and our natural tendency is to want to be making progress. to that end, sometimes we focus too narrowly on the immediate step, and we don't step back and look. the complexity of these wells and this new -- i say new, in the last 20 years -- involvement of the design team and the field team together provides a check and balance against that tendency. as was said, none of these guys made the conscious decision that, okay, i'm going to do this because it's faster, but it's not as safe. i don't believe they did that. but the overall impetus to make progress and to, in some cases of design and execution, choose

a route that was quicker, that involved fewer steps, that part of it does come from management. so i can't tell you why they continued step after step after step to miss the point, to not go into high alert, to not go shutter down. we don't know what's going on here, we've got to get this figured out. i can't tell you that. but i can tell you that there is continuous pressure to move forward, to make progress. to get'er done. >> mr. lewis, i appreciate your candor and, i guess, for those of us who have never worked on a rig, we can only imagine all of the complexities of these things that are happening all at the same time as well as the pressure to get it done. what i am curious about and particularly because our commission's mission is to really think about what we can recommend that will change the

balance between the pressure to get it done and the pressure to do it right and be safe is i'm trying to think through what it is that could be required either of the industry by way of best practices, as you've described, or by government in terms of regulation that would up the ante on the safety equivalent si. you mentioned that in alaska and in norway you're required to leave wells overbalanced. obviously, that must be a regulation that doesn't apply in the gulf of mexico. do you think that would be helpful, that kind of thing. not necessarily just the overbalance, but that kind of additional requirement by government to put additional pressure on the industry to be able to assure the safety when these wells get closed down? this. >> i think there's a balancing point. i think that some of the mms regulations, i'm sorry, i'm

still stuck in the old terminology here. i'm not even sure i know the new acronym for the agency. [laughter] their regulations, i feel, are inadequately specific both in definition of the intent of some of them, but more importantly, in their continuous use of qualifications where they say or as the operator in their best judgment decides. an example is maximum anticipated surface pressure. it says you have to bring us a casing design and show us what the maximum anticipated surface pressure is, and then it never says anything about how you calculate the maximum anticipated surface pressure.

and there are an innumerable array of assumptions that you can use in that calculation which will drive that number from either total reservoir pressure or total formation fracture pressure to zero depending on how you want to play with the input. now, the regulation says that the mms will review your data and see if it's appropriate. the reality is that they have neither the staff, nor the tools, nor the financing to do that. if we're going to talk about increasing regulation, we need to talk first about increased financing and increased staffing and increased technical competence of the people who are charged with enforcing those regulations. i think that a very important part of today will be this afternoon when we hear from two of the major companies with respect to their safety cultures, and it might be interesting to ask those people how they feel about melding that

with a regulatory environment that together induces best practices. >> thank you. >> i was just going to add the comment on that. you know, i agree that, you know, we have to have a regulatory environment that has some requirements, obviously, some specific requirements. i think it also needs to be performance-based because, you know, i think that, you know, to deliver the kind of safety performance and industry performance that we want it has to be this integration of safety culture and, you know, and the specifics of safety. you have to have a safety culture of performance, and just like mr. lewis' discussion about drilling fast, you know, certainly, you know, one of the key things is optimally, you know, drilling. but as we, you know, all know if, you know, if you try and drill too fast, you end up having hole problems and lost returns and actually, you know,

it's not only effecting the safety, it actually then ultimately effect your efficiency. so i think it was mentioned earlier, i think chairman reilly mentioned it, you know, this, you know, good performance also is good safety and good safety culture. so i think it has to be a combination of those two things. >> mr. bosch. >> yes. mr. lewis, you indicated that one reason for the changing plans for the temporary abandonment within the last week might have been as a result of the lack of previous attention to converting this well, making sure this well was available for production well. when in the process of drilling this well was it determined that this would be left as a production well. >> well, that final decision would not have been made, would not have been finalized until

they had evaluated the logging data that was run after they td'd the well. however, i believe that there was a fair degree of confidence in their geophysical interpretation that it would be completed. the drilling of that section of the well would have given you your preliminary confirmation of that in that we are now essentially logging while drilling to a certain extent. however, the point of this is that the amount of time available from that decision point which was ten days, two weeks from the failure is

totally inadequate to obtain the materials necessary to achieve this abandonment, totally inadequate to achieve the materials to complete the well with. you're talking lead times here of months to sick or eight months -- six or eight months to a year for some of these items if you have not designed for them before that point in time, not only are you going to be rushed with the design, you're going to be running in circles trying to find stuff to do it. i may have lost the thrust of your question there. have i adequately covered that for you? i think you responded it was not until maybe two weeks prior to the incident that the determination, the information was available to make the determination that this would be a production well. and i think i got that from your your -- what youal said

there was one thi that the int thi design at the last minute and that's the use of this excess loss oflation circulation material as the a spacer. that decision was a last minuted change was driven by a attempt to simplify a disposal issue that would have been considered a hazardous waste and required shoreside transportation and disposal if it had not been used in the manner that it was used.

>> was there, was there material suitable for use as a spacer that is a type of more readily available in use spacer on the rig? >> there most likely was. i would expect there to have been. normally, what you would have used is simply a vis cosfied fluid, possibly weighted. a standard procedure is to use a spacer that's about halfway between the fluid you're displacing and the other fluid in terms of density. your waiting materials, your vis cosfiers and your weight fluid all should have been available on the rig, yes. >> great, thank you. >> we're now going to take a ten-minute break. we'll reconvene at 10:48.

[inaudible conversations] [inaudible conversations] ning remarks? >> i do. i have a brief statement. first of all, thank you for e ti >> thank you for inviting me.a again, co-chairs riley and grah graham, and other distinguishedn commissioners, as you know this is my third appearance before the commission ugh this is at a g , can barely see you from here. takeged toab although to continue our discussions both about the changes that we've made in our future plans for drilling on the

nation's shelf. the regulation and enforcement share the same goal, which is to reform the way the offshore drilling is conducted and regulated in u.s. waters. as you know in late june the president and secretary salazar ask me to become the nation's director of offshore development. their direction was sweeping and clear, to review the agency from top to the bottom, and make the changes necessary to give the american people the confidence that drilling in our oceans will be conducted in a safe and environmentally responsible day. since then, as you know, we've aggressively pursued reform agenda to raise the safety and accountability for my agency. these reforms are ongoing and will continue for some time. they are, i think, in many respects, familiar to the commission. let me walk through them very quickly. first we've launched an

aggressive reorganization of the former mms. second, we've formed an investigations in review unit that steps up our internal investigations and external investigations in our efforts. third, clarifies what we expect to companies related to worst-case discharges, containment capabilities, and certifications of compliance, the most recent of which was issued yesterday. we have developed a policy to deal with real and apparent conflicts of interest. we've begun a full review which will no longer be used to approve deepwater drilling projects. we've issued for the first time, guidance for what's called idol iron. requiring companies to set permanent plugs on approximately 3,000 nonproducing wells and dismanned -- dismantling approximately 750. we have developed rules related to casing, cementing, b.o.p.

certifications, and other matters. we've developed and published the rule requiring oil and gas operators to develop for the first time their own safety and environmental management programs, the s.e.m.s. rule, both in the gulf of mexico and in the arctic. now we have pursued the changes while managing hundreds of loyal and committed public servants, many of whom have been in the agency for 20 years or more, through a crisis, the likes of which none of them had ever experienced before. and who it's fair to say have been deeply and profoundly shaken by the unrelenting and in many ways, unfair criticism that they have received. now there are great challenges that face the country with respect to offshore oil and gas drilling. those challenges can't be minimized because they are substantial and they are difficult. let me summarize briefly several of the most significant challenges that i see for the development and regulation of oil and gas resources. issues that we confront every

day and are the context for your work as well as for our reform agenda. first, to achieve the appropriate balance between ensuring that new safety environment standards are strictly adhered to my industry, and at the same time, expediting the prompt process of permits in deep and shallow water. this balance is critical and most be topmost in our minds as we impose and force regulations and make changes as we reform my agency. second, providing appropriate funding. we talked about this with dr. cruickshank. funding and resources for the management of regulation of offshore energy development. it's clear, and i've seen statements that the agency for decades was starved for resources and was not able to review drilling operations, conduct inspections, and enforce standards adequately. even though the agency personnel tried very hard to do so. i've been asked by the president

and the secretary to fix these problems. but that will, to put it starkly, require a substantial infusion of resources to accomplish. we have requested substantial resources from congress for the hiring of personnel to review drilling permits, to inspect rigs, monitor drilling activities, and to ensure compliance with environmental standards. there is a substantial technological gap between the industry and the people who oversee it, namely the people in my agency, that has to be addressed through new tools and training for government personnel. i'm deeply concerned without the resources that we requested, justification for which could not be more compelling. the changes and reforms that we have pursued and will continue to pursue will not be realized. third, there is a grave need innovation and technological development with the safety, the blowout containment, and spill response. there's a tremendous opportunity here, and a desperate need for

technological development offshore. i believe some, if not all of you, have gone on igs and platforms. in many ways, they are engineering marvels. yet, the technological development that relates to safety has lagged behind the development of the rigs themselves. and so there's some questions that have come up that we need to address. what features should the next generation have in what types of censors and safety devices should be installed on the drilling rigs? what kind of electronic and metering should be required to get realtime and important data. both to the companies that operate, and to the regulators that oversee them. how will versatile and containment equipment be designed and be built. now the department announced the creation of the institute, called the ocean center sail institute, that we hope will

draw on government, industry, academia, and ngos to help address these and many other questions. fourth we need to optimize safety and environmental compliance regime for operational and offshore regulation. we will continue to think very hard about the safety and offshore regulatory regime. we have the prescriptive regulations, which is the system we currently have, and increasingly holding industry to performance standards that we develop. those must be appropriate for the reality and scale of the united states as current offshore and oil and gas industry in our economy. we can't simply import foreign models into our current model. then too, the model that we adopt has to be consistent with the existing relationships between government and the private sector. finally, we must develop the strategy for offshore energy

development in the arctic. as you know the resource potential there is substantial. but the arctic environment presents a broad range for challenges for oil and gas development. just to kick through them, they are whether conditions, the development of the necessary infrastructure. employs realistic still response resources and last but certainly not least, protecting sensitive arctic habitats and marine mammals. these are all important issues and we are considering all of them. final word, this commission is in a unique position to collect and analyze information relating to these issues. and to draw upon a broad range of expertise and perspectives in your work. i know your work is coming to a close. but the challenges for industry and agency to develop practical and effective solutions will continue. therefore, as we do already, i look forward to working with the commission, i look forward to

the report, i look forward to the recommendations, and i want to thank you the commission for its work. >> thank you, dr. bromwich. we really want to be helpful to you in the task that you have set. when you first appeared some four months ago before us in new orleans, i realized the question of the experience of the nuclear industry and the nuclear power operations that encouraged you to consider that as a way to supplement your regulatory effort. and raise the bar within industry by defining best practice and working closely with the regulators to bring up the game. i also possibility taking some of the resource load off. have you had a chance to consider that? do you have an opinion on it? >> we have consider it. we will continue to consider it. i think your suggestions and your questions have stimulated thinking both within our agency, and i hope to some extent, within industry. i don't think it can be an

immediate institute for the current system that we have now. is there the possibility and potential for the self-regulating mechanism that would enhance the regulatory system that we have and increase oversight? i think there is that possibility. i look forward to exploring it. i think we need to be realistic about differences that exist between the oil and gas and the nuclear industry on the others. and one is that oil and gas has been historically extremely competitive. my sense is the kind of information that would be handled in the oil and gas industry if one company inspected another or participated in inspections of another, there would be issues about technical and proprietary information that companies maybe reluctant to share with one another. i think there are larger, far larger number of participates in the oil and gas and the shallow water drilling aspects of the industry than there are in the nuclear industry. so i think we have to look at

those differences square in the face and try to figure out whether they are aspects that can be adapted to the oil and gas field. but i don't think -- i'm sure your not suggesting one can take one model and import it into a very different industry with a very different structure. >> thank you. senator graham. >> thank you very much, bill. my questions are going to largely follow the comments that you have just made, mr. bromwich. you stated that one of your priorities was appropriate funding to carry out your responsibilities. in many areas in which private business is going to be inspected by government, there are fees or other means by which that inspection service is funded. if you take out a building permit, the funds that you pay for the permit end up going to

finance the inspector who is supposed to be sure that the building is built to code and standards, safety, et cetera. why couldn't a system like that be utilized between the agency and the industry rather than relying on appropriated taxpayer funds to support the inspection function? >> that's a very good question, senator graham. my understanding was that was a significant element of what the administration was proposing to get us $100 million additional dollars in fiscal year 2011. there was a significant proposed increase in inspects -- inspections fees. the reaction on capitol hill was mixed. there was substantial opposition from industry to raising the fees. that's not a surprising reaction. to the extent that we are banking on or hoping that an

enhancement of fees will help to fund the needed augmentations, i think we need to see what the reaction is going to be. so far it has not been incredibly positive. >> there would be a potential alternative approach, and that is all of this drilling is done on public lands subject to lease arrangements. why couldn't you include in the lease the fee that would be sufficient to cover the cost of inspecting the activities that the leasee is going to undertake on you the tenant, on behalf of the u.s. people's own land? >> that's an interesting suggestion. i don't know whether it's been previously explored or not. i would be intrigued, would be interested in pursuing it. i don't know whether it's ever been considered before, and if so, what the reasons were for not going forward with it.

it's a way to go forward and get additional money from the industry that have used the public lands. >> another of your priorities is innovation, r&d, relative to offshore drilling. it seems to me it's a constant challenge for government to stay current much less ahead of entrepreneurial, aggressive, private sector energies. and that's -- we want entrepreneurial aggressive private sector entities to move the economy forward. how would you see the new entity that you described giving government some greater ability to at least stay competitive in terms of it's ability to provide effective regulatory standards and enforcement standards in a rapidly changing technical environment? >> i think we don't have a fully

developed proposal yet. i think sec tar salazar made the announcement because he wanted to get the reaction of the industry and ngos, but it is in recognition of a very significant definition that exists in the knowledge and industry and that guides them to deeper and deeper water and the technological know how and the development capacity that exists in the government. we are at a severe handicap and always have been as people drill in deeper and deeper water. we're hopeful that one the things that may happen is we will create the institute and get the circulation of personnel. so we will get the benefits of people and industry who are involved in r&d programs who can share that information with the government, which will allow us to enhance the way we go about regulating offshore oil and gas. so the proposal, which is still

very much in an outline form, is to try to develop that capacity in government so that we can stay more abreast of the industry than we have in the past. but i'm also concerned about something else which relates to the level of r&d which exists within industry. i went on a tour, recruitment tour a couple of weeks ago in the southwest. i dealt with the chairs of petroleum engineering schools in louisiana and texas. they expressed concern about the level of r&d in the private sector into drilling and drilling safety. i think we're really talking about two different but important things. one is to make sure that drilling safety r&d goes on at an adequate level within the industry. but then also that that knowledge in r&d gets shared with the government so that the

regulator is better equipped to do it's job. > a couple of final questions, >> a couple of final questions which were not on your list. one of the things that we're probably going to be talking about is a governmental restructuring. are there some changes that would match responsibility with skill sets more effectively? one of those that's been suggested currently the osha responsibility for worker safety is technically vested in the coast guard for offshore rigs but it's my understanding that the memorandum of understanding the coast guard transferred that to mms -- >> we'll leave this right now to go live to the u.s. senate. you can see this hearing in its entirety on c-span.org. the senate holding a brief pro forma session expected to last just a couple of minutes. no legislative business will be conducted today.

now live coverage of the u.s. senate here on c-span2. the presiding officer: the senate will come to order. the presiding officer: the clerk will read a communication to the senate. the clerk: washington, d.c., november 10, 2010. to the senate: under the provisions of rule 1, paragraph 3, of the standing rules of the senate, i hereby appoint the honorable jack reed, a senator from the state of rhode island, to perform the duties of the chair. signed: daniel k. inouye, president pro tempore. the presiding officer: under the previous order, >> the senate wrapping up another pro forma session. no legislative business conducted. lawmakers have been holding these every three days to keep president obama from making any recess appointments. the next and last pro forma session is this coming friday at 9:30 am eastern. elsewhere on capitol hill house

republicans are preparing to take control later today presumptivetive house speaker john boehner will be briefing reporters and he'll be with john walden. that's at 11:45 eastern and you can see live it live on our companion network, c-span. >> with most election results final and the winners preparing to govern, use the c-span video library to see what the winners said on the campaign trail and during 140 debates c-span covered. search, watch and share anytime all free. it's washington your way. >> the national park service on tuesday released its plan for the future of the national mall. the plan four years in the making details proposed new infrastructure and visitor amenities, park service officials held a press conference at the jefferson memorial to present their proposals. we'll also hear from interior secretary ken salazar. this is a half hour.

>> good afternoon, i'm john jarvis. i'm the director of the national park service. and i want to thank you all for joining us here today for this milestone. an incredibly important milestone in the life of the national mall. joining me here today are the secretary of interior, ken salazar, the assistant secretary of fish wildlife and parks, my boss, tom strickland and two of our partners, coca-cola who has been helping us on the mall with our recycling program and the trust for the national mall who has been an incredibly important partner that will be with us for the mall's future. the national park service is in

the pepper -- business to make sure we share all the stories of the visitors of all americans and those who come from around the world. this century and into the next century is well. in order to do that and to do it well, we have to do planning. and this particular plan has been long way coming and is quite thick there to express really the vision of this great place as well as the stakeholders that have provided extraordinary input into the development of this plan, more than 30,000 americans commented on this plan through the process and even got comments from around the world. one from mozambique and there's a large interest around the world on this incredible place and it speaks volumes really to

the values that are embedded in this national mall. nothing in washington, d.c. is done alone. there are many, many partners that weighed in and had legal requirements is well to participate in the development of this mall. and my job here this morning in part is to recognize many of them. for their contributions and involvement in the development of this. certainly, members in congress and the appropriations and authorizing committees, especially delegate eleanor holmes norton and her direct support for the district of columbia. the national planning commission whom did send this plan review and their review and the decision and the u.s. commission on fine arts, the smithsonian institution, the architects of the capitol, the national gallery of art, the district of columbia's planning transportation and historic preservation offices.

[planes flying over] >> the advisory council on historic preservation, the washington area metropolitan transportation authority, the u.s. holocaust memorial museum, the federal reserve federal reserve, the national archives and records and the department of agriculture, usepa, general services, bureau of engraving and printing, national endowment for the humanities. i mean, i'm telling you, every one of those folks had some involvement is well. plus, we've had organizations participate. american society of landscape architects, the american planning association, the american institute of architects, the american civil liberties union, the committee of 100 for the federal city, dc preservation league, downtown business improvement district, the guild of professional tour guides, the national association of olmsted parks, the national coalition to save our mall, the national parks cultivation association and the national trust for historic preservation.

frankly, without the help with all of those individuals and all of those government agencies and organizations, we really would not be here today. and i think with their input we have crafted a great vision for the national mall. and one of those keys and absolute partner in the development of that -- of this play and the future is the trust of the national mall and it's with great honor and pleasure i get to introduce the chairman, chip akridge. [applause] >> thank you, director jarvis. we appreciate all your support and your leadership over these last several years. i'd also like to thank secretary salazar, assistant secretary strickland and peggy o'dell who's standing over here. she's the regional director. she served as this park's superintendent for the majority of the time that this plan was being crafted so she had a major degree of input in what has been in this plan.

the trust is honored to be the national park services partner in this ambitious envisionary project. we want to thank you for having us here today to share this day with you. this is a terrific day. the secretary of state said be careful what you ask for, chip, you might get a job. and this is what we ended up with. i want to acknowledge those 30,000 people that the director mentioned that participated in providing input into the mall plan. their input was invaluable in helping craft the final plan. i want to give a special thanks to susan, susan, would you stand up, please. come on. [applause] >> susan was the project manager for the team that put together the national mall plan. she and her associates put in yeoman's efforts. did you understand how much effort it took just to read the number of organizations that had to be consulted on this thing?

17 organizations had to approve this plan. so we want to thank her for developing the plan but even more i thank her for getting it finally approved. thank you. americans have a great tradition of protecting our revered public spaces. about 25 years ago, the public/private partnership kind of merged as the organization. it was instrumental in getting many of these projects off the drawing board and to completion. there's some wonderful examples. the statue of liberty on ellis island in new york, central park in new york, a federal public/private partnership, a state one. and the stair spang-- star span and 150 public/private partnership. we're ready to take on the job of restoring and improving the national mall.

it's been 30 years -- 30 years except for this job right here since any amount of major money has been spent on serious renovation of any part of the mall. the volumor and the bravery of those who have fought to preserve our freedoms and those monuments of our iconic leaders are being dishonored from simple neglect. america cannot stand by and let the national mall continue to be a national disgrace. with the national mall plan as our guide, the trust is committed to raising the private sector's half of the required funds to restore and improve this space to make it something we can all be proud of. mr. secretary, since your appointment, you have been a steadfast supporter and an excellent partner. he has put his money where his mouth is.

he committed a significant amount of money to three critical restoration projects which evidence of which is right here. we just toured it. we're excited to begin working with you and your entire team, the department of interior, and the national park service to execute this plan. together with your leadership and the commitments that you've made to the project, i know that we will accomplish our shared goal, and that is to make the national mall the best park in the world. thank you, sir. [applause] >> i now want to introduce steve killeen president and dreof coca-cola refreshments. coca-cola is a another great partner and they provided the funding for first ever recycling program on the mall. steve, we're grateful to your generosity and we're looking forward to building a great relationship. [applause]

>> thanks very much, chip. and thank you, secretary salazar, for inviting coca-cola here today to share in this terrific national mall signing. the coca-cola company is thrilled to be standing next to our national park partners and to participate in the important work of restoring the national mall. one of our true national treasures. the coca-cola company has been partners with the national park service for more than 40 years with more than 30 million visitors each year there is no better place to launch a comprehensive greening effort than right here at the nation's capital on the national mall. i told them 15 more minutes before i was ready. [planes flying over] >> this year, coca-cola contributed more than $1 million to the national park foundation in partnership with the national park service and the trust for the national mall.

today i'm proud to say we're launching a sustainable, permanent recycling program to help restore and preserve the national mall. before starting the project, we invested in research with our national park partners to determine not only what motivates people to recycling but also what features make it easier for them to do so. this includes researching everything from what color bins catch people's eyes to the shape and size of the lids on each receptacle. that's why starting today you will see new blue recycling bins dotting the landscape of the mall from the capital reflecting pool all the way down to the lincoln memorial and right here at the jefferson memorial. in total, the coca-cola company is donating 320 recycling bins to be used by the national park service throughout this great property. but we recognize this is not an enough to keep up with hawaii traffic events that often take place here. so we also have donated two recycling trailers which house

an additional 400 bins to be used during the great special events that happen here such as the fourth of july and earth day celebrations. and because we firmly believe that education is the key to changing people's behavior and generating their commitment to recycling, coca-cola will also make available for special events a mobile educational vehicle to educate consumers on the importance of recycling. if you think about it, recycling is arguably the easiest and most effective way to protect our environment. and recycling is something that we can all do as individuals at home, employees at work, and businesses and our communities and as visitors to places like the national mall. that's why we started coca-cola recycling in 2007 to support the coca-cola system's goal of eliminating all waste during the life of our packaging through efforts to reduce, recover, and reuse all the materials in our business.

as part of this commitment, in 2009, we opened the world's largest bottle to bottle recycling facility in spartansburg, south carolina. this 30-acre state-of-the-art plant is capable of producing 100 million pounds of recycled p.e.t. plastic each year. that's about 2 billion 20 ounce coca-cola bottles. as a company it's our goal to eliminate 100% of the waste in our production facilities and divert it all into the recycling program. but we all know that recycling is only one part of the equation. as coca-cola, we are constantly innovating and looking for new ways to reduce our environmental footprint and make our businesses and our communities ever more sustainable. this includes introducing the first ever climate-friendly beverage coolers on capitol hill

and moving them to our hidrinks trucks that use 30% less fuel and produce 30% fewer emission and -- and we also want to develop sustainable renewable packaging with things like our new plant bottle where 30% comes from plant-based materials. these are just a couple of examples of coca-cola is making sure we are doing our part in building sustainable communities. caring for our environment is part of coca-cola's heritage and we are committed to preserving and protecting it. we look forward to continuing our partnership with the national park foundation and hope this is a successful inaugural recycling program. after the pet press conference today i would love you if you would join me in a brief demonstration of the new recycling equipment that we have available for us here at the national mall. but now it's my great pleasure to introduce tom strickland the assistant secretary for fish and wildlife parks. tom? [applause]

>> thank you, steve. and thank you to coca-cola for their support for this beautiful place. the national mall, like all of the national park system is a treasured landscape and it belongs to all the people of america. but it's unique because of all the lands in america, it's the most popular place for people in this country to gather. it serves a unique role in terms of expression of our first amendment rights, a place to come as well as to celebrate, to see the magnificent structures like the one we're in front of right now, the jefferson memorial. just about 22 months ago an estimated 2 million people filled the mall to celebrate a moment in this country's history. just a few weeks ago, we had congregations of folks with vastly different points of view seek out the national mall to express their views about this country and what it means.

so it's the most popular piece of real estate in america. and i would suggest the most profoundly piece of real estate in the world for what it stands for. and yet we're loving it to death. this plan today -- this vision for the mall is the first step in bringing the mall back to the level of beauty and a special place that it so much occupies in our mind. it's a product of a collective effort. i want to congratulate our leaders at the park service. and it is appropriate as we sit here today, that the director of the national park service who i suggest will go down as one of if not the greatest director in that group's history, john jarvis started his career as a park ranger at the jefferson memorial. you've come a long way, john. we're very proud of you. [applause] >> so with that let me say we have a stewardship responsibility at the department of interior for some magnificent and natural places and and the

places that we're honoring with this mall and we have and our secretary interior someone who has a profound sense of history, a profound love for the out of doors who has shown great vision and leadership to lead this department in the 21st century. join me in welcoming the 50th secretary of interior, ken salazar. [applause] >> hey, so we're going to sign the record on decision and i'll make some comments and i'll be happy to take questions to the press. if all of you will join me behind here if i could have peggy o'dell the great leader of the parks department and maria and everyone who is a park ranger and park official who works with us come and stand behind us as we sign this record of decision and i also want the members of the national parks who will make this a reality. sally, lead the gang up here. come on all of you. stand right here behind -- come up on both sides.

tom, i think you and i are standing over here and then i'll make a few comments. [inaudible conversations] [inaudible conversations]

[applause] >> let me make just a few comments and take questions from the press. hey, you parks guys, you work for me. come over here. i don't want you to go anywhere. if we could get the horse, we would have you in here too. let me just make a few comments. first and foremost, when we look at what's going on here today and the national mall in washington, d.c., this is about jobs in america. this is about jobs that are created by the 30 million people who come to our country to our

nation's capital who spend dollars staying here in our hotels and eating. -- eating in our restaurant and see creating jobs in america. so this is exactly the kind of project that is so important when we think about the job creation challenges our nation faces. and this is but one for us all across america and every single state and each of our national parks and wildlife refuges and our national landscape conservation system and everywhere we look we look at our outdoors and our historic preservation is an opportunity to create jobs for america. number two, this is an exciting time for us as a nation here in what is america's front yard. because yesterday while we were signing the record of the decision and i'll speak to it in a minute we also know there are a lot of other things going on here in the mall. and our parks people, our contracto contractors, the other organizations that have been involved with us are doing a herculean effort in moving what

was a static stagnant effort 20 months ago to being on the verge of doing some things that will go down in the history of our country right here in the national mall. you don't have to think for a long time but just sense what is going on here. we have, yes, the celebration here at the jefferson memorial where about $12 million has gone into this project that will preserve the jefferson national memorial into a century and beyond. they tell me the contractors that it's in the kind of protection on the sea walls but down there on the maul itself and when you think of the history of the reflecting pool, that place is already being remodeled and refurbished with $30 million plus commitment that we have placed into the reflecting pool of the national mall. and when you think about the dc world war i memorial which had been abandoned for so long, it's coming back as one of our renovation projects. and it's not ending there.

we pushed through just in the last year the final efforts on moving forward with the martin luther king memorial. and in october of this next year we hope to be celebrating one of the iconic figures of the united states of america in celebrating martin luther king and his legacy to civil rights and to an america that has been an america very much in progress. so there is a lot that is exciting and a lot that is happening right now today in the nation's front yard here in the national mall and i want to give the people behind me a round of applause because they are the ones who make it happen every single day. [applause] >> number three, i want to say a quick word about recycling. you know, when you think about the world that we live in today, it wasn't so long ago that recycling wasn't even a consideration. and yet over time and really the last 10, 20 years recycling has become a way forward. i'm delighted with coca-cola and

with steve and all the rest of the people who have come here together to help us get recycling done here on the national mall. for me as i have often run the national mall as tom strickland has often run the national mall, i think it is a stain on our nation's capital that our front yard really did not have a recycling initiative to make sure that the thousands, in fact, millions -- it has to be millions of bottles that are frankly discarded here. we're simply going into the landfills of america. that will no longer be the case and it will no longer be the case because we frankly said that we were going to change it. and as you -- some of it saw it wasn't done on the fourth of july because i went out and i counted the recycling bins because we didn't have them all up and now we have them all and for that i want to thank the national park service and coca-cola and tom strickland for making it happen. give them a round of applause. [applause] >> finally, as chip and sally

well know and the national mall trust, the record of decision is a pathway forward. but there's a lot that has to be done. there are critical issues that have to be made and there are resources that will have to be invested into this front yard of america. yes, we have a head start but with the great help of the national mall trust, we hope to be able to raise the money from the private sector and the kinds of partnerships we see here with coca-cola to really make the reality of this record of decision move forward. for me personally, as i have watched the condition of the mall, it has gone from a condition that was a very bad condition to one that maybe i would give it a c grade today, one where we have to aim to give it an a grade and that's true whether it's regarding recycling cans or whether it's a condition of the turf on the malls or whether its other iconic structure like the world war i memorial that we have to do more of. and so our work here today is

one that will continue on into the future. and i'm confident that with those of you who are involved in making this happen that we'll get it done. i want to make a couple of comments some of which are done here and some of which we already addressed even though they may not yet have been made public. but one of the things that destroys the national mall are the heavy impact uses on the mall. when you have -- when you have vehicles that weigh 10, 20, 30 tons out on the mall and you have places that are used essentially as construction on the national mall, it basically keeps our turf from growing. and it creates lots of problems for the mall. and so, yes, we're moving the solar -- the capital off the mall because we don't believe it's appropriate to have those impact uses in this particular place. but as we manage all the multiple uses that some of the earlier speakers spoke about, they are addressed in this record of decision so how do we

find those areas in the limit land on the mall where you can have those heavy impact uses? and how do we make sure that we preserve the opportunity for people to play baseball and to do the other uses on the mall and all the other rights of exercise. well, this record of decision is a roadmap that will take us there as we address all those issues which profoundly affect each and every one of the visitors that come here to the national mall. and the last thing i would say is, yes, this is about jobs all over america. it exemplifies international and national tourism is and what the millions and millions of jobs that are created through this kind of investment. it's also another great part of interior's responsibility and that's how we tell america's story. that is our job, senator inouye also told us the top job of custodian's resources and custodians of america's history. there's no better place in the

united states than here on the national mall to tell the story of america. so thank you all very much for being a part of it. and we'd be happy to take questions from the press. yes. >> mr. secretary -- [inaudible] >> and you're saying that this is work that's going to last forever. is the government never going to have to come out back here and not spend money. >> i can guarantee there will not be a need to reconstruct the wall here at the jefferson memorial during the lifetime of anybody here. [laughter] >> and the essence of it is i asked that contractor that very question and he said it's built for more than its 100-year life but in truth it's being built forever. over 30 of them they're being -- they're going all the way down into bedrock, 4 feet into bedrock and so we can assume, you know, things will need maintenance but i think what your seeing here is a permanent

kind of construction that will sustain itself over generations. yes. right here. [inaudible] >> some people are worried about security and the white house was shut off and the capitol was shut off and all the streets were cut off and the business center may be underground. what are you going to do to keep the monuments that are celebrating freedom open and free -- [inaudible] >> how curious is that issue? >> well, you know, we at interior will take the security of our national icons very seriously, whether it's the washington monument here or the statue of liberty in new york city. and they are important icons and we have security plans around them. and as we move forward in the post-9/11 world, we have already seen restrictions that have been put in place, some of them more

passive and some of them more aggressive. but it is our responsibility along with others in the united states of america to make sure that we're keeping our places safe for people who come to visit them. and we'll take the appropriate measures that ensure safety but at the same time assure that there is a level of access that still provides enjoyment to people. other questions? yes. [inaudible] >> the time frame on the -- of which one of the projects? >> the goal is to raise -- [inaudible] >> how long would it take to get to the aid -- [inaudible] >> let me just say -- i'm going to have peggy answer that but i have a quick comment on that. and that is that construction -- i mean, whenever we take a construction project,

it affects traffic. so right now you've seen in the last year the martin luther king memorial efforts have affected construction in that area. so there will be construction affects but there is a priority in the program to try to minimize those construction effects. in terms of how long it will take to do everything that is set forth in the record of the decision, that is a question that will only be answered by what kind of support we're able to get from the private sector to invest in these projects that are outlined in the record of decision. and by support we get from congress is well as we move forward in implementing the aspects of the plan. peggy? >> well, i think you did a really fine job. i'm not sure i need to add anything. but i will say that the good news is done. the next good news is that the money will come in increments. and so not all the projects will be started at the same time. they will be phased as funding is available.

and we work very hard with the district of columbia and all the other entities in town to make sure that we each know what the other organization is doing and planning in this city and we try to coordinate our work so that we're not creating gridlock every day for our commuters. >> thank you all very much for being here today. and watch our work continue here at the national mall, america's front yard. thank you. [applause] [inaudible conversations]

>> next, pakistan's former president general per very musharraf, he's in the united states this week talking about his plans to seek the presidency again. he currently lives in london where he announced last month that he's forming a new political party and plans to run for office again. in 2013. this is live coverage from the atlantic council here in washington. >> i'll give a couple of lines from this interview just to illustrate how much can change and how little can change in a period of time. we talked about something that hadn't made the news much until that time and that was the notion of a gas pipeline that would run from iran to pakistan and potentially on to india. a trilateral track that could be game-changing. one of the things we're working on at the atlantic council in the is out asia center is how does one drive this kind of regional cooperation? how does one wage peace in the region?

we talked about drones. there had just been an attack on a village where al-qaeda leaders were expected to have had dinner. they killed pakistani women and children and set off street protests in pakistan cities. you talked in the interview of how you hadn't been informed in advance and that pakistan had told the u.s., quote, we don't want anyone to operate in pakistan, unquote, even if that meant a slower response to intelligence. mr. president, we established the is out asia center two years ago because we recognized the centrality, not only of these sorts of questions but because of the centrality of the bilateral relationship with pakistan in its regional context. you are an unusual man, talent,

that understands both the region and washington. and interestingly, we have picked a leader for our center who is probably the most unique person in understanding -- he's an insider in both societies and an outsider in both societies, which is really a frightening bit of schizophrenia to bring to the leadership of any organization. but he knows how washington works and he knows how pakistan works. and it give us a leadership that has a position where the is out asia center is not an american center. it really is a global center in talking about a region and bringing us real, real expertise that has put us at the center of this debate after just two years -- in less than two years in operation. only by understanding the relationship with pakistan with this kind of sophistication can we move forward.

there may be no more important bilateral relationship in 2011 for the u.s. than this one, president obama's trip to india notwithstanding. so we want to talk about the global -- the geographic subcontinent in the center gulf states, afghanistan, central asia, iran. we understand it's all interlinked. and we think the solution to the problems we're looking at will in the end only come from this. john kerry has called our work on u.s./pakistan relations seminal. since the center's launch we have published an updated report. the first report we did was in 2009. we then did an updated report on the tenuous relationship. and we commit -- we remain committed to our mission of waging peace. let me just quote the first sentence from that report. quote, perhaps no bilateral relationship in the world

matches that of the u.s. and pakistan when it comes to its combustible combination of strategic importance and perilous instability. so that context is as important as is our speaker today, a man who understands the context and the challenges as well as anyone on earth. few people in the world have an understanding of the interworkings of pakistan, its current place in the region as future direction better than president musharraf. he worked up through the political ranks to become general and army chief of staff in 1998. he took over president after a bloodless coup in 1999 and led his country until his resignation in 2009. his life story tracks the dramatic history of the country in the region. he is not only a person of history in the region but as we'll hear today, he's very much a person also of the present.

president musharraf, the floor is yours and you will be moderated after yo moderated -- moderating after your comments. [applause] >> president kempe and president of the academy council, it is indeed my unique privilege to be talking to all of you on a very important subject, the subject of our region, what is happening there. it is the happening place today and the strategic focus of the whole world. it's to our region. therefore, i would like to really share that we must understand the region and in no doubt the world and indeed the united states coalition forces and pakistan must cooperate fully to emerge successful in whatever they are battling.

but within this, therefore, i'm going to talk to you on regional developments, on the current situation there in the region. and also the ups and downs of pakistan and united states relationships. as you said, it's a strategic relationship of great importance. but may i frankly say that, yes, indeed in words but in actions one would expect much more. to show or to demonstrate the strategic importance that pakistan enjoys in that region. which i'm going to now enunciate through whatever i'm going to say. i would like to take a historical perspective of this -- whatever has been happening around in this region. and i will start by -- because

from that i'm going to -- sorry. [phone ringing] [laughter] >> i think -- yeah. i'll shut it off. [laughter] >> i take the historical perspective dividing into certain periods and within that, i will extract the relationship of pakistan and the united states and why there have been ups and downs. first period that i want to take 1979 to 1989 and may i say since 1948 pakistan has been a strategic partner of the united states. and we have been with you all these years, 42 years, right up to 1989, very clearly. from 1979 to '89, we launched with the soviet invasion of afghanistan, we launched a jihad

against the soviet forces. we called it a jihad and when i say united states and pakistan. -- when i say we, united states and pakistan. we want to draw mujahedeen from the world, which we did. we drew the mujahedeen from morocco to indonesia from almost all muslim countries and we controlled armed taliban from frontier province of pakistan and pumped them into afghanistan. so this country new the strategic relationship with the united states on its up since 1948 especially with the ten years where we fought a war together in afghanistan, we fought jihad for ten long years, this jihad was reached and in this jihad the elites of afghanistan abandoned afghanistan. for united states and the comforts of europe. the jihad was spearheaded by religious militant groups.

and also the negative aspect which i must highlight that what the glue that held afghanistan together, the ethnic groups together, which is the national covenant. this glue after the king by the soviet was no more. and, therefore, when we talk about political resolution, we are talking of a new national covenant, home grown national covenant giving the pashtunses giving the national dominance of governance so this period of 1979 ended in the soviet defeat. in 1989. but what happened after 1989 i gave the next period of '89 to 2001, 12 years.

i call it 12 years of disaster. firstly, pakistan and afghanistan -- this region was totally abandoned by the united states. not only abandoned, there was a strategic shift in united states towards pakistan against pakistan towards india. there was sanctions imposed on pakistan through the peshawar amendment and closing up relationships of india starting in 1989. in spite of the fact that we were the strategic ally for 42 years and we fought a war together for 10 years. this led to a sense of betrayal within the people of pakistan. which exists even now. so 1989, the abandonment of the region was the first great blunder committed by united states.

not only with vis-a-vis pakistan but also the 25,000 mujahedeen who were hold up in afghanistan coalesced into al-qaeda. and then in 2005, taliban emerged. all this happened because there was a total void and vacuum in afghanistan, each ethnic group fighting the other. from '89 to '95 for six years battling each other even the pashtuns were divided into about eight different groups and they ravaged and destroyed the country. in 1989 when taliban emerged, the fighting then went between two groups, the taliban on one side and the northern alliance. and the minorities on the other side. they destroyed afghanistan for another up to 2000 for another 5 years.

so in these 12 years afghanistan became a ghost country. i went to kabul immediately after 9/11, soon after when i visited afghanistan. kabul was worst than somalia. if anyone has seen somalia in the bad days. so this was kabul, a ghost city. this is what happened in these 12 years after having retreating of the soviet union the fruits of that victory went to europe because the strategic focus then was euro-centric because of the cold war, nato, berlin wall, reunification of germany, all that happened, all the gains went to europe. what did afghanistan get? or pakistan get? nothing. for 12 years we were abandoned and pakistan got 4 million refugees in the process. into pakistan. we had to fend for 4 million

refugees, warfare, warlordism in afghanistan. pakistan alone to protect its own interest in these 12 years. that was the downs of the pakistan and united states relations. where the people of pakistan thought that the united states has used pakistan and abandoned us. then comes 9/11. and the terrible terrorist attack here in the united states. pakistan again becomes important. pakistan is needed again. and, therefore, we again become strategic partners but when we became strategic partners, the question that i was asked everywhere that i went in pakistan, what makes you think united states will not again use us and abandon us?

it's important ladies and gentlemen when we try to take a decision to stay or quit. are we again to be abandoned? question mark. in the minds of every pakistani. so now the next blunder that i'll talk of which is very, very significant. after 9/11, after 9/11 the taliban were defeated. with the help of northern alliance. which was a minority. taliban dispersed, ran al-qaeda totally decimated. they ran into the mountains and cities of pakistan. there was no command structure. there was total disarray of al-qaeda and taliban. afghanistan now was available for the political instrument to

be used. the military instrument delivered in afghanistan in 2000 and soon after 11 by -- in 9/11 by giving in to afghanistan and now political solution available to be executed in afghanistan. but, unfortunately, that political solution didn't come about. what is that political solution? you cannot go in afghanistan with a minority with shiites in charge. afghanistan has always been governed by pashtuns historically. they being 50, 55% of afghanistan. now here was a situation early in 2002 where we could have changed policy and strategy, taken pastuns on board and put a

legitimate pashtun-dominated government in kabul. unfortunately, we did not do that. then abandonment was available and we failed with the minority, the biggest blunder we are persisting right now. now we are trying to talk to moderate taliban or taliban. what we should have done in 2002 and '3 from a position of strength, now we are trying to do from a position of weakness. that was the next blunder. and now we are in the process of taking a decision whether to stay or quit. well, ladies and gentlemen, the decision has to be taken very carefully. we cannot commit a fourth blunder.

what i would like to see in afghanistan -- people ask whether we can win. i would like to -- my reply is, we must not lose, even if you don't -- even if the answer to winning may be 50/50, but we must not lose. and let me say with 100% conviction if we stay there and show resolve, we will not lose. and we will not leaving. so, therefore, my food for thought here is, ladies and gentlemen, that we must not lose first and then work out the winning strategy. and i have said that pakistan is supposedly a strategic partner. but i don't know. pakistanis and people of

pakistan are not too sure whether we are the strategic partner in words and deeds and actions. pakistan has certain sensitivities, ladies and gentlemen. what are the sensitivities of pakistan? firstly, our integrity, our well-being, of course, and the world showing concern and giving us importance which is due to us. the other is the kashmir dispute. the kashmir dispute is important, not only that it's a dispute in the united nations since '48 but today it is causing a lot of terrorism and extremism within our society. in 1989 when kashmir erupted, it erupted in the indian part of kashmir.

dozens of mujahedeen groups sprung up within pakistan. and thousands of people were prepared volunteering to join, to go to india and to help kashmir to fights against indian army. and all these much maligned names -- i don't want you to remember names, are products of '90s. now when there's another fatah in indian kashmir and that is suppressed by indian army by hundreds of people, dozens killed. these mujahedeen groups start rising and people give them a lot of support. this sensitivity and its impact to terrorism and extremism must be understood by the world.

and, therefore, the significance of resolution of the kashmir dispute not because fantastic wants it's necessary for the world to fight terrorism. the other sensitivities are nuclear capability. ladies and gentlemen, pakistan is much the rogue element, rogue nuclear state, rogue army, islamic bomb -- i don't know why india is not a hindu bomb or an israeli bomb is not a jewish bomb. why is a pakistani bomb only a islamic bottom. i don't understand this logic, but anyway, pakistan is nuclear. for as a defensive existence on it. our strategy of was of military defensive military deterrence right from 1948. and we quantified this into army, navy, air force. on the conventional type.

we held that always. in 1974, india went nuclear. so, therefore, the defensive deterrence strategy became untenable. therefore, pakistan had to go nuclear. and when india started fighting in the early '90s, pakistan had to make nuclearize. to restore that balance and restore the strategy of effective deterrence. which we did. so, therefore, while pakistan is nuclear or strategic capability is a compulsion which is not the case with india and i don't understand the logic nor will pakistani understand the logic while pakistan nuclear assets are disturbing the world. so this is our sensitivity. we are nuclear on our strategic assets.

is the pride of every man walking the streets of pakistan? so any indication of negativism coming from aboard, the trek coming on the strategic capability of pakistan is viewed extremely seriously by every individual pakistani. 'cause this is the feeling. now, president obama's visit to india -- i don't want to talk much. and i don't believe in pakistan being indo-centric and i do believe relationships bilateral importance of relationship. united states -- the president wants to go to the india. absolutely, he has all the rights to do everything.

but if pakistan is a strategic partner, pakistan has strategic significance, pakistan is suffering because of so many bomb blasts, hundreds if not thousands of people dead. pakistan army has suffered 2,500 dead. pakistan's isi has suffered about 300 dead. and then you had this flood, massive flood, unprecedented. so many casualties. i thought president obama should have shown some concern for this small strategic partner with pakistan. no mention of kashmir. i've explained the issue. it is sensitive from fighting

terrorism from an extremism point of view. so why is the concern of india may be that no third-party ought to be involved, yes, indeed it should not be involved. and we should resolve kashmir dispute bilaterally which we were doing in my time. and we brought near solution. but certainly the sole superpower one expects concern for pakistan, being a strategic ally. of importance. and also sensitivity to terrorism because kashmir does contribute negatively towards terrorism and extremism. while there is concern in the united states or interest in united states because india wants to purchase $45 billion of arms purchases, yes, it is our

commercial and economic interest. what i remember in my time pakistan i was requesting european union and united states for an fta, free trade agreement, or pta, preferential trade agreement. because i believed in trade not aid. because trade means opening up factories, job creation, poverty alleviation, unemployment reduction. unfortunately -- it does not -- [inaudible] >> lastly, ladies and gentlemen, i talk of the political scene in pakistan. here in united states, as was all said, pakistan strategic significance, therefore, we ought to be concerned what is happening in pakistan. and what the future holds for pakistan.

we must ensure that pakistan's integrity, its solidarity, its stability is maintained because we have to fight terrorism and extremism and defeat it. and if you want to do that, we look at the political realities in pakistan. today, pakistan is on a downward turn. its economy, its governance, political turmoil and, of course, terrorism and extremism. in this situation, let's look at the future. one has to look at the future otherwise we always tend to react, react when it is too late. we need to see is there light in this darkness that pakistan is facing today. and that light will come through the political alternatives.

i do understand that democracy has to be maintained. but through democratic, through the process of elections is light visible. we will have elections in 2013. or some people are saying midterm elections or whatever. or what will be the result of that election? will we have a government which will deliver to pakistan and take pakistan forward in its darkness through light, fight terrorism? ensure the solidarity and integrity of pakistan? i don't see that light, unfortunately. therefore, ladies and gentlemen, i personally talk that i need -- maybe they will charge that i produce an alternative which may be viable for pakistan. and, therefore, i've joined politics. one has to analyze the future of pakistan. we must ensure the stability and

solidarity of pakistan for the sake of controlling of turmoil in that region and containing further turmoil in the region. i know i have less time. i'm open to any questions that you may want to ask. [applause] .. >> reminded by the general to the ambassador, when he said

that being friends with america is like living on the banks of a great river, every four years it changes course, and leaves you either flooded or high and dry. [laughter] and want to get that flavor from your commentary on the u.s.-pakistan relationship. but when you took the fateful step of joining what some called the coalition of the coerced after 9/11, you agreed to provide access to the united states, to launch the attack on afghanistan. and there is enough evidence that some of the earlier drone attacks which led to a lot of public outcry against pakistan's involvement in the war were also launch from pakistan airfields originally. and then moved to afghanistan. there was no taliban in pakistan

at that time. and it resulted largely because of the infusion of the pakistan army into the border region. so when looking back on this, do you think there was too much haste in aches eating to the u.s. request? >> this is the argument that many people have given, and i have faced this question to many, many times. first of all, pakistan's decision to join the coalition and united states, the first question that i ask myself before joining, what is in pakistan's interest? does pakistan want taliban addition, taliban government in pakistan? do we believe in views of islam that taliban hold? do we want that in pakistan? the answer was no. we don't. and i know that 99% of pakistanis will say no.

we don't want that. with all that confidence, it was not in our interest to be supported to taliban. so it was pakistan, not u.s. interest. then i also went further. if we did not join what could happen? and my answer, which i don't want to elaborate, was certainly very dangerous for pakistan. because india was ever prepared to join, and certainly united states would have attacked afghanistan, how do they attack afghanistan from india? august the, of violating pakistan's sovereignty airspace or whatever, or lead. so, therefore, from our point of view, it was good at a personal level. i am prepared, but it is not the solution for a leader, and, therefore, whether that decision

was correct or wrong, i think with hindsight most of the pakistanis believe that it was the correct decision now. now, regarding, not there, yes, indeed. there was pms in which was more serious. d. n. s. m. he was a mean leader. and he's the man whose stronger in this region, in the region. but then there was others. these are all products because of what has been happening. these are products because we defeated, as i said, and after 9/11, taliban and al qaeda were defeated. when the taliban reemerged? 2003. in 2004 i think and 2003. we had a two-year period,

political solution. i coined a term, all taliban are pashtuns but not all pashtun are taliban. i said this so let's get them from the taliban. and get them on our side. the pashtuns. now t

really extremism went on the right. and because of that, it became about et cetera, et cetera i agree. so i think we need, we need to hear the history, but also see the future, the realities of today and battling in future in winning. i think we should concentrate on that and not go wrong there. >> just to go back to the drones. you mentioned yourself that every single person in pakistan on the streets as opposed to the drones. if fatah is an integral part of that, and it is, then why allow the drug attacks to cross your

sovereign boundary? >> yes, you did ask. drones, this is, this is a dilemma here that we share with you. the dilemma is that these drones do certainly target militants. i know that. but at the same time indiscriminate use of drones cause a lot of collateral damage. that is what is negative. and the other negative is why -- you have said about in my time, i never allowed anything to violate sovereignty of pakistan. we need drones for giving us information and intelligence above targets. where is the target? that is the main thing. where are the militants? and aerial surveillance isn't ability to spot the militants.

but then after spotting them, is the issue of what action to be taken out. there are many methods of dealing with the targets. you can use air force with precision guided missiles. you can send your helicopter gunships, or you can use, we have created a force, special operations task force of the special services group. taliban force. we can send the taliban force, surrounded and attacked it. so there are various methods. now, i was far use of pakistan armed hughes forces. so that was a signal itself, i think there were only a few drone attacks and those times. i always objected to that. now there is this indiscriminate use of drones, and that is causing a negative.

while they do attack militants, but the people of pakistan do not accept a violation of their sovereignty. so that is the dilemma. i always said why not give drones to pakistan, the pakistan armed forces. that is what the united states laws come into play of transfer of high technology and all. well, this is unusual circumstances, and usual measures required. >> this is the element of mistrust that still prevails between their strategic partners. but let me take you back across the border. you were saying something quite important about pakistan and the u.s. strategy there. you said can we win? and you said the response is we must not lose. and then come up with a strategy. now it's been almost 10 years since there's been kinetic operations in afghanistan. what come in your mind, is it, this strategy?

speak back yes, that is the key question. i heard a three-part. do not lose. and when we talk of quitting, it has terrible impact, negative on both sides. negative on partners, because every partner in the coalition, including pakistan, would like to evaluate the situation after you quit. and certainly i am reminded of 1989. all ethnic group fighting each other, millions of refugees into pakistan, and we are again alone. so pakistan would have to think, must think, negative. the enemy strategy, very, very clear.

if i was a taliban commander, god forbid, i mean, what is the problem, time is on my side. let these people go. so first of all, let us first, please and gemma, we must know tribal culture for chivalry is respected. and this little bit of power is the narrow perspective. so, therefore, these results, and stay there. now we have to certainly win. what is the winning strategy? and how can we do it? we have to first be in a military dominant position. speak from position of

dominance. never speak from position of weakness. how do you do that? our forces today, u.s. forces, coalition forces, are deluded in space. militarily recalled his delusion of space. too much space, less force. so any thinking of going across the pakistan border by the way is increasing space with the same force, more delusion of space. you will be defeated. you will suffer poor casualties. never make that mistake. so, therefore, now how do you do away with his delusion of space, of our national army, yes, indeed. way more. but do we know that the national army today is on target? what a blunder. 50%, 55% is ethnic pashtun. how can you do this? there has to be a balance. in a national army.

there has to be more pashtuns. secondly, is there any other element? i think there is. even now, although we should have done in 2002. if you see pashtun culture, tribal culture, in this tribal culture in the tribal tribes, two things that i want to stress, they are confined to their mosques. over the centuries, over the centuries tribal, where are they? they have been suppressed, but they are there. they are there. secondly, this tribal culture, everyone carries a weapon, and they have armies. each tribe has an army. when ever there was tribal feud, they shoot from his armory and

so there's a second culture and pride and weapons and good weapons. now, let us look at tribes who have no ideological ethnicities with taliban. and tribal molex who have some, i don't want to use the four letter word. have something in them. [laughter] and they've been are raised, armed, given that pride, let them come with you and fight the taliban. by the way, tribal have always fought with the pakistan army against india. in all wars. so, therefore, let's create those. so this is to gain military dominance.

and in the political instrument, military will never give you a solution. which can only create an environment for you. so political instrument, we have to get the pashtuns on board. there is no more direct taliban. i don't agree with this term of modern taliban. there is taliban and pashtun. whatever the name, get the pashtuns on board. we have to get them, and good thing in that, the taliban is not -- it is not all the taliban have good structure like the army, not like that. there are number of taliban groups operating. in fact, let me tell you that haqqani, their people have clashed with each other.

they suffered about 150 dead, killed by a tiny group. and he then ambushed them. it's very good. that there are a number of taliban. so there is a call for managing political affairs. but from a position of since. >> thank you, mr. president. one last question from me before i share you with the audience. and i know that they have many questions. this is picking up on your point, regarding the 2013th elections in pakistan. you said you decided to join politics that some would say you joined politics in 1999 when you took over the government. however, what has changed in pakistan from the time petulance pakistan, not entirely, that you think would allow you to go

back? and in the obstacle with which you face about from potential legal challenges, is the question of the indirect, the provincial assembly members, national a summit, the senate voting for the office of the president, your party, it has only just been launched. do you think there's any realistic chance that you will have enough support, particularly if the elections are called early? >> well, the journey of a thousand miles starts with a first step. and is always the first of step. it's too big. if it is today, then you think of it as too big. you don't have that leadership in you. i presume it is not too big. because, number one, i left not because i was, my popularity was

rock-bottom. i was the most popular man in pakistan in 2007 at there is no doubt in my mind. i know that. i had an understanding in pakistan with the masses of the people in pakistan. it is in 2007 that political turmoil was there because of certain legal action that i took, for which was the reason i don't want to get in that. it is not that pakistan was going down. it was not the social economic develop in a pakistan was going down. it was not that pakistan people, the condition of the people, the welfare building of the people was going down. the poverty in pakistan, according to the world bank figures, 2008 figures, are from 38% to 17%. which government has done this? and the people of pakistan know it. it was hard.

poverty, in the seven years that i was there. now, this is one of my popularity did go down, there is no doubt, but it didn't rock-bottom that i was popular in light of segments in pakistan. one of the other point is, what pakistan is suffering today. is the reason for, again, people thinking of me. that i could deliver from the darkness. i said that in this darkness the people of pakistan are not seeing any like. what is the choice if not people, peoples party performing today in government, and i don't have to elaborate that everyone knows what is happening in pakistan as far as governance is concerned. the alternative is, the others tried twice and failed miserably. and 99, pakistan was a failed

and he folded and bankrupt estate that we had $300 million only in the foreign exchange results. and all our indicators, to be sure, 103%. maybe a little better than united states today. [laughter] by however, it was 103%. and it was, the economy was in a terrible state. people were poor. they were crying. they were yearning for some change. i was a chieftain. i know how many women and men came to me and told me when i going to take over? what are you waiting for when pakistan is gone? i am popular in 99. if i gave the names of some of them, this gathering will know them. who came to me and told me to take over before pakistan is gone, and 99. this condition now is almost the same. dispositive, hopelessness, people wanting to run away,

inefficient, touching the sky. people committing suicide. people in the streets. now they are remembering what they have missed. the important essential items in pakistan, sugar is one of the essential items. i was reading just two days back, in 2006 the sugar price went from 21 to 23 rupees. and i called the sugar mill growers to explain to the what is the cost of sugar cane they're getting and what is the profit they make, why is this increased to to get it is 115 rupees a kilo. this is what has happened in two years. it's just one thing. i don't have to call all of the figures, and i'll be economic indicators. therefore, a pakistan, people of pakistan are yearning for deliverance. and that is why the first step has a lot of relevance, and i

think there's a lot of, a chance of success. i cannot be sure, but i believe that it is better to try and fail than to go down not trying at all. >> thank you, mr. president i'm going to open it up. and i will start with the front over your. if you could please wait for the mic phone and identify yourselves when you're called upon. >> good morning. welcome back to washington. >> how are you? >> very well, thank you. very fond memories of the times we visited pakistan. and also the first menu had with president bush when i was ambassador of the united nations of our official residence in new york after 9/11. my question builds on what you were just talking about, mr. president, which is the economic situation. i do remember that the economy was growing. i think at its peak during her tenure at something like 7% a

year. >> 8.4 present sir. >> i stand corrected. and i recall that we're talking about different ways of economic cooperation, including trying to great reconstruction opportunities so we could give preferential treatment to pakistani products that would come into the united states. so could you perhaps just elaborate a little bit on what your economic platform would be to get pakistan back on its feet, economically, again if you were, had the opportunity? >> yes, indeed. thank you very much. i cherish the memory with you, sir. because you are very frank in our approach, i appreciated your frankness. and you also appreciated my frankness in exchange. you reminded me of the

reconstruction opportunities own for the develop of economic social economic development of the tribal region, tribal agencies. and we were also promise $150 million a year, if you remember. nothing came about. that is the negative side. so, therefore, in his tribal agencies what i want to say is we have to be fast. we have to be trusting. we have to move fast into living and doing something for the people for the travel agency, for the frontier, for people of pakistan is that for pakistani. now, economy, today the economy of pakistan is nosediving downward. i have been analyzing why, why is it going down so. first reason was, immediately after 2008 when the elected government came into being, one thing that happened, massive flight of capital from pakistan

going out. extends taking, running away with their money. this led to the exchange rates, the dollar which was held at 60 rupees for eight years, between 60 and 61, shot up to 85. today it is 87 rupees. 60 to 87 rupees. fdi has gone down consider the. i won't say it has dried up. so these reduction in fdi. exports have half. so, therefore, gone down. the impact, fiscal deficit has gone down come increase. your balance of human deficit increase, and again, your debt-to-gdp ratio on the right, i don't know the latest statistics. so these are the negative trends. why? because of lack of trust and confidence in the government. i personally think, if there is

trust and confidence in the government, without doing anything there will be every verse flow of money. after all, pakistanis want to invest in their own country. they can be motivated. they love their country. why should they take their money out? they will bring the money back. and why would the gulf, these gulf systems anyone else, why would fdi not come back to pakistan? and i believe diplomacy and trade relations mostly, interstate relations, have a lot to do with interpersonal relations. and i am very sure that gulf and everyone will be, could be persuaded with western pakistan. so we can reverse these, the economy will start doing better. i have no doubt in that. and our condition today is not what was there in 1999.

the foreign exchange reserves are there. we left them from $300 million, to $18.5 billion. this is what we left for pakistan. now it is less, because i think, it is there, not $300 million. and also, our revenue collection is there. we raise the revenue connection -- collection. now it will surely go down, but not that much. so the stock exchange which we went up from 1000 stock exchange index, had gone to 14 and a half thousand in 2007. it was 14.5000 that it has gone down but it is at eight or 9000 i think that so the situation is not as bad. it is recoverable, but what is required is confidence of the people in the government. and the government to perform

for the state and the people of pakistan. i have a simple definition as a food for thought, which is my own definition. for a leader or for any government, ensure the security, progress and development of the state, the well being of its people. this is a definition i have come and if this is insured, all others is secondary. and i said is because i know i'm talking to a u.s. audience. democracy, ladies and gentlemen, is democracy is the tool to deliver for the state, progress of the state, and welfare, well being of its people. it is not in itself, it must deliver to the state and the people. so if you have elected government, democratically elected government, but running the state and the people down to the ground, i don't think that

kind of democracy is the democracy that any state wants. so, therefore, into product is the state, welfare of the state, well being of the people. and that must be ensured. we hope that democracy in pakistan delivers to the people and the state. >> thank you. we have a question there. as you can see, there's great demand for questions. . .

>> what if any can we do to turn around what i believe is this collision? >> thank you, sir. i'm surprised as well as glad to hear what you said. well, we, what the united states can do is to help pakistan, and helping pakistan, i have bluntly indicated whatever is happening is not really helping pakistan. we have to help pakistan economically, yes, indeed, but concerns of corruption certainly is there. there's no doubt, so you asked a

difficult question, frankly. i think if i was there, i would have asked for market excess. give market excess so that i can create jobs. i can open factories, and i can do reduce unemployment, reduce poverty. now, that is certainly a thing that united states can certainly do. remaining, i think pakistan on the law and order side, we are being harmed from many directions. we are fighting terrorism and extremism. i think the united states needs to develop a better understanding of the isi and

army instead of deeming the isi and army for collaborating with the taliban. i don't understand why this is done. on one side the army has suffered 2500 dead at the hand of the taliban, so they are killing the armymen for and you are blaming the army. i don't un. there is a mismatch. there are 300 dead all over pakistan, and yet you are saying we are collaborating with taliban. there's a mismatch. please try to understand. i believe micromanagement to pakistan. be concerned with their intentions that they do not want taliban and al-qaeda, and be

concerned with their strategic delivery. don't micromanage for them. they understand who to talk to, how to talk, which enemy to take on board and defeat the other, and then go for the other. leave this micromanagement to the people of pakistan. this is the second, i think, better understanding. i don't think you can win internal stability in pakistan. political stability, i don't know whether the united states can contribute on political stability in pakistan, but it is political stability which will then bring about economic stability and fighting terrorism and extremism and would govern, and that, i don't know whether the united states can assist. >> thank you. we have a question at the back.

>> thank you, mr. president, for your candid presentation. if i may draw you out on what seems to be a tension in your presentation, you spoke with regards of the president's visit to the region of your resentment with regards to indo-centric depictions of pakistan and that you're obsessed with india. statement earlier on, you talked about the capacity of your nation is compulsion. does that have to do with india or something else? how do you recognize these comments? >> it has to do with india, certainly. if you know, sir, i know of indian forces if i tell you briefly, those forces are based on 33 infantry divisions.

25 are oriented to the pakistan border. they have brought about 6 armored and division and all six are organized against the border. they are used for an offensive all oriented towards pakistan's border. their navy is oriented to pakistan's shores, so what do you expect? when there's incidents like their attack on the parliament, the whole time the army came on to the border of pakistan, and we had to move our army and there was a situation. what do you expect pakistan to do? it's a threat. we forfeit three or four times than india and the politicians

in india are trying for punishment on pakistan, attacking pakistan, ect., ect.. what does the leadership in pakistan do? they have an existential threat, and there our strategy is of minimum defensive deterrence in the conventional and unconventional. now, previously it was conventional, but now with india going nuclear, it is also unconventional. >> jim moody. mr. president, nice to see you again and thank you for your frank comments. stepping back from the issues you've been discussing that are important, but those like myself who lived in pakistan and love pakistan, we're concerned about the educational system there. i've been to many villages where

it says on the education map there's a school there, but you go there and there's no school. they're called ghost schools. thank you for initiating a good program and only 40% of pakistani children of school age are in school. this is a huge burden for the future. stepping away from the media issues, how do we get pakistan to head towards the goals that are crucial to the long term pakistan? >> yes, i couldn't agree with you more so. indeed, the long term strategy, human development, education, health, poverty, employment generation, education is the key. this is a knowledge-based economy in the world, and we are missing out, but that is a long-term strategy. now, how to do it, i do understand we have to do something. what did we do and what needs to be done is certainly more

allocation of funds to education, but when we talk of more allocation much funds, i increase the budget to education from 2.9% to 4%. it was visible, but a 1% increase is 170 billion rupis. this is the increase of gdp $170 million. our total gdp in pack stan used to be 90 million rupees and the management. it was in 2006 it went to 520 million rupees. after this 1% increase it's 170 million. however, i totally agree with you that government has not been

performing. you're 100% right of ghost schools. there's ghost teachers. we carried out a survey in 1996 or 1997 i think under the orders of the government and we carried out a survey by the army and 20% schools, teachers are ghost only on paper, money going in pockets. therefore, we have to do something more than the government, and therefore we created this nfsv. he came, he was a doctor here having a very good practice. he came and gave me this idea of education and health at the grassroot levels, and in education he had the idea to have a center that have schools

and lower spending and take schools in the villages, open little schools, get teachers from that village, girls and boys, and i bought the idea, told him to come to pakistan, and he did that, and since 2001 that nhsd spread to 10 districts of pakistan. they opened thousands of schools and thousands of adult literacy centers. there are a lot of philanthropics it pakistan. a lot of philanthropics involved in collecting money and information and opening school. they are the best because they do it with a passion, and there are dozens of them. i personal think the -- i personally think the government should reenforce the

philanthropics because they do things with passion, and make them expand, so i think it has to be a multiprong strategy to educate the people of pakistan which is so important not only for economic development, but also fighting off terrorism and extremism because it is the root of terrorism. i wouldn't agree with you more, sir. >> thank you, mr. president. >> when you were in power, you came across as a pakistani leader who generally wanted a kashmir solution, and you had efforts to reopen the debate to think outside the box, and it was reported that you were very closed to doing an agreement with india in kashmir, and if it is true, can that be the way today in >> you get me elected

and then revive it? [laughter] the issue, yes, i think you are right. we were. i used to be called a man of war which i was, i was in uniform. but i call myself a man for peace, and i said that with conviction because i said i have seen the ravages of war. i have fought all the wars and confrontation with india and all in the region elsewhere and triable uprising and so forth. my own best friend was killed in war. my son is named after my best friend, so therefore no one understands the ravages of war as i do. i do. i'm a man of peace. a lot of people of india ask me you're a military man, what are you doing? i am more peace, and with that idea, i initiated the process

and i knishuated -- initiated the process and indeed we are proceeding well. there are three qualities required in a leader i think for a deal, for some agreement on disputes to succeed. one is sincerity. sincerity to resolve the dispute from the heart, from the heart and soul and mind. the other is flexibility. flexibility to accept others' point of view. the third one is the problem, and that is boldness and courage. why it is acquired is when you raise a deal on an issue like kashmir, it's give and take. both sides are not naive enough to give everything. there has to be a give and

take. you have to give and india has to give. that gift part becomes problematic because there's agitation in your own back yord, and if -- yard, and if there is a leader who buckles under pressure, then he'll be thinking by political cloud will go down, my popularity will go down, and that interferes in the fast movement of peace. boldness is required. we were moving reasonably fast, in fact. we worked out the parameters and we were drafting an agreement. i think it's petty we couldn't reach on collusions. fleeting moments come in the lives of leaders and countries, and the key to success is to raft the fleeting moments, and don't let it slide past, but

unfortunately, it flew past. we need to grab that. >> we have a little time left and some more questions to get through quickly. the microphone's coming to you, christina. >> thank you, good to see you again, mr. president. i wanted to ask you, you talk about the blunders made in afghanistan by the u.s.. i want to ask you -- >> the bunders? >> yes. i wanted to ask why you allowed the taliban leadership safe haven and enabled them to recruit and train. were you really in control of isi. there's evidence that the isi helped the taliban, and do you share the view that the haqqani

network are associated with pakistan? >> i have to be careful to answer you if you write something that disagrees with us which you did before. [laughter] i forgot your question. [laughter] >> safe havens for the taliban. >> yeah. now, if you think that i provided safe havens to taliban in quetta, i mean, what answer can i give you? people who are trying to kill me, attacking me, i'm providing safe havens to them? i can't answer anything other than this. quetta, we talk of quetta, and

there is an isi office in quetta. have we identified where this quetta office is? quetta shura is a refuge jeej and there's camps with about 90,000. have you gone inside this camp? i have flown in a helicopter around the camp because i thought if we had to put in a military action, i wanted to see what kind of a place this is. there are places in this camp where two men can't cross each other because it's so closed and congested. 90,000 people living like this. it's a nightmare if there's any military operation in this area. now, all of these refugees --

and there's dozens of these camps in pakistan. all these refugee camps are used for all purposes. they are coming and staying inside. there must be people who are harboring them, but to think that i as the president of pakistan is allowing this to happen is not the case. it's a border and we introduce check and there's thousands of vehicles coming and going every day including the isif workers who go to the border from outside. we introduced biometric system there and passed a system so that we can control the movement

across the border. on the iran side, there stole our bus, and in despite of introducing a similar system on that side, nobody has done that. we are trying our best to control movements, but on the other side, there's no response, so therefore, i would fear that when these refugee camps, maybe a safe haven for any kind of activity, it is not government sponsored. that is what i would like to say, so there's no safe haven created or no everything with the taliban to come and stay there. after all, al the al-qaeda and taliban leaders of significance, tell me one caught in pakistan,

and by whom? by pakistan law enforcement agencies and intelligence, the isi in cooperation with cia indeed, so i think these are which really are everyone in pakistan when we put all blame for movement across the border and pakistan and i don't understand why. we don't want taliban coming to pakistan. why is pakistan only responsible? why are not the collision forces responsible? can we share the blame 50/50? i don't understand this -- this is what really develops the mistrust and lack of confidence

in each other. >> thank you. >> president, we welcome you here. >> thank you. >> i'd like to ask you about afghanistan and the role of pakistan and india in afghanistan. many people say that the two countries are engaged in a proxy war. is it possible to have peace? both countries have interest there, and pakistan has strong security interests, and india also has interest. what do you do to move from proxy war to proxy peace? >> thank you, sir. who is initiating the proxy war is the first question. what is happening in afghanistan? i mean, i am from pakistan

obviously, so please don't think i am saying all this just to protect pakistan, but i know there are many indians who may be sitting here, but -- unless we face facts and fight terrorism with the action, we will fail. now, what is happening there and what is happening to pakistan? i would like to address that. there's an indian cons lute that everyone knows. why are these two there on the pakistan border? is there an indian community there? is india doing some trade there? what is the interest of india in these two countries? nothing other than than aiding, abetting terrorism and stabbing pakistan in the back. i have documentary evidence of

this. i know the indian intelligence rise is coming into these con consulate and i've been telling president karzai don't give them instructions on our border. why do they want to build road? we build the roads for you, but no, they must build there. where their agents come because they want to bump terrorists into pakistan. our grandson was killed in pakistan and who is against the and he said that on television in the media that they don't believe in pakistan. he's sitting in kabul, sir. he goes to delhi and received by

raw agents. i have seen the photographs, so let me say this at this gathering. all training of one diplomat, police and intelligence, takes place in india. i have been offering everything to karzai, nothing in pakistan, all in india. what is happen, sir? we are being stapped in the -- stabbed in the back. what does pakistan do? what should isi do? isi is supposed to protect pakistan's interest, and that is what they do, so therefore, the united states must understand what is happening, and let me say, i've said this openly to everyone, help pakistan in stopping all of this.

there must not be a proxy war there. i totally agree with you, but please understand who is doing it and why it is happening. >> thank you. >> thank you, mr. president. you made some remarks earlier on regarding the conduct of military operations in afghanistan, and you made some suggestions regarding empowering local tribes and leaders, ect.. that seems to run contrary to what is the official strategy of isif and general petraeus of the national army and national police. now, do you see a possibility of your ideas or similar ones of empowering tribes and local leaders to take place? is there anybody who could listen to this or are we doomed to fail because of this idea we

need to build national institutions and first and foremost the army and police? >> it's not in con flibt. if -- conflict. >> if we're developing a national army and police and we can raise them to a level where we can have a solution as i said, that's a good course of action, but i have said an added possibility. if we cannot have that possibility and a national army, i'm not against it at all. police and one national army is done, sir. ultimately, they are to take over, but my doubt against that is that i hope ethnic balance is being maintained. i fear to be again and pushing more to the taliban, and the moment you leave with this kind

of a force, there'll be war there, total war with all platoons fighting these people, the revival of 89, so therefore, we must have a strick balance and we must have pashtuns in the government and not having one or two ministers having been given and saying we have pashtuns. under the one national army, so how is this happening and this is what pushes the pashtuns. a national army is being raised in large numbers, enough to police the border and the cities and towns and i think that's the right stray ji.

>> thank you, mr. president, we're getting near the end of our time, so i'll request the last two questions in the order i recognize. pam over here, and then at the back. >> good morning, very nice to see you again. i'd like to ask you about a different militancy problem, not one coming from afghanistan, but one coming from within the country, particularly let, you mentioned the dilemma of drones and pakistan deals with a dilemma that have been very helpful to it in the past with india and i believe offered again to join with the army against india if necessary, but are in fact causing havoc. i heard yesterday that the

mumbai attack was a success because it destroyed so many promises chances for peace for the two countries, and given the fact you bend so many of these groups and they came back and they came back, i'd like to ask you one of many things about your time in office. i'll ask you only one. given everything that's happened since july of 2007, did you make a mistake? attacking the brothers. >> l. e. t., and i have in the history that in 1989 the freedom struggle started, and with that the first group that erupted was

indian and because of the suppression of the indian army they ran into pakistan, and then erupted in early 90s, and a little towards the end, and many other names which i don't remember frankly. dozens of mew -- mu mujahideen groups did nothing about it and they were fighting the indian army. it went along with the psyche of the people and pakistan was refusing to even stable it in any form of the it was not allowing pakistan any room towards resolution in the united

nations or anywhere, therefore, it went along this mujahideen activity, went along with the psyche and the thinking and entire pob pewlation of pack -- population of pakistan, and then comes 9/11, and now we join the coalition, and there is taliban and al-qaeda and everything. these mujahideen groups whose ore orientation to develop with taliban and al-qaeda. now, this is the biggest problem area that they are involved in terrorism in pakistan, therefore, we, as you said, i had banned almost all of them. you bring them back, i'll ban them again maybe, but it's easier said than done. allow pakistan government and the intelligence organizations,

allow them with patience sometimes, you can't rock the boat so much that it capsizes, and therefore once these things have to be done, allow gradual action through a well-thought out strategy which does not disturb the entire law and order situation of pakistan, so this is what i would like to say, yes indeed there's a question of reigning in these groups and the other wing, the -- the best work in earthquake, they did an excellent job in the relief operations. you're dealing with a situation

which has popularity in the people. when they weren't fighting kashmir, it's very popular with the people of pakistan. people are being killed and therefore we must kill and we must fight. it's a difficult situation for any government in pakistan. the result is the kashmir group and that's my fear that the president obama doesn't talk about autoall and you're the superpower and you have responsibilities towards everyone, and therefore i talk maybe at least he should have mentioned that you need to resolve this kashmir dispute, so this is the other point, certainly i didn't do anything wrong in the heart of islamabad

and women another 2500 with ammunition and suicide jackets and explosions inside the mosque in there. we were being hue mileuate -- humiliated and the government insulted. icial -- i remember the alarm caused in the diplomats, sending their families out and getting chinese and beating them up inside that mosque, so we had to take action, but before taking action, i did everything to bring them to an understanding, and i used all religious lobbies, the counsel of islamic ideology, i called from saudi

arabia and we succeeded on getting the talibans out and only terrorists left, and there was an attack, and we cannot be declared as a republic when the government is challenged, at least not under me. >> at the back? >> i wanted to ask if you are the next leader of pakistan, will you stop drone attacks and will you just allow them to be used for gathering the intelligence? >> we'll cross that bridge when we get there. first you get me there, and then we'll decide what to do about it. [laughter] i said there's a dilemma. we have to resolve this dilemma

while we must have military and must not do something that disturbs public opinion massively in pakistan, so we must get to some solutions. the dilemma has to be resolved. i don't know how to resolve it, but yes, it has to be resolved. >> mr. president, on behalf of fred kempe and the counsel, we want to thank you. [applause] >> thank you, sir. >> particular. >> thank you. [inaudible conversations] [inaudible conversations]

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[inaudible conversations] >> house republicans are preparing to take control of that chamber follows last week east elections. john boehner will be briefing reporters joined by congressman gregg weldon happening about a minute from now on c-span. leadership elections are on the horizon on the upcoming congress and republicans and democrats choose their leaders next week in separate party meetings. house republicans announced wednesday november 17th as the date to elect new leader, and house democrats is picking their slate of leaders the following day next thursday. it's been a week and a day since the midterm elections. there's still several races

unresolved, seven house races and the race for alaskan senate and independent senator murkowski and there's the bush vs. gore case with righting ballots. senator murkowski had a campaign after losing her gop primary. they are preventing the state from making a judgment on voter intention. alaska law calls for the oval to be filled in and the candidates last name as it appears on the declaration of candidacy written in. >> with most results final and the winners preparing to govern, use the c-span video library. search, watch, and share any time all free. it's washington your way.

>> the federal deposit insurance corporation helded conference an housing finance issues. this is an hour and 40 minutes. >> good morning, i'm, i'm laurie goodman, senior managing directer.

amhurst is in the trading and residential mortgage backed securities. we have a great panel today. first is timothy riddiough from the university of wisconsin at madson, and then we're actually going to follow the order of papers on the session, and i'm going to comment in reverse order, so tim, you're up. >> okay, thank you, laurie. >> good morning, everybody. thank you, laurie. thank you for the invitation. it's a pleasure to be here. so i'm going to talk, this is a policy paper on securitization talking about some of the tradeoffs with respect to it. it came into being this -- i start the working on this last spring on se bat call. i sent the month

>> i've been sitting at the table all day yesterday and there was photographers and these annoying clicks all the time, and there's none here today, and i'm wondering why. [laughter] okay. so before we start, let's just make sure we unwhat we're talking about with securitization. there's a lot of discussion yesterday, and already, a lot of discussion this morning about securitization.

what is it? well, it's really two things. it's a two-step process. one is when a loan is sold and remove from the balance sheet effectively. there's discussions about covered bonds and it might come back in another form, but it's taking that individual loan off the balance sheet. that's a necessary condition, but it's not sufficient, and the big part is the second condition. it's transformed into something else, and that leading up to the financial crisis, the transformation process in the u.s. was putting it in a bankruptcy remote entity or a special purpose vehicle, and then you could do it with the single loan or with more than one loan, and then, and then issuing securities from that thing, but that's not necessary. you can go to a covered bond model where something goes back to the balance sheet also, but there's a transformation regardless of what happens.

that's what we really mean by securitization. whole loan sales have been around for hundreds and hundreds of years, but securitization has only been around, of course, the dutch invented it, since the late 1700s. the first time i've uncovered securitization in the united states was the middle 1800s, and so in any case, that's what we mean, and then it's often times the loan production process, it's unbundled; right? that's the way things work. you get more players involved rather than ding everything under one roof, there's entities involved with making securitization happen. let me just start by the promise of securitization, talking about that for a minute. i want to focus my comments on the challenges of securitization, and i think i'll provide some of my comments similar to what some of the

other folks talked about, but i think i'll have a different perspective here this morning for you, but let's cover the good of securitization. every single one of these bullet points when there's a good, you can think of the flipside of the coin where there's a bad to go with it, but hang with me more a minute in covering the promise of securitization. i think this is why policy-wise, the economics, this slide is really the economics, the sound economics of securitization. all right, and why policymakers have become convinced that, yeah, we want to figure out a way to make securitization work because the economics underlying securitization really are potentially sound. the problem is that is that there's a dark side to almost every one of these light side statements, and the challenge is to control the dark side elements of these, and so at a very basic level, the beginnings of securitization started in a

big scale way in the u.s. in the 1930s, and the basic idea then was liquidity provision, allowing banks to push loans of their balance sheet and sell them and replenish their reserves and be able to make new loans again. liquidity precision is a big positive that's been around forever. it's not so much the recent story to securitization, but economically, it's very, very important. reductions in risk concentration are in my view a huge potential benefit. it's, it's the economist's notion of spreading risk around the financial system, all right, and of course the dark side of that is systemic risk, but the positive side is you don't have concentrated risk on the balance sheets of banks and other intermediaries. you create new securities that

are impossible or hard to replicate because transaction costs are high, and that's a good thing. similar, this is a little bit different meeting unmet investor demands, there were regulatory reasons and some very good fundamental reasons i think why investors demand high-rated security. part is collateral requirements or investing from afar in a global economy, and the fact that you can manufacture aaa rating securities is a good thing if controlled properly with a shortage of high quality securities. selection of the market failure and what i'm thinking about here for example is making a market for student loans. you cannot -- it's very difficult at a local level because of a selection and

moral hazard problems because we don't have debtors prisons in a anymore, and there's no collateral that students post, but if you pose the risks and have standards to that, you can begin to price it and then create securities out of things and make a private market for something that is otherwise very difficult to make. production efficiencies, this is adam smith economics coming to banking, lending, financial intermediation that you design tests to specialists rather than doing it under one roof and there's official gains with doing that. again, there's the flipside problem that comes to mind, but specialization, if done properly, can be a good thing, and finally and very importantly is increased competition in borrow's choice. borrowers have in the

residential side -- i came from the residential side myself, but i'm focused on the commercial side in more recent years, having alternatives in markets and mortgage products. we all economists believe that's a good thing, borrower choice and competition is a positive, so, you know, this is the short list, and this is at some level a very, very powerful list. the challenge then of course is to mitigate the dark side of these which i'll talk about some in a moment. before i do, just a couple comments. one is big picture, you know, securitization is this complex process of manufacturing complex financial securities, and i think the fundamental question we're grappling with here in the u.s. is we have a complex economy, and does a complex economy require a complicated financial system? you know, there are folks out there in some very, very good

economists who i respect in most areas in which they talk is arguing we should go back to 1930-style financial systems where the good old days is where banks keep everything on the balance sheets. this is a little bit of the covered bond idea in fact. banks keep bonds on the balance sheets and we dumb down the financial system because what matters is the real economy, and when we get fancy in finance, we just blow ourselves up, and there's -- it's a really important valid viewpoint. this is a really, really critical underlying question, and then, if you conclude that we need at least some degree of complexity where you cut it off. you know, how simple do you need to get. dwight jaffee in the previous section with housing finance, is he here?

he's in the back. i'll be careful not to take your name too much in vain. part of dwight's message that i heard with mortgage finance is we need a much safer system, and in some sense we need a much less complex system. we don't want with consumer advance a junk buy market. we want to keep things simpler. this is the big question we're grappling with, and since i started working on this paper in mar, again, -- march, again, we've move towards consensus that we do need some complexity in the financial system and there are efficiency gains per the previous slides to what the good is with respect to securitization, and then other aspects of the financial system. the issue that is how complex do we need to be to create something that's sustainable and adds value to the overall

economy? okay. so that's, that's the perspective, and so let's talk about some of the challenges, and you know, i view this whole thing, it was one big -- the whole thing leading up to the financial crisis with subprime and so forth was in a sense a classic american thing to do which is that we did this giant science experiment, had no idea how it would turn out, and we thought, well, maybe, you know, maybe we'll blow up the lab, but the damage is confined to the lab space, but the fact is that we blew up the entire neighborhood, and another sort of fundamental question then is does that mean we shouldn't experiment anymore and abandon these things, and personally, i'm concerned about that. that's what innovation is about. it doesn't always work the first time.

i'm personally sympathetic especially as we move, as we move towards privatetizing the mortgage finance system. i'm sympathetic to subprime. i think we can figure out a way to do riskier lending in a viable, sustainable manner, and what we tried last time didn't work. i'm skeptical and concerned that we moved too far the other way towards a lack of risk taking and too much safety in the financial mortgage system. okay. let's talk about specifically a little more specifically about some of the challenges. there's been lots of discussion about how to manage this loan production process when you're breaking it apart. one comment, though that i think is underappreciated has been commented on a little bit during

this comps is that -- conference is that the initial design was not completely flawed. there was a lot of focus with securitization on selection problems, getting the incentives right between the originator and the security of the ultimate investors. investors in these securities were right from the get-go, very in tune with adverse selections concern and securitization was set up, tried to set it up to deal with cherry-picking kinds of things with buyback provisions. there was retention. ..