the iron mask, and e.g. 20 finance ministers and central bankers will meet in washington d.c. next week, focusing on raising imf resources for intervening in financial crises. this is about an hour 10

minutes. >> to welcome all of you to the brookings institution this morning. we have had the honor on several occasions of having christine tran three com and edify us on some of the most important issues of the day. but this is a double first. w. asia conti, her husband is with us today and it is his first visit. thank you for being here and the support that you give in, not just to your wife, but to a clause and now a great institution. it is also the first time that madam lagarde has been here in her capacity as managing her of the imf. she obviously knows the fun and very well she knows the book of business. she knows this town very well as well. she was an exchange student at

holton arms, up off of river road once upon a time. and around that same time, she worked as an intern i would guess in the out his event congressman aucoin of maine and that was at the time of the watergate and nixon impeachment. so that must've been quite a busy and exciting time to be in the congress. i might add, not in lagarde also knows that this is a tough town and that even geo-economics is sometimes a sport. i just hope the fact that it's been a tough town is not connected with your limited mobility here today. she also knows, as do we all, that this is a season in washington that is distinguished by two things.

cherry blossoms and the fund big eating. so that is the latter of those that is talked about this morning. she is very good unshaven -- she is going give those insight into the week ahead. she will be talking about the state of the global economy. she will be giving us thoughts on what it will take to keep the recovery on track, what it will take to assure that there will be growth and indeed smart growth in the global economy. and i suspect that it will also come out. it makes it particularly appropriate that javier solano, at the brookings institution and other great european would be with us today to participate in this conversation. this event is sponsored under

the aegis of our global economy and developing program. the director of that program, kemal dervis knows all of the issues very well, among many other associations that make him the perfect person to enter into a conversation with madam lagarde after she finishes her remarks. he's been deeply involved in itchy 20 process. after a bit of back-and-forth between the two of them, someone will open to all of you. so madam lagarde coming thank you for being with us all today. [applause] >> thank you very much and good morning to all of you. i'm delighted to be here and i can assure you that my slight disability is nothing to do with

the hardship of living and working in washington d.c., which is a full-time come to seriously very nice on tbn. i would like to thank the brookings institution and especially you, strobe talbott sos to come the kemal dervis for having invited me to speak here today. this institution actually provides an ideal foreign midnight view to address the issue of global economic future into the beyond the immediate comparative and chat with the crisis, so expect me today to actually deal with the short-term issues we're facing, but also try to look a little beyond that and have a slightly longer-term view of what we are facing and how we should face it. in fact the ideal forum, i'm sure both turkey the ims john

maynard keynes as well as harry dexter white at the fund took the opportunity even in the midst of a crisis to think about the future to be on the crisis. they seized the day to use odes: "carpe diem.". now you strobe and you, kemal arcserve tourists who actually decided to embrace that spirit of seizing the day, seizing the moment of carpe diem, you with the extraordinary work that shoot it at the time when the soviet union actually fell into pieces and new, kemal as a courageous, very brave minister of finance in turkey when implemented reforms have helped to be in a much better position in its crisis. in the spirit of seizing the moment has also inspired the g20

leaders at a time and they'll congregated back in washington d.c. and two dozen eight and later on in 2009 in london and those caught at the time, the london moment. they decided to collectively they should seize the moment, address the issues courageously and look a little bit beyond what was the immediate urgency is. it may be another one of those moments. it's possibly a washington moment. in recent months important actions have been taken, particularly out of europe. thank you for being with us today. i'm so pleased you are here. and as a result, we have seen some improvements and economic climate. the risks remain high and the situation fragile.

let me also identify that would probably have at the moment a little bit of reading space. not much, but a little bit of breathing space where we can actively pursue what still needs to be done. who knows, perhaps not the cherry blossom, but the spring meetings might be an occasion for us to actually take a chance that that washington moment. now what do i mean by that? we need to address three important issues and ask three important questions. first of all, what are the next steps needed to keep the crisis that they? second, what are the building blocks needed to achieve more lasting growth and stability not

to put the crisis at bay, but to put the crisis behind as? and third, wouldn't strengthen corporation, particularly strength and ims be a pal to take advantage of the tectonic shift that has taken place around the world? obviously those are the three questions that i would like to take intern. actively pursuing that still has to be done to keep the crisis that i. let's backtrack a few months ago. remember we were staring into the ivs. but more recently, some day that i particularly arising out of this country, telling us that the united states are probably beginning to turn the corner and some actions taken by the europeans i'm also glad to a

little bit less stress on the financial markets. a little bit because clearly what is happening in the last few days tells us that turning the corner is not an easy thing to achieve. in the meantime, emerging and developing economies have been and should continue to be a relative source of strength. but again, we must not let down our guard. and as nelson mandela once said, the secret is that when you pass one, you suddenly realize that there are more hills to climb and that is exactly where we are. more hills to climb. and clearly the risk that looms largest on the horizon is that sovereign and financial stresses returned with renewed force in europe. not to talk about the increased price of oil. the steps taken by the europeans

in recent months are a timely reminder of the power policy results and yet as i said, there are still risks. the situation is still fragile and they're still hills to the client. europe in particular must keep up and build on the offers that it has undertaken. continued strong policies that country level. we have good examples of bad. italy, spain most recently. continued support from the european central blake has been critical of the last few months. continued efforts to build a healthier banking system and continued steps towards more fiscal integration. the much expected european decision made by the euro area partners to strengthen the firewall was indeed crucial. these actions will help slowly but surely to restore confidence and restore stability and reduce

abilities. they also need a broader approach, simply because our economy was interconnect did. but broderick church was stronger global firewire is not only to keep the crisis that by the feds tattling area of instant interconnections, the stronger european firewall will be part of the solution, but part of the solution only and i do we need something stronger in which the ims can play a role. it will help of a circle of protection with each and every country that needs it. and had ims can haul. they can help if it's the membership matches the epicenter and the countries bystanders.

now we are of course constantly assessing and reassessing global risks, taking into account developments into the global economy and the economic climate, under market as well as all policy actions taken around the world, particularly out of europe. and the needs today may not be quite as large as we'd estimated earlier this year. if only because action was taken by those european institutions that mentioned earlier. but let us make no mistake. the risks and the needs are still sizable and it would be very imprudent to ignore that fact. in this context has been encouraged by the expression of support by many of our members to increase their resources. and i know full that during the

spring meetings that are coming up next week, we will see development and we will make progress and we shall seize the moment. and that rings me to my second point and my main point. the opportunity we have to build a stronger foundation for growth and stability, to put the crisis not at day, but to put it behind us, but to do that is not just about short-term sm. it's going to be about anchoring medium-term, long-term decisive four-lane productions that will restore confidence for all. the crisis has indeed shaken the foundation of our traditional economic framework. for too long, the benefits of growth have been shared by too few, growing inequalities and weak financial markets left the

world prone to instability increases. and the nine months that i have been managing director of the imf, i traveled across their membership. that was one of magic is common to see for myself and most places for the advanced economies become in developing economies, emerging markets have seen the same thing. the cost of instability, the face of unemployment, the hardship, loss of dignity, economic classes the same in all countries to different degrees. and this other painful conclusion of social exclusion and high unemployment, especially with young people. especially in countries full of hope, would've liked to transition from the air of spring to a better future. in this countries, a generation is that a grave risk of being lost in transition and it is

imperative that the reforms underway across the region succeed and it is imperative that all the people of the middle east had the opportunity for a fairer and more prosperous future and it is imperative that we help them help themselves. otherwise, not only would it be a last transition, but it would be a last promise. particularly appropriate financial support will be critical to prevent the risk of near-term economic instability and jeopardizing the future. the cost of inaction for that region would be much higher than the course that is needed to help them help themselves. in the middle east and elsewhere, the global economic desktop deliver the right type of growth and the jobs that people need and it is not happening at the scale where it should. so we've been as over the crisis, we must take the opportunity to rethink the framework and harness a new type

of growth. now what does that mean in this? i wish i had the unfair. and some of the best economic minds in the world are struggling with this issue, including here at proteins, including at the front. let me share with you some of our thinking. and it's going to include policy action recommendations. it's going to include key factors that we see likely to produce the most stable sustainable and solid group and it's going to make some short-term needed actions as well as medium and longer term one. in the short term, what is clearly needed is more confidence, more stability, more demand. the immediate focus of policy therefore should be to support

growth where it is still weak. let me be clear. in many countries, especially in advanced economies, fiscal adjustment is essential, but the base of adjustment matters. and it must be specific. and it has to be demand, therefore any policy that supports demand will be fine. neither is the imf saying that it has to be fiscal consolidation across the board without specificities. we say there is the base to be heard and it has to be country specific. let me be clear. yes, some countries have no choice but to adjust now, sharply and quickly. but it's not true across the board. other countries can actually let automatic stabilizers play their role. let revenue and reduce public

spending, especially those safety nets in greece and there is some countries of a limited number that can actually slow the pace of consolidation in order to let growth actually take root rather than harm growth. but that short-term caution that i try to articulate by identifying those that have to take hard measures, those that can let the stabilizers work and those that can slow the pace, that should not be an excuse to delay after his two restores sound public finances. grounding adjustment and medium-term plans, as is particularly needed for the united states and for japan, for example, will not only help address fiscal concerns, but also reinforce confidence and growth. the expectations will be there.

turning to monetary policy now. it can also support growth or inflation remains in check, which is pretty much the case in all entranced economies. for emerging economies come a bit more caution is required, especially if rising oil prices refer to it earlier and extended credit booms begin to test the bounds of inflation. again, has to be country specific. low income countries must also strike the right balance, given as they are being hit by reduced inflows and probably produce transistors as well against current best, especially those radiating out of your. it will have to rebuild the policy buskers they had to use during the crisis. these kinds of policies will help to get growth restarted over the short-term. now with the longer-term we must

also work towards growth. that is more inclusive, more durable and not just pay lip service to it, actually to it. clearly the rebalancing of global economy from atrios did demand from external deficit to surplus countries whose key and this is something that the imf has been advocating for a one time. i went a little bit below the radar screen lately, but that is key if we want and no one turned to address the imbalances. we are seeing promising sign in china, for instance with the current account balance has moved from a little over 10% to probably a little less. it's good. but it's only partial. because many external factors abate, then it will hike again.

so more needs to be done. we also know based on the imf research the more equitable distribution of income must help financial stability and more lasting growth. let me take one example, the example of brazil, which then the 1990s have taken significant steps to transfer from the more privilege to the less privileged. by further countries were to reduce the quality by less than brazil has done in the last two decades. our analysis shows that period of uninterrupted high-growth could be 50% longer than they might otherwise be. analysis, researchers actually can help them to set standards. india and china, too, have made

important and rest are reducing poverty can be a tight growth has also exacerbated inequality. so those inequalities need more attention and the governments in those countries know it. so what will be the key fact here is that will help? i've gone through the policies. fiscal, monetary, short-term and occurred in the media term. but at the critical fact there's quite a few three of them amongst others. i'll mention those three. the first one in our view is a financial system that supports rather than destabilize the economy. and that means preparing the financial system so that it can deliver credit growth, jobs. this means better regulation and supervision and coordination across countries because some countries have made progress in their supervision system. they have. but the court nation between

supervisors, that is not at its best and it has to happen. it means getting the financial or to pay its fair share as well and you know there are discussions on that particular matter. we dare not be complacent on financial sector reform. the mission has not yet been accomplished. the mission is to be accomplished. steps have been taken. standards have been agreed. major pieces of legislation have been saturday, but the implementation, the court nation is still vastly lacking. two, we must improve competitiveness in a better functioning labor markets. it can work in parallel. it's tough indeed, but it can work in parallel. and if we take one example again of such policies, i would take the example of ireland that it

actually focus on improving competitiveness, but have also made short that those people who are unemployed are getting specific training to make them able to access the job market and have put in place measures actually engaging, incentivizing a few employers to employ the unemployed. nobody should pretend that it is easy. labor market reforms are difficult. in many cases it involves lowering labor costs but reform is essential for competitiveness and creating greater job opportunities in the future, especially for younger workers. it needs to be done, but it needs to be done according to specificities of the country. he needs to be done with care and it needs to be done in a dialogue that is a solid dialogue with all the stakeholders. third, remember the financial or the works this hurt the economy?

the competitiveness in the reform of the labor market and finally the appropriate safety net that will protect the less privileged. this is necessary because the reforms that i've just mentioned actually stretch the chemistry of society and put them at risk. they're for safety nets clearly important and again i would take the example of kenya for instance which we have worked hard, with the volume of transfers pass transfers to the underprivileged in his new friend concerning only 200 families to 33,000 in just four years and that is clearly hoped keep the texture of society together. and the imf will continue to work closely with countries that thought in mind. jobs, inclusive growth, sustainable growth.

and that takes me to actually my final and third point. the need for us to coalesce around and take advantage of the major shifts in global economy. because my worry is that the lingering risk of instability may actually pull policymakers apart and in words rather than together and out words, looking at different self-interest and not the benefit of the whole, which will indeed scared their self-interest. my belief is that through a collaborative approach be the better better chance of success. now what kind of shifts every scene? we have seen the rise and fall and rise of the emerging markets. i think we can actually say that they're no longer emerging markets. they have emerged. we have also seen historic

progress in reducing poverty in low income countries. during the past two decades, a emerging and countries have accounted for 50% of global gross and in the same time span, more than 600 million people have been taken out of poverty. third shift. the important players i was talking about, emerging markets predominately want to play bigger role in international scene and that's perfectly legitimate. they must play an increasingly important part in the global government structure. they played a significant role at the g20 level and of the imf, we see on a daily basis they want to play bigger role. fair enough. they are bigger players on the international scene than they have new ideas and experiments in certain they 10 reform is going to deliver a better

representation and i consistently urge and i still do today all of our membership to vote to ratify, to make sure there's appropriate presentation. it is better for the global economy cannot better for the membership and the imf to continue to be relevant because their presidency will be a factor of whether or not we properly represent our membership. both in terms of put a penetrance of governance. what dose to receive it is a bit of a shift? we see more and different methods of collaboration. just look at what is happening on the european scene. the euro group. there is no bailout clause. no particular institution to build on the basis for some of the key institutions. the role of the ecb was particularly strict and limited. that is changing. new type of cooperation.

let us look at a show with regional abridgments like for instance by arrangement. at the swap agreements between central banks. those are new arrangements as well and the latest cooperation agreements between the bricks breaks including last week in india is also another way of cooperating that is innovative, that is testament that cooperation is better than working in a solution. the imf recognizes this, too and we are at very intersection of an increasingly global world, where to stay relevant the imf first, as we said, constantly reflect its membership, serve all its members and help them manage the economic changes they're going through.

again, take the countries of the arab spring. we can support them. we can support them with a unique contribution of the imf, a combination of advice, macroeconomic advice indeed, type of assistance, financial support and the combination of the three can be of help because we are committed to support their program, to respond to their needs with their local political supporter. we're doing this importantly working closely with those governments, with the countries around them and also with the debian partnership which is an example of the cross corporations, but also with other partners at the table to support that movement. i'll give you another example. recently the imf solved some polls in the process and capital gains. countries of the choice to

either keep it to themselves or reinvest in a comment out the use were confessional years. and you know what? two thirds of those who have so far decided to reinvest in the common pot african countries. of course he'll say, confessional news will be for them, but they have the choice. they could have cut it for themselves. they decided to put it in a comment pot were confessional years. that is another example that could inspire us. they seized the moment. to conclude, clearly the crisis is not over. but thanks to collect his efforts, we have an opportunity, a small breaking moment possibly to reassess the challenge and to reassess how to best respond to the challenges. we have the opportunity to push on and take the further actions that are certainly needed to keep the prices that they had to finally put the crisis behind us. short-term action, long-term

action in the fiscal consolidation and growth, monetary action or possible longer-term decisions. the three principles in my view should decide over these combined policies. first of all, act quickly. seize the moment. we have that window of opportunity now. number two, act together. united. and number three, act with confidence because the faction will not be needed just for the short-term, but for the much longer-term. and i will finish up a quote by alexander graham bell, which i quietly. he once said, when one door closes, another opens. but we often look so long and so regretfully upon the doors that we do not see the one which has

just opened for us. maybe a door has opened and we can seize the moment. thank you. [applause] >> well, thank you very much. this is a wonderful comprehensive presentation. you balance the short-term but the longer-term. you'd talents to ability with growth, fiscal rectitude with the social safety net requirements. it's as tall order of course. but let me ask you. you know can't be stressed at the end of togetherness. to what extent do we really is it an interdependent economy? we saw some figures in the u.s., for example, weeks and weeks and

months ago, which you referred to see in the u.s. is taking up the recovery is much stronger despite europe. we had the debates in the past years on decoupling of the emerging markets. so to what degree are regions kind of autonomous in their growth dynamics, which could lead to fragmentation international corp. or to what extent are we really much more interdependent and perhaps one realize this? i know the fund is doing research on that. it's a complicated question. but do we really live in a world economy? >> i think the answer to the question is yes. and the research that is conduct that particularly based on the spillover research that has been conduct it for the last few years clearly indicates that there is very high degree of interconnectedness between the

economies and that interconnectedness is particularly evident through the financial circuits, the financial sectors if you will, where the contagion can be propagated much faster than through any other channels. besides initially but maybe trade would be a contingent channel. we thought investment may be one, but clearly the one that is most connect team in a way as that of the financial sectors, totally integrated and organizing links and binds between our economies. and i thought to say that they cannot be regional constructions, regional structures regional architecture that can help protect or better regulate those institutions. no, but i think in doing so and building these infrastructures, those regions, those countries

have to be totally convinced of the interconnect goodness of our economy. and that's a little bit my fear, my personal fear is that we lose sight of that and send countries would rather retire and withdraw in this vast territory that they have under control and do not pay attention sufficiently to what happens in the rest of the world because it happens in the best of the world will have either a negative or positive effect on them. and while clearly when we have look at your end that euro zone, we see clearly that they could be very significant spillover effects right around the is so in a central and eastern europe, but also in other places of the world. >> and if i understand correctly, there would there would be a spillover report did

she bring out in the next few days or it would be an integrated analysis of these in. >> correct. >> thank you very much. i think we'll open it to the floor now and we will take not questions one by one, but a trade group that by two or three and then i think we look in some time. in the back there. please identify yourself. >> two things on the table quickly. could you say a little more about -- sorry, hi. about sure -- elaborate more in china and that it stays this drop in your expectation that it will pop back up as soon as quotes rekindle around the world and secondly you imply you are scaling back your request for more resources. could you tell us what your new number is quiet

>> thank you for your wonderful remarks. i am a recent outcome of center for global development. when you talk about the new form of growth is inclusive and durable, i was expecting it to then address the nature of the economy shift to clean and renewable resources although it is not permit the ims purview, sydney public policy intrusive taxation can play a role of celebrating on a welcome your views on that. >> maybe we'll take these two because they were quite comprehensive. >> be sure. >> i think it was zero asked during a question about the china's current account. what we have seen is clearly a significant reduction of the surplus of china's current account, moving to a little less than 3% from the latest numbers which we've had.

and in and of itself, is a great result. what is important is to see exactly what the rebalancing is about and what it is comprised. and you know, subject to additional research because this is a topic to look into, is clearly composed of various components. one is an external fact year, the fact that demand has been lowered and prior years. it has certainly had a direct effect, but there's also been a portion of the reduction that is attributable to a shift, moving from less export to more domestic growth and for shelley probably have more related to investment and consumption. it's a combination of all of that. our site of initial research indicates that it will move up again, but we have in mind

something in between 4% and 5%, which is still less than the number we had before and its progress. we believe that there is still more work to be done for the rebalancing to take place, but it's in the right direction. in terms of scaling back, what i said very clearly is that we need to constantly assess and reassess the rest then as we progress in 2012, some of the drama is they were envisaged at the end of 2011 or the beginning of 2012 not only have not materialized, but some good news have actually restored a little bit of confidence, restored a little bit on the financial market. that perfect stability and not less enduring either. so we need to cautiously reassess some way are reassessing to a lower number in terms of risk, which will bring me to probably reassess a lower

number of additional resources needed. i'm not fixated on any particular member yet in the near area of the many are, the more the better. so we will see how we end up first about the spring meeting and then further on is the path that we embark upon and will probably take a little bit of time. i hope to make similar progress at the time of the spring meeting. in terms of moving to clean energy, it's obviously a component of growth strategy and while there's been lots written about him green growth come is clearly a chat area that needs to be better explored and better and lamented. i wouldn't want to please myself with words and i'm convinced that a component of clean energy and energy mix absolutely

necessary and is a component to go increasing over time as innovation takes roots. but it's certainly not one that is going to overnight substitute and replace and adding a sheet that the societies have been used to, which is why we are quite concerned about the issue of the price of oil. one country that will be very interesting to watch in terms of substitution and how quickly they managed to substitute his japan with its implied decision to significantly reduce the nuclear energy by a combination of sun as she and renewable energy and that would be a very interesting sort of pilot of substitution and how quickly it can happen. >> my name is jean quan writing for the journal. i have two questions.

the first one is the g8 media is happy being a few blocks away and yesterday the state secretary, hillary clinton says the g8 is an essential forum for global economic development. would you please tell us in your debt is how do compare to g20. the second question as i covered g20 and the moment has been very successful and the ims purview was to decrease voting rights and has been asked used -- executed. so what is the next priority for the washington moment? thank you. >> gentleman behind you. >> i'm writing for the journal and greece. and every day being over the last two years where we are only

bad, negative things about greece and about great people. and of course you are very honest and you always speak your mind. how do you tell us if you see any positives increase? [laughter] >> thank you drama script earth, tranquil department of commerce. we appreciate your talking about inequality and the world. that is hopeful coming from the ims and i appreciated your referring to the imf research on kenya with the cash transfers in on any quality. chapter three talks about debt restructuring and i was wondering, do you have that familiarity? is this a time where there could be some debt restructuring within the older oecd countries to add to aggregate demand in the u.s.?

and could this expand beyond just for closure so there could be that at the financial areas had a boost so that the middle-class and the oecd could have its own boost? thank you. >> already. we will take these three. >> it is also entering the restructuring of the right quick >> i don't want to compare the g8 and the g20. they have different memberships come and serve different, but i can tell you, you know, made very clear recollection of the decided moment in 2008 -- 42,008, when the question arose, should it be the g8, should it be somebody else? should it be the u.n.? who should be what to do with the global crisis at the nature come or financial interconnections actually brought the entire economy to

the brink's? and it was obvious that it had to be the g20. it's obvious because it had to have as many economies around the table and if much of the gdp said they could be as good and a solid when a decision was made to organize stimulus packages. so i see higher virtues and the g20 or any institution that actually encompasses a large membership. solutions can no longer be dictated by the mayor a members, which doesn't mean that it is a relative. there are other topics to discuss. but for once, concerns the entire world, the entire economy? as i said, the larger the table, the better. now, you asked me about china and you might get the 2010 quoter reform actually organize

this transfer of quotas and voice to china, which was clearly underrepresented. but there are other ways to make sure everybody has to say and i'll just remind you that i was the first one to appoint deputy managing or who was it chiang mai who is recently appointed the secretary of the board, who is also a chinese national. so you know, the voices are not just a factor of the institution , the governance. it is also how you open up, reach out and make room at the head table. that is what i will continue to do. >> all right, greece. [laughter] there have been many negative things. you're right. but you know, i think the courage of the great people and the first place is a very strong

positive and i think it must be a week of nice. very brave and nice. greek civil servants, create people that face the application, to pay their tax, that there is a sacrifice of cut pension and cut wages. i would say that any programs that is made in tax and revenue collection is also a great positive for the country. and i would say that a coalition of the political party to actually endorse, backup, lead in a difficult exercise the country has to face is also positive. and i have to say for having worked with ken cummins and mr. papageno is clearly on that page i applaud his efforts. now, fast questions about inequalities. there is a subset of your

questions that have to do with debt restructuring and assorted internal debt restructuring by way of addressing the housing problem in the u.s. this is not aimed at the ims has, you know, had a long-standing tradition of. the housing problem is something that needs to be addressed, not a matter of urgency. measures have been taken. their proposals made by the administration. the big boys and girls, stan and freddie has to be part of the equation because clearly, you know, the american households have to be able to unload a bit, just in the way, you know, we encourage banks to lend, well, the households have to be hope to borrow so that consumption can appropriate and can be reinitiated.

>> high coming into jacklin, former dirt and now at john hopkins. [inaudible] >> that's right. and back home. you've been working very hard to try to get support for sources in part to hope beefs up the european firewall, but one problem is that when the imf lens, you can only impose conditionality on the bartering countries. and obviously, a solution to the problems of greece or portugal or spain or italy are not only in the policies of the bartering countries, but the rest of the euro zone countries. how is greece going to get unemployment down ball that adjustment is going on? sahadi you see the ims be

enabled to have more authority employees on economic conditionality essentially and the rest of europe when the structure is quite fitting how you deal with currency unions click >> thank you. >> thank you. my name is him a liar. i'm from television of spain. can you please elaborate more in spain. we've seen the pressure mounting on spain, but we are doing a very severe, as you know, profound cap on reforms. you're a very straightforward person. can you please send a clear message about spain? are we've all? are the markets wrong? what is going on here? [laughter] >> thank you.

and it's such an honor to have a woman at the head of institution finally. thank you. i have two quick questions. one aside concerns what we talk about labor competition because it seems that working people who can be the engines of growth or consumption are asked to cut wages and job security and in the united states to say that taking the form of attacks on minimum wage than people can't survive. they're below the poverty line on minimum wage. i'm very cautious about your admonition to have tough competition in that regard. the second one was finish you did not disguise and that is in terms of the spillover from the loose monetary policies in the united states and europe, the very low interest rates and the harms they are doing some countries is the president of her sober minded barak obama the other day. but it is all so, can't

countries put up barriers instead of just short-term emergency capital controls quiets midas capital have to have the absolute right to migrate, but people can't? >> okay. i knew you were from italy because you asked very pointed question. because you're right. when the imf lens, the imf opposes or negotiates rather conditionality incentive program that is actually in sync with what the local authorities about broader political support as possible are prepared to endorse. in doing so, we do so with the country, not the region. but let me just make three points. one is enlarging the imf resources is not in tended for

the year is down. enlarging the imf resources isn't tired. tired membership and i'm concerned not so much about the needs in the euro zone, but also to needs outside the euro zone and then he is very far outside the year is out for for for cautionary purposes we do know that there are people out arrant countries out there that are looking into it and will be seeking support. point number two, whenever we've been involved in europe, whether it was hungry, ireland, portugal or greece, it's always been jointly with the european commission and shortly with the european central bank and that's why it's called detroit. whenever we negotiate those programs, we make sure the troika is fully on board and never had any dissenting views. we've always manage to come to

terms, which means the european commission also has to take into account what the other members of the currency can do. the more to your point, we do not have institutionally away to coalesce members of the currencies down around a particular program that we negotiate with the country, not allowed the central bank of that currency zone. and i think we need to look deeply into debt to see whether we should not read it a bit in which the way we do with such sections of the currencies down. now, say who is right, who is wrong. i think spain has done, is doing and will have to continue to do significant efforts. and you know, i don't think we can compare any of the three countries i have mentioned with

spain, with any other country for that matter because they reach very specific. there is that degree of interconnectedness and yet we cannot apply sort of one-size-fits-all solution. the crisis in spain, the difficulty the space theme, how it has to do with real estate loans, has to do with financial agent, financial banks, financial set or was not really in sync with the real estate development. and those needs to be addressed in progress is underway and that is spain has done is laudable, needs to be continued, needs to be done in cooperation, coordination, could understand with other members of the euro zone. good synchronization with the european communication, steadily

and over the right amount of time so that it does not strangle growth. okay, the next question is to ask in the labor issue as well as the fact of quantitative easing measures in all the rest of it. so it was all that together. i did not mean to encourage competition and of labor. that is not the point. but i was trying to say is that one factor that is important to to help sustainable and solid growth is the efficiency of the economy. what i mean his competitiveness of the economy. one of the factors is indeed later. and what i said is in many instances, be that the direct or cost for the indirect cost has to be addressed and incentives to this has to be low-wage,

which does not mean competition of labor. i've also indicated in that particular part of my speech that it needs to be done in a constant dialogue with all stakeholders. it is not something that can be imposed upon unilaterally, brutally, but it needs to be discussed in a constructive dialogue. second point you raised is this issue of the spillover effects of monetary policies. you know, i don't have a magic stick, nor crystal ball, but what my research teams are telling me is when you look at q1 or q2 from the u.s. perspective and they had to get the work work as far as the ltr programs as the ecb are concerned, it's the spillover effects are actually very, very moderate and what we see in terms of capital flow is

essentially, not exclusively, but essentially results of the attraction at the emerging markets with this study high level of growth they are producing on investors that clearly attract like a mad at the flawed capitalist. of course the spillover effects have to be taken into account. best buy will continue to study them in aggregate them is able to communicate and to draw lessons and learnings from that. but i don't think it can be black and white. his son is at q1, q2 are actually producing a capital flows to emerging market economies. it's much more sophisticated and in-depth. >> i think we will take two more questions and then we will and.

..

so would be great. >> has the right to be mutual. [laughter] >> thank you very much. >> a grip very interested in your comments on the of reforms of the financial system, and your specific comment on the coordination across country is quote on quote, not at its best. can you expand on that and once again, thank you for your address today. >> tokyo 2012, still a young man. [laughter] but it's about time that we return to tokyo and the imf is please ensure the world bank is but i can only speak for my institution it's extremely pleased to go to tokyo. we are delighted to cooperate with the japanese authorities

who have an excellent corporation. will be a challenge because any imf draws thousands of people, not just of the ministers and the governors but lots of researchers to make people interested in the economic thinking and the consideration of both institutions. so, it will be a challenge to get there to give the but i know i can count on the japanese authority to make that meeting is success. if i was to point out to the jury as areas where i hope we can make progress, one is certainly the sort of framework for growth of that we have to continuously were gone, and this rebalancing exercise that has always been on our radar screen and has gone a little bit astray because of the most recent development the crisis. i hope we can move on not just on paper, not just in economic

research without consideration but action by the members of the institution, and i hope that by then we will have made significant progress to help those countries in the middle east that are keen to the transition to the better functioning economy. so we will work hard in the meantime so we can deliver something there will be comprehensive i hope. >> you will allow me -- mabey not to make a comment on that particular one because i have to stay politically neutral. i am very concerned time is of the essence and should never, ever be wasted. as i said i think we have a breathing moment. financial system coordination. what i meant is the appropriate level of coordination between

regulators, supervisors to make sure we not only have good solis standards but fly well on paper but need to be implemented. the need to be delivered, and whether you look at the turn of events, whether you look at the clearing, whether you will get even the standards of in terms of the capitol ratio and in terms of liquidity it has to be developed into actual practices in the implementation and the fields across the boards and would be extremely helpful of supervisors were to willingly exchange data and information which i'm not sure that they do at the sufficient level. [applause] savitt let me think the managing director on behalf of brookings

and all of you came from brookings and elsewhere for an impressive overview. i just was thinking if we made the experiment that the imf wasn't there i think we would see few people, nobody could give this integrated view of the overall economic social challenges the world faces and the imf traditions, the lessons learned over the past i think represent a gift to the international community and corporations in the world respecting as you did a free moment the sovereignty of the nation states but also as my friend the need to share some of that sovereignty for the good, and i think we are very lucky to have you at the home of the institution. [applause]

[inaudible conversations]

now a discussion of u.s. relations with turkey, iran and russia and the role each country has been serious's escalating violence. former president carter's national security advisor sabrue brzezinski this trend by the national security adviser gerald ford and george h. w. bush this

is one hour and 15 minutes. >> good morning. i am to jon alterman the brzezinski chair and strategy here at csis and directed the middle east program. it's a great pleasure to welcome you all here. i want to thank senator mechanic for making to the possible. i want to remind you all to please silence your cell phones. i want to remind you will be life tweeting using gsj2012. that must be meaningful to somebody to and i'm not sure who. [laughter] fall when the panel will take questions from the audience. please refer a microphone, identify yourself and please be sure to ask your question in the form of questions which is not to make a statement and then say to our distinguished speakers would do you think of my statement. >> in the third session starting at 12:30.

this panel turkey, russia and iran it arises out of a project we are doing out csis led by steve flanagan to look at this part of the world that is being in many ways interrelated in ways that don't necessarily involve of us. you have three and players that have been interacting for the money with each other sometimes as rifles and sometimes as partners and hit it isn't at the center of what we think about. and we thought it would be good as the world changes and russia's world changes and the world continues to try to think of what to do with iran and how to deal with iran that this would be a good venue to people but i think are unparalleled in their inside look into this part of the world and also the questions of the u.s. strategy general brent scowcroft national security adviser in the ford and bush administration, zbigniew

brzezinski, national security advisor in the carter administration and no-load introduction this a tremendous amount of was on the panel. my children will teach me to tell you that i add to that wisdom not one that few solid legal right to asking you general scowcroft, in the last ten years, turkey's role in the world has changed dramatically. in your view was the most important ways that turkey's role and turkey's policy changed in the last ten years, and what are the constants in the way that they look in the world? >> turkey is no longer facing 90% of the west. it has turned east or has broadened its scope to the east.

right after the end of world war ii, remember real engagement in the cold war began in turkey and greece with aid to turkey and greece, and turkey became a pillar of nato and very close in the military sense of the united states, and they were one of the best members of nato. they helped us in south korea and said turkey sent troops there. we had a very good relationship with them that was a surface relationship. there were good allies and we have this kind of comfortable relationship. turkey as i say is reaching out to the east, south in all directions and they are foreign

policy expression is no enemies anywhere around so it's a very imaginative but very different relationship. and i think we need to adjust to that, and i think wild turkey is not the comfortable friend that was before. its role is even more important than it was before, and i think the relationship that is developed between president obama and the prime minister is really very healthy. >> dr. brzezinski, not a comfortable friend anymore; how we accommodate ourselves that turkey is doing more and more

things that make some of our policies more difficult and i'm thinking particularly about the growing trade relationship between turkey and iran at a time the u.s. is trying to cut iran off from economic support around the world. >> first of all let me see that turkey is an independent country. it has a right to whatever kind of relationship it wishes to have with any of its neighbors and we want turkey to follow the path we favor we have to be sensitive also to its interest. reciprocity if not a balanced is the name of the game in international politics. i agree with everything said by one of the falling to eight. turkey's greater scope of today is the reflection of its

internal site of the, the relative success, the continuing success of the model that they've now been pursuing for 90 years in the process transforming turkey much more successfully than the comparable process of change needed for the north of turkey because the transformation began under lenin in the 1920's, the transformation had begun in the 1920's and today turkey is a more space and more stable space country than anything that exists in russia and the modernization has been more comprehensive in the style of clothing and the mannerisms and education of the country modeled very much incidentally on early

20th century germany and very deliberately so, turkey is in that sense a successful case of modernization and has some short comings and its policy is a by-product of the success but also something else i would like to add mainly disappointment. the turks took seriously the decision to invite turkey to join the e.u. and the of been trying to meet the tough standards but they've been trying to meet them. in the meantime the of learned from the principal countries maybe they are not welcome in europe. that's been a shock to the turks and in that sense it has commissioned some of the turkish that we have seen in the world

scene. they were not enamored with our decision to go to iraq militarily and unilaterally in 2003. there are not enamored of it and were not pleased to have their arms twisted in order to get them to join us. as a to be more assertive in terms of their independence but fundamentally it's a pivotal state in this critical in terms of the security of europe and so far as the turmoil in the middle east is concerned it is the source of some opportunity for the stands of becoming part of the world, and then on top of that turkey has pursued a

relatively independent policy towards russia so all of that give special prominence and i will stop prepare probably because deutsch and other aspects of this very soon to be all i will say additionally is that could be jerry buckley threatened if things and syria go badly and things in iran but badly, and worst of all, if things go badly within syria and iran when there by linking these problems and escalating the dynamic and the would be a major threat to the region, very significant threat to turkey. >> a couple weeks ago the former army colonel came up to me quietly and said the turkish policy in syria has been a disaster. turkey has been much too

aggressive confronting. how do you assess the way turkey has looked to position as of both in the neighborhood and more broadly in the world? >> that's an interesting examination because it think it tells you a lot of the prime minister because five years ago turkey and syria were very close. the trade across the border was booming. they were very, very close together. i believe he has now decided that assad is a menace and needs to go, and erdogan is now on a democracy kick and i say sort of because you see the results come you don't hear the discussion

that most. but i think turkey has decided the internal situation in syria is serious enough that assad can't deal with it and it needs to go, so he turned from of an ally but very close to assad to probably his worst enemy now. >> do you think that is the right way to orient turkey and should turkey have been more circumspect in your mind than they have been? i am sure they know much more about this problem than i do it would absolutely sure they know much more about it than the u.s.

[laughter] so i returned to the turks and fisa hokies so far as syria is concerned. but we have to drop the practice of announcing publicly when things start going badly in some countries that its leader must go with an emphasis on the word must because these kind of categorical announcements which have been followed by any action don't produce anything except conflict. it's much better to have a notion of what one is going to do before one talks and in so far as syria is concerned, my view from the very beginning was that this is not like iraq. assad is not like gadhafi, and

in libya, you had significant opposition to gadhafi from the beginning so it is politically conceded. if you look at the map on the conflict of syria it is sporadic. it's here and there in this town and that region, but it isn't clearly divided or enduring and basically the country is in a kind of occasional anarchy in parts of the country but there are no clear lines. our ability to deal with it from this area from here is relatively limited supply have been of the view that we should backward for the turks and the saudis decided, period, whatever. >> what about the russians? >> if they decide they want to go and it doesn't matter as we did the british and the french in libya. if they decide they want to

play, we should back them. if they want to go to the u.n., we should back them. but the book of russians or the turks are certainly sensitive to the russian concerns. we know the russian position is much more committed as a much more inclined to write off since day one to read the problem is that in effect while assad has become the brutal dictator there is no alternative to that and they have the element of power still under its control unless turkey is prepared to mobilize the forces and send them into syria, and i don't count on them doing anything like that to provide the money, the -- who else is going to do and how. as we have to let this problem work itself out with the turks and the saudis and the arabs to

take initiative not freezing of the chinese with the condemnation to the fact the conduct is disgraceful, disgusting and so forth which is for the best u.s. officials but we can create some kind of a consensus that the turks and the saudis try to resolve this problem. >> number of people have talked about the importance of using syria as a way to isolate iran and cut off iran's access to the front-line state of israel and the mediterranean. can you see this a principal way to isolate iran and if so what are the policy prescriptions that have followed? >> i don't see that as a way to isolate iran, i see that as a way to prevent iran through hezbollah interfering in the palestinian issue, so why don't

see action in syria especially as an attempt to deal with the question and i agree there are some problems that don't have solutions and syria is one of the most complicated countries in the region in terms of ethnic, religious, cultural, traditional sports, it's badly fractured and that's why it's not one center like the tribal system in libya, and we can't treat it that way. in the geopolitical sense to bring the russians in again,

they have stanley u.s. resolution on libya and they said they've been of christ to support civilians. we use the u.n. authorization to overturn gadhafi and to condemn the russians and the chinese for vetoing a similar resolution on syria is astonishing because what they're saying is syphilis once you're not critical us again. the regime change is just another twist to the chinese and then the russians, for the russians it is as well since syria is their last client state 30 years ago the u.s. and russia

were struggling for leadership in the middle east. the last stronghold of that is more with the issue is and if the regime change and syria i don't know what regime followed. if assad left tomorrow, you wouldn't have a peaceful syria. hanna's zbigniew says the power of syria are largely in the in tact. that is the military structure is run by assad even though the bulk of the ordinary soldiers are probably sunni notte shia the. the business community hasn't

fundamentally deserted. so there isn't anything there to get old to use chemical me add to this week to think of this problem of syria and the way that brandt looked at it in this larger setting and suppose we were to push harder on the position it's not going to prevail political violence will intensify and tension in the region will drop. suppose in this context the conflict starts with iran, iran gets bombed by the israelis, the iranians retaliate of course because they will view us as having a spirited and we have to do something about it suited a conflict and or supporting an escalation of the violence and

syria and now we are retaliating against iran. what do the iranians to? the easiest thing they can do right now to hurt us is not only to make life more miserable for us in western afghanistan that we are trying to withdraw peacefully over the next year but they can destabilize iraq very quickly by inflaming the connection there by linking that violence with violence and syria, and all of a sudden we have the violence that stems from pakistan all the way to the mediterranean. we stress the choice before reissue the demands to other countries about how they are to run affairs. what happens in that context with the russians first of all it's very close to them.

second, there is iran and the right to syria there's a risk and evidence for the developing for conflict between iran and azerbaijan because they are beginning to blame azerbaijan for some of the activities that have been conducted in iran and they could lash out in a very important source of energy for the west and then to compound this dilemma there are some interesting alerts developing regarding the situation. the russians in the last few months of upgraded their 58th army stationed just north of georgia at the highest level of technological competence to anyone on the russian army throughout russian territory and the georgians are becoming very much alarm. there's a conflict between iran and azerbaijan they might do

something to take care of the regime and the early european energy independence would be good, so the couple said in an escalating conflict that has many different ramifications and put up a very serious consequences so my basic advice to everyone is played colcord and think through this might mean because this is a very volatile region of the potential for explosions in several different spots. this may sound terribly catastrophic but the fact of the matter is that is the actual situation not to mention israel and palestinians and egypt etc., etc.. i think we better be aware of the fact that our dominance in the middle east is rapidly diminishing and the capacity to

influence by verbal command as close to zero. we have to work with others intelligently on how to manage this problem. >> to avoid a whole art of the crisis scenario you still have the strike on iran would do you think that means for the turkish interest both in the near term and in the sort of two to five-year time frame given that turkey has relations with both iran, israel and also with us? >> let me go back and answer that to start with the prime minister again. prime minister erdogan has had a falling out with the israelis and i think principally stemmed from the chart that while he was >> he had met with the leadership shortly before the

operation he wasn't told anything about it, and i think as a result of love and the interception of the shift into gaza the relationships of gotten much worse, and i think that an israeli strike on iran wouldn't be taken kindly to read as said it would produce almost incalculable results for the united states. what makes the region much more difficult for the turks trying to play a diplomatic role in the

region, and i think it is a role however dubious the prospect may be to welcome because it would fundamentally in our interest and the turkish rule for example list hosting the talks and it's a very useful way that turkey can go and so i think that a step of this character by israel would sharply diminish a utility and sharply increased the antagonism and is a very

volatile personality and his walked off the stage in a meeting like this for example to what he sees as in justices or hurts and that we have to keep in mind here. to think it is so complicated what's just use a little force, let's clean this thing out of the consequences of just doing that. the complicated situation is it

can be worse and almost certainly will be should take a turn to strong violence >> the status quo china's involvement in syria. as we look at the relationship between turkey, russia and iran does the rise of china affect the relationship or is at just the trigger that doesn't affect the intimacy between these three countries? >> it probably doesn't affect the intimacy as you put it between these three countries but i think it does affect the sort of general attitude towards this issue, and the chinese i don't think have any particular

state and any kind of particular outcome and syria. the stake in the region growing up and i think that is a fundamental concern they are fully aware of the fact the region debts ignited, the consequences are unpredictable and will immediately hurt their own economic interest because of their dependence on energy from the middle east but also her stability marginally in southwest asia including the islamic element that is of concern to them. they do border afghanistan after all and the of problematics in will certainly not help them coping with the social and economic problems that they confront and which probably on the political level of become more difficult to deal with even within china itself as the society becomes politically

conscious so within the of general attitude towards this kind of problem but they don't want to be involved in it themselves because they feel they don't have to be. the russians don't quit feel that way do they could become involved they could also see opportunities for themselves if things begin to golden flames, so the attitude is inherently different but the chinese and the russians by and large share a common attitude here which is one where it's not push the envelope too far to let things get out of hand, and this is why there is an international potential that the united states could exploit in order to dampen down the problems of syria and of iran rather than to allow this to be pushed into a situation in which by half

september, early october we will be giving them a choice of either humiliating to new demands and restrictions would be imposed on them only in a not in keeping entirely in the provisions for economic strangulation which case we don't know how they might behave. they might even learn rational. it's not a well organized or disciplined government, some are more extreme than others. we could have all sorts of ways which a conflict begins not just with an israeli attack on iran but also the slashing out. >> the position saying to everyone else just dampen down the pace categorical demands don't make extreme threats, don't issue orders from the

olympic heights you cannot enforce, and i don't think that is necessarily an unsound approach on this issue. >> i think that he's right and we are talking to get the chinese to intervene in a lot of places. that's not their way, this is into their world, and so, they only a grudgingly reach out. the chinese attitude has been we did about 20% of our oil from iran. they're a good customer that is always interested in but they are beginning to realize that if something happens and there's a conflict with their face rick, we do, with orders to supply of leal and the price of oil and so

now they're beginning to realize they have equity they need to protect, but in general they are very much against the use of force especially just the use of force in situations like syria because they relate everything to themselves as an insurrection so they are against intervention in any levies a fair but they cannot avoid in the middle east there critical dependence on oil and their consequences for china if things go badly. >> can i add something to it? that's a very important point and i think that it's something else related here. look at who is in the

occasionally public moralist and private fashion pushing for more action. the british and french. from the historical point of view is in that food for thought? how are they perceived in the region. as the recent colonial empirical power and they are indicating to us this or that i thought the was doable. here it is just a big mess, so the chinese attitude in some respect is more enlightened than the attitude of some of our friends who seem to think it is going to be a cinch and the facilities get bombed and complain and hardly do anything but the problem is solved. >> when you were in government the chinese would be the status quo power in we would be

revolutionary power is the furthest thing from your mind, but it seems to be the place we are in. should we be hoping for a change in government, should we be pushing for a change in government? you were in the government but in that experience tell you about how we should treat these changes in the country's? >> i think one of the worst policies we have adopted is to solve our problems by regime change. first of all, we don't know how to do it, secondly, we don't know any country will the mission of the consequences of the regime change would be, whether it would be better or worse, and it puts color to a

relationship that is very bad. when we said it is regime change, that puts the chinese clear out. the regime change scare's them in north korea and now we are working much more closely together because we have abandoned that. in iran, i think one of the things that is most disconcerting to the iranians is our input regime change policy, and it seems to me if we were to go to iran and say look, your regime it this what this we understand you have security problems, and we are prepared to

sit down with you and look at k security structure for the region in which he will felt comfortable. so you don't need to go down this nuclear rich. if you commit your security situation will be worse, not better come and give them a way out other than abject surrender or conflict and that is not all that clear to them now and i hope in these meetings that that will sort of show the way. the armenian government is a very complicated structure. there's the form of government itself which doesn't have any fundamental power, there's the religious structure and the constitution have the ultimate political power then there's the revolutionary guard, not the

army, the revolutionary -- i'm not a formal military, the revolutionary guard who are the enforcers. these three have a relationship with each other that we don't fully understand. but deciding who are the good guys and who are the bad guys i think is beyond our intelligence capability. >> that sounds like we tell the iranians we recognize and won't intervene and actually distinguish restrictive because security structure in the region. should that be the goal of the policy? >> i think the goal of the policy right now what to be an arrangement keeping with the international norms and obligations of the nonproliferation treaty. the fact of the matter is that the united states right now is

under considerable pressure to demand a negotiating process things that go far beyond that involved far more restricted truly humiliating conditions on the iranians or less to them in a cage. that policy if it is pursued by the united states will have the effect cristobal not promoting regime change but regime reinforcement because the people within the government. they are proud people, 80 million with one of the several impressive histories and terms of statecraft and they happen to feel strongly they are entitled to a nuclear program that most of them i assume think is not a weapons program. it may be and it may have built an actual weapons program several years ago but right now

it is unclear as to what it is but in terms of the perception of the issue domestically it's their right to have a program that meets their needs. so we ought to be negotiating on the international community and on the store sells or israel but on behalf of the international community that the i iranian sar fulfilling all of the restrictions and obligations, and if that is the case i think that we perhaps can have an accommodation that meets helen needs and the long run in my view for most political change in iran because it reduces the collision that brings the government and the region together but if we press on these negotiations for any capitulation by the iranians, that is to say submit to restrictions no one else is

subject to and by the way we tried to present what consequences might be handled think they are in touch american national interest were the major powers involved in this. some of what it comes to changing the nature of government utrecht but you feel something is germinating in russia, that is a nostalgic and the current russian government to feel as if russia and the future is as you learn your recent book is a country that we should try to bring into the western alliance. what is the time line in your mind for changing russia would is a different kind of russia mean both for east and west of the russian foreign policy but north and southeast that gets into the turkey and iran relationship.

>> i argue in my book that both russia and turkey off to be the countries that we seek to engage to diversify. it doesn't mean they have to join the e.u. with all its obligations but some free-market for the u.s. community that increases russia and turkey and respond to you directly it is my argument that turkey is meeting the standards of what this community increases in terms of political values. russia cultural and historical, religiously is part of the west and one aspect of russian history which is probably missing in terms of its connection that this political value of constitutional rule will supremacy of law that's missing but it's beginning to emerge. this is the most interesting aspect of recent development in russia. you have at the apex a political leadership personalized that is

nostalgic for the recent past. he said famously it is a fragmentation of the soviet union and world war i, world war ii, the holocaust come to russia come and nagasaki and so forth and it's a dismantling of the soviet union. much more important than that it was not emerging and internationally minded middle class composed of the number class located in the big cities most of whom have continuous exposure to the west and to the world largest travel to the west who study in the west in many cases and are partaking the notion that there is a civic society that is to say society entitled to have the same

privileges and rights that the democracies of the west hanft. it's getting stronger and stronger and is without precedent the absence of political fear and some lenders to the lot on the red square and hold up a placard in which the show putin behind bars to me is almost unthinkable since i felt the dhaka dealt with the soviet union. person during that 20, 30, 40 years ago with the hobaugh immediately and shot probably within a day. the new society that is emerging is fearless and that's a new reality and therefore i think with russia and turkey can to eradicate to the west if we're smart but if we draw these categorical lines and look with

indifference at something that could erupt and simply play the game of being indifferent to decrease possibilities could fade away on the international scene with unpredictable dynamics at work and one thing you know about the war as it is easy to start but you never know how to end, how long will that take and what might be some of the manifestations that take place. >> you have all been patient with me and we have microphones and went to open up for questions and again if he would identify yourself to only ask one question because we have a room full of people and also to ask your question in the form of the question. right here in the front. dan is coming to you.

>> i'm a special operations command. first, thank you for your remarks. i wonder -- you comment on this a little bit when you spoke on the atlantic counseling in december but i wonder if you could comment on how well you think that the administration not looking for a partisan comment but just as an assessment how well the administration is doing in fulfilling the type of policy that both of you are advocating here today and what do you think they should be doing next? >> i don't know how to get my arms around a question like that. the kind of policies we adopt and how the ad registration is doing them.

let me just say i think the administration is facing a very different world, and i think we see it, we see it in the arab spring and if the arab spring and its consequences in russia as zbigniew has described very well there actually will be different almost replace it happens, and so we think fundamentally we have to be agile, fault full and a broad mind. the atmosphere in washington today is none of those, and that worries me. i think for example in russia i

agree completely with zbigniew and we don't agree to things relative on russia but putin isn't a dummy. she was nostalgic for the soviet union. putin was resentment to the to resentful of the west because he thinks we walked all over russia at the end of the cold war when they were weak but he's not a dummy, and i think that he sees in the six years where medvedev was the president that he got a lot of things done because he has a different atmosphere. he's not nostalgic for the cold war and so on. putin said i'm going to be president again and he's been to be the prime minister at and was surprised at the reaction inside

russia because that's the way of russia works. will the doesn't now, but i don't think that he's a dummy and i think we may see a different putin and russia which else zbigniew says and i would say over some period of time media generation or more going to felt in what has been missing in russia as a european member and that is the rules outlaw. >> i would add this. i think it is unfortunate that we are confronting this very complex crisis which i have no doubt president, the secretary of state, secretary defense understand well is unfortunate that it is compounded by the simultaneous presidential

political process. that affects everything in a complicated fashion and makes a clear-cut response and highly focused response difficult for us to man come sorry think tennis a timing problem that is in - complication on this. >> question rate appear. >> steve flanagan. you alluded to the changing situation in afghanistan post american withdrawal and also to the caucuses but i wonder if each of you might touch on how you assess the interest of the three countries, turkey, russia and iran and central asia and the caucuses and contrast their abilities and capacities to realize those where they might come into conflict and where we might see further trouble in those regions particularly given some of the shifts we see particularly after leaving the

control and afghanistan. >> russia, turkey and -- >> iran. >> would you do that in two minutes? >> i would put it this way. as long as the situation as the interest and not incompatible entirely that is to say there's a kind of modus operandi of the trend of russians and to some extent the transgressions and the turks and uranium's regarding the trade patterns, the existing status quo not necessarily liked by all of them and the russians don't like for example of that church and azerbaijan. the turks don't mind useful to them and they have sort of a, they did that by necessity but if the situation deteriorates of a fear that the antagonistic interest of the state will surface and this is why things happen in the caucus that could also happen within the stance in

which there are communications meeting stronger and the region gets torn apart by the events in the coming dynamic than i think the conflicts between them could become even sharper rather contributing to the negative consequences. this is why the stakes are so large and this is why i did deplore the kind of limited sloganeering that has taken place on the political level regarding the problems of the region and why i don't sense the sufficient strategic analysis or the potential for really significant turn of events in this region in our political approach to these issues. ..

and actually that's a good point. remastered for you a huge slice of what would be called a dairyland, forget azerbaijan isn't turkey. it's a very large number is iran

had a very large number of a rainy artist series. but we live in a year of nationalists and produce nationalities. the potential of this problem should not be underestimated. >> my name is [inaudible] at johns hopkins university and want you to speak a little more about turkey's strategic stand with you ran not only from an economic and political standpoint, but also vis-à-vis the iran nuclear program. >> i didn't hear. >> the question had to do with turkeys position towards the

iran nuclear program. >> what do you think turkey is trying to do as it engages with iran? how large a piece of strategy is still in the problem of water art schools? >> i don't really know. turkey has not pronounced itself on the iranian nuclear program. i think turkey and iran has started a minuet about oil and turkey is dependent for energy resource is on others. i think here are the two pillars of the region if you include russia, that for centuries the

ukrainian empire, the ottoman empire and the russian empire. and the sordid relationships go back and are intuitive and peoples mind and attitudes in the way they think about these. i -- my guess would be that the turks are not so concerned about the iranian program as we are. but i think one of the consequences if area precedes and develops a nuclear weapons program would almost certainly be that turkey would follow suit. so that would be my answer to the question. >> i would just add this. we do have some indications of what the turkish attitude is towards the reigning nuclear

problem because the turks and the brazilians came out with solutions to the problem and they negotiated it on the basis initially but not instructions, but advice from my sister that they are to see. and they came out with a solution and we changed her mind on the subject and decided that wasn't good enough. it's systematic effort to put iran within the npt box. no more, no less. >> today see somebody that they are? yet, on the way back in the corner. >> thank you. dr. brzezinski mention the possibility that the new russian, georgian born under some circumstances. how serious is this threat? what do you think?

>> i'm sorry -- >> how serious is the threat? >> i would say very high, but there's a con in the region, which begins to accelerate escalade. >> yes, sir. admit that. >> thank you. i am lifted american bar association on law and national security. what is conspicuously absent from the mark and always very thoughtful is a very tan the reference by dr. brzezinski about the role of the pt, with d.c. as the will of role of the international organization coming to you and umno has been a great deal of time trying to make the organizations relevant. are there regional organizations were at the conspicuously not going to play a role in cc

between the empowered negotiations of avoiding in managing conflict in the region? >> well, i would say that it depends a great deal on how powerful are the forces that are collecting in some sort of a conflict. if they are secondary or tertiary importance, i think regional or international organizations can be quite influential and i think the best example of that pertains to several instant lives in which international regional organ nations that leda pacifying role in africa. the problem we are discussing today unfortunately involves powers with more significant regional scope of influence or potential disrupt finance. and that means in turn at the source of the resolution of these problems don't only come

from the major powers. and this is why it is so important that we and the others who work with us because we can't solve it by ourselves have some sort of a shared strategy for coping with the problems that brent and i have been discussing today because i don't think we can impose and i'm not sure we have the right approach towards the problem. others say like the chinese have the right solution, but for more distance with less engagement. so they can resolve the problem either. but if we can try a process in which the five plus one in negotiating with iran and we, talking to the turks and the saudi's regarding syria and engaging the russians and the trainees in the background of that, perhaps we can cope. but unless they do that very systematically with the larger concept in mind, they slide out

of control and secondary participants in the problem will set the pace. iran gets a tag. not by a common but the consequences are felt by us here the situation in syria and terry and someone overreacts out of control, too. and this is by a really serious approach based precisely on the so-called five plus one has to be pursued with a sense of collective responsibility and not only one country, perhaps just our own interest been uppermost in mind, particularly at a time when our policies found to be influenced by the presidential race, which gives them a particularly short-term care either rather than a strategic perspective.

>> cairo, do you think we need more international organizations? >> i don't know who need more, but we have to push much harder to make them more valuable. you know, we live in a much more interconnect world now. but the international organizations are not resilient. the iran is the best we have, but it needs a lot of help, restructuring and it means the outskirts of the united states the 19th day we would get -- we could get russia's support and chinese support. the regional organizations, the african union, for example, played a useful role, better support for them hostages sort is, way. the arab league and the gcc played a key role in the success

of the libyan operation. the third thing we should el monte is a regional organization for the timing of the things that aid and abet what we are trying to do, but has the expertise and the local feel that we don't have. so i believe that it's a good question and we need much more effort in that direction. >> yes commissary. >> my last job was the american ambassador to denmark. turkey, the largest muslim country is secular, but has shown some tenants these to move away from that, do you see that being a concern and the influence that egypt? could eject become -- i mean, turkey is such a good role model

in that area. do you see that changing? >> well, i am aware of the shortcomings on the turkish experiment. their problems are not with the press. there are political trials involving the military, which may be justified. i do not know, but there has been a history of military coups, so there is at least some basis for considering the possibility that there is justification in the procedures. but they all reflect, obviously, certain inadequacies on the democratic poetical process. nonetheless, having said this, i think an overall assessment of turkish modernization, secularization, democratization of the last hundred years has to be quite high and the persistence with which it was viewed as impressive, really very impressive. and so on the whole, i think

turkish -- the turkish experiment is suspicious and its promise and it behooves the west to encourage it and this is why i applaud the reaction of the european to the issue of turkish participation and they raised turkish hopes. they reduce time. but we can be an expensive supplement and reinforcement for turkish aspirations to rethink and a larger con that they really do is embrace them and embraces russia as well have escaped the turks illogically global role, but live in a very dangerous neighborhood a greater sense of security participation and said they might shoot than themselves and i think that is the kind of policy that would in effect, i think, reinforce the region. that's the challenge we have. the fact that president obama

and president are to come as message here. we are now being tested in this regional contacts and a great deal of on how we conduct ourselves over the next several, literally. it is a conflict that could erupt and become very large, but the timeframe, which will determine whether the matches been set, whether the fire is united are not a short-term. so it's very important to watch carefully what is being done and how we conduct ourselves and how we avoid the danger that we will be for a variety of domestic reasons in the short run with match burst consequences in the long run. >> i think there are questions about the direction turkey is

heading. it is probably slightly less than i was 10 years ago, less secular because 10 years ago, turkey undertook a series of deep economic and political report. in response to significantly to the thames taken into the european union, which they discussed before. the consequences of those is that the central and eastern part of turkey is now a part of turkey and a real sense that it wasn't before. turkeys to be assembled primarily. western oriented circular. now, turkey is more

representative of the whole of turkey. and that is a less secular of which you can say that is a natural evolution from the harsh secular-ish to break the power of the ottoman. or you can say it's a new islamist movement. i don't think we know, i think it's been said that it's up to us to encourage the evolution of turkey in no way, which is natural for them and the harshness of the ataturk reforms may be to need to continue so long because they have been successful. now it's taken me years for turkey to evolve from the ottoman empire to a modern

secular democratic state. but they've done it. and i think they should be relaxed about the things we see in turkey. they are not all perfect, but i imagine the turks are not all relaxed about what they see in the united states either. >> we just have a few more minutes. just as a closing thought, you both talked about the importance of a more modest u.s. foreign policy that demanding the declaratory, were interested in institutions politically. we tested out the evolution. politically, how do you get the native states to go to a politician support, kinds of policies you advocate. >> when you say marmont is, i wouldn't buy that word. it should be in some respects more strategic, more visionary,

more is. that is to say, we are living in a world in which turmoil is becoming more pervasive. we are living in a world in which global corporation is more necessary. in order of global corporation you have larger units cooperating with each other so that their corporation begins to flow into the worlds of large pair of global problems will not be solved in mechanical votes of uneven state. they will be sold in two major entities that the road to collaborate and this is where policy has to be one in which we create a more stable balance in the far east, not projecting ourselves into the problems of the far east, particularly in wars, but trying to balance and manipulate the way the british did european politics for a whole century, but without entanglement. and promoting japanese, chinese

reconciliation, mediating indian, chinese rivalry but not becoming a protagonist. last but not least, not demonizing china by trying to structure stable relationships with it because china and we face an unprecedented challenge namely to exist without antagonism, which has been the predominant historically. we both realized that will suffer conflicts, to each of us has not attempted to demonize and in europe in the other half of eurasia, my view is one i have been propagating, namely turkey and russia in the framework in which we work together to resolve the problems of that region and the asian powers they get affected by it. this is why dealing with the problems we face in the near future, we have to be really conscious of the fact that our

priority is to work with others who share an interest in stability and not drafted resolutions which they approach from a narrow national perspective without thinking of the larger con on his abusive floors. i think the use of force should not be sent in that is left with willful decisions of individual state. but it should be something that takes place only in concert, particularly with the powers that share an interest in spreading the degree of stability in international affairs and enhancing their own court ration with each other. >> cairo, kennedy school of week? >> yes, at the end of the cold war, the first reaction in the united states was one of relief. nomar problems, just relax, let the world go. >> i almost didn't have a job, you know, because of it.

>> then came 9/11. we thought were the only superpower. we'll make the world and if you know what us or against us and it was a unilateral rush to do a lot of things, which didn't work out too well. but i think the united states remain the only country who had the ability to mobilize the world on behalf of the kinds of names, not to direct that, not to run it, but to get together the kinds of policies, the kinds of things that people can resonate to run the world. that is a tough row. but no one else can do it. the europeans eventually may be 02, but certainly not now. the chinese can't do it. the russians can't do it.

were the only ones who can, but i'll take a farsightedness and it will take the best instincts of the american people rather than the worst ones which seem to be prominent at the moment. >> we are ending on an optimistic now. i want to thank you guys for coming. thank you for participating. [applause] this got about 10 minutes, 12 minutes. time for a bio break and get a cup of coffee and we'll start back in with the second wave questions. thank you. [inaudible conversations]

>> at the same security firm in washington, military analyst and thinking and criticized u.s. policy in afghanistan. the former advisor to stand in the crystals that afghan forces were not ready to take over as the u.s. prepares to withdraw and 2014. and question the credibility of the afghan government. he was joined by the former u.s. ambassador to afghanistan by ronald lorenz. this is an hour and 15 minute period >> good morning. my name is robert lamb, director of the complication that csi is a thank you for coming this morning. i want to start by thinking said mechanic of her making the entire day possible. i would like to request that she will please fans your so that we are not interrupted with what i think will be an interesting

discussion. we will be live tweedy in the event from csis -underscore order. following the panel will take questions from the audience. please leave her the microphone to come to you because we are -- we are live streaming this over the internet will want to make sure that everyone can hear your question. when you do get the microphone, please identify yourself and raise your question as a question. please don't give any speeches. keep your question limited. lunch will be served during the third session beginning at 12:30 this session and at 12:15 a little bit about our program, the program of crisis conflict and cooperation used be called the post-conflict

reconstruction now in our tent dear that csi is coming during a time in the field has changed really dramatically 10 years ago after 9/11 there was a lot of hope about the reconstruction and the wars in afghanistan and iraq. we've had quite a lot of aches. his with post-conflict reconstruction and we found it is time to rethink where we are in the field, where we've come. a lot of what we do in our program looks at development and governance in particular in conflict areas, in particular the risk and cooperation that might exist. i'm thrilled today to be sharing the stage with three distinguished panelists. anthony cordesman to many media left is the chair in strategy that csi is. the distinguished service medal is. he participated in the 2009

afghanistan review and has done quite a bit of advising on the conflicts in afghanistan, iraq and not easily many other places as well. going back many years, his service to the field as strategy goes back all the way to vietnam. he has studied publicly every major strategic issue that has arisen, everything from energy to nuclear tomato leaves and we are looking forward to his comments today on afghanistan and pakistan. dr. cory shockey has joined as well. formerly of west point, hobson's goal of international studies and university of maryland, where she and i both got her phd. during the bush administration, she was the department of state in the office of policy planning and also national security planning where she advised on

defense issues, including coordination on working with our allies. in afghanistan and iraq. and finally, on which meant that we had ambassador neumann, former ambassador to iran and afghanistan has been a good deal of time in baghdad have made the nonpolitical affairs and in a number of issues. he was once a deputy assistant secretary in the state department and a published author in a very well-known expert on all things having to do with the subjects we talk about today. i thank you all for being here. it's very easy to be pessimistic about the situation in dagestan and the transition in afghanistan in the u.s. relationship with pakistan. clearly both countries face problems with corruption, problems with relations between

civilian and relative parts of the government. there is a good deal of violence in those countries, some related to insurgency, some more terroristic in nature. strange relationships between government officials and various mind that is, organized criminals, former warlords and commanders. it's a challenging environment to work in. with the death of bin laden and the relationship with the united states broke down pretty severely. here we are nearly a year later and we are still struggling to redefine the relationship. it is somewhat harder to be optimistic about the situation in both countries. they've seen the situation is completely hopeless is not particularly helpful to those trying to figure out how to move the situation of both countries forward. and afghanistan we can observe at least 10 years ago the

country was essentially a medieval yakkers he say which you will about the state of the government and the economy, those of which are god, there is the fact and. there are a number of former warlords and not in who are participating in the political process and not necessarily still as combatants in the otherwise they have been in the past. that's not to say they might not be again in the future. there is participation in political processes, formation and political parties. generally speaking, there are -- there has been progress in the cities, probably more than in many of those other areas. there are some lights and stability in the market activities that have not been in afghanistan in the long time. again that may not be sustainable. that could collapse fairly quickly as history has shown us. we need to acknowledge the

progress that is then made. most afghans probably do not want the countries to collapse. he prefers the government would work in the military be strong enough to defend the country and protect them without participating in the civil war. these are some of the observations we can make that could be told upon for the future. but it's all tenuous. in pakistan, most pakistanis probably do not want the military to take over civilian government. civilian government is likely to complete its full term for the first time in a decade. the judiciary is increasingly independent and self confident double societies increased my confidence even in the face of a great deal of intimidation from militants and extremists. there have been some government reforms that separate powers of the local level to establish requirement. they have not been fully implemented and it's not an

tiredly clear when they will be put at the very least they put in play if some incentives most importantly in pakistan there about pakistanis who also want their government to function well and with preferred or not either court to militant groups and terrorists operating groups and importers. you can build strategy on optimism and pessimism. you need to build strategy in a realistic understanding of the facts on the ground and what is actually possible. in pakistan, it probably is not useful for us to disengage the weary disengages pakistan, the less influence will have been there and where do you have very little influence on pakistan's domestic politics and quality of governance for that matter. the challenge is how can we marginalize those within the

pakistani government of military intelligence services who are anti-american, who would take more militant views, more hard-line views about the views of violence in and outside of pakistan. how can pakistan's many moderates and reformers and democrats be supported? what can the united states do to make sure they are not marginalized within packets and, that there've been questions. in afghanistan, there have been questions about governance and political settlement. it's an extremely difficult situation as we all know the government is often seen by many analysts, particularly in the united states is the one of the main road works on the pats in afghanistan. it is not necessarily the case we depend on the afghan government to hold the country together to build with its own people. afghanistan is the kind of system that we don't necessarily

understand how to analyze, but there is an academic term for college hybrid article system, which means there's a formal government that structures the overall system of decision-making and services in that country. but the formal government is merely the skeleton to the system. in fond du lac is, tribal and ethnic leaders, organized criminal insurgents and various other individuals in afghanistan are the flash, muscles, sometimes the tumors on the system. collectively, they make us a hybrid system in afghanistan. to the degree we think we are going to try to get the government of afghanistan to have a monopoly of government and those in afghanistan i think we are probably fooling ourselves. that is a long-term project, probably the work of generations. afghanistan will probably continue to be a hybrid system here's to the question as to what degree can we shape the

hybrid system so that it's stable and there's not an violent. not economic and political class in afghanistan. i have faster speakers to talk about their views of some of the most important risk that we face in both afghanistan and pakistan. i'm what they think of the most important u.s. ventures in those countries and what changes they think need to be made in the current approach. i'm going to step down, then give you all their views and i think i will start with tony cordesman. you're welcome to sit or stand as the light. >> thanks very much. i'd like to talk specifically about the risks in transition. and let me preface this with two-point. first, it is by no means clear

that if we can't achieve most of our goals, afghanistan somehow comes back under taliban control. it may well decide. we need to remember that for all the problems that are in, the taliban and other insurgent movements relatively limited and strengthen coverage. they are tied to given belief structures and ethnic kurd. what will happen is that afghanistan refers to something very close to what it used to be. a capital with a group of various ethnic and sick care in a geographic movement. and if that happens, i think it is also important to note that as countries go, particularly in today's financial climate, this is not a country of greece or teach at importance the made state. we are not in it because of its strategic importance. we are and because of the given

point in time it was the center of the movement that can do it several terrorist attacks on the united states. whatever happens for the talks of the silk road, this is not going to be an area of major economic importance to the west pier to china, russia, countries in the region it may be. very many other centers of extremism of al qaeda now emerging as ones with probably a more serious threat in fact pocket don is much more the center of al qaeda today in afghanistan. but i may go back to 2009 in c. where are we on the road to transition a little happen and it very quick read. we had, i think realistic hopes on the part of some that we could deal with the problems of corruption and affect goodness and the afghan government.

we will not make success all of the object gives that were formally on the table are not going to happen by 2014. ms is not a reflection on president carbide. it is power brokers, people struggling for money, struggling for influence in struggling for security. we will train more civil servants. but by and large, afghanistan is not going to meet the goals in the afghan compact and the bodies which deal with corruption are almost uniformly in effect given when they become in effect did, either end up as scapegoats aranda in being this and it. whether that matters are not is a real issue. i suspect that as the money grows weaker and smaller, corruption will revert to the more affordable patterns.

we are not going to deal with the insurgent sanctuaries in an. it is totally clear that whatever hopes were, that pakistan will turn against these insurgencies. pakistan will focus on its own internal security issues. we can talk, we can meet,,,, connie group in the various taliban are not going to be somehow pushed out a month there is some kind of unanticipated peace settlement, the sanctuaries in pakistan in 2014 and 2015 will be very much what they are today. that creates a massive challenge to his security. our transition plan for the afghan national security forces is frankly not a plan.

roughly a year ago we were talking about expenditure levels at seven to 9 billion years for 2020 for the afghan national security forcescome in the forests over hundred thousand of which roughly 40% would be five different distinction because it's often confused with an army. we are now talking about $4.4 billion a year after transition, having cut our fy 13 request roughly in half from what we spent enough weight so. we're talking about going down to 230,000. none of us really know what this means under focus on on manpower numbers ignores the fact that when it comes down to transferring responsibility, both within the ministries according to the department of

defense reporting them in the training for us, we've not yet been able to put together the structure to provide sustainability, discussed elements of the force structure as distinguished from italian elements. within the place we have a pattern of corruption, local influence, which is going to be the pattern of corruption and influence when we leave. we have a peace negotiation. if you go onto the website or the taliban, you will find that they declared that peace negotiation is victory, that they one and basically we are forced to concede and talking to them because they have one. that is not usually the prelude to the smith compromise and effect a transition out of the military position. and i think one has to remember what happened in cambodia where we ended that the kinder, gentler pot, taking over what is

happening closer in nepal. pushing too hard for peace to quickly creates two problems. one is he manpower the opposition, the insurgents in the process. the other is no one knows what to plan for. if we don't know whether there will be a negotiation or it will be successful, how deeply ashamed of any level clerks when we talk about u.s. for skype, it is important to note that we never build a to the u.s. force levels that were called for in the original mcchrystal plan and we have already built down far more than we had originally planned to go down. similarly, we never had the number of civilian called for in the strategy. whether that is critical or not is not yet clear, but i think that the plans we had at the start of last year, for holding

onto this been moving into the east are not tenable with the forces we are going to have laughed. and the rate of reduction in the course of the period between june and said under this year is going to create major problems. in terms of afghan president and structure, if we look at the real power structure, we still have a question, can we have a successful election at the same year we are in transition? if so, who will the leader be quite what it really matter? we often worry about the quality of the election for the afghan legislature, but nobody can explain to me what it does aside from consume affect. the constitution we left basically gives the president power over virtually all of the revenues and outlays provinces and districts with the structure that is inherently weak.

the last time i looked, we were at about 25% of the pole for afghan officials in the field we planted 2009. whether that is a good thing or bad thing is hard to measure. some people would argue that these are enough. when you look at the pressure coming from outsiders on what happens we do not yet now, but we see a step back. we certainly do not see pakistan which has abandoned its goal of making afghanistan strategic tasks, whether andy has changed its goals is another issue. what is truly striking is the absolute lack of commitment so far on the part of china or russia, both in need in any other kind of active presence. the most russia has a support us in maintaining power

projections. in terms of the actual fighting, let me just make a comment about what they've seen. there are two sources of reporting on asking charity that are unclassified and official. one is a report by the 1230 report coming semiannual report. another is that the special inspector general for afghan reconstruction. two years ago, those reports provided data on areas of insurgent influence, areas where the afghan government was i was not becoming more effective, not support aid was being banned, a whole series of indicators. all of them are no longer in the report. what we see today is a set of ushers, which bear a striking resemblance to what happened and he had mom.

we don't talk about insurgent influence. we talk about in church and significant influence in insurgent initiated attacks. strangely enough we pretend to when i those criterion. they don't take on our conventional forces and when. so the numbers become very favorable relative to the peak fighting of 2010 and that is exactly what happened in vietnam. we almost never lost a tactical clash and of course it almost never mattered because i did count was influenced, the growth of the ability to control or intimidate the population, sent and we no longer poured upon. it is a very disturbing to me as we head into training mission that was jesus.

that we do not provide meaningful measures on where the fighting is with the progress were making for the areas of his urgent influence. after 50 odd years of working with the u.s. government, wherever you see a mass of dropping transparent tea, it is not a sign of success. now let me just close with the economics of transition. if you go back to the bond conference, the afghan government submitted a paper listing a whole group of reforms that if an promising for the six years. in return for that, and asks for between $10,000,000,020,000,000,000 a year in aid through 2020. it did not describe how the aid would be spent and the figures were taken almost verbatim from a world inc. study on transition

, which is the same city the u.s. is using to the extent we have a train should plan. there is a little problem. the world bank estimate that the afghan economy is approximately half the estimate used by the state department and the cia. this is illustrates the almost total disconnect in the level of economic data we have. we don't know basically where money goes. we know how much we appropriate, but we have no accounting assistant to say exactly what they spend it goes inside afghanistan and we have no formal measures of effectiveness as to what the programs are. please don't misunderstand. i think we have accomplished a great deal of growth, with water in individual aid projects.

but if you look at these numbers is he going into the economics of transition, we have spent since this war began, 10 times the highest estimate of the afghan domestic gdp over the same 10 year period. as that money goes down, we risk a recession or depression major report sheds and we do not pass in any credible fund the most basic data on the afghan population, the afghan economy or exactly what we've been doing with aid money and expect you who it is on to your thank you. >> i disagree with a couple of counties judgments and i guess that's all-star. all focus on the risks and maybe

i'll pick up mitigating factors in the conversation. the first place i differ with tony's judgment is that it does seem to me the military piece of what were doing in afghanistan is going better than i think it seems to tony. the problem for me is the military piece of it never has matched with other elements of the strategy and those things are essential to us being able to capitalize on the game the military thinking. we've never had that right in afghanistan and now with the clock ticking down to 2014, some of the essential bargains that we made in afghanistan i think it to be revisited in order for the transition not to simply result in something we are not going to like a whole lot better than we like to 2001 version of afghanistan. the first big thing i think we are not doing is investing in rethinking the structure of the

elect roh system and distribution of political power in afghanistan. there is a terrific posting today that looks at the choices that we make, which of them are inherent in the constitutional measure of afghanistan, which are simply political bargains that we make and one of the things that really strikes me about the government structures that the united states indoors both in iraq and afghanistan is the centralized nature admits so it is carried terrific country that has vibrant state and local challenges to federal authority that it leads me to believe the basic reason we do it is because it is easier for us to manage it that way, right? for someone in charge can help them have authority over the country, but that is a terrible

match for the culture and politics of afghanistan. and then essentially what we have done so that the afghan to kerry over the constitution from one afghanistan had detained an karzai is currently invested. there's not a regional balance to her, not a parliamentary balance to the as tony pointed out. it seems to me in the time we have remaining to focusing on the structure of governance, were changes made be made to provide for a more pluralistic and my representative afghanistan is someplace that to be investing an awful lot of time and attention because of president karzai honors the constitutional pledge that he will not run again in 2014, this is a real opportunity for bringing forward political leadership and putting in place structures and practices that

will make afghanistan a lot better than afghanistan currently is and that can begin to reconnect the people of afghanistan with the government that they have lost faith in a near loss of faith in their government is a huge impediment to our capacity to carry out our strategy. i at risk that i think i see from this is the second place i think i differ with tony. it does look to me like afghanistan does have the potential to refer to the 2001 afghanistan if we don't play the endgame right. and in particular, if we apply the endgames the obama administration applied in iraq, that is just a recipe for an afghanistan that reinforces the al qaeda narrative. this is their big victory. 10 years we achieved nothing. they're in control of the country. why wouldn't al qaeda make that

essential of their operations? because it would feed the narrative that we have spent so much time is so much effort trying to pull up by the roots and is substituted with a narrative that is about as having a positive vision for the country. because ultimately it is certainly a battle for security, but also a battle of narratives and who who has an idea that afghans will buy into. another risk i see a is that we are about to convince ourselves of several things about america's ability to change and influence the world and whether it is worth it to do it. then i think it feels to me a lot like the end of the non. but it's too hard, the countries that actually deserve our help.

they're fighting against us as well as deciding what is. but our ideas and values are not some mean that they shared and that it is actually to ask pensive and too hard to try and create positive change. and while i am actually sympathetic to a lot of commotion behind that, because it is really hard and fighting and winning these kind of lawyers is confusing and contradictory and it's hard to tell when you're making progress and very often you will they know far in retrospect when does it is in the country you're trying to affect tell their story. that said, if we allow ourselves to begin to believe, that leads us to vice president haydn counterterrorism strategy. you kill bad guys wherever you can find that guys and you don't

try and send girls to school, salt childhood nutrition, improve quality of government and in my judgment, one of the main reasons the united states can perpetuate and has perpetuated its global power is because most people in the world and most countries in the world actually want us to succeed. countries and people don't actually work very hard against what we are trying to advance in the world very often and that is a huge part of that element of american strategy. and if we start being something more than our military might come the likelihood of other people wanting us to succeed in helping a 60 drops dramatically. and that is actually a consequence of not trying to make the world a better place and not caring about whether 10 years ago there were 10,000 afghans girls in schools and

others 10 million -- i'm sorry, 2.6 million afghan girls in school. that creates a different afghanistan in the long run. some were about to convince ourselves of that stuff doesn't matter. we can't do it and they don't want to. i'm not seems to me likely to cause us a whole lot of problems in the coming two decades. another risk i see in the endgame of afghanistan is that if we adopt this approach and decided hearts and minds are unwinnable and by the time it's too expensive and too hard to do, that it makes much more difficult to get positive cooperation for other things we want to do. because astros afghanistan's a place where the first attack on american territory comes from and we don't bother to see that went through to one that secures our actual interest, then why would other countries that we

are trying to persuade to do what is in our interest has any belief at all that we are going to see it through to read day and we benefit of perhaps the country that is most important to persuade in this regard is pakistan for reasons tony alluded to and i think are self-evident. another risk i think that is internal to the american logic on this is that whole of government operations is really hard and we are not are you good at it and we're about to convince ourselves that we can't do this. our military is great at our job, but nobody else is any good and we need a strategy that where the military card games are weighed down by failures in diplomacy and development and other things. american diplomats aren't nearly as capable, but that is not

because they're either or a leading. it's because we don't invest in professionalism is the way we invest in the professionalism of the american military company to fix this. it's a structural fix. not impossible. in fact, businesses all over the country succeed at this. the military succeeds at this. we can fix it. we just haven't ever looking at the consequences which is better military success outpaces our capacity to capitalize on it to diplomatic and economic terms. but a solution to that is that falling back to strategies that don't have constituent elements of diplomatic and development in other aspects. it is they can ourselves as as other teams and military success. another risk that i think tony very rightly pointed as the afghan national security forces cannot do what we expect them to

do. this seems to me very much an open question and while i see positive signs, for me the most significant one recently was the comparison of the studies of the american military about green and blue attacks in afghanistan and one that the afghan army did to the american military does wonderfully and enduringly well critiqued so we could do better, right? but it concluded as we need to be more sensitive, more knowledgeable and more respectful of the afghans. i am sure all of that is true, but it is a problem that focuses on us as a solution. the afghan army also did a study and what they sound is the majority of green blue attacks occur with the perpetrators have time, families living in