leaders, is as a process, not necessarily in the outcome, but as a process, one of the most unedifying. and here we are, the united states of america, the inventor of modern democracy, and i suspect that many of you around the room, i know quite a few of you travel a great deal and you must hear the same things that the four of us do when we travel. what is going on in your country and when are you going to get this thing over with and get back to leading the world? the second consequence is that it has a extremely negative effect on the ability of the united states' government and the president himself to actually conduct foreign policy. because a lot of foreign policy requires, of course, the cooperation of the legislative branch. it is -- it is not just difficult, it's impossible to imagine getting any major treaty

through. i mean, maybe there is some chance of the law of the sea getting through -- bruce would have a better sense of that than i. i know there are some optimistic signs. if you look at what this means for the two most important threats facing the planet today, which is our nuclear proliferation and climate change, we're dead in the water. and we're dead in the water largely because of the paralysis of the system in this town, which is greatly exacerbated by the campaign. one of all of our favorite characters from american literature, pogo, is often quoted these days. we have met the enemy, or we have met the problem, and it's us. and i think that is a sad but central theme in what we're talking about. >> i want to take it to you and your paper, which takes some issue with the ideas that have been put forward. and lays out the idea that basically, there are huge

disagreements and different pathways in front of us, given the choices between barack obama and mitt romney. so if you could take a little bit about that, and where specifically you see that reverberating, and which situations around the world. >> sure. so, you know, i think if things were going reasonably well in the world, it wouldn't make that much difference, because in some sense, the focus of the elections is going to be on domest domestic issues. that's probably right. but things aren't going that well in the world. and in particular, things aren't going that well in the global economy. so i am not sure i would ascribe to bruce's view that, well, the sort of the -- the fundamental institutions that take care of the world economy are still

doing their job, and, you know, regardless of who comes in, they will still be able to do their job. i just am not sure that that is still the case. the reform of the international financial institutions has been going very slowly. one of the big destabilizing factors in the global economy has been the mammoth accumulation of foreign reserves by countries like asia, for example. why? what some people would say is, they're doing that because they have very little confidence that the international monetary fund would come to their support in a way that is they would find either useful or reliable. and a lot of that comes from the lessons that at least some economies have drawn from the

intervention by the fund at the time of the 1997 and 1998 financial crisis in east asia. so there is this sense that, well, you know, the imf and the world bank, they all need to reform, and they need to have a greater weight given to emerging economies as part of that process. actually, that reform is going so slowly, that it may be threatened. the path that the g-20 agreed on is almost certainly not going to be -- not going to be met. and so one gets very much a sense of institutional drift at the level of the global economy. and even the g-20 that strobe referred to, i mean, the g-20 did some, you know, really terrific achievement. when it came together with a --

a coordinated fiscal stimulus. right now, the g-20 is floundering a little bit. the crisis has moved from being a global crisis to being an individual country crisis. individual countries are each taking their own roots to thinking about how they want to deal with this. the did he agree did he agree of macro economic coordination across countries is very limited. the u.s. role in this, the traditional u.s. leadership role in this has been very limited. and the question becomes which administration is more likely to pursue a multilateralist approach towards global economic governance, and approach that really emphasizes and starts to think about the collective

action requirements of dealing with big global economies, whether it's -- global problems, whether it's policy coordination at the macro level, whether it's food security, whether it's climate change, quite frankly. and, you know, will there be differences? i would argue there probably will be in, you know, a lot of the rhetoric of the elections, the idea of global governance is just not something that sits well with one -- one of the political parties. and, you know, what one would say, well, they have a very clear vision that one doesn't need and one shouldn't want global governance. so i'm not necessarily commenting on, you know, which is right in their vision. but certainly it seems to me that they have very different approaches as to the desirability for global governance and the kind of leadership that they would give

to global collective action. so at the end of the day, it comes down to a question about well do we believe that the world's problems can be usefully solved through collective action, or do we actually think that the world's problems will, you know, more or less be solved by each country individually solving their own problems, and as they do so, the world as a whole will recover? regardless of which of these you believe, i think that, you know, it's more likely to be the case that there will be a substantial difference in approach between, you know, those two extremes, caricatures i've laid out, rather than saying well, it's all going to be pretty much indistinguishab indistinguishable, regardless who have comes in. >> i'll start with you on this question. when you look at what mitt romney and what barack obama

have been saying so far, and bruce talked about how we can start to discern some of what mitt romney's foreign policy is, even though he hasn't spoken about it a huge amount so far, are there -- statements that they're making that are particular head-scratchers for you, that you aren't sure make sense, and their understanding of the global situation? >> i don't know about, you know, specific statements. but in -- you know, in some areas, what i would say is that new alliances really need to be created. so one of the interesting things that is happening, just on the economic front, is last year was actually the first year, certainly, since the war, that the g-7 economies as a group

accounted for less than half of global economic output. at market exchange rates. not at sort of some, you know, purchasing power parity estimates. but at market exchange rates. for the first time. less than 50%. and this year will probably be the first year since the war that asia becomes a larger economic block than europe. so the thing that has basically held the global economy together, which was, frankly, the g-7 and the transatlantic alliance, is now, you know, giving way to some different alliances. now, how will those alliances actually be knit together? and will they be knit together on the basis of economic agreements, or on security agreements? my guess is that that's going to be quite different. and i mean, you know, broadly

speaking, when you think about the positions that have been taken on countries like taiwan and the relationship with china, it's likely to be quite different. >> mr. stroke, are there things on that that you've been hearing mitt romney and barack obama saying that you're not sure make sense, or are they making sense on those issues? what stands out to you specifically when they're talking about some of these issues on the trail? >> well, they're clearly both for -- entirely understandable and traditional reasons. looking for ways to draw contrast between themselves, and each make sure that he is on the -- on the more politically successful end of the comparison. but i guess i see this a little bit differently than homi. i have no better crystal ball than he has about exactly what the composition and thrust of a

romney foreign policy would be. but i really would go back to my agreement with bruce on this. i don't think it will be all that different. and let me give you a couple of reasons for that. among other things, i don't think that a responsibly-led republican administration will have a huge choice of going back to call it whatever you want. isolationism or for that matter, i think the phrase in your paper is machoism. if those are the two poles, you know, we're going to sail right between the two of them. which means basically following the essential contours of what has been the obama policy, which as i said earlier, has something in common with the late george w. bush. also remember that president romney's challenge and everybody notably, including isaac and his colleagues at politico have been

writing about this. he had to go very far to the right in order to get the nomination, and now he has to move to the center, and he's clearly -- he's clearly doing that. with an exception, and i'll come to it in a moment, there are signals out there that would be a -- it would be a foreign policy that would have a lot of continuity of the present one, one being the overall disposition of a president romn romney. remember that governor romney presided over the passage into state law in massachusetts on emissions policy with regard to climate change that was a good deal more enlightened than that of the united states of america. matched only perhaps by the admissions policy of governor schwarzenegger negatiin califor. who knows who his secretary of state might be. but there are a lot of names floating out there. bob zoellick until recently, the

president of the world bank, was one, and he believes that -- in dealing with china and other countries, what we should ask of countries is to be responsible stakeholders in a rule-based international economy. that's pretty close to the theme of bruce's paper. here's the one exception, which i think will -- is both curious in terms of its motivation and effect, and will probably fade. and that is, a lot of -- sort of cheap bashing of other countries. john michael and i make the point in our paper that every country on the planet with two exceptions has to hope and pray it's never mentioned during american presidential campaign. because if it's mentioned, it's going to be bad. two exceptions are israel and great britain. and, of course, china has come up a lot. russia has come up a lot. governor romney has for some reason decided to declare that russia, i think, is the number one strategic threat to the united states. that sounds very yesteryear, i

must say. we'll have other panelists in this room about russia, but i don't think anybody is going to buy on to that proposition. as for china, we all know that china is an easy target in some ways. but we've already mentioned the people who are, you know -- the wise heads of the republican party. and i can assure you, all you have to do is read henry kissing kissinger's latest book on china. and candidate romney is going to get a lot of advice between now and when he gets anywhere near the convention, not to mention the white house, to go easy on china bashing. and that's not what's going to win the election. it's the economy. >> do you want to pick up on this? >> well, i think just -- there are a lot of things that homi said i agree with about the nature of the challenge that we face. and i started off at the point that our economy is much more dependent on the global economy than would be true in the past and the kind of collective

action challenge that homi talked about is real. where i differ is when i look back at successive administrations and there is a clear pattern. republicans run as if american power unfettered from multilateral institutions is the way you're going to run the world. they interoffice, they tried that out, it fails, and they end up working within the mainstream of multilateral institutions. democrats run against that experience, say they're going to work within the mainstream of multilateralism, try that, it fails, and they pursue unilateralism. what's the biggest foreign policy success obama has, the unilateral killing of a terrorist probably in vials of international law not that anybody cares, right? so -- and the bush administration came into office, there were 20,000 u.n. peace keepers in the world. at last office, 100,000 u.n. peace keepers in the world. hugely expanded under the bush administration. i just think this issue of the tension between the unilateral release of power on the one hand and multilateral engagement is a

constant in american foreign policy and shifts within administrations, as it did within this. the second point i think is worth picking up, though, homi used a very good phrase, which is knit together new alignses. and one of the things that's been interesting in watching obama, if you go back to 2008, it was absolutely evident that he was going to be the much better president compared to mccain. to knit together the new allianc alliances, with indonesia, with turkey, brazil, india, china, et cetera. and that's just proven harder than we all thought it was going to be. these are independent powers, they have their own interests, they are not going to simply follow american dictate. there are places where their interests align with ours, and it's just proven harder, i think, than the obama administration anticipated to knit together those alliances. and you've seen, i think, a shift back towards europe, a shift back towards the g-8, a shift back towards hard power in the obama foreign policy of late. but that challenge will be there.

and i think it is a real question to ask. which administration is likely to have the better team, the better tools, the better orientation to continue that work of knitting together those new alliances, in both economic and security rules, because that is the defining challenge for american foreign policy in the coming period. >> i think you bring up a point that one of the frustrating things, perhaps, of covering politics is that often what people say on the campaign trail is not what happens and what they do when they get into office. so i'm wondering, do you think -- whoever wants to jump in on this, what can we say for sure that president romney would do or second term president obama would do in the four years starting on january 20th, 2013, when it comes to foreign policy based on what they've said? are there other tea leaves we should be reading and essentially ignoring a lot of the rhetoric they're using out on the trail? >> i'll give you one example. i was talking to one of mitt romney's big donors about iran.

and the ex it tent to which -- this is the issue where romney is trying to portray obama as too soft, too willing to pursue sanctions and dim homacy versus force, et cetera. and i asked this chap, i won't name him, what would be romney's first step on iran if he was elected. he said, well, he'll go to israel and he'll say that guy was your worst enemy, i'm your best friend and as your best friend, i'm going to ask you for a couple more years for the diplomatic and the sanctions track before we look at the military option. so i think that we have to -- i do think there is going to be a lot more continuity on some of those things than the rhetoric of the campaign suggests. >> one difference, i think, for sure would be the comprehensive treaty. my guess which is probably influenced by wishful thinking, is that a second term obama would go hell bent for leather to get the ratification of the comprehensive test band treaty.

the refusal in 1999 was a dark day for the senate, the country, the world and the non pro liberation regime. i think that's much less likely in a romney administration. climate, i don't know. for the reasons i indicated earlier. i think governor romney will have to do -- will need to revert to his precampaign mode in both his attitudes and what he's willing to do. but the arguments in favor of him picking up on the climate issue are pretty strong. >> i'm just wondering, do you think there is a difference of opinion that will matter when it comes to that issue? >> yeah. >> because your paper lays out there's not really a lot of these substantive differences. >> it's interesting. i think it's possible -- by no means certain. it's possible that a romney presidency would treat international institutions and alliances a little bit like the bush administration did in the

first phase in its first term as sort of red meat to throw to the right wing of the party, right? it's not what romney says. if to throw to the right wing of the party, the u.n. its not what romney says. he says we'll work within the multilateral institutions, we'll try to orient them towards the human rights which is what obama said. strobe said he has to pivot to the middle for the campaign but he has to protect his flank and protect his base. and there are times when republicans sort of throw the u.n. to the flank as kind of red meat. that's a possibility. and george bush, jr., did that in first term and quickly discovered it does not work and moved back and becoming one of the more multilateralist presidents in history. i think for political reasons, romney doesn't pursue a

multilateralist agenda. and i don't think you have any choice, just don't think that the reality is such there are no unilateral option in any real sense of this term. >> homi, i'm guessing you want to respond to this. but the question of what sort of a predictor the campaign rhetoric will actually be to what they do once in office. >> yeah, i mean, i think the difficulty is that the -- you know, the old patent of well, we'll try out something, if it doesn't work we can do something else. to some extent, that worked at least in economic terms when the u.s. was so dominant that it could, you know, afford to do that. my worry is that right now a lot of the international financial institutions are in such a vulnerable condition that if for two years they continue without

a strong reform other institutions will start to crop up. that will be developed, run and managed by people who exclude the united states. and that you'll start to get a fragmentation of that global economic management and once that's set in, it will become difficult to go back and then say, oh, okay, we have learned. we'll come back and, you know, strengthen this. so i suspect we might be at a point where the -- you know, the space for the kind of experimentation that bruce was talking about just may not be there any longer. and, you know, without being overly dramatic about it, one could possibly kill off or severely damage some of the existing institutions if they're not given the kind of tender

loving care that they actually need at this particular moment. and the only person who can give them that tender loving care is the president of the united states. >> could i ask -- isaac, could i ask homi a question on that. we just had an american jim kim currently the president of dartmouth designated, nominated by the united states to be the president. there is talk about this perhaps being the last american president of the world bank and there's also talk about the -- what we will no longer call the major developing countries but the emerging powers, india, china, brazil, so forth and so on, creating a related but in some ways separate facility. could you just say a word about that and what that augers? >> so couple of things. you know, one, i think that t

the -- jim kim is going to find that he takes over the world bank and he's suddenly going to see that he has to contract lending by about one-half because essentially all of the ammunition has been already shot off by his predecessor in dealing with this current crisis. he's got no budget increase to speak of, so it's going to be a really tough situation and position for him to manage. but at the same time, the kinds of challenges that the world bank was set up to deal with are if anything getting bigger. the infrastructure needs of developing countries especially because of climate change and the need to climate proof, have more adaptation, mostly on

infrastructure because those are the long lived assets right now developing countries are spending something like 800, $900 billion a year on this -- people are talking about a number which is at least double that. as being part of their needs. you know? what agency is going to be able to actually do that in a sustainable fashion, generate that kind of financial channels and if it's not going to be the world bank, then for sure there are going to be other institutions developing. now, whether that will take the form of the so-called bricks bank or not, i have to say i have my doubts there because the bricks is a really nice acronym, but as a political grouping in terms of a knitting together of alliances i think the challenges they face dwarves anything that

the u.s. faces in bringing together new challenges and i think bruce is right. it's not easy to have a convergence of interests and i don't think on this particular issue to be quite honest that they do have that kind of convergence of issues. that doesn't mean that the things that they're talking about aren't of enormous importance around relevance and what they're talking about is saying we need a global institution that has a new mandate and, you know, in fact a mandate to actually do something about green growth, about climate proofing investments. we need a global institution that reflects the change in membership and partly that's the more significant weight of emerging economies, but it's also partly a function of the

fact that we're entering into worlds where nonstate or quasi state actors are incredibly important on the economic front. so whether you -- you know, whether you're talking about sovereign funds or pension funds or other forms of capital they have to be brought into these kind of institutions. these institutions will only be able to operate if they leverage that kind of capital in a much more serious way. and then finally, there needs to be a modernization of the modalities. the idea that you'll take money from crudely, you know, belgium dentists who save to, you know, indian infrastructure investors, that's no longer really going to be the channel. and for all its -- the problems that it has brought us, financial innovation in the world, the way in which risks

are parcelled out, has actually generated a whole range of new modalities. so finance has to be modernized to these new kinds of risks, factors and a new global institution probably would need to be much more agile in its deployment of those kinds of risk-bearing instruments. >> might be headquartered in istanbul. >> or in south africa. >> pretty clear that bruce would like to respond to this. i'm going to let you do that, but talk as you see how a president romney or president obama fitting into that over the course of the next four years. >> so partly what i wanted to pick up on is this. so two things that homi said that i strongly agree with. the first when you look at things like the bricks, i think it's pretty clear that each member of the bricks for each member of the bricks the

relationship to the united states is more important than the relationship to each of the others. >> if people aren't familiar -- >> sorry. this is brazil, russia, india, china and sometimes south africa. it's an odd grouping doesn't it include turkey. >> and it includes russia. >> but the point is the new actors on the international stage. they basically only agree on one issue which is that they would like more power on international systems. they don't agree on other issues, either internationally or substantively. they can agree to poke at us if we don't give them more power. but it does mean there's a huge opportunity for the united states in exactly the terms that homi portrayed of sort of knitting together new alliances and recasting the kind of core institutions that manage the global systems we rely on. and these actors will demand and