarmament regime will need to be strengthened. The inspectors would need to be
strengthened so that we don't repeat the errors of the past, and they can go in
with a strengthened hand and get their work done. My sense is that that resolution
will be passed. There's still lots of discussions and negotiations going on.

And I expect the council to send in the inspectors with their strengthened regime
with a demand that Iraq should perform and with the request that the inspectors
should report back should Iraq fail to do so. And if Iraq were to fail to do so, I
suspect the council will indicate the consequences that Iraq will have to face up
to. There has been a suggestion that maybe even in this resolution there should be
the phrase, "if Iraq fails, all necessary means must be used," which is a code
phrase for military action. But I think the member states want a two-stage
approach. Send in the inspectors. If they get into trouble, if it fails, come back,
and we will pass the second resolution.
So this is where we are. And I expect that within the next week or two the council
will have acted. The Chief Inspector Hans Blix and his team are ready to go. They
met with the Iraqis and discussed the practical aspects of resumption of their
work. But they are waiting for the council to act so that if there are new
instructions, they can factor it into their work.

And of course, all the member states will work together. And my plea to the council
is that they should work in unity. From experience, it is only when the council is
united that they have the greatest impact. And I hope and trust that the council
will be able to manage this process in a way that we keep the unity of the member
states together. We keep the USA in the fold working with the Security Council not
just for today but for tomorrow and the day after. Thank you very much.

PRESENTER: Thank you, Mr. Secretary-General.

[APPLAUSE]

Thank you so much. That was extraordinary.