and this is a story that has been playing out throughout america. and i think it makes it a much more contested sort of group. how you get the messaging right for them will be an interesting challenge for both parties. >> that goes right to the heart of the paper, economics and demographics. which drew about millennials is also true about hispanics and african-americans. the groups at the core of the democratic coalition of the same groups that have been hammered the worse by this recession. you are talking about the mynheer d. share of the vote demographically, but what do you think the impact of that economic discontent is going to be both on turnout and share for obama in the groups that are part of this coalition except for the college-educated white women who are all having a really hard time? the right, that is why they hold the elections. i think it is fair to project there'll be some compression of

margins among these groups. there'll be some compression of margins among young voters and compression of voters among hispanics for example, maybe some among blacks. we can live with that. the question is what is the level of that compression? these groups are still very sympathetic to obama and more broadly very importantly to where the democrats come to this point versus the republicans. this is the disjuncture between approval ratings and support at this point. if you look at hispanic job approval, it ain't that great, maybe around 50%, little bit more, a little bit less. ..

so i think that economics is like a weight on obama among these groups, and a week that he can partially keep off his chest. >> if i could go back to the question you asked about her about raising first uses head-to-head amongst latino voters. it's interesting to think about conversations going on now among republican nominees for their nominations. and the same conversation that went on in 2007 and 2008, a republican nation process which on the subject of immigration has been driven both times by a

very hard line. the view that we really have to get tough and crackdown. and this came after eight years of the george w. bush presidency coming out of texas, understood the demographic and political power of the latino vote did very well. i think he won close to the latino vote of more than 30% when he ran for reelection as governor of texas. he was close to 50. whether or not he got 44 and 04, that the republicans clearly feeling this is -- we're not going to be locked in and this will not be like an african american community where we can't not doubt and that is part of our challenge. i think the republicans have hurt themselves at this constituency with the nature of their primary process conversation. if you think that 43 years ago, actually they wound up dominating the one candidate from their field who had the

most open to comprehensive immigration reform and a centrist on that issue. and as a result, immigration disappeared as a general election issue. we were onto other things. something similar may happen again this time. hard to know what the process is going, but both of the conversations that latinos have been listening to at the national level has not been receptive. they have not been a good job of reaching to the constituency is likely the hope. >> i would agree when you mentioned that romney i was surprised in the past couple months how he has ratcheted up the anti-immigration reform rhetoric. and he did so initially because rick perry had just entered the fray and rick. had like two other national republicans from border states, george w. bush and jon mccain

had a record as being in favor of comprehensive reform of citizenship for the many millions already here. so romney really poured it on and he had arguably, except for the colorful comment came wet sticky notes and put alligators and that kind of rhetoric, bonnie has already as a nominee has a verbal record that is going to stand him in really bad with hispanic voters. >> the future gender is hostage to the current coalition. one of the reasons why republicans are so headstrong on immigration is because they are not doing so much support from portions of the white community that are most uncomfortable. 2006, 23 senate republicans voted to legalize immigrants. last year with charles schumer, billy could not find a single cosponsor in l.a. times debate said he would no longer vote for

his own bill. they are being forced in that direction. it is not entirely the party where obama was intimidated from pursuing immigration reform by the fear of losing many of these blue dog low diversity, low education burrell or white districts, which were annihilated anyway. if obama does win, if he loses, it will only be by accelerating transformation through this new coalition, which is essentially a bimodal coalition of minority voters and college educated him on a blue collar white working class and that requires you to think some issues where you kind of start and driving with your eyes in the rearview mirror. there is more protectionist sentiment in the republican party. on issues like immigration, maybe he can control certainly

trade, i think they are being intimidated by the fear of losing people who they've already lost and not really serving interest of the coalition. think about the fight over entitlements. democrats are vying front of the train tracks to rewrite cuts in programs that benefit way seniors voting over 60% republican. and in the process creating a long-term squeeze on discretionary spending that will benefit the growing minority population to move into the middle class who is voting 80% democratic. so if each party has an agenda that is not entirely interned with whether the coalition is now because they each govern within members who used to elect them. >> one thing i would say to that is lain on the train tracks to the extent for a democrat related a bomb or obama deal

they would've gotten the votes in congress to pass that regardless of the changes in medicare and social security. enough democrats understand just what you said is that these programs have to be the future spending has to be curved. there's still hope springs eternal that they can reverse the voters, the squeeze is on colleges and antipoverty programs and so i think they are much more democrats are much more willing to give on entitlements than republicans. >> health care is one of the only programs in modern history from an explicitly transferring content to general. the fun coverage for the uninsured, which is heavily -- this conflict between this emerging nonwhite -- heavily nonwhite millennial generation

in these older whites are getting mark or would it antigovernment is going to basically be the structure of our political debate for several decades. it's kind of a bratwurst grey construct will increasingly define the political choices. >> it sounds like almost a consensus of the panel though is that the path of 270 lease for obama is putting the accelerator in this coalitional transformation. for the other side it talks about did i mention the economy was so great? okay well, we have yet for a while. we put a lot of stuff on the table, but let's hear from the audience now. >> hi, my name is cliff bernat. i'm not affiliated with anybody. i think the presentation has been great and a lot of good information. i think though it is based on all things being equal approach.

and it seems there are factors in play now that are making the playing field not all things being equal. one of those the growth of the super packs unlimited, unrestricted, unaccountable information -- misinformation, redistricting now controlled by proponents of republican governors. and other factors going on that seems to not want a playing field as it is equal. i wonder if you could talk about the impact of those elements on this discussion. >> does anyone want to offer a comment? >> boy, that is a big topic. certainly the polarized and paralyzed congress is a reflection of the way the districts are drawn and that is a long and unhappy story at the moment. i think in a way it has created

local parties that are more ideologically coherent that may have been in our lifetimes. you'd like to think that is a good thing, a clarifying thing, but instead it seems it has driven everybody and you just enough people here that can find the. as for super pot, ask for money in politics, i spent a chunk of my life working on that issue. and there's a lot that hasn't gone well on that front either. i would however hold up for everybody scrutiny of the 2008 presidential election campaign, were someone named barack obama put them in the senate for all of two years and was a complete newcomer to the national stage, but had a message in a set of skills that enabled him to get to reprocess was very tough the primary process, a lot of it from small donors and here we are today. that is not to say that i don't

disagree that he was different. that's a personal view. but i don't believe at the end of the day, certainly not determined at the presidential level. you know, 98% in the house at a time when people can't stand congress come you've got to scratch her head and say what going on there and i suspect money has a piece of that action. >> another question right there. >> good afternoon. this summer in the fall, puerto rico will vote to determine its political future. one likely outcome of that is request to become the state. how will that movement impacts almost half a million puerto ricans living in the eye for corridor in about another quarter million puerto ricans living in cleveland, ohio, cincinnati, key battleground states as well as philadelphia. moving forward, what would

happen to adding two hispanic senators and maybe half a dozen congressmen to the legislature. >> i never really thought of it. as you are going through it, you assume republicans would resist creating a new state they would vote democratic. on the other hand if your implication is hundreds of thousands to move back to puerto rico, they might be going to accept the trade to increase the odds of winning florida because the growth of the non-cuban panic is one reason why they have gotten back in the game. i guess i don't think were adding any states soon. i think we are so polarized that i have a hard time seeing how a consensus emerges to do that. but you know, there is no -- like i said, there is no question that in many of these

states what has brought them within reach for democrats is a combination of minority population in a somewhat population growing more receptive ear so anything that interrupts that, republicans might want to see puerto ricans move back from ohio and florida to puerto rico, at least electorally. >> okay, curt. ratepayer. >> hi -- does this work? curtis gans. one, the issue of trying out has not been discussed very much. i cannot conceive going on campuses that you are not going to get a much lower turnout. i cannot conceive that hispanics are 50/50 that they may decide because the turnout is going to be conceivably lower. i think that impacts on the

scenario. i also think firstly because of the republican positions on entitlements there may be some on the top end of this scale. the second thing is the analysis does not include americans a lax, which i think may turn out to be a significant force because the condition florida. on the third thing is they really is a major change have in virginia since two and eight. you know, republicans controlled the whole state and my county and northern virginia, republicans will the board of supervisors. you know, the demographic fact yours are not exactly as presented because the political factors are more important. anyway, i am looking for ron comment, paul's comment on latino turnout and anything else

anyone might want to comment on the american select and changes in the states. >> first of all the political point is absolutely right. i think where he did as well. you have to expect that obama share of the vote on each major group will be lower in 2012 than i was in 2008 with the exception of african-americans. the issue is he a scott brown to give. 52-point outcome of the most of any democrats who said the question is can he manage to survive because they think it will be less than it could be a lot less in the working-class white community, which is not only resistant to getting hammered economically. to be the key to victory as holding down losses in places like northern virginia to a point where he can still win by emphasizing contrast with the republican. i will have to be the key to that. one issue i was trying to allude to kind of elliptic lee alluded to in my response to roy was

demographically conditions are there for the shared by minorities to go up and for the millennial formerly in more millennial figure turn 18. 15 million more eligible to vote in 2,122,008. more are eligible to vote, but denominator make it bigger, too, which is beside 2010 in awful lot of older blue-collar voters. if they really pour out in 2012 that can come even if more minorities vote and more millennial so, it is conceivable the share of the votes won't increase as much as you might expect if denominator gets bigger. so i think that is an important consideration. there are two separate issues. it is not only do these core coalitions for democrats show up, but how much should everyone else show up? certainly i believe in 22010, the elderly seniors are the largest they've ever been in a

midterm election and a lot of those voters are waiting for the chance to come out again and vote against the socialists in the white house. so there's that issue as well. >> the question of what is going to be the mobilization of differential in this election. the mobilization differential is heavily skewed towards third of constituent needs. my view is a very much doubt in this incredibly hotly contested presidential election they will go all out in the machine will have the resources to go all out, but all the things we've talked about that can bring into play, all the issues they can talk about, there may be some differential, but i don't think it's going to be the level of 2010 and to me the most reasonable expectation will balance out. obama will see an electorate of

roughly 20% and the rest will be pretty much on trend, which actually -- people exaggerate the extent to which the obama election in 2000 it was anomalous in terms of turnout. it was higher than normal, but not phenomenal. so it's hard to change turnout patterns drastically from election to election. given how mobilized each side would be, it's roughly canceling out, but it could be wrong. >> a couple statistics. if you go back to 2008 a look at these numbers before coming over. the share of white eligible like chris who voted in 2008 to 66% african-american 65%, the smallest gap measure tomas because it was an historic election that was a huge surge for obvious reasons given to break through the milestone. 66 and seven by thomas at 2% hispanic. and now with an increase, but was in a search.

the question now is -- together with a huge turnout and closing of the gap among younger voters. i do think that there is a real question of whether he can keep the enthusiasm because i think he had an easier sell in a better message for younger voters through years ago than he has today and i wouldn't hazard a guess on the latino vote except to say that demographic change will push the base amount for the population bulges and however million, many are hispanic and most of them are born in this country. we've got a big bulge of older hispanics who again neither are not citizens are not here illegally have kids. almost all of their kids were born here and so there is not an impediment. >> wanting should emphasize that the difference between nation generation. if we believe in a generational analysis by my definition, there

could be 26% of eligible voters in this election will be from coming out, millennial generation. that's because it is now bleeding upwards into the 30 plus year olds. so by definition we will be millennial. it depends on what you define as the birth year. 4 million additional voters per year coming into the millennial generation will produce a lot more voters because there are weaker each group now. not just 18 to 29. >> with a touch on. the way back. >> i'm arnie came, a consultant. i think the panel for having

this. my question is, don't you guys think that if minorities continue to turn out in 2012 obama will win by a landslide? because its minority african-americans are the key in determining the president's election. , where are the presidential elections for a campaign for 2012 and also what about the african and asian, other than hispanics. that's all. >> okay. comments? minority vote and differentiation among minority vote. >> in 2008 obama won over nine and 10 in just under two thirds of all out there. and the other is an interesting category. as you think not only other, but

also the hispanics are moving way beyond a state where they have been influential in the past. in virginia to does make him a 10% is either white or black. in a place like north carolina, the growing hispanic which has not been part of the thumb on the scale for obama to get over that time. strong minority turnout in strong minority vote is a necessary but not sufficient condition for obama in 2012. the figures that roy gave her probably a good of a national journal. if it goes up to 20% he was three quarters, that's 28 percentage point. as a share of the vote. that means you still have to get 40% of whites, which they could not do. either way, democratic vote in 2010 was below 75% level among minorities. you have a lot of people hurting. one thing i do wonder is how

much ahead of the approval rating is in the head-to-head. maybe with individual sub groups, but as a cosmic phenomenon and it is unlikely he will run significantly ahead. the evidence of incumbent presidents went close to approval ratings. you can pick the number before the election and i think in both parties the figure used to say if you're below 50% come you are unlikely to win given how cynical people are about politicianscome on i talked to people at the obama campaign they came up with 47 on a threshold at which he added shot to win. >> another demographic statistic of the research we do. a lot of the conversation and a lot of the way we have been taught to think about politics and getting to 270 and all the rest is through the prism of race and ethnicity. that's a lot of what we talked about today.

of all new marriages in the united states in 2009, 15% are between partners of a different race or ethnicity. so with her and hispanic marrying a white or black, et cetera, et cetera. we do marriage in the white house today, when barack obama's parents were married, the best we could gather, first of all, it's illegal in about 16 states for that to happen answer me an enormous cultural taboo. the best is one in 1000 marriages for between a white person in a black person. this is part of the chain. i wonder a decade or two from now whether it will be as easy to slice the electorate in the way we are all accustomed to slicing it because this is very much a part of the change going on and i suspect again the young folks -- it's the only world they know when of course it's comfortable to them. and then they say where does

this come from and they're having more trouble adapting. so that's part of the drama. >> the fastest-growing group in the united states. we will take a few more brief questions and then we'll have the panel comment. so let's take a few more questions. >> my name is steven. what do you make of the three state hypothesis that whoever carries to pennsylvania, ohio and florida will be the next president? >> another question. >> high, and this presentation can be broke it down by white working class from a white college educated. looking at that gap, the education gap amongst whites, i'm wondering how much that persists amongst minorities and the manuals as well as what that might say about the future. >> another question? that will have to be the last one.

>> the question is about colorado another brown versus great economic situation in hispanic population is in colorado. >> three good questions. i'm afraid that's always got time for. so panel, let's chew on these last three questions center on anything else you want. >> to question had colorado when men. i don't think you have to get two of the three pennsylvania and ohio if you get this new combination. it would be difficult for obama. but what is essentially a waste could be argued as a single state, north carolina and virginia. unfortunately for obama it is not soapy much harder to get north carolina. you would only have to get one of those three state. >> output by money on whoever

gets to those three states. educational attainment breaks and other breaks within minority communities of more than nine in 10 for obama of any kind there. there are important differences, particularly the african-american community. women doing much better than men. how that plays out in terms of public policy and other things is frankly more interesting question and the rest of our lives than it is in politics because that's a pretty locked indecision. >> in the three state scenario, if obama can hold pennsylvania with the 17 states voted democratic since 1992 from 18 states in each election since 92, he could win with the three south estate west virginia. but more likely if someone was

two of the states. your question about the gap, the more educated and asked where the more difference. but the class and version. i'll colorado, i think colorado has gone from our reach to the necessity for democrats. it's hard for me to imagine obama getting to 270 without it unless you can win either florida or ohio in both of those are higher states at this point in colorado embodies the modern democratic coalition where you have significant minority population and a college education population is willing to win an absolute majority in 2008. as i said in 2010 despite a real movement to the right among working-class white, there were enough of those people just to get over the line. that what makes a difference in the state of wisconsin.

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after castor came into power, many of the people who didn't like him very much flight to cuba and where they fled to is mainly right here in miami. of course the election of the first black resident was a landmark that shows there has been tremendous change in the american racial attitudes. had there not been that change

he would have had no hope of prevailing. >> in the presidential debate it is critical that and it's hard to relax in that situation but you have got to be calm enough where you can listen and make a split-second decision. do i move on? do i follow-up? what do i do now? >> what the booktv's coverage from miami on line at the c-span video library. archived and searchable. watch what you want, when you want. >> the newly designed c-span.org web site has 11 video choices making it easy for you to watch today's events live and recorded.

>> according to the fdic, u.s. banks are in $35.000000000 in profits for the third quarter this year. that's $11.5 billion increase over last year's figures. the number of "problem institutions" fell from 865 to 844. the ftc -- fdic insures deposits. this briefing is a half-hour. >> good morning everyone and welcome to our release of the quarterly results for the banking industry. the third quarter data show that the ongoing recovery continued

in the third quarter supporting improved profitability for the industry as a whole and for the majority of fdic insured institutions. industry earnings were positive for a seventh consecutive quarter as shown on the first chart that is projected up here. insured institutions reported $35.3 billion net income in the third quarter. this was almost 50% more than reported a year ago and it represents the highest quarterly total in more than four years. more than 60% of banks reported improved earnings and while the percentage that were unprofitable -- while the percentage that were unprofitable fell from the lowest level since the first quarter of 2008. you can see in the next chart the lower expenses for loan losses were once again the largest contributor to the year over year earnings.

banks set aside $18.6 billion in provisions for loan losses in the third quarter. this was $16.5 billion less than a year ago and the lowest quarterly total in four years. revisions have been declining from year ago levels for eight consecutive quarters. the ongoing reduction in loss provisions has stemmed from improvement in the credit quality of rank loan portfolios. the next chart illustrates the improving trend in credit quality that has been underway since the first half of last year. the chart also shows that loss rates still remain well above historic norms and above level seen in the crisis of the late '80s and early '90s. the net charge-off rate has fallen for seven consecutive

quarters while the percentage of loans that are not currently have declined in each of the last six quarters. these improvements have occurred across all major loan categoried industrial loans showing the greatest improvement. however, the next chart shows the industry revenue remains relatively flat in the quarter. improvement in industry earnings has been almost entirely dependent on reduced loss provisions. the traditional banking business of taking deposits in making loans accounts for almost two-thirds of net operating revenue. revenue growth will likely depend on increased -- our latest data show that loan balances at insured institutions increased for a second consecutive quarter, rising by almost $22 billion. loans to commercial and

industrial borrowers increased wear fifth consecutive quarter and residential mortgages also increase. banks continue to reduce their portfolios of commercial real estate loans and a sizable amount of intracompany lending between related tanks was eliminated in the third quarter by a merger. this elimination accounts for the reduction in loan growth between the second and third quarters. with that accounting for the longer and second and third quarters were roughly comparable. after three years of shrinking loan portfolios and a loan growth is positive news for the industry and the economy but the lending growth we are seeing remains well below normal levels. this chart also shows the deposit growth continued to surge in the third quarter by large denomination accounts for the biggest banks. deposits in domestic offices increased by almost $280 billion

during the quarter following the 234 alien dollar increase in the second quarter. most of increase in domestic deposits consist of large denomination, non-interest bearing transaction accounts that have temporary unlimited deposit insurance coverage through the end of 2012. most of this growth was that the largest banks but the majority of institutions for corporate recorded increases in these fully insured accounts. some of the growth in deposits has replace higher cost liabilities but the inflows have expanded the balance sheets. banks have invested many of these in u.s. treasuries and gnc securities and other low risk low yield assets. their result has been downward pressure on asset yields particularly at the largest banks. we saw further improvement in

the number of problem banks in the third quarter. the number of institutions on on her problem was fell from 865-2844 to just the second quarter in a row but the problem was occurring. a total of 26 banks failed in the third quarter. that's for -- for more than the second quarter but 15 fewer than in the same quarter of 2010. so far this year there have been 90 bank failures. at this time last year, the fdic had resolved 149 failed institutions. although the trend of trouble institutions had this have just been improving, current numbers of both failures and problem institutions remain high by historical standards. the deposit insurance fund rose to $7.8 billion as of september 30. that's up from $3.9 billion as

of june 30. this balance has now risen seven quarters in a row. assessment income and few are fewer expected bank failures continued to drive growth. estimated insured deposits since september 30 were $6.8 billion. that's 3.6% higher than june 30 levelsand than three-quarters of the increase came from temporarily insured balances exceeding $250,000 in non-interest-bearing transaction accounts which totaled $1.2 trillion as of september 30. the reserve ratio. this balance is a percentage of estimated insured deposits as 0.12% since september 30. that's up from 0.06% june 30. we will take any progress we can get on that score. in summary, in summary we

continue to see income growth that reflects improving asset quality and lower loss provisions. although loan balance to show the second quarter of modest increase, this did not translate into meaningful revenue growth which would require expanded lending. the number of problem banks fell for a second consecutive quarter and the balance continue to rise. i think it is fair to say that u.s. banks have come a long way since the depths of the financial crisis. bank balance sheets are stronger in a number of ways and the industry is generally profitable. but the recovery is by no means complete. ongoing distress and real estate markets and slow growth in jobs and incomes continue to pose risks to credit quality. the u.s. economic outlook is also clouded by uncertainties in the global economy and by volatility in the financial markets. so even as the banking industry

recovers, the fdic remains highly vigilant for new economic challenge that may lie ahead. that concludes my statement and i would be glad to try to respond to any questions. yes. >> thank you gesture chairman. peter barnes of fox business. could you discuss the situation with europe, exposure to u.s. banks to europe over both sovereign debt in short-term lending to european institutions, longer-term loans. are u.s. banks safe from european contagion and derivatives as well, please. >> i think the last point you make is really perhaps the most significant one. u.s. bank exposures to europe,

direct exposures are relatively limited. i think most observers feel that the key risk for u.s. institutions as well as for the global economy is really the potential of contagion effect of a serious financial crisis developing in europe. that is probably the focus of our greatest contention from the standpoint of the stability of the u.s. financial system. [inaudible] >> i wouldn't try to do that. it's the nature of the contagion. no, you can't estimate the impact is going to have on the markets but you know that it could be broadened if it starts to develop. >> hello. my name is carter dougherty with bloomberg. a question that is little more broad brush but i've been

spending a lot of time with community bankers lately and sometimes especially when the chamber of commerce types come in to into the room to get lively discussions and i'm willing to bet that you have witnessed as well the bank start by saying there was no demand for loans and the economy types will chime in and say yes there is but your underwriting standards are outrageous. the bankers say this is because of the restrictions being imposed on us and the hangover from the crisis and what not. and we go around and around. i was wondering if you could tell us in broad rush based on the numbers you are looking at in this quarterly report, which side in this debate does this lead credence to, and in particular the most striking charges chart three you have in your statement about non-current loans and loan losses following the wealth of price -- crisis levels. i wonder is that driven mainly by legacy lending from before the crisis or does this reflect

decisions made sense let's say in 2008? >> i think the improvement in credit quality, i guess that is really the final point you are asking about. i think it is a reflection of the efforts of the institution to work off the problem loans and to renew exposures, utilize careful underwriting to balance the credit quality and that has been reflected on both delinquencies and charge-offs. on the broader question, i think it is fair to say that the growth in income, while is reflective of the large institutions which account for the majority of the assets also reflect the majority of the income growth but that income growth has been reflected among community banks.

the numbers indicate that 60% of our institutions have realized increases in profitability, and i think as a general matter, community banks are coming out of this crisis. in reasonably good shape. we have 400 institutions fail over the course of this crisis and perhaps 300 them have been institutions under a billion dollars. so we have nearly 7000 institutions under a billion dollars and asset to the united states. for a large majority, they come out of this actually and reasonably good shape, well capitalized and well-positioned i think to meet credit demands going forward. i think the overall story for community banks in the united states is reasonably positive and are clearly going to confront challenges going

forward. >> hi heather questioned about this contagion effect. going back to the u.s. banks, what about the foreign banks in the united states. are you not worried about the contagion effect there? are you sure that living wills, that they have prepared are going to be enough for you to resolve them? and also, i mean are we talking to the regulators in europe? there seems to be some kind of disconnect and i was just wondering, are you worried about that? >> we worry about everything. [laughter] that is sort of our job. let me say, you sort of asked a couple of questions here. on the living wills, you know, under the dodd-frank at the federal reserve and the fdic are joining authority to issue the rules establishing a standard

for living wills and to supervise clients with the regulation. the fed and the fdic joined final rulemaking and we have actually started the engagement with their large institutions with regard to preparing the living well. the point i would really want to underline his while the living will process is really getting going now, the fdic has been working on an internal resolution plan to exercise our authorities under title ii of dodd-frank for over a year since the enactment of the legislation in 2010. our internal resolution class which really are key planning designs are in a fairly advanced stage of development in the few these living wills as an important complement to add additional information for us to utilize for those internal plans themselves.

those internal plans i think are pretty far along and we have been engaging actively with key foreign supervisors. and i do think it is fair to say that this crisis has brought about a sea change in the recognition by supervisors around the world of the crucial cross-border relationships that we have. so i would say is a general matter we have gotten quite predict responses as we have been engaged with foreign supervisors and that is something we are actively engaged in. >> high. i wanted to ask about capital. the profile says that capital remains at its highest since 2006. is that accurate? but it also discusses dividend

payments. can you go into that a little bit more, what the picture is? there has been a lot of controversy i banks about being able to make the payments so the future of the capital they are holding versus the dividends. >> i guess, the issue on dividend payments relates to maintaining retained earnings and strengthening the capital. the decisions on dividend payments is generally a federal reserve judgment judgments of the fdic does not have a direct role and they wouldn't want to comment on the general composition other than to say the fed has been careful in trying to make judgments to the authorities and individuals to distribute dividends based on their capital position. >> i was just making sure i understand what this is saying,

that you know, the industry has the most capital that it has had at the same time it has this big increase in paying out dividends? >> well, that wouldn't be necessarily -- would be inconsistent. they could have high levels of capital which places them in the strongest position to pay dividends while retaining strong capital. >> considering the reliance on lower loan provisions that you are citing, is there a level that you are hopeful or that you are waiting for her loans that would be a trigger for you would then think that the industry is at a point where earnings can be sustainable after the loan loss provisions stops there falling down point? >> well the key issue is going to be, can we get a pickup in

economic activity that will generate demand for loans and i think that is probably the key issue in terms of loan growth. that is, you know, that's probably our central point of concern. while the industry is hitting steady income gains, that have really been generated by continued improvements in credit quality and the ability to reduce loss provisions, those are in a sense reflections of greater strength in the industry, so a positive development but that can't go on indefinitely. at some point in order to generate income and revenues, funding is going to have to expand and that clearly is going to be loans to the overall reform but said the economy. that is what i think a lot of this is going to depend on. >> with regard to what you mentioned about contagion, what are u.s. regulators telling u.s. banks like they have to do

something more than they are doing now to guard against contagion? what he telling the industry and general about guarding and against this contagion? >> a think there's a continued effort to get the industry to strengthen both capital and liquidity positions which are at much longer levels now than they were a couple of years ago, and of course attention is being paid to what we see as potential avenues for contagion particularly with regard to the derivatives markets as well. thank you all very much. [inaudible conversations]

>> i see from the -- [inaudible conversations] anyway, as far as holdings, european sovereign debt or loans to europe, short-term lending in europe, is that declining from what you can tell from your examinations and are you encouraging banks to reduce their european exposure? >> i deal with the largest institutions and obviously those are the ones that would have the greatest exposure to europe. and for the most part, we want to make sure institutions understand exactly what those exposures are, where is coming from and the level of risk that

they are taking. and making sure number one that it is communicated clearly not only to their boards but also to us, the fdic and the federal reserve so we have a good understanding. where it gets a little bit tricky is in the area of derivatives. i know that has certainly been raised before and ultimately understanding where the level of counterparty risk stands at institutions and again, working directly with the federal reserve and institutions. we are getting a good idea exactly where that exposure is. finally i would say that this is no surprise to these institutions now since it has been something that has been developing as -- over several quarters and they have had plenty of time to adjust their positions which they have.

>> the statistic about the residential mortgage loans and growth being the highest since 2007, what do you it should be that to? >> there is something in a cycle or something in the system. >> i think partly it's a low bar. there has been a lot of declines in balances since been. but, we did see, we get some partial data on originations. we did see origination activity in the third quarter. i would assume some of that has to do with refinancing, but beyond that i don't think we have a lot of. >> the mortgage market right now is primarily fha and gses as well as the portfolio market so institutions institutions that originating are going those two routes primarily. it is to some extent discretionary keeping it on the balance sheet versus the large increase in this quarter.

>> on the loan balance sheet increases, i mean is it more significant than suggested because it is part of the decreases, the elimination of company loans between two affiliated banks that merge. is that something we should ignore or is that an impact thing? >> well it was, since it was all within the same company it was out of one pocket into another, and i don't think those loans were necessarily generating a lot of reported income in any event. like the chairman said it's just an adjustment. if you factor in the roughly $40 billion in these loans were taken off the books as the result of the merger, that

contributed to the size of the increase in reported talents as between june 30 in september 30 so you could elevate that by about 40 billion that was essentially taken away by a stroke of a pen the pen and then you have growth and increase that was comparable to the -- on an almost terms it looks like a drop-off in loan growth, but in reality we think it was much more similar than dissimilar. >> the way to describe it would be loan growth that was similar to what we saw. >> exactly, yes. we do have to say what the reported numbers were but to provide context, that sort of merger is very unusual and most institutions don't have that level of lending between affiliates. >> can i also ask again about the influx with a large denomination deposit? i mean, there is a chart that

shows you know that compares that growth to the deposit compared to the growth in lending. i mean what is the practical impact for banks and how much is this hurting the revenue, the revenues, the fact that they have all this money that they are not me can loans? >> well i think as the chairman noted, some of the influx replaces other funds. these are non-interest-bearing deposits so they are replacing non-deposit liabilities that presumably pay interest. so there's a reduction effect in terms of the interest expense for institutions. but to the extent that it grows the balance sheet they have to find investments for those funds and the current environment of the investments tend to be relatively low yield. and also, just in terms of the

level of interest rates and appointed the rate cycle they loans that are running off the books at this point were loans that were made several years ago that were booked at higher rates than they are currently prevailing so the new loans that are put on the books are at today's rates, so you are having a substitution effect as well. so what we have seen is that the asset yields are coming down. the funding costs are coming down but the asset yields are coming down more rapidly and again principally the largest banks because that is where the bulk of this inflow is occurring. >> carter with bloomberg. what accounts for the sharp rise in the deposit insurance? >> well, it's mostly due to assessment income. we are collecting about $3.5 billion a quarter in

assessment income from institutions. a little bit of that, little bit of the increases also due to a reversal of some of our reserves due to lowered anticipated losses on failures but most of it again is premium assessment paid by the industry. >> and any chance you guys could comment on the wall street journal about bank of america this morning? i had to give it a shot. thanks. >> thanks very much.

>> there was a flood in fort meade. people were down there telling sandbags and trying to -- so air force one stopped and they had a mortar k. kay dance a flooded area. he took off his jacket. my memory is he felt free sandbags, said hello and hi to everyone, got back in the car and went back in the plane but that night, what was filled on the airways was not free sandbags, it was reagan filling sandbags with his shirt off.

sam sam donaldson nbc's andrea mitchell and former senator chris dodd talk about the legacy of ronald reagan. new york city mayor michael discuss the american dream and in the u.s. and astronauts jon glenn, neal armstrong, buzz aldrin and michael collins are awarded the congressional gold medal. for the entire thanksgiving day special go to c-span.org. now i discussion about the arab spring protest. the carnegie endowment for international peace hosted this forum with a former jordanian ambassador to the u.s. and middle east scholars john

alterman and marina ottaway. they talk about how the arab monarchies of jordan morocco and bahrain are dealing with pro-democracy movements in their countries. this is an hour and 25 minutes. >> i'm very pleased to be moderating the session today. the session is on arab monarchies and how they confronted her dealt with events in the arab spring or the arab awakening. we have a very distinguished panel with us. this is part of a research project in emerging as a carnegie paper in a few weeks, exactly on the topic of arab monarchies and arab spring. the authors of this paper are dr. marwan muasher and dr. marina ottaway. let me go ahead and introduce them and their commentator for

today, jon alterman. he is in charge of carnegie's middle east work here and in beirut. he is known i'm sure to all of the previously, vice president at the world bank and deputy prime minister previously in jordan and foreign minister, very active and heading to reform agenda in jordan and also previously very much involved in the arab peace initiative and the arab-israeli peace process. alterman is senior associate at the carnegie program and has written widely on clinical reform, political change in the arab world in africa and the balkans and elsewhere and authored author of many books and studies. are commentator for today is a good friend, jon alterman. correction, his name is not jonathan alterman.

it is not short for anything, and jon is also publicly well-known to many of you as the director and senior fellow at the middle east program at csis here in d.c.. he served as a member of the policy planning staff at the u.s. department of state and he is a member currently have the lehman executive panel and was also an expert on the iraq study group and writes widely on middle east affairs. the topic of today is on the minds of many of you from events in the air of poor old when they just began and most of the events seem to be in the arab republics that it is interesting that the air -- arab republicans that got most in trouble were the republics trying to turn into monarchies like fathers give being -- trying to get power to their sons and so on. i will start right away and give the floor to dr. muasher.

dr. muasher and dr. ottaway will have five minutes each and that we will have comments from jon and then go to the audience for q&a. >> thank you, paul. the idea that era group monarchies can introduce reform more easily than republican regimes is a very popular idea particularly here in the u.s. and i think justifiably so. this is because arab monarchies in general and there are eight of them, to enjoy a degree of legitimacy that is not found in republican regimes. the notion is that arab monarchies can introduce reform from above and not risk leaving power at the end of the reform process. but, manage it from above.

i'd like to characterize maybe in a simplistic way arab governments or countries into two categories other than monarchies and republics, and those who have time and those whose time is up. on those who have time, you think arab monarchies for the most part fall within the categories of countries who do have some time. however, time also in my view is a double-edged sword because time can be used a regimes to argue that it can be exploited in a serious and sustained reform process that is managed from above and in such a manner goes through

and reform from above is becoming more and more difficult by the day, if the political will exists among arab monarchies to lead a reform process from above they are capable to do so. but so far, i think the paper will also conclude that while we have seen reform in certain air of monarchies that are meaningful, so far a sustained comprehensive reform process that leads in and to power-sharing and the serious redistribution of power among the branches of government so far is yet to be presented and whereas you can look at countries on one side to bahrain on the other and other countries in between, there are meaningful reforms that have been introduced or at least promised with varying degrees, but none of them so far amount to a

comprehensive, sustained, conclusive process that will as i said in the end result in a serious redistribution of power and those countries. with that, i would like to turn my attention to the country that i am most familiar with and that marino will talk about morocco and some of the other gulf states. in jordan, reform so far and in particular as it responds to the uprisings have also been so far piecemeal and not comprehensive. the king did appoint two committees, national dialogue committee whose principle objective was to introduce a new electoral law. this was something that is key to reform in jordan as i would

indicate and the constitutional amendment committee that ended up amending articles of the constitution which have been now enacted after being approved by both houses. the monarchy in jordan is not under attack, as i have indicated earlier. it is seen as a security blanket for all jordanians of all ethnic origins, but having said that, there were serious demands in the country for changes within the regime rather than demand for regime change. and these changes within the regime are demands that have so far reached the king himself and the powers of the king. i need to also point out here, and that is not particular to

jordan also, that there are basically no demands in the country for a constitutional monarchy and that applies a thing to monaco as well. and other words no one talks about end and that will reach, that will result in being a constitutional monarch in britain for the king in jordan. the king's powers are included in the constitution. so no one is talking about the king that does not have powers. in fact i think all the groups in jordan want the king to have powers but they wants changes to the way the system governs. there is now an increasing complaint against the role of intelligence services in the country, the role that has become way too inclusive and the

intelligence services seem to be the actual governments in place and not the formal government. there are multiple plans in jordan. people like to divide the electorate into jordanians and palestinians and most have been going on now are from the east jordanian's. i personally think that there are -- too simplistic a division. i think that's just as you can talk about the jordanians and palestinians you can also talk about the haves and the have-nots and you can talk about urban versus rural areas and the demand has value as well. from political demands calling to an end of corruption, calling for rescinding the role of the intelligence services, the elected governments through

parliament and other such distributions of power, but there'll also there are also economic demands that if ranged from an equitable distribution of resources to increase salaries to increased subsidies etc.. and there i think one characteristic of jordan is that there is an ongoing debate among the jordanians in the country. 60 some years after independence, the country has not yet defined jordanians and there are no rational debates going on. anytime there are debates that talk about people becoming extremely rational about it. eisa jordanians feel there is jordanian identity will be a diluted -- of palestinian origin the jordanians of palestinian origin see they are not fairly

represented and as such, any talk about reform in the country which must start in my view with a new electoral law, faces this big problem of an honest, you know, discussion and definition of who is a jordanian. in any other country those who have the nationality of the country are nationalist. in jordan that is not necessarily so. legally it is the case but in the minds of people and the electoral laws and all the legal environment, it does not suggest that people are treated in the same way just because they hold a jordanian nationality. there have been important introductions made with the new political constitutional amendments. we do now have or will have a new constitution.

the amendment now call for an independent electric commission, something which has been proved an extremely -- entrusting them with the minister of interior. the government now has limits as to issuing temporary laws, as to resolution of parliament, and civil liberties have been enhanced in the country. but of course having said that, limited reforms regarding the king's powers, the kings basically power in the country have not been touched on the most part with the new amendment. on economic reform there has been in my view almost no reform done since the uprising.

the budget deficits in the country has reached an unsustainable level, more than 11% before grants and even with grants, and the substantial grants from saudi arabia and the west, the government is still over 6%. very high unemployment. the official figures 13%. that might be much higher. a very large public debt that has exceeded the legal limit of 60% of gdp so the country has some serious economic row bums and of course with the uprisings and a tendency to sort of succumb to populace demands of increase salaries and subsidies and things that the country just cannot sustain, the country is going to face a serious economic problem in dealing with these uprisings. there comes the issue of the gcc membership.

promised by the gcc countries to include jordan in the gcc and the gulf cooperation council, and there of course the promise is going to be more jobs for jordanians and therefore rising -- from jordanians coming back from the gulf, lower unemployment and of course the promise of more grants and foreign aid coming from the gcc countries. but the question today in jordad have not been protected at all 16 years ago. today the public is questioning this membership and asking, is this a bribe to slow down the face of reform in the country or what is it and why did it come

now? in general, think, as i said, the country still needs a long-term strategy for reform and the constitutional amendments are in tort and first that but they cannot tv be the end of the road, and as such, a long-term strategy needs to be developed and it has not been developed yet by the government. clearly, i think jordanians want the king to lead the reform process, clearly. there are no demands for the king to set aside. they do want the king to lead the process but they also want serious measures in order to do that and they remain mixed about whether the amendment so far has come far enough in introducing these reforms. the old habit in jordan of changing frequent changes to the government no longer works. today, people are -- criticizing

the king and directly rather than criticizing just the government and of course the king as indicated in two or three years, he would like to see a government they lacked from parliament. that is yet to be seen because so far the electoral law even with the amendments made to it is not going to result in a political party based parliament. that will not do so before sometime in the country. if that is the case, then the king, even if he wants to, is going to find it very difficult to choose a prime minister and a cabinet from parliament if it does not -- and as such i think the onus is going to be increasing beyond him tube ridge the credibility gap which today is increasing between the regime of the republic rather than

entrust government with doing so during such a time when jordan will have a political party based culture and government and sort of the onus -- but much of that, much of that challenge is going to rest on the kings shoulders in the foreseeable future. and let me stop with that. >> thank you very much marwan for sharing with us about monarchies and their context in general and a lot of the depth and analysis of changes taking place in yet to take place in jordan. thank you very much and we turn to marina. >> thank you. let me start with some remarks with reform but before i look more closely in the case of

morocco. the process of reform from the top would be the most desirable. we have seen what is happening in egypt and we are seeing what is happening in libya and syria. they can leave a country devastated and lead to a long series of conflict before the complex cycles down. it is possible for the government to start introducing reform before the demand becomes so overwhelming that they cannot manage the process. that appears to be a win-win situation. the problems that we have seen, that we seem to be witnessing with the air of diplomacy at this point is that unless there is a lot of pressure from below,

they don't see the incentive or at least they don't see the pressure as marwan was saying to try to introduce those changes now. you have pretty close to absolute power. you have a vast amount of power. why make your life more complicated by giving away some of this, with organized political parties and so on. so what we are seeing is the remaining cases and this is not the arab world, monarchies really don't try to introduce reform from the top when it's almost too late. another words they start moving and they cannot manage the process. there is a cautionary tale here if you look at the arab monarchies now in the case of bahrain where because of the initial response to the protest

in bahrain, the situation has become protest in bahrain. the situation has become where it seems clear to me nothing short of a real transition for constitutional monarchy is going to satisfy the protest. in other words, the monarchy has boxed itself into a corner and it has become a question of syria losing much of its prerogative if not losing, the royal family and losing its position. so if you want an analogy, it's a bigger situation then we see whenever there is a -- somewhere. you have early warning systems, rumblings of the crops have failed and people know essentially, people follow these things and know that before long there are going to be starving

people and yet nothing ever is done until the people are starving in the streets. the same way in the parliament, the monarchies really don't move until something is happening. what is striking at this point is this unwillingness, either unwillingness to move which characterizes the gulf monarchies or this extreme caution in the reform policies which marwan as outlined in the case of jordan and i'm going to talk about the monarchies in morocco. all of these monarchies know they are in danger. another words there is no monarchy, but no other government in the arab world that is saying this is not -- the kind of the peoples that have shaken other countries cannot take place in my country. in fact the signs are quite

clear that all the monarchies are very worried about what is going on in other countries. they may obtain that everything is okay that in saudi arabia where the king of praise the population for not going out in the streets and protesting. at the same time distributing incredibly high amounts of money in various guys to the population which certainly shows that they are extremely worried about what is happening there. the other paradoxical situation that we see is that while none of the monarchies, particularly the gulf monarchies, have significant reforms in their countries, more and more they are reacting another country saying that they should introduce major reforms. all the arab monarchies are in

favor of the arab league. they have all come out telling syria that they have to make changes. another words, there seems to be an underlying theme here that reform is necessary, but not at home or not quite at home. so it is a very paradoxical reaction in many ways. let me talk about two countries in greater detail. first of all talking about morocco. morocco in many ways is a very interesting example because at least outwardly in morocco the king has tried to stay way ahead. within two weeks, a little more than two weeks, 2.5 weeks of the starting of the protest on february 20 the king came on television and announced a new

constitutional world would be drafted. he is a committee that started the new constitution and he did so. the constitution came out on time. he gave to this committee a few months to prepare the new constitution. the constitution was presented to the king on time which was probably easy given the fact that it was written not by a representative audit but a small committee of experts. the constitution was overwhelmingly approved by the population. i think the rock and government bay have gotten -- when they announced 98.5% of the kind of -- raises alarm bells. but there was no doubt that the support for the new constitution was realized because people

supported the king in the king presented the new constitution and people voted for the new constitution. essentially the king moved very boldly. the problem is the constitution was enacted and is a very ambiguous constitution. is a constitution that could lead to the power of the king. could lead not to a constitution should shuttle monarchy or a parliamentary monarchy, but could lead to a monarchy where the parliament has substantial power. but it could also lead very much to being largely untouched. there are loopholes in the constitution that allowed the king to essentially maintain most of the power in his hands and whether or not the king is going to use these loopholes is

going to depend on whether the political parties, whether the parliament allows him to do so. .. but there should be a proposal can be a brooch and a country that includes very wealthy are

asked to make a decision and he is going to maintain control of the. so essentially what it means is they can maintain control over anything they want by declaring that his son be to import. the question is the political parties. they're going to allow them to do so are they going to push back if he tries to, defiance against the power in the past. the elections have not taken place. elections are now scheduled for the 23rd of november. so we really don't know the election. the results. but there were two indications that suggest to me that probably there is not going to be a what you said at the parliament. there are two main contenders for india elections.

one is a coalition of parties that is organized around the party for modernity, which is a party that is a childhood friend of the king, someone who is very close to the king. if the party and the coalition of the election, get the largest number of vote and election under the new constitution, decaying to choose an individual from the winning correlation and make the prime minister. what will happen in this case is that the king is trying to become the prime minister and they are not encouraging to see the power of the prime minister and the power of the government vis-à-vis the government. there is also a possibility at the parties we get the plurality of the vote is going to be the

party for justice and development, which is the islamist party. it's a very bolster his party and above all it is the party that says today very clearly the main goal in this election is to complete the legitimization, to complete the integration with islamists in the political system with pay-per-view that has as its metrical is probably not going to upset too much. it is not going to take -- to push too hard against. so the risk of morocco is after all the initiative for the new constitution is on, we find a situation which is very much the

one that exists before. why is this a risk? you can say what is wrong with? it is a risk because in morocco you have another is on this political organization that so far has stayed on that site is that the political system. it is very matched opposed not only to the constitution that the king presented the new constitution, but a decrease from time to time to question the legitimacy of the monarchy as a whole. now nobody knows exactly how much support these organizations has because it has never competed in an election because it refuses to recognize the legitimacy of the moroccan state. but this is the largest political organization in the

country. in other words, by moving so cautiously, decaying may end up and i certainly won the first round if you want. he has made came much of his power. he has maintained and may find himself to be a different type of opposition. i'm not in morocco argue how successful the king has been. we see when the voters come out. moroccans voters cycle does this and satisfaction by not going out and vote. the last election is about 37% of eligible voters cast a vote. over one third of the ballots that they cast our cue to protest voting. so he may very well see a

similar. if there is still a road now committing me note that the monarchy has not moved fast enough, that mohammed has not been not successful as he was in staying ahead of the process in managing the process of reform in the past. and managed to protest the dissatisfied population rather than being able to produce the reform you want. let me move funds for a moment and just talk about what mark shea. the caution is the opposite of what has been happening in other countries because you can save

the other still have legitimacy. in a sense, i think that they are missing an opportunity to move more decisively. but they still have the opportunity. the legitimacy is very high end is clear and all studies. in bahrain they have a first situation. in other words, the monarchy at least in the eyes of the shia population you hear even the most moderate members of the shia opposition are now calling for the full flight of constitutional monarchy. that is the monarchy with a cane that does not have any power at the kangaroos, but does not govern. and of course they are beginning to ask for the republic for the overthrow of the monarchy with the monarchy completely. tomorrow at 7:00 in the morning,

washington time, that the sunni commission will present the results of its investigation on how the country came to protest. for those of you who have not followed by rain closely, first of all, by rein has a long history of political compulsion and strive for the shia population, which is the majority and also does not have much power. a ten-year period about people in the 90s. finally they reached some agreement of the political system in the parliament and then at the beginning of the year, but the protest in the rain starts again. and by rein was put down.

how harshly we will know more clearly and so far we have one thing in the monarchy says another. the report that comes out of tomorrow is supposed to be the definitive study done by an independent commission from outside by rain that will tell how -- what actually happened. and i think judging on the way in which the bahraini government at the embassy here are becoming proactive in telling everybody their goal is to learn from the mistakes they made in the past, i think there is reason to leave this report is going to be very critical of the government. we know more tomorrow, but clearly the iranians are worried even if they keep on telling us that nobody has seen the report

yet. and i think that it's not a good report. the point since i'm running out of time here, but point is that the arraignment monarchy reacted to the unrest, not by moving towards the process reform, they come in in the peninsula, which means this saudi troops and iraqi troops come a few from other countries are now in the country hoping to maintain. by doing all this, the monarchy has lost a lot of its legitimacy and has lost all the capacity to introduce reforms from the top. because i think at this point, the kind of reform to be required to close at five to reform that the monarchy probably cannot accept.

it is the demise of revolutionary. let me stop here and then we can open up. >> thank you are giving very good context to what monarchies can do with their time and the challenges of reform from above. given escape over the country like morocco, where the king is reform and perhaps taken ahead of political change in a country that is clearly missed the boat as it were. thank you for this detailed analyses of morocco in a raid. and i turn to our commentator, jon. >> thank you very much for some very provocative remarks and attracted rice which helped structure then. i want to commend carnegie for looking at us. we got lazy because the last time you had the fall of the monarchy in the middle east with more than 30 years ago.

the last time you had an air of monarchy was more than 40 years ago in reality since the problem had been solved. the stability of monarchies have been solved and i think before we see in the region in the last year has cost us to reinvestigate in i commend you for doing so. it seems to me there are sort of three pillars on which arab monarchies and perhaps other monarchies rest. one is legitimacy. legitimacy for people not from an art school systems i find sort of hard concept to grasp because it always feels to me like i never quite understand what people are talking about when they talk about the king because the way people talk about the king and the way people are educated not to talk about the king is deeply ingrained in society is ruled by kings. and it just takes going to morocco and jordan in a number of the arab -- a goal state such you understand it is not just language.

there's clearly something else in there that is deeply part of the educational system and deeply part of the religious structure and there is a way to kings in the region enjoys serious is legitimacy, which is very foreign to us coming from my monarchical systems. i think part of the making in this part of the world -- part of the way the arab monarchies work is the king is an arbiter, not a dispute are. it's really, really important that the king visit site. the king moderate size between people under the king. and that keeps the king pure. if you want to do think about it, the king is a crooked referee. the king sort of threw us a call every once in a while towards society favors, but nobody doubts the authority of the king to be the judge of what is in balance in what is out of

bounds. the kings that the site of the road, that become arbiters and have been for markings. he and i king is really presiding over a much more dynamic system from the kinds of systems most authoritarian leaders presided over tibet -- all of these three are related institution of power at monarchies, which is not the way -- we think of kings is absolute rulers. the king can do whatever he wants. but that is not the later anarchy's work. in many cases they try to give power to relatives. my friend mike curb to be very interesting book called all in the family about these dynastic monarchies, where if you look at the gcc, a senior member of the royal family is the defense minister, the interior minister in the foreign minister of every gcc state.

now either that's a wacky coincidence or there is some pain deep in the structure of how these places were it should not close relatives covering those things. parties think it h&h from not and you can get the money from the monarchy out and distribute it, but if you are a senior member of the royal family, you have base date. and there is often an advantage from having an incoherent among senior members of the royal family because that means an increasing number of people in society feel a bit senior royal fighting for my interest. so you don't want to again -- the shyest example of a monarch who held it all too closely, the show had to clear the plan for he wanted to leave iran. the shot did not have much in coherence and his government and partly as a consequence i thought it was too easy for people to say i have no stake in the system. i have no interest in its continuance.

clearly in the successful monarchy is what we see is the monarchs use the family. they use money to co-opt important people in important tribes and co-opt important groups that a large number of people feel they have the state can make in the monarchy as the referee. the third issue related to the previous two is money. monarchs tend to have money that they put around here and there. if unemployed within governments. it's between government says he saw this saudi's look at the neighborhoods and they not only put a hundred and $30 million, 30% of gdp into saudi arabia cannot pay $10 billion. who knows what jordanians will have gotten. presumably going to benefit to some degree in interest among all the monarchies and preserving other monarchies and a sense that you can use money to help to does. many duplicates the system.

if you can't find enough money, you have to find other ways to duplicate the system. it seems to me for all of this, where the public faith in, if you look at the polling numbers, they were generally not overwhelming polling numbers saying we need democracy. you see someone talking about a greater voice, but it seems to me what people want is better outcomes. if you look at perceptions of democracy in the arab world, you look at a country like kuwait, which has had a permit for decades, but the parliament is not a great advertisement. this is the better results you get with the monarchy. the quality friend told me the last new government hostel was built in 1976. there is a sense in kuwait and in a sense, if you look down the goals that should have

authoritarian systems will presided over this incredible increase in wealth and employment and opportunity in travel and all the kinds of things people want. my sense is that for many people what they really want is better outcomes. they want a sense of justice. they don't necessarily need to go. they don't have any more faith in democratic systems then the 81% -- 91% of americans who disapprove of the job congress is doing. people just want better outcomes. to my knowledge -- to my understanding they don't care about about mechanics of how you get there. the only would it do better on comes is an argument not totally solved in the arab world. what we've seen paradoxically is despite a relative level of satisfaction, we see that preemptive effort in in the uae to expand the franchise, to get

people or announced the right to vote in the uae they have federal national council, which initially -- i love the system. they can pick the people out to vote for the government. the government picked the people, but they expanded that considerably in the last round. very low turnout, about 25%. there seems to be a commitment to give people more of an ability to vote although people are demanding a subsidy say they go to expand the vote as well. it's a preemptive move, rather than something driven by demand. and seems to be in many cases that is something the poorest states have tried to do because they haven't had the easy money to solve the problems. the example of this state, which is most masterfully used the

franchise and use the political process to sort of regulate the country of morocco. the king of morocco has done a masterful job for more than a decade, always being on the verge of fundamental reform. i mean, there is always the latest and greatest is really going to change and i were there is a decentralization of power that was touted about fibers except go. they are real. they have a fax, but the effects are always longer-term, more subtle. anything by doing this in the way the king does is, the king decided what are the issues, our issues debated? who are the people who decide these issues in the public is the king has so much legitimacy the public trust came to do this. it is a very effective way of

managing public demands. part of the and if they'd been talking about because the king decided we should be serious about a constitution. there is already an elite discussion that can help beat that debate down. i think one of the other things the king has done effectively. i am not sure we have 100% agree it seems to me that one of the things the kings had done by having the legal side of his fondness in politics than in his legal status islamist is a split these. so there are people who said nothing to do with the system some people would say we work in the system and get what we can get an part of what that does defending that islam is never overwhelm entire system.

you could argue it is brilliant. you could argue that's not really what's going on, but to me that part of the strategy here is regulating who can participate in debate and how they participate as a way of maintaining control over how the system works. to move on to bahrain. i think it's a terrible word and jordan. and bahrain near 30% of the population that is sunni that identifies it and monarchy and clings to the monarchy. and jordan you have perhaps 40% of the population, which feels that it belongs to the state and the state belongs to it. and for those of you who haven't had conversations with

jordanians in government service in the military especially, there really is a sense that i've gotten the palestinians are interlopers. they are busy making millions of dollars in the dirt while real jordanians do the hard work of building the state. it strikes me as assorted eerie echo of the sense that many sunnis have that they are the ones who are observing in the police and the army and others are busy out doing their thing, but they are not really holy bahrain the way palestinians holy jordanians. one of the things that worries me is the sense that i increasingly get at the king because he relies on the army and the army as east bank of the tuition, the king identifies more with some of his subjects than others. is not about the palestinian

east bank, that is part of it. there's lots of ways to provide the jordanian policy. two incredibly different elites have an east bank the, which is deeply tied to the government in west bengal date is deeply tied to business. the two of them see each other threatening one another and threatening the nature of the state rather than see themselves as inherent parts of it. all of that i think suggests the need for politics to help alleviate. the key issue from everything i've heard from people involved in writing it is the report will be a political document. it is intended to be a political document. it's not a criminal indictment. it is as much fact-finding as one can do sitting at the ritz-carlton with consultants who really weren't in bahrain very much.

it is intended and this goes back to the first point. it is intended to enhance the power of the king within bahrain because when i was in bahrain a little more than a month ago the perception was that king had become the third or fourth most powerful person in the country. at the guys in charge of the military had more power, that the prime minister was extraordinarily powerful. the king of the crown point out the king is probably third or fourth in the power structure and this is intended as i understand it to give the king away to reassert his centrality researchers centrality and in some ways diffusion of power has gone too far and this is intended as in a way to help the king get back more of a central role. but the king of sub 10 is not the dictator of sub 10. they king is intended to be the arbiter and because it's really

a break down in the politics, a breakdown in managing politically a schism between a sunni population is increasingly estranged that is the breakdown and marginalizes the king and the king's task is a fundamentally political task of researching his role as the arbiter of bahraini politics is a cautionary tale for how politics divide societies with your new role, security services, which is what we see in jordan and other places in the region. thank you. >> thank you for that rich set of comments and insight. we have about a half an hour for q&a. there's microphones on different parts. so please raise your hand and step up, please, sir. synapse of the microphone comes and introduced a few >> i am ross danziger, adviser to aipac.

with a follow-up to what jon said, and jordan you have a serious imbalance on the one hand that minority of palestinians who have most of the money. and a minority of these jordanians have most of the power. the question is how can the government go about repairing this imbalance? second question is not directly related to the topic but i think i'd have an effect in the future. could you comment on the move by the monarchy to have some kind of an overture to hamas and relate to that as he visited the king to ramallah. >> let's take a few more questions. race teams. one of the back. >> with the workmen from the national democratic institute. first of all thank you very much. i've enjoyed the conversation about top-down reform and

prospects cannot trust what a question for bottoms that demand. we've talked about a very invited society, study population. what could potentially trigger the kind of men that pull the protest movement we've seen in other places in the region? >> one more question for this round. stir in the fire. >> thank you. jim michael. i'm a consultant and development cooperation with the principle focus on rule of law. it seems to me that this top-down and it's really related to the previous question has to interact with the civil society that has some values as things like equality of treatment, a belief that the institutions of governance and justice can make a positive difference for the society and where you have the

different groups contending and competing in acceptance of the idea that if you're east and you get different trigger the then if your west bank. if your woman you be treated differently than a man. and these kinds of decisions in the society and the skepticism i have found him talking to people of the region come a skepticism about whether these reforms are modernization or whether they are really transformational changes in the society. as a junior from panelists about how you see engaging civil society but the constitutional process have not been transparent or participatory. have a civil society and a civic culture that is going to encourage a further reform process going to develop in this? because if it doesn't come it doesn't seem this will be a sustainable process. >> thank you it lets trantor

panel. >> sure. the place in balancing jordanian society. i mean, the relationship between the different site is a society in the regime is changing. today it is the fact that most of the protest on the street or east jordanian. the part of the population has consciously decided not to go to the street. because they don't want to be blamed for what is going on. they don't want to be rid of the rights they have for many reasons. they have consciously not come to the street. and it seems to me this tradition of formula, or you buy of loyalty with service, basically to the east jordanian part of the population is coming to an end.

in other words, there isn't a degree of satisfaction that was there before are not part of society. which now feels that the state is moving away to the system that has privileged son that the expense of others. i firmly believe if a reform process is to succeed in jordan, it has to be led dedicating because he alone today can credibly link it here to present all sectors of society at east jordanian and palestinian origin. he can credibly claim that he can not alone the reform process that is noninclusive to go to

your question about civil society. any reform process and you think that applies not just to jordan, but the rest is bad. that is written by the government and then handed over to people and said this is it, guys. you complement not a process that's going to work. if it is not developed by the different sectors of society, it has no chance of succeeding. it is not a condition if you want. we had successful experiment in jordan of writing the inclusive blueprint cover the national agenda 2005 when actually all set there is that society, political social economy did participate in the writing of the document. but then of course it was put on the shelf because assistant that there was too far-reaching. today the national agenda is

outdated. people are calling for way more than the national agenda. when we did it six years ago, we talk about constitutional amendment was taboo. today already we've had 42 and that if people think it's not enough. you need to do more. so i participatory process id. asked in the arab world and it is the seriousness of the machines. the constitutional amendment that did work, but one of the major criticisms of coors as it is no opposition members, none whatsoever. that is not credible in my view. the question about the monarchy and hamas -- i mean, there is no question that the regime and

jordan is warming up to hamas more than it used to. i happen to believe that, you know, political islam i think needs to be included in needs to be talked to in that without talking to political islam in the region, you are excluding a powerful sector of society. i believe in a political islam movement that is peaceful, but i think with regard to the arab-israeli conflict, it is not useful going facts critical to exclude any party. i mean, can we imagine a situation where you have a peace agreement with israel without hamas involved and? it is just not going to work in my view. six that a lot of people have interpreted that to mean that hamas is going back to jordan and will open offices in jordan.

i have no way of telling whether this is true or not. the official position of the government is this is not the plan to bring back hamas to jordan. kindly on the issue of automatic demand, this is the question that really marina proposed. so far, the overwhelming majority of the political leaders around the regime and other monarchies are telling these leaders, these monarchs, don't worry. you know, the numbers of protesters in the street in jordan is no more than 5000 s. therefore you have nothing to worry. and of course the counter argument is don't wait until the 5000 becomes 30,000. because then it will be too late. and the best way to avoid such a

situation is a reform process, which in my view is totally doable in jordan, but then the monarch of the system will have to change or it just the traditional rental relationship between the regime and the public rule of law has to apply. everybody has to feel whether they are jordanian or palestinian, they have to feel they are being treated equitably. if people feel that and if people see credible reform process, it may take five or 10 or 15 years. but if they see a credible one that is participatory and been implemented rather than just talk about it on the shelf, if they see one that is credible, people are patient. a lot of people have stopped to

be patient about his reform redrick that is not followed up with implementation. >> marina and jon, any comments? >> on the issue at the bottom of demand, i would like to point out that if you judge on the action of the arab monarchy, there is no monarchy that does not believe large protest is possible i may have to try it the ahead of it. the problem is the push from the bottom is absolutely necessary for reform from the top to be implemented yet no one is going to start implementing reform if they don't feel that there is a push for it. the problem is the monarchy is coming in they could monarchies

with the exception of jordan and particularly morocco have tried to respond to the potential for underestimating the country by essentially trying to buy of population by introducing real changes. i have some more different view of thought and uae announcing elections. by and large as we can see this situation without giving in, without having to deal with the real pressure. but they know it is there and that is why they are acting the way they are acting. yes i think it's crucial, but it's not going to calm. in other words, think of the case of morocco.

the king decides to make the right constitution and process a cortical participatory process. so they fit in addition to these other mechanisms, which is an interesting name. but they are supposed to be the one that pervaded and allows for civil society organized nation to make defense fund. then we consulted. they would has to make submission and they never heard anything -- they were never consulted again here the problems they are if i don't want to say it was their fault, but the fact is they were not organized enough to really force day hand -- the commission of the king whoever you might say to take into consideration what they wanted. so if you want at the line here is that reform from the top is

only going to, if there is sufficient push from the bottom. problem is the push from the bottom team engulfed -- can engulf the reform of the top if it becomes too much. perhaps this is one of the reasons why monarchies are so cautious. they lose control over. >> to quit points. what drives the demand for different political system is a sense of political system will get better results. to the extent people think a more democratic system would give them better results in terms of justice in economics and other things, that drives people towards it to the extent that they see democratic systems in iraq and elsewhere leading to chaos. that is a disincentive to pursue them. the other piece important to keep in mind as global voices to

push for more representative government are not the ones who always capture the government that becomes our representative afterwards. there is something just sort of unfortunate passivity about many liberals. if you just like a leech has played out, there is a whole core of activists in cairo who have no links to the broader country. they don't have links outside of cairo they have extent that national not works. part of opening up the system means you have to do politics in a serious way. one of the things that monarchies have been extraordinarily successful at doing in saudi arabia better than all is they keep the religious conservatives are social liberals under their wings, protect them against each other and become the arbiter. and that in many ways protects

centrality of the monarchy and exposed its fearful of what might happen if you really had a more democratic system that ends up continuing the system rather than opening up to political reform. >> thank you, jon. another round of questions and then restart their common, man. >> thank you. margarita ragsdale with department of state. i've been following the middle east for many years starting out as a graduate student and looking at the year in spring, i really was excited then i began to worry. i wonder if these monarchies are damned if they do and damned if they don't demand no government and suddenly the monarchies have not had a long experience of really working in a democratic fashion. but i am wondering if any government in the middle east now can manage the unrealistic expectation of instant prosperity of servers holds a

change so much of what they are thinking goes to what mr. mr. alterman is talking about in the sense of a better life. i'm wondering if they really can get that even with reforms these governments will do. thank you. >> thank you. >> i have a question on my own i wanted to ask. you mentioned in your remarks of course the jordanian situation. just wonder if you could tell us a bit more about how you see that going, why the offer was made, but it might actually end up, how it might affect jordan in the gcc is of. if there are no other questions, let's go to our panelists, and maybe go in reverse order. jon, do you want to start first? >> yeah. my sense is that on the one hand deal exporting state you are in

a pretty good position because of where oil prices are and nothing they don't have to do it many did in the 90s when oil prices were lower and you think about different political deals. what happens in iraq and what happens in the chip and libya and we are still going to see, you know, what kinds of transitions we have in syria and yemen and both are coming. how those play out will have a true moniker fact over the last five years on demand for opening up systems. because unwrapping the package means that all the words get out and will say that leave the thing wrapped up. also, where oil prices are for the next 10 years is a profound effect on how much demand there is to change because people will feel greater prosperity or

people will feel it growing at the rate we. if a newer oil prices are going and the next 10 years it would be much wealthier than i am. but i think it's a nontrivial variables that we don't really think about. in general, the higher oil prices are common to more constrains political demands and political change in oil exporting states in the lower they are, the more forces change. that is beyond my ability to project. anything to your question there is a sort of regional interest in what people see in the region. al jazeera has played an incredible role not only as the narrator of this incredible. , but also projecting images in framing the discourse of how this all works. i think most of the gcc states

have decided they'd seen enough of popular revolution demanding gene. in my own judgment as they are going to be looking for solutions in countries, which do not involve negotiating with street and instead will involve forces coming in and establishing can troll and taking deals people from on high rather than a name at the very messy process of contestation negotiation. that is a godsend, but i think a few look at how the countries look at yemen and syria, i think that is what i see. one of the reasons they find each episode disturbing right now is because of the sense that they don't know where it's headed. egypt is the center of gravity. a sense that egypt will collapse into competing demands is very

threatening to the way countries see their relations with india region and more broadly in the kind of demonstration effect egypt by how for morocco of the way through iraq. >> i'm not too convinced that the problem for this country is going to be the reality of realistic expectations. i think india to know there is not going to be prosperity. i was following very closely the transition in south africa and never missing in the country is going to be bankrupt because the african population is going to expect to be paid at the same salaries than the whites were receiving and of course that is simply not feasible because the way the whites will be such high salaries is the african population is paid a really low salary. people knew there was no way of balancing.

yes there are expectations that she walk around cairo nowadays and bump into the demonstration no matter where you go. but the expectation is that government that has -- that is essentially tried to haul the problem, not by introducing political reforms, but by making economic concessions. it has been very much encouraged by the government. for an example in asia two or three years before mubarak without, where there was small size over the country and as long as they kept it strictly economic, the government gave them a salary. so it's not so much in unrealistic expectation, but it is together bit that they pay

money rather than the money of informed. they say there is no doubt that all of these countries have huge problems of tackling the unemployment. not even countries still have to solve that problem. and people on the tour do not expect to travel. >> rethink whether you're excited were worried about the area of spring, i never like to call it. spring from day one is because this all depends on the time present you are looking at. this immediately develop of autocratic regimes leaving the scene in almost instantaneously to democratic regimes and was of course unrealistic and civil

society in a political part of the culture is the sad. it was simply not going to happen. so if people are looking a few months, of course everybody is buried. if people are looking for this is a process, that would indeed go through a lot of iterations and mistakes before it hopefully arrives at people and prosperous societies. and it is a different quality. i mean, i am not surprised that this happened in egypt today. anybody who thought the army with its democratic institution, let them argue with me. the army was there by necessity at the beginning. but of course it's not going to protect democracy. anybody could've told you that.

so i think we need to be realistic that these transitions are going to take time, that they are different conditions in different arab countries, so some countries will do better than others and eastern europe, poland and russia until today in the arab world -- i mean coming address the question of whether any government can manage transition. yes, look at tanisha. yes it's a small country, but transition is going very simply in tunisia. they have had elections been held the coalition government as next head of the country now is the secular left leftist agreed to by the largest party that won the elections to islamists, the head of the constituent assembly is seen other well-known secular. the transition is going very well in indonesia.

that doesn't mean it would go as will arab countries, but it does mean that it's possible and then i think there are lessons that can be learned as they go through such transitions. people will learn lessons moving forward. one lesson i think the arab world has already is that nobody wants another theocratic government. and that is already there. that does not mean that religion will not play a role in an important one in arab governments that will emerge, but i think for the last part would be civilian governments and not theocratic ones. on the question of the gcc, it is spent six months in the gcc announced intention to invite jordan and morocco to the membership. nothing much has changed until then. different reason.

mean, it is clear that all gcc countries are enthusiastic parties. the saudis are but then maybe it stops there. as many questions being raised. other questions have to do with is this full membership or partial membership. these countries go through phases. first they have the customs union and then they have free trade agreement and then they had the last stage known, which is the monetary union, which no one has reached. so for jordan of course, the lure is that it would have free movement of labor, so that jordanians can work ideas without having to get work permits. and that more investments from the hopeful country jordan. thus the rule of course. but as i said it's very interesting to me. this is not a new demand. i was in government 15 years ago

when you first test for membership in the gcc. it's very interesting to me that when you ask on the street, the answer is not enough semantic yes. you know, what is the catch here clicks [laughter] said there is also a name not saying -- i'm not necessarily saying that there is sort of a catch against reform. all i am saying is people understand today that their problems are not purely economic and there is a demand for better government that will not go away just because their pockets become fuller at least in jordan. >> thank you very much. if there are no more questions, m.i.t. thank you all for coming this morning and certainly to thank our excellent piano. the paper will come out in a few weeks.

please look forward. and please join me in thinking our panelists. [applause] [inaudible conversations] [inaudible conversations] >> in the name of the greatest people that i've have heard claimed this very, i draw outlined in the dust and toss the comment before they traded

tyranny and i say segregation now, segregation tomorrow and segregation forever. [cheers and applause]

>> major general daniel allen spoke to reporters about the military mission in afghanistan a video conference from bagram airbase, general allen talked about counterinsurgency operations in a plane reduction in troop levels. this is 40 minutes. >> good morning here in the pentagon briefing room and good evening in afghanistan. and i too welcome army general major daniel allyn back to the briefing room. as most are aware, general allyn

is regional communities. general allyn in men and women of the first calvary decision to send rce simple partnership with the afghan national security forces he commands a combined team of eight u.s. french and polish test courses. rc east area of responsibility includes 14 provinces with a combined population of more than 7.5 million afghan citizens. this is a generous second briefing with us. he joined us in august of this year and will be briefing us today his headquarters in bagram airfield. following opening remarks will take your questions and with that, general, i will turn it over to you, sir. >> thanks, jane. i appreciate the opportunity to talk with all of you. on behalf of other teammates of

joint task force one, it's an honor to represent committees today. my joint task force one just computed our six-month assessment on her campaign plan progress and 68 dozen afghan security forces with whom we partner, we are currently on a path to accomplish their assigned missions. our main effort continues to be partnership with the development of the afghan security forces to achieve security privacy for approximately 7.5 million afghans and 14 provinces and 100 xt districts that comprise regional command east. ..

>> 60% of which were afghan. it postured us to keep the pressure on the enemies of the people of afghanistan this winter. conversely, insurgent attacks 24 fall failed miserably across the board. examples of actuallied insurgent attacks in the last two months include suicide bombers who failed in their attempt to attack the government center in the district on 16 october. one attacker detonated his device and killed himself while

afghan police stopped the remaining three attackers. in a separate incident, insurgents tried an ineffective attack on the district center. on the 10th of november, where afghan police and security forces killed eight insurgents. additionally, coalition forces killed multiple insur gents in two -- insurgents in two separate failed attacks in the province on 7 october and 8 november. it's increasingly evident that we are facing an defeating inexperienced and poorly train, and led insurgent fighters. most recently, despite insentiments to use all force to attack the traditional jurga, forces provided a secure environment for this gathering this past week. over the past 90 days, violence continues to cause 85%-90% of

afghan casualties despite leaders such as omar's recent directives to stop targeting sievians. we can dedoes the insur janets targeting afghan civilians are undisciplined or leaders lack the ability to enforce their own directives. because of the enmy's continued violence against the afghan people, there's increased cooperation between the afghan people, the local governments, and the security forces who serve them. we're now seeing in eastern afghanistan, the result of having the right inputs for the past year now. senior leaders professed this last year and recent successes demonstrate how vital those inputs are. much more work remains to be done, but we are seeing tangible progress in the afghan security forces and potential government capacity. we'll continue to press forward with our afghan partners to

achieve a stable, security future for the people of afghanistan, and with that, i'm happy to take your questions. >> thank you, sir. we'll start here. >> thank you. thank you, general. this is from -- the question now some elements in pakistan are now trying to reconsider they announced they will not attack anymore in pakistan. what i'm asking is is this going to help the haqqani network, you will be controlling, if they are having been inside pakistan? this will affect your mission and also as we approach thanksgiving, what's the mood during this thanksgiving of the u.s., your mission concern, thank you.

>> well, i think i understood the second half of the question clearly. the morale is high, and the soldiers are very confident in their -- very excited about the capacity that's developing in the afghan security force partners looking forward to celebrating thanksgiving here in the midweek, and we definitely feel the support of our families back home and also of our leadership, many visiting us during the holiday period, and in terms of whether or not the haqqani's dialogue with pakistan affects our efforts here, remains to be seen, and we will obviously be -- we are ready to continue to maintain the releaptless pressure on any and all -- relentless pressure on any an all who attack the afghan people and the security forces of

afghanistan. >> hi, general, nbc news. you mentioned in your opening statement that you believe that the inputs are right in your area over the last year, the increase in u.s. troops there and afghan troops, but we've been hearing more and more that there will be a surge or another increase of u.s. troops into rc east and next year and maybe into the middle of the year before the surge starts drawing down. do you still expect that? anticipate an increase in troops and perhaps an increase in operations in your area coming early 2012? >> thanks, courteney, and i know you're well aware that this was really the first full fighting season with all the surge forces on the ground, and i think we can clearly see the impact it had on denying the insurgents

any opportunity to regain lost ground both in the south, the southwest, and also in the areas that we rested from their control during the summer campaign. we are obviously still in the process of the early phase of the 2011 reductions, and we are on track to meet that by the middle of next month, and the resources that we have now are having us in good shape for both the winter fighting season and heading into the spring campaign , and i'd say any future decision that general allen makes on resources is something that is probably best addressed to them. >> general, hi, david cloud with the l.a. times. i wanted to ask about the

partnering effort you mentioned. there's some here in washington who think there ought to be a shift in that effort, away from partnering u.s. units with afghan national army units and towards an embedded as provider -- adviser approach in order to speed up the ability of afghan units 20 take over -- to take over battle space. my questions -- two questions -- one, do you have any embedded advisers within units, and two, are you thinking about moving to that kind of model, and do you think it would be beneficial? >> well, thanks, david, and frankly, the quickest way that you accelerate the development of afghan security forces is by putting the world's best army at that mission, and that's what we've been doing with our embedded partnership, with the

companies and battalions of the afghan security forces, and we have seen market improvement through that embedded partnership, and that has also built the confidence of their leaders as well as their confidence as we do that. now, we also have security forces assistance teams as a part of our effort, and we align them with the units that are have made the most progress so that we can partner with those units that most need the development work, and frankly, it's a very careful assessment that our commanders at every level make to ensure that we have our embedded partners with the right units and the right leaders as well as our advisers working with those units that have developed to the point where advisory assistance is

sufficient to sustain them towards the time readiness. >> so you have -- sounds like a mix of embedded advisers and partnered units. can you help me understand what the break down is there? i mean, of the asf and your area, what's the -- and the units in your area, how many have embedded advisers and how many are partnered units? >> yeah, that's a very complex question to answer. obviously, we have 68,000 afghan security forces, and we have, today, just over 29,000 coalition forces so if you did raw math, you can tell that about half of the security forces enjoy an embedded partnership arrangement, but it's really based on where

our -- the main focus of our operations are, where the enemy threat requires it, and those units that have advanced their readiness to the point where adviser teams are adequate to sustain them -- that's where we align them, so within just about every brigade combat teams and areas of operation, you have a mix of adviser team and embedded partnerships. i wouldn't want to try to give you a raw number, but suffice to say all the adviser team and all our units are fully invested in partnering with our afghan security forces to accelerate their development. >> dan with afp. can you tell us what's the state

of rocket fire coming from the haqqani network over the border? we've heard there was a dray dramatic increase since may with the pakistani frontier corp. either turning a blind eye or worse. is that still the situation? has there been any improvement? the other question related to that is how do you see the afghan forces ability and capability to defend that border without coalition forces? are they close to that, and are there any afghan units able to operate there independently, and do they have helicopters, for example, that support that? >> well, dan, first of all, to your question about the cross border fires, that is actually tapers somewhat in the past several weeks, and, in fact, we've had some very good cases

in the last three weeks of the pack mill coordinating with us to respond against those cross-border fires, and that coordination occurs with every event that happens. i'd say in the last three weeks, we're probably averaging three to four cross-border firing incidents a week, not all of those are confirmed to come from haqqani operators, but the majority come from the area in which they normally operate. now, we do have afghan border police that are operating independently, and in several areas in regional command east, and, in fact, in recent -- on the third of november, retransitioned an -- we transitioned an area to independent control by the 7th zone of abp, so that's a case

where they advanced to that level, and we were able to focus or partnership on other elements. we are -- part of our strategy is to ensure that the afghan border police are ready to defend their border as we continue their development, and obviously, our enabler capability, like helicopters that you mentioned is a key capability that they will need for some time while we continue to train and develop their own afghan air force assets. they are not ready today to do that, but they are clearly on a training path to attain that security primacy over time. >> npr, i wanted you to talk a little bit more about troop reductions next month to meet the white house call for reductions in troops.

a ballpark, and how many you expect to pull out of the east, combat or support units, and also, a broader question into next year. as you know, general allen, the top commander in afghanistan wants to shift more american troops to the east. do you see that need, or can that hole be filled by afghan forces? >> thanks, tom, for that question. first of all, we've got about 200 troops to withdraw from the east to meet our target and our portion of the surge recovery, and none of those are front line combat troops so we will sustain our focus on partnership and pressure on the insurgent networks, and looking forward to

the east, clearly, the question of how many more resources you need depends upon how quickly you want to finish defeating the insurgent force here in the east, and that time line drives what resources are needed. we still have insurgent safe havens to deal with in the east. we're focused on those each and every day and maintain pressure on them with every resource we have at our disposal as we develop the afghan security forces to hold and secure their nation over time. >> from the times, general. can you tell me as you're planning various operations, how important it is, the element of night raids in both attacking the haqqani network and

gathering intelligence for your other operations, and the second question is after 2014, can you see, at this stage, that it will be possible for all american forces to be out of the east in 2014 or necessary to keep some of the american forces in the east past 2014? >> well, first of all, to your question of night raids. clearly, operations going after the insurgent network leaders are a key component of the counter insurgency and counterterrorism effort. those enemies of afghanistan clearly are successfully targeted at minimal risk to civilians through night raids, and those will continue to be

important, and clearly, we are focused on continuing to expand the afghan force role in the operations, and they are increasing every day, and ultimately as we are with all operations, the goal is for them to take the lead in those operations as we continue to expand their development, and in terms of our commitment to afghanistan after 2014, i know that general allen has made it clear that there will be a continued need for security force development after 2014, and that is a part of the strategic partnership dialogue that's still ongoing, and so i would say that we will have an enduring commitment to the development of the afghan security forces and their capability.

>> general, lou martinez of abc news. back to your answer to tom's question about east. are you saying from the 14 provinces that rc east controls that 200 total will be sent home as part of the first tranche or any tranche as a result of this repositioning? >> the question that i thought he asked was how much did you have remaining to meet your surge recovery, and that's about 200, so, yes, that is from the 14 provinces of command east, and surge recovery effort. >> a follow-up -- do you have any other forces that left before these 200, or is this the total 200 for the year?

>> no. we had about 1500 total that we contributed, and in the largest portion of that was a unit that did not deploy in as part of one the brigade formations, so they were offramped on arrival as opposed to being withdrawn from the force, so that was the bulk of our reduction, and the rest, we were able to shave from nonimagery and maneuver force formations. >> hi, general, courteney again. if we can just quickly go back to the cross-border, a follow-up on dan's question on a

cross-border fire. what -- the fact that the number of cross-border has gone down in recent weeks, does that have anything toot wed weather, or do you think that actually is some kind of operational reason behind that, or it's just getting colder, and it's more challenging? >> no, courteney, we don't see any connection to the weather, at all. it's obviously a number of factors. we've continued to get about the same number of attacks against our border positions, but the majority of that firing over the last several weeks is on the afghan side of the border, now, whether or not there is more to the explanation than that's where the enemy is choosing to shoot from, i can't answer that. i do know the positive sign from our perspective is the

responsiveness with which the pack mill border forts have coordinated actions against the firing, and we've also had some complementary efforts as we maneuvered forces to deny insurgent infiltration, our counterparts on the other side of the border have also adjusted positions at our request, and this is a very positive step forward, and really was a direct result of the regional board coordination meeting that the afghans held with the 11th corp. of the pakistan military in kabul a little bit over a month ago, and another positive sign is the communications exercises. we've done one about three weeks ago. we've got another one scheduled to go here in november, and it involves the pakistan border forts, the afghan border forts,

and also our combat outposts, and, again, the goal here is that pakistan military and afghan military secure that border in a bilateral way, and we are increasingly allowing them to do the majority of that coordination. >> general, tom, again with npr. the strategy here in washington is to attack the haqqani network and also get the leadership to the table to talk. at this point, have you seen or heard any indication that the hackny leadership is willing to -- haqqani leadership is willing to come to the table to talk negotiations? >> well, tom, i can only speak for who's talking with the afghan leaders in our provinces

here in regional command east, and so far, that that has not been haqqani leaders coming to the table. now, we have had a very sizable increase in insurgent leaders coming forward across about six of the provinces based on the pressure that's been applied against them over the summer, but that is not included to date, any major haqqani leadership. >> general, aol defense. you've said you reduced mostly noncombat units in your draw down. we've heard that one of the biggest needs of the afghan security forces are the logistics and those things. what are you doing to bolster the afghans' combat support and logistics?

>> well, thanks. that's -- i appreciate you bringing up our efforts in building their sustainment capacity. it is one of the primary october -- objectives we have in the ongoing effort, and particularly a focus this winter as we prepare them for the spring campaign. in our brigade support battalions that support every one of our brigade combat teams are the primary trainers and partners in that effort, and they have not been touched at all by the surge recovery, and they are fully invested and partnered with the combat service support that are the core element of each afghan national army brigade, and they will remain very, very focused, and at the same time, at the national level, the national training mission in afghanistan

under lieutenant bulger, has a sustainment command arriving soon to focus on the national to operational level logistics development for the afghan security forces, and those two efforts combined are focused on closing the gap on tactical through national levels sustainment needs of the afghan security forces. >> general, lou martinez again with abc. i think you touched earlier on the peace talks between the pakistan government and pakistan taliban that's been in the news today. do you support those efforts given in the past when there's cease fires, safe havens have been maintained, and the cross-border attacks into the rc east staff continued?

>> well, i think you're really asking a strategic level question of attackty call commander. obviously, the dialogue that's going on here within regional command east is occurring between insurgent leaders and government of afghan leaders. as an example, governor was very engaged with the several groups of leaders who expressed the desire to rejoin the government in those conversations and that dialogue is still ongoing, and obviously, this is an afghanistan-led afghanistan program, and our effort is to try to ensure that the resources that they need to facilitate the dialogue, if and when it occurs is made available.

>> thank you. let me just follow with one question, general. one, do you agree that peace and stability in afghanistan it will all depend on how pakistan behaves across the border? how do you see, sir, today relations between afghanistan and pakistan as far as the stability and as far as afghanistan is concerned? thank you. >> i think state in afghanistan has a number of factors. obviously, the safe haven that some of the insurgents enjoy in pakistan is a contributing factor, but there are several other variables that have to also be addressed by the government of afghanistan and the afghan security forces with our support, and i'd say that

the pakistan and afghanistan leadership are involved at all levels in healthy dialogue. i certainly see it with the military leaders that i work with, and as i mentioned, the regional board coordination meeting that the afghan border police led with the 11th corp. of the pakistan military, and so i think the two countries are in dialogue, and they have a lot of respect for each other, and i know you understand fully that during the solve yet ere -- soviet era, there was a lot of the leaders here in afghanistan that were protected in pakistan and they have never forgotten that, so the two countries clearly have a lot of common ground that they lean on. >> general, sort of general