>> they don't get in exchange for that operation. though if you have the of the structure because you are cooperating here. that does not really do it. and it's fun to talk about these other issues. but it would be useful. >> please wait for the microphone. >> thank you, mr. congressman, thank you for your interesting presentation.

is whenever i have a chance to talk about this, they raise the question of ballot the candidates and why the united states are coming with the idea that pakistan has been the nuclear power in the vicinity that would be needed in order to be a part of this. this includes the safe haven of bin laden and those who would say that the future of pakistan doesn't look much better than the future of iran. and the other thing is the linkage between the peace process and the middle east. in the linkage he made was that the progress and the way that

the association tried, it will be satisfactory and that will help us to move on lal we are negotiating this and they said that the linkage goes the other way around. and secretary john kerry is working so hard to achieve this and of course, we will achieve a certain effect on these negotiations with iran. [laughter] >> you know, there is a saying in politics that, you know, some of my friends believe strongly in this one position. and my other friends really believe strongly in a totally different position. i am going to side with my clients in this case.

my point is that i think that we should -- i really applaud secretary john kerry really trying to reengage on the israeli and palestinian negotiations and i know that there are lots of people that think it is a fools errand and i happen to think it is a very important errand and the clock is ticking in a very big way on the possibilities for a settlement bear and we know lots of people that think that the clock is on the run now. but what i would like to -- i don't really want to get into this. there are lots of different ways much success in the israeli and palestinian discussions can have a positive influence in the negotiations. and the timetables, and i just

think that bogardus of what happens, we need to move ahead and this includes the negotiations for a whole set of reasons. and while there could be -- there are a number of different declarations of different actions. i don't think one is a justification or other. so with respect to this, with the iranians what they say and i just think that we have to save their a lot of contradictions in the special dynamics between the pakistani and the indians. and there you have two countries that have never signed it. and they are a party to it and

that is, as you know, it means that you have to abide by the requirements and the reality is that iran did violate the terms by developing these seeker programs. so they were clearly in violation of the agreement that they sign and that is why the international community has been so suspicious and by and ivo, we have every right to pass views and the security council passed and they can say that it's not fair and we signed it and they didn't sign and then they didn't sign it and it is -- to get to the earlier point, it is like, you know, look. you have the fact about the international conduct and it's not something to kid ourselves with. it has a bearing on the risks of

people getting a nuclear weapon and that is -- iran's conduct has made people rightly fearful of what would happen. so for all those reasons, i think that we are right to be focused as we are. serve? >> alan platt, i am a graduate of teaching here. in response to a question that andrew ray is about congress' role, congressman rogers talked about sanctions, which has been important to congress and i question your concerns, the budget and the funding, particularly appropriate because i know you're talking about the budget committee and he may have an agreement next week. do you see your house colleagues, particularly the republican caucus supporting the kind of funding levels of

flexibility for the intelligence communities that would seem to be indicated by the kind of policies that the congressman would like to see the united states follow? >> you are right, we are in the middle of budget negotiations. and it would be great if we could get an agreement by next week and as of right now, it is still up in the air. but to your question, i think that -- oh, i guess, i think that when it comes to providing the resources necessary for the defense and the intelligence community. there is a bipartisan supported that part of the budget and with respect to other very important part of our national security budget, we have had less success in convincing our republican colleagues in what i mean by that is the other part of what i

think are important and robust to the policy, which includes other forms of insistence. this includes economic assistance and other important solos as the secretary and others secretaries have made clear here the state department budget is puny in comparison to the defense budget. but again, an awful lot of benefit from some of those investments to the state department in terms of the ssn and economic assistance and other forms and it is that part of the budget where we have had a lot less success in getting bipartisan support. and although i would say that in the senate that we have more bipartisan support for that. so for example, senator lindsey graham and john mccain have been very big supporters of a robust

state department and by day as well. and in our house, certainly some of our colleagues on the republican side, especially broadly defined as the tea party folks. it has been really difficult trying to convince some of the important part of national security and the arguments in favor of that form of assistance. but again, this is a constant methane and if you look at the house republican budget, over the ten-year that 10 year period of time, it would dramatically cut the category of the budget for this kind of state department operations and so we will have to work together to try to prevent it. and if you want to try to do the kind of things that might wants to do, mike rogers. i agree with most of what he said in afghanistan and i think that -- it was from this race

back debt and a big mistake with the united states to disengage. disengaging at the end. i think that we did create a vacuum that dead lead to al qaeda being part of the exploit and that vacuum is important that we -- it's important that we maintain a presence there. and if we maintain it, we better make sure that we provide the resources necessary for our folks. >> thank you. >> did you have a question? >> [inaudible] >> is part of the industry. and you mentioned that one area that we have with russia and syria is to prevent syria from becoming the base of situations

for al qaeda and that is to do the serve the integrity because once we start changing that part of the world we are in for a change is that we have had and it is as follows. do you for see and that term a scenario whereby we we see this as being an instrument so to achieving this ensures that you share with us. >> i think that the american position, which i supported, it has been been part of this arab spring.

it represents the syrian people across different sectarian lines for openness and a change. it is a brutal regime that suppresses the rights of the syrian people and so we need to -- we need to change this regime in the country of syria. and of course, the challenge has been in the ambassador has spoken a lot on this recently and someone who is knowledgeable with the dynamics in the region. we think that the syrian people that deserve a government that presents their aspirations and we need to make sure that as we transition is the goal of any political government and

negotiated agreement because otherwise if you do not negotiate that transition, the risk, of course is that you have these other very extreme al qaeda related elements taken advantage of the situation and they are stronger than the other opposition elements and that is -- in some cases it's the worst case, i would argue. and so there isn't aleman were russia and the united states and they have an interest in making that happen and that is why we are actually -- that is why we are actually operating in trying

to get the negotiations corralling. and the problem is to have the it's perceived themselves to be, you know, somewhat different positions. paralyzes they go into the negotiations which permission does appreciate to work to what i think should be the goal to transition to a negotiated government that better reflects the aspirations of the syrian people as evidenced by what we saw during the early days of the arab spring and the hopeful period. coming from one last question. >> the second row. [laughter] >> i'm sure that we are part of this and i think you were your

operation, which was before an understandable mss and the treaty was completely different in an international environment in five countries have decided that they have the right to have this weapon and others do not and in that time, they were able so that we were able to deliver and to guarantee that this will be suspected. now it is completely different and we have this which is obtained and do you think that it is still possible with any country to having to deny that right and the weapon now, sense only by force it does not work. and the legitimate race. it is nonexistent. >> well, first of all, i would make a couple of points.

i think it -- i think that most people agree. i've certainly think that russia and the united states agreed that a world where more countries have nuclear weapons is a more dangerous world. and i would argue that the proliferation of nuclear weapons makes it a more dangerous world and more likely that you will see these nuclear weapons years and that we are a world in which, we are bad actors that can talk about the nuclear material that is not adequately safeguarded. in per the postwar period, as t@ in the postwar period, as those countries have achieved and put in place the form that they did, which said that they -- and it is -- you know, as i don't think it gives you a right to enrich

this. but it provides a vehicle for countries like the peaceful use of nuclear power under certain conditions. and this has been part of the six-month interim agreement. the actual language is a mutually agreeable program and i have said to some of my colleagues that if somebody said you have the right to free speech, i have a say over what you are allowed to say what the form of your speech would you really tell me that that is the right to free speech or would you say i was intruding on that. and the reality is the language says that you have to have a mutually agreeable type of -- you know, program. the reasons go back to the fact

that iran was in violation of that. necessity with the overall architectural and i still think that it provides an international architecture that makes the world a little bit less dangerous as a place. and obviously, enforcing it is an ongoing challenge. and we are, as you know, there are many countries that have this as a civilian only nuclear power program and you have lots of other countries. in another reason. russia has an important role -- it is just -- you have this power point. and as an example, as providing nuclear power but also having provided nuclear fuel, with it.

and the amount of material has been enriched by now and the quantities are much larger than unjustified by any civilian use. and the number of centrifuges are much more than unjustified from any current civilian use of nuclear power which is why people rightfully asked the question, you know, if what you say is true, that you want an exclusively peaceful program,.

>> chairman ryan, he is across the aisle to get the best still possible for the situation. and another that you are hard at it and we are hopeful of this deal. and i appreciate you. >> it is so great to be able to talk about that. >> it is very important as far as the issues for the country and the international computer idiot. [applause] [applause] [applause] >> if you could all point out this event on iran and syria with the national security adviser. this panel is moderated by the pbs news hour in just over an

hour. [applause] >> i would now like to introduce a moderator for our next panel on the u.s. and russia and the middle east. margaret warner, chief foreign affairs correspondent and i'm pleased to say at this point that we have agreed to coproduced a joint web special about the middle east, hosted by margaret warner beginning in 2014. welcome. >> thank you. cynic i look forward to that and we have some fabulous participants and i know you know the law and i will give brief introductions and a minute and i think we are seeing growing russian engagement in the middle east. after quite a few decades of

non-engagement. bashar al-assad and his regime with weapons and the deal with syria to be involved in the iranian nuclear nuclear agreement. russia has been making this part of the middle east and we have seen many have been a sphere of influence in egypt. so is russia and the middle east and if so to what end. and what is the objective and we can explore that today with a person who needs no introduction. center for strategic and international studies.

this includes our intelligence council recently. and she is co-author of a recent book which the review said was not just another biography but a psychological portrait. so i hope he can bring this to the conversation we only have an hour and i hope that we want to save the 20 minutes or so for the audience questions or add doctor, is russia -- what is russia a two?

>> the middle east is next to the soft underbelly. so the russians are a defensive interests. interest. there is an explosion in the middle east, it will explode and it will involve this and can ignite the moslems and israel. in another another interest is to restore some of russia's influence. which i think could be part of this and so i think that finally, russia would like to minimize american influence. and there is probably part of

this in the sense that it engages russia and if so, do you see this to what end? >> i see the greater russian engagement than a year ago. if we look at the number of visitors, top-level visitors, moscow is in the recent three to four weeks. i think that and frankly, yes, i think that it is much bigger now

than the paradox is and this taken on it was very clear. but it wasn't actually about syria. it wasn't even so much about the middle east. it was about some principles. in this includes how it happens before. and that was the key driving force for russia.

getting be deeper into syria. at first, and russia is reaching out to countries who have this established relationship. and they are now capitalizing on these political scenes. and this explains the shift

towards government and the russians were very keen and what we see is a very interesting constellation. this includes israel and the visits with israeli leaders. this is a completely new relationship. and this ms. includes a partners in the middle east.

and this includes the secular, at least in their profile. and that is what is russia has really been about. trying to restore the balance of shifting on domestic politics. the problems, thinking about the ongoing insurgency. is not just a regime change. >> do think there is an overarching theme to the way that russia is engaging in the middle east now? is an opportunistic or trying to put out fires? >> i think historically there was a time when russia was one of the is a principal players.

and russia knows that. but neither is anyone else. the united states is declining. and there is a lot of local sentiment and this includes what has took what is going on. and that includes its present. and now it is becoming a player in this includes not independence and finding it very part of this the that we are building of a political presence

and thereby diminishing the russian influence. we can explain trying to establish a presence, and hoping that our influence will continue to decline and realizing that we need russia. we need both of them and we have this and we are becoming a different game. one in which no one is likely to be preeminent. and so for her bare of us have been a marginal interest in the out the expectation that we will make one of us or more than one of us partisans is very different than the 60s and 70s and even in the early '80s not a cold war great power rivalry? >> macinnes, it's not a zero-sum outcome for anyone who's sends

in this and each can benefit from the other's presence for the same time being not being in the other party's presence. and that's part of this in which the marginal gains have been what we have been seeking. >> how do you think that the russian government sees this as overarching objective in the middle east and this is wilmette region. >> the general perception of american policy and as for russia, the reason it is

relatively successful in this month that they initially had an objective, but because he said to certain principles and what should be done in rather what should not be done. and that is, we see that you have any kind of idea about this process is even part of this challenge and i think it's better than what we have anything and i agree with the gentleman that the part of russian success is due to this and i think it is confuse and it is nonexisting in the middle east which is they strained neck so you think that kind conceit, which is to oppose them undermining our external

overthrow of the sovereign states and leaders is appealing throughout the middle east? were simply throughout the actors played the golf seeds who themselves are fearing that prospect? >> i think it is in me consistency and they want to understand the logic and they do not understand. as for the idea i think it is basically the assumption that the regime change is not a solution and this is what russia is trying to say to americans. >> his only, please, can you tell me the study of vladimir payton. do you think that plays into the

russian actions and in what way? and that loosely at. >> one of which is that vladimir putin has the president the taken who is going to risk your russia state and some of the tuition and i think we have made it very clear on the panel that that is not a russian objective or vladimir putin's objectives and to make it back as a player and the annual address lester. he said he wanted to make sure it was a planned and i think that that is something in this

includes the europeans have played an important role in the negotiations with iran. and the other we want to make sure that russia can defend itself from throughout and he wants to seek to preserve this to some degree. and this is the russian arms and even extreme circumstances would make sure that we are prepared on those in this includes this, and these are all marginal

efforts. and no one is really sure what the outcome is going to be. so that was very much consistent with the view of vladimir putin and how to take advantage of aa equities in your hat. to make sure that you don't have anything in the round. >> you have written that the west really has misunderstood, let's talk about this, misunderstood why russia has supported the bashar al-assad cuisine in the security council. >> you decide that it wasn't middle east wasn't really about that. >> explain what you mean. >> after the cold war and spirit had exchange and change significantly. as includes the system that

became yeshua in the very the responsibility to protect and so-called humanitarian interventions were launched as a legitimate tool and this includes in this coincided with the best as a means to settle problems. and in international community is led by others, native said tiger woods was right. it was progressive. it was a glitch pilotage was responsible for everything in the next step we are part of this and this is also a class of

our approach and because of the deep conviction that is not the way to settle anything in russia was embarrassed by what happened. and this includes part of it. and this includes the russian diplomacy. and i think the foreign minister said was what was part of this is a model how international local conflicts and credits. you think you. what is your response to that.

>> do you think -- >> this is an enormous capacity. >> this is now russia's standing against what is away of intervention in the affairs of other countries and the support for certain people. >> i think that was on the possible. in my view, correctly. not to intervene in the problem. and i think that we stumbled

would seem to imply and imagine that it was the those are starting the whole thing which is known for democracy, they were were known as the sagittarian conflict and they would get unsold for that and it was part of that and the whole thing was transformed into something that would be contained on the basis of wider international accommodation with what ever happened to others this includes various aspects of the peace process will produce benefits for one of them. this is the nature of the game and the next phase is successful and it will have to be a compromise. including the compromise of those who will stabilize the

region. and it will not make us decisive. for the chinese that will give them a benefit and that includes a continual source of oil and maybe some bank interests. so the positive stakes are so not entirely sane and they are very disruptive and we have been a part of this. >> so do you think that the u.s. and the russians really do have common interests in resolving this conflict. we sort of heard that from the congressman, preventing an extremist she hardly extremist

entity from a good heart and syria we can prevent. >> i think that certainly the case and i think we have to lay this out is how has this been done we are in both sections but he has art he laid out that we don't know how we get to that we don't know what that will look like. will it end up in a partition.

>> we now know it is needed to be done. even if we are not clear on who is part of that, we know that we don't want those lessons to weapons to be used again or falling into the hands of unauthorized and much more complex government. we don't necessarily have an agreement.

there's going to be a lot of difficult discussions to be held >> this includes u.s. russia and the cooperation providing any kind of template for getting all the parties to the table. this includes the chairman of the house intelligence committee that cannot deliver its partner at its favored forest within syria. >> this is a key problem. and frankly i don't see directly

twin chemical weapons and the operations, which is, it is surprisingly successful. in this includes real political will and we have the technical capacity on both sides and i think that that will be completely successful. but i think -- i don't think this because this is a particular issue that i had recently had the conversation

and let's make a deal. geneva is part of this numbly can agree that we have a common over 90% of those fighting and syria. >> yes, i don't know where it goes. and we cannot agree and we can agree on syria. and this includes this. but essential is the agreement this includes this situation.

>> and i think it is reengaged men and so on. do you think that it has been a right approach? the usb along to buy by this at all or see this as an opportunity to resolve some issues? >> i don't think it should be. because i don't think it should be over in estimated. and it's not something that we should negatively or positively be a part of. i think think there's a chance that the reduction and so i think it should be compromised in an arrangement in which the shellmac doesn't have to go, but he doesn't care. >> explain nazi there is nothing

for that. his second term expires next year in the roughly timeframe that we are talking about and i don't publicly mention the fact that that does us an opening for where he volunteers. perhaps with some encouragement from the russians said he doesn't want a third term. he picked it up and had a major a trivial of his position. he asked bashar al-assad, your second term expires and are you going to run again? responded that i have the known and i do not respond and i think that that takes part of it. which is a sunni dominated area, explicitly. but we might get a different power distribution arrangement

is some formulaic conciliate some of the most significant elements in this society. and we have some interest in collaborating this. and something that preserves a surrealist went now which is the so-called revolutionaries which are ultra- sectarian and this includes the best between my accent and their extent.

smith would you like to talk about this? sumac hash we look upon the greater russia engagement? student we have talked about the same outcomes in which there is a degree of collaboration and there are many factors as far as this goes. but we are all part of this similar outcome in the middle east would've liked resource resource to have a balance between also is not part of sectarian or some solution that retains a series that we can look at. in some fashion.

and how do you factor in us. one thing to factor in as the restoring of the relation ships. and many people here they have forgotten that -- i think that many of us will remember that in 2004, the russian -- months to save the government but the russian author says having a him , assassinated the former president 2000 for info on and actually they happen to be there at the time this happened and they were having a conference and let's just say it was part of this of this incident.

and that is the point that we have and may seeing a set of connections between pressure and the region. it have an impact not just within a glittery event long-term stability of russia's regions and they won't sue whatever solutions that we have some kind of guarantee you had against a lovelock from the middle east and situation when when it rages upon the this is not just a perception. this is just not used as a political bargaining chip. this is something the vladimir putin in the region has a strategic situation as terroristic as anyone else's him we have a serious street conversation and what we think the middle east is going to look like in the future. >> before we go to audience questions and getting the money,

what is russia's posture as far as iran today. supplying weapons and other kinds of advanced technology and not the same time it is certainly technology that is voted for sanctions this includes this. >> i have been a part of a relationship with iran and this is a simplistic picture, which i sometimes read as part as a rationale is that all and what he mention is that russia would this and russia can cancel a deal after 2010. they are very much -- and that previous president of the both about roche and in particular about this.

i think that we have improved because of syria. because of our business is extremely helpful and great. and there are different views on whether we should encourage this or not but some people believe that -- it is not in the best interest because if we improve the relationship will immediately turn to the west of forget about everything that we have talked about. and that is why we should try to prevent it in the report of this because we should be something that we encourage this and this includes a better relationship because of arm is extremely important as a regional player.

and learned forward russia that is a very important thing to keep in contact if you a good relationship with iran. the more opportunities for alone and international affairs on a more important and also they will never become part of this. there will be an independent force and i think that we are interested in to have stronger predictor of all country reacher men. >> yes, you were nodding. and i agree obviously with what the truth is and what you are talking about in realizing that this is definitely the veto any to remind the audience to push this aside a lot of of further is that there is a change in relationship with israel, which also means that russia, like the

united states has to balance of salts and the balance towards this is part of the quote world, russia was seen in a position to a variety of reasons. but things have been a part of this and a simplistic view of the amal us imola this and this has to do with soviet jews and not just the whole of the former soviet republics and manifested in this and there was a russian speaker among many others that they. name: nonetheless, aim message of this number of people that have been in there for a period of time as he would come in israeli society and they become part of the fabric that vladimir putin himself has talked about

and talked about our jews and he has never heard a soviet leader make that kind of comment. in any platter of this. he wants to establish the critical tides of engineers. he wants to talk about intellectuals on the great kind of cultural achievements and he wants to see this is a huge loss to the fabric of russian society has made great efforts and high-level visits and this includes them as well. and this includes what is going on and it depends on what is going on in this all-out this. you should be able to put your feet on your table. i like action on this very

important situation with russians relationships with israel. it is very interesting to balance all of these demands. >> he said that russia had a roundabout? >> i think russia and the united states same goals as far as nuclear weapons are concerned. i think that we share this interest. as in good a good summer together to transform this interim agreement. ..

>> that raises a and interesting question beyond the realm it depends what will russia wants to be but

if it is in unrealistic nostalgias or imperial status, then we see some of that in the current crisis with the ukraine then the answer is obvious it will not be very accommodating. in fact, what putin has done to a remarkable degree is generate the newly independent states that surround the former soviet union, a genuine national hostility from russia. it is as basic as that but hardly the independent states want to be part of eurasia. some feel they have to be but simultaneously communicating to a san the chinese and europeans what they would like to accomplish in the meantime to negate the us step and i

think putin is a realistic of his aspirations sandy laying one is desirable and inevitable that russia as a senior and a significant partner in the european states. that isn't the issues are about a and involve the relationship with iran a and others. >> this is a panel if your question is directed to one person, please say so we will go to the gentleman back here. briefly state your name and affiliation and keep your question brief. >> george mason university. one often hears russian officials are in the us say it is important to keep aside in power as bad as he is it is worse without him and russia will be threatened by veggie hottest

that a rise in syria and rebound into russia itself. but is there any concern that the russian support for a side makes russia a target of the jihad is? is it necessarily causing alienation in the middle east in the long run so does the support that actually help russia or hurt it? thank you. >> russia is a target for the jihad is did the way. as for support for aside we can argue but that is up for debate but i think what happens in the recent couple of years demonstrated one

simple thing the attempt to find the right side of history. they would change position and it does not work for coming in this situation where no one is okay it is better to have a clear view of commitments that produces at least a certain degree of respect to this country jihadists will try to undermine the russia and i would said it relied you in libya gadaffi was killed because of russia it would lead to a resolution here knows what would happen but he shows absolutely no gratitude with the new government and of the first day and they said russia in

chinese companies and now will come in the more. >> first of all, thank you very much for this rich discussion. in terms of russia's attitude, a pre-talk about iran, saudi arabia, look at the eastern better training in the way id which russia may look at europe and, where does the strategic vision that you outlined past you do is essentially and how does

that play into this discussion? >> from my point of view it involves the ultimate reputation of the argument in self isolated imperial power more or less within the geographical confines of the former russian empire is in his era. largely because of the posture on the supply of energy. this is now coming to a rapid end that the russians hope for future economic success is increasing the independence of the chinese to buy all of the energy the russians have to offer

towards the middle east and iran. if up prognosis' turns out right it involves great enhancement the american interjection so what you have raised the ultimate challenges to create the creasy nationalistic and imperial estate crash, of them would be members and neighbors. >> of oil and gas issue has been overestimated although i fully agree with the doctors that it is

significant because of the shale gas revolution and for russia it is very important to say five or 10 years ago to prevent those that come to the european market. but now not so much. europeans have different reasons than all of those calculations i think it is extremely exciting but as for russia by decree i could argue about the chinese it is the interesting topic but that is absolutely true for economic development is not necessarily china but those

markets need russian supply that is not what the doctor says but russia actually sits on the largest deposits of shale gas it has enormous potential but also the other increasing problem but

russia was a major player for the certain period of time in terms of gas or oil sometime in the next 10 years. but with a current business model russian babies look to adapt because of of big industry but we have seen them adapt many times before. they do not have the big pipeline but they're not finished. on a more complex scale so we have to be careful to think everything has changed radically and to what the shale gas revolution reminds us is how in the '70s the

whole game change because of the oil embargo haag's and the way they change their own issues that is where we are right now. so we have to be careful to think this changes russia's position but they will respond and we will have discussions so we have to ruby and careful right now -- be careful right now. >> my question is on a different topic there are ethnic and religious

minorities but there is one of the place of the olympic games about windage thousand people in syria expelled by russia at some point to the of the least. but there is no help from the of russian authorities actually some families are deported. reduce see any change regarding the refugees? >> can you explain who is this group is? >> a group of people from the caucus to the

left, russia, after the fighting against the russian empire and then across of middle east i think it is a very complicated issue because of the one hand russia has different nationalities as their read a couple hundred came in it and tried to leave their but in the russian case it is difficult to equilibrium

those who are brought into the region and the fear that will be used and the security services have to speak in these terms first of all, and i am afraid it will be difficult with that situation. >> i am with voice of russia america and i have a question. could you discuss the end game especially consider paying the fact willis and stations in regard to interest of saudi arabia did you said in another article with the settlements before.

>> we will keep it to one questioned. >> what is the question and? [laughter] >> what is the end game? >> it will be either the treaty approved through the same process that created the current six month arrangement during the break down with the securities and the context of which i hope we go loose cover since of rationality the coz the war in the the least to put the expedition to afghanistan and iraq look like short-term trifles. it is a very painful choice but it is important but it

with the context of the growing discussion the absence of recognition of the fact in the gene to prevent a nuclear war by acting in a way even when push came to -- push came to shove but in some point it has to go to war to preserve the independence even if there is no solution we reinforce by saying what we

have done with regards to japan or doris career i am not sure it could maintain the situation without a subsequent full-scale treaty with iran. >> if the talks totally broke down you think going to a containment and deterrent strategy is preferable? civic yes. there is a reason to stay that the proportion of power between the united states and the iranian nuclear power quality enormous. we are being swept in -- swept into the us a plastic formulation the fact of the matter is to have a nuclear test that is known to though world.

it is difficult process did you have one nuclear bomb. if you are about 150% share then you have to have a delivery system on top of it to have more nuclear weapons then you can counter attack so even in the absence of the agreement it will take a lot of time before it is a serious threat. in to react to any act of violence as a knack directed at the united states has the same credibility invalidity as our policy deterrent in

the cold war. >> of the question is the interview with the end of september the question was what kind of serious do you want? the question is secular. this is ideal. >> secular is no word associated with the west we deal with the of the least between religious traditions

what has ben distinctive not a democracy by a means is within syria there was more a combination and toleration of religious diversity then joining the arab states that proclaims themselves which is the fact means the of policy of one nation and over another with the complex internal arrangement that i should think. >> is asked to be the last question. >> i will add one sentence interestingly there is one

situation that is very much emphasized in russia almost absent here in the debates a future of christians is syria because here it is strange it is not an issue while for different reasons we are sincerely concerned about this including talks and it should be discussed or considered especially since we know what happened in said iraq. >> i would say we did discuss but going back to what was said about the unknown sectarian tone to take sides of the conflict.

the game back to the 1990's with the european countries is in particular with the potions of the croats and the orthodox serbs said we have all learned from that with the depiction of the 1980's to have how we talk about this we all talk about the proper way is with a complex situation. and then to get to the oil whole issue and the role of the other groups in the area with the middle east peace process to be careful how we do it so to make sure it is the same tone of the debates

in the united states with that constituency. so with the refugee process along with jordan in the other neighboring countries and then in spite of the fact the media and population is indigenous with the ottoman empire. and how you do of people seeking the right to with the religious affinity? that will have an impact over every country and then we see the spill over into lebanon transforming over

the population what we will see in the next few years. >> just as predicted. think you for a fascinating conversation. the conference will break until 3:00 then we will resume with a panel on syria. thank you very batch. [applause]

>> if this is a rare, instead to see congress 1901 less than 2% came from working-class backgrounds that wowed the been congress then flash forward spending less than 2% during the service

industry jobs. so this isn't one day that has changed lots of different aspects of cable news, big money and politics while all this is happening happening, this is one of the constants of the last 100 years that working-class people are not being elected

[inaudible conversations]onf the.

>> will come to theinan conference is following the of quarterly meeting of the financial regulatory committee all of you who would break the ice and snow to come here today. we are little short on staff some of the members did not make it but i will first introduce the members of the shadow committee of the press conference, peter from the american enterprise institute, marshall from the wharton school university of pennsylvania, chester, from i carnegie-mellon and sitting in the audience is kenneth dam from the university of chicago. and i am george kaufman from illinois university and cochairman of the shadow group. we have four statements. unfortunately one of them was

delayed because of the chief author that came in today that what we will do with that statement is we may talk about it today at the meeting and we will have it ready in a weekend if you have an e-mail list, you will be getting a copy of the statement. we have three statements that should be in front of you. at the first deals with the liquidity ratios as defined by the committee, the u.s. regulators and the six shadow financial regulatory committees. i might note that the u.s. shadow financial regulatory committee is in its 26th year and we have spawned the birth of the other committees. we have been very press release. for a five and 2 in 26 years i wouldn't call that promiscuous. anyway, there's one in japan, europe, asia, australia, new

zealand, latin america. we try to get together every two years. we did last october in tokyo and we issued a statement on the liquidity that we made reference to in this statement. as usual, we will go over each statement one at a time and then take questions after all of the statements have been reviewed. the second statement, 147, is asset management. there is also one that was in today's lead editorial in "the wall street journal." both that "the wall street journal" and us work on sunday. they print on monday morning and we had to wait for noon time. that is the scoop in that way. the third statement is on jpmorgan settlement on those large numbers what do they mean and are they justified? the fourth statement that we were not able to complete because the chief author isn't

here and is caught up in the snow is an open letter to members of the international swaps and derivatives association regarding changes in the contract to facilitate resolutions. if you could write english i would be able to read it. resolution. we will talk a little bit about that and how it affects the bill if we have time. we will be sending it to my e-mail in the next week or so. the next one is by herring. >> actually it is a joint paper with sheila bear. the idea of trying to improve the liquidity positions of the things stand from the crisis. the regulators in the united states i think deceived themselves for an entire year that that was the only problem because a sickly all they did is try to shore up the liquidity position of the banks with a number of invented facilities

and a number of bailouts one way or the other. that was really only in the fall of 2008 that they admitted that thethere were solvency issues ad deep solvency issues in some of the banks that began to address it. you might recall the equity infusions and unsupervised capital adequacy in the simulations. so, the international regulators even before the crisis was over agreed that they needed to do more than just regulate capital. they needed to regulate liquidity as well. the idea for fruit in december, 2010, when they set out conceptually two kinds of ratios. one would be short-term focused, a booklet of the coverage ratio. and the other would be long-term focus so that your mismatch between short and long term liabilities and long-term assets wouldn't be great and that is

the next stable funding ratio. people thought that ratio was a good idea, but so far they haven't been able to agree on a proposal. so if they work i'm not even sure it is in progress but it's yet to come. about the liquidity coverage ratio is here and it's been through several revisions. the idea was very clear when it was first articulated. the regulators wanted to be sure that every major internationally active banks have enough high quality liquid assets on hand to be able to cover 30 days of net outflows under a stressed condition. so the idea was that every bank should be expected to make it on its own for 30 days without recourse to the central bank, without the desperately engaging the fire sale of assets. that's a pretty ambitious goal

and it may well be a correct goal, but it's certainly a stretch for many banks these days, particularly in europe. as a result of the european supervisors and the european banks pressed hard to losing the ratio. so what began as a very clear idea got to be hazy first with regard to the enumerator in addition to things that are obviously high quality liquid assets, like cash at the central bank that's not required, treasury bills. they wanted to add a number of assets that the pentagon secondary markets for the liquidity. now come in normal times that's just fine because that's really how banks manage typically. but recall one of the problems in 2,008 is one of the markets simply dried up. and so it was a compromise with the idea from the very start.

then they tackled the denominator and the denominator had some pretty rigorous assumptions about which parts of the balance sheet would run off, the amount of deposits people would withdraw, the amount of commitment lines that would be drawn. it's fairly complicated but it was a fairly broad list. after the europeans were done with it it became half roughly. the runoff rate are basically half of what they once were. that is what they produced in january of last year. ben bernanke was asked about it because he had to take testimony on the macro policy in february of that year and he said that the fed was committed to implementing a version in the united states that would be super equivalent, which is sort of a kind way of saying tougher.

the fed delivered in fact it is in the register i believe november 29. what they did was to tighten the definition of liquid assets they still have assets that depend on secondary markets, but they have excluded assets related to mortgages. they have also tightened up the categories of the outflows and the net cash outflows and used roughly the same assumptions. but do they have also specified that these are the same outflows that would be calculated under the annual ski cap exercise of the capital assessment program. so, you end up with a ratio that has no particular relationship to high quality liquid assets that would be available in the real crisis and you have a

degree of stress that given the arbitrary runoff assumptions are not totally clearly related to the stress test scenario that they are in posing. when the shadows met any group in tokyo, this was actually top of mind for all of the groups because this is an international regulation and a number of people have concerns about it. i should mention also the fed reserves credit for shortening the amplification period if they wanted to be there by january, 2015 and fully there by 2017. so that is considerably above the international norm which is going to stress i out over four years starting much later. they also have more teeth in it. if a bank is out of compliance for three consecutive days they have to submit a liquidity

management plan and they have no particular sanction at all. when the shadow committees met, there were several concerns about how these ratios would work in practice. one is that they are excessively complicated. now if you are familiar with regulation this is certainly a contemporary trend one can only wonder what the rule is going to look at and unveil this one comes out 125 pages. it's very tough reading in the federal register. and it's going to be enormously difficult to comply with because there is many different categories in so many different weightings and caps that are trying to take account of the differences in liquidity but not in a way that is quite approximate. it's also going to be very difficult to administer and it's going to be tricky for the regulators to find out who the bank is in compliance with because there are so many different components so many

different ways. the other problem is that this is being imposed in the context of an economy that is trying to work its way through the unconventional monetary policy that is literally flooded economy with liquidity. it's going to click and at the same time a number of adjustments in the capital requirements, the leverage requirements, the risk weighted assets require humans and require meds for more liquidity in the parties and the dearth of its transactions, such that it is quite possible that this liquidity requirement could cause liquidity to dry up any serious way. there's a serious problem in the unintended consequences of occurring here because nobody appears to have thought through how all of the various changes and regulations are going to interact. unfortunately the regulation has

become so specialized that the capitol regulation people don't necessarily talk all the time to the liquidity regulation people and when they go to their powers you sort of hope they connect, but you can't be sure. so we were concerned about that and wanted an indicator that was easier to implement, easier to understand. the ratio that was not a minimum that would be informative. the reason we decided we didn't want a minimum required images we felt nobody could figure out what the right minimum was at this point, but we realized it would be highly useful for the market to have some kind of indicator that would allow them to compare liquidity positions across the institutions. and we simply don't have that now. there's no way you can pull it out even if you bare your soul from the footnotes -- berry ourselves in the footnotes.

so we have the indicator into the idea behind it is very much like the regional basel idea that implementebutimplemented ay obviously. the idea is if you reduce enumerator to only those assets do not depend on a secondary market for the liquidity. so that would be things like cash reserves for the short-term treasury bills, that sort of thing. we would take out all of the things that rely on an act of secondary market. as a widget in a position of liquidity in normal times, but it's not something we can rely on any crisis. then for the denominator, we decided to do a very simple kind of stress test. and that was to take an institutions actual net cash flow over the preceding 30 days and assume a worst case that the

institution wouldn't be able to roll over its liabilities in the entire 30 days. and we would calculate the ratio as the lowest ratio was only can you let its basis on that period. that would be reported. and the advantage of that is that the market would become a factor in exercising some discipline over the liquidity. it wouldn't be only the burden of the regulators. it would be very clear that stress the are dealing with would be useful if you are looking ahead and say what will the cash flow be looking ahead. but the problem in that is you have to make a number of assumptions that are highly subjective, difficult to verify and almost invite gaming so that

a bank with a liquidity position can easily manage the scenario to make it look better than it actually is. if you get the actual data there's nothing you can do and it's simple to deal with. so we've come out with an actual measure and the market, understanding there are significant business differences across banks, would probably form and look at one bank related to a bank that had a similar make stuf such business. given that we can't be sure exactly what that ratio is another would be the feeling of what it should be. over time he would have numbers that are comparable achieved can't be basel ratios and you would have numbers across banks which again you can't really do with the basel ratios. we think this is a simple way to proceed. it's a more cautious way to proceed given the other regulatory changes at this time. and it will help involve the

market in what is a very tricky regulatory arena and where to market discipline is long overdue. >> the second is 347 asset management and system at risk and marshall blume will review that statement. >> thank you very much. recently, the office of financial research, ofr by dodd frank issued a report asset management and financial stability. and it focused on the money management industry. it has received considerable attention because the sec asked for comments on the report without issuing its own port. it also was the subject of one of the lead editorials in "the wall street journal" today.

the source was a request from the financial stability oversight council to determine whether the firms in the financial management industry or asset management industry should be subject to enhanced provincial standards. if the report itself focused primarily on the non- money market funds or they d they do e money market fund occasionally. we found that the report made some confusion between the operations of banks and investment management firms. this is particularly with respect to leverage taking on debt. when a bank loses money on its own asset, what happens is the capital account goes down, and it may actually be eliminated. overall, when banks lose money,

there's less ability for the banks to make loans because the capital account has gone down. investment management firms are quite different. the assets that an investment management firm manages are held in trust or some other sort of investment company. but generally, the investment management firm does not have its assets tied up in the funds that it manages. there may be some of that, but not a lot. so what happens when a fund loses money? what happens is if loses money and it only has an indirect effect on the investment management company. now, the report states that when

the funds the firm manages the client, revenues for the firm will decline. the report paints a picture of systemic risk when that happens. it's not clear exactly how this happens. but the report states that when firms lose revenue, that will have a double serious effect on the economy and we found that argument unpersuasive at all. it is true the firms will become small and it's been a tour of investment management firms that the costs are highly variable were primarily personnel costs and those can be reduced very quickly. so we think that has -- that argument has much merit. going on into the report, the report identifies four potential areas that may lead to systemic

risk. reaching for the yield and hurting behavior. number two, redemption risk, number three, leverage and number four, failure of an investment management firm. as we mentioned before, we don't think the fourth one has much merit but let's look at the other ones. the other ones, like reaching for the yield and the redemption risk and leverage our inherent in the investment process. and placing restrictions on the systemically important firms probably wouldn't change on those types of risk in the investment process. what would happen is investors want a yield and if the large firms can't offer the yield, the ones who might be subject to

enhanced regulation, the investors would just go to other firms. so in nature it is the investment process that there are the people that reach for the yield and there will be hurting. we illustrate this with one example. we don't go through every one of the statements or every one of the comments in the report. let's take the searching for yield. one approach people have been doing is putting money into heidi yield bonds reallocating their assets to that area. that's particularly true with mutual funds restricted in the amount of leverage. other investors are doing something we call the kerry trade. this is a trade where you short the short maturities of the governments and use the proceeds

to buy long-term and pick up the differences in the yield curve between long and short. there is a lot of that going on right now. now, what happens when the yield goes up? both of these strategies will lose money but it doesn't affect the investment management firm directly except for the freestyle revenues. so these losses in our judgment has nothing to do with systemic risk. they are just the normal course of doing business and investing. another potential source of systemic risk involves the mispricing of assets in a portfolio and the destabilizing effect that investors will have when they take advantage of these destabilizing or these destabilizing possibilities. this used to be called market timing and mutual funds where

people bought a cheap price and sold it at a high price to the disadvantage of other people. the sec is currently considering the proposal with respect to the money market funds and it's important to note that it does not involve subjecting investment management firms to enhanced provincial standards. throughout the report, the ofr calls for the collection of the new data to identify sources on the systemic risk. it looks like they are trying to find a lot of the data and maybe they will find the systemic risk. in collecting such data, it's important that the collector spells of the potential benefits against a private cost of collecting this type of data, otherwise it's just collecting what the data and hopefully they will find something.

the committee also thinks that the fec and the ftc rather than the ofr should take the lead role in collecting such data. these organizations have experience in this area. the ofr is new, but these regulatory agencies, the sec and the cftc know what's going on and should take the lead role and it's important that only if these agencies do find clear and convincing evidence of systemic risk in the investment management industry and that this could be addressed with enhanced prudential regulation should the financial stability oversight commission designate investment management firms systemically important. >> thank you, marshall.

the last statement is on j.p. morgan settlement. peter wallison of all people. >> thank you very much, george. ..

now banks we know are subject to pervasive government supervision and regulation. as a result they really can not, they really can not litigate with their supervisor. the risks of doing that are extraordinary and there is possible retaliation by the supervisor in other areas if the banks take them on. so there's real concern about settlements that occur between the government and a bank because perhaps that settlement is not the result of each party looking at their options and the evidence of the other side but rather simply the government's overwhelming power. a bank can not really afford to take on the government in this way or take on its supervisor

and as a result you wonder, unless there's a lot of information around what actually happened, you wonder whether there is really an arms length kind of settlement. the same question arises where the settlement has occurred and we don't have very much information about the evidence that the government had to create the settlement. and why the, or why the bank agreed to the settlement. there's a lack of transparency in these cases. and again, because of the fact that the government has so much power with respect to the bank, the lack of transparency raises questions about the rule of law. are we really dealing with a situation in which the government has found something that is extraordinarily

troubling and has fined or otherwise created some source of fund that the, has to be paid to the government when the government had always, has always the power to force the institution to settle? so again, those are the kinds of issues that i think, the committee thinks cause "the washington post" economist, "the wall street journal" and other news media to be suspicious about what happened here between jpmorgan chase and, and the department of justice and the other government agencies both at the federal and at the state level who were involved in the settlement. now the committee also sees some policy issues here that are quite troubling.

one is that, of course, much of the cost that is were imposed on jpmorgan chase came because of things that were done by bear stearns and washington mutual two large financial institutions that they acquired at the behest of the government. now it's possible they might have been able in a contractual arrangement to avoid these kinds of costs but this was all done very hastily because of the circumstances and so it seems unfair in a way for the government to have imposed these losses on jpmorgan for things that the institution did much at the request and to the betterment of the government because of the government's policies here. so that's yet another thing that worries you and in the future will large and healthy financial

institutions be willing to take on failing institutions when they might be taxed with the result? so, that's one issue of policy that we have to look at carefully. the committee was also concerned about one other thing that, which is really to me, in particular, and to other members of the committee, particularly troubling. and that is, that the, the charges that were placed against jpmorgan came after the chairman of the bank started to take on the government's policy in a number of areas. he was critical, i'm talking here of jamie dimon. he was critical of the, of the dodd-frank act and was critical of many other regulatory policies of the government. and, at the same time, he was in

a sense, a spokesman for thing industry but an individual who was the chairman of a large bank then following those criticisms, came all of these charges against jpmorgan chase, which had previously been thought to be one of the healthiest and best-managed banks. so, the worry here is that the lesson that the government is, or the message that the government is sending is that, if you criticize the government's policies in any important respect, there will be retaliation against you of the kind that occurred with jpmorgan. and i'm afraid, i think, other members of the committee are also afraid, that to the extent this is occurring, we have done great damage to our, not only to our economic, to the way our

economy functions, that is, with banks having the opportunity, banks and other financial institutions having the opportunities to criticize what the government is suggesting, but, also, to our political system because the public then will not get the kind of feedback about what the government is doing that they can only get from the regulatory, from the regulated industries. so that's, those are the two policy issues that come out of this very, very heavy settlement that the government exacted from jpmorgan chase. thank you. >> thank you, peter. i mentioned earlier that we had intended a fourth statement but we were not able to complete that in time given the weather conditions. we'll send it to you by email but he wants review part of it before that. >> it's a simple statement. we had technical difficultyings with a missing e copy. it