the combined effect of that. we've also put a limit on how much more you can go to funds or the state you can only go for the further 5% because we reckoned after that it should be wound up and if you can't rescue it by the time you've got up to about 25% of assets, then what are you doing trying to rescue it? we've legislated at the bank funding resolution fund that is 1% of the cover to deposit it has to be built up over time so it may take a while to get there and the euro zone funding gets pulled. that is absolutely all things based on size and brisk. there's still a little bit of fighting going on as to how that is to be defined in a subsequent rulemaking process.

now i would finish by saying a couple of words about banking unions. this is for the 18 countries in the euro zone. we've made the european central bank as the supervisor. it will directly supervise the largest 130 banks and then it can call up any of the other 6,000 or so if it suspects there is a problem. the whole of the eu that is all 28 member states have the same regulations and rules for the bank supervision from the european supervisory agencies but the euro zone will make a further detailed supervision of its own but one suspects the banking authority is also charged with looking at that book to make sure they are coherent so we don't have

different things going on whether you are inside or outside of the banking union. all the countries have their own deposit guarantee scheme and we have the intensity mutual lies that in the zone that has failed at the moment. it doesn't conclude that hasn't at her because we have a common level of insurance and common system of rules and it's all pre- funded so the money is there. when i say pre- funded it will be when they finish paying in. we've also created a resolution authority for the euro zone so that all of the resolutions will be done in a uniform way into the parliament pushes hard to make sure this is what we call countrcountry blindest of it all depends on the bank and the risk and all those kind of thing and not that came from the country and we are not happy with you at the moment because you have been somewhere else.

i think a point on the side to mention is that while we are trying to do this business of separating the sovereign from the bank come issues about banking liquidity relies on the sovereign have weighed very heavily on our mind in the parliament, and i did go a bit across while he was still the head of the fsb when they suggested that only the sovereign could do liquid assets and i said that's what we wanted the middle of the sovereign debt crisis to help separate the banks. so he did say yes i've heard what you're saying and say yes again in the capital requirement directive we stretched the boundaries of the liquid instruments because the last thing we want to do is reconnect back from the banks. it's going to be difficult because there is so much suffering back and happens to be residing.

i was going to say something about globalization which is the nature of this but i think perhaps there isn't time i would like to point out with a lot of the banking regulation it's doing the opposite of allowing globalization and trade sends pleasure that is what the committee did on the trade finance so i'm happy t to see te governors have taken europe and my advice and there might be some pestering and they've amended that. we have problems now with correspondent banking not just because of the closure of the correspondent banking arrangement but because of money laundering concerns but also the treatment where it might get 100% runoff into a liquidity coverage ratio went quite a lot of correspondent banking is actually operational banking and should qualify for less so i hope you're listening. and then there's a problem with a third of its that europe has

done a little bit on this, not my fault. it was all the commission into this means again we are shoveling out the emerging markets and making the trade much more expensive for them. and then finally, the uk and the u.s. are leading the way in reinventing capital liquidity in the subsidiaries which is probably leading to a fragmentation of banking also you can make justifications in that is the debate all on its own there's quite a lot going on but basically we are all tackling the same problems in slightly different systems and circumstances. thank you. [applause] we realize th realized the onlyg standing between you and cocktails his question time so we are going to ask a few questions and takes him from the audience. first i'm a big supporter of the

community banks but what do you say to the member bank of your association 150 million-dollar bank who thinks he's totally overwhelmed by dodd frank and isn't making any money in interest rates that way they are? >> i think community banking is at the dawn of the greatest period in its history. when i was running my bank during the crisis the world was falling apart and you had over 700 banks fail in one year. we didn't even approach 500 banks in five years in this crisis. but 701 year and so the gurus and the consultants were out there saying this is the end of life as we know it.

there will be no community banks (-left-paren 1995. i went to seminars like that and i sat there and said what's wrong with me? i got t ought to sell my bank at out of banking. and there was a mentality that the banks that survived this crisis are tough and resilient and nimble. they are forward edge and those that are questioning i think most of the banks in the community banking space today will hang and. of course hof course both of cos where does make sense but the greatest impediment are the regulation that those regulations when he took them to scale the regulations to size the risk and complexity of the institution. that's what we need in the country for the community banks to fluoridatio flourish and then

have a vibrant forward thinking system. but i would've told him to hang in there because five years from now the landscape is going to be very conducive to the community banks at any given local area. >> i think the challenge is to be able to examine the different levels. that is a challenge for a lot of people in this room that i know it can be done and we have seen it done before. throughout your career as an analyst you have given lots of advice. what do you tell clients today with the national landscape will look like in five or ten years? >> it really is a very different picture depending on the financial service firm and also on the product it's one of the reasons why i think you have to do it on a product line basics because even though all of the numbers come back up to the top tier to the return on equity and

dividends and all that great stuff from the shareholder perspective, the business mix really drives the regulatory framework. the only thing that i think it's important that cuts across it for the banks and i wish it did for the non- banks is this issue of internal controls, risk governance and what they've talked about and heightened expectations. it is clear the boards of directors can't just get three ring binders and flip through when the fancy numbers go by on a white board and agree to things. they shouldn't have done it before and i think that increasingly they won't and that's true at community banks and across the spectrum and i think that it would do the industry well to have more generally applied to so the government has meaning and directors are far more independent as well as expert. >> i'm fascinated by your model.

are you going to pursue this? >> the functional regulation model as you mentioned earlier about the shadow industries. are you going to take on and try to get the folks in dc to take this? >> i hope so. as i said it's one thing we can do under the current law so i think it is worth a good hard look. >> i'm curious what your biggest frustrations might have been when you developed this. you are in the process of developing this system and how much you look at the american system as we were developing. >> yes i think sometimes it was helpful that there was a staggering in the way that we did things. so dodd frank came out faster and partly because that's the way you do things and you didn't have to go into it in as much so

we already knew what was in dodd frank and we were able to have a lot of discussions so a lot of what we then got into our sort of first round is incorporating the rules he was going to make and i think that it was kind of a nudge nudge process. there were a few places it didn't work but basically it didn't work usually to deliberate reasons. in our case a couple of things were quite a few things that i wanted him to the parliament wanted but the commission had a different view. i wish that our conferences between the two parts in the house and the senate were televised because i could punctuate an essay i told you so. but hopefully one way or another

we will get to there in the end but the biggest frustration i find is writing for things to work getting the eu and the u.s. together i think we need to get intervention and road tests the rules on the markets because our markets are different and a lot of where we have made changes and i deliberately made some of these was because it didn't work. i don't know quite what the european regulators were doing there and sleeping or quarreli quarreling. i don't think they were doing what i would want to do. and we do have this problem and frustration both in the uk and in the european parliament that we don't quite know what the regulators are saying in these meetings because the normal cost of things in the democracy has been turned upside down.

you normally have the political end up in the regulators. now we've got the regulators doing it first and then it comes to some kind of political's eye -- signoff. both in the first stage legislation and then we can vete sure the rules if we don't like them. in the u.s. you have the first stage which is again in congress and then you have the lawyers in the court during the second stage but there is a signoff of what is done and i am not sure that this complete reversal without a little bit earlier political engagement especially when you're in new areas is going to work and i've got a lot of respect for central banks but they are not anyone from groupthink and at the moment

they are the ones calling the shots on everything and they are in the majority of the financial stability boards and they do not have the full range of expertise across all of the markets and everything else that they didn't necessarily cover themselves in spotting the financial crisis either. i just think we need to reclaim territory back from the central bank. bank. >> does anyone have questions they would like to ask at this moment. go ahead, sir. >> i work for the brookline bank core. i agree with you on the community banks but i think there are dark clouds around the industry in particular.

i have some friends in parts of the country who say they are having trouble making money. executive management is tired. the board is tired. they can't attract talent and they can't afford to pay some of the experts they need in compliance and things like that and so when they go to put themselves up for sale or chat with other people they find that in some places it just has no value. so i would ask you the question is what do you think would be one or two catalysts to sort of end of that and turn that around and number two is there any danger of that creeping upward because i know certainly even five to 10 billion $, the bankers are struggling with those costs. >> part of it is just generational change.

i'm a baby boomer and they are beginning to shuffle off the stage. and you have a new generation coming up so part of that tiredness is basically just generational fatigue and a lot of times particularly in the community banking space the senior management are a bunch of boomers and all of a sudden they are what was you look around a board table and it's nothing but white hair so there's a certain amount of generational fatigue so they sort of talk among themselves. i'm tired and this is burdensome. it's not fun anymore. i heard that when i was coming up with the people that had gray hair then. it's not fun anymore. and i thought it was a ball. i liked it. i was ready to go so that's part of this. another is the relationship

between and this gets a little in the weeds but kind of banker and field examiner. i faced field examiner for 20 plus years and when i was in the teeth of my banking career he had more flexibility thave morel one-on-one with about a banker and resolve the issues. they could handle it in the bank. everything wasn't a big deal. they were not on the phone talking to kansas city or washington can i do with this? so part of it is we need more flexibility in the system.

it's showing up in the worry and as far as not making as much money it's harder. it's a just harder. they are not in the teeth of it yet is tougher in the rules of the regulations making it tougher to make money. again, you used to have more flexibility. banking is a relationship commonsense business and i would make loans to people that today wouldn't be able to make that loud. they were marginal and i knew that i would have a discussion with my field examiners and i would probably be able to talk them into a grace period of one exam or two. today i won't take that chance.

today it is black-and-white. either you are in the box were out of the box and that is a shame because it hurts the community banking model that your bank 5 million coming you are kind of in the sweet spot. that is a great franchise to have and i think you can do a lot with 5 billion. you can be an innovative and a lot of ways in a 5 billion-dollar bank. i think in a lot of ways the smaller bank -- it isn't too big to fail. i don't even like that term a lot. it's not those banks that keep the community bankers of that night they do just fine against those. i had a reporter when the one de community bankers were afraid of competition from the megabanks and i said are you kidding? everybody is bigger than me. the credit union, a guy that operates out of the trunk of his car as more assets than i do. i compete against everybody.

that doesn't bother me. what bothered me was regulation, how i was going to handle the check hike. another thing increasingly towards the end of my career as a banker is what we called cybersecurity. i was terrified that my systems were going to get hacked. in a small bank you can only take that loss once and you are done s to that keeps you up at night. hang in ther there as it is generational change. >> next question. >> you mentioned 1200 counties that have 1200 monopoly community banks. >> 1200 counties that are only served by a community banks somewhere in that county. we have counties in missouri that are bigger than the entire

new england state. i mean, vermont is like a county. so think of it like that. [laughter] >> okay. i was wondering to what extent consumers are served by having a lack of competition among bang. and then further you mentioned not so much been concerned that the competition and larger banks but from the non- banks providing more cutting-edge services and products. how hard is it for a community banks to do that and how reliant are they on third-party vendors to make those services have been? >> we are in a state of the great tip o'neill. and he has probably the most famous piece of political advice anywhere. all politics is local. you can apply this to all community banking the local. it really is community banks by community bank. to your question on the counties

i wasn't saying there was only one community bank in the county. i was saying there were a community banks serving the county area to say you could have four or five banks competing among themselves. but there are no megabanks as we call them or actually any other types of service providers in some of those counties. so it isn't that one bank is monopolizing that county like six banks monopolizing the system. it is that one county might be served by five banks. as far as innovative products, community banks will do whatever it takes to get to the innovative product. that's the part that's local. some are heavily dependent on third-party service providers

like vendors like that. some are big enough and have the scale. some have a lot of its own internal stuff. i consider them a community banks down in san antonio. and so it just depends. that is a decision that each of those bank managements when i was running my business i have o decide was it more cost effective worksite internalized it and give it my self? and i made it on a case-by-case basis. but whatever would help me in a competitive atmosphere, that is the direction i'm going. >> another question? >> the federal reserve distinguishes between community banks and larger banks when it comes to capital regulation. and it allows smaller banks to not measure their capital adequacy under the consolidated rules but on the bank only basis.

i'm wondering if you think that distinction is appropriate and should there be a different approach to the capitol at the community levels an and at the large bank level and whether the appropriate threshold for that distinction is the one that's now under affect? >> the threshold is very low right now. we've actually been pushing to make it higher. and i think you have to start in the premise that the average tier one capital to the actual cash capital on average throughout the nation in community banking is just under 10%. okay. that is tier number one. i'm not talking risk-based capital. risk based capital is around 15, 16%. somewhere in there. so you are starting from a very, very high capital ratio to begin with. so, the small bank holding

companies exemption that you're talking about i think is athletic, 500 million below clicks and that is only consolidated capital between the holding company and the bank. the bank still has to do that to the well-capitalized six, eight and ten. that doesn't relieve the small bank of the metric of the six, eight and attend to be capitalized and believe me, it's not good to be under six and eight and ten in this environment where the bank regulatory agencies are actually requiring in many cases more than 6 68 and ten to be consided well-capitalized. depending on the bank. is it appropriate? i don't think there is an appropriateness to it given the capital structures of the small banks. if you're talking about the banks under 500 million whether they are under a different rule

of consolidating the holding company capital to the subsidiary capital, i think any different suspect minimus in that area because they are already highly so capitalized they are way off the charts compared to their bigger but put it that way. >> any other questions? i wonder if karen could react a little bit more to sharon's point about how europe looks at the shadow banking system and has really succeeded in shrinking it versus what we do here in the united states. >> overhead. >> i think it is as i said closer to regulation by function although the comparison has to be done very carefully because as sharon said, the banking system is so fundamentally

different. it's universal banks. the banks do things that are always knew, relatively new in the united states world may done in a few institutions. so, the dangers in the financial systems are different from the different types of approaches. so the risks may be the same, but in terms of the provincial risk being highly leveraged itss toxic no matter where it arises or having an adequate liquidity. but the approach on the two venues has to be nuanced by the structure and often cultural differencedifferences and banki. >> my only response to that i think that the european zone has done a good job of that and i have to say because that is an opening to get a shot in here

that my bigges biggest disappoit -- i had a lot of disappointments with the cfp b. this is just the biggest one is that they are too much focused on the regulated banking industry and not enough focus on the unregulated shadow banking industry. they are charter hits them all kind of power over all kinds of non- commercial bank financial providers. rather than spending all this ammunition on those of us that already have the occ to the federal reserve and the fdic and our auditors and everybody else crawling all over us, let's turn a little of that fire over to the non- banking sector and that is my biggest disappointment. they are trying to get the low hanging fruit and try into some notches on their pistol and they have to grow up and be a

regulator and know where the threats are rather than bludgeoning someone hundred million dollar bank in missouri. a little editorial comment. >> i think we will end on that note. we will turn it back over to you. [applause] thank you very, very much. tom and everyone, you don't have to worry. not going to leave the group in singing happy birthday to the occ, but i will wish you and your staff here standing in for generations of the occ staffers wishing you all the best and congratulations and i think that deserves a round of applause. started the day with the jersey

boys and i'm trying to characterize the motivation of the speakers but looking at the crowd that still here i'm stunned. try into make the world a better place than when he found it speaking not only for the speakers but all of you in that regard when we are thinking about making a transcript of this event so many of the issues were raised, so many interesting questions from you. i know a lot of you are only here because you signed up to prevent getting more e-mails.

[laughter] i understand that. so, developing this list of issues might mean you get more e-mails from me and i'm sorry. but i thank you very much for your attention and involvement and participation. i think tom and jesse and my wife who is extensively involved in this. paul, amy, everyone else that i neglected to mention. this is a great collaboration. i would love to do it again and again, congratulations to you. try to get home safe. [applause] ♪

gather in denver recently to discuss the progress, problems and future of the canada's industry what organizers said what's the first of its kind. tonight at eight eastern on c-span the national cannabis summit. here is a preview with some marks of national cannabis industry founder troy.

>> if you are here for money that's great and i think that a lot of people come to this industry because of the economic opportunity but that isn't what keeps them. what keeps them are the people, the passion, the change that we are making, the pioneering spirit that we are building, and because this is different. your businesses are not like other businesses and so i think it is going to be an interesting ride as we look at our different motivations for being involved in this sector. we learned if you want something done in this world you have to figure out how to make it profitable. the hippies keep being right. they were right about renewable energy and organic food, right

about cannabis. if you look at renewable energy these are movements that started because people cared about something. they cared about the environment they wanted to use renewables. they cared about the health of the farms and the land and about what we put in our bodies. and it started out really small and with an activist sort of flavor. but once they figured out how to have profitable business models around those ideas now organic foods are everywhere and organic energy is growing by leaps and bounds. and i think that is what the industry is doing for freedom. >> recreational marijuana has been illegal for about 18 months. washington state recreational industry becomes legal starting

this week. see the cannabis business summit at 8 p.m. eastern on c-span. booktv sat down with former secretary of state hillary clinton in little rock to discuss her new book hard choices. >> getting to the point that you can make peace is never easy because you don't make peace with your friends. you make it with people who are your adversaries, who have killed those you care about and it is a psychological drama you have to get into the head of those on the other side because you have to change their calculation enough to get them to the table. we will see what happens but that has to be the first. and i'm right about what we did in afghanistan and pakistan trying to get the tablet into

the table for a company and discussion. in iraq today i think what we have to understand is that it is primarily a political problem that has to be addressed. the ascension of the sunni extremist group is taking advantage of the breakdown in the political dialogue and the total lack of trust between the maliki government, the sunni leaders and the kurdish leaders. how well have america's political families like clinton, bush and kennedy go kennedy got? we looked into that on the washington journal. this segment is about 45 minutes

next guest joins us from new york and is the author of a new book taking a look at relationships between the clintons andet obama's. joining us from new yorkew welcome. >> thank you for having me. havg why did you turn your attention to these two families?well >> the media has spent a great deal of time writing and talkinb about the few that exist in thee republican party between the t. party and the establishment wings of the party.irtually n tm but i spent virtually no time at all on the few going on between the two great democratic families. obama and clinton and that is going to affect who gets the democratic nomination and even who is in the white house in

2016. >> what is the feud as easy as? stomach it is over many different things. between clinton and obama over at ththe time debate co- kind of words they hurled at each other during the 2008 presidential primary in which they called bill clinton a racist and bill clinton called -- and hillary called it a fairytale. even more important is an ideological battle between the left wing of the party that represented by the barack obama into the even more centrist centerleft wing of the party that's represented by clinton said this is a battle not only over personal and revenge .-full-stop over the ideology.

>> when it comes to those ideologies you say that president obama is left of center and president clinton more center in its approach and those two kind of expose themselves as negotiations between the two in the forefront not only over his wife in future but that president clinton would ultimately give him the election campaign. >> that's right. as we know in 2008 -- i'm sorry, 2012 i meant to say -- president clinton made a rising speech for barack obama as the democratic national convention, and the media played that as though these two wings of the party were burying the hatchet and now we are united. that is part of a dea the deal t bill clinton and barack obama struck during the golf game in which he said he would support

obama in the return for the support and 2016. so it was a political arrangement that fell apart after the election when barack obama changed his mind and decided that he was going to keep his options open in 2016 and he has not. hillary clinton and her march towards the nomination. >> part of the meeting that you spoke about talks about president clinton's view of the meeting and one of the quotes in the book is partial from the book saying that i hate this man more than any man i've ever met but the important thing to keep in mind is that the decision to invite me out for a game of golf is a sign of weakness. any deal we might strike would immediately please obama in my desk. can you add some context to that? >> i would be happy to because he thought that by giving a speech at the democratic national convention in august of 2012 he had placed barack obama

in his debt. that's what happens in politics. it's generally one hand washes the other. then they would make down the deal and according to my sources who were in the room when he got the news he placed his face in his hands and shook his head and he was so upset that hillary clinton thought he was going to have a heart attack over this what he considered to be on the deal. >> there was no name specifically. what do you make of the claims and why not bring more people to the forefront as people who actually gave you the sources and give you the names? >> i think that is a very legitimate question and a question has been asked of bob woodward whose books are all

anonymous sources. again change offers and all the sources that are anonymous thank you very much. the sources are anonymous when you report on the current political battles it's very hard to get people on the record because they don't want to lose their access to the people in power. so i've developed over the course of many years during the books i've written on hillary clinton and on barack obama and the last book i wrote was the amateur barack obama in the white house i have a rolodex of sources who i've come to depend on who have proven to be absolutely accurate again and again and again. and these people will talk to me for a variety of reasons not the least of which they like to see themselves as important and close to power but none of them

will go on the record and understandably so. >> our guest to talk about his book and tensions between the clintons and obama is as the guest mentioned their previous books about every clinton, kennedy's and other topics if you want to ask questions about this but here's your chance to do so for the democrats, (202)585-3880, republicans (202)585-3881, and independent (202)585-3882. twitter is c-span w. j. and if you want to send a question through e-mail is journal@c-span.org. you talk about president obama and the president made promise kept afterwards but you also bring in the valerie jarrett the president's adviser. what is her role in all of this? >> guest:.

she was a friend of franklin roosevelt and eleanor. valerie jarrett is best friends with both michelle obama and barack obama. she has a room she occupies permanently in the white house and has a secret service detail she goes on vacations with them, she goes to whatever meeting she wants to attend and she carries the president's message to the cabinet ministers and other people in the administration. there has been no one since way back in the 40s who has this

kind of power. >> and you write saying she made he chosen one. he was her she focused on him and devoted her entire life to him and gave him the kind of unconditional love that he never received from his mother who frequently abandoned him as a child. >> that's right. there've been several as you know biographies of barack obama and there's been a lot of speculation about the fact that his mother was not around a lot. she traveled a great deal and when she was around he felt a great need to win over her love according to many books by showing what a great man he would become. and i think in many ways he has said similar relationship with

both his wife that he really wants to please and valerie jarrett who is a kind of substitute mother figure. >> host: first call is from kathy on the republican line. you are on. good morning. >> caller: i'm so happy that you wrote this book and i just have a comment. they are so fake and this is what they get they would've stayed at the end of the day like bill clinton did for him when he made that ridiculous speech and this is what he got for dealing with the devil. thank you. >> guest: that is an interesting question. it's interesting that bill clinton has been taking some soundings in various states across the united states with democratic party chairman building a support team for hillary in 2016 and he has told

his friends and associates that when he speaks to these party chairman and the democrats, he learns that the obama administration, the political people in the obama administration have been there as well and that they are looking for what's bill clinton calls a mini me "-close-double-quote, that would come out of nowhere and challenge hillary for the 2016 democratic nomination. so in bill clinton's eye as there is no greater obstacle to hillary didn't -- getting them barack obama. >> host: democratic line? >> caller: remember bill clinton signed off on nafta and approving china being the most favored nation status 20 years

ago. then he signed off on the repeal of the glass-steagall act which caused a great recession. and we know that nafta sets the stage for china and others getting all the manufacturing jobs. so our economy now is a result of bill clinton. hopefully the democrats get someone incredible like joe biden to run and is certainly not hillary. thank you. >> guest: thank you for that question. it is interesting that bill clinton may be the single most popular politician in america is not in the entire world right now. there seems to be a collective amnesia about what the clinton presidency was like. we did balance the budget as we just set durin said during the n years and we did a reform of the welfare but it's in conjunction with a republican congress which in many ways forced its hand.

what we seem to have forgotten so many americans is that during the clinton administration you are right about the class that allowed banks to do their own trading and which ultimately resulted in the collapse of the economy in 2008 plus even in my estimations and more important failure and that is that during the clinton years nothing seriously was done about the rise of al qaeda and the islamist extreme terrorism that now is shaking the world to its foundation. that the bill is popular wherever it goes that no one seems to remember anything from monica to terrorism. >> host: you say that it's popular to the one person he wasn't popular with his valerie jarrett. why is that? >> guest: that is an excellent

question. because the feud between these two families, the obamas and clintons have an ideological personal dimension and one of those dimensions is they say when they are with their friends and associates and political advisers they don't believe -- and i'm not saying this is what they said. the obamas don't believe that they stand for any principles. they looked out upon the clintons as opportunists. on the other hand, they look at the obama team as a bunch of amateurs and experienced people who seem to fumble all the great issues of our time because they don't know how to govern. so there are so many reasons why these two sides don't get along.

you know where he's coming from and the country is so divided we are going out in a handbasket. it's ridiculous. you need to have more people speaking for different things. it's ridiculous. i'm talking to him directly. my kids and my great grandkids and this country that we are living in.

>> anything else that you would like to respond to? >> guest: i had a little bit of trouble hearing her. it wasn't very clear but i think what i'm hearing is what about all of this negativity. it was the blood feud between the clintons and obamas adding fire to the negativity. and i would say to the caller im just as patriotic as you are. you are right this country is divided and what we need is a pick a leader in the white house and congress that knows what they are doing. the most recent poll that came out i believe today says that the majority of americans think

president obama is the worst president in 70 years. that is a poll. that is in my opinion, that is of americans. a lot of people think this is based on racism, but because he's african-american people don't respect him. the opposition to barack obama by so many people have been plummeting the poll ratings and has to do with what i consider to be a selfless and experienced fumbling administration that doesn't seem to be able to get its act together. >> host: somebody says if this is a feud between clinton and obama bayshore hide it well. >> they used to hide it well. i'm not so sure that they are still hiding it well because only recently bill clinton came

out publicly and said that obamacare was a flawed law. that is a big statement from bill clinton and a huge blow to president obama that a former democratic president would say that this needs to be revised. on her part, hillary has come out publicly and said that despite the white house claim that the irs scandal is an invented scandal that it's really not a scandal at all and she thinks it is a scandal in the data should be looked into. she almost came out and said she thought it should be a special prosecutor. these are statements by the clintons that indicate that they are beginning to the space between themselves and the obama administration as they get closer and closer to the time that hillary is going to announce that she is running for president.

>> host: rocklin new york. republican line. good morning. >> caller: good morning. it seems to me that mr. president obama even though he's having trouble you say with the clintons, he also doesn't care for mr. bush either. so if you want to put this in some kind of realm, you know, it's the two presidents that were sitting presidents and we have the house now and there's something wrong and besides that, when the clintons were in the happened to have it good because they were at a stage in life where electronics were coming up and people were getting into that and there was a lot of money made through that. do you understand what i'm

saying? >> i do and i would like to respond and say that barack obama basically if you get to the court matters won the presidency in 2008 by his opposition to george w. bush and the iraq war. that was the key platform. and for years now he is in his sixth year in office he blamed bush again and again and again for the problems that he has inherited. the fact of the matter is barack obama in my view and in the view of the clintons has caused many of his own problems. we see now the middle east going up in flames on a hillary clinton urged barack obama to get involved in syria early in that war not with ground troops but with the support of the opposition to the regime and if

he had -- if obama had listened to hillary i think we wouldn't be seeing the spread of radical islam through serious into iraq that we are seeing today and then of course there was the reset with russia that the obama administration tried to make good relations with the blood of their putin. while we have seen how that works out. so again and again, blaming the past is no excuse for not functioning well in the present and i think that the clintons feel very strongly that as it was put and i use this as a title in my last book that barack obama is an amateur. >> host: and that is the title of the book also about clinton and the kennedys as well. edward klein from new york the title below to view the clintons versus the obamas.

good morning. go ahead. >> caller: can you hear me? >> guest: yes, go ahead. your bias is that listening to you is like everything he's incompetent if he was incompetent he wouldn't be the president. you have a problem because he is there doing this job because if he wasn't he wouldn't have been there. what makes you incompetent with what you are doing? >> i'm going to let people decide whether i'm in competent or not. i've written 12 books most of which have been on the bestseller list. i used to be the editor-in-chief of "the new york times" magazine and before that i was the editor of "newsweek" so i had a long history in my field of achievement and i feel that my

books have again and again proven to be true. as far as the president is concerned, i'm not the only person saying this is an in competent administration. this seems to be a widespread view among the political class. even liberal democrats have been critical of the administration giving you one example when barack obama threatened that if the president of syria crossed a red line that obama drew and used chemical weapons that the united states would take military action. ..t. he backed down on that after the weapons were used and in doing so, he lost not only personal credibility for himself, but credibility for the stature of

the united states throughout the entire world. cecil up next, from georgia, democrat line. caller: thank you for c-span. there has been a lot said since i have been on the phone. i think this guy just wants to and thaty for his work is ok. that is his job, to try to make money on his book. that's okay and that is job to try to make money on his book but i think he's trying to get stuff started and everyone else is talking about the red line and that sort of thing. hillary hasn't even decided yet so we don't know what obama is going to do as far as hillary. >> guest: well i hope that you have an opportunity to read my book, "blood feud" the clintons vs. the obamas because this book

documents chapter after chapter the better what is called family fight that's going on in the democratic party between these two great families. and it is not only i but many of my sources and many of the sources and other publications who have documented this growing feud and i think as we go beyond the 2014 midterm elections and start getting really involved in the presidential campaign which allowed them after november you will see a widening rift between these two wings of the party represented by obama on the left and the clintons on the centerleft. let's go mr. klein roger green on process for selecting hillary

as secretary of state a concession and an example of keeping her enemies closer? >> guest: yes, it was. that's exactly correct. the appointment of hillary clinton as secretary of state was opposed by valerie jarrett and michelle obama on the grounds that it would bring the clintons into the white house and complicate obama's ability to get his policies through. but in fact in obama's point of view and the point of view of his political and other political advisers bringing hillary and in a way forced bill clinton to silence, to not be an active opponent of the obama so for instance bill clinton literally signed an agreement with the obama administration that if hillary were appointed

as secretary of state he would not make any speeches in foreign countries for which by the way he used to get paid hundreds of thousands of dollars we know now or say anything in major policy speeches that was not first vetted and cleared by the white house. so i bringing hillary and as this twitter person said, he kept his enemies close and kept them quiet. posts go mr. klein "the wall street journal" has a story this morning taking a look at both bill and hillary's ability to raise cash from corporate sources when it comes to your book what exactly are they clintons looking for from the obama says bars the steel made in 2012? at this point, they hae practically given up on getting obama's active support in 2016. they have been creating what i would call a parallel democratic

party organization, a clinton from thearate democratic national committee controlled by the white house. bill has been actively involved in this, putting together policy books for hillary. bill has been actively involved in this and has been putting together policy for hillary. he has been bringing major donors and political figures down to little rock where he has his clinton library. he has been spending all of his time putting together a campaign that hillary is going to run. in fact he has turned over most of the day-to-day running and the policy decisions of the clinton foundation to his daughter, chelsea, who is now in charge while bill is spending his time on hillary's campaign. >> host: what about the obama campaigns database, names,

donations? what has happened a back? >> guest: that's a very good question because part of that deal that i mentioned during the golf game at andrews air force base to which bill thought he had to deal with obama, part of that deal was in addition to obama supporter of hillary that he would turn over the whole database and donor base to the clintons and allow bill to nominate the head of the democratic national committee all of which obama has since reneged on. >> host: jamie is on our independent line. jamie, go ahead. >> caller: my name is amy that i am in remington. >> host: you're right. go ahead. >> caller: i'm going aback a bit too someone on the west coast apparently couldn't get in

and you aren't very kind with your phone numbers. i want to know what your guest thinks about the current supreme court and particularly about its decision and hobby lobby. >> host: maam i don't know if that's the topic we are engaging in this morning. mr. klein you can comment if you want to. >> guest: i will make a brief comment and say that the coverage of the supreme court decision and the reaction from the obama white house in my view overlooked the fact that the supreme court did not say that these smaller corporations didn't have to give any contraceptive health care. it was just some contraceptive

health care including the day after pills which some people think is an abortion pill. but as far as contraceptives are concerned they are still covered. they are very inexpensive as well and i don't think that the supreme court decision was that radical although i certainly think that the obama administration is seeing it as a big body blow to obamacare. >> host: joe from maryland, democrats line. hi. >> caller: hello. good morning. can you hear may? >> guest: hello joe, how are you? >> caller: i'm good, thank you. i just wanted to comment on your professional author and i just think when you write a sound for republican or whatever and that's your choice but if you look at the administration of past you see it has always been the usual.

since president obama was elected it was a pursuit for -- and that's okay. but to portray him as being what he is, less than impressive and i think that's an insult to the nation and america wake up. >> guest: i would like to comment on that and i think it's a very sensitive issue. among the african-american community and the united states as i understand it from my interviews there is a deep feeling that this president is being unfairly attacked because of his race. among whites, that's not us, and although a number of liberals agree with that point of view. i don't comment on that in my book because i don't think i'm qualified to do so.

i comment in my book "blood feud" about the actual policies carried out by this administration, about the conflict between bill clinton who by the way is a great friend of the african-american community, so his criticisms of obama i think it's very hard to say that they are racist based because he himself often jokes that he was the first black president. other african-americans have called in the first black president because he did so much good for the african-americans in this country. so this feud is very hard to say this feud is racial base between the obama's and the clintons. >> host: carlos from chicago on our independent line you are on with edward klein. >> caller: good morning to both of you. how were you doing mr. klein? what i'm going to tell you, i

have a couple of questions in a comment at the suggestion for your next book. he spoke of african-americans. if you are talking about an african-americans perspective and you look at both president from past and present, my question first of all is are you republican, democrat or independent? >> guest: personally i'm a registered independent. >> caller: you are a registered independent? my next question would be what prompted you to write this book and what prompted me to make this phonecall is because they say it again if you look at things -- you are not qualified and i understand that but the

african-americans you have interviewed whether they shared with you about the accomplishments that our president has done? >> guest: i would like to comment on that if i may. >> host: go ahead, sir. go ahead mr. klein. >> guest: okay. i have made many trips to chicago where barack obama began his political career and where the african-american community was the first community that got behind him in a strong way, raised money for him and launched him on his political career. i've interviewed many members of the african-american community in chicago. almost without exception, they are disappointed with barack obama because once he got into the white house they never heard from him again. they made phonecalls, they wrote letters, they send e-mails. they said you know here we were

what they called for state people, people who were there at the beginning of his career and without whom he could not have risen to the great heights that he hasn't he has forgotten them. it's not only the african-american community. i have also interviewed jewish people who raised a lot of money for barack obama, christians who are liberal and are very pro-obama and they all say almost without exception that you know they love this man, they were happy to be behind him but that he has shown no gratitude towards them or even made an effort to bring them closer to the white house to show his gratitude. this feeling about obama is also common among members of congre congress. democrats and republicans alike who say they never hear from him.

he doesn't get to know them. he is aloof and detached. this is not just me reporting this. this is many journalists, both in the mainstream media, in the liberal media and in the conservative media. >> host: james from delaware you are on with edward klein. go ahead. >> caller: i would like to ask you guess the question that first one he just said about the african-american views of obama. they thought that he would get in there and do more towards the community than he did and the reason you couldn't guess because he faced a congress that no one imagined he would face. he faced opposition that no one even imagined he would face. even if he would appear to look toward the african-american community he would be called different names. but what i wanted to ask your guest is, he said earlier that

there is a poll that says obama is the worst president in 70 years. does he have any idea about the last administration? do they buy it because every day you have a parade of political hacks coming on criticizing the democratic administration. if rupert murdoch bought the station by that the station why did you talus? >> host: that's not the case that mr. klein go ahead with your thoughts. >> guest: i'm not sure i understood the question. what's i think he was rehashing what was said previously and particularly criticisms about this president by congress and others particularly i guess relations with congress. that's my gathering but go ahead. >> guest: right. well the clintons feel, as i have described in this book

"blood feud," that obama has not shown the political talent to even try to work with this congress. for instance, let's remember that when bill clinton was president he had a republican revolution i on his hands and newt gingrich came in and essentially said that the president was irrelevant almost and he came very close to saying that. and what did bill clinton do? bill clinton rather than dig in and say well i'm just going to do what i want to do, irrespective of the congress, he triangulated as they called it, he found common ground with the republican congress to do many very important things that we have already mentioned. balance the budget, reformed

welfare, send 100,000 new police officers onto the streets of american cities and on and on and on, so there was a political calculation on bill clinton's part that he could work even with a dug in opposition. this is not happen during the obama administration. there is virtually no communication between him and the republicans. i'm not suggesting for a second the republicans haven't been very critical of him. they have but you know i interviewed vernon jordan and african-american, who was on the record in my book by the way and has been a major figure in the democratic party for many, many years. he said yes the republicans have made it difficult for this president that when you are elected president you expect to lead in this leadership has been

missing. >> host: i i.e. wrote that vernon jordan was a relative of alaric jerrett? >> guest: his wife is a relative of valerie jarrett. >> caller: how are you doing? first of all the republicans are the ones that put us into this mess. but congress has not worked with this president throughout both of his terms and i would like you to come back on after the midterm election and see who is going to be running. republicans are going down the tubes, trust me. i'd like you to come back after the midterm election and it like you to come back and listen to my comments, okay? >> guest: i would like nothing better than to come back to c-span if they invite me i will be here and i'd be delighted to talk to you after the midterm elections. >> host: mr. klein a comment

from twitter about presidential advisers which i think of to some the topics of your books. dee dee fredericks writes do you think the advisers of both president of bombing president clinton came from the same exclusive think tank pull? >> guest: no, i don't. i think president clinton's advisers came from what was called the democratic leadership council which was a centerleft group that tried to bring the democratic party are way from its radical base to more of a centrist position. the obama administration has been by and large, not entirely but by and large run in his policy decisions by political people. i'm talking about david axelrod who helped him get elected. i'm talking about valerie jarrett. i will give you a concrete example of this. in my book, "blood feud" i

discuss a meeting that took place between bill and hillary clinton and caroline kennedy at caroline kennedy's apartment on park avenue in new york. caroline kennedy was about to take a proposal as ambassador to tokyo and cheap wanted some advice from hillary, the former secretary of state about what she should expats. hillary told her according to sources that hillary spoke to later don't be surprised if you are marching orders as ambassador in tokyo, not from the state department but from valerie jarrett in the white house who is essentially a political adviser, not a policy person. i think that says volumes about how this administration has been run. >> host: mr. klein the cover of your book features bill and hillary clinton and michelle and

barack obama. tell us how they work together as a couple particularly in the political sense. how each couple works. >> guest: how they work together? that would take us a long time but basically i would say as quickly as i can say this that the clintons have a marriage that is somewhat similar to the marriage of franklin roosevelt and eleanor roosevelt. it's essentially a working relationship. they have gone their separate ways and did in many ways they don't live together often but they are colleagues and collaborators on policy as eleanor and franklin were. on the other side, excuse me. we have a first lady in michelle obama who is best friends with valerie jarrett and who is a

behind-the-scenes adviser to her husband in a way that's quite different because in many respects michelle behaves toward her husband as though she knows better. he has said in public that she is the boss. he often sounds like a henpecked the a guy i must say. i know that's very radical to say that but i think there's a lot of truth to that. these women both michelle and valerie have enormous influence over his policy decisions. another concrete example, plan bill daly was the chief of staff of the obama white house, he said after he resigned that he and obama would come to an agreement and then valerie jarrett would go upstairs to the residents that night, spend the evening up there talking to

barack and michelle and the next morning the president would come down and contravene and throw out the agreement that daly had an daily resigned because he said he couldn't function with that kind of white house. >> host: we talked about a friday of topics and other topics in "blood feud" support the author edward klein who joins us in new york for this discussion. mr. klein, thank you. >> guest: it's been a great pleasure. thank you very much for having me on.

>> my first reaction was surprised because i had worked for mr. sterling. i coach the clippers in the ear 2000. he invited me to his daughter's wedding. i had no idea exactly what was going on but i also, because of my association i know lg baylor and i know what he was complaining about so i was confused not knowing exactly which set of facts mr. sterling stood behind. and then when his words came out it was so obvious and shocking and just disgusting. all of those things wrapped in one but the surprise of it, to find that type of sentiment and someone who relies on black americans for so much of his

success and public profile was amazing. i just couldn't believe that someone could have that much bigotry inside and think it was okay. >> next a discussion on european energy, russia's changing relationship with western countries and u.s. strategy for helping ukraine being more energy independent. former umass as -- ambassadors join a former energy department department official at this wilson center for him. it's hour and 35 minutes.

>> i am "blood feud" and i want to welcome everyone on behalf of jane harman president ceo of the wilson center who is out of town at the moment but she wishes she could be here. this is going to be a really interesting and important session. it's interesting and important both for what you will hear today am because this is the end not girl session of what will be an ongoing seminar series looking at energy issues in different regions of the world. we hope to have the series continue more or less on every other month. one of the reasons for doing this is because obviously energy

is a golden word. we were just talking about how unlike say imperial russian law energy will fill a room in washington and there will there are real reasons for that because the issues we are going to talk about will very much affect how we all live our li important for us to be adding to the conversation about energy and to do so by building on the wilson center's strength, by focusing on regions around the world and bringing in the regional dimension. this series in this book comes from a book which is really the brainchild of one of the panelists jan kalicki who has been affiliated with the center for a long time and he is the animating force behind a number of center activities and for the book that's on sale outside,

energy and security. this is the second edition of the book. i think the first edition was about the bestseller at the wilson center and i say about because there's a book on terrorism that runs equal with it. but it's obviously this is an important topic and jan has assembled for the volumes of our panels like this wonderful experts. we are fortunate to have you on with us. he was a chevron for 13 years and eight years in the clinton administration before that. we are also very honored to be joined by this very distinguished group of very senior people including ambassadors and nsc directors. it will be i am sure a wonderful panel. without i'm going to turn the chair over to matt rojansky and in doing so i want to thank matt and his staff for pulling together this session.

as always the staff has done a wonderful job. >> thanks very much player. i'm not in fact carlos pascual and anyone who has not figured that i might be in the wrong room. part of the reason we are all here as blair said is because of the phenomenal experts who have gathered on this panel and written this book and it helped me wilson center really to make a mark on the issue of energy. i am particularly grateful to jam, david and juliette to give us this kind of content at a time like this because i think it's of particular concern that not everything be understood through the lens of the current conflict the current tragedy, the current fascinating developments in ukraine but actually understood on its merits on a deeper level in some cases in a very technical way in order to be able to grasp what

may happen in the future including a connection with the crisis in ukraine. we won't shy away from that by any means but i think we want to try to take a broader look at the same time. the kennan institute is the world's -- wilson center's oldest program. we celebrated our 40th anniversary this year. we have over 400 alumni throughout the russian federation and more than 100 ukraine, all throughout ukraine including by the way in crimea and we are very proud to be the first program here at the wilson center to host what will now be this energy series. other programs we expect to follow include china, north america, arctic, latin america, middle east africa and others. now, when i think about energy in this region and i frankly don't think about oil and gas. i don't think about power lines.

i don't think about environmental impacts. i think mostly about modernization because the psychological key for development and for political success in this entire part of the robust modernization. energy is so central to that issue that i think it's almost become a part of the psychological lexicon of politics and of people throughout the post-soviet space. russia strictly no exception. i think the panel today can address some of these questions but i would like to put them out there. is there a change now with the emergence of a new connection between ukraine but also mulled over georgia to the european union's? is there changed fundamentally in the dynamics of energy development and modernization in the region? i we beginning to see a real cleavage that is going to have real impact or are we seeing a temporary blip about sanctions

until a political deal is reached and then flows will return to normal in every sense? what in the longer term is the positive vision for energy in this region? i can energy be something other than an interruption and an inadequacy of the system? and then of course are we going to do thanks to the politics which continue to become more and more complex every day and i think we are seeing that now. are we going to have the time necessary to make the right kinds of decisions about energy issues in this region? i think the panel can shed light on all of those questions and so my first -- is to introduce jan kalicki who us something about energy and the editor of energy

and security. >> thank you very much mathen also blair for the kind introductions. it's a great pleasure to be here with my friend and coeditor david goldwyn who spend long hours together working on the book. my co-author for the chapter that we did on russia and eurasia and my very good friends john byerly and bill courtney. looking at the audience i see a lot of old friends and i'm delighted that you are able to come and join us here. let me just say a few words about the ukraine crisis in the context of how it interacts with energy issues and then i think david will start with the rubric of the book and tackle it from the other side. in ukraine, i guess many feel that the crisis may be on its way to stabilizing but the long-term issues remain.

for one sovereignty, does russia's annexation of crimea stand? this so-called economy mean russian hegemony at least overt eastern ukraine? second eastern retrenchment which seems to be the russian path at least for the time being instead of western engagement which seems to be the chosen path in ukraine subject to what happens from day-to-day every day as a new development occurs. nationalist forces are on the rise in russia as other countries have an opportunity for cooperation i believe will narrow to those interest that will coincide so one has to be skeptical about and third in russia and ukraine energy is not just a commodity. it's really an economic life preserver and a crucial instrument of influence. i think it's important to

recognize that while we may have a market view of energy from the western perspective, it's very much a political view from the eastern perspective. personally, i am skeptical that the situation will more than stabilize in the near future but that is still meaningful. moscow can return to their own daunting national and regional agendas. regionally russian tolerance keeps the u.n. agreement and can help open an opportunity for genuine reform and ukraine is becoming a bridge rather than an orange wedge a southern finland if you will and perhaps president pershing to if the oligarchs stick with him he can secure support in this country and of the e.u. the u.s. and imf put our money where our mouth

is. otherwise as the chinese say big noise upstairs nobody coming down. and that is very much a possibility given the nature of western behavior which has been lots of rhetoric, some sanctions which are very specific targeted area that notch in my view of a larger strategy. that is where the energy becomes very important. i'm reminded the prime minister of the u.k. said recently we have to realize energy is not a fifth level consideration. it's a first level consideration and i'm glad that our european friends are coming to that conclusion. some of us here in this town have been feeling this for quite a long while and i'm glad that there is some statement to that effect over there. so what about this role? i would say it's crucial but in

the past it was a crucial negative and the future has to be crucially positive. in the past corrupt middlemen siphoned off gas revenues, ukraine's gas came at exorbitant prices in russia pressed ahead with alternative pipelines to completely circumvent ukraine. the question in the future is whether ukraine and we can reverse these trends. this implies a concerted effort to replace overpriced russian gas to overhaul ukraine's domestic gas system and to push back against russia's anti-ukraine pipeline policies. a pretty tall order for sure. his statesmanship possible here? >> a radically yes. energy could reinforce ukraine as a bridge rather than a wedge and i think at least two elements will be necessary. first come energy discussion by

russia as part of an imf loan and reform package and relatedly because they can't go just on their own, replacing the zero-sum pipeline game with a++ alternative. for example ukraine, russia and the e.u. could each invest in one third of ukraine's pipeline with a golden share held by each state company. these are really big challenges and i'm not pretending this is something you would do by tomorrow or the day after tomorrow. and in the past the small leaders which i think basically were especially in kiev were not up to these challenges. but one is always hopeful and i'm enough to miss and i think better leadership as possible and certainly we can't do worse in kea. crises have a way of forcing leaders to make braver decisions.

just one example, russia's economic downturn will require i believe greater cooperation with the west over time. the ukraine can and should be part of this perhaps inevitable new agenda. just to conclude i would say that energy is the key to a strategy for ukraine and russia and vice versa. after david speaks to the other half of this framework i look forward to hearing from john bill and julia will help us figure out what the strategy might look at and i would like to say again how pleased we are to be hosted by canon which is a major part of the wilson center's history. at a time we look at the issues we are facing. >> david's former special envoy for energy and the coeditor with jan. >> thanks matt and thanks to the wilson center for hosting this event and for all of you for coming. in this book that jan and i put

together with these terrific officer -- authors. to the primary themes are that the technological advances in the u.s. the shale oil and gas revolution is change the position of the u.s. in the energy space both by its relative abundance by being the leader in technology and less of a commander in the world in terms of energy which gives us more status to talk to others about change. we really make two primary points. it's an 800 page book that the two primary ones i want to talk about today are that we have the opportunity to make the energy world more resilient by promulgating this technology overseas by connecting the u.s. oil and gas to the international market making oil and gas markets more competitive themselves. by using our role in international financial institutions to make other countries more attractive to energy investment so they can be more self-sufficient. and we can leverage the fact

that many producers are also big consumers. saudi arabia for one and a lot of consumers have come into the cause by stability. we have more diplomatic capital than we have. point to is we have the ability to make a spit in our policy and use energy not as a weapon that is a force multiplier or as a tool or least as part of our kit to make change and help other countries be more resilient it's unclear whether we will. it's unclear whether we can manage promoting the development of energy overseas and support for climate change. it's uncertain whether we could either the words natural gas a policy statement coming out of the white house and say we actually want others to develop it further than we want to make the world more resilient because we are using lesson they'll have more. it's unclear and the question as it affects russia and ukraine and europe and the caspian too is we are already doing all we can to maximize this advantage. and i think the short answer to that is no, not yet.

and i hope what we'll talk about today is what our agenda should be for europe. europe does not have a fully integrated gas market. you can't move gas from point-to-point. are we doing enough to move europe in that direction and is europe doing enough themselves quick development of shale gas. a lot of the shale opposition comes from gas from and a lot of energy giants in western europe who did not want to give up the relationships they have with russia. or we doing enough to call them out and advocate for the promotion of indigenous guests in europe and to within burma to consequences in a correct way or do we have to -- not because we are too embarrassed to talk about. with respect to countries and ukraine poland, the others are we doing enough to promote internal economic change to leverage market reforms labor pricing system that someone might want to invest in and i think again the answer is we are not doing enough yet.

i think occurred -- the third category is whether we are doing enough on our own to combat to markets exporting lng or crude oil all common topics the one we compete with others we make prices more competitive. we are the only country in the oecd that exports energy and we tell everyone else to put their restrictions on exports of energy and develop all they can. maybe this is not sustainable. maybe we should look at this but i think we have to ask ourselves are we doing enough on this agenda to promote this and what about the caspian as well and ambassador courtney will talk about this in his talk but we spent decades trying to build up the caspian and promote exports and they are probably wondering where the policy is right now. i think we have done important things. we are helping ukraine with the shale gas. we are helping them some on debt but if the strategic option is to make energy less profitable

for russia and investment in russia less attractive and provide diversity of supply for europe and diversity of supply for other countries there's a whole lot more on her agenda that we are not doing and hopefully this morning we will talk about what the steps might be. >> thank you very much david. thank you both for keeping to her strict time limits. ambassador john byerly was former u.s. ambassador to the russian federation. >> thanks matt and it's great to be back here at the wilson center again and to see so many familiar faces and committed experts. it was a little daunting to talk to a crowd like this about russia. think what i would like to do is we will talk a lot about energy today. i'd like to maybe just pull back for a minute and look at the general context of their relationship, the troubled relationship between russia and

the west, russia and the united states russia and europe and then hone in on a few aspects that i think makes this crisis feel a bit different and then bring it back to the energy side. there's a temptation for those of us who have been doing u.s. soviet u.s.-russia relations for most of our careers to see any dispute between russia and the west as just the latest in a series of cyclical downturns which are almost inevitably followed by upturns and i think more importantly there has always been a tendency or an inclination over the last 20 years since the collapse of the soviet union to see the strategic paths of russia and the united states, russia and europe, russia and the west as more convergence at the end of the day then divergent. for many many decades those of us who were in the business of writing talking points including

bill, david and jan wrote many times the talking point that we want a relationship between the united states and russia where we can contain our inevitable disagreements and prevent them from doing damage to the areas of a relationship where we have common interests, where we have shared views, where we have good cooperation. this was never an overwhelming consensus on either side for the last 20 years but at the end of the day it was usually the argument that one out and so i think one of the central questions that we need to be asking now whether we are looking at the energy question or regional conflicts in which we would like russia to work for us is can we still agree that these two countries are on convergent trajectories where do we see these convergent trajectories as achievable or some people would say even desirable anymore.

for me, this current downturn, this current crisis over crimea and ukraine feels quite a bit different than other ones i've experienced in my time working in the soviet union and with russia and i would point to three quick factors that make it feel different. the first is the scale of the economic terms between russia and the united states, russia and the europeans and more importantly the willingness of the americans and the europeans to use or threaten the use of sanctions as a policy tool. this is much more salient now than it was even five years ago when we had a downturn over the actual crisis in their relationship with georgia. the u.s.-russia trade relationship hit a high watermark in 2012 about $40 billion but that's only one tenth of what the russians trade

on an annual basis with the europeans so the stakes are very very high at this point. we used to talk, is to talk when i was the ambassador about how the investment relationship between united states and russia could serve as something as a shock absorbers and postulate those inevitable ups and downs and political relationships that we lived there over the years. i think we have to look at that in a different way now because the size of the economic relationship makes the economic relationship in a way more of a potential hostage to political ups and downs then maybe we thought before. the economic relationship comes the scale of its certainly makes this crisis feel different than previous ones. a second factor is the very complex political context that both the europeans and the americans are working as we formulate and implement their

policies here in washington the statesmen like consensus that used to exist in foreign policy stops at the water's edge. we need to work together especially on important countries like russia. that has been gone for so long it's hard for some of us to remember that it existed or some of the younger people in the audience to even imagine that it existed. policy towards the ussr and russia used to be in a protected category. i don't think that's true in washington anymore and the appetite of the u.s. congress and the administration to use and legislate sanctions has never been higher than it is now. an entire generation of congressman, senators who knew russia and have experience working in russia, people like richard lugar, sam nunn howard levin and tom lantos. they are all gone or on their way out. i have never known the level of

misunderstanding of the complex realities in russia to be as low come as bad as it is in congress right now and i would say that the situation is worse in russia with the duma and the federation council and their views on the united states. so we have to got a problem there. meanwhile in brussels as we all know the ability of the europeans to forge a consensus inside the european union and the commission leads to the lowest common denominator so that the second problem. the third one and i will end on this it makes this crisis feel to me less like a cyclical downturn in more like a signal of fundamental divergence is the growing strength in russia this persuasive national idea. i like to call it ideology and you can use that word if you want that questions the utility of partnership with the west and

rejects western values and institutions as any kind of a model for russia. russia turns away from the west and it has never happened before at a time when factually russia is disintegrated to and dependent on an open to the west as is the case now in russia so it feels to me very much like there are two trajectories inside of russia right now. it's discouraging for me to see how much of that new national idea is founded on a mythology that the west and the united states want to weaken russia. a weak russia in my opinion in the opinion of everyone i know who does policy on russia in europe and the united states think rush is her worst nightmare but working with russia to make it stronger and to find especially through the

energy cooperation a way to have russia prosper and become more integrated is really the name of the game and i hope we will be able to dig deeper into that in the next hour or so. >> thank you very much john. pokorny was u.s. ambassador to kazakhstan and georgia. >> thank you very much. let me comment on the strategic context affecting what i will call her three energy day the giants to the south of russia azerbaijan and turkmenistan. the strategic environment in this mermaid maaco undergo dramatic change. the first changes china. in 2011 its gdp was 4.7 times larger than russia's. the imf estimates in 2018 only seven years later china's gdp will be six times higher than

russia's. leveraging this economic dynamic china is investing in energy and kazakhstan and turkmenistan. china has ordered broke russia's monopoly over energy export pipelines from central asia. oil and gas now float eastward over long distances to china. last year chinese leader chee ching science tens of billions of dollars in commercial deals. china is challenging russia's security world. last may she ching created a defense consultant mechanism for his central asia focused regional organization. central asia and russia offer chinese sources of energy. in this way the u.s. military rebalanced asia-pacific and a fitting kazakhstan and turkmenistan. the second source of change is russia's relative power combined with tactics that alienate. russia has long abused its his

control over energy export pipelines squeezing turkmenistan. in 2009 -- not the kremlin opposed the construction of the oil pipeline which takes over from osher by john by russia. moscow is pressuring neighbors to join his protectionist duration union. kazakhstan assange board the grumbling about the higher cost of imports from europe and elsewhere. emboldened by the seizure of crimea russia might conceivably ought to interview -- interview your. russians might see urgency in this in acting before china's growing influence in kazakhstan makes russian intimidation less feasible. another risk to the baby giants

is russia's naval buildup in the caspian sea. in april russia's caspian sea flotilla held a snap ten-day drill. at the same time with russian forces in both cases russia sought to intimidate. the drawdown of nato forces in afghanistan will reduce the security of energy baby giants. they will be vulnerable to flows of narcotics and battle-hardened extremists. the drawdown will also reduce coalition logistics support from central asia and therefore associated revenues. in early 2012 during the blockage of shipments through pakistan 85% of coalition supplies traverse this former soviet union on the way to afghanistan. now percentages and volumes are far lower. the fate of iran could become a

fourth source of strategic shift. iran has made arrangements with the three baby giants that they would like to share more energy to and through iran. if iran were to reach a nuclear accord that led to reduce international sanctions as options for the baby giants would improve. no distraction technologies may create a fifth strategic shift by diminishing the relative contribution to world energy supplies of osher by john kazakhstan and turkmenistan. ill liberal governments and massive corruption have characterized the three baby giants as independent states 22 years ago. the countries may remain politically stable but the gap between reality and expectations might be rising especially among the younger and better informed. if a social or political explosion were to emerge this

could affect the strategic context for energy development. might the six strategic shifts mean for the region in the west? as jan and julia point out in the book there's a need for a quote stable balance among neighboring powers end quote. usher by john and kazakhstan and perhaps turkmenistan will want the west to remain engaged in their region. this will help them assure a stable balance among the two laboring party powers. the west could also help them fill the security vacuum that will emerge as coalition troops withdraw from afghanistan. energy will guarantee a degree of western support for the independence and prosperity of the three baby giants. this however may not be enough. as europe and america retrenched from some of their far-flung commitments they will concentrate their foreign-policy increasingly on countries that

i'm making progress towards democracy and respect for human rights. we see this already in western support for ukraine and georgia. the main challenge ahead for the three baby giants is to find better ways to couple energy wealth with more freedoms. this will help them build sustainable prosperity and a loyal citizenry that will resist internal and external threats and help the baby giants live in peace with their neighbors. these countries should also try to offset it for cities by improving their energy investment climates. according to the world bank's index of these doing business kazakhstan is near the top one fourth of countries in the world and azerbaijan is in the top one third. finally the west should realize that the strength of its support for ukraine against russian aggression and support for reforms in grief -- ukraine will send a positive and important

signal to central asia and the south caucasus. this region is further from europe then ukraine and feels itself more exposed to external predation. a robust western posture in ukraine including economic sanctions on russia will help deter moscow from -- other neighbors. demonizing russia's not the policy. deterring it is. thank you. >> thank you bill. julia nanay. >> thank you and thank you all for coming. i think what i would like to do is send us in the direction of what all this means for russia in terms of russian energy and the chapter that jen and i offered we focus quite a bit on russia. and to look at how russia must be perceiving some of the developments not only between

itself and ukraine but also in the broader region when you look at iran and this whole problem of suddenly be in stability for countries that have sizable oil and gas resources. for russia i think if you think about the u.s. on conventional energy boom it's putting us on a path to overtaking russia to becoming the world becoming the worlds largest oil-producing nation. i mean we are not there yet. russia produces 10.5 million barrels a day. it's the lead oil producer right now but moscow has been seeking ways to maintain its competitive edge and bill -- both oil production and exports and really it's a relationship in this area with the u.s. that is important. .. budget

revenues, 40% of tax revenues. oil and gas contribute about a third of russian gdp and high oil prices contribute significantly to gdp growth. so in order to underpin its ability to keep oil and gas, well actually oil production at competitive levels with the u.s. there is this race for exploration in the arctic which is one of the areas that we've heard about. in order to basically develop the next generation of oil and gas projects in russia, russia will need the help of the international oil industry. and as a result, it is already lining up with some of the world's biggest corporations like exxonmobil, eni of italy, norway's statoil. each which bring important political and commercial and technological inputs that are essential for russia today. i