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groove their driver's license and i think a statement responsibility to use taxpayer money that comes from taxpayers all over the country to use it first for things it will benefit people.

and since a driver's license since we saw a birth certificate issued in a virgin islands is good in florida, we need to have a national issue and urge them use funds that will help improve the lives of americans. i don't think it's necessary you can't spend money on anything until you've fixed everything about your driver's license security but i do think it should be one of the top three priorities and states should have to spend some of their money improving driver's license security until they are at the point where they think we're there and the homeland security department agrees. >> thank you. mr. kwame, i have a question relating to some of the electronic databases that are required by real id and slowly being implemented by a handful of states. in particular, i'm interested in

the electronic verification of vital events records or evve. as i understand it, some states are using this system to help electronically verify birth certificate information. however, only a few states currently have scanned birth records included in the system. can you speak to the current status of this -- of states' use of evve and whether it is feasible for dmvs to use evve on a widespread basis to verify birth certificates in the near term? >> thank you for the question, senator and also thank you for your leadership on this issue and for the help of your staff who has just been tremendous in trying to pull together so many different interest groups to find a solution.

with regard to evv i know the organization that runs that particular system has i believe submitted a statement. about 15 states currently participate, 15. only three dmvs currently use that system. we have 56 jurisdictions. only three currently use it. the organization according to their testimony believes that 85% of birth records dating back to 1985 are in an electronic form. i would like to see verification of that number. certainly, i have no reason to believe that. i do know several states they've had great difficulty in actually transferring especially old records into electronic forum to make them consistent, accurate, and useable. that is not to do at the end of the day. there's one state in particular just recently who moved its

license to a legal presence standard so you had to prove legal presence in the united states. that stated to set up a war room just for the birth certificate issue because for all those people coming in, those who are in the united states legally, who are foreign-born or foreign residence, had no problem showing they were legally present. the person had a problem to show who was a citizen of the united states was the grandmother who's birth certificate was in the family bible that was burned down. they had trouble proving they were in the hundreds the state spent more of its time with its citizens than it ever did with those who ever showed those records. transferring birth certificates in a electronic form in creating these databases is not an easy task. i think it's got to be done slowly. it's going to be done in a meaningful way. and again, the questions i heard from governors were not about

should we do it. a lot of them said if it's there, that's great. maybe we'll use it but we want to know about the governance. we want to know about the privacy protections and the accuracy even for it, they'll estimate they'll have 90 or 95% accuracy. the way it translates at a line at dmv is that 1 in every 10 person will have a false reading. that means delay or perhaps another trip to the dmv. you could be one of those citizens who have been in the same house, the same county, the same city all your life but you're going to be rejected if this system doesn't work well and isn't 100% reliable. the pilot project is aspirational. let's see if we can get it up and running and see if we can solve those questions and if it's a somewhat, if you build it they would come. i add if you build it right, i think the states will come along but we need to do that on a cooperative basis.

we don't need to rush it just to meet real id standards. >> thank you. mr. baker, you testified all the certificates which generally are in paper form, in county vital record offices throughout the country probably could be digitized and made searchable through evve for $100 million or just $2 million per state, not counting dc and the territories. in addition to a total of $4 million to get it activated in all states, what is the basis of that estimate? >> that estimate is derived in part from the estimates that we received when i was in government based on the experience of the states that actually had to digitize their

records and as well from the place that administers the problem, that administers the database. >> thank you. senator collins, further questions? >> mr. quam, there are some states that have vigorously protested real id and have passed legislation forbidding compliance with it. there are other states that have invested a great deal of money and effort and have taken steps towards compliance. vermont is one of those states. >> uh-huh. >> if if it were to pass and we have new implementing regulations, is there concern that the investments made by states who are seeking to comply with the law would be for naught? or do you consider the pass id

bill sufficiently similar to current law that those investments would still be put to good use? >> it's an excellent question, senator. and i think it's the latter. that because pass id builds on the strengths of real id and because so many of those 18 benchmarks that states have to meet at the end of this year are still part of pass id, you're going to see security increased across-the-board. that also happens to be where most of the state investments have been made. therefore, those investments aren't lost. they're actually used. so you're going to keep the value with those that have been invested. it's interesting. even in some of those states who have been such vocal opponents, some of those governors have gone on their own and said, you know, i want to invest on a secure license. i hate real id but i want to invest. pass id gives them an idea.

legislators, governors, all those who protested a law they did not like to reevaluate and to see if this makes more sense and their investments can actually have value down the road. >> that's an excellent point. i've noticed that as well when i've looked at individual states is the fact that some of the states that had protested the loudest are, in fact, close to compliance at least have reached material compliance with the law but understandably they didn't like washington telling them how without consultation. and they also in some cases were resentful of the financial burden. does everybody state currently have a requirement for legal presence? >> i believe -- actually, i'll look to someone on the

panelists. i believe we're almost there. when real id first went into place, i think about 10 states did not have it. >> correct. >> i think most of the states have moved. there may be one left who doesn't have that requirement. but everybody else now has legal presence as a requirement. >> do any of the other panelists know the answer to that question? >> i'm under the impression that new mexico and perhaps hawaii still have not gone to that standard. >> that is something that we'll check with the department for the record. i know my state of maine was one of the last. the governor recently vetoed a bill that would have repealed the requirement for legal -- for a showing of legal presence. i salute the governor for doing so because i think that is a fundamental reform. i am, however, sympathetic to the situation mr. quam described because we've had situations in

maine because of our close association with candidate where the great grandmother came over from canada many, many years ago, decades ago, married an american, thought that made her a citizen and does not have proof of her being born just across the border in new brunswick. so it can be a difficult issue. i still think a requirement for legal presence is extremely important and that we should not be giving driver's licenses to people who are here illegally. but it does get more complex when one tries to comply with the law. let me ask one final question and that's to mr. baker. and i want to go back to the issue because i'm truly troubled by creating that loophole and

how it would work in real life application. in addition to creating the possibility for endless litigation, my concern is that security officials are increasingly being trained in behavi behavioral registration techniques that the airport has used for decades and very successfully. and an individual may present himself at the airport without a compliant id, go through secondary screening and there are no obvious red flags. he is not on the terrorist watch list, he is not carrying anything that a wand picks up as contraband and yet through the training the security guard has

in behavioral recognition techniques, the guard may believe that this individual poses a risk under the provisions of real -- of the pass id legislation with the prohibition against denying the individual access to the plane solely because he doesn't have a compliant id. are you concerned that the guard would not have grounds to deny the individual access to the airplane, mr. baker? >> i am. as we know, there's a good chance that the capitol building is still standing precisely because the 20th highjacker was turned away in orlando by a border official who said, you know, he just gave me a creepy feeling and i wasn't going to let him in. we really need to be able to let people use their judgment and discretion. it's critical as the israelis

that we look for terrorists, not just for weapons. i predict that once we write this into law, the courts will be asked to enforce it. people will say, you know, i missed my flight so i was denied bordering because i was sitting there cooling my heels and answers -- answering your questions and i was denied bordering because i didn't have an id. i think the courts will say, we have to make sure that this is not a pretext. that they aren't just making up a creepy feeling to deny him boarding because he didn't have id. so we'll have to do a searching inquiry as to what the reasons are. and some are good reasons and some are not. you can't underestimate the impact it has on a relatively low-paid employee to have a federal judge questioning his motives and telling him he did the job wrong. no one wants to go through that. and all of those things are going to be a real damper on

doing the kinds of search and inquiry we want tsa to do. >> and i want to make clear that i'm not talking about irrational prejudices. i'm not talking about profiling. i am talking about a trained security guard using the specific technique that's been used in israel for many, many years and which is being used today in some of our airports. i believe logan in boston is one of those airports that is using the technique. so this is a trained guard assessment and my concern is i think the burden of proof is shifting from the individual presenting himself at the airport who has to prove that he is whom he says he is to the security guard to prove that he

is not the person he says he is. and that really concerns me. so i hope that all the members of this panel will work further with us to help us sort this issue out. it is the reason that i did not join as a cosponsor of this bill is that i felt so strongly that this undermines the security and the purpose of having a secure identification. so i do look forward to working with our panels -- working with the sponsor of the bill, and i want to thank you, senator akaka, for your leadership, and i want to thank the panel. senator akaka, i know if senator lieberman were here, he would say that the hearing record is going to remain open for another

15 days for the submission of any questions or additional materials. and i'm going to turn it over to you. and thank you for your leadership. and i want to thank all of our witnesses today. thank you. >> thank you very much. >> thank you very much. i want to thank our ranking member who has provided great leadership in this area and thanking into some of the issues that we've been facing as it has been so helpful in doing that. i have a few questions here. mr. baker's testimony suggests that real id act increased privacy protections, and that the repeat of the real id would lead to significantly more cases of identity theft.

over the years, as we have worked on oversight of real id, cdt has been an advocate for additional privacy protections. both in real id and on other government issues. would you address the contention that real id adequately protects privacy and why you believe additional protections included in the past id are needed? >> thank you, senator akaka. the issue in terms of whether real id improves privacy i think -- you can look up in the record. you can look at the -- i mean, the notes for proposed rulemaking that dhs put out while mr. baker was there and you can look at the footnote that specifically says that they cannot add privacy controls into the law -- i mean, into the

regulations because the law removed the words "privacy" specifically that was in the intelligence reform act. so while i do think that dhs did take steps to say we're supposed to protect security and, therefore, we're going to build in some privacy protection business personal information, they did not go as far as they would have, even according to dhs, if they had these privacy protections built in. i think that it was clear being on the negotiating rulemaking that we were moving in the direction of coming to the right balance there. but when real id came and overturned that committee from that work and that committee's work, it took us many, many steps back away from privacy protections that would have been in place. while you can say that license reform would protect privacy, i do think that is true and that's why we support license reform and there are some privacy groups that are more skeptical

of license reform than cdt is. we still feel that the move towards license reform is important. that if even if we were going to repeal it, would be replaced with the negotiated rulemaking or put the privacy protections in law as you did with pass id and that's why we support those provisions but this idea that real id would be better than those other two solutions, pass id or the original negotiated rulemaking, i think is just demonstratebly false based on what dhs has written about it directly. >> i would like to ask you about an especially important issue that was magnified by the enactment of real id. this is the issue of how to protect the personally

identifiable information on the machine readable zone of driver's licenses and identification cards. cdt has been a long advocate, a long-time advocate, for additional protections for this information. which was put into a common machine readable format through real id. understand that there are concerns that eliminating the ability to store electronic data from licenses could be detrimental to fraud and identity theft prevention. would you please address this issue. >> sure. i discussed this a little bit with senator collins earlier in response to her question about the fraud exemption. but just taking this a step further, i think we should look under what is allowed under pass id. any retailer is allowed to take the license and swipe it. and to do a comparison -- to

check to make sure that this is a real driver's license that was issued by a state so they can do that. they can check and make sure that the information in the machine readable zone that they have in their database and do a check immediately on that -- that it is the same -- that it is the same person. the only thing they can't do is take it and swipe that information and store it in the database. and it's the ease of aggregation of that data that represents the concern, especially, as we know that we're getting the ability to put more and more information into the machine readable zone. today, it's one thing to say well, most states have the only information that's on the card in the machine readable zone. in the future that is not going to be the case. so the real concern is in making sure while we have this opportunity to discuss security on the card and standards for security on the card, that we're also looking into the future and saying that as we put more and more information into the machine readable zone we're going to make sure that that information is secure and that information is to card holders

is of more concern because you can see what's on the front of the card. you can't see what's in the machine readable zone. so when you give it to someone, you know you can only use the front of the card to type in information or to scan it, you know you're only using that information. it is a technological protection to say that if the person sweeps the card, they can only read the same information that's on the front of the card. and that's what we should be focused on. there's also the security threat of turning over more and more information from swiping the card to many, many individuals. i had a conversation recently with the federal cio who used to be the cio at the washington dmv and he was telling me while he was in washington, he put up a number of fraud prevention measures where to ensure that dmv workers could only do a check against the database. and so they could only verify the information in the database. that was the security in the privacy protections put in place to limit the amount of information that a dmv worker

could find out about the information. that same -- those same types of rules should go into effect that would want to use their driver's license and that should be a machine readable zone. >> thank you. mr. baker, your testimony asserts that pass id would return us to pre-9/11 standards for the issuance of identification documents. however, the pass id act actually contains many of the same security requirements as real id. including requirements that provide a photo identity document, documentation showing the person's date of birth, proof of the person's social security number, documentation showing the person's name and address of principal residence and proof that an individual is

in the country lawfully. under pass id, social security numbers and lawful presence would be checked electronically. as with the u.s. passports, identification documents would be validated or authenticated rather than verified with the issuing agency. none of these federal standards were in place pre-9/11. my question to you is, what is the basis for your claim that pass id would move states back to pre-9/11 standards? >> let me taking a running jump at that. i certainly don't mean to suggest that the items that pass id requires are not useful. i think they are very use until by and large they are the 18

elements that we thought should be done as part of material compliance. one of the big problems here is under real id, material compliance and those 18 items are due to be completed at the end of this year. and you might expect to have to give some additional time because of the crisis that states find themselves in but states knew that was the deadline they were working toward and even those who said we reject real id, nonetheless said they expect to do those 19 objectives or the substantive ones. what pass id does it says, you know, those 18 items, do them in 2016 and maybe not even then if there's some litigation or delay over delivering the regs. that's a terrible delay. we shouldn't accept what i think will be much more five years of delay and that does mean that for the next five or six years

we're getting nothing that we didn't have. you talked about the electronic checks that are done, i think those are useful but again, the lack of ambition is astonishing. we have an everify program for employers that the two administrations have now embraced. they said people who get money who are contractors should follow everify. they should check social security number to make sure it matches the name and then if they don't match, you don't get the job. well, there's nothing in here that says you don't get your license if your name and your social security don't match. we've got to at least have the same standards that we have for everify. people should be required to produce the dhsid if they are not american citizens but they're authorized to work. if they don't have a passport, the state should check, to see if the photos on the passport match.

those are systems that are available now or about to be rolled out. there's no need to say, oh, i'm not sure it will work. it's working today for 150,000 employers and the states should go through that same process. this bill does not require them to do as much as the employers are doing today. so in those respects, i think we have stepped substantially back from both from real id. i do not mean to say -- because we didn't deal with source documents address the problem that the 9/11 commission was most concerned about which was the highjackers getting legitimate ids by using fake documents. thank you. >> thank you very much for your response. i would like to ask mr. quam whether he has any comments about this. >> thank you, senator. i think mr. baker grossly

underestimates the states. number one to say all of this won't be done until 2016 makes absolutely no sense. the states will need every single minute of a five-year window to bring 245 million drivers back in to get this. they're not waiting till the end. they want a system in place that creates the certainty so they can make the investments and they can start the process, and they want to do it as soon as they possibly can. no one is waiting. save and solve are verifications systems that are not used today -- well, they are used by several states but it will require all of them to use those. the fact of the matter is, pass id took the best parts, the most workable parts of real id, and brought them over. he's exactly right about that. and it's because governors were interested in finding a solution, not starting at zero but starting at where we are, take what works and then actually get the job done.

i actually believe that states are going to aspire to do better than pass id. pass id will set a floor that states will go beyond. i think states will participate vigorously in the pilot program. i think they want to find solutions. they would like nothing more than to have these systems that protect the privacy, that can add to the verification that are robust and reliable so you can get citizens through that line quickly and they know that the id that they're given represents exactly who they are. we all share that common goal. to say that they don't, is misleading. i think states and governors are on a page where pass id offers solutions. it offers more verification and because it can be done, pass id meets the 9/11 recommendations where real id actually fails. >> well, thank you very much.

are there any other comments from our other two panelists? if not, i want to thank you so much. this has been helpful. thank you for your support. and all that you've done -- i want to especially thank you for the work -- for working with our staff to put this hearing together. i want to thank you again for moving us this far and without question we're going to have to move on this as quickly as we can. and we'll try to do that. so the hearing record will be open for 15 days until july 30 for the submission of statements and questions for the record. again, thank you very much. the hearing is now adjourned.

>> how is c-span funded? >> taxpayer dollars? >> private donations? >> public support? >> consumer-funded, i guess? >> viewer-funded, i don't know? >> private contributions? >> how is c-span funded? 30 years ago, america's cable companies created c-span as a public service, a private business initiative, no government mandate, no government money. >> next, secretary of state clinton on foreign policy.

her speech on so-called smart power included statements on the middle east, north korea and afghanistan. from the council on foreign relations in washington, this is a little more than an hour. >> well, good afternoon. i'm richard hass the president of the counsel of foreign relations and i want to thank our members and guests who are here on this magnificent new building. and i want to welcome many other people who may be listening to or watching this event on any number of mechanical devices that i for one am unable to operate. [laughter] >> for those of you who are not familiar with us, the council on foreign relations is an independent nonpartisan membership organization, think tank and publisher dedicated to increasing understanding of the world and the foreign policy choices facing the united states. we meet here today, july 15th, 2009, just a few days before the

obama administration marks the completion of its first six months in office. we will also soon commemorate the eighth anniversary of 9/11 and a few months after that, the 20th anniversary of 11/9, the day the berlin wall crumbled, symbolizing the end of the cold war. the past two decades have made clear and then some, though, that the end of that dangerous geopolitical era did not usher in an age of perpetual peace. anyone downtowning this need to contemplate the in box of president obama and those who work for him and those we have here today. the backdrop of uneconomic difficulties the united states must contend with the particular challenges posed by north korea, afghanistan, pakistan, iran, iraq, the middle east, darfur, honor do you recallious --

honduras from poverty, protectionism and nonproliferation, the challenges that are really the hallmark of this era. and making it even more difficult is the reality that american resources are stretched and there's a substantial gap between this year's challenges and the capacities of existing regional global institutions. this then is the context in which today's speaker, hillary clinton goes to work each and every day. hillary clinton is the 67th secretary of state of the united states. in addition to thomas jefferson, james madison, james monroe, john quincy adams, dean atchison and henry kissinger, her predecessors also include able parker upsure and others.

she's the 22nd secretary of state to serve in the u.s. senate, the 15th to hail from the great state of new york, the third woman and the first former first lady. and while i'm citing statistics, i thought i would also mention, in case anyone is interested, that no less than six secretaries of state have gone on to be president. [laughter] >> secretary clinton, it is a pleasure and it is an honor to welcome you here to the council on foreign relations. madam secretary, i trust you will not take it the wrong way when i say, break a leg. [laughter] [applause]

>> oh, thank you very much, richard. and i am delighted to be here in these new headquarters. i have been often to, i guess, the mother ship in new york city, but it's good to have an outpost of the council right here down the street from the state department. we get a lot of advice from the council so this will mean i won't have as far to go to be told what we should be doing and how we should think about the future. richard just gave what could be described as a mini version of my remarks in talking about the issues that confront us but i look out at this audience filled with not only many friends and colleagues but people who have served in prior administrations. and so there is never a time when the inbox is not full. you know, shortly before i started at the state department, a former secretary of state called me with this advice. don't try to do too much.

and it seemed like a wise admonition if only it were possible. but the international agenda today is unforgiving. two wars, conflict in the middle east, ongoing threats of violent extremism and nuclear proliferation, global recession, climate change, hunger and disease and a widening gap between the rich and the poor. all of these challenges affect america's security and prosperity. and they all threaten global stability and progress. but they are not reason to despair about the future. the same forces that compound our problems, economic interdependence, open borders and the speedy movement of capital, goods and people are also part of the solution. and with more states facing common challenges, we have the chance and a profound responsibility to exercise

american leadership to solve problems in concert with others. that is the heart of america's mission in the world today. now, some see the rise of other nations and our economic troubles here at home as signs that american power has waned. others simply don't trust us to lead. they view america as an unaccountable power, too quick to impose its will at the expense of their interests and our principles but they are wrong. the question is not whether our nation can or should lead but how it will lead in the 21st century. rigid ideologies and old formulas don't apply. we need a new mindset about how america will use its power to safeguard our nation, expand shared prosperity and help more people in more places live up to their god-given potential. president obama has led us to

think outside the usual boundaries. he has launched a new era of engagement based on common interests, shared values and mutual respect. going forward, capitalizing on america's unique strengths, we must advance those interests through partnership and promote universal values through the power of our example and the empowerment of people. in this way, we can forge the global consensus required to defeat the threats, manage the dangers and seize the opportunities of the 21st century. america will always be a world leader as long as we remain true to our ideals and embrace strategies that match the times. so we will exercise american leadership to build partnerships and solve problems that no nation can solve on its own. and we will pursue policies to mobilize more partners and deliver results.

fir first, though, let me say while the ideas that shape foreign policy are critically important, this for me is not simply an intellectual exercise. for over 16 years, i've had the chance, the privilege, really, to represent our country overseas. as first lady and as a senator and now as secretary of state. i've seen the bellies of starving children, girls sold into human trafficking, men dying of treatable diseases, women denied the right to own property or vote. and young people without schooling or jobs gripped by a sense of futility about their futures. i've also seen how hope, hard work, and ingenuity can overcome the longest of odds. and for almost 36 years, i have worked as an advocate for children, women and families here at home. i've traveled across our country listening to everyday concerns of our citizens.

i've met parents struggling to keep their jobs, pay their mortgages, cover their children's college tuitions and afford healthcare. and all that i have done and seen has convinced me that our foreign policy must produce results for people. the laid off auto work in detroit whose future will depend on global economic recovery, the farmer or small business owner in the developing world whose lack of opportunity can drive political instability and economic stagnation. the families whose loved ones are risking their lives for our country in iraq and afghanistan and elsewhere. children in every land who deserve a brighter future. these are the people, hundreds of millions of them here in america and billions around the world, whose lives and experiences, hopes and dreams must inform the decisions we take and the actions that follow.

and these are the people who inspire me and my colleagues and the work that we try to do everyday. in approaching our foreign policy priorities, we have to deal with the urgent, the important, and the long term all at once. but even as we are forced to multitask, a very gender-related term, we must have priorities which president obama has outlined in speeches from prague to cairo from moscow. we want to reverse the spread of nuclear weapons, prevent their use and build a world free of their threat. we want to isolate violent extremists while reaching out to muslims around the world. we want to encourage and facilitate the efforts of all parties to pursue and achieve a comprehensive peace in the middle east. we want to seek global economic recovery and growth by

strengthening our own economy, advancing a robust development agenda, expanding trade that is free and fair and boosting investment that creates decent jobs. we want to combat climate change, increase energy security and lay the foundation for a prosperous clean energy future. and we want to support and encourage democratic governments that protect the rights and deliver results for their people and we intend to stand up for human rights everywhere. liberty, democracy, justice and opportunity underlie our priorities. some accuse of us using these ideals to justify actions that contradict their very meaning, and others say we are too often imperialistic seeking our power at the expense of other people and it has fed anti-americanism and it does not reflect who we are. no doubt we lost some ground in

recent years but the damage is temporary. it's kind of like my elbow. it's getting better everyday. [laughter] >> whether in latin america or lebanon, iran or liberia, those who are inspired by democracy, who understand that democracy is about more than just elections, that it must also protect minority rights and press freedom, develop strong, competent and independent judiciaries, literatures and executive agencies and commit for democracy to deliver results, these are the people who will find that americans are their friends, not adversaries. as president obama made clear last week in ghana, this administration will stand for accountable and transparent governance and support those who work to build democratic institutions wherever they live. our approach to foreign policy must reflect the world as it is, not as it used to be. it does not make sense to adapt

a 19th century concert of powers or a 20th century balance of power strategy. we cannot go back to cold war containment or to unilateralism. today we must acknowledge two inescapable facts that define our world. first, no nation can meet the world's challenges alone. the issues are too complex, too many players are competing for influence from rising powers to corporations to criminal cartels, from ngos to al-qaeda, from state-controlled media to individuals using twitter. second, most nations worry about the same global threats, from nonproliferation to fighting disease to counterterrorism, but also face very real obstacles. for reasons of history, geography, ideology and inertia. they face these obstacles and they stand in the way of turning commonality of interest into common action. so these two facts demand a different global architecture,

one in which states have clear incentives to cooperate and live up to their responsibilities as well as strong disincentives to sit on the sidelines and sow discord. and what foreign policy experts at places like the council call collective action problems and what i call obstacles to cooperation. for just as no nation can meet these challenges alone, no challenge can be met without america. and here's how we'll do it. we'll work through existing institutions and reform them but we'll go further. we'll use our power to convene, our ability to connect countries around the world and sound foreign policy strategies to create partnerships aimed at solving problems. we'll go beyond states to create opportunities for nonstate actors and individuals to contribute to solutions. we believe this approach will advance our interest by uniting diverse partners around common concerns. it will make it more difficult for others to abdicate their responsibilities or abuse their

power but will offer a place at the table to any nation, group, or citizen willing to shoulder a fair share of the burden. in short, we will lead by inducing by cooperation among a greater number of actors and reducing competition, tilting the balance away from a multipolar world and toward a multipartner world. now, we know this approach is not a panacea. we will remain clear-eyed about our purpose, not everybody in the world wishes us well or shares our values and interests. and some will actively seek to undermine our efforts. in those cases our partnerships can become power locations to constrain. and to these foes and would-be foes, let me say our focus on diplomacy and development is not an alternative to our national security arsenal. our willingness to talk is not a sign of weakness to be exploited. we will not hesitate to defend

our friends, our interests, and above all, our people vigorously and when necessary with the world's strongest military. this is not an option we seek, nor is it a threat. it's a promise to all americans. building the architecture of global cooperation requires us to devise the right policies, and use the right tools. i speak often of smart power because it is so central to our thinking and our decision-making. it means the intelligent use of all means at our disposable including our ability to convene and connect. it means our economic and military strength, our capacity for entrepreneurship and innovation and the ability and credibility of our new president and his team. it also means the application of old-fashioned commonsense in policymaking. it's a blend of principle and pragmatism. smart power translates into specific policy approaches in five areas. first we intend to update and create vehicles for cooperation

with our partners, second, we will pursue principled engagement with those who disagree with us, third, we will elevate development as a core pillar of american power, fourth, we will intergrate civilian and military action in conflict areas and fifth, we will leverage key sources of american power including our economic strength and the power of our example. our first approach is to build these stronger mechanisms of cooperation with our historic allies, with emerging powers and with multilateral institutions. and to pursue that cooperation. and as i said a pragmatic and principled way. we don't see though as an opposition but complementary. we start by reinvigorating our bedrock alliances which did fray in recent years. in europe that means improved bilateral relationships, a more productive relationship with the european union and a revitalized nato. i believe nato is the greatest alliance in history but it was built for the cold war.

the new nato is a democratic community of nearly a billion people stretching from the baltics in the east to alaska in the west. we're working to update its strategic concepts so that it is as effective in this century as it was in the last. at the same time, we are working with our key treaty allies, japan and korea, australia, thailand and the philippines and other partners to strengthen our bilateral relationships as well as transpacific institutions. we are both a transatlantic and a transpacific nation. we will also put special emphasis on encouraging major and emerging global powers, china, india, russia and brazil as well as turkey indonesia and south africa to be full partners in tackling the global agenda. i want to underscore the task and my personal commitment to it. these states are vital to achieving solutions to the shared problems and advancing our priorities.

nonproliferation, economic growth, climate change, among others with these states we will stand firm on our principles even as we seek common ground. this week i will travel to india where external affairs minister will lay out a broad-based agenda that calls for a whole government approach. later this month secretary geithner and i will jointly lead our new strategic and economic dialog with china. it will cover not just economic issues but the range of strategic challenges we face together. in the fall i will travel to russia to advance the binational presidential commission that the foreign minister and i will cochair. the fact of these and others meetings does not guarantee results but they set in motion processes and relationships that will widen our avenues of cooperation and narrow the areas of disagreement without illusion. we know that progress will not likely come quickly or without bumps in the road but we are

determined to begin and stay on this path. now, our global and regional institutions were built for a world that has been transformed so they too must be transformed and reformed. as the president said following the recent g8 meeting in italy we are seeking institutions that combine the efficiency and capacity for action with inclusiveness from the u.n. to the world bank from the imf and the g8 and the g20 from the oas and the summit and all of these and other institutions have a role to play but their continued vitality and relevance depend on their legitimacy and representativeness. and the ability of their members to act swiftly and responsibly when problems arise. we also will reach out beyond governments because we believe partnerships with people play a critical role in our 21st century statecraft. president obama's cairo speech

is a powerful example of communicating directly with people from the bottom-up and we are following up with a comprehensive agenda of educational exchanges, outreach and entrepreneurial ventures. in every country i visit i look for opportunities to bolster civil society and engage with citizens, whether at a town hall in baghdad, a first in that country, or appearing on local popular television shows that reach a wide and young audience or meeting with democracy activists, war widows or students. .. our partnerships with

their governments stronger and more durable. we have also begun to adopt a more flexible and pragmatic partnership with our partners. we won't agree on every issue. standing firm on our principles should not prevent us working together where we can so we will not tell our partners to take it or leave it, nor will we insist that they are with us or against us. in today's world that is global malpractice. our diplomacy in north korea is a case in point. we have invested diplomatic resources to achieve security council consensus in response to north korea's provocative action. i spoke numerous times to my counterparts in japan, south korea, russia and china drying out their concerns, making our

principles and red lines clear and seeking a fast forward. the short term results were 2 unanimous security council resolutions with real teeth and consequences for north korea. the follow-on, active involvement of china, russia and india in persuading others to comply with the resolutions. the long-term result, we believe, will be a tougher joint effort to the complete and verifiable or taunt denuclearization of the korean peninsula cultivating these partnerships and their full range takes time. and patience. it also takes persistence. that doesn't mean procrastinating on urgent issues, nor is it a justification for delaying efforts that may take years to bear fruit. one of my favorite of reservations, politics is this long and slow boring of hired boards, it takes passion and

perspective. perspective dictates passion and patience, and of course passion keeps us from not finding excuses to do nothing. i am well aware that time alone does not heal all wounds. consider the palestinian/israeli conflict. that is why we wasted no time in starting an intensive effort on day i to realize the rights of palestinians and israelis to live in peace and security in two states which is an america's interests and the world. we have been working with the israelis to deal with the issue of settlement, to ease the living conditions of palestinians and create circumstances that can lead to the establishment of a viable palestinian state. for the last few decades american administrations have held consistent positions on the settlement issue and while we expect action from israel, we recognize that these decisions are politically challenging. and we know that progress towards peace cannot be the

responsibility of the united states or israel alone. ending the conflict requires action on all sides. the palestinians have the responsibility to improve and extend positive actions already taken on security to act forcefully against incitement and refrain from any action that would make meaningful negotiations less likely. and arab states, have a responsibility to support the palestinian authority with words and deeds, to take steps to improve relations with israel and to prepare their public to embrace peace and accept israel's place in the region. the saudi peace proposal supported by 20 nations with a positive step, but we believe that more is needed. so we are asking those who embrace the proposal to take meaningful steps now. anwar sadat and king hussein posed an important threshold in

their vision, mobilized these constituencies in israel and paved the way for lasting agreements. by providing support to the palestinians and offering an opening, however modest to the israelis, the arab states would have the same impact. sending messages of peace is not enough. we must act against the cultures of 8, intolerance and disrespect that perpetuate conflict. our second policy approach is diplomacy even in cases of adversaries or nations with whom we disagree. is a that is our interest and puts us in better position to lead with our other partners. we cannot be afraid or unwilling to engage, yet some suggest this is a side of naivete or acquiescence to these countries's repression of their own people. i believe that is wrong. as long as it engagement might

advance our interests and our values, it is unwise to take it off the table. negotiations can provide insight into regime's calculations and the possibility, even if it seems remote, that a regime will alter its behavior in exchange for the benefit of acceptance in the international community. exhausting the option for dialogue is also more likely to make our partners more willing to exert pressure should persuasion failure. we watched the energy of iran's election with great -- only to be appalled by the manner in which the government used violence to quell the voices of the iranian people. and they arrested foreign journalists, nationals, expelling them and cutting off access to energy. as we have made clear that these actions the deplorable and

unacceptable. the islamic republic has not succeeded in halting iranian march toward a nuclear weapon, reducing iranian support for terror, or improving iran's treatment of its own citizens. neither the president nor i have any illusions that dialogue with the islamic republic will guarantee success of any kind and the prospect have suddenly shifted in the weeks following the election. we also understand the importance of offering to engage iran, and giving its leaders a clear choice, whether to join the international community as a responsible member were to continue down a path to further isolation. direct talks provide the best vehicle for presenting and explaining the choice. that is why we offered iran's leaders and unmistakeable

opportunity. iran does not have a right to nuclear military capacity and we are determined to prevent that. but it does have a right to civil nuclear power if it reestablished as the confidence of the international community, will use its programs for peaceful purposes. iran can become an instructive actor in the region if it stop spending our neighbors and supporting terrorism. if it fulfills its obligation on human rights it can be part of the international community. the choice is clear. we remain ready to engage with iran, but the time for action is now. the opportunity will not remain open indefinitely. our third policy approach and personal priority for me as secretary is to elevate and integrate development as a quote killer of american power. we advance our security, our prosperity and values by improving the material conditions of people's lives around the world.

these efforts also lay the groundwork for greater global cooperation by building the capacity of new partners and tackling shared problems from the ground up. a central purpose of the quadrennial diplomacy and development review that i announced last week is to explore how to effectively design, fund, and implement development and foreign assistance as part of a broader foreign policy. we have devoted a smaller percentage of our government budget to development than any other advanced country and too little of what we have spent has contributed to genuine and lasting progress. too much of the money has never reached an intended target, but stays here in america to pay salaries and fund overhead contract. i am committed to more partnerships with ngos but i want more of our tax dollars to be used effectively. and to deliver tangible results. as we seek more agile and

effective partnerships for development, we will focus on country driven solutions such as those we are launching with haiti on recovery and sustainable development and with african states on global hunger. these initiatives must not be designed to help countries scraped by. they are a tool to help countries stand on their own. our development agenda will also focus on women as drivers of economic growth and social stability. women have long comprise the majority of the world's on health, and schools and underfed. they are also the bulk of the world's for. the global recession has had a disproportionate effect on women and girls which, in turn, has repercussions for families, communities and even regions. until women around the world are afforded their rights and the opportunity that education, health care and gainful employment, global progress and prosperity will have its own

glass ceiling. our fourth approach is to ensure our civilian and military efforts operate in a coordinated and complementary fashion. where we are engaged in conflict. this is the core of our strategy in afghanistan and iraq where we are integrating our efforts with our national partners. afghanistan and pakistan, our goal is to disrupt, dismantle and defeat al qaeda and its extremist allies. why do we ask our young men and women in afghanistan when al qaeda's leadership is in pakistan. we deserve a good answer. we and our allies fight in afghanistan because the taliban protect al qaeda and depends on it for support sometimes coordinating activities. to eliminate al qaeda we must

also fight the taliban. not all those who fight with the taliban support al qaeda. or believe in the extremist policies that taliban pursued when in power. we and our afghan allies, anyone supporting the taliban who renounces al qaeda, lays down their arms and is willing to participate in the free and open society that is enshrined in the afghan constitution, to achieve our goals, president obama is sending an additional 17,000 troops, and 4,000 military trainers to afghanistan, equally important, we are sending hundreds of direct hire american civilians to beat a new effort to strengthen the afghan government, help rebuild the agricultural sector, create jobs, encourage the rule of law, expand opportunities for women, and train the afghan police. no one should doubt our commitment to afghanistan and its people, but it is the afghan

people themselves who will determine their own future. as we proceed, we must not forget that success in afghanistan also requires close cooperation with neighboring pakistan which i will visit this fall. pakistan is, itself, under intensive pressure from extremist groups, trilateral cooperation among afghanistan, pakistan and the united states has built confidence. our national security, as well as the future of afghanistan, depends on a stable democratic and economically viable pakistan. and we applaud the new pakistan determination to deal with the militant frap who've written democracy. in iraq we are bolstering our diplomacy and development programs while we implement a responsible with all of our troops. last month our combat troops successfully redeployed from towns and cities, principal

focus is shifting from security issues to civilian efforts that promote iraqi capacity, supporting the work of the iraqi ministry and aiding in their efforts to achieve national unity. we are developing a long-term economic and political relationship with iraq as outlined by the u.s./iraq strategic framework arrangement, that provides future development of iraq and iraqi people, i look forward to discussing it and its implementation with the prime minister when he comes to washington next week. our fifth approach is to shore up sources of influence including economic strength and the power of the example. we renew our own values by permitting torture and beginning to close the guantanamo bay detention facility. we have been straightforward about our own measure of responsibility. for problems like drug trafficking in mexico, and global climate change. when i acknowledge our role in

mexico's current concept conflict, some were critical. but they're missing the point. our responsibility and willingness to change, to do the right thing, are themselves hallmarks of our greatness as a nation and strategic assets that can help us for coalitions in the performance of our interest. that is true when it comes to non-proliferation and climate change. president obama is committed to the vision of a world without nuclear weapons. and a series of concrete steps to reduce the threat and spread of these weapons including working with the senate to ratify the start agreement and a comprehensive test ban treaty, taking on greater responsibility within the non-proliferation treaty framework, and meeting with world leaders for a nuclear summit. we must urge others to take practical steps to advance our shared nonproliferation agenda. our administration is also

committed to deep reductions in greenhouse gas emissions with a plan that will dramatically change the way we produce, consume and conserve energy. and in the process, spark and inflows and of new investments and millions of jobs. we must urge every nation to meet its obligations and to sees the opportunity of a clean energy future. we are restoring our economy at home to enhance and strengthen our capacity of fraud. especially in this time of economic turmoil. this is not a traditional priority for secretary of state but i vigorously support american recovery and growth as a pillar of our global leadership and i am committed to a role within the state department within a government approach to international economic policyfilmmaking. we will work to ensure our economic trade and investment, loan guarantees, technical assistance, decent work

practices, support our foreign policy objectives. when coupled with a sound development effort, our economic out reach can give us a better form of globalization, reducing the bitter opposition of recent years and lifting millions more out of poverty. i am determined to ensure the men and lynn and of our foreign and civil service have the resources they need to implement our priorities effectively and safely. that is why i appointed for the first time a deputy secretary for management and resources. we worked so hard to secure additional funding for state and u.s. id. that is why we put ourselves on a path to double foreign assistance over the next few years and why we are implementing a plan to dramatically increase the number of diplomats and development experts. just as we would never deny ammunition to american troops heading into battle we cannot send our civilian personnel into the field under equipped. we don't invest in diplomacy and development, we will end up

paying a lot more for conflict and their consequences. as secretary gates has said, diplomacy is an incidental instrument of did -- international security as it has been since franklin, jefferson and adams won for and support for washington's army. all of this adds up to a very ambitious agenda but the world does not afford us the luxury of choosing or waiting. i said at the outset we must tackle the urgent, important and long term all at once. we have those witness to and makers of significant change. we cannot and should not be passive observers. we are determined to channel the current collapse of change toward a world free of violent extremism, nuclear weapons, global warming, policy and abuse of human rights and above all a world in which more people in more places can live up to their god-given potential. the architecture of cooperation we seek to build will advance all of these goals using our power not to dominate or divide

but to solve problems. the architecture of progress for america and all nations. thomas paine said we have it within our power to start the world over again. today, in a new and different era, we are called upon to use that power. i believe we have the right strategy, the right priorities, the right policies, the right president, and we have the american people, diverse, committed and open to the future. now all we have to do is deliver. thank you all very much. [applause] >> thank you for delivering a

truly comprehensive thought, that is broad and deep. i am going to go straight to our membership and let them ask some questions. i ask them only to wait for a microphone and keep their questions as brief as they can be so we can get as many in as possible. let us know your name and affiliation when we do call on you. this is the part of the meeting where i am wikipedia 70% of our membership. you call on people. >> that was your job. >> madam secretary, in 1999, i saw you in gaza with president clinton. there was a great deal of hope. by the end of 2010 we will have a disagreement between israelis

and palestinians and can you say something about syria? >> i will remember that on occasion in gaza, the hope that was generated, i still carry that hope with me, personally and on behalf of the position i now hold. is one of the reasons why i urge the president to appoint a skilled negotiator as a special envoy, george mitchell gratefully accepted. we have been working literally nonstop to set up the conditions for such negotiations. as i said in my speech, we don't think it is just the responsibility of israelis or palestinians, we expect the entire region, particularly the arab states, to assist us, by making it clear they're going to support the two state solution.

we intend to pursue our efforts. we can only tell you our commitment is deep and durable and i don't get easily discouraged and i don't want anyone else to because this is a difficult undertaking especially because of ten years before we were in gaza in 1999 and where we are today in 2009 but i have been heartened by what i have seen in the last six months. with respect to syria, we have made it clear to syria including the offer to return an ambassador, that we do want an engagement but we expect it to the reciprocal, and there are certain actions we would like to see the syrians take as we begin to explore this with them.

syria is a critical player in the middle east. i am hoping that the syrian calculation of where they should be positional e with respect to their relationship with iran and their support for extremists and terrorist activities, will be changing so that we can pursue the two way engagement that will benefit both us and the larger region. >> you mention in your speech the role of the palestinian authority, you did not mention specifically hamas, did you mentioned a situation? >> we are firmly committed to the core principles.

all kinds of pronouncements, we would expect hamas to recognize israel and renounce violence and agree to abide by prior agreements and we have been very pleased that russia, the un, have stood firm with us on that. in efforts to try to work out a unity government between the palestinian authority and hamas, the palestinian authority has also stood firmly because they are committed to a two state solution, something that hamas has not yet committed to. at this stage, what we want to do is get the negotiations going within the israelis and palestinian authority. as i said with respect to the taliban, those who are willing to lay down arms, renounce al qaeda, be willing to participate in a society in that is free and open, they are welcome. i think that is true for people

in other organizations, realize that rejection and resistance hasn't given them or their children the kind of futures that they would hope for. i am very committed to working to encourage as many people as possible to be part of the two state solution but there are certain and requirements that have to be paid. >> through the reuben of philadelphia. madam secretary, i wonder if you could elaborate on the administration's willingness to engage with iran. has iran responded to the letter sent in may, and if the iranians show interest if in engagement, what if they stonewall? how long could this go on if there was absolutely no give? and finally, could you clarify,

after vice president joe biden's remarks, has there been any green, yellow, red light given to israel about an attack on iran. >> those are three easy questions. with respect to iran, i am going to stay within the boundaries of what i said in my speech, we are well aware that the situation after the election puts a different complexion on both the iranian government, we really don't know what their intentions might be at this point in time. we are very troubled by the repressive actions that they put in the aftermath of their elections as well as what our most likely certain amount of irregularities. but as i said, we have no path that has opened up right now,

but we have made it clear that there's a choice for the iranian government to make. we will wait to see how they decide, whether that choice is worth pursuing. if they were to choose to pursue it, we have made it very clear that this is not an open ended engagement, this is not a door that stays open no matter what happens. i think until there is some decision on their part, we really won't no what to expect. with respect to the vice president's remarks, the president and white house clarified those the next day. >> we have a two part question and a 3 part question, please limit future questions to one part. ambassador shaffer?

>> it is nice to see you, madam secretary, i last saw you in colombo when you were first lady. >> i remember that. >> you are about to go to india. let me ask you what you expect to get out of the trip, a lot of it will be on the bilateral side. i wanted to ask if you can focus a little bit on the foreign policy and global part of your agenda. are there issues where you see a real prospect of working together with india, are there others that are tougher and what do you see as the entry point? >> ambassador, we are delighted, our two countries will be engaging in a very broad, comprehensive dialogue. it is the most wide-ranging that i think has ever been put on the table between india and the united states, it has six killers, one of which is foreign policy, strategic challenges along with other matters like

health and education and agriculture and the economy. so i don't want to prejudge, but it is clear that everything is on the table to discuss. we believe india has a tremendous opportunity and a growing responsibility which they acknowledge, play not just a regional role but a global one as well. how they choose to define that, we will explore in depth during the course of our discussion. but obviously there are a number of areas where we would welcome indian leadership and involvement that are difficult. there is nothing easy about non-proliferation. anybody who ever read engaging india knows that's very difficult issue -- we want to look at new ways for global and regional regimes on weapons of

mass destruction, particularly nuclear. we are very interested in the role that india sees for itself in the immediate area. you mentioned sri lanka. they weathered the beginning of the recession better than other places. how will they live people of poverty? the commerce party made a number of important campaign promises to the for, india and china have understandable questions about how they will play in any kind

change regime they have to get an infrastructure so crops go to the market. you need storage and refrigeration facilities. this is an extremely rich area. i am excited, i am very much looking forward to my three days with the prime minister, and others in india. we are going to do everything we can to broaden and deepen our

engagement. >> you at mentioned ambassador senator mitchell and todd stern. to any members of your staff want to ask a question? i don't want to -- in case the staff -- wasn't sufficiently long. i wanted to -- in the back, the third to last row. i can't see that far, i see one or two hand. >> madam secretary, there have been reports in the discussions between george mitchell and the israeli defense minister, ehud barak, a stern number of settlements that have already begun, construction has begun already, there was some agreement to allow the construction on these houses to go forward. can you confirm that?

>> i am not going to step on the negotiations, any decisions that are made will be announced officially. is only fair to the israeli government as well as to our own. >> in many ways. could you talk about the envisioning of that. >> it was a very important

discipline and will for the defense department. and the means to achieve them. we will do the first ever diplomacy and development review. it requires us to think hard about what we're going to achieve. want to be as specific as possible, to match our mission with the resources they need to justify what we are doing and demonstrate results. especially in a global economic downturn, i feel real responsibility to explain to people who are not currently

employed are hanging on by their fingernails, why am i asking for more money for something called diplomacy and development. i'm not asking for money to build tanks or airplanes, i am asking to send people to represent the united states to engage in important negotiations, the early warning signals. the experts in the field to work with other nations, achieve sustainable for the investment we make, lift the standard of living which we believe helps to sow the seeds of stability, and hopefully democracy. we have to make that case. we have embarked on this, it is extremely complicated. i have no illusions about that. it is also something where we have to coordinate with a number of other agencies, defense does work, you can call diplomacy and development, treasury,

multilateral, financial institutions are certainly engaged at least in development. you have usda, u.s. trade rep, you can go down the list. we want to try to explain the whole of government approach. we will be working with the white house to bring together all the other stakeholders in diplomacy. we are deep into discussion boat with the pentagon and the congress about bringing back the authorities and the money that went with them, that has been used by the military for diplomacy and development. whom -- the migration of those authorities and resources is one of the many reasons why the state department and usa id have had more challenging time than usual. this is both a policy tool as

well as an attempt to explain and justify what is we can accomplish and i want to institutionalize, and it might be put into legislation. it is not just because i am secretary of state, but it will require the same level of rigor and analysis every four years by state and usa id. >> all the way in the back. i can't see who it is. hmmm. >> madam secretary, i have a question about the dividends that are being received, the administration is receiving from its commitment to alliance and alliance relationships, many of our nato allies definitely welcome the shift in strategy and the commitment to alliance relationships that the administration put forward. the response was of little bit tepid on military and civil

side. president obama characterize that as a down payment and there would be more forthcoming. some allies are hiding behind complaints as well. we have not seen full development on the civil side of the administration's strategy. do you see the second and third payments coming from our allies and give us a brief sense of where you are. you mentioned the commitment of additional personnel to afghanistan, civil personnel on the u.s. side, what about our allies and other partners in the world? >> i agree it was a down payment. i was more impressed by what we got than some were. i know how difficult it was to makes a convincing case to allies, they had been either shut out of the process or had a feeling that their contributions were not adequately appreciated. we have a lot of catch-up work to do and it is part of our

strategic review. richard holbrooke is here and he put together an interagency team as well at international team. we have been tense, ongoing discussion with our allies and others who want to play a part in promoting the strategy that the president put forth. is challenging because of the global economic crisis that everybody is facing. is also difficult as it is in our own country to understand, you have been there for nearly eight years and now you are adding more troops and asking for more funding, sending more civilians. we have to answer these questions in our own country. you saw where prime minister brown in great britain said they lost eight soldiers. the government went out and began talking about why it was important to work with the united states and others in

afghanistan and got, from what i could glean, a more positive response than people anticipated because you have to be willing to assuage the fears and anxieties and paint a picture of where you're going. on the civilian side, this has been one of the areas and my deputy of resource management working with ambassador holbrooke and his team and usa id and everybody involved, we have been heartened by the numbers of people who have volunteered to go. but we have limited the areas the united states is going to focus on. you heard me say agriculture. 70% of the people of afghanistan live in rural areas. afghanistan used to be, in some descriptions, a garden of central asia and south asia. and because of the soviet

invasion and the resistance to that, and the war lord. it is so eroded and dry, the whole agricultural base has to be reinvigorated. so we are really focused on that. we are not promising to be all things to all people and we are working with our allies so that they will focus on areas that we are not able to any longer. this is very complicated and people idea is to be able to clear and hold, which is what our marines are doing in the south right now and it provides security for people and to begin to see life return to markets and other means of common activity and to go in and work with local people on their police force, which we will be focusing on, on agriculture and since i am secretary of state, i am women, women's roles and

opportunities. i am not here to say we know exactly everything to do and everyone of our allies is going to come through, but i am encouraged by those who feel the political pressure, economic pressure to shift from military resources to civilian and development resources, and i think we have put together something which has a direct relationship to the strategy we are now following. >> russell leader. >> from the easy questions, let me ask you a of a tad more challenging question. the previous presidents, from jimmy carter to ronald reagan sought to reach out to iran, every president has had that experience. iran, for 20 years, has been cheating in its obligations under previous treaties.

if iran fails to respond positively to these initiatives, and if our friends and allies and others including russia and china are unprepared for significant sanctions, what happens then? president obama either during the campaign or shortly thereafter, said that the u.s. would not be willing to see iran with a nuclear weapon. i have to ask the question, if these other efforts don't work, is the administration prepared to live with a nuclear iran or not? >> as i said in my speech, as you rightly quoted the president, we have consistently stated that we do not accept a nuclear-armed iran. we think it is a great threat to the region and beyond. as you might guess, i am not

going to negotiate with iran sitting here. in most negotiations i have ever been a part of, as a senator or any other capacity, but if you have a clear set of objectives, you have a better idea of what might or might not be possible. we have no illusions about this. i believe the absence of the united states for much of the eight years in these negotiations was a mistake. we outsource our policy to iran, and frankly it didn't work very well. that is how i see it. i want to be in the middle of it, to make our own judgments, to figure out what we know and don't know and be in a stronger position, with respect to other nations. part of the attractiveness of

engagement, direct engagement is not only to make our own judgments but also to demonstrate to others that we have done so and to make clear what kind of reaction we have gotten, which i think lays the groundwork for concerted action. and in the last six months, in our efforts in talking with other partners, i have noticed a turn in attitudes by some, a recognition that it is not just the united states that should be concerned about what iran is doing, but there are implications for others, much closer than we are to iran? as i said in a speech, our policy is one that we believe makes the most sense for our interest and we intend to pursue

it and obviously we have excess along the way depending on the consequences of the discussions. >> we have time for one last question. >> good to see you. here comes the microphone. >> stanley ross of bowling company. of one you to expand on one of the points you made for the end of the speech, the government approach to economic issues. particularly as you work on the economic recovery in the u.s. the reference you made to free trade agreements. exports obviously are going to be part of every plan. what role do you see for yourself in terms of commercial advocacy, sometimes tough, the environment faced by american business overseas. >> commercial advocacy is part of our list of responsibilities, as you know, and it is one that i take very seriously but i would like to take a step back and look at the broader picture.

the state department's role in economic aspects of foreign policy. from my perspective, trade is a foreign policy tool as well as an economic one. we are in the midst of working hard on our trade policy, trying to determine how we can be more affective in making the case to the congress and the american people about trade but also making it clear to the rest of the world that we are a trading nation and we want to be. we are at a point where the economic implications of foreign policy are now very heavily seen as part of the intersection of nations. the g 20 is assuming greater and greater importance. it started in 1998 as a result of the asian financial crisis, and it has stayed as a player because it serves a very useful purpose.

you have people at the table who before were not welcome or even thought of in the same breath as the united states or great britain or someone else. so i think that the role of the economic agenda in the state department needs to be strengthened. we work closely with treasury, we work closely with the national economic council. a quick example, david lipton, who works with larry summers in the white house, just went to pakistan to do an assessment of pakistan's capacity to me the m imf requirements. was that an economic analysis? was a strategic? security? political? i would argue it is all of them.

it is critical to deal with other countries. one of the reasons i work for our dialogue with china, to be inclusive and comprehensive, is because strategic and economic concerns cannot be divorced. so on all of these issues, the state department has to play a role on the economic front. we are working with everybody. obviously we have different perspectives, jurisdiction, we know all of that. there is a recognition inside this administration that is all hands on deck, everybody is being required to get up and do your part, redefine what is and expand so you can be the most effective player possible. this is part of our responsibility. >> after 26 months, what struck you about this? what surprised you the most? >> i am really impressed by the quality of the people i work

with at both the state department and usaid, the level of passion and commitment, the willingness to work long, all hours, you know that from your experience. the excitement of being part of the newer administration, which has meant so much to so many people around the world, has certainly cause people to rethink who we are as americans, and maybe give us a break, cut us some slack as we get organized and get going. i still think it is hard to justify not having our full government in place six months after we started. that is something we have got to do something about. we are trying to get our political leaders in place to work with our very dedicated foreign service and civil service employees, but we are still not there yet. i have no idea, when i was in the senate asking a million

questions, how really shortsighted that was. it is amazing. the other thing i didn't realize, when all else fails, if there was a problem that had a foreign policy implication, write letter when you are in the congress. our new undersecretary for arms control and non-proliferation, in my eight years, i wrote hundreds of letters, now i have to read them. [laughter] it depends on which side of the table you are sitting. we are making a difference, we're going to work as hard as we can to translate that into results that the american people deserve. >> everybody here wishes you a successful and safe trip to indiana and thailand and it has been a privilege and an honor to have you here today. [applause] >> thank you so much. [applause]

>> up next on c-span2, a portion of a hearing with bank of america ceo ken lewis on that company's merger with merrill lynch, a hearing on that merger at 10:00 a.m. on c-span.org. the senate is back live at 9:30 a.m. eastern with more work on the defense program's bill. >> live coverage of the confirmation hearings for supreme court justice nominee judge sonia sotomayor continues this week on c-span3, c-span radio and on the web at

c-span.org. you can watch a real air this weekend on c-span2 and on the weekend on c-span. the first half-hour of the hearing will be simulcast on c-span3 and c-span beginning at 9:30 eastern. >> book tv takes you to the harlem book fair live saturday afternoon on c-span2. check out the entire weekend schedule at book tv.org. >> this weekend, the nation's governors take on critical issues facing their states. live coverage of the governor's summer meeting saturday, sunday and monday on c-span. >> former treasury secretary henry paulson testifies on capitol hill this morning about the merger of bank of america and merrill lynch, and federal aid to the institutions. you can watch that live on-line on c-span.org and see it later on c-span network. we are going to show you part of

last month's hearing with banc of america ceo ken lewis, talking about how the merger with merrill lynch came about. >> let me walk you through the decision to purchase merrill lynch. we made that decision in september 2008. we did so because we saw the potential benefits i just described and without any promise or expectation of government support. in mid december i with the fis that merrill lynch had significantly raise its forecast of its losses and we contacted officials with treasury and federal reserve to inform them we had concerns about closing transaction. at that time we were considering declaring material adverse change which as a matter of contract law can compel consummation of the deal. treasury and federal reserve representative -- such action, significant concerns about systemic consequences and the risk to bank of america in

pursuing this course. weeks for government support, limiting the risk of proceeding with the transaction. we both were aware of the global financial system was in fragile condition with the collapse of merrill lynch hastening the crisis. bank of america concluded there were serious risks including material adverse change and proceeding with the transaction with government support was the better course. this course made sense for bank of america and its shareholders and made sense for the stability of the market. i believe committed people with good intentions in the private sector and the government worked desperately hard in late 2008 to prevent a collapse of the global financial system that resonated throughout the globally economy. six months later it is easy to forget just how close to the brink our system came. i will never forget. i believe those efforts will be well remembered long after any current controversy is forgotten. i will conclude my remarks.

>> thank you very much for your statement. let me begin with the questions. let me ask you, unanimous consent that we have, ten minutes on each side initially which would include, after that five minutes for each member, and of course, we need a second or third round, we will do that as well. without objection, show that. one of the key questions is, when you discovered the massive losses that merrill lynch, you learned of them late, and they came as a big surprise. but the e-mails from the feds tella different story. tin clark said the your claim to

be surprised seemed somewhat suspect. the federal government, kevin watch, wrote that this claim is and there are more like this. is clear that the fed thank you either new or you should have known about these losses sooner. after today, everything that was happening in the financial markets last fall, your claim that you had no idea about merrill's losses until december, is remarkable. the fed seemed to think that you are not being forthcoming about that or you were completely clueless about your merger and the situation on wall street.

my question is, when exactly did you know about these losses and why didn't you know about them sooner? >> thank you for the question. the financial markets in the fourth quarter 2008 suffered a massive credit meltdown, something that had not been seen during our lifetimes. it was evidence in our own book, things that were bad and getting worse. other banks were suffering losses as well. they were consistent with

others, and others that we as seeing as well. in mid december, losses accelerated dramatically. we didn't know about losses, these losses accelerated, that gave us the grave concern. >> they you move forward with the merrill deal, because you thought it was in the best interest about his shareholders? >> the pressure from the federal government. we were told that if we went through, i can't remember the exact words, please give me --

the government could or would, i have said in the past that it was the threat, the threat was not what gave me concern. what gave me concerned that they would make that threat to a bank in good standing, it showed the seriousness with which they thought that we should not call them back, a material adverse change. as a result of that, that was a factor in our decisions because the regulators and federal government were saying we don't think calling them back is the best thing for you or the financial system but there were other considerations. if in fact you lost the mac, you subject to severe lawsuits and the amounts of money you had to pay. we thought, given the fact that the government felt that strongly and the fact that there was a