of what's in those and why it is there, and i don't know that we've gotten parallel answers back from the chinese. but there is this, just the fact that our hill tears in these different domains are more and more interactive, and can there is a competitive element of that.pera and it's not just at the tactical level we're operating in this similar waters. i think it's starting to be at a force structure level where their decisions about what kindi of forces to develop and field, you know, are taken in mind with our capabilities, and as the secretary said the other day, cs it's also the case that the u.s. is starting to look at the things that china's developingnn and what do we need to do to protect our own interests. .. would be a big step. that is why i hope that these efforts to really get a strategic stability dialogue with content in it -- had hoped

that would develop positively. >> james. >> i will go against my irish nature and talk about some good news. if you look back even five years ago at the military-millet ferrmilitary, would it not be gt if we could get the chinese to cooperate with us on the chinese would keep a greater role in peacekeeping and imagine if we could get them involved in the anti piracy task force off of the horn of africa. and the constants of everything else. in chinese statements leading to secretary gates's visit they threw those out as standard fare to what they are interested in talking about and are serious about and that is progress.

those are areas we can capitalize on. and actually making concrete changes. freedom of action to do more things. they're specifically prohibited. they go along way to alter some of the characteristics of that legislation to allow this to happen. our own hands will be tied in our ability to be flexible in our relationship. >> let me start with david. >> we cut in a different

direction. if it resumed what we need or do we seek stronger security issues. they have a broader cross-section in beijing. if that is the case, current mechanisms are available to us and what future mechanisms would you propose that would enable us to broaden that dialogue? >> u.s. the right question. there were a series of bureaucratic issues on the chinese side. they can frame it and slice it like that. doesn't serve their interests or our interest. one thing i have been disappointed with has been the

protocol level and bureaucratic language. it was highlighted as a forum in which we could bridge across these civilian and military strategic issues and as long as we continue to send top war fighters and department leaders to this meeting and they send foreign affairs officers we are never going to do that. that is a bureaucratic logjam. it could be an environment in which we talk about security issues in a more multi disciplinary and bureaucratic kind of way but they have been unwilling to figure out the key to unlocking that on the protocol side. >> i agree with that. let me come at it in a different way. for having a dialogue with the pla military they are focused on issues of dominance and vulnerability of satellites on

their strategy for dealing with the u. s and that is a very competitive dialogue. what we really want is all of the chinese users including the manned space program and scientific uses of space and includes commercial uses of space, users of satellites, launch capabilities, and a different set of interests for the military. carrying out commercial opportunities to keep chinese satellite tv networks operating in remote areas. the views that are pretty narrow and hard-core, to be balanced by a variety of other users of space in china who have a different set of perspectives and interests but that is one of the problems the chinese system

doesn't do well in cutting across bureaucracy and representing those particular interests and some of the military programs are kept pretty secret. it is hard for them to deliberate across that. if you can find mechanisms to do so, it would be really helpful. >> it takes two to tango. in these concentrated forums if you have the wrong people showing up, you can try to play that game too where they expect -- mike mullen sitting across the table and they have hillary clinton shot. i don't know if that is the best way to do it but you can fight fire with fire a little bit to focus the other side into i am ready for a serious discussion and to grow these talks but if you keep mickey mouseing me i will play that game too.

>> admiral mcveigh? >> institute of foreign policy analysis. many people in this room advocate building trust and confidence with things like maritime cooperation and humanitarian assistance and disaster relief and whatever we can do on the military maritime consultant agreement. i wonder looking at it instead of from the bottom up work from the top down, the prospects that secretary gates could come back to convince president obama that he should persuade president who that he should overcome these loud voices that disrupt military relationship and other aspects. in other words might we expect -- could we hope for realization that we don't want to disrupt the overall bilateral

relationship with these military military destruction that have been happening on a regular basis. it seems to me that he could bring that to a halt. does the panel think that is a prospect? >> interesting to me that we haven't touched on party military relation issue. is significant in this case. we have interesting ground with military in my view. talking about his new historic mission and diversify military task and civilian origins of that leads to some interesting conclusions. i personally view that one of the reasons for these historic missions to be put out was to provide a vision of a future template for continuing to receive large-scale central government financial resources

for missions well beyond resolution of the taiwan situation. in other words that their modernization program which was so successful because they finally had a concrete planning scenario could have a wider range of planning scenarios that we continue to justify with annual increases in military expenditure without having it be detected in taiwan but at the same time already in the elections season, horrible that our election season is two years long. there is more than two years long and we are in that session. there's a delicate dance going on with his relationship with the military, implications of that for the succession particularly the estimation of whether or not he is going to hold on to the chairmanship after the next party congress for a decent interval. for that transition of power.

in that environment given those sensitivities or the fact that there in that political season, very unlikely in my view that he would expend political capital to force the chinese military to do something that they are disinclined to do for strategic, bureaucratic and financial reasons. >> chris? >> this may not be the pace with a republican taker of the house there is a different way of focusing on all these issues of hearings that are -- none of us miss any provocative things from any level, human-rights trade. that is the bad news. if you worry about managing noise level, if you can shake the congressional oversight looking at real things in a real way. not just banging a drum. >> will you start on that?

>> i have no idea what direction that will go in. a la coming into the process. some voices are no longer there. you have folks who will score as many political points as they can in the next few years. they already said that. you will find more oversight hearings weather they provide more oversight is another question. you had certain folks saying we will look at this or this and it doesn't really sometimes appear -- you grandstanding little bit. [talking over each other] >> what are we thinking?

exactly. we have a lot stronger and louder and more polarized, there have been briefings, go out and look at security line. that is over the coming months. >> something there? >> when you look at the house foreign affairs committee and membership of that committee, there are a half-dozen people who have long established bureaucratic legislative track record, interest in china. i would expect that committee would have a fundamental change in the next few years.

>> let me add something. the pressure made at the start. whatever global or international issue you are looking at or economic issue, there is a china component to that. it would be less the case in the past that it is for affairs or security committees dealing with china. if you focused on a range of global issues it will be part of that and sometimes that will be positive where they are doing positive things and making good contributions and sometimes it will be negative but you will find in the committee a lot more will dig into issues where china is an important part of their responsibility. >> i said it was hard for a reason. not simply applying electrodes to lead and getting beijing changing direction. we are getting into a tougher more nuanced and challenging

time to figure out what will work and actually compelling some form of mutual reshaping that is already happening. we concluded united states is doing stuff. they are all responding to the other. this can shape itself in a positive direction or can go really wrong. >> michael swaine next. >> i want to comment on david's point which i think is critical about the issue, how instrumental that might be and i tend to believe in the suggestion of what people have been saying that there are real limits on how far on an official level you can go in advancing in terms of deepening understanding and the ways that change strategic thinking. because it is so deeply enmeshed

in politics on both sides as well as military attitudes that are increasingly hardened and to me i think what needs to happen is there need to be a real serious thing through on the u.s. side about how you can engage the chinese on really significant strategic issues that are not simply narrow issue based but larger questions of power and purpose in the pacific. overtime, not all official. you can't do this on an official level. you can't engage in an official dialogue on questions like that which are open ended or conceptual and addressed them. through a formal dialogue. you have these sorts of dialogues as far as i can see. it is serious thinking how you

can develop, some of forte of track or dialogue, it is not led by officials by official actions. that is a hard thing to do. that is why we haven't got it. it is increasingly important. it is something that allows you to get around these problems on the chinese side and may be on the u.s. side. the senior levels of both evidence, the importance of this understanding. that is why the trip is so critically important.

this visit, to determine what happens in u.s.-china relations. there needs to be a strong message sent on both sides of a commitment to the engagement and discussion of these issues, and that commitment has to show, the military's are not in control. they are not dictating the direction of this relationship. i think the chinese civilian leadership have indicated that in the last several months and there needs to be a sort of deepening of that recognition on both sides to make a statement by both governments that can then allow for this movement forward in these dialogs. >> when i walked into this room and looked at these photos i

always have to that feeling. may be romanticizing an earlier area but being able to have conceptual dialogue about power and purpose that are not tied by deliverables that have been discussed as a follow-on press conference. it would be a new 10 or in the relationship. the problem potentially is the strategic structural conditions apply that allow these dialogs in prior administrations. bose apply now, is there a unifying common thread? those sorts of things or are they simply not there? >> presidents and

administrations have veteran talent with all the tracks and negotiations, to north korea. you can have the schulzs and better, to go ahead and do this for you. and an avenue of discussion. that is just to make sure everyone was listening. ultimately there are all sorts of methods. we are really quite open and generally, generally interpreting our interests in this. there is no other agenda in

washington. to not even get it to carry this far. >> as a veteran and some time organizer to dialogue. just to make the point that the u.s. and chinese governments meet a lot. all the departments and ministries, on particular issues. there's a constant stream of official visitors coming in. it is harder to talk about the strategic issues because they get into issues of secrecy and there's a lot of dialogue. people in the administration talked about nonofficial dialogue as well as the official

ones. they think systematically and strategically about how we use the two. we try to help the little bit with that but the unofficial dialogue can be a useful means as michael suggested dealing with the bigger picture conceptual things, exploring areas that are not right for official meetings with governments living up to what they say in this meeting. the administration is trying to think strategically about when do you want things to be official when you are willing to live by the agreements you make in those settings but also recognize talking points will be clear and a more formal setting. when do you want it to be an unofficial meeting where you can be more exploratory in finding common ground and how do you use the two parts together and they are thinking systematically and strategically in those terms about the right mix of those two things. highlighting on some of these

issues, tough to talk about at an official level. maybe there's a role for these unofficial dialogues, and the other thing it can do. i mentioned space issues, as a chinese broadcaster. they are in the room. the other is for the organizer have been able to do. the bureaucracies are hard to do in an official contacts. >> we create the 1.5 shield, and

in the back shares. it is that the proxy channels and everything else. i give them a communication channel without responsibility, and authentication. it may be the best we are going to get for a while. i would point out that everyone in the room knows that the chinese side in my view without bureaucratic behavior tend to be more systematic in harvesting the information out of those meetings and developing a broader picture whereas on our side it tends to be more unilateral and there is not as strong an attempt to systematize the messages that are coming in. >> if you can wait for a

microphone. >> two fingers. >> my concern is not the narrow issues, cyberspace in beijing on that, my concern is much broader sense of how power is distributed and how it is changing in asia in particular and what that means for the primary strategic interests of the two countries. we have an income palliate -- incompatibility between the u.s. and chinese. stability is based on american predominance. the chinese don't accept that notion. at least they want to qualify significantly. they have said they reject it out right but they don't accept it entirely. they want to reduce their vulnerability. those vulnerability there based to a large extent on what the u.s. says as its predominance. that flows through a host of issues we're talking about here.

and yet it is never engaged between the two side. >> there's a big challenge in that we have to rope in our allies in that discussion as well. makes it difficult to talk big picture without including the rest of our northeast asia friends. ambassador roy. >> with the kissinger associates. i want to complement the panel on what i thought were some first-rate presentations on this question. i wonder if one or two or four of you could comment on the psychological factors. we are talking about a chinese military that 35 years ago had a defense strategy consisting of people's war, digging tunnels, storing grain everywhere. brendel targeting missiles on your own soil because that is where you have to engage the

enemy. i went to china in 1976 to the house armed services committee, the first contact we had since the nixon visit and it was impossible to have a dialogue. the terminology made no sense. concept of accidental loss they never heard of. they didn't know what we were talking about. over the last 35 years while we may be enormous progress they haven't been able to develop until recently indigenous first-rate military equipment. they had to purchase former enemies like russia. and we are talking of relations between that military and the united states military. we were rising as agree power which is recognized by everybody as being the military in the world that has the strongest capabilities, is most advanced. and yet we are talking about

relationships here as the chinese somehow can resume to deal as an equal under these circumstances with of the world's best without losing face. much of what you have described is what you would expect from somebody who hasn't yet proved themselves. the chinese navy has been a coastal defense force. now they are in the gulf of aden but they are getting miniscule experience. senior leaders are largely what we would call provincial in terms of their world outlook because they haven't had the exposure or contact with advanced military's of the rest of the world that you would expect. my own sense is that if we want this military to military relationship to develop we can have a great move forward. we need incremental steps. we have to deal with each other in ways so that they can gain

confidence that they can deal with us in the types of dialogues we would like to have without losing face because they are constantly demonstrating that they are not up to our standards in terms of understanding what we want to talk about. maybe i am misrepresenting this but my experience is the psychological factors play a powerful role in how people interact and they haven't been touched on. have i misrepresented the issue? i welcome some thoughts. >> it is a very good point. if you meet with military officers you meet with colonels or lower ranking officials and they are really smart and seem to get it and understand what is going on. why aren't you teaching in beijing? i am a colonel. no one will listen to me. also the limits within the system which is as i mentioned

cover your but, don't let information flow. lieutenants don't brief kernels on what is going on and there's a possibility for information to stop especially if it reflects negatively on you. those are all factors we have to consider in our own thinking including provincial thinking. we send everybody has a graduate degree. they go to harvard or to travel around the world to study. we need to do more of that and open the door not to have our folks especially those for senior command to go out, travel, spend a year in china just traveling, going around small towns and doing whatever and coming back, shaving your head and going back to work. we still have to figure out some way to have to a functioning dialogue with folks who you don't have a lot in common or understand the same terminology

but that might be a very long wait for us. you have to figure out some ways to bridge these communication divides. is difficult but something you have got to -- >> the big question is the chinese threat perception of us in that the more we engage with them the more we reveal that gap to ourselves and decrease their level of concern. i don't know how to overcome that gap. ..at the moment, they have some very advanced platforms, but on a network with the rest of their system? do they have advanced software on top of the hardware? if we find out more about that for cooperation, does that reduce their deterrent? is that the way to overcome that? the very early stages would be

joint force operations. they have seen that this is vitally important in order to conduct modern war. this is an area where they are feeling their way. they have made remarkable progress in recent years. but i do not want to use demeaning language, i just want to capture the idea. it is like taking someone from the country and sending them to new york city. the way that they behave shows that there from the country. -- that they are from the country. >> let me speak to two aspects. i am not to talk much about psychology because he has written books on that topic. you can look at two pieces of it. one is the experience of

training officers. that has changed. they would spend their career in one military region into the got to the senior level and have very little contact with foreigners. we now see an officer corps that is becoming more educated. there is a premium on credentials. there is more opportunities to travel. over time, i think that will produce a change in attitude and a comfort in interacting with others. it has only been 10 or 12 years that the chinese military it really started doing the rudiments of military diplomacy in terms of exercises and deployments for this kind of purposes. over time, you will see a greater comfort of individuals in being able to operate at this level. it is much more sophisticated and effective.

that is one piece. education, training and experience. they have made progress on that. the other side is the capabilities peace. -- peaiece. they worked in favor of the strong at the expense of the week. they are stronger. you are starting to see a greater willingness to show off those capabilities. sometimes that is a very negative way to try and intimidate neighbors. but it also means they can be more open without fear of giving away vital military secrets. that is also an underlying condition that may permit greater dialogue. it does not ensure that that will happen.

it is, perhaps, a condition that will support that over time. >> exactly. a that is the key issue. >> they are changing. they say that you do not ever asked us what we think of anything. >> i am fascinated by the psychological aspect of it. perhaps more than i was in the past. that may just be a residue of the fact that in parenting preteen girls and trying to train a golden retriever at the same time. everything you said is right. it fits very much with dick's book. there are new ingredients in this goulash. in my view, it is a very clear triumphantism that is being led

by people in the pla as a consequence of the olympics and achievements along the way that suggests -- that was in full voice a few months ago. it is interesting to find elements in this system backpedaling. perhaps the premature unveiling of this new confidence. what concerns me most at the psychological level in our strategic dialogue -- it is difficult to talk about this without appearing to be paternalistic. a combination that i feel in my personal interaction with people

in the pla, a combination of a cocky swagger combined with continuing insecurity and caution. you can define the chinese leadership as feeling that triumphalism. not wanting to deflect it. but also understanding that they are sitting on top of huge structural problems. they have huge problems in military development. it creates a psychological divergence is that some people would seek to exploit and other people are trying to heal. we talked about the spokesman. i continue to be fascinated by the . .he growth -- by the laggar this is a system that is so

imprisoned by its stated principles. it is in desperate need of names. emerge.watching them a mo they do not have the words to communicate why they are doing things. you cannot say not interference in the internal affairs of other countries. that is the purpose of being a great power. yet they want to say that they are not interfering in their internal affairs, but they are interfering in internal affairs. it causes strategic confusion and increases the possibility of what gates called the calculation -- miscalculation.

we are having a lot of difficulty matching actions with words. that is this unfortunate pubescent kind o >> you know, that's the fortunate pubescent kind of process. we can't react to everything that we do. we have to take more of a reactic role and more of a posture. we could be sucked into that drama as my 11-year-old daughter would say. and it spirals downwards. psychologically, i think everything that you said was right. i think all of the new elements were complicated one. we knew how to deal with china that was concerned about face, we don't know how to deal with china that's concerned about face and has all of these triumphlist weaknesses. >> speaking of triumph, one

thing that i'd add, we could always hold our economic system over them. now we are looking at the economic system and going ha-ha. my is better. until they started having their own food problems so we can counter ha-ha to them. >> counter ha-ha. >> it's a diplomatic phrase. >> i think hermon khan first wrote about this. >> he did. >> we'll start here and then chris. >> the technology, and psychological discussion really tees up. the fundamental question that we came here to talk about. gates visit mill to mill. in terms of the chinese psychology, what do they think it's going to gain or put another way, what is appeal they lose by not having mill to mill? >> well, my favorite term from

cold war political science was feigned compliance. >> yes. >> i think what we are seeing is a major exercise on the part of the bureaucratic institution with desire for dialogue just within six party we felt it was more about talking about and setting up meetings about talking. that's why i think, you know, the shell will be there. but i'm not sure the concept will be anything other [inaudible] >> let's get real quick. chris, briefly. >> compliance is a parental thing too. one thing, tiny anecdote, i was summoned to ask my guidance would they get speaker pelosi to not give the dalai lama the gold metal. the first sentence and the way it was posed, when we talked about the so-called dalai lama, if the first words out of your

mouth to pelosi is the so-called dalai lama is stopping discussion. they haven't got the language to talk about what they want sometimes. >> mike philsbury please. >> i want to join in the phrase. i was quite influenced by dick solomon's book and what they used to so psycho-culture hypotheses about how countries reach. it seems to me this is much neglected topic in the study of mill to mill and the pla and what they are like. i've run across a number of chinese military writings where they attempt to assess what are american psychological views, how does american american -- wt

article was called how american strategic culture results in america drive for hegemeni in the world. we are from people from childrearing process on, we americans are built to dominate the world. the general goes on with advise to his readers about who to -- about what to do about this kind of power. that leads me to ask. do you think our own debate in washington about the nature of china, u.s.-china relations is as sharp as i perceive it to be. i was impressed ten years ago, jim lily, and david shambaugh had a chapter on military issues, including me. they used vicious debate. there's a vicious debate going on in washington about china. then they characterized it.

when the three of you are talking, you are either all part of the same group, and you agree with each other, and somebody else isn't here, or there really aren't much of a sharp debate about china. and that seems final sense is true. strikes me as a pity. if there's miscalculations and misperceptions between the u.s. and china, which seems to be comment that secretaries of defense make. if i were drafting president obama's talking points with the meetings with president hu, they seem, they the chinese, seem to see a shift in the balance of power regionally and globally dating back to something like 2008, maybe a different date. if that's true, do we agree with it? do we agree that america is in decline? we are not the america that we once were? are we adjusting our policies

towards what the chinese call strategic retraction or not? if we don't agree with it, it's something big to talk about. it would be a nice people of paper. reasons why the u.s. is not in decline. reasons why, yes, we do of the to dominate the world. we call it world leadership. if we agree, our own assessment is the same, then bob sutter is right, it's time to readjust. bob sutter has done two articles on why the u.s. needs to readjust, i hate to use that word, warehouse with respect to taiwan, it's clashing inside the washington, d.c. our panel seems to be all of the same or not see the debate that i and the chinese seem to say in washington. >> the chinese have come to us many times and describe their view of the factual struggle in washington. of course, it's some laughable

cartoon version of what's going on that they -- the view from the outside. but to your point about decline, i think secretary gates very carefully chose his words at his press availability before he left. when he said there were many nations in the dust bin of history who have doubted u.s. resilience. >> resilience, he didn't say we're not in decline. resilience is -- the chinese had parsed that word. it's not the same thing. those who think we are in decline are mistaken. secretary gates did not use those words. >> right. i still like the tone of it. > do you have something profound to say? >> i rarely have anything profound to say. i yield the balance of my time. >> three questions left. 15 minutes. we are going to wrap up on time. secretary kelly, and randy, and then andrew.

>> my question is to ask kind of comparison on the civil government side in china. there's really an increasing number of younger people and even much more influential people who are extremely well educated and travel throughout the world. it's been mentioned that more and more young pla officers are showing up. but it's not at all clear to me that at senior levels, at the levels that really control the pla, that this is very general. and so i guess my point is whether this comparison of the relative isolation of some of the pla leaders can potentially lead to some misjudgments. second part of that is weather you have seen a change in recent years as budgets of the pla have

gotten higher with the development of a sort of military, industrial complex within china and to what extent that development is starting to impact on policy whether it is or isn't. >> well, first i think that familiarity is always a good thing. it doesn't necessarily mean misjudgment. i mean i think that countries that have known each other really, really well, it was not in their economic interest to go to war, ended up going to war. britain and germany is a good example. united states and japan was another case of that. so i think -- it's always good to make sure that you have as much dialogue as possible. i think the whole policy organism has to be making some

of the right decisions in making sure you steer that course. it's not just about younger and senior officers. it's about your entire government being in tune and communicating internally about what it is that you are hearing and connecting those dots regarding china policy. it gives you a multiplicity of ways to communication and screw up and step on things. in terms of military industrial capability in china, i think the greater the military industrial, the greater their broader industrial capacities is a significant issue. i think it's a significant issue for us. because increasingly were you are having components and parts that, you know, on the subcontractor level china has targeted growth in the commercial aerospace. those components are kind of dual use, and increasingly, companies, for example, i just take them off on my head, honey well goodrich is going to

find pressure. am i going to be independent on someone other than the u.s. supplier producing corps weapon systems. what does that mean for us? conversely, what does that mean for china? increasingly, it's going to be become a self-sufficient suppliers. that reduces the number of leverage points that you have on china trying to steer policy points. >> i think there is a lag between the caliber of the officers and the senior people in decision making. but that's one benefit that we get from mill to mill is the chance to expose some of those future chinese leaders to the u.s. system. and it is not that we are going to tell them any secrets about how do joint operations and here's how to do it. i think part of the value is they come over with a very suspicious attitude towards the u.s. and at least when i'm involved in that, we try to expose them to broader u.s. society and they see a u.s. military that isn't as hot till as they imagine.

so that's one piece. on the military industrial complex, i mean i think broadly there's been attention between the pla that wanted the best possible weapons and the chinese defense industry that couldn't produce them. and so various pla services that preferred to procure advance weapons overseas. as the defense industries capabilities has improved, there is starting to be more of a synergy there. i think the navy is the issue where i talked about kind of a developing naval lobby and some of that is defense industry within and some of it is navy, and some of it is couldics or commentators. but there's a public debate about what kind of naval capabilities china needs and should have carriers or not, and how much to spend on this. that's not something that you saw in the past. whether one can call it a military industrial complex, maybe there's some elements of

that. but certain synergies of interest i think are starting to emerge. >> you know, if you read sam huntington's soldier in the state, i think he was very right to point out that militaries and their personnel and their officer corps because of the mission, because of their training cannot be as cosmopolitan as the counterparts. that's not necessarily a bag thing. i think the same lag clearly occurred in the pla. the one caveat that i would make to that, often i have found talking to senior pla leaders that their views of the west and of the united states are often deeply colored by their children who are all here studying and making money and making business. there are those connections at a familiar level that provide a window. and in some cases, i think, we under estimate the extent to

which these vast networks of cadray children act as a constraint on rash behavior. it really goes to the heart of this issue about sort of our mutual equities. on the defense and industrial side. defense as a rule tend to be conservative by nature. but i would say that it's important to note as phil did that the most successful sectors, particularly shipbuilding, are the one that is are most deeply integrated into the global r&d and have the most interaction with the outside world. it's the ones like commercial aviation that have had the least amount of total interaction that in many cases have made the least amount of progress. >> further behind. >> yeah. and so they provide yet another window into the world. yet another set of entanglements

into the global economic system. i think it's critical to understand and think about why the crises have not escalated further. why we keep coming back on u.s. relations is because of the hundreds of billions of dollars of independent trade. >> thank you. mindful of the time, i'm going to take the two last questions together with the questioners fore bareness and give them a chance to respond. >> the panel is pessimistic, it makes my feel optimistic. i don't think there's anything wrong with mill to mill relationship as long as it's more robust. the point was made about the state of our two military. i think that china has an awful got to gain to interacting with us, than us. sure we have things to gain.

every time they want to cut things off, thank you and recalibrate more than do what every administration disease, become the suiter and try to solve the problem. this is an american thing. we got to solve the problem. take the initiative. the problem with is that is the problem as defined by the prc. we start talking about taiwan arms sale, recognizant flights. i don't know, the question is what is the downside of something that is a lot more modest, incremental, and slow over time, as long as the rest of the relationship is somewhat more robust. i frankly don't see it. i think, again, they have a lot more to gain from this than we do. i could see the military relationship with about four meetings a year, a psych def, and i don't know ndu exchange.

phil has people coming to visit him. [laughter] >> what's the downside of something a lot less robust? >> do you want to follow up, andrew? >> andrew, rand corporation. there's nothing wrong with -- yeah. you former randite you, the following from the previous comment question about is there anything wrong with having a modest mill? no. i personally don't think there is, necessarily. but i think what is important goes back to something that james said is, you know, what do -- i really worry like he does and presumably a number of people in this room is about a crisis spiraling out of control. so what should be really important i think is having a reliable channel of communication. i mean the hotline that really can be used. i remember a few years ago, i was talking to a bunch of people in beijing and they thought it

was really good to have a hotline with the most powerful country. it was all about status. it wasn't about using the damn thing. why don't you guys pick up? i said i'm going to take a wild guess because you don't know what to say? yeah, you are right. i don't know what to say. all you need to say is message received. take notes. but if we don't have a basic channel of communication, that's what i worry about. >> responses and final thoughts? >> okay. very quickly please. >> on randy's point, the cost of giving in, if a full and robust relationship requires giving in, those cost are too high. four solid strategic meetings and an icaf delegation or two.

but it's so vital on so many different levels. and to andrew's point, i'm not sure that the mill-mill even as we've defined it will achieve that goal. i'm not sure the mill-mill even as we've laid it out provides the crisis management mechanism. that may just have to be taken over by the civilians in the point of the crisis as it has in every single one that we've had for the last 15 years. >> you don't want to let the program or some quantitative goal. you want it focused on u.s. interest and how do specific interactions advance those interests. certainly there's value in the kind of strategic policy dialogues that we've talked about. i think there maybe valued in limited operational things. you know, such as working on

search and rescue, the count piracy deployments. partly because it exposes when the u.s. and the pla work together and even in those narrow concepts it exposes some chinese officers to that and it kind of levins the leadership. it's not all about competition. there are areas where we can cooperate. i think that's a good message to send. you don't want to go over board. just my experience at ndu, i think over the seven years that i've been there there's been a very careful effort to manage the mill to mill and be very conscious of what we are doing and why we are doing it. and some of that has paid off in terms of good discussions. with respect to the crisis management, i think we need to have modest expectations for what we can achieve through mechanisms such as hotlines. and communicate those to the chinese. we should not expect the paycom

to pick up and call his counterpartner to solve a crisis. those are vehicles for passing information, and not necessarily respecting a response. we ought to be clear about that. so they know if they do pick up, have the note pad handy, take it down, pass it on. we don't necessarily expect a substantive response right away on the phone. but with that said, you know, you can note that the presidential level calls have been an important part of the relationship. these things can work out somewhat at that level and can be effective to them. >> one last word. >> contact words eventually still, i think, has an impact. look what what we've discussed here. the channels, the kids, the direct conversations. the evolution of the officer core at large with a more global view. each and every single one of

those things is playing into it. generally, the more people that come into contact with americans, they like us. so eventually they get a sense of what a minute. they aren't monolithic, they are thoughtful, they don't wake up every morning and want to declare war on us. they are in a completely different place intellectually than we are. and i think that over time, that's going to, i think, have an impact on the way the next generation of chinese leaders start to look at it. increasingly, nobody has really communist at all. the number of chinese, including people who wear uniforms and mock the government is surprising to me as somebody who does not have as much contact as many people in the room have a tendency of doing. so i think, you know, every single opportunity for you to be able to drive your message across that, you know, we hear you guys, we know where you are going, here's what our concerns

are. we are listening, we understand your concerns, here are the counterconcerns that we have. for example, on taiwan, you know, you could look at it with the -- what's happening with taiwan. you could look at a lot of the capabilities that the chinese are developing are completely pointless. if you think there's going to be unification or whatever you want to call it. and the other thing is on the surveillance, we're the super power. so as the super power, if you tell me you do not want me near your coast, i'm going to have to do it -- like i may not have planned it. now i have to do it. your carrier can't come into the south. you are messing up my deployment because i have to send a carrier to steam. it's just one the things, you know, -- it's a perk of super power. the thing is -- >> it's an obligation. >> you got to show everybody, wait a minute, i can't take it sitting down. you know, and when people said how would you feel about chinese surveillance over the united states, you know, well, you know, i grew up in new york city in the cold war.

there were, you know, bombers that were sometimes off of long island. you know, i -- you know, submarines surfaced on fire and sinking in new jersey. that kind of stuff happens. so from a broader stand point, i think that, you know, the more you communicate, the better it is ultimately. even if you think the other side is not listening. even if it's an obligation to tell them, hey, look, here's what we are up to. we are concerns. these are what our concerns are. evenly, there might be a lightbulb. anybody that saw "despicable me," you know, lightbulb. that's the moment we are waiting for. >> that's a good place to end. >> lightbulb. >> please join me in thanking the panelist in enlightening us and entertaining us during lunch. >> on your screen is senator john kerry, he's at the center

for american progress to talk about domestic policy channels in the u.s. and it's role as a global leader. the senator just back from his third trip to sudan which is conducting a nationwide referendum on independence for south sudan. live coverage here on c-span it. >> so many channels, passing a budget, getting the economy back on track, putting people back to work, dealing with the many national security channels our country faces, the vitriolic rhetoric that slowed down new s.t.a.r.t. is the problems at hand as senator kerry will discuss, it's the decisions that we make now or fail to make that will determine the influence of our prosperity of our nation of years to come. if we want to come with technology, energy, education, and economic power, we'll have to make serious and sober efforts to lead today. that means spending far less

time in symbolic debates and much more time getting down to the serious work of governing. in light of last week's appalling events, it appeared the new congress will tone down the rhetoric at least in the short term. scheduled vote, including the health care in the house will be postponed in order to focus on the enormous tragedy in arizona. there's a loud and public debate which has taken place over the cause of the violence and whether the way we express ourselves should be constrained from this point forward. that's important. but i think in order to move on to a new era, we have to actually change the way we do business on a day-to-day bases. we need to take responsibility for our action and must seek opportunities for cooperation and collaboration and actually try to understand one another in order to address the enormous challenges facing our country today.

i'm glad that we've got people like senator john kerry in congress fighting to bring the focus back to the larger challenges before us. it's my pressure to introduce him here today. senator kerry was first elected in the senate from 1984 where he quickly established himself as an export on foreign relations committee in 2009, he's chaired the senate committee on small business and entrepreneurship from 2007 to 2009, and, of course, he ran as the democratic candidate for president in 2004. he's an expert on foreign affairs, on competitiveness, on climate, energy, and military affairs. i could think of few public servants more qualified to address the channels facing our country going forward. senator kerry, welcome back to the center for american progress. the floor is yours. thank you for being here. [applause] [applause] >> john, thank you very much for

terrific personal introduction, but more importantly, i think thank you for capturing the importance of our shifting the dialogue and the importance of our talking about the future of the country even as we face these difficult issues. and let me just say with respect to your very generous comments on the s.t.a.r.t. treaty, it was a tremendous team effort. and president, vice president, secretary of state and others were anonymously -- enormously engaged. we would not have achieved it without the kind of team effort that was produced. someone might ask why with our country in mourning we are here this morning continuing to talk about the business of the country. but the truth is that's what gabrielle giffords was doing.

talking about the business of the country. and the truth is talking about the business of our country is more urgent than ever. john and i did consider postponing this speech which had been planned for some time. but serious times call for serious discussions. and after some reflection, both of us felt that not only should this speech not be postponed, but that, in fact, it was imperative to give it. so obviously as we gather here this morning, last weekend's unspeakable tragedy is at the forefront of all of our minds. our thoughts are very much with congresswoman giffords, and the families of all of the victims. we pray for her full recovery even as the nation mourns the loss of innocent life in such a senseless act. all of us struggle to understand

this horrific event. there's much we still don't know about what happened and why. but here's what we do know without any question. on saturday a public servant went to meet with her constituents in the best tradition of our democracy. and while out, just doing her job, congresswoman giffords was shot down. today she's fighting for her life. and six people lost their lives in this senseless assault. not just on them, but in it's calculating planning for assassination, an assault on our democracy itself. eeriely, i heard this weekend's news while in sudan, representing our country in a collective effort to help the people who have endured unspeakable violence and trying to make a fresh start through

their democracy. yet, as i stood beside the africans that have lost loved one in the democratic values that we as americans so proudly export to the word, there was an unavoidable clash with the events unfolding in tucson. a dramatic underscoring of the work that must be done to revitalize our own democracy here at home. many observers have already reduced this tragedy to simple questions of whether over heated rhetoric is to blame, or one partisan group or another. and surely today, many pundits and politicians are measuring their words. a little bit more carefully, and thinking a little bit more about what they are saying. but in the weeks and months ahead, the real issue that we need to confront isn't just what role devicive political rhetoric may have played on saturday. but it's the violence, devicive,

overly simplistic dialogue does. in the wake of tragedy, speaker boehner was right to suspend the house's usual business. the question now is whether we are all going to suspend and then end business as usual in the united states capitol. because even before this event shook us and all of us partisan routine, it should have been clear that on bedrock questions of civility and consensus, discourse, and democracy the whole endeavor of building a politics of national purpose, the big question wasn't who's rhetoric was right or wrong. but whether our political conversation was indeed worthy of the confidence and trust of the american people. millions of americans wake up every day knowing that we can do better. much better than we've done the

last bitter years. because our history has proven it time and time again. when the soviets sent the first satellite into history into orbit, leaders from both parties rose with a sense of common purpose and resolve that never again would the united states fall behind anyone anywhere. president kennedy summoned our nation to reach the great and audacious goal before the decade is out of landing a man on the moon and returning him safely to earth. there were no partisan divisions that blocked that way. with daring and unflagging determination, we moved immediately to unprecedented levels of investment in science, technology, engineering, and research and development. and only 12 years after sputnik, two americans humbling took

mankind's first steps on the moon. back then just as today, our leaders democrat and republican, had deep disagreements on many of the issues. but back then, they shared an even deeper commitment to stand together for the strength and the success of our country. for them at that turning point, politics stop not just at the ocean's edge, but at edge of the atmosphere. for them, american exceptionalism wasn't just a slogan. they knew that america is exceptional, not because we say we are, but because we do exceptional things. as i first said last month, we as a people face another sputnik moment now, today. in the great question is whether we will meet this moment as americans did so boldly five decades ago. the decisions that we make, or fail to make, in this decade, on new energy sources, on education, infrastructure,

technology, and research, all of which are going to produce the jobs of the future, and our decisions also on deficits and entitlements. will without doubt determine whether the united states of america will continue to lead the world or be left to follow in the wake of others on the way to decline, less prosperous in our own land, and less secure in the world. now some will question how in the world could this be possible? america less prosperous? america on the decline. they forget that exceptionalism for america has never been an automatic fact. a birthright on autopilot. but it's an inheritance of an opportunity to be renewed and revitalized by each generation. so let me share some facts with you. this john adams said facts are

stubborn things. right now other developed and developing countries are making far-reaching choices to reshape their economies and move forward in a new and very difficult global era. instead of us responding as americans have in the past, the frustrating reality is that our american political system is increasingly paralyzed and balkinized into a patch work of narrow itself that have driven the larger national good farther from the national dialogue. increasingly, over heated ideological and partisan in fighting leave us less able to address or even comprehend the decisive nature and scale of the challenges that will decide our whole future. the fact is that our strength here at home determines our strength in the world. and other countries are every day constantly taking our

measure, sizing us up, watching our politics, measuring our gridlock on issue after issue, enduring consensus has been frayed or shredded by lust for power and cloaked in partisan games. health care's individual mandate, guess what? it started as a republican idea. a probusiness idea, because rising insurance cost leave big wholes in the profits of corporations. cap and trade, guess again, another republican idea based on market principals and with bipartisan successfully implemented by president george herbert walker bush now denounced as heresy and independence. for every year, every president since richard nixon recognize

that politics are america's achilles heel, but we've been blocked by the siren call of short-term interest instead of achieving long-term success. even as we were clawing our way to the ratification of the s.t.a.r.t. treaty that john talked about last month, i noticed that far more ambitious treaties had been ratified by votes of 90 or 95 to zero. i joked in this senate, in this climate, in this moment, in this part of washington, 67 might be the new 95. i'm proud that in the end we sent a signal to the world that an american foreign policy however the slug and improbable the victory, partisan politics can still sop at the edge. but the fact remains that it was closer than it ever should have been. all of this under scores the

current danger clear and present danger to our country. in ways that go far beyond that single debate and highlight a host of other issues that demand and deserve common resolve, not constant suspicious and division. if treaties ratified almost unanimously yesterday get just 71 votes today, what's the forecast for other decisive and the devicive endeavors that once would have commanded 79 votes in the senate? we can't afford for the old 79 to become the new 49. dooming our national will to under take the gridlock. because in 21st century, where choices and consequences come at us every day, so many faster than ever before, larger

consequences and downstream impacts than ever before, the price of senate in action isn't just that we will stand still, it isn't just that america will fall behind, it's that we will stay behind as we see the best possibilities of this young century to others who are more focused and more disciplined. just think about an issue. as simple and as fundamental as building an investing in america. an issue that was once so clearly bipartisan. the republican mayor of new york city, mr. laguardia famously say there's no republican or democratic way to clean the streets. well, for decades, there was no democratic and republican way to build roads and bridges and airports. the building of america was every american's job. this wasn't narrow pork. it was a national priority.

today we are still living off and wearing out the infrastructure put in place by republicans and democrats together starting with president eisenhower's interstate highway system. we didn't build it. our parents and grandparents did. now partisan paralysis, even as it decay. the question is what are we building for our children and for future generations? reliable modern infrastructure, my friends, isn't a luxury. it's the life blood of our economy. the key to connecting our markets to moving products and people, generating and sustaining millions of jobs for american workers, the key to not wasting hundreds of thousands of hours of productivity stuck in a traffic jam, millions of gallons of gas on clogged highways, in the face of global competition,

our growth and exports are tied to the modernity of our infrastructure. you wouldn't know from today's congress. as we invest too little and our competitors invest more and more, the harder and hearer -- harder it will be to watch up, and more more attractive it will be for future investments. in 2009, china spent an estimated $300 billion on infrastructure. 9% of it's gross domestic product. europe financed $350 billion in projects across the continent from 2005 two -- to 2009. modernizing sea ports, reconfiguring whole city centers. with an additional $340 billion planned over the next three years. and what about us?

well, we though that americans have always been builders. we built a transcontinental railroad, we built an interstate highway system, we built the rockets that let us explore the farthest edge of the solar system and beyond. result of our gridlock and attention to the short term and partisan games played today, that's not what we are doing now. for too long we have under built and under invested and too much of what we have done has been uninformed by any long term strategic plan for our nation. in 2008, it was estimated that we had to make an annual investment of $250 billion for the next 50 years just to legitimately meet our current transportation needs. right now, we aren't even close to that. right now we are as many miles away from that as we ought to be building in order to get there. other countries are doing what we ought to do.

and they are racing ahead because they've created infrastructure banks to build a new future. we've yet to even build a new consensus for our own national infrastructure bank in order to make americans the worlds builders, and plain and simply to keep our country the leader in the new world economy. i can't tell you how many times dealings with foreign readers that we move around the world we move the feedback. you hear it and see it, doubts people asking questions. just imagine the possibilities, the possibilities for americans that would come from this endeavor. financing projects from high-speed rail to air and sea ports. with the expectation, actually, of being repaid for the cost of it. lending directly to economically viable initiatives of both national and regional without political influence. run in an open and transparent

manner by experienced professionals with meaningful, congressional oversight. that's an indispensable strategy for prosperity and legitimate vision that americans can embrace. if we offer america the leadership that it deserves, it ought to be an undoubted opportunity and necessity for bipartisanship. it's not just infrastructure where we have to rebuild our sense of great national purpose my friends. virtually every measure shows that we are falling behind. today the united states is ranked 10th in global competitiveness. among the g20 countries. america is now 12th worldwide in the percentage of 25 to 34 year olds with a college degree. trailing among others, russia, new zealand, south korea, and israel. this year investors have pulled

$74 billion out of domestic stock funds, and put $42 billion into foreign stock funds. high profile, multinational companies, including applied materials and ibm are already opening major r&d centers in china. research and development. that's our life blood. and they are going to open them in china. and as we look to the googles of the future, it's increasingly possible they are going to be founded by students of a chinese university, rather than stanford. we need to face up to the new challenges. not just as individuals or separate interests, but as a nation with a national purpose. the world of the next generation will change too rapidly for political parties to focus too narrowly on the next election. and the 21st century can be

another american century, but only if we restore the larger sense of responsibility and replace the clattering of the perpetual campaign with a wider discussion of what is best for our country. for the last months, we've watched the news and read the campaignand we've heard a lot bites. we've heard politicians say that they are not going to become a part of washington. they say they are for small government. lower taxes, more freedom. but what do they really mean? do they want a government too limited to have invented the internet? now a vital part of our commerce and communications. do they want a government too small to give america's autoto industry and all of the workers a second chance to fight for the survival? do they want taxes so low or too low to invest in the research

that creates jobs and industry and fills the treasury with so many more revenue that educates our children, cures disease, and defends our country. we have to get past the slogans. we have to get past the sound bites. we have to talk in real terms about how america, our country, can do best. if we are going to balance the budget and create jobs, yes, we should. we can't pretech that we are going to do it just by eliminating earmarks and government waste. we have to look at the plain facts of how we have done this before and by the way, you don't have to look very far back. in the early 1990s, our economy was faultering because deficit and debt were freezing up capital. we had to send a signal to the marketplace that we were capable of being fiscally responsible. we did just that. and as a result, we saw a longest economic expansion in

history creating over 22 million jobs, generated, unprecedented wealth in america with every single income bracket rising. but we did it by making tough choices. the clinton economic plan committed the country to a path of discipline that helped to unlease the productive potential of the american people. we invested in the work force in research, and development, we helped new industries, and working with republicans in a bipartisan way we came up with a budget framework that put our nation on track to be debt free by 2012 for the first time since andrew jackson's administration. how we got off track is a story that doesn't require retelling. but the truth of how we generated the 1990s economic boom does need to be told.

we didn't just cut our way to a balanced budget. we grew our way there. and we cannot now just cut without remembering the vital need to invest in the future of our nation. nothing played a more important role back then than the fact that we developed a $1 trillion technology market with $1 billion users. here we are today, staring at another economic opportunity of extraordinary proportions. staring us right in the face. and so far, we are doing precious little about it. far less than any of our principal competitors. the current energy economy is a $6 trillion market with today 4 billion users growing over the next 30 to 40 years to perhaps 9 billion users and the fastest growing segment of that is green

energy. projected at $2.3 trillion in just 2020. yet as of today, without a different policy decision by us, most of this investment is going to be in asia and not the united states of america. two years ago, only two years ago, china accounted for just 5% of the worlds solar panel production. today, it boasts the words largest solar panel manufacturing industry, exporting about 95% of it's production to other countries, including us, the united states of america. just two years ago, they produced 5%, and today they are producing over 60%. in the span of two years. we don't have one company in the top 10 companies of the world in solar production despite the fact that we invented this technology right here in the bell laboratory 50 years ago. shame on us.

what are we thinking? what are we doing? china is reaping the rewards from the technologies that we invented. :

>> he's now focusing deutsche bank's green investment dollars more and more on opportunities in china, western europe where the governments provide a more positive environment. today only 45 million of the 7 billion green investment funded deutsche bank manages is from the united states of america. simply put, because we are asleep, the investments are going elsewhere. so now is the moment in my judgment i think in the judgment of the majority of americans, and with many of our dollars, not just coalesced moment we need, now is the moment we need for america to reach for the brass energy ring to go to the moon here on earth by building our new energy future. and in doing so create millions of steady, high-paying jobs at every level of our economy.

make no mistake. jobs that produce energy in america are jobs that stay in america. the amount of work to be done here is, it's a literally stunning. it's the work of many lifetimes. and it has to begin now. this shouldn't be a partisan issue, but instead of coming together to meet the defining test of new energy economy and her new future and our economic future, we are now leaving a political season in which too many candidates promised not to work with the other party. it was a platform of running for office. and in this, the weight of a senate session that started for republicans with a powerpoint presentation pronouncing, and i quote, the purpose of the majority is to pass their agenda. the purpose of the minority is to become the majority.

now obviously it's no secret, i'm a convinced democrat, and i know it's better to be in the majority than in the minority. i've been in both in the 25 years. and i don't want anyone to come to the senate and check their beliefs at the door and go washington. it's not what i'm asking. and the founding fathers didn't want anyone to do that either. and certainly no one is elected to the senate promising to join an exclusive club. or forget where they came from. but the truth is some of the most fiercely indie pendant, plain talking, direct and determined partisans that i've ever known in the senate have also been a very want to tackle the toughest issue. finding common ground with people they disagreed on with just about damn near everything else they thought about. daniel patrick moynihan was a new york liberal. alan simpson was a wyoming

conservative. but they could sit down and talk and debate and disagree about deficits and debt, entitlements, and somehow someway they could shape the way forward. and they did it in a way that enlisted liberals like bill bradley and moderates like jack times, conservatives like john danforth. because of a new that certain issues were just too important to be lost in partisan squabbling. and you couldn't find three more proudly partisan and ideologically distinct politicians than ronald reagan, tip o'neill, and bob dole. but they found a way to put politics aside and save social security or a generation rather than saving it for misuses in the next campaign. they didn't capitulate. they compromised. and speaking of backroom deals, they agreed not to let either party demagogue the issue against the incumbent who cast the tough votes in order to pass

the bill. now let me tell you, if you've got to make a backroom deal, that's the kind of back room deal we ought to make in washington. folks, you're not going to find a republican today who would dare criticize ronald reagan. last week when the candidates for chairman of the republican national committee have their debate, grover norquist asked each of them to name their favorite republican, either the reagan. and he said he had to add that caveat so that everyone didn't get the same answer. well, we would all be better off if some of these republicans remember that their favorite person, ronald reagan, worked across the aisle to solve big problems. and we would also be all better off if grover norquist thought about ronald reagan before he announced that bipartisanship is just another word. that's the difference today. ideology isn't new to the

american political arena. and ideology itself isn't until the. the biggest breakthrough to the american politics have been brokered not by the mushy middle or by splitting the difference, but my people have a pretty healthy sense of ideology. ted kennedy and orrin hatch were powerful teams, precisely because they didn't agree that much. and they spent a lot of time fighting each other. and so the senate leaned in and listened on those occasions when somehow this ultimate odd couple found things that they were willing to fight for together. sometimes ask john kennedy once said, party asks too much. sometimes party leaders also asked too much. especially if they exploit the rules of the united states senate, the sole purpose of denying a president a second term. that's what we have witnessed for the last few years.

republicans nearly unanimous in opposition to almost every single proposal by the president, and almost every proposal by democratic colleagues. the extraordinary measure of a filibuster has become an ordinary expedient. today it's possible, 41 senators representing only about one-tenth of the american population, to bring the united states senate and, therefore, the congress to a standstill. now certainly i believe the filibuster has its rightful place. i used it once to stop the drilling for oil in the arctic wildlife refuge because i believe it was in our national interest, and safety are more senators ought to be required to speak up at such an irrevocable decision. and we should reserve that capacity that we have reached a point where filibuster is being invoked by the minority, not because of that kind of major difference over policy, but as a political tool to literally undermine the president. consider this, the entire 19th

century, including the struggle against slavery, fewer than two dozen filibusters were mounted. the entire century. between 1933 and the coming of world war ii, it was only attempted twice. during the eisenhower administration, twice. during john kennedy's presidency, four times. and then ate during lyndon johnson's push for civil rights. and the voting rights bills. egg issues. by the time jimmy carter and ronald reagan occupied the white house there about 20 filibusters a year. but ladies and gentlemen, the 110th congress of 2007-2008 there were a record 112 cloture vote. and 9111th congress, the one we just left, there were 136. one of which even delayed a vote to authorize funding for the

army, navy, air force and marine corps during the time of war. that's not how the founding fathers tended united states senate to work. and that's definitely not how our country can afford to work. chris dodd said it best in his farewell address just a few weeks ago, a speech the republican leader called one of the most important in the history of the chamber. krist sounded a warning. he said what will determine whether this institution works or not? what has always determined whether we will fulfill framers highest hopes for justify the senate's worst fears is not the senate rules, the calendar, or the media. it is whether each of the 100 senators can work together. that was a speech that needed to be heard, but the question now is not whether it was heard. it's whether we really listened to it.

because when it comes to our economy, our country really does need 100 senators to face the facts and find a way to work not just on their side, but side-by-side. no one runs for united states senate arguing that united states should have one-fifth of its foreign debt held by china. no winning candidate has ever suggested that the united states ought to trail poland in education, or that germany should invent the next google or develop the cutting edge new clean energy industries. no one has ever gone into a debate pledging that indian workers should hold jobs of the future, not american workers. that's what effectively is happening. there's a bipartisan consensus just waiting to lift our country, and our future, senators are willing to sit down

and forge it and make it real. if we are willing to stop talking past each other, to stop substituting soundbites for substance, if we are finally willing to pull ourselves out of the ideological cement of our own mixing, we will, no doubt, continue to be frustrated and angry from time to time. it's the nature of life and politics. but i believe that more often than not we can rise to the common ground of the great national purpose. surely we can agree an act to realize the goals set by the president who called his fellow citizens to me that area sputnik moment in america, and in america that is not first, not first but first period. so in this time of crisis, and in this time of morning, this time of a lot of soul-searching, in this time of challenge and opportunity, we all need to

commit to reaching across the aisle as colleagues did before us, to unite to do the exceptional thing, that together keep america exceptional for generations to come. that's our mission, and we need to get about the business of accomplishing it. thank you. [applause] >> senator, thank you for the call to the higher national purpose after the call to common good. i think the senate is on a tight schedule but he is time for a couple of questions. we will start in the back. >> dean scott, dna washington. can you talk a little bit about your vision for climate change

this year, what you think can be done on the support topic given -- >> absolutely. we are working now to rebuild a coalition an and a consensus ona national basis that will revalidate the urgency and besides in an effective way. i think that what happened with the u.n. thing was exploited. you talk about something i'm trying to say today, was really that unfortunately it became too much politicized, and as a result we lost track of what we were really trying to do. i think there is coalition out there waiting to rebuild. if you look at what happened in california last november where they beat back an initiative that was calculated to try to

undo their efforts on climate. they won overwhelmingly and it is very significant battle. i think that's an example of what needs to be done nationally. congress is not going to be there yet, obviously. so i think the key is going to be energy. there are a host of energy initiatives, all of which can reduce global initiative, all of which can put the united states on a path towards increased job production and new technologies. that's really what i was talking about in my prepared comments today. this energy future that is, as i said, staring us in the face, is the largest market in the world which other countries are rushing towards. i think if we can build a consensus that doesn't require command-and-control, doesn't require excessive regulatory effort, but unleashes the entrepreneurial spirit of the nation, encourages capital investment, sends a signal to

the marketplace about the long-term goals of our country so that private capital begins to move in those directions here in this country, and people like deutsche bank reevaluate their current position in seek america moving in that direction. there's a huge amount that can be done. there are all kinds of possibilities in terms of new energy sources. we have ever pulled in this room who is, i see is deeply committed to something like a fusion. many people think we can do more research in terms of fusion. is a host of different things that we could be doing more of, better, faster, and commit ourselves to which ultimately will reduce the missions. metalevel we need to according to science, but sufficient to be able to allow us to rekindle the urgency, rebuild the movement of the grassroots, reconnected americans on this issue, and hopefully build a new consensus in the congress about why this is good for our economy as well

as for our national security, as well as for our health. i was with somebody the other day who is going to be engaged in the public campaign of this, i'm not going to tell you it is now, but somebody well known who was talking about, you know, you walk into a doctor's office and you get a diagnosis that tells you you've got a certain kind of cancer. when you have a certain kind of cancer, 99% chance if you don't do this, 80% if you don't do this, et cetera, basically what we've been told. 99% of the doctors in the world, the site is to do the research on this site we've got this kind of cancer. and yet we are not behaving like a normal patient that comes out of that office. so we need to go reach america on it, and i'm convinced we will be build that consensus. we will start with energy and ultimately we will wind up i hope creating a job base in the energy future for our country that would meet the challenge.

>> thank you. talking about business in congress, what you think about the administration proposal to solve the mexican drug issue? >> i think this is just a huge challenge for all of us. it is tearing apart the fabric of life and society in mexico, community on our border and the neighbor. there are ways in which we are contributing to this problem. not just in are used in america, and, therefore, the demand, but also in the trafficking and flow of weapons that have empower people to engage in a kind of civil war within that country. we are going to look at this very closely in the foreign relations committee. we are evaluating whether not we may have a joint hearing or

roundtable, not hearing, but a roundtable, discussion in mexico, and explore all of the ways which we could be most helpful. so i think the administration is on the right track, but we are going to look very carefully if there's more we're able to do. because this is a national security threat to the united states of america. and we are partly inadvertently in some cases, but turning the other way and others, complicit in the problem. and we owe the mexicans our best efforts to try to respond. >> stand with the "huffington post." you spoke about pervasive use of the filibuster, but you stopped short of endorsing the one proposal out there by senator tom udall to revamp the rules of this. i wonder if you're planning on signing him with a proposal and what do you think of the landscape for achieving rules

reform on january 20? >> both is going to be very strong. i do support that proposal, i think, or the basics of the proposal. i think we want to protect the rights of minority, the founding fathers envisioned that in the constitution. i think it's critical to do it. and what goes around comes around. and clearly having been in the minority i understand that. but we have to find a way to guarantee that come as i said, it is being used not as a day-to-day tactic that has no accountability, but that is being used in a way that engages the nation in a legitimate debate about something substantive. as long as that takes place i think that's a fair place to that kind of a struggle to try to find a way to get to go 60 votes. today you don't have to do that. you don't even have to talk. you can just announce you will

be opposed to something and it effectively shut something down. and there's no accountability. the reason is, or even who is doing that. that has to stop. and i am completely supportive of efforts to try to guarantee that we make it a responsible process. [inaudible] >> human rights treaties, particularly disabilities and others. and i just want to, i know there are a lot of lessons from the start, but if there any particular lessons that you think could guide going forward, and particularly where it has been sound bites, not a discussion. so i would be really interested in your reflections. >> i contend -- intend to seek the majority leader's support in bringing another tree to the floor of the senate, hopefully sooner rather than later.

i need to run through a number of traps and talk with colleagues and working with colleagues which treaty that would be. there are several possibilities, but i think it's imperative that as i just said we have got to do the business of our nation. there are several treaties, one of them for instance, the other is, you know the list of them, but the bottom line is there's a very broad support in a military community, in the business community come in chamber of commerce, environment community, broad bipartisanship were some of those. and my hope is if we reach out to people early enough, have discussions with them early enough, do the groundwork, i hope we could avoid people taking quick, hasty

ideologically inspired or outside interest group inspired positions of opposition until they've had a chance to really evaluate what's at stake. that's my prayer. with respect to all of those kinds of issues, and i hope out of today's discussion and beyond, this will not be the only one obviously, we're going to be talking about a lot of these things innocent amongst ourselves, and will be a national dialogue on this article. hopefully, we can have a good campaign for 2012, but not with what we're really here to do with the interests of the country are. and not just with respect to those treaties, but as i said, with respect to enormous agenda that is staring us in the face that has been grid locked down for many, too many years. president nixon talked about energy independence. president carter took major steps to try to move us towards energy independence.

since september 11, 2001, not only have we not reduce our energy dependence by 1%, we have actually increased it by 25 or 30%. so we have become more indebted and more bound because we have failed to invest in these obvious alternatives that would not only liberate us from borrowing money from china so we can buy oil from someone else, and then follow the atmosphere and make people sicker and send it to the hospitals and spend more money on that, a very un-virtuous cycle. not only are we doing that but we are not turning that around so we are actually creating those jobs here at home that reduce all of those negative impacts. the irony of this is, folks, public life i learned in the years i've been here that there are very few public issues where you get, you know, to benefit so doing one thing.

usually it's one for one or maybe one and a half or two. here you get five or six benefits, because you clean up the air and you are healthier. you reduce your dependency on foreign oil. you are not sending money to terrorist in the berkeley through back channels. you're making america freer to make certain kinds of foreign policy decisions because you have more leverage because you are not dependent on other people who can hold you up because you are indebted to them for the supply of your energy. you have better health. europe more jobs in america. you have increase our national security. how many think you get that kind of benefit for, for one big choice? i hope that we'll get there in this congress and i'll do everything in my power to help get us there. that you all very much. >> a.q., chairman. thank you, chairman.

[inaudible conversations] [inaudible conversations] [inaudible conversations] >> senator john kerry has just returned from his third trip to sudan. he has been relaying messages from the administration aimed at staving off a new outbreak of violence in that country, which by the way this week is conducting its referendum on independence for south sudan. the vote is part of the 2005 agreement that ended two decades of north-south civil war which killed 2 million people. we're going to get an update from the state department and the assistant secretary for african affairs. we will have live coverage of that news conference this afternoon at 1 p.m. eastern here on c-span2.the saker pro in washington today the u.s.

house gavels and at noon eastern. no major business today, but we do expect remarks on congresswoman gabrielle giffords verizon here in earlier footage. she continues to be in criticalg condition after the tucson unit shooting that left six dead. watch the house live at noon each. governor chris christie is getting his first state of the state address. new jersey facing a $10.5 billion deficit. will have live coverage of the state of the state 2 p.m. eastern on c-span. >> european leaders gathered in paris last week to discuss the global economy of the french

prime ministers stressed the year, the second most traded currency in the world as the u.s. dollar. still strong despite inability in european markets. france will host both the summits this year. this is 25 minutes. [speaking in native tongue] >> translator: prime minister, ladies and gentlemen, ministers, it's a great pleasure, great honor for me for declaring this open. it was organized and thought of by eric who wished to have any cause of dysfunction in the world economy which came to stark light because of the world

economic crisis. i would like to congratulate and welcome him here, more particularly for the great courage that he has shown over the past few months. this year this symposium is looking at how we were actually emerge from the crisis. and i think if we look at past year we can see that the world economy seems to be moving much faster towards the east and south, emerging countries represent 50% of industrial production compared to 30%. and, in fact, china which took on the same row as germany as the leading exporter became the second international power in 2010. we will the chinese economy overtake the u.s. economy. china will become in 2014.

very long ago, at the turn-of-the-century, the '40s or 50s it seems highly unlikely, but now we can see that this seems to be very likely. the united states has not, in fact, got back on track to the chinese gdp has gone up by 28% at the same time. and we can see that growth we will continue. we may have to see certain overheating, where as other countries have to deal with the scars of the crisis, human, social and economic scars. so this meeting is also going to bring latin america and mediterranean in the forefront, and asia in the forefront. this is a world where there will

be many changes, conflicts between different civilizations, national identities will have to be thought of as gateways to the other parts of the world, to reach out and not, in fact, a way of closing in on one. they have to be pathways so that one could lead to greater innovation. we have to have new activities, new creations, new sorts of this new world, is also going to be more open and more balanced than in the past year even though there will be pitfalls. we who have known the cold war, the two blocks, we who have been through periods where confidence in the back on each other in silence, can't but rejoice by these changes. today we can see that history in fact is facing and presenting

challenges to us. and i cannot imagine that france and europe in anyway would be so afraid our timid as to think that the future is not actually holding up opportunities out to us. as i said, one of the important conclusions we can draw from the crisis was the fact that we had to face our responsibilities and the establishment of clear-cut policies. i think the chief tony has in fact put us on the track as well. so we have moved from building a look at long-term reforms to structural changes. i think we can see that the world system which was on verge of collapse and the past year. would also fought against protectionism, and we've also strengthened the international financial institutions in a

great many. we have given them the means to cope with these crises. we have changed tha the governa. we have drawn conclusions from the new world that emerging companies -- countries have to play in with the world bank and this was the way during the solsona. and we have also started regulating the international financial system since the washington summit in 2008, huge progress has been accomplished country financial regulation. this is for the question of capital and the queries and banks that also had the control of securitization, securities, and also the bonuses of traders. i think we have been able to react faster given the emergencies that we have to face. now that these risks seem to be receding, we should not lag.

5025 it must continue to show that it is capable of taking decisions and implementing them if it were not to do so, other institutions would fill that gap or the vacuum. the many years, this really is a presidents am to go along with certain obligations and goals that have been present for us for a long time. first of all, to reform international monetary system, we will be talking about that this afternoon. secondly, we have to continue with the financial regulatory reform, particularly decisions taken by the g20 on all the different markets. also deregulatory markets should spread and cover areas where it is not as stringent for the time being.

we have to deal with shadow banking as well. and if not, we will be running the risk of finding ourselves in a rather contradictory position. and that is that the risks and the measures that we are taking to manage risks will, in fact, just shift the risk to another sector which would not be covered with the same regulation. and we also have to look at the market chapter in the g20 agenda, have greater protection of the integrity of markets. concerning raw materials, particularly the agriculture products and energy, we also have to work on finding solutions. that's our second priority. there will also be heavy improvement of global governan governance. this also concerns the g20. its internal organization and its links with international

organizations, but it also concerns united nations family. we need a multilateral system that works any more efficient manner. we have managed to reform the world bank's. we've managed to give their responsibilities to the imf. can we do the same now with the united states. without taking place of the rifle institutions of the u.n. we think this is a legitimate question that should be raised. also, it will allow us to in subjects that we feel have not been sufficiently aired until now. so the first time we have seen development. up to now this is not a question that was handled by the g20, and i think we cannot think of sustainable development without thinking of africa and the poorest countries. this is why we have put forward the founding of infrastructure

and also the security, also innovative financing which is indispensable if we wish to have the right sort. and so the president of the french republic also wishes to but if social face of globalization. and this is also a point that we feel very strongly about in the imbalance world. the social issues can take on certain forms such as dumping, dumping can have a social effect but also environmental and economic effects. globalization should not allow us to take ethics and moral issues out of the agenda. it is possible to regulate things better. we think it is possible. we feel that therefore the social issues should really be at the heart of all the subjects governed by the g20. the ilo has always upheld this

position, and, therefore, we think that the ilo will also have an important role to play in the discussions of the g20. now, in the g8, a few questions concerning the internet, the digital economy, with the major subjects. is his first of all because of her presents a larger chunk of our economy. and 2020, the internet will represent 20% of gdp, but also because it trickles down at all levels. it is competitive. it makes more attractive, or not. and it is also real channel of education and culture. but up to now very few high level meetings, that is as a head of state or government level, has dealt with directly. we like to look at different aspects, the internet for example, access and funding of the infrastructure, or

structures of information society. then secondly, the question of values and how values are to be shared. and thirdly, a different economic road. we cannot imagine that the digital economy would be organized where come in such a way that there is no real participation our access to the funding in those countries. and then the question of intellectual prosperity and also attacks aspects of digital services. we also have to look at safety in the information society. we have to look at consumer's rights. we have to look at the security of payments, and we also have to

look at the resilience of networks and how to fight cyber criminal. the first, ladies and gentlemen, will of course be to concentrate on the euro zone. and the last few months the eurozone has been hurt severely under threats. the irish banker problem which is linked also to the financial crisis in ireland has led to a great deal of instability and sovereign markets and the eurozone. speculators and commentators who frequently didn't believe in the euro field will be a spread over affected other countries. i would first of all like to remind you that this is not the euro crisis that we are dealing with. it is a strong currency. it is the second largest currency in the world. it has become the second greatest reserve. it is a question of trust and

confidence in the euro zone countries. some of these countries, therefore, the crisis has in fact exposed. for example, the toxic issues as presented, or the problem as we've seen it in ireland. first of all, we have a traditional classical crisis. when we are coming out of the crisis, there are risks, for example, a huge increase in public debt. but many of the countries have the financial imbalances, also further weakened by the fact that there has been a real estate bubble and also a huge public deficit. and because of this we can say that cannot be managed at all. this is not the deviations, not

the cost of the currency terms. it is because of future deficits, public deficit. banking regulations that are sufficient which haven't covered risk sufficiently. and also and insufficient management or control over domestic demand. now, obvious a responsibility is to find the right sort of supervisory mechanisms that allow us to foresee these sort of risks. but there are two points i would like to raise. these public expenditure deficits, real estate issues and competitive issues are not limited to europe alone. there are other countries that had to face the same problem, sometimes on a greater scale. in countries where the policies were not adequate, it was necessary to take structural action. however, we do not see that it

would have been different if these countries were not part of the eurozone. none of the countries would have had to face sovereign debt crisis, could in any way to avoid the collapse of domestic demand and consumer spending. in fact, the eurozone itself raise any questions about the stability that we've known over the past 10 years because of the single currency. the single currency has led to market to develop. it has led to the development of crisis and maintaining consumer purchasing power. nobody can imagine the sort of disorder and imbalances if we hadn't had the single currency in 2008. euro did not in any way curtail growth. in fact, a gdp per capita went up by 2.7% in france between

2008-2010. from a general point of view, the year is table. when we look at the finances of the eurozone, as you've seen it is less in a difficult situation compared to the united states and japan. for example, and 2010 we can see that for japan and the united states gdp was minus 11, minus nine respectively, compared to the eurozone what it was minus five. and also when you look at the figures concerning public deficit. i can eurozone comes out fairly welcome to japan a nested but however let us not forget that this crisis has gone to the forefront. weaknesses concerning organization and so we should not in any way forget these vital points. we found in the eurozone there

were no financial stabilization mechanism. this is a real weakness and, therefore, the reactivity of our son was, in fact, remarkable. i know that been some criticism in the way in which europe reacted to this crisis but i think those who make this criticism do not realize the thought and the skill taking in less than a year. the european commission has taken a massive program of 11000 year old to correct the crisis increase, and greece have continued to take steps. and want to get i would to congratulate, welcome and recognize the greek prime minister here for taking the very courageous steps. we must also say that there are huge contributions made to the mechanism, the financial mechanism.

with stricter budgetary control, by the average government. also we can see that liquidity on the market, and this means that italy has a good control of these market systems. however, it is also demand that countries that commit nationally to reduce the deficit but also certain commitments have to be made. the management of the crisis has been successful. there is no doubt about it, but it is not sufficient. structural measures were indispensable. you want to get the has reacted fast and well. and concerned the lack of trust, some of your zone countries, the european country has taken certain rules which supervises public accounts and debts, and also the macroeconomic imbalances that may occur in the eurozone. these rules are a major step

forward, and will allow the eurozone countries to be better and greater ,-comcomedy on financial issues it is a question of economic internal imbalance is that should be supervised more closely. and these rules of course will be expressed in laws very soon. we also got a permanent crisis management mechanism. it will be a financial stabilization mechanism. in 2013 this will take over from the fund, this mechanism which has been approved will have solid legal basis. and this has been made possible thanks to the provision of the lisbon treaty which was in 2011-degree activity capacity to adapt, therefore it is perfectly clear to us or from an economic point of view, we have seen that there has been real correction of the imbalances. ireland has gained some of its

last, in spain the current balance of payment is correcting itself as well. and gradually they will be greater dynamic growth for in federal domestic demand in germany. however, we can say that there is the most we can do. we feel that we still have to take steps for economic adjustments to correct the imbalances that took place within the eurozone. europe also gives us the impression of being, of lagging behind, and the way in which its markets can react, and also in the way that it doesn't have a long-term approach. therefore, there are three solutions to reinforce the eurozone. we need to have attended supervision of the financial aspects of the zone, but also convergence concerning tax and

social issues. that i think is an issue for the next months to come. after this crisis the question of convergence and harmonization will be our top priority in europe. including in areas that up till now have not been looked at closely for political sensitivities, or for whatever other reasons. this is why i think the fact that we're having a discussion on the cost of labor and the question of the 35 are starting. for many years i have said it would be impossible to the eurozone in which the working and all these factors will be completely different. we're also going to step up growth and employment. obviously, this is only by groups that we can come out of

the crisis. it is also in this way that our citizens can dare to the european model, and i think we can continue to believe and base ourselves on european technology and excellence, innovation, and excellence is actually important in europe and this is what we will be concentrate on. when we talk about new capitalism, and i think we can no longer accept that markets will be in fact organizing our economies. it's not the markets in the united states that are the engine of any form of innovation. it's not markets in china that is the market or the driving force of the huge changes that are taking place. and i think in europe as well we have examples of this.

and that we see that when it is possible, government should also step in to give further help to research, development, to innovation. this is what i think the european research programs have to be readjusted to concentrate on industry. this is why france has decided to set up a european fund and also a capital risk products. it's important for us to look at the impact of new european regulations on the competitive -- competitiveness. it's important also that in the european competition policy, they be included. and also we have to go further and stressing capital of europe worldwide with the solid currency, with credit -- credible central bank renewed with institutions with president

of the council, with a new external service, europe will be the leading economic body in the world, and will be able to be heard worldwide. france and europe feels that they really are at the center of world governance of the international monetary change, and, therefore, we have to take steps together to correct certain imbalances, particularly this food price system. ladies and gentlemen, in history of man there have been moments where there are breakdowns. and i think we have been through one of those periods. when things can actually go one way or the other. some may feel completely, feel totally giddy and lightheaded, looking at the changes that are going to come up, that we're going to have to face.

others may look at it in a slightly doomsday mayor. but i suggest that we should not go to one extreme or the other. we should be ambitious. we should have vision. we should be listed and this is because human life and condition cannot be written with ink of the past. the choice is being responsible is caring, open-minded, should be guiding light their thank you. [applause] >> [inaudible conversations] [inaudible conversations] [inaudible conversations]

>> some reports of violence incident and it's a weeklong vote for an independent southern sudan. the vote is part of a 2005 agreement that ended two decades of north-south civil war which killed 2 million people. we will get a state department update on sudan live at 1 p.m. eastern here on c-span2. the greek prime minister also spoke to european leaders and economists in paris last week. both greece and ireland receive financial aid packages from the european union and imf last year. greece will receive approximate $140 billion by 2012. and has pledged to reduce its deficit by 30 billion year old or $40 billion in five years. this event runs a little over 20 minutes.

thank you, minister. [speaking in native tongue] ladies and gentlemen, dear friends, there are many friends you. i see joe and jeffrey. i would like to thank you for honoring me with this invitation to speak to such a distinguished audience. i assume that this is in recognition not have some academic work i have done on the title of the talk, but because of the scars i and my country their having made enormous efforts to survive in this new world of new capitalism. so let me talk to you of my experience, and i hope this will help our discourse today. i will speak of the myths that surround a crisis but i would like to make a statement that

yes, europe has been going through a crisis. but despite all the doomsday is about the euro, it is my true belief and for my experience this past year that we not only have the capacity but we also have the will. not only to survive but to prosper and work together. so my comments are here in fact to open up the further the debate of how we can further strengthen this community of values, our family is called the european union. ms. -- myth number one, the crisis was too much penny, too much prophecy. and, therefore, the pain is now the cure. know, that was just the tip of the iceberg.

the symptoms rather than the underlying cause. the real problem was one of governance, lack of monetary, block lack of transfer to, bad allocation of funds rather than lack of funds, unequal this edition of money rather than spending by all. unequal privileges rather than a sense of justice for all. and this for example, fueled tax evasion with a great economy some international bodies say could have gone to 35 to 40% of greek gdp compared to a possible 15% in germany. however in other ways to greek crisis underlined the nature of the crisis in the u.s., the financial markets where lack of transparency, lack of monitoring, fraudulent allocation of aaa bonds, in reality toxic bonds, corrupt

practices were at the core of the freefall of the u.s. ended the world economy. it shows the lack of the necessary governance structures or even more so the capture of our democratic structures by very strong special interests that it also highlighted the deep injustice, the privatization of profit and the socialization of losses and debt. ireland is a case in point that although with its own intrinsic problems, it is in essence paying for the people of ireland, the people violate a pay for the toxic practices of the international financial system. and this is a politically unsustainable practice in our democracies. again, one that challenges us to look at our governance structures and could make sure that they are transparent democratic responsible and just. so yes, we have had to make sacrifices in greece, to deal with the symptom of debt and deficit, cutting wages in the public sector, rebounding our

pension system, hiking taxes, putting an excise unprofitable businesses, cutting spending in most area from defense to transport, merging or privatizing public companies. this has allowed us to achieve a very difficult goal of cutting our deficit by more than 6% this year. and achievement he believes could have accomplished. but we have done so you're however our real task, the task of my government today is to make deeper changes. create a society of transparency and good governance rather than dispensing privileges for the few and far special interest. we want to guarantee basic rights for all, justice, equality, welfare and jobs. at the same time great the conditions for sustainable growth in a country which has great potential. comparative advantages from agriculture to tourism to clean energy, shipping and, of course, culture. and we are doing so by major reforms, tax reforms, reforms in

transparency by bringing all our funding in public sector online. today everything is online. fighting corruption in the health sector, opening up professions, these are just some of the few things we have and are continuing to do. the second myth is the markets will solve the problems. we simply have to take the necessary measures as countries, and we will have taken, and it would've taken all the same measures everything will be on track. well, we are on track and greece has been successful in the publishing its goals this last year and it is not my assessment. this is the commissions combined assessment. and yet not only greece but others in the euro zone are being pressured towards exclusion from the markets with high spreads our terms of lending. markets are not some divine entity nor are they to double. they are made up of human beings, heads of corporations, hedge funds, banks, enterprises,

and consumers. so we must very simply understand that there are different interests at play. and our government challenge here is whether we organized of these interest in we regulate so that markets work for the common good. or they become increasingly a tool for the concentration of power and privilege of the few. i say this because today we are faced with a huge concentration of financial power. for example, according to a recent article in the "new york times" only a handful of nine anonymous people as they say more or less control various derivative markets. and more and more analysts are telling us that the core problem of the recent great recession as with the great depression is any quality. ..

>> responsible then the problem will vanish. no need for stronger governing structures in the european union. no need for solidarity, particularly to countries that have not been responsible in

their practices. but this myth avoid three basic problems. first, the recent global crisis revealed some of the missing bricks in the architecture. without at the same time, having a common treasury. an attempt to replace the ladder with a fiscal and certain extent truck choral policies which haven't worked as we would have liked. at the same time, fiscal expansion has been used to combat the weak demand that accompanied the financial crisis. secondly, the problems are much wider and diverse than fiscal consolidation at the national level. let me mention a few. high anxiety, insecurity in the markets, insecurity in our populations, prophesies of doom, market worries about future debt, competitiveness, growth potential of the european union economies, credit rating

agencies that are accountable to no one, yet their behind closed door actions can distort and affect national and global economies, and we see that today concerns many eu economies. tax havens, yes, we are in need to collect revenue. we do so. yet big interest can escape through tax havens which are helped by the financial system. this is unsustainable and unjust to the societies when we are trying to put our house in order. it's robbery of our growth potential and the potential to invest in the welfare of the citizens. we can only solve the problem we close and strong economic governance. not by going alone, but greater european integration. finally we know that europe is challenged by a waning excel

tiffness and slow growth. we are facing a historical in asia and other emerging economies. this is a fact an inirreversible fact. we are challenged by a competitiveness that is not always based on quality, but often on inequality. lack of democratic and social rights, ease of denigrated environments. yet this is not the model we can or should emulate. our response must be one of quality of products, of massive investment in the new prospect of green and clean development, and this means investment in education, investment in innovation, investment in infrastructure from transportation to energy, investment in social welfare of our citizens. i say this also to highlight the

fact that we, we are in need of solidarity, we in greece and ireland recently, to deal with the hostile markets that gave us no time to make the necessary changes. this is why we in the european union set up the esfs for the countries in need to give the time to make the necessary reforms. the european union with whatever difficult delays did step up in the challenge. i believe this will have been complimented in recent decisions when we say we will do everything necessary to achieve stability in the european union and the euro zone. let me take the opportunity to extent my thanks for the support that the french government, mr. feon has demonstrated and warmness that we've received from the french people. my point is broader, this is not

a form of charity. not only because we will be paying back in full. but because the challenge is a much wider one. it is a european one. a threefold challenge of stabilization in a world of uncertainty. these mechanisms are a form of stabilization. not simply solidarity, but stabilization for all in europe. secondly, regulation of the financial system. making it more transparent and fair, and again, investing in the real economy. thirdly, a growth scenario for jobs, competitiveness, and green development. so allow me to conclude with some more concrete proposals. it's been threefold, embarking on fiscal consolidation, fiscal governance, creating a financial stabilization mechanism. the results, however, are still

not the desired ones as the market seems to continue to have doubts about our determination and resolution to deal with the crisis. this is in contrast to our real intentions. in order to reduce a more incredible strategy, we can deal with three issues on debt, sustainability, and countries in trouble and reverse the situation leading to an exit from the crisis. first we need to take action that will break the prosip recall influence, especially from countries benefiting from the support mechanism. can would be use the in the cia reports of collateral asassment. the regulation framework of the agencies has to improve. second the characteristic scope and lending terms of the mechanisms have to improve further and become more

effective in dealing with debt sustainability, and market inperfections. we have to think again about the seniority or not about the mechanism loans, the loans themselves should be given at rates and duration that fit better to the characteristics of advance countries which cannot experience growth rates which with the imf lending terms are realigned. no case we should allow for moral hazards. i'm sure we can find other solutions to the problem while at the same time raising the wall, and give a helping hand to the economies in trouble. third, we have to think more about growth. both in member state level and at the eu level. in this way we will endeavor to improve further the prosperity, and find the resources to reduce our debt much faster. while restoring budget disciplinary, this cannot be

achieved without the goals of high employment and society peace. there's no room to provide economic stimulus at the level of national policies that we have seen. room does exist at the level of european union. european union possibility. if we fair it to the united states, there's no federal debt. we have to take a strong initiative to open the growth chapter of the european union growth. even the stability part is doomed to fail. markets will only calm down if they are convinced that the union is capable to return to the path both of stability and growth. only by combining stability and growth, political and social

stability can be secured. finally we will have -- we should use all of the possible tools in a tool box to make our efforts successful. and here there is an open discussion on a number of tools. i'd like to mention them. the financial transaction tax, a tool which would give resources to the european union. very important. tax on co2 or the so-called greenhouse gases tax. another resource which would also help us move towards green development, but also create own resources for the european union. there's growing as an effective instrument to help europe achieve major objectives. euro bonds will help projects and other investments that can enhance growth and particularly the greenhouse. euro bonds in banking systems

and thus facilitate the adjustment effort of countries aimed at restoring sound public finances. in this way, euro bonds will contribute to the financial stability as a whole. all euro area countries will be better off economically and financially if we succeed to resolve the crisis, safeguard financial crisis as a whole and support the common currency, the euro. countries will fiscal weaknesses, including my own, will have to do their homework to move sound financial and excel -- competitiveness. it is necessary that we are making in each of other country. but it can serve as an effective complimentary means to help foster and use as a tool for economic and green growth.

ladies and gentleman, for the past three years, the global economy has been caught in the worse financial crisis since the great depression. millions have lost jobs, and economic growth across the road has grown to a halt. while our citizens has been burdened with massive new public debt and in some case watch the democratic sovereignty being put at risk. here today we are meeting to take the next steps to bring forth a new world. unlike so many meetings, we've all attended in the past year, here today instead of squabbling over who pays for what, who bails out whom, we must sit out the design that will design the collective and comprehensive action needed to restore the balance to market and governance. we owe this to our citizens. that's the least we can do. we also know our political voice in europe, whether it is in our

own region, or a wider region such as the mediterranean, the middle east, black sea, caucuses, or africa, will be affected by the changes and decisioning. and here france and greece has been working and are working closely together on regional issues such as in the mediterranean. here instead of a topdown approach, the european union is building an much more equal partnership with our neighbors in the mediterranean. we have taken an initiative with greece and other countries such as france and turkey are involved and seeing this as a positive force for cooperation dealing with conflicts such as the one until the middle east. we all want to see a peaceful settlement as soon as possible in the middle east. but also seeing how the green development can be an opportunity for jobs and growth in the mediterranean and in europe while dealing with the

environmental problem. jeffrey sachs has been helpful in helping us work on this issue. i'm very confident that working together we can also become a catalyst not only for conflict resolution, but for a stronger voice for democracy, human rights, prosperity around our world. so before i close, i would like to take this opportunity to thank our host country, france, not only for organizing this event, but again for the solidarity that you have shown. and i wish you well in your role this year at the head of the g20. you have a great challenge ahead of you, and global democratic governance will be on our agenda. we support french efforts to reform the global monetary system, to control the fluctuation of prices were essential commodities and stable food and to help in regulating our world economy.

and europe can and must play it's part. i too often believe we do not understand or realize the real potential that europe has in this world. if we work together, if we believe in europe, we can help make the world is more just, democratic, and green place for our citizens around the globe. greece is going through a difficult crisis. but be sure we are making this crisis an opportunity for change and for prosperity for our people. for a very different greece. one we are proud of. my hope is that the greek crisis will also become an opportunity for europe and the world. thank you very much. [applause] [applause]

>> well, thank you very much. thanks for inviting me, eric, to come to this very impressive conference for the first time. but i wasn't the finance minister a year ago. this is only my first opportunity to come. it's actually my second visit to paris as the chancellor. and the dialogue, i should say between the british and the french governments grows and strengthens, we welcome your president to london recently and your prime minister will be in london next week. i think the fact that we are having this discussion, the fact that we are having this conference, that some of my good colleagues are here, so many distinguished academics are here, shows that france right at the beginning of it's important presidency of the g20 and the g8 is taking the time and the trouble to address the very serious questions and challenges that lie ahead.

there is an english expression about football which is that football is a game of two halves. and the world economy is at the moment a game of two halves. i was recently in china and hong kong and south korea. one couldn't be impressed by the energy, the excitement, the dynamism of the asian economies and the impressive growth that you see in the big emerging economies of the world. and they are profoundly optimistic about the future. these countries. and you can feel it. the optimism is almost tangible. and then you travel just before christmas to the united states of america, you travel around europe, you come to the united kingd om, and there's not the same optimism. there's the lack of question, and questions about the economic

futures in the advanced developed economies. and there is soul searching and pessimism. i think we are right to challenge that and confront that, and ask how we can change that. i would suggest in opening up this session that there are three challenges. a challenge for the international institutions, a challenge for the european union, and a challenge for our own domestic government. the first is the challenge for the international institutions. and i think the challenge is this, can these institutions can as relevant in the economic recovery as they were in the recession. it's not the straightforward, it's not all countries need to do the same thing at the moment. and that is a challenge for international coordination, and there's a second challenge which we are all very familiar with which is these institutions created after the second world

war in a world dominated by western victors of that war. don't necessarily reflect the world as it is today. now steps are being taken to change that. but i welcome the fact that france is directly addressing these questions at the beginning of it's presidency of the g20. we shouldn't forget that quite substantial progress has been made if one had stood here two years ago and said will it be possible for the world to agree new banking regulations and new accord in the space of 24 months, people would have doubted that. of course, the challenge now is to get the countries of the -- to sign up to that accord to actually implement it. if you had said 18 months ago that we were going to be able to reform the imf that europe was going to voluntarity give up seats on the governing board of the imf, that we were going to increase the representation of

china and india and brazil, people would have said you'd never be able to get agreement to that in a relative short period of time. but we have done that. and if you had said the g20 would be able to start addressing the incredibly politically difficult economically challenging issue of global economic imbalances where there is strong national interests involved, you too would have said that was going to be extremely difficult. but at the sole g20 meeting, it was starting to be addressed. so there is progress. but i think there is much more that needs to happen. and i would say this, directly to my french colleagues in the room, i think you have an enormous responsibility in the next year to prove that the g20 is relevant as an important international institution going forward. because if the french can't make a success of the g20, then i

don't see who can. and all of the signs are good. all of the signs are pointing in the right direction. i think the agenda that you have set out looking at the international monetary system, looking at global institutions, ensuring that the things that have already been agreed to in south korea, london, and pittsburg are implemented. all of the signs are good. you don't mind me saying so, the responsibility is great. i think your president will live up to that responsibility and deliver a great presidency of the g20. i also think, by the way, since i won't go through all of the international institutions that we need to address, but i would just mention these two. i think the financial stability board as a great an important role to play in the future and should be strengthened, and i also think sitting before us as countries as we look at what we can do to stimulate global prosperity is a free trade round

which we know is difficult, which we know there are political obstacles to. but it sits there. i think 2011 is an window of opportunity to deal with that. that is the challenge for the international institutions to prove they are as relevant in recovery as they were in recession. the challenge to europe, let me be candid, i include the united kingdom in this is to put our own house together. of course, the united kingdom is not a member of the euro zone. although i'm the first british chancellor to attend a euro group meeting. which tells you something must have gone wrong last year. but the point i would make is this, that i think in the next few months, and i think the next few months, the euro zone needs to demonstrate that we are here ready to assist in that, needs to demonstrate to the world that the countries of the euro stand

behind their currency, and there is good progress being made with the decision to create the european stability mechanism. we now need to see that in detail and we need to as i say convince the world that the countries of the euro do stand behind the gyro. -- euro. i believe they do. and it has been demonstrated. we can't afford another year of periodic crises and destabilizing instability. i think another big challenge for the uk and other members of the european union is to restore confidence in the european banking system. this is a major challenge, but frankly, a lack of global confidence in some of europe's banks is a major drag on recovery across europe. and the stress test that we all signed up to the finance ministers in this room last

year, were frankly not good enough. they identified at the end of this process $3.5 billion capital shortfall. if you looked at all of the banks of europe, there was a $3.5 billion capital shortfall, and steps were taken to address that within just a few months later in ireland, we discovered that we needed 35 billion euros for the irish banks. that's why the european finance ministers agrees there should be another round of stress tests at the beginning of the year. we need to get them right, they need to be creditable, they need to look at liquidity as well as capital and we need to have the right plans in place to ensure where there's need for capital, it can be provided. in longer term, in order to protect taxpayers and ensure the

countries like the united kingdom and france can continue to be the home of large international banks. we need to also ensure that taxpayers are not the people who have to pay for the mistakes of those banks. we have to create a system where banks are not too big to fail to use the jar don. -- jargon. i think an important stem is implementing the basel agreement. that basel agreement needs to be implemented not just in europe, in the united states, it needs to implemented elsewhere in the world. but there's a responsibility as we finance ministers look to turn the basel agreement into european law that we do not water it down. that we live up to the commitments that we have entered into. and we remember that actually three extremely distinguished european central bankers, were

absolutely at the heart of drafting up the basel agreement. this is a european-shaped agreement. we need to implement it. i would suggest this should be the priority of the ecothin, of the european commission, and we should not get into the unnecessary distractions of other regulations that i think are beside the point. and frankly, if i can say this, in paris, we need to move on from a rather sterile debate which you hear whispered which is the competition between london and paris and frankfurt for financial services business and realize the real challenge is for europe to remain a competitive place versus the united states the asia. that's the issue that we should have at the front of our mind. properly regulated financial services, we are changing the system of the uk, proper

international rules that are implemented by those who sign up to them. we have those rules on the table in basel, and then competitive financial services that can help fund a recovery and a growing world. and indeed that leads me to the broader question that europe needs to address this challenge, including the united kingdom, of how we remain a competitive place to do business full stop. i think there's a role for the european union in leading europe in a direction where it directly addresses some of the challenges this continent has, some the structural problems we have in our economies, some of the barriers to competitiveness because we realize surely after the lost two years that the world does not owe europe a living. europe has to go out there and make it's case as the best and most dynamic place to do business in the world. and that brings me to my third and final point. in the end, there is a huge responsibility, of course, on national governments to get things right.

we've got to put our own houses in order. i speak as the finance minister representing the country with the largest budget deficit in the g20. until island over took us, the largest budget deficit in the eu. and i would argue that the steps that a new british government has taken in the last seven months proves that in the end, national governments aren't capable of earning market credibility, aren't capable of demonstrating to the world that they can put their house in order in a public finance sents. -- sense. we have seen in the last few months, our credit rating affirmed at a time when almost every other credit rating change in a negative direction around europe, and we have seen our market interest rates fall and our spreads fall as many other european countries with smaller budget deficits have seen theirs

rise. it demonstrates in other words, countries can put forward the credible plans, and this week we took an extremely difficult decision, but a tough and necessary one to increase our value-added taxes, our sales tax, and that took effect at the beginning of this week. countries and political systems can take the steps that are necessary. we are also taking difficult steps to reform our welfare system and to reduce area of government spending. but i would say that in the process we are also trying to concentrate spending on where we think it is most productive. we see a positive role for government spending. and i would mention just three things that -- >> could i mention that we are slightly over time. >> i only have one page to go. >> i know. we are three minutes over time. >> i would point out that we are taking steps to increase investment in education, build new transportation links, and i would say this to some of my otherc