threatens the peace of all. it seeks not to liberate, but to enslave, not to build, but to destroy. that malignancy is militant islam. it cloaks itself in the mantle of a great faith, yet it murders jews, christians and muslims alike with unforgiving impartiality.

the greatest danger facing our

world. this is what iran is trying to do. can you imagine that man who rented here yesterday, can you imagine him armed with nuclear weapons? the international community must stop iran before it is too late. if iran is not suffering we will face nuclear terrorism and the arab spring could soon become an iranian winter. that would be a tragedy. millions of arabs have taken to the streets to replace tyranny with liberty and no one would benefit more than israel if those committed to freedom and peace would prevail. this is my fervent hope. as prime minister of israel i can at risk the future of the

jewish state on wishful thinking. leaders must see reality as it is. not as it ought to be. we must do our best to shape the future but we cannot wish away the dangers of the present. the world around israel is becoming more dangerous. militant islam has already taken over lebanon and gaza. it is determined to tear apart the peace treaty between israel and egypt and between israel and jordan. it has poisoned many arab minds against jews and israel against america and the west. opposes not the policies of israel but the existence of israel. some argue the spread of militant islam especially in these turbulent times if you

want to slow it down, they argue, israel must hurry to make concessions. to make territorial compromise. this theory sounds simple. basically it goes like this. leave the territory. peace will be advanced. the moderates will be strengthened, radicals will be kept at bay and don't worry about the details of how israel will defend itself. international troops will do the job. these people say constantly make a sweeping offer and everything will work out. there's only one problem with that theory. we have tried it. it hasn't worked. in 2000 israel made a sweeping piece of fur that met virtually all the palestinian demands.

the arabs rejected it. palestinian lodged a terror attack that claimed 1,000 is really lives. the prime minister after words made an even more sweeping offer. in 2008 abbas didn't even respond but israel did more than make a sweeping offer. we actually left territories. we withdrew from lebanon in 2,000 and from every square inch of gaza in 2005. that didn't calm the islamic storm. the militant islamic storm that threatens us. it only brought a storm closer and made it stronger. hezbollah and hamas fired

thousands of rockets from the very territories we vacated. when israel left lebanon the moderates did defeat the radicals. the moderates were devoured by the radicals. i regret to say international troops left lebanon and gaza didn't stop the radicals from attacking israel. we left gaza hoping for peace. we did freeze the settlements in gaza. we uprooted them. we did exactly what the theory says. get out, go back to the 1967 borders, dismantle the settlements. i don't think people remember how far we went to achieve this. we uprooted thousands of people

from their homes. we pulled children auditors schools and their kindergartens. we bulldozed synagogues. we even moved lowlands -- loved ones from their graves. having done all that we gave the keys of gaza to president abbas. the theory says it shall work out. the palestinian authority can build a peaceful state in gaza. you can remember the entire world applauded our withdrawal as an act of great statesmanship leaders labeled act of peace. but ladies and gentlemen, we

didn't get peace. we got work. we got iran. which through its proxy, hamas to kick out the palestinian authority. the palestinian authority collapsed in a day, in one day. president abbas just said on this podium that the palestinians are armed only with their hopes and dreams. hopes, dreams and 10,000 missiles and rockets supplied by iran. not to mention lethal weapons flowing into gaza from libya and elsewhere. thousands of missiles have rained down on our cities. you might understand that given

all this is really is rightly ask what is to prevent this from happening again in the west bank. most of our major cities in the south of the country are within a few dozen kilometers from gaza but in the center of the company -- country opposite the west bank our cities are few hundred meters or a few kilometers from the edge of the west bank. someone -- i want to ask you, would any of you bring danger so close to your city, your families? would you act so recklessly with the lives of your citizens? israel is prepared to have a palestinian state in the west bank but we are not prepared to

have another gaza. that is why we need to have real security arrangements which the palestinians refused to negotiate with us. israelis remember the bitter lessons of gaza. many of israel's critics ignore them. they advise israel to go down the same perilous path again. you read what these people say and it is as if nothing happened. they keep repeating the same device and the same formulas as though none of this happened. to reach far reaching concessions without first assuring israel's security. they praised those who unwittingly freeze the in satiable crocodile of militant islam as bold statesmen. they cast as enemies of peace

those of us who insist that we must first direct a security barrier to keep the crocodile out or at the very least jam an iron bar between its gaping jaws. in the face of the labels israel must he'd better advice. better bad press than a good eulogy and better still would be a fair press whose sense of history extends beyond breakfast and which recognizes israel's legitimate security concerns. i believe in serious peace negotiations these needs and concerns can be properly addressed but will not be addressed without negotiations. israel is such a tiny country.

without the west bank israel is nine miles wide. i want to put it to you in perspective. that is two thirds the length of manhattan. the position between battery park and columbia university. don't forget the people who live in brooklyn and new jersey are considerably nicer than some of israel's neighbors. how do you protect such a tiny country surrounded by people sworn to obstruction and armed to the teeth by iran? obviously you can't defend it from within that narrow space alone. israel needs greater strategic depth. that is exactly why security council it resolution 242 didn't require israel to leave all the territories captured in the six day war.

we talked about withdrawal from territories to secure defensible boundaries and to defend itself is robust maintain a long-term israeli military presence in critical strategic areas in the west bank. i explained this to president abbas. he answered that if a palestinian state was to be a sovereign country it could never accept such arrangements. was not? america has had troops in japan, germany and south korea for half a century. britain has in it their place -- an air base in cyprus and forces in three independent african nations. none of the state's claim they are not sovereign countries.

there are many other vital security issues that must be addressed. israel's small dimensions create huge security problems. american can be crossed by jet airplanes in six hours. to fly across israel it takes three minutes. is this tiny air space to be chopped in half and given to palestinian state not at peace with israel? our major international airport is a few kilometers away from the west bank. without peace will our planes become targets for antiaircraft missiles placed in the adjacent palestinian state? how will we stop smuggling into the west bank? not merely the west bank but west bank mountains.

the coastal plain where most of israel's population sits below. how could we prevent smuggling into these mountains of those missiles that could be fired on our cities. i bring up these problems because they are not theoretical problems. they are very real and for israelis they are life and death matters. all these potential cracks in israel's security have to be fielded in a peace agreement before palestinian state is declared, not afterwards. if you leave it afterwards they won't be sealed. these problems will explode in our face and explode the peace. palestinians should first make peace with israel and then get their state. i also want to tell you this.

after such a peace agreement is signed israel will not be the last country to well, palestinian state as a new member of the united nations. we will be the first. [applause] there is one more thin. thing. hamas has been violating international law by holding a soldier captive for five years. they haven't given one -- he is held in a dungeon in darkness against all international law. he is the grandson of someone

who escaped the holocaust and coming in the 1930s to israel. he is the son of every israeli family. every nation represented here should demand his immediate release. if you want -- [applause] -- if you want to pass a resolution about the middle east today, that is the resolution you should pass. [applause] ladies and gentlemen, last year in israel in barilan university i laid out my vision for peace

in which demilitarized palestinian state recognizes the jew--the jewish state. this is the body that recognize the jewish state 64 years ago. don't you think it is time the palestinians did the same? the jewish state of israel will always protect the rights of all its minorities including more than 1 million arab citizens of israel. i wish i could say the same thing about a future palestinian state. palestinian officials made clear the other day right here in new york that the palestinian state won't allow any jews in it. they will be june '40.

do free --jew free. there are laws that make the selling of land to do is punishable by death. that is racism. and you know which was this evokes. israel has no intention whatsoever to change the democratic character of our state. we just don't want the palestinians to change the jewish character of our state. we want to give up -- [applause] -- we want them to give up the fantasy of flooding israel with millions of palestinians. president abbas just stood here

and said that the core of the israeli-palestinian conflict is the settlement. that is odd. our conflict has been raging for nearly half a century before there was a single israeli settlement in the west bank. if what president abbas is saying is true, peace settlement he is talking about cartel of eve, tel aviv, jafa maybe that is what he meant the other day when he said israel has been occupying palestinian land for 63 years. he didn't say from 1967. he said from 1948. i hope someone will bother to ask him this question because it

illustrates a simple truth--the core of the conflict is not the settlement. the settlements are a result of the conflict. the settlements -- it is an issue that has to be addressed and resolved in the course of negotiations but the core of the conflict has always been and remains the refusal of the palestinians to recognize the jewish state in any border. i think it is time the palestinian leadership recognizes what every serious international leader has recognized from lloyd george in 1917 to president truman in 1948 to president obama two days ago right here. israel is the jewish state. [applause]

president abbas, stop walking around this issue. recognize the jewish state and make peace with us. such a genuine peace, israel is prepared to make painful compromises. we believe the palestinians should be neither the citizens of israel nor its subject. they should live in a free state of their own. they should be ready like us for compromise. we will know that they are ready for compromise and for peace when they start taking israel's security requirements seriously and when they stop denying historical connection to our ancient homeland. i often hear them accuse israel of jewizing jerusalem. that is like anglicizing london. you know why we are called jews?

because we come from judea. in my office in jerusalem there is an ancient signet ring of a jewish official from the time of the bible. it was found next to the western wall and dates back 2700 years to the time of king ezekiah. there is a name of a jewish official inscribed on the ring in hebrew. his name was netanyahu. that is my last name. my first name benjamin, dates back 1,000 years earlier to benjamin, son of jacob who was also known as israel. jacob and his 12 sons roamed the same hills of judea and samaria up 4,000 years ago. there has been a continuous jewish presence in the land ever

since. for those jews who were exiled from our land they never stopped dreaming of coming back. on the eve of their expulsion jews in the ukraine feeding of the program and fleeing the ghettos as the nazis were circling around them never stopped trading. they never stopped yearning. they whispered next year in jerusalem, next year in the promised land. [applause] as the prime minister of israel i speak for 100 generations of jews who were dispersed throughout the land who suffered every evil under the sun but who never gave up hope of restoring

their national life in the one and only jewish state. ladies and gentlemen, i continue to hope that president abbas will be my partner in peace. i worked hard to advance that peace. the day i came into office i called for direct negotiations without preconditions. president abbas didn't respond. i aligned a vision of peace of two states with two peoples and he still didn't respond. i removed hundreds of roadblocks and checkpoints to ease freedom of movement in palestinian areas. this facilitated a fantastic growth in the palestinian economy but no response. i took the unprecedented step of freezing buildings in the settlements for ten months. no prime minister did that

before ever. once again -- you applaud but there was no response. no response. in the last few weeks american officials put forward ideas how to restart peace talks. there were things in those ideas about orders i didn't like. there were things about the jewish state that i am sure the palestinians didn't like. but with all my reservations i was willing to move forward. president abbas, why don't you join me? we have to stop negotiating about the negotiations. let's just get on with it. let's negotiate peace. [applause]

has spent years defending israel on the battlefield. i spent a decade defending israel in the court of public opinion. president abbas beeper still you have dedicated your life to advancing the palestinian cause. must this conflict continue for generations? or will we enable our children and our grandchildren to speak in the years ahead of how we found a way to end it? that is what we should aim for. that is what i believe we can achieve. in two years we met in jerusalem only once even though my door has always been open to you. if you wish i will come to room

allah. i have a better suggestion. we both have just flown thousands of miles to new york. now we are in the same city. we are in the same building. so let's meet here today in the united nations. [applause] who is there to stop us? what is there to stop us? if we genuinely want peace, what is there to stop us from meeting today and begin peace negotiations? i suggest we talk openly and honestly. let's listen to one another. let's do as we say in the middle east, let's talk peace, straight forward. i will tell you my needs and concerns and you will tell me yours and with god's help we

will find the common ground of peace. [applause] there is an old arab saying that you cannot applaud with one hand. the same is true of peace. i cannot make peace alone. i cannot make peace without you. president abbas, i extend my hand, the hand of israel in peace. i hope you will grass that hand. we are both the sons of abraham. my people call him abraham and your people call him ibrahim. we dwell in the same land. our destinies are intertwined. let us realize the vision of

isaiah. [speaking in native tongue] the people who walk in darkness will see a great light. let that light be the light of peace. >> a live look at the united nations security council. the council meets to consider palestine's request for statehood and full membership. palestinian president abbas made a formal request on friday. the u.s. has said it will veto the bid and israel has lobbied for member nations to oppose or abstain from voting. this is live coverage on c-span2. ..

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>> again, the u.n. security council meeting to discuss the palestinians request for recognition as a state. palestinian authority president mahmoud abbas formally requested the united nations recognize palestine as an independent state last week during the opening of the general assembly. the 15 member security council is divided on the request, and the united states is opposed and said it would veto the request. it has addressed -- in his address president obama said ultimately it is in the israelis and palestinians, not us who must reach agreement on the status of a palestinian nation. israel actually announced tuesday the building of additional settlements in east jerusalem.

president abbas denounced the move and said peace with israel is not possible until settlement construction and. white house spokesman jay carney said the administration is deeply disappointed by that announcement and that when you decide to take unilateral action, that makes it harder to achieve the peace. we make our views known just as we did with regard to the palestinian action at the united nations. that statement again from white house spokesman jay carney yesterday. we are waiting for the security council to get under way in just a few minutes. [inaudible conversations] [inaudible conversations]

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>> [inaudible conversations] [speaking in native tongue] >> translator: i declare open the 6624th meeting of the security council. the provisional agenda for this meeting is admission of new members. the agenda is adopted. the security council will now begin its consideration of item two on its agenda. in a letter dated the 23rd of september, 2011, and addressed to the secretary-general, the

application of palestine for admission to membership in the united nations was submitted by its president. that letter has been circulated as an attachment to a now by the secretary-general and document number s/2011/592. under the provisions of rule 59 of the provisional rules of procedure, of the security council, unless the council decides otherwise an application for membership shall be referred by the president of the council to the committee on the admission of new members. accordingly, unless i hear proposal to the contrary i shall refer to application of palestine to the committee on the admission of new members for examination, and report on its

outcomes. as i hear no objection it is so decided. i would propose that the committee on the admission of new members meet on friday, september 30, 2011, at 10 a.m. in conference room one, to consider the application of palestine for membership in the united nations. meeting is adjourned. [inaudible conversations] [inaudible conversations]

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[inaudible conversations] >> as you saw, the security council president submitted a request for palestinian statehood to the full committee. there were no objections, and being he adjourned the security council meeting. again, we have been like that the u.n. security council which was formally considering palestine statehood today. here's a portion out of an event on the topic from yesterday, experts met to discuss the implications of the long-standing conflict with israel on the u.s. and international community. this comes from a discussion

hosted by the potomac institute for policy studies in arlington. [applause] >> i would like to thank the professor alexander and the potomac institute for the kind invitation, and for the kind introduction and also i would like to thank mr. don wallace for this important topic which, of course, now everybody who is involved in global affairs and international affairs is following what is happening in the u.n. within the next few weeks, of course we'll have a very important implication. not only regionally in the middle east, but also on several aspects of world affairs.

i'd like to say to professor alexander, i was one of those who negotiate a peace treaty with israel in 1994, and drafted the peace treaty. and it was a very monumental event. it makes such a difference now that we see what, you know, the developers in the middle east has led to. the prospects of peace at that time were so high that everybody was thinking that within a few years actually, people would have two states, a state of palestine and a state of israel, both secure, both living in peace side by side, include one of these, include peace not only states of governments but between peoples. unfortunately, the developments in the middle east haven't put

forth this goal of the peace process. into effect. people will say well, who is to blame in this regard, are on the stamina i think this is not a question. i think what we all should strive for is vision in the hope of peace that eventually one day, and hopefully soon, we will have two states. one day hopefully soon we will have peace in the middle east that achieves the security and peace for both israel, the palestinians, and the rest of the countries in the middle east. now, the question comes, why, you know, palestinians want in the united nations.

and what would this achieve? 1988 the plo has already declared the creation of palestinian state, and i think within a couple of years time they have like 110 by 120. now i think of more like 140 recognitions. but does political recognition great states, that's a different matter. you know, international lawyers know that for a state to be established it needs a territory, unique people and need an effective government. now, what happened the past couple of years, i think it wasn't productive in pushing forward to have a negotiated solution based on the oslo accords, based on the other process. and i think what happened is

that palestinians generally felt that there is not much within the negotiation process, i think, to achieve their right for self-determination. not only by the united nations but most countries in the world. and i think even israel has a right for self-determination to the palestinians. now, the issue where, what do you achieve from going to that. i think what the question should be that what, what would israel lose a having a palestinian declared? the issue as president abbas said a couple of days ago, it's not about israel. it's about the palestinians and for them to have a state. and i think it achieves a moral, moral value. that they are recognized by the

international community through the united nations as a state. their right to self-determination has been hurt. with this create a state on the ground? it would not. it would remain an occupied state. and for it, for the occupation to end, everybody agrees, although some of stakeholders, including jordan, the united states, the europeans, the quartet, that it has to be negotiated solution. negotiated solution with the bases which is the 1967 borders. when there was controversy about the mutual exchange, people sort of, you know, the basis of 1967 border, what does that mean? resolution 240 which was accepted by everybody including israel, talks about peace on the basis of exchange, mutual

exchange of territory. so this is the premises. at the 1967 lines, and then you have, you do the exchange of territory on the basis of what makes the palestinians and israel as secure. what is happening is that there is critical issues that need to be resolved. and these issues, again, by negotiations that can resolve them. and the key issue is basically which was not mentioned the other day is settlements. this is what led to the palestinians to mainly to go to the united nations. the settlement is something which effectively destroys any chances of a two-state solution. it is eating lands, and you can come and this affects since the

oslo accord until now, the number of settlers have not only doubled but tripled and quadrupled. and the peace, the lands that the palestinians have a state on the effectively is diminishing day by day. this is the key problem. and if there is any intention to have peace, there has to be a resolution of this courageous resolution on part of israel with regard to the settlements, and to do with them, with the settlers and the settlers. then there's the issue of of course, and president abbas made it through the other day the genoa summit that there is a palestinian state, one that is a palestinian state, the issue of the refugees problem would be addressed. this gives a strong signal on

how the resolution of the matter would be. professor alexander talked about one thing, one indication of two states, and arab state and palestinian state, and that is of course another part of the resolution, refugees, which is resolution 194 which calls for a just settlement for the palestinian refugees problem. and this is the basis, one of the bases of the arab peace initiative that was presented. so that is another parameter that we can deal with and can be a basis for a solution. a just solution, and i resolution of the issue of the settlements. and that can be for this

including, you know, degree -- to agree on borders and securities first. again, it is an a negotiated settlement. what the palestinians will do, it will not undermine the prospects of negotiated settlement. there's nothing that israel will loose from the declaration of a palestinian state as such. it will actually be an incentive for our -- for all parties to go forward and negotiate on the hard issues that i talked about. again, it is, you know, if you're talking about security, security, security can be achieved through peace. and the argument basically that is only one side deserved security and the other side deserves peace, doesn't work. it has to be peace and security for both sides. and this is where the two sides

can agree on, and then the united states and other stakeholders from including jordan from including egypt, including the united nations, have to support any future solution in this regard. i don't know if i want, you want me to add anything in this, but i'm happy to answer a few questions later about this, and thank you all for this. [applause] >> thank you very much. >> don't worry, there will be plenty of questions and time. the purpose is to develop a dialogue within a very short period of time you will provide a very -- perspective and obviously there were hundreds of resolutions of the united

nations, and we are dealing with different aspects. we can go through all of them. but the one, 181 resolution, november 29, 1947 is critical in the sense that this was the vision of international community to have two states living in peace side by side. and the question is, how can we realize that? to bring quote unquote an israeli view on this issue, we were delighted to have with us the professor. you have his cd, so i'm not going to go into details. obviously, currently is the co-chair in israel studies,

director of the institute for israeli studies of the interrelation -- the university of maryland again, on a personal, professional level, i was able to follow his work as an academic, as well as political adviser to prime minister yitzhak rabin. and he set up some very important institutes, such as the institute for media politics and society. was a professor of sociology, communication, at tel aviv university. was stationed in jerusalem, and he was editor in chief of the editor -- i could go on and on. he was educated at deeper him university and received his ph.d at columbia school of economics. in addition to his academic work, he was a very prominent

journalist and political commentator. and, in fact, during golden my years term as prime minister, was a spokesman of the labour party. was it a different labor party been is today, but it integrate, and he published extensively on many of the issues that we're going to deal with. so, it is all yours. >> thank you. thank you for inviting me to take part in this interesting meeting. this is the first time i've been at this institute and it looks very impressive. i'm sure i'll have more time afterwards to tour. like my two predecessors, i participate as well at the peace treaty, signing a peace treaty between israel and jordan, but i

was also in washington win the peace, not peace but the recognition, mutual recognition of israel and the plo was done. and during these years there was much more. so to answer your first question, your bottom line, is the conflict permanent, using your term, or not, during that time i was sure it would be over within 10 years. today, i'm not so sure that it will be over within 10 years. i didn't get my optimism but i'm afraid it will take more time. and, unfortunately, i'm afraid it will lead to few rounds of violence before reaching agreement. but let me start more systematically by answering three questions. one, why have the house since decided to go to the u.n.? and white israel was against it. what happened last week to the u.n.? that's the second question. and the third question, what will happen in the near future?

namely, the next year or so. and the advantage that i have over you, or that i'm not representing official position so i can be critical on both sides, not only on the other side but also on the israeli position. when they decide to go to the u.n., according to the palestinian leader, mahmoud abbas, is very simple. to continue the negotiation on the diplomatic domain. the direct negotiations did not reach anything and, therefore, we are changing our strategy, we are moving into the diplomatic arena to continue the negotiation. this is what he wrote in the u.n. article, and in your times article some time ago. others would take him and this is the israeli, most of the israelis position, well, it's not to continue the negotiations, it's instead of negotiations. it to use advantages to do which

will be given to the palestinians if they move to the u.n. that they don't have today. and there's a third school of thought, no, it's not to negotiate at all. it is instead of negotiations. ..

only through negotiations between the two sides without preconditions. and the palestinians are presenting preconditions and they want to conclude an agreement without negotiations and therefore it can not be done. the most sophisticated answer to that which some people mention but not all of them. and not in all, not in all debates which i head or participate in washington at least. that is, if you decide to move to the u.n. and to establish a palestinian state through the u.n. process, you decide to ignore, not only to ignore, but to abandon the peace solution. after all the basis of the relations between israel and the palestinians was the idea of land for peace. if the palestinians are getting, even if it is some billion i canly getting a

state, namely the land, without negotiating, then why should there be negotiations anymore? what you are left with will either be mine or yours but the idea of land for peace can not be pursued anymore and without that you lose really the basis for negotiations and for conclusion. then you can ask, you can say there's another reason why israel decided not to go and that is because of course the situation in the middle east has changed and israel has become weaker with the strategic new conditions and the israelis feel to negotiate today might put them under much more pressure than they were in the past. and you will have the fourth position some israelis accept that is, netanyahu, prime minister netanyahu doesn't want to negotiate. there were some israelis, there was a demonstration a week ago, who argue that netanyahu is using different

reasons for negotiations in his heart he doesn't want to negotiate and israel should accept the plo, the palestinian pa initiative and support the creation of a state. again that school of thought is very small. the majority of the israelis believe that the position that the, the government says, namely that you can not reach an agreement without negotiations, particularly not without, particularly not with if you have preconditions. the whole issue of sellments suddenly became a precondition. for 20 years we did negotiate, reach agreements without this precondition. why is it now on the table? it only shows that the palestinians have changed their position and are using the settlements today which they did not for the last 20 years. so what happened last week at the u.n.? well it is clear that both prime minister netanyahu and

president mazen spoke mainly to domestic audiences. that was the first target to talk to the domestic audiences. indeed they were very successful both changed their position dramatically. netanyahu came back home and public opinion polls today are more supportive of him than they were two weeks ago and abu mazen is recognized as this real leader unlike the image that he had before then. so they were successful in doing that. will that bring us closer to peace? i'm not sure because the second outcome of the last we can talks in new york were, widening the gap between the two positions. each one of the two added more elements, more ingredients to the original position that was a month ago, a month earlier. the israelis, everybody were furious with the speech of abu mazen who spoke about

christianity and islam world, or the christian and muslim attachment to the holy land and he didn't mention the jews. he spoke about israel and the entire state of israel, not only the occupied territories but those who were occupied in '67. this, if you compare this speech to speeches earlier, he moved far away from the israelis. and i'm sure some palestinian supporters would say netanyahu did the same. so both sides moved two positions or added more elements that were not there earlier. so definitely we did not come closer. the good story, the good news that the confrontation was prevented. defense minister barack spoke about tsunami at the u.n. there was no tsunami at the u.n. and the, security

council started yesterday discussing in the subcommittee the proposition put forward by the palestinians. might take weeks, might take months, so it will ease the tension. there was the quartet proposition that was put on the table that can be discussed in the future which i guess you all know. so the buildup to a dramatic, to a drama was, seemed to be not as frightening a it is. things went down. so what will happen in the immediate future? well, i don't think that much can happen in the near future. i don't believe that, yonah you asked us where the palestinian state will be established in the near future? not in the next year. i don't think the timetable put the quartet to the sides will be, no one will be able to fulfill that. i believe that, the calls

for the renewal of negotiations, it will be very difficult to do that. if it will be done, it will be done just for public opinion and public diplomacy and not seriously. the palestinians will bring the call to the u.s., to the u.n. general assembly and probably will get a majority there but it will be only symbolic achievement, symbolic act. so i think that, in the next year things will continue as they are, as they were in the last year. the year 2012 will be a transition period. don't forget that you are getting closer and closer to elections in the united states which will play a role. and i don't see much change in the near future unless one thing does happen, and in the middle east that can happen within minutes. remember the last war in

lebanon. if there are, if violence starts, a peaceful palestinian demonstration could very easily turn into a violent demonstration and israeli soldiers would have to fire. and that, the genie will come out of the bottle. or provocation by israeli extreme settlers. so the transformation from violence from a low-key into a drama could be very easily. if that doesn't happen i believe that the next year, there will be more talks and we'll be able to meet here again after the elections in the united states to ask in what way the new american president or the old american president, or the renewed american president can support the process to get forward. thank you. [applause] >> thank you, very much,

yoram, for an israeli view, not official. and, as i said, our mission is to learn the lessons of history and to try to anticipate the future. so as we say, after the elections we'll meet again and we'll see what can be done. our next speaker, dr. dov zakheim, i'm sure is familiar figure, if i may use this term in washington. and he currently is senate adviser to css and senior fellow at cna corporation and previously served as senior vice president of

booz allen hamilton. he is very well-known for many of his contributions. one of them the undersecretary of defense and chief of financial officer of the department of defense. now, obviously has a very long list of accomplishments. as i mentioned, you can read it but what is really important, if look at some of the key challenges to the united states, afghanistan and iraq dealing with some of these issues. i met him i think in the late '70s, early '80s at css. he graduated from columbia university initially and then he studied in london,

london school of economics and received a ph.d actually at oxford university. and has served academically as a professor at a number of institutions including the national war college, columbia, trinity college and so on. i would like to mention only one book, the most recent book that i got. how the bush administration managed reconstruction of afghanistan. just was published several months ago and, obviously dov is a frequent commentator on radio, tv and media in general. dov, please.

>> thanks very much, yonah. it's good to be here. i want to acknowledge my good friend general al gray who is sitting in the front row, who was one of the most dynamic come man daunts the marine corps has ever ad. al and i go back longer than either of us will admit but i am certainly proud i can call him a friend. like yoram, i'm not going to speak for this administration. anybody who knows me will understand why i wouldn't, but i do want to give a sense of at least where the national security community in this town stands and is looking at things and i want to start with the largest possible context and work my way down to the subject of the u.n. and the palestinian application. the largest context frankly is that, we would like to look somewhere other than the middle east.

we have been swamped by the middle east for a decade. we're getting out of iraq. you can debate whether we should have gone in or not. that's irrelevant. we've been there and the real question is, when we get out what will iraq look like? will it be jeffersonian democracy? nobody says that. will it absorb american resources? might. it already has to a huge extent. but we'll have a relationship. we're about to sell them f-16s. so there's a change there. there are other parts of the world that have been literally demanding our attention for quite some time. think about it. for a start there's europe. nobody pays much attention to europe until there's a huge crisis with the e.u. and all of a sudden on top of our economic crisis this could be a massive disaster. so you have our treasury secretary going out and meeting with the eurozone people and trying to give

them advice at the same time as he is trying to deal with a big economic problem back home. so europe's on our agenda. east asia is on our agenda. we do talk about china and think about china and i'm not sure how to relate to china. latin america is increasingly on our agenda, primarily because of brazil but not only because of brazil. when you add that to domestic concerns and you recognize as anybody who has been in government recognizes we have a hard time walking and chewing gum at the same time you begin to realize why the middle east is not a place that we would like to continue to focus on endlessly, say for the next decade as we have for the past decade. there is the context of the middle east itself. i already mentioned iraq. but there's so much more. where's the arab spring headed? i was talking to an arab foreign minister just on sunday who says, well, we're in autumn now. it is still going on. not too many things have been resolved.

even in tunisia which in many ways is the easiest one to resolve. they're still fighting in libya. we don't know whether libya will turn into iraq vintage 2005-2006. we just don't know. yemen. president salah is back. how does that play out? who knows? syria. everybody knows about it. everybody worries about it. not too much talk about it. meanwhile president assad keeps killing his own people. how will that play out? who knows? there are the gcc states tearfied of any upheaval in bahrain. the troops have not left bahrain, the police as they're called. saudi and emeati. police. saudi arabia terrified of yemen. not terror in your classic sense, yonah, but terror in terms of pure fear in the region. israel and egypt. we're talking about israel

and palestinian but what about a situation where after so many years of peace and quiet, the embassy is practically overrun in cairo and who knows when the israeli ambassador will ever come back to egypt, and you know, you can worst case that even though there have been reassurances coming out of cairo to jerusalem. of course turkey. you've seen the latest round. prime minister netanyahu has now shot back at president erdowan. prime minister erred dough juan. -- erdowan. that is not a recipe so you have complications there. even in the middle east the peace process is a just a part of a huge hole. well then, you might say in that case, maybe the peace process isn't all that important to the united states. i said this before in other locations there are certainly are israeli policymakers who think if you wake an american

policymaker up at 2:00 in the morning they will admit to you that the peace process is not that important and they are dead wrong because whatever you might think of the merits of the peace process, it is probably the single highest priority we have in the middle east. whether it should be or not again is immaterial. i believe that is what it is. and that is why general petraeus has said what he said and that's why the former secretary of the defense gates has said what he said because that is the national security community's view. why is it its view? not because they think that a deal between israel which is relatively small and palestinian which is even smaller is going to solve the troubles of a region as yonah pointed out is huge. no, but it will ease them. anything that is easing the difficulties particularly of our allies and particularly of those in the gcc and anything that allows the gcc to work more closely with

israel against iran is something that is a huge priority for us. so, there's another point as well which is not often stated but no one's ever accused me of being a dip prohat and -- diplomat and i don't think i will ever be one. think there is a perception, i know there's a perception in the diplomatic community that the israel over the long-term is getting strategically weaker. it on the contrary because people are pro-israel and don't want to see israel become strategically weaker. there is a sense that it is becoming weaker relative to its neighbors. it's becoming weaker relative to what might happen on the arab street and with arab spring and finally it might become weaker simply because our interests in this country are less congruent with israel's interests than they were 20 years ago. then they were, say, when the oslo treaty was signed.

it's not that they're totally divergent but they're less congruent and that's important as well. now, turning to the palestinian application, of course we're going to veto. the palestinians know it. everybody knows it. we've said it. there is no way we can back off. in fact if we did back off and didn't veto we would destroy our credibility not only with israel but with the arabs. as it is our credibility in the arab world is pretty crummy because they see that we cut a deal with qaddafi, threw him under the bus. we allowed mubarak to be thrown under the bus. whether that is true or not, i don't care, that is the perception in the region. of course we allowed the shah to be thrown under the bus. people in that part of the world, correct me if i'm wrong, sir, have very long memories so they remember. and people are saying well there's a pattern here. and if we throw the israelis under the bus, no one will believe us about anything.

so we're going to have to veto. but, having said that, what does the palestinian objective, what helps the palestinian objective by going through the motions for a veto? i'm not sure, other than prompting negotiations, maybe not the way it's been described but simply getting people to move off the dime. there is a perception in the region and a perception in this town perhaps the administration could have been more forceful and it expresses itself in variety of ways. it is interesting mr. obama has yet to visit israel. if it is such a high priority for him why hasn't he gone there yet? has he done anything like mr. clinton did in terms of shuttle diplomacy or camp david diplomacy? the answer is no. mrs. clinton is now heavily engaged but for a long time she wasn't. there was a series of people who basically had the mandate to negotiate on behalf of the united states

but they weren't senior enough, or as in the case of dennis ross, everybody knew them. so same old-same old. if you're trying to get a deal going, same old-same old doesn't necessarily work. dennis is a very talented fellow but he's been there and done that over and over and over again. so if this prompts a really intensive effort on the part of the united states and the quartet, then all of sudden you're talking about an opportunity. but, at the same time the palestinians have to make sure that they don't make life so complicated that the opportunity is blown. for example, the settlements issue, i've heard abu mazen personally say, well, you know, what do you expect from us? it was the american administration that started the settlement things and that boxed me into a corner. perhaps but at the same time if you focus on, you know, settlements to the point where somebody just had a baby and wants to build an extra bedroom and that will hold up peace in the middle

east that's nuts. it's just stupid. if you want to say don't build major settlements, don't start anymore outposts there would be huge sympathy in this country for that but don't build another bedroom? will that turn the tide in the middle east? give me a break. another complication, you can't go and say well once we have an independent palestinian jews won't be able to live there because that sets off all kinds of emotions. because last people said that were the nazis. and if you want to get american support to push a peace deal and to put some pressure on the israelis you don't say stuff like that but palestinian officials have. not very smart. what to do about hamas? as long as hamas they don't want to recognize israel you're giving the israelis an excuse not to cut a deal. the palestinians have to come up with some kind of formula how they're going to deal with hamas in a wayñi it

doesn't railroad the kind of deal they really want. obviously that is a pa challenge. finally, assuming which i think is a safe assumption that things don't get past the security council so they go to the general assembly. if they want to get a negotiation based on having some kind of status that's granted to them by the general assembly and, you know, it is difficult to argue against that, will that include being able to sue the israelis in the international criminal court and international court of justice? because you can't expect people to negotiate with you if you're branding them criminals. that's not going to work. it didn't work for the israelis when they branded the palestinians criminals. it will not work the other way either. there are certain challenges for the palestinians as well just like there are for the israelis. as for the timing of the quartet. you could argue that this will never happen. it is fanciful. if you argue you have the quartet on the same page, remember, to get the e.u. on the same page was pretty phenomenal. i think if you speak to e.u. foreign ministers as i have they're pretty proud of the

fact that they pulled that one off. you now have an awful lot of very powerful, economically powerful countries pulling in the same direction plus the russians may not be as economically powerful but still very influential and trying to get something to go in a year. will it happen in a year? i think mr. obama has a tremendous incentive to make it happen in a year. he is clearly appealing to his own base. he considers the jewish community in this country part of his base and the latest polls that have been taken show that by 48 to 45% american jews think obama is not doing a good job. when was the last time you saw a poll like that? if i were sitting in the white house advising the president i would be nervous. so he has an incentive actually to make this quartet thing work and might. i don't know. but, if it does, then he has to deal with the other side which is the congress. and of course, everybody talks about congress as if we republicans dominated both houses.

we actually don't. we only have one house right now. the house of representatives but it's clear that the sympathy for mr. netanyahu and the support for israel in the congress is exceedingly strong. so the deal would have to be one that israel can live with. otherwise you wind up with, not only divided government but with mix signals to the region. and historically when the united states sends mixed signals to the region it doesn't work out well. so, there are quite a few challenges here. i'm not going to do what professor peri did or yonah and make prediction what is will happen. can better things happen? i think they can. there are lots of pressures in that direction. can people make mistakes along the way? absolutely. [applause] >> of all the speakers provoke a lot of rigor and a lot of issues and questions

we'll come back to it but before we would like to invite ambassador ed marks to expound a little bit on the concerns, the interests of the international community. it was already referred to whether it's the e.u. obviously the u.n., nato and some of the other organizations and fundamentally is there a role for diplomacy in this particular issue? and how do you see the steps in the coming months and years? >> one more word. again on a personal level as well as professionally it is indeed a pleasure and honor

and all that, i think in terms of the bridges between the academic community and government goes all the way back and we were able to mobilize you to participate in many, many of the activities over the years and particularly when you were the deputy ambassador at-large at the department of state on counterterrorism issues. and since you retired obviously we try to bring you back into the fold. it's all yours. >> thank you, yonah, as always. very generous. first i'd like to note for those who have managed to look at the bios, you may have noticed my bio is extremely short compared to my colleagues. there are two reasons for that. one, i have been traveling and i forgot to send them

even my puffed up bio. other reason is my colleagues obviously have much more richer and irdistinguished background than i do. i want to note the brevity of my bio, i don't want anybody to jump to the conclusion which i was with the cia and not with the foreign service. not true. last week palestinian president mahmoud abbas formally asked the united nations to accept palestinian as a member state. in doing so he sort of speak, returned to the scene of the crime as in 1947 when britain was the dominant power in palestine. both arabs and jews contested, were opposed to british rule and arabs and jews struggled for dominance in the region and the country. the u.n. resolution of november 29, 1947 was intended to provide a peaceful change to that situation with the

redistribution of power by terminating british control on the one hand and partitioning the territory between arabs and jews on the other. that event was clearly in a historic sense a culmination of long-term changes going on in the world since the treaties. particularly the spread of nationalism, the concept of nationalism which had grown and, well beyond the original participants in the treaties. in the 19th century nationalism was a major cause of conflict in the international world, caused many numerous conflicts between self-identified groups, nationalities, and foreign powers. by the end of world war i the national prints of what pretty much has been accepted by everybody was surely enshrined in the covenant of the league of nations and with that the dissolution of the european colonial powers began although it took another generation or two. . .

>> any recommendation for change acceptable to all parties is essentially superfluous. i mean, it will happen. however, a recommendation by one of the parties concerned that it requires enforcement.

in the u.n. system means action by the security council. if it is willing and if it is able. the situation was quite accurately described in 1945, right after the creation of the u.n. by no other than john foster dulles who noted these two characteristics, quote, the general assembly is charged, among other things, to recommend measures for the peaceful adjustment of any situation likely to impart -- to impact the general welfare or friendly relations among nations. they know added the role of security council is negative. it's to stop the nations for public brawling. however, the 47 ga recommendation not being acceptable one of the parties and the security council proving unable or unwilling to stop the recommendations in other words to stop the public brawling we have had decades of public

conflict ever since. all during this period, many outsiders, many other countries have attempted to assist the finding a solution to the conflict, most notably the united states. but without much success as has been common in detail by my colleagues here. and the palestinians have now decided to seek a new intermediary and have gone back to the united nations. in doing so, they've clearly decided that at least at this point in time, the israeli-palestine conflict cannot be resolved except directly by the two protagonists. excuse me, cannot be resolved directly by the two protagonists. this despite the fact that for some time now the two-state solution has become the accepted solution in principle. i emphasize in principle for the two primary parties. despite this general agreement principle, the agreement has become the prominent example

today in the world in a situation where the devil indeed is in the details. but the new initiative in a sense can only return the situation to the post-1947 era in the sense that it will require a security council resolution and it's clear that if nothing else the united states will veto the resolution. therefore, even a decision in the general assembly will once again produce a recommendation challenging one of the parties without enforcement by the other party or stakeholder. the alternatives remain what they have been. in other words, for decades either a negotiated settlement between the two or continued conflict. i will not attempt to make any prediction to that which would be. that's already been done better and more auauthoritatively with my colleagues on the table. let me talk a little bit about the other players in this

situation because if we don't -- either we get a negotiated settlement or others will continue to assist, whether that is meaningful or not is an interesting question. the history of outside involvement has not been encouraging. foremost along with the united states and the ambassador in 1983 made a description of that situation i think it's probably still valid. he said, quote, there's nothing in the international system quite similar to the relationship between the united states and israel. given the enormous disparity of power and influence between the two partners. and then he went on to say, from the moment of its active entry in the domain of middle eastern politics the united states carried on its shoulders a consciousness of responsibility for the outcome of this ins enterprise. i think that description remains a century valid. i'm not sure everybody here would agree although israel's economic and military success over the years has somewhat

diminished the disparity between the two in this situation. and consequently increase israel's sense of independent action. at the same time, there have been two developments that affect the united states' role in this. one, the end of the cold war produced what of an increase in u.s. global influence, u.s. global role. at the same time, the increasingly partisan character of the american domestic foreign dialog -- dialog on foreign affairs has narrowed the scope of american administrations to act. public positions taken by all the republican candidates for president have made it quite clear that an unequivocal support of the presidency of the israel is for any government. despite the presence of j street and uneasiest among american juice the unequivocal opposition to any significant american initiative in this situation is now clear led by most american

jews, the republican opposition and the evangelical groups who have made support for israel almost a matter of faith. as a result, president obama's effort to revive the peace process by an independent initiative quickly became a dead vetter and he's reached a state where he promised to veto regardless of the situation, regardless of conditions. and the initiative and the security council. he made a point, in fact, of stating in his speech that peace between the israelis and the palestinians was only possible with direct negotiations, not by any u.n. declarations. so even the u.s. now officially takes the position that only direct negotiations can resolve the problem and all outsiders includes the united states are essentially note takers. at the same time we have been involved in the quartet in the hope that it might do something. but the response of the palestinian initiative the quartet initiative to resolve to

draft a compromise which might avoid the conflict, the veto in the security council has been rejected by mr. abbas and which way and whether even the future of the quartet will exist is an interesting proposition with the vote coming because a vote in the security council might well break up the quartet. please excuse me if i appear unduly cynical but most countries in the middle east with regard to the situation would really just prefer that it went away. it varies, of course, government, government, leader to leader but since the dramatic wars of some decades ago, the majorities are limiting themselves to a century pro for forma, egypt had form peace treaties with israel. the saudis preach among other things support for the two-state solutions and the gulf state say

as little as possible as rare as possible. the two possible game changers in the area, of course, are the two new emerging regional powers, iran and turkey. it's interesting to note that neither are arab. nevertheless, the changes they are going through have obvious and significant implications. one of the other interesting aspect of this problem is that both were governments who for long periods conducted very close and intimate relations with israel. iran under the shah conducted a very, very close bilateral relationship including military relations, although quickly abandoned with the islamic revolution more than 30 years ago. the current iranian reach for regional predominance have caused them to adopt the palestinian cause quite openly and quite dramatically. which combined with the allegationed nuclear weapons program has made them the top -- top of the israeli worry list.

and the issue does not appear to focus on a two-state resolution. it's doubtful that they would support that to any degree. the shift in turkish policy and relations that were recent and dramatic arising with the events to the turkish flotilla trying to ram the gaze blockade. from my point of view it's difficult which was cause and which was effect. in the bid for middle east relationship, the turkish prime minister has suggested and argued there's a new change of spirit in the middle east and turkey plans to play a prominent role. at this moment it's difficult to tell how far turkey will go both in true of this and its relations with israel. their role over the years has not been very brilliant. spot. ers of israel they have moved to a much more nuanced positions. particularly the reversal role

as the palestinians have increasingly been seen by many as the underdog referring to the sideways of the era of movies like exodus. a widespread shift in public perception is certainly produced great changes in public and governmental attitudes. on the other hand, the europeans have been supportive of the so-called quartet. we'll see how it turns out. mentioning the cartel brings up the subject of russia. at best minor players still sitting at the table because of its former global glories but it's difficult to see its actions are much more mischievous dabbling with no intent or ability to play a more active or constructive role. the important question however has been the role of nonstate actors. over the years, the question has become increasing of interest of many of the united states actors including the group of humanitarian ngos on one hand and political movements in the

middle east on the other. humanitarian ngos have played a role in the change of attitude towards the relationship with the israelis and the palestinians particularly in fostering the increasing view of the palestinians as the underdog. more dramatic has been the role of nonstate political organizations willing to use violence, in other words, the terrorist groups. here we have two-state varieties, the palestinian group such as hamas whose the use of violence as essential to their mission, their objective which is the elimination of israel. others such as hezbollah and al-qaeda have taken on the palestinian causes really as conscious political decisions to the degree the position is determined by honest sympathy and real concern or by deliberate political calculation, i will leave to others to judge. meanwhile, the main group

comprised of the palestinian authority is a two-state authority and largely abandoned by tactics. however to achieve a political settlement has been noted to return to violence even by those groups. the rest of the world are basically onlookers. no real role. lots of articles near papers, occasional speeches in the u.n. and they're basically on and play no significant role. of course, we get to actual votes in the u.n., where votes by all these other countries, particularly, if they produce a significant majority in the g8 for the statehood measure will, obviously, have some effect on members of the security council world politics being what they are. but there's one other aspect of the changing attitude in the world which is causing serious concern in israel and among its supporters and should to all of us. international pressure on israel to end the occupation grows daily. and in the minds of some this is

tied to questioning the very existence of israel itself. a growing concern for this trend, sometimes called the delegitimatization campaign is stowering the mood of the public and the ability of the israeli's government to negotiate. while most people in governments around the world continue to make a clear distinction between support for the palestinian -- a palestinian state and israel's right to exist, many in israel, the people who someone as said in a different context have too much history and too much of that tragic do not see it that way. and while it is true that israel often appears to be paranoid, it is useful to remember that even paranoids can have enemies. and at the conclusion, i would like to make the unremarkable comment while most onlookers lack of power to determine a resolve or facilitate seriously this issue, nevertheless can

exert influence to complicate it for both parties. neither case, whether intended or not the palestinian initiative at the u.n. and the resulting israeli and american response have made it closer that the issue is now clearly and solely in the hands of the two parties. perhaps it was always so. thank you. [applause] >> thank you. thank you very much, ed. and i may note that one article that was published in the partnership is to nato's response to terrorism in other words, nato the original security provider is moving as we can see to a global security provider and in libya and so forth.

at any rate, the speakers raise some very critical, very important issues both historical and contemporary and we would like to develop some sort of discussion. before we do, we have to give the podium to the general, to kick off this discussion. genera general? >> i think they had enough talk and get into this phase so why don't we open it up for questions. yes. hi, please. yeah, you. [inaudible]

>> the palestinians and the israelis no one is the economic -- [inaudible] >> yet, as the two sides view there are a -- [inaudible] >> palestinian investment with economic integration and -- [inaudible] >> is it possible that we may have some kind of economic integration as a prelude to some kind of political solution? thank you. >> the political decisions and keep hoping that the economics will make people fat and happy. i didn't say what you were but i'm just saying that's the dream for the people on the right, in particular. look, there's certainly no doubt

that the west bank is doing exceedingly well with gross domestic product growth that matches anybody in the world right now. coming off a low base but still very, very impressive. you know, that's like china. i mean, it's very impressive, i agree. i think in part that also may have motivated abu mazza because on the one hand there's this political impulse that is almost divorced from economic reality. if you think about hamas' behavior after the pullout from gaza where they destroyed all sorts of economic infrastructure that would have created a much more comfortable life for their own people and they did it for political reason. does so sometimes political and economics work together and sometimes they operate in cross-purposes and they may well to some extent there will be a

willingness to take economic risk, that is to say, create discord which will harm the palestinian economic economy on the west bank in order to obtain political objectives. it's just the reality. history's proved that over and over again. remember, britain and germany were the biggest trading partners since world war i and that didn't seem to stop them. >> the idea of the prime minister fayed was to build a new state from the bottom. and people do not see the difference between the economic field and the political field or institutionalization of the political process on the other hand and the economic development on the other. he gained a fantastic way by building institutions so the

state-building process was done in a very careful and thorough and successful way. i'm not so sure about the economics, particularly, that the huge economic development on the west bank is due to full investment. not so much investment as for money that flows into the region. so i won't build on the economic development on the west bank to become -- to become a state on the way while the political institutions are really stronger and stronger. >> any other comments from the panel? >> anyone else? >> just a footnote, i think with the arab spring and the instability, the uncertainty about the future, i think there is a coming around between israel and egypt and jordan and turkey, and that is tourism

security, meaning many are very much interested in making sure that this particular sector of the economy is of valuable. and the only way to do that is to improve security. so i think this give us the parties an opportunity to cooperate in this very specific area. >> i think the jordanian, and the palestinian and the israeli is so intertwined that there is no imagining of having a solution without the three countries, of course, you know, you can add egypt and the turkey later but there has to be some kind of economic integration still because there is so much close together now. you have as i said, you know, palestinian money and israel

and, you know, israeli money in the west bank, jordanian money is used in the west bank. there is trade between the jordan and the west bank so it has to be integrated at one point properly, in a proper manner and that's why there is a vision and jordan's peace treaty to have these kind of projects where the economy can be integrated in these kind of projects. thank you. >> yes. >> use that microphone and introduce yourself. >> my name is albert. i have a question for the panel. last week i attended a meeting at the american university on the same topic and at that meeting retired general danny surprised the you know when he was asked a question. is this palestinian bid in the u.n. should succeed how you will

that increase the dangers of the security risk of israel? and his answer was that israeli intelligence and the pa security officials have been cooperating for many years through difficult and difficult times and he didn't think that would change at all. i wondered if you shared his optimism? >> please. >> the cooperation between the palestinian authority and israel, particularly, on the security fields was very, very close and undeveloped until last week. it might occur in the future both because regimes do not have an interesting for a wave of violence. just one example. a week ago before -- a week before the discussions at the u.n., the palestinian authorities bought from israel a

new nonlethal weapon. the israeli authorities gave it to them open handed. 'cause the interest of both sides was to prevent violence. both understood that violence was not work for either the interest of the palestinian authority nor for israel. i guess that will continue. this is what general rothchild referred to. that if things deteriorate it could have definitely a very negative impact on the relationship between israel and the palestinian authority. >> one thing that could undermine the situation -- i agree with what professor perry just said. if congress cuts off aid, i think it will be a serious mistake. and what it will do is reverse the kind of economic growth that we've just been talking about. so instead of young men going to work, they will have other things to do which is to riot, cause violence, provoke

reactions and then you could see a downward spiral. i know strong people feel on the hill about the linkage between aid and what the palestinians are doing in the u.n., but, frankly, if they were to react in a knee-jerk way the consequences could be very sever severe. >> in the very important situation you outlined, it will be key to the israeli reaction. what we diplomats call the shape of the table credential question. when the two postafter the event happens and they meet and the palestinians show up with name plates and cards that say colonel so-and-so republic of palestine, do the israelis accept that or reject it? it will all depend in this case the palestinians will be the demanders and it will be up to

the israeli first of all by accepting the credentials of people, credentials of someone who pretend to be the representatives of an established state. >> yeah, in the back. there you go. >> i'm an advisor to aipac. dov said for the palestinians to go to the icj, it would actually be counterproductive because israelis will not negotiate with people who call them criminals and actually mahmoud abbas in his may op-ed said that they can go to the icj and we would like to hear if possible mahmoud and your comment on that sustained development of abbas. >> well, with regard to the icj

they don't really need to be a state to go to the icj. i mean, in 2004, the general assembly also, you know, sent a question about the legality of building of a wall and the occupied palestinian territory and, you know, we all know what's happened. and the decision was in favor for the palestinians. and that the world is a lack of measure which undermines the elimination and the future prospects of peace in the middle east. but they don't really need that. with regard to the icc, this is a complicated matter. it's not the issue. from a political perspective they have to styled on this -- they have to proceed forward. and the icj is intended to

protect the rights of people. you are a human being and your rights are being violated during conflict or during peace of crimes against humanity. it's to protect you as an individual from any person who violates your rights. and, you know, his or her statehood. that person goes unpunished. so i cannot speak on behalf of the palestinians with regard to the icc but it is a matter for them to decide in taking everything into account, basically, thank you. >> those are very many opinions on every issue in israel. on some issues there's almost unanimity and one of them is the anti-israel bias of the u.n. general assembly or positions

like the icc. it used to be said that if there would be a motion to the u.n., that it's split, there would be 90 votes for that resolution if it comes from any of the arab states. and the same applies to the icc. the israelis do not see an icc an objective, moral institution but a playground for political interests. and there were very many cases where the israelis felt it was proven so. and, therefore, the near vision or the mere pronunciation of mahmoud abbas that they will use these means that it's being used by israel is a hint we're not going to negotiate with serious partners but we are going to outflank you in fields where you're very weak. >> yes, right here.

>> repeatedly you hear the statement, this is the last chance for a two-state solution. what does that mean? and isn't the two-state solution the only alternative in the long run? what does that mean? >> it's a wonderful question. both politically and theoretically. and the political powers -- there was a book written 15 years ago in which it looked into the question of when does -- when does a state can withdraw from another territory that it occupies? and when it cannot do it anymore? and it took some cases, the french in algeria, the british in ireland and israel in the west bank and he has a very interesting theoretical model where you reach a stage where

you cannot withdraw anymore. and the new territory is being really squeezed and become a part of a metropolitan. when he wrote the book he was sure that israel would be able to withdraw from the territories. after 15, 17 years after he wrote this book, now he believes it will be much more difficult for israel to do so. namely, that israel has reached the stage of no return. it will be very difficult according to him to withdraw from the territories. i beg to differ. i believe that if there is a political will by the partners, a two-state solution can be achieved. after all we know the parameters that were put on the table by president clinton and reiterated by the different negotiators. the last ones were prime minister olmert and president abu maze.

the question is whether it will be 2% more here than there. i think the major issue is not the territories. it's the political will. >> despite what i said in my prepared remarks about the essential irrelevance and i would like to suggest given the question that this situation offered an opportunity for an outsider and it was the united states. there's a phrase in this about never let a good crisis go to waste. what if shortly after the palestinians announced their decision of going to the u.n., the united states had tabled the resolution and the security calling for palestinian statehood on the basis of the details of the last accord that was almost signed but never. what if put that resolution on

the table in the security counsel? doug? >> well, i guess -- i also see it as an and i agree with professor perry, until the security council has to vote, the opportunity is still there. some wag said that the real mistake the israelis made when abu mazen put his proposal on the state and they said great, we support you and he would have withdrawn it. but seriously, the opportunity exists and in terms of the settlers, the more outposts of settlers and the more settlements become cities. that's what they really are. they're not settlements. they're cities. they're as big as american small towns and sometimes even bigger. the parameters of the last camp

david tried and that's why i said on my remarks that the palestinians are focusing on the wrong thing. by focusing on all settlements on every bit of construction, which, frankly, the administration opened the door for them to do, they've rendered it impossible for netanyahu to follow up that way because again if somebody appearance baby they want to build a bedroom, all of a sudden they're creating new settlements. on the other hand, if they were to say we want a commitment no outposts at all, no new outposts, no extension territorially. that's a different story and if that were to happen today, i think a deal would be impossible in terms of land exchanges. >> yes, please. >> i think it's a very important question and i would like to answer it. the more settlements that are being built and since the oslo accords, this number has tripled

and quadrupled. and in the waiving and without no territorial same time to build the state. it has to have elements for it to become a state. if you don't have that, there will be no state. you don't have a state, then it is one-state solution. and it is israel. and we would not take more refugees in jordan. and jordan is jordan. but what happens then? you have within the next few years, the number in historic palestine of jews and arabs will be the same. so what are we going to do? are we going to have a arab

state or are we going to have a jewish state or a democratic state. that's the question israel has. and time is not on israel's side. >> yes, please. >> my name is george. [inaudible] >> you have abbas to the united nations. [inaudible] >> which i assume is the basis what the palestinians want for a state. he said that he needs to hear just a number of the israelis before he can sit down with them -- [inaudible] >> 1967.

that's what he wants to do. he just said i just want to hear one sentence which is two states for two people. and we would sit down. now, is this just -- [inaudible] >> or is this just a show? and my question is, when the palestinians want a state, the state is associated historically with the territory. or they have to have some sort of -- [inaudible] >> to the international communit community. >> i'm not sure about this. i haven't heard this issue before. but again, you know, the parameters for a settlement are well-known. and they are very similar to that, that is what was proposed by president clinton in 2000. i don't think it will change much from that.

everybody knows how the solution is going to be. people should not say, well, if i delay for a day or two or 10, the negotiations, that i will gain more. it won't happen. you'll not. you'll be shooting yourself in the foot as i was saying before. >> anyone else? yeah, please. i just wanted you ask you general that no one discovered in jerusalem -- [inaudible] >> regarding the whole process in the settlements that can be part of the city. and also for mr. mahmoud, you were talking earlier that in the territory -- [inaudible] >> well, the general understanding i have is that gaza would also be included in a potential palestinian state but yet there's two separate

governments right now so how would that work, especially, in a current situation. [inaudible] >> one palestinian state or one palestinian state with divided government and no one really knows -- there is no true sovereignty by top of the authority by abbas or the hamas government, how would that work? >> that's another thing which is none of a lateral measure taken by mr. sharon at that time to withdraw without an agreement and that was the consequence of it. mr. sharon said no agreement we're drawing and that's it. that's a big problem and that's why you have a negotiated situation. but you're absolutely right. and this is a big problem and since hamas took over gaza, this is probably -- in my opinion,

the thorniest issue to the arab-israeli conflict. now, that doesn't mean you can't negotiate -- you can't negotiate. you have to find a basis for a solution and the basis has already -- it has been created. you're going to start from that and then you worry about gaza and let's see first if we can have some framework for an agreement that we can work on, and then without giving too much details on this issue, gaza will eventually will be resolved. if we have a framework of an agreement. >> one has to look at the negotiations that took place already in the late 1980s. we're not starting to negotiate today. the quartet asked both sides to put forward -- >> within the next three months. >> we know what the positions are. they were negotiated.

they were very close to an agreement. several times. so some of the questions are really irrelevant. the question of the borders are almost -- i would dare say irrelevant. we know that israel is going to give back if there is an agreement between '95 to 98% of the territories. most of the settlers will remain at 2 or 3%. so neither the issue of the borders nor the issue of the settlements or the israeli settlers is a real problem. without that, there would be no agreement. there are some issues that were left open. here i can be less sure but i believe that intelligent diplomats or politicians know the answer as well. and that includes both issues, jerusalem, and the refugees. israel will have to give up its demand that there will be no

palestinians capitals in jerusalem, palestinians will have to give up their demand that refugees will go back to israel. this will be the historical compromise. without that, there will be no solution. what is left are new issues that have been raised lately and they have to be solved. for example, the security issue. and indeed the israelis were asked now to present the security demands because with it changes in the middle east, what will the future of the jordan be? in the past they were more lenient. because if they will be changing jordan, if the american influence in iraq will diminish, attacking israel from the east it is much more likely today than it was 10 years ago so the israeli will demand much -- probably will demand a permanent position of the israeli military of the jordan river something of which the palestinians will not agree and there will be some

more elements that will not be discussed. we are wasting our time talking about this. [laughter] >> anybody else? >> i have one question for professor perry and ambassador marks. the first question is for you, professor. you say the issue is political will. the political will of the netanyahu administration -- i'd be curious for your true observations are. and the question ambassador marks is, others have said that the united states could have in a sense welcomed this opportunity to go to the security council and in a sense not be automatically negative to the palestinian initiative. do you think that's realistic given the issue of political will in the netanyahu administration? and our relationship with it? >> okay. like i said, here's the

opportunity and understood the conditions and not putting forward a resolution to the palestinian statehood putting one which encapsulated the last negotiated agreement in all details before it was rejected. now there were still a couple of points that weren't accepted on that. so what? put it before the security council and then let's negotiate in the security council with the united states, remember, still holding a veto if it all goes awry, if it gets really out of hand, then you forced the two parties in the security council to negotiate that a little bit of difference, which is significant. if it doesn't work, it doesn't work. but you completely preempt the palestinian request for a statehood without these defined questions which seems to bother everybody. you put on the question, statehood under these conditions. you guys want it?

negotiate it. >> this is one of the most difficult questions for every -- any israeli analyst. what does netanyahu -- what does he feel very deeply in his heart or in his head? and that is because netanyahu -- netanyahu's political -- political makeup is complicated. on one hand he's the son of his father. he's the husband of his wife. and he's the father of his son. all three will never give back the west bank for the palestinians to make peace with. on the other hand there's a very clear shrewd politician who understands world reality and understands the constrains on israel and he understands that there's a gap between the beliefs, dreams and reality and he's very pragmatic. which part of his personality will be stronger depends on the

political gains. there's a reason why the president peres, for example, changed his position in the last three years. and when netanyahu met with president peres he told him i'm going to make peace and you'll be surprised how much i'm willing to compromise and other times peres says it doesn't seem he will do so. i believe at the end of the day it will not be what his in his heart but what will be in his mind. and the way he reads the international situation, the forces outside israel, forces within israel -- i'll give you just one example. the labour party, i'm not a great fan of the labour party anymore but they won a fantastic election last week when they elected a new leader. the public opinion polls gave the party in the next election 22 seats instead of the less than 10 they have today. if there will be a change next year and a half, the next elections in israel, it won't be

a major change. but you need only three, four seats to move from the right to the left. that will enable netanyahu who will probably be re-elected to establish a different coalition. if he has a different coalition not with the extreme parties on the right but with some parties on the left, it might be easier for him to move towards his compromise. the same applies for pressure from the outside world. so you cannot -- no one can give you an answer because there's no answer. it depends what will be the nature of the game in the futur future. >> another subject which i don't know much, i don't know anything about netanyahu and what he's like but there are two things that have happened in israel the last 20 years or so which influenced him. these are an elected leader in a democracy. both of these developments show

it still works that's the rule of unintended consequences. evangelical community welcome back the israeli government and population. given the perspective of the evangelical community, apparently hired right fairly conservatives have pushed the israeli body politics to the right. the arrival in israel about a million russian citizens allegedly jewish who have turned out to be soviet russian types in terms of their political views and their social attitudes has also significantly shifted the center of balance of the israeli politics -- the israeli polity to the right. now, these have shifted and changed perspective of the israeli public position and netanyahu is after all an elected leader. i think i'm going to get some comment on it. [inaudible] >> don't forget that in the end young voters, the millenniumists

that gave obama the victory, and it was 10 years after the breakdown of the oslo agreement in the year 2000. with suicidal attacks in israel where they cannot go to the pubs to drink because there's bums there because they can't go to the university because there's bums on buses. where israel withdrew from south lebanon and they continued to shell israeli cities. when they saw prime minister sharon withdrew from gaza and yet hezbollah continue -- the hamas continue to attack civilians. so these million people moved dramatically to the right and it would be a miracle had they not done so. watching what happened 10 years in israel. >> we have time for one more answer. yeah. right back here.

>> my question is this, given that recently in israel and with the spirit of the arab spring, do you think this failure by the recent attempt by palestine to be a state will result in even more violence and perhaps even a third palestinian de-fatah? do you think many leaders are considering that and that's playing a role in the international discussion? >> well, it's not about the issue of israel because basically going to the security council at the u.n. there's many alternatives. they might eventually it got. they have procedure under the united for peace resolution where they can go straight to the general assembly on this. or they can be like the vatican,

i think that is under discussion at the u.n. that might happen. i frankly think it depends on the israelis and the palestinians and how much they try to cooperate and trying to diffuse any kind of tension that will ensue in this regard. security cooperation has been going well. that's why there is no major incident in the past few years coming from the west bank and that's very important. basically that's the point. and that's a short answer. >> okay. well, i want to -- on behalf of mike and professor alexander i want to thank our distinguished panel just for a super-series of presentations and responses to the questions. and i'll wrap it up -- i'll tell you a little story. it has nothing to do with israel or palestine, but it has a little bit to do with negotiations. when we were -- when we were

discussing things with the former soviet union and the warsaw pact and the strategic arms reductions and what led to the so-called cold war, i remember we hosted general madoff who was the chairman of the joint chiefs of staff for the soviet union and the most influential military person in the soviet union. when he -- when he threw his weight behind mr. gorbachev, that made the difference. and so we were hosting him at camp lejeune and amongst other things he said -- he asked one of our corporals -- he said, what do you think about we russians being here and what do you think about that? and why do you think we're here? and the corporal said -- looked him in the eye and said, i don't know why you're here, marshal, but it sounds like a pretty good idea. and what the corporal meant, of

course, is that you got -- it's far better to talk and negotiate than it is running around saying you're going to do this and do that. you're never going to get anywhere with a ladder. you may or may not be successful with the former but it's worth a hell of a try and it's obvious to me that this is a very complex issue, of course, as we all know. but i personally think that it has to be solved through negotiations by the israelis and the palestinians in order to work. i don't see any other way to do it. and the worst thing of all would be to have third and fourth parties representing them. so thank you all very much. [applause]

[inaudible conversations] >> the united states security council to consider palestinian's request for statehood and full membership. the council president referred the request to the admissions committee without objection. following the meeting both the israeli and the palestinian ambassadors reacted to the day's events. these comments run about 20 minutes. [speaking in native tongue] >> translator: i declare open

the 6,624th meeting of security council. the provisional agenda for this meeting is admission of new members. the agenda is adopted. the security council will now begin its consideration of item 2 on its agenda. in a letter, dated the 23rd of september, 2011, and addressed to the secretary-general, the application the request by palestine to be admitted to the united nations by its president. that letter has been circulated by attachment by the securitiem in document nightclub s

2011/592. under the provisions of rule 59 of the provisional rules of procedure of the security council. unless the council decides otherwise, an application for member shall be referred by the president of the council to the committee of the admission of new members. accordingly, unless i hear a proposal to the contrary, i defer the application of palestine to the committee on the admission of new members for examination and reports on its outcomes. as i hear, no objection, it is so decided.

i would propose that the committee on the admission of new members meet on friday, december 30th, 2011, in room 1 in the northland building to consider the application for palestine for membership in the united nations. the meeting's adjourned. [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> good morning, everyone. as we have witnessed 2 minutes ago, the security council in an official open meeting decided on two things, one, they decided to include the application of the

state of palestine for admission on the agenda of the security council. that was adopted unanimously. and secondly, as with the decision suggested the proposal suggested by the president of the security council to send the application to the appropriate committee to begin the process of deliberating on our application, and that also was adopted unanimously and on friday that committee composed of the 15 members of the security council at the level of ambassadors will meet to start the process of discussing our application. we are grateful for the presidential of the security council for moving decisively and clearly on this -- on our application. and we are grateful for the

members of the security council for approving unanimously to send the application to the appropriate committee and to begin the process of the consideration of our application. as you see, the process is moving forward step-by-step. and we hope that the security council to shoulder its responsibility and to approve our application and to send a recommendation to the general assembly for the admission of palestine to the united nations. let me also add based on the request for palestine the caucus in the security council met yesterday and we had a very constructive discussion dealing with many of the details as we move forward with the consideration of our application, and we decided to

meet on a weekly basis and maybe we will meet more often than on weekly basis as the situation requires. as you see, now we are moving step-by-step. friday we submitted our application. discussion took place in the security council and a meeting took place on monday. another one this morning and wednesday and another one will take place on friday. and we hope that this exercise not to take too long before we see positive action by the security council in accepting our application. ..

[speaking in native tongue] [speaking in native tongue] [speaking in native tongue] [speaking in native tongue]

[speaking in native tongue] speak[speaking in native tongue] [speaking in native tongue] [speaking in native tongue]

>> ambassador, has there been any -- >> i think at this level, that is sufficient, and we will talk, you know, more. >> [inaudible] >> our leadership is meeting in ramallah today, and when they announce their position, you will know it. thank you. >> [inaudible] israeli settlement bill, the new settlements that were approved. >> i think this offensive and proadvantagetive action -- provocative action, illegal action by israel in announcing yesterday the construction of 1,100 units in east jerusalem is a clear answer by the israeli government to the quartet, the negotiation and to the refusal of abiding by the global consensus on the fact that settlements are illegal obstacles to peace, and they

these to be stopped. they gave 1,100 answers of saying no to the effort of the international community of opening doors for negotiation, and i think that this speaks clearly that israel is not interested in negotiating with us in spite of the fact that they say they'd like to do so. but their action speaks louder than what they say verbally, and they are not interested in peace. and negotiation. those who are interested in peace and negotiation would abide by their obligation under the road map which calls for freeze of settlement, and they would abide by international law which says that settlements are illegal. this action is an offensive action, and challenging the international community by not listening to them including the quartet. thank you very much. >> [inaudible] security council?

>> [inaudible] >> first of all, good morning to everyone. i'd like to say not just good morning, but -- [speaking in native tongue] it's the eve of israel's new year, and i think it's exactly the right time to congratulate and look forward for a better year, a year where we will be able to sit down in direct negotiations and talk about peace and achieving two states for two people. i would like to emphasize that a palestinian state, a real palestinian state, a viable palestinian state will not be achieved in imposing things from the outside, but only from direct negotiations. prime minister netanyahu in this building called out and said i would like to meet you in this building here in this city.

back in jerusalem, the distance between ramallah and jerusalem is much shorter than the distance here to the united nations. let's go back without shortcuts to direct negotiations. that's the only way one can really move forward to a substantial peace for both sides. no shortcuts. we had peace we egypt. it wasn't imposed, we negotiated. with jordan, the same thing. it wasn't imposed from the outside, it was negotiated. peace by definition is an agreement of both sides that will be achieved in negotiations. there are no shortcuts to that. is it easy? the answer is, no. is it frustrating? yes. do we have sleepless nights? yes. at the end of the day, that's the only way forward.

and my message to you is, especially today, we've started a process, and the process at the end of the day should be between palestinians and israelis talking about everything without any preconditions in kreme and in ramallah -- jerusalem and in ramallah, and i wish you all a good year and a healthy year. thank you. [inaudible conversations] >> what's your view of the quartet, or what is your government's view? they haven't -- we haven't heard a reaction to the quartet proposal. >> the cabinet just sat today. there isn't a question, there isn't an answer yet on the quartet statement. but in general, the prime minister was very, very clear. the quartet statement as you see it was calling on both sides to return to direct negotiations, it was a clear thing saying there is no shortcuts. and we are ready, and i think able, today.

and even today and in the next days to sit down and negotiate everything that is on the table directly with the palestinians. >> mr. ambassador, that quartet statement said specifically, called on both sides to refrain from provocative action. i'll ask you the same question i just asked the palestinian ambassador. what do you think the effect will be of yesterday's announcement by the israeli government to approve over a thousand new settlements? >> first, it's in jerusalem, and jerusalem is something that we will negotiate, and the first things that we will sit with the palestinians, we'll negotiate about everything without any preconditions. ladies and gentlemen, jerusalem -- and i'd like to stress that -- is the capital of the jewish people. this is our heart. jerusalem, if i may say so, was the capital of the jewish people when london was still a swamp. so everything is on the table,

everything is negotiation -- negotiable, but don't -- i hear the palestinians using every pretext in order to find a reason not to go into negotiations. and if you zoom back for a second, all we want and i think everything in the world we want in both palestinians and israelis would want is for both sides to sit down and negotiate everything. nothing is off the table. [inaudible conversations] >> can i ask you one thing? do you think there is -- how many votes do you think there are in the council for palestinian membership? what's your strategy at this point in terms of the voting in the council? >> i think the important thing is to understand, and here i think the united states and the president of the united states was very clear. through the security council, the palestinians would not become the 194th member state in this building. so it doesn't really make a difference yet. we are both working and,

truthfully, on both sides to have a bloc of countries that, basically, would say, ladies and gentlemen, go back to direct negotiations, sit down and talk this thing with each other. not trying to circumvent it from the outside. so i think the most important thing is, and that's what the quartet was also saying, get back to direct negotiations, shortcuts. >> ambassador? >> please. >> ambassador, the palestinians most likely will win an upgrade in status in the general assembly. why are you not working with them on a resolution that's, that you could live with rather than fighting it? and secondly, negotiations, successful ones and others, have usually taken an intermediary because you are far apart. mostly the united states. do you see that coming this time? >> i will surprise you. with the palestinians themselves

in the oslo agreements, we negotiated directly, and everyone else from the outside -- the americans and others who were put into those negotiations at the second stage -- so we can do it ourselves, we can do it by talking to each other. we know the problems, we know how tough this is, and there are no shortcuts, there are no instant solutions leer. here. and especially today. and it's important when the security council states we're not against a palestinian state. the prime minister stated that again and again. but the thing is how to get there. and the feeling is that we should really be talking to each other and not over each other. and it's time at this stage to move from speech making to peacemaking. thank you very, very much. thank you. >> reports are indicating that it may take several weeks for

palestine's request for statehood and full membership in the united nations to be considered by the admissions committee. we'll continue to monitor the situation, and we'll update you as information becomes available. and a quick reminder, watch all of today's u.n. action and speeches from the last several days online anytime at c-span.org/video library. >> should always start with the assumption that when a politician or a ceo is saying something, they're not telling you the truth. now, they may be telling you the truth, but the burden should be on them to prove it. >> he's an eagle scout, held a brief stint as editor of mother jones magazine, directed and produced three of the top ten-grossing documentaries of all time and also a best-selling author. his latest, a memoir, is "here comes trouble." sunday on "in depth," your chance to call, e hail and tweet michael moore live on c-span2.

>> he founded zell labor -- several labor unions and ran for president five times. the last time from prison. eugene debs lost, but he changed political history. he's one of the 14 men featured in c-span's new weekly series, "the contenders." live from the debs' home in tear rah hot, indiana. get a preview and watch other videos about him at our special web site for the series, c-span.org/the contenders. >> you're watching c-span2 with politics and public affairs weekdays featuring live coverage of the u.s. senate. on weeknights watch key public policy events and every weekend the latest nonfiction authors and books on booktv. you can see past programs and get our schedules at our web site, and you can join in the conversation on social media sites. >> yesterday the chief economist for the american bankers

association said that the u.s. economy is this many a period of slow and painful growth citing unemployment and the housing market as problem areas. at a conference in washington, james chessen also criticized congress for waiting until after the next election to make tough fiscal decisions and expressed skepticism that the so-called congressional supercommittee would be able to address the deficit. this runs just under an hour. [applause] >> thank you very much, paul. can everybody hear me? um, it's a pleasure to be back here. when paul and valerie asked me to come once again, i didn't think i'd have anything to say. [laughter] but, apparently, we do. um, you'll notice the theme of the talk today is a song, actually, by green day. how many people know green day

as a group? i'm really stunned. you must have, you must have kids that are, you know, teenagers or young adults here. but this is some lyrics out of that, and we were sort of struggling. britney dangler, who's in the back and ryan, britney came up with the title. we were trying to think about the themes, and britney and ryan and rob morgan on my staff put all these wonderful slides together. but this sort of captures the feelings that we've had. you know, we think back three years ago, lehman brothers failed. two years ago we hit the peak of unemployment in september. we tried to figure out if there were bad things that happened last september. i'm sure there were, we just didn't find any. and now we're back in the mess with a lot of things going on. and, of course, the other thing that always happens in september is the imf always meets, and as their big planning meeting, of course, we all know what the outcome of that have been over the last several years. so -- and then, of course, we have our congress who, again, continues to create problems.

and after the latest round of the fights shutting down the government, really, let's just all go to sleep perhaps for october since the continuing resolution is going to kick into that. so that's sort of the theme. here's the key things that i want to talk about today. the first is it's not 2008 although it feels that way. second, if your time frame is one or two years, you're way too short. and we talked a little bit about this last time, and i do have some of my be favorite slides to just update you on where we are with that. the third one is it's a small world, meaning that everything that we do in the united states is affected by what happens in the rest of the world, and we can't escape that. and so we can talk a little bit about the sovereign debt crisis in greece. and the last one, of course, is self-inflicted head wounds. we manage to do this all the time. so let's jump into this. it's not 2008. it feels that way, i understand.

in washington it doesn't quite feel bad, that bad, but i know that most of you are not from washington, and you probably understand the impact in other parts of the world. although oddly enough, if you've been to a mall lately, it does not feel like a real recession. somebody commented that people are spending more, they go to the mall because it makes them feel better. well, let me tell you some of the things that kind of contrast to what happens. this is the major market volatility. you can see what happened, i have a laser pointer here whichs exciting -- which is always exciting, as you know. [laughter] did i do this last time? how many of you have cats? laser pointer's the greatest thing on earth, right? [laughter] okay, so laser pointers -- they really are, they really are. it's a reason to get a cat, frankly. [laughter] anyway, this is what happened when we had the big crisis. there's still a lot of volatility in the markets, it's

still a big problem, but it isn't rising to the level that we saw before. so there is volatility in the markets, but risk spreads remain very low. and we've shown you some of the events that occurred before, um, and contrast that to where we are. we're really at very low levels here, almost abnormally low levels here. but even the debate that we had over the deficit did not create risk spreads that we had before. so that's a very good sign. now, there's still liquidity issues, we can talk about that, but the markets are not in the state they were three years ago. well, consumers are adjusting too. this is a cole porter song, as you know, and it's really up with of my favorite lyrics. and it kind of sums up what happened in the midst of all the things that were going on with consumer spending with great abandon. and i want to tell you a little story. you probably don't know that

there's a self-storage association. and you should, because they have the greatest fax sheet on earth. all right, so one of the things that happened, of course, is people were spending a huge amount of money, they had to do something with that money. now, let me give you a sense of how much they were spending, okay? between 2003 and 2007, cashout refinancing, the cashout part was $870 billion. the be you add the cashout -- if you add the cashout and the home equity lines for those refinance anything that five-year period, $1.3 trillion. a huge amount of money was pulled out of inflated house prices and done what? put into things that people now have to store. [laughter] right?

there is 2.2 billion square feet of self-storage space in the united states. now, think of that. washington, d.c. is about ten square miles. of course, they took virginia out of that. that 2.2 billion is the equivalent of 78 square miles of covered self-storage space. now, i won't ask how many of you have self-storage. you know who you are. [laughter] you wonder each month why you're writing that check. and ryan and i were talking about this because we were having a great time looking at the fact sheet. excuse me. and ryan said, you know, self-storage is really expensive. and i said i don't know, i don't have a self-storage unit. and he said he has a friend, he said, who's a woman who's storing furniture for after her marriage. and she's paying $200 a month

for that. and i said, god, that's a lot. and he said, yeah, the worse problem is she doesn't even have a boyfriend yet. [laughter] so that's a bit extreme, right? $200 to store, um, furniture for after your marriage. so consumers have to adjust. we had a huge amount of spending, and they've started that adjustment. this is a financial obligation ratio of the fed, excuse me. it's the old debt service ratio. and you'll notice by the trends that it is down to what it was back in 1994. now, some of that's the interest rates are low. that helps on that debt service payment. but there has been a conscious effort to bring that ratio down. now that, of course, effects lenders because some of that's with credit. you also see personal income growth rising. you can see the consequence of

the recession here. this is the negative part. but look what the growth has been. we kind of forget this. in contrast what the growth and personal income has been over that big expansion period. so personal income growth is growing, it's made up now the losses that occurred in that recession. it's not enormous, but it's certainly positive, all right? this and we tend to forget that when we get all the bad news. look at what happened with net, household net worth. this is both financial and, of course, real property. and you can see a huge decline, trillions and trillions of dollars in the decline of that. that's the green bars there. but you see there is, there is an effort. it's slowed down some because of the stock market, but there has been a significant increase again in household net worth. and recall that a big part of that first net worth increase was the inflated values of home

prices which were not sustainable. they were, they were artificial be. the other change happened is savings rates have been much higher as a consequence -- and just to put that this perspective, this drop here even if you assume that it's less than that, still requires a savings rate of about 10% to make up for the losses in wealth that occurred. so even though the savings rates are up around 6%, they still really should be higher to make up for a loss of that wealth that happened. but, again, the good news is net worth is recovering, it's a slow process. consumers are saving more, they're borrowing less, they're making efforts to get their balance sheet back in order. so that's an important, that's an important change that's occurring. it's a slow change, of course. businesses are doing better as well. and one of the most interesting charts is this one which is the corporate cash levels.

you can see it's up around a trillion dollars in corporate cash, and if you add other liquid assets -- foreign deposits, hue chul funds that businesses hold -- you're up around $2 trillion that they're sitting on. they're sitting on a lot of cash now. they're stronger as a consequence of that, but it's that uncertainty that exists that they're not willing to deploy that cash now. that is the biggest concern now. there's a huge amount of uncertainty, it's freezing business decisions, it's putting all this cash just idly on the sidelines. but the point is that businesses are doing the right things to prepare themselves as things turn around, as uncertainty disappears. banks, too, are improving as, hopefully, you're all aware. i hope it's true of all your institutions. this is the level of capital. that level up there for the industry, the capital assets

ratio, is the highest since 1938. all the capital ratios whether it's the straight capital asset ratio, tier i, total risk base are at record levels in the united states since we've been collecting all this, all this information. very strong improvement, and we sometimes forget all the things that have happened. now, there's still challenges ahead, of course. this is the asset quality side. and you can see both the chargeoffs in nonperforming, you can see they rose sharp hi as you're all -- sharply as you're all aware. they're still high relative to historic trends. that's certainly true, but look at the trends now, very sharply downward here in the changes in that. in fact, we've had many quarters, over a year, i think, of improvements in the non-current loans. so strong improvements in that. we're past the hump. you know, still struggles for many institutions, but capital

is at record highs, problem assets are improving. same thing with the profitability of banks. you can see the profitability hit a low for the number of institutions that were profitable. there's been a recovery. it's been slow. and we're now getting back more to historical standards with most, a high percentage of the industry being profitable. so the banking industry, certainly, is improving. that's very good news, obviously, for the u.s. and the u.s. economy. this is jobs. that picture, while we know is still struggling, is certainly better than the job losses that were experienced in the recession. and you can just visually see that. i may have shared this with you last year. it's just a stunning chart when you look at the magnitude of those losses. that's eight and a half million jobs were lost in that period. and you can see there's still struggles here, you know? it's still variable, but, you know, look at the pattern, you know, before the big crisis.

not too out of line with that. but the point is, again, it's not 2008. we've moved through a lot of that. now, you'll always hear about layoffs, and you'll always hear about quits and those kinds of things that are happening. but another piece of good news is the hiring is just at that balance where it's absorbing layoffs and voluntary quits. so we're back in a better equilibrium. is it enough to get the economy going? well, not so much. just to give you a sense of that, you need 200 jobs on average a month and about a 4%gdp to get the economy on a trajectory that moves us back to normal be -- normal levels in five or six years. and i'll show you that. but whenever you see the monthly job figures, if it's short of

200,000 new jobs created, we are not moving fast enough to significantly reduce the unemployment rate. and we have a chart on that in a mint. here's the other part of that story. if you look at this part over here, okay, we're going to break that down for you now just over the course of the last year. and the thing to recognize here is what's happening on the private sector versus the public sector. and the interesting thing that's obvious from this chart is you see the private sector has been adding jobs for 18 months straight. it's not a huge increase, not the kind of things that, you know, really grabs headlines, but you can see it's been a fairly consistent pattern. now, of course, things have slowed down here, right? and this month here, the latest month, was at zero. but it wasn't the private sector wasn't adding jobs, it's because look what's happening on the public sector side.

they've been reducing those jobs. that's been drag -- that's been the drag here. we could have more private sector jobs, but the drag is really coming from the public sector. certainly on the state and local levels. so, again, the point is it's not what it was before, it's not great, but let's not relive the 2008. all right, so the time horizon is five to six years. that's the second key message that i want to leave you with. and here's back to some of my favorite charts. this is the unemployment rate. this is where we are. i think i showed you this before where these are the trends in the previous recessions. and all we've done is straight line that out from the peak of that as we've done with others. all right?