>> i am with the american enterprise institute. the people there are stating the opinion of themselves or their

organization. this is really not meant to be a technical debate. it's a policy debate of where we a year after the snowden revelations and what we've learned and what has and hasn't kind of gone forward from there. i'm just going to ask each one of our panelists to really well written and well spoken on this topic to just give a couple of key points of their point of view and then we will get into a dialogue among of the us panelists and we will open it up so be thinking about questions. so i'm going to start with stuart baker whose a partner at step tow and johnson. were you the first policy assistant secretary. i want to make sure i get that title right at dhs which is something we've seen grow in its responsibilities. this is something you really hadn't fathomed at the time. it's probably to know what you know and be where you are now. i will open with stuart and just a little shout out for those who are looking for a summer book read. he's got a great book. you might want to look that up.

>> skating on stilts. you can down load it for free. it's creative commons license. you can give it to your friends for holidays. there's a blog that goes with it. that's where you'll find it. i was also long ago in the 90s the general counsel of the national security agency. so i know them well. i have to say i think this entire thing is -- i'm calling it tragedy if it had not been so carefully orchestrated by people who had an agenda. the folks who controlled this data are determined to cause as much damage as they can to the national security agency. they have done many of the things they accused the intelligence community of doing. managing information, withholding information from people that -- from the public that doesn't fit their narrative.

they did that with the very first disclosure when they told us that nsa was collecting the phone meta data for everybody in the country and withheld for two weeks any information which they had about all the limitations on what nsa could do with that information and on their ability to actually look at it. that has been consistent -- a consistent with the snowden journalist approach ever since. they have come as close to misrepresenting this data as they could and the only people who control this data are people who are deeply hostile to the national security agency and in many cases, the national security of the united states. so it is a tragedy. i think it raises some interesting issues for congress. the hard problem, the problem that we are all debating is how do you do oversight of

intelligence. it's got to be obvious to everyone that you can't do intelligence by disclosing your intelligence programs. you won't have any left if you do that. if you once grant that proposition it's kind of hard to imagine what further oversight would have been appropriate. it does seem to me that there has been quite a bit of effective oversight in this context. so i would be glad to talk more about the details of the oversight or how we ended up in the position we're in today. thanks. >> great. thanks. next we have kevin bankston he's the policy director of the open technology institute and previously at the center of democracy and technology. obviously you've been following this area for a long time and probably put a lot of this stuff into perspective for you. kevin also just recently wrote an article in the washington post -- >> cnn. >> that was on the anniversary

and it's a great read. it's on his website if you want to take a look at that. why don't you give us your perspective on what's going on here. >> thanks. >> so kevin bankston formerly aclu and enf so surprise i come from a civil libertarian perspective when it comes to government surveillance. but i think what i want to talk about today is the fact that however you fall on the national security versus personal privacy and civil liberties debate which is a sim plitic wplistic way to this. i think there can be a strong argument way that we need to see substantial reforms in the way we do surveillance to address all the other issues being raised by the snowden revelations and the programs it did reveal. this is not about a national security benefit versus private civil liberties. it's about national security

versus privacy and civil liberties versus the internet economy and versus the security of the internet and the openness of internet architecture. it's about the continuing viability of our internet freedom agenda abroad. the continued health of our relations with our allies and emerging governments abroad. so even if you don't care a jot about privacy and civil liberties, i think there are a lot of minuses in the plus/minus columns when we talk about these programs and how we need to respond to them. frankly, you know one point i've heard is that well, it's not actually the program's fault, it's the snowden revelation's of the program's fault. i think that is a moot point or at least a semantic one. the fact is the information is out there. the damage has been done. the u.s. government does have to act in a way to address the credibility concerns that's it has now raised in regard to the

own behavior and the security and functioning of the internet as a whole. in regard to that in addition to the short piece we did in cnn, we actually have a short paper that you can find on the desk out front and it has been handed around that actually runs through the variety of costs that have been reported on since the snowden revelations since began and runs through many of the things i just spoke about. that's in advance of a much longer paper that will be published before the end of the month. suffice too see on the impact we have predictions of billions of dollars lost to the u.s. internet industry. we are starting to hear numbers of particular companies saying things like we have lost half of our international hosting business in the past year. there is a real impact coming from this. we need to act to address it. so thank you. >> thanks kevin.

>> chris is the director of policy at the business offer alliance. i found out he's a fellow neb rask an so i'm excited about that. you come at this from a different perspective. you have a long history in doing technology policy and looking at the challenges this takes for some of your companies that are member companies. do you want to address that. >> absolutely. thanks everyone for the opportunity and for being here today. i think where i've ended up here physically not in the middle between the two of you is perhaps unfortunate but really it's where the technology industry has ended up caught in the middle of a much larger debate about really what should be seen as a new era of privacy. we're entering a new era of technology. i appreciate that kevin came back at the end to what are at this point very real conseque e

consequences for the technology industry. this is obviously a huge debate about privacy, about the balance of law enforcement and surveillance interests and national security and that is a huge debate that we have to have. it also, i think, should be seen as an economic debate because of the huge impact that this is going to have on the technology sector moving forward. >> so just sticking with you. so your companies are seeing ramifications after a year they really -- they feel like they've seen an impact. can you elaborate on that? >> absolutely. i should mention at the time bsa is represents a broad swath of the traditional software and hardware companies in the it sector. speaking here today i'm not speaking for any one of those members and at times, i will

probably be speaking for myself and i will try to make that clear. yes, it's been pretty wildly reported as kevin mentioned, there has been a real impact on this. i've seen probably most recently the news that verizon lost a contract with the german government and the german government specifically sited security concerns and wanting to keep the network domestic. we are hearing antidotally a lot of examples of countries customers, end users raising security concerns as to whether or not they should use u.s. based companies for their services. hearing questions even in companies that don't -- have not been pulled into the whole national security surveillance debate. they are getting questions about this. so we're absolutely hearing a lot of examples of concerns from customers around the world. >> so staying on the trade thought for a second before we

go to privacy, so the impact on the u.s. government's credibility, we think this is real. this is not just a posturing issue or being used as a trade lever? >> so i don't know -- a trade lever as much as a lever to influence and grow economies around the world. what we are seeing is obviously the companies that have been drawn into this debate are u.s. companies. u.s. companies in many places are the leading providers of technology products and increasingly technology services around the world. what we have here is an inflection point, a moment for another countries, other companies to close the gap and to use this as an opportunity to really catch-up to the i.t.

industry in the united states. >> that would be my sense. there is no doubt that there are some privacy -- genuine privacy concerns here but there's also no doubt that there are merchant motivations in people with cloud saying they want our stuff stored here. the desire to have stuff stored locally has a lot of motivations. one is more jobs locally. one is that we don't hear much about is all of this move, i'm sure kevin has been enthusiastic about encrypting communications and to the e-mail provider. that has cut off access by local law enforcement to a whole bunch of information that they can only get now by coming to the united states and asking pretty please, the u.s. will give us the information.

they would rather force all the e-mail to be stored in brazil or germany so that their law enforcement agencies can walk in and take it which is the general rule for most of these law enforcement agencies. that is part of the motivation in demanding that there be more localization of the cloud. it's not particularly good for privacy. it's probably bad for privacy but it is part of the motivation. >> if i might add to that. i think in some instances we agree on this stu in the sense that several of the trends that we're seeing now pre-existed the snowden revelations but the snowden revelations have hastened them have given acommuniti ammunition to those we were arguing with. prior to snowden there were certain governments who were trying to get american companies to locally host both private data and data that the youtube videos and the like so that local governments could exert

greater control over content and have easier access to data. the snowden revelations have much strength en strengthened t way that impacts human rights. one of our biggest concerns about data localization presnowden was that many of these countries were doing this not because they were trying to protect themselves against big bad americans but because they wanted to exert greater control over internet data and internet speech. we've now given them a great deal of ammunition on that. similarly, even prior to the snowden revelations, there was a big debate over the role of the u.s. in internet governance and what should the future of internet governance be. shoul should it continue to be a multi-stakeholder model but that many are concerned has been dominated by the u.s. or should it be in the realms and

governments. we've had countries like china, russia, and saudi arabia pushing hard to increase the role of governments in the global administration in the internet. that trend existed presnowden however the snowden revelations have significantly given the contours of that debate given a lot of ammunition to people who don't necessarily we want control over the internet. they can say it because we want to get up to mischief like the u.s. >> or if i can put it on a bumper sticker it would be snowden better for russia than for privacy. >> taking a slightly different point of view of that. from the idea of encrypting your e-mail from end to end. is that healthy. >> i would say it's an enormous benefit. although it is also costly. i think the companies have had

to expend a great deal of resources to do this. if we're talking about costs of the nsa programs that is one of them. i think there are a great deal of benefits to them as well. google and yahoo should have been inscriptienscriptincryptin links. we want to see more encryption between e-mail servers. this is something google published a transparency report with all the companies that weren't encrypting all of your e-mails. all of this goes to the good and hardening of the information and security against unauthorized access. >> it's also authorized access. every country has loathsome criminals that they are quite entitled to investigate. when you encrypt everything end to end, their investigations will end up in multilateral assistance treaty requests for

assistance to the u.s. government if they don't have a treaty and most of the authoritarian governments don't have a treaty that we're willing to cooperate under, they have no way of getting information even against the criminals that they are investigating if they are using g mail and yahoo mail and the like. that will create enormous tension between the companies and governments. it will lead into hacking into people's computers and frankly for most of us, if your biggest worry is the police or the national security agency, encrypting end to end has a pretty significant effect. if you think that the people's liberation army is more likely to break into your system. believe me if you're in the united states, that is the case. encrypting end to end doesn't really solve the problem. you want to encrypt the data at

rest. all of these solutions that we've been spending boat loads of money are aimed at the wrong target. >> i think it's pretty obvious from the actions of the companies increasing encryption it's obvious that the goal here is ensuring the confidence of the end users that their data is secure. stuart quite rightly notes the existence and criminals and the ability to pursue proper investigations and ultimately does that increase state hacking, possibly. i think what we would suggest and what we would propose is we see the real alternative and the real message that we should be driving is the importance of international cooperation and conversations about this. this is a place at this point we feel governments need to be coming together to talk about how to governor access to data and to create a framework that

works around the world. >> i mean, i would agree with that and simply add that much of the focus right now, i think is technically hard ening the internet against all governments or criminals or russian mafia and that much of that focus when it comes to government access is to ensure if the government does need data which it often does that they come through the front door with appropriate legal process rather than the back door. >> they are going to move the front door to brazil and germany and romania and russia and china. they are going to insist that the data be stored there, including american's data. we're going to completely lose control of any privacy standards with respect to the foreign government access to that data. >> it's interesting. i feel like we're arguing past each other. i share that same concern but i think we have a different idea of what are the root causes of

that. i think that the snowden revelations have given a great deal of ammunition to the countries that want to do that. i think that but i'm not going to accept that threat as a reason why we should not also secure our data. >> so can we unpack that a little bit. i think that's really an interesting point. so let's just pick a country -- let's use brazil. so if i have data as an american citizen now in brazil. what do you think my concern is? >> so i'm willing to bet, i know more about the european standards. >> i picked the wrong country. >> we could go to germany. it's a safe bet that the brazilians don't have a higher standard for access than the germans and the dutch and the french. the fact is that in practically every country, law enforcement can walk in and just say would you like to give us that information. thank you. by the way it's understood

you're not going to tell anybody that you're provided us with that information. >> for clarity, the law enforcement person and they in that sentence is the local -- isb. >> they will walk into -- anybody that stores data in brazil is subject to having the police come in and ask for their subscribers information voluntarily, end quotes. without disclosing because it would be embarrassing the fact of having provided that information. if you are an american who just happens to be taking a visit to the world cup and you do e-mails from brazil, there's a decent chance that under the stand ars as they are revolving all of that stuff will be stored in brazil and not anywhere else and that your data will be looked at by the authorities in brazil for whatever purpose they want to

use it for without any of the protections that we are now arguing about how to improve. >> kevin do you want to -- >> i think the more apt discussion to be having is what do others think is going to happen to their data if they store it in the united states? right now what people believe is going to happen if they store it in the united states is that the nsa is going to have relatively unchecked access to it and that is causing people to choose not to do business with american companies. it is causing governments to propose new infrastructure for the internet to limit the amount of data that travels directly or incidentally through the united states. >> i don't disagree that there are people and media with strong interests in keeping that issue alive in foreign countries and that it is being used in some cases in good faith and in some cases in bad faith to try to get localization of data. i'm not sure that that's a completely successful move in every respect but the more we

prevent governments from getting any access to this accept through the really more or less broke process, the more likely we are to inspire a determination to localize that data where we will completely lose privacy protections for my americans who happen to be caught up in that web. so i think we do more or less agree yeah, i'm just not sure what would you suggest an apology tour. a world apology tour? this is something that's being misused by governments. most of the public policy proposals that are currently before congress, let's get rid of the 215 programs. let's do something about back end data searches for americans will have zero impact on the campaign that is being put forward. if what you would like is a international agreement that we're not going to do espionage,

that's about as plausible as agreeing that we don't have extra marital sex in the future. it is simply something that is going to happen and we're not going to be able to regulate it. if we signed up to that we would be the only people who tried to enforce it on our own government. >> i certainly agree that the current proposals are focused on americans and don't hit the programs that are going to impact people outside of the united states including section 702. i think that's a deficiency of the proposals. as far as things we can do, you can look at the very back page of the paper we handed out that has a number of recommendations about how we can start addressing this issue. i think one of them is 702 reform. limiting the scope of the data that can be collected and the range of purposes for which it can be collected. greater range of transparency. a variety of confidence building

measures in regard to u.s. government encryption standards and -- you mention the process as well. this is not actually in our recommendations but i think our answer to the issue of well, how do we address if we encrypt the data, others governments won't be able to get it on their territory. what do we do about that? i think what we do about that an certainly it is the position of the reform governance surveillance program is that we do need for the 21 century for governments to international make requests between each other for data that's stored in their jurisdictions. >> i agree with kevin. i think to stuart's analogy, we don't need a world apology tour but it's pretty clear that doing nothing is not getting us anywhere at all. there's lots of extra marital sex still going on. >> okay. >> again like whatever we do, the fact is billions of dollars

are beginning to be lost. there's going to be more to come. we are seeing a -- i use the word ammunition before. we are seeing a lot of energy now being put behind things that could fundamentally fragment the internet. could fundamentally shift the l theinternet activity away from the united states. we have to be active to prevent that. >> what is the dollar impact on this and the companies? what has happened. the problem with looking at the numbers of what has happened is by the time you have a dollar, a real dollar impact, that business is lost. it's not coming back to u.s. companies. i think that that is the danger of sitting and waiting to see how this plays out. it's hurting u.s. companies. it will hurt worse.

it will hurt our surveillance capabilities worse if we let this path continue to play out by doing nothing. >> that's actually a really great point, not that i'm necessarily -- >> i want to hear this. >> well, to those who -- i mean i'm a civil libertarians i'm primarily focused on protecting civil liberties but to the extent that you chill people from storing data or communication in the united states, that distinctly impacts our intelligence capability. regardless of what you think it should be in terms the legal standards if less of that data is here. we le hawill have less of that for intelligence purposes as well. in that way the economic impact and the impact on the internet itself is also going to have a security impact for us. >> should we be concerned that there was a recent report saying

math am imagine imagine people are turning away work from the nsa because they don't agree with the dialogue. how do we say to young evaning ne engineers going forward that we still know what's going on? how do we manage this going forward? >> one of the things i would suggest is that one, if this is what we're worried about, most of the reform proposals have nothing to do with this and aren't going to as kevin more or less anni less acknowledged aren't going to change anyone's view. indeed the longer the fight goes on the more attention gets paid to the snowden documents and the perception that nsa is collecting everything. if this is what we're worried about, we should focus on things

like reform and frankly, rather than a world apology tour we should be taking some of this fight to the people who are misusing it for their advantage. high on that list has to be the european union. which has patented the business method of holding american companies hostage over some objection over u.s. policy that has nothing to do with companies. they did that to airlines over pnr. they did that over swift to u.s. collection of terrorist finance information. they are doing it now over safe harbor trying to find a way to say we will threaten all of the u.s. companies that want to do business transatlantically with losing their protection under the safe harbor as a way of trying to extract concessions from the united states on

unrelated topics. they want to regulate. they have no authority to regulate any intelligence service in europe. the only intelligence europe they think they have the authority to regulate is the united states. it's time to call their bluff over this and one of the things that frankly for people here in congress, you ought to be thinking about is the european parliament comes over here all the time. they constantly are thinking about ways to hurt u.s. companies, putting them into law and saying we're doing it to protect privacy and when they come here, they hear nothing from congress to suggest there's anything wrong with the positions they are taking. congress here needs to be as aggressive about protecting u.s. interests as the europeans are about protecting european economic interests. that means taking actions to prevent and to specify consequences from my effort to screw around with the safe harbor over this issue which really has nothing to do with the law of privacy in europe

which the safe harbor already fully vindicates. >> so i guess to get away from europe for a sec. let's say art imitates life and a company decides to become the google of brazil. is there an ability to do -- >> we call it -- >> to do sort of a check the box exercise of i would like all of my dauta to avoid a u.s. server. can the zeros and ones really do that. there's a certain element of this dialogue which is very pragmatic from a policy perspective. i don't know if all of these things are feasible. >> so i think i would rely on a real technologist to measure the feasibility of that.

the problem is only the goliaths can do that. there's a huge swath of the technology industry is not that big. it's not built that way. the cost to a lot of bsa member companies of trying to assure every customer by saying your data will be held in x locality just isn't possible. you undermine not just the efficiency of the system and value that cloud computing and other things bring but you undermine the cost. >> so when putin said a couple of weeks ago that he wanted all twitter information to be -- if they were allowed to keep tweeting in russia they would have to stay on a local exchange server or put a server locally. i don't mean to make this very specific to one company but if you're a company at that point, do you just say good luck. we'll do our best. i realize we've had these challenges and iterations with

yahoo in the past. if you are one of these edge providers who are very popular especially the social networks how much credence do you have to put to some of these people or do you just say great. russia, we wish you the best with that. >> twitter is not a bsa member. i think it's really hard to answer some of those questions from a company perspective. especially when you are answerable to stock holders. some of the markets, some of the worst parties here are fairly large markets. >> it's a business call. i think you have to decide how much is it going to cost me not just in funds but in disappointment on the part of your customers versus what it will cost you to get out of that market. when the chinese started censoring google, google said this is not our market. when the europeans decided to

sensor google, google said what do we have to do. that's a decision they have to make. you make it on a business basis. >> i just also add there's a layer technically and figuratively between the edge providers as well. if you move up a layer and look at the isps and the back bone providers, those who have the internet exchange points that carry all of this traffic, we are moving into an age where there aren't a whole lot of those. there are fewer and fewer entities controlling all of those pureeing points. you look at the emerging markets especially in countries less friendly to human rights. there are actually very few of these points and they are under pretty strict control by the government such that it's actually quite feasible to say we don't want this or that traffic coming in or out of the country or we don't want this service to be able to reach out people or vice versa.

we want to keep it internal. it's worth being mindful of that. it's also worth noting that to the extent that major isps agree we want to keep our bits on particular links. that's feasible for them to do. we are seeing this in the context of the european yun yun and they are talking about a routing program where it will not leave europe. it is technically possible. it will not be cheap. >> this is just like any other security decision. you have to decide what it's worth to you in money and in hassle. it has to be worth it to everybody who has control of the decisions. it turns out i suspect that it

isn't worth of it of all the people that would have to be persuaded for a zone to do that for the internet. certainly it's worth it for governments to say if you're going to host our data, we want our data hosted in our country. frankly that's the u.s. position. it's not a surprise. so on some things, we have the leverage and they can do it relatively inexpensively and they will do it pretty much no matter what we do for the next year on snowden response. for the rest, they won't because it isn't worth all the hassle just as sometimes it isn't worth all the hassle to have a 20 character password. we know we should. we mean to on january 1 but my january 30 we decided it's too hard to remember. it's certainly worth it to some governments and foreign

competitors. they've been very outward about talking down u.s. competitors. >> they have been but you know everybody all of their customers are also quite cynical about that and they are quite prepared to say well, okay. if your 2% more expensive we might take that hit in order to get what you're selling but if you're 20% to hell with you we're going to amazon. >> if i may jump back to another point, i do want to make clear whenever you say you've conceded a point you do need to rethink what he said. i said the current legislative proposals doesn't do enough to reassure the primary markets because the focus has been ending the telephone records program that primarily effects us. i do want to be clear that it does do a number of things that i think would help address this problem. it would prevent bulk collection

of all records if it's done right. we're working on it in the senate. it should be reassuring to anyone who stores data or has records kept about them in the united states. it also would do an enormous amount -- screeria -- nigeria.

airlines flight. this is one hour. >> welcome. this is a special event. it's a pleasure to have the british ambassador here to talk about nato and the changing face of transatlantic security. it could not have come at a more timely quick. he became the ambassador to the u.s. in january of 2012. this is his second posting this washington. he was previously the mc's downs lore for public and private apairs. prior tore that was ambassador to turkey starting in 2002.

peter his career in the diplomatic service have included postings in toronto there's a lot more to it. it's just too distinguished for me. let's welcome the ambassador. don't forget you can follow online as twitter as well. #def1live. if you want to get to more questions. [ applause ] >> thank you. thanks, jimmy. thank you so much. thank you all very much for copping down this afternoon it is quite a time will me emt. i think as we survey the rather dramatic events going around world recently it's important to

talk about the human dynamic going on and to remember the people who lost their lives when theed airplane was shot down last week. people are dying in gaza. all types of things are not in the headlines that are bigger issues. >> in my introduction how many important an vrsaries there are going on. what a hiftor rick time it is. it's 200 years since the end of the last conflict between britain and the united states. the beginning of the closest military alliance we've ever seen. seven decades since the trauma and heroism of the d-day

landings. twooif years since the falling of the berlin wall. >> 70 years ago this week british and american forces were embroiled in heavy fighting around a french town as they battled to break out of a normandy breach head. those landings involved 175,000 british service men fighting across their u.s. comrades. the brits and americans joined by canadians, new zu laealandez dutch, it was a partnership to defeat fascism. after the war britain were

instrumental in the creation of nato which has proved vital in facing down soviet aggression. the fall of the berlin wall 25 years ago as i was saying this november marked the beginning of soef yoet d. britain and america have come together again and again to lead coalitions in national security. as we did on land in the balkans and the sea of the horn of africa and the skies over libya. the september 11 attacks sparked the alliances longest mission to date in afghanistan and throughout nato's military operations, british and u.s. personnel made up the two largest contingents fighting in

afghanistan. today we face fresh challenges. the contours of the conflict in gaza are depressingly familiar. it doesn't lessen the urgency of finding a resolution. of course israel has a right to defend itself against the rocket attacks but we believe it does it appropriately to take on measur measures to keep the loss of civilian life. i'm very pleased this morning john kerry is on his way back to the region to see if he can deliver that objective. in other parts the world, the nature of the challenges is changing constantly almost by the day. in ukraine we find ourselves in

new and dangerous territory. the shooting down of a civilian airline is an intolerable out rage. it's being compounded by russian separatists to block access to the crash site. tragically, others are still on the side of the accident of the crash. >> the separatists grant immediate access to the side so those who are still there can be identified and it areturned to their families f. owe the international community can have the facts behind whose responsible for this atroegs crime. those who took the lives 298 lives can be held responsible for their actions. it looks like it was fired from a separatist controlled area of eastern ukraine. whatever the outcome of the investigation, it's already

clear that russia has fermented a conflict. president putin has the power to bring an edge to the bloodshed. we believe he must do you so without delay. the eyes of the world are behind him. today's threats come from regional terism, cyber attacks and so on. some states seek to use the cyber domain. increasing we're seeing threats from nonstate actors. none can no longer be seen as fringe groups. al qaeda's core has been deteriorated. we can't dismiss the challenge

these developments pose to our national security because the rise of isis threatens to destabilize the region. we can add a third grouping. we might call them quasi state actors. we see them in ukraine. this should be a source of american for all countries. any threat to the principal of national sovereign nations. first we've got to look to stop the conflicts before they occur. whether we like it or not, that requires some discreet intelligence gathering sometimes necessarily secret sow that we can find terrorisms before they kill innocent people not

afterwards. another is our efforts to remedy the societial ills. this is aimed at changing the culture of impunity for those who commit these terrible acts. smams we ha sometimes we have to take a firmer line. until the kremlin decides to bring an end to this conflict nato will have to continue to take action to reassure its partners. we will continue to ratchet up sanctions and continue we must economically russia needs the west at least as much as we do

russia. real sanctions can have real bite. the uk has pushed for international piece and national security. meanwhile, we will carry on working through the mf to help stabilize ukraine's economy and through the osce to monitor conditions on the ground. >> through sanctions, diplomacy, negotiation, we've made progress and enough to make extending the negotiations for another four months. these are good examples of handling problems without force. it's clear that each time our

efforts to keep arm forces. our militaries must be nimble and flexible. we brits are investing heavily in new capabilities to make our equipment fit for purpose. working more seamlessly with our american allies. we're upgreating to more traditional war capabilities. we will be spending $250 billion in the next two years. david cameron announced a 1 $1/2 billion in surveillance and intelligent capabilities. >> over the next few years we have a rejuvenated air craft carriers and a fleet of f

fighters to fly from them. a couple of months ago i visited the queen elizabeth with my american counterpart in jumpsuits and goggles. the queen elizabeth ceremony with her majesty, and our most most capability is our fighting men and women. our troops we believe remain among the pest in the world. we ask a lot of them and they deliver year in, year out to an it astonishing high level. with so many people now returning from afghanistan,

we've got to take more seriously than ever the pastural obligations that we have toward veterans and their families. we're funding projects like homes for veterans and mental health lines for personnel and their families. just after the nato submit in south wails, london will host the games for wounded warriors in the u.s./uk for a dozen countries. it will be a major celebration of their troops from and their major w maj major celebrations. >> in his recent speech at west point president obama emphasized the importance of partnerships. weigh gree with him. for as good as our efforts may

be they will fall short. britain seeks partnerships beyond for example. we have strong historical ties with hong kong and australia and new zealand and singapore. where i should add even the smallest contact is valuable because it does lessen the risk of miscommunication or miscalculation in a region where territorial pursuits exists even as military powers mature. these are at. it's in everyone's tre to try to stabilize the nations before they become a great threat. libya is an example of a state that we can't afford to let

slide into anarchy. the g 8 agreed to train more than 7,000 militias to reintegrate them in society. there's another efforts to help libya, the uk is playing a major role elsewhere. we've got experts within the eu's trading mission in molly. with other governments we're actively engaged in training un peace keepers for stabilizing missions around the world. the most important partnerships however are those we enjoy with our close allies. with the u.s. cooperation has become routine, almost operation. we've joined to the hip but it

does not stop there. across our arounded forces, we enjoy a unique level of integration. hundreds are positioned in the united states along with their american comrades. the same is true the other way around with u.s. personnel in the uk. as we approach the end of combat operations in afghanistan. we're also looking seriously when we no longer have to fight side by side. last month the joint chiefs met their mettish equivalents where peace was at the top of the agenda. we're developing a combined joint expeditionary force with france which we expect to be fully operational to 2069.

which brings me to the nato summit in october. just a few months ago we were asked why we even need a summit. well in one is saying that anymore. on the contrary, there's pretty much universal acceptness of the importance of the alliance today and in the past p. the summit will focus on threats rent and tuture and will resolve around three key things. first afghanistan. afghanistan today is not perfect but it is far from the terrorist launchpad it was back in 201. afghan troops are providing security across the country. unprecedented numbers of girls

are going to school. 40% of afghans use mobile phones. none of this would have been even thinkable under the taliban. all of it contributes to a afghanistan that is for more secure today than any time since the taliban took the turn out in afghanistan's residential elections showed that afghanistans want a constitutional peaceful transfer of power which we hope leads to the formation of a government of national unit. nato will go on supporting afghanistan. thanks to the pledges we made two years ago in chicago, the funding is there. second seem for the summit is going to be european security and the longer term implicati s

implications. we have hybrid warfare that russia has been engaging in. crucially we must consider how to further deter russian aggression. last week's events underscore how urgent the situation is becoming. >> finally we will be able to future proof the alliance. we need to make sure nato has everything we need. as well as modernization, we needed to develop than that. a system in which allies share the burden of security by pooling resources in a coordinated manner. clearly this requires all allies

to pull their weight that includes states that's spending falls below 2% of gdp. we believe that security is well worth the price tag. of one of only four countries to have met the nato target. we will continue nato's efforts to building the largest partnership. almost half of the nation's participating in afghanistan. we owe it to them to look for new ways of integrating them into the alliance decision making process. nato acted as a deterrent

against depression but the alliance needs to know hae it can be equally effective in its new role as an active player on a constantly changing global security change. together, the united states and europe have played a leading role in designing international system since the world war. the system has been a great pros than ever before. more countries are democratic than ever before. around the globe, more and more societies are emerging from poverty. at the same time, security picture is more complex that at any time in recent memory. the brits, americans and other who landed in normandy 70 years ago did so to combat a clear unified state-based anniversary. the next two generations face similarly ugly threat. today, it's far more fragmented and complex.

not only nation states but also terrorists, extremists, insurgents, all pose a threat to our national security. to deal with it, we need strong traditional military, and we're working to achieve that, as i have been trying to explain. we also need a subtle array of alternatives. we need hard power and soft power, we need intelligence, democracy, sanctions. we need development and military partnerships. nato is the world's preeminent alliance, but again, adapts to new realities as it has done over the last quarter century. i'm confident that come september, come the nato summit in south wales, world leaders will be able to show that nato remains strong, united, ready to meet and defeat any threat. as we continue to adapt, we could do a lot worse than bear in mind the important words of abraham lincoln who wrote 150 years ago the struggle today is

not all together of today. it's also for the vast future. thank you very much for your attention. [ applause ] and for your applause. i'm very happy now to look forward to sitting down with you and discussing your questions and discussing whatever else you want to raise.

>> thank you. you have no idea what just happened. excellent address, and raised lot of good points and sets up an interesting and complex landscape, and i want to go through a lot of them including the state of affairs and debate in britain right now about defense and the military. relationship to the u.s., nato, but where to start? i think defense one, we discuss the future of military power. and what comes next, where we're going. and part of that big question

right now is the use of power, the limits of it, and the purposes of our militaries. that's a debate going on in this country. i know in the united kingdom, there is a new kind of recommitment to a future with a major funding announcement, as you said. explain to us and the viewers a little bit about the background there of the debate in britain of how much to spend, what kind of military to have, and how it should be used. >> i think in the u.k., we are very conscious about nato is a very precious alliance, but it is not reasonable to expect the united states to continue to bear more than its fair share of the costs. when i last looked at the numbers, it was something like 75% of the cost of nato fell to the united states. we believe the other partners have to do their bit as well. that's why we're firm believers in the target of 2% of gdp from

each member of the alienls in order to assure that we are pulling our weight. united kingdom is somewhat above that figure at the moment. there are not many of our european partners who are. as i mentioned in my remarks, we believe just four countries. so it's very important in terms of equality of burden sharing, but it is also very important in terms of capabilities. and it's not just about what is the amount of money you spend. it's what you do with it. it is, are you willing to use the equipment you've got? and it's asking yourself to question of whether the equipment you've got for your brave fighting men and women of the armed services is the right stuff to deal with the current or future threats. of course, it's a long lead time with military equipment you design and manufacture, and threats have a nasty habit of evolving very rapidly, more quickly than we sometimes can do in terms of design and manufacture. neverthele nevertheless, we believe it's

important to keep an eye on what the threats are, what to do with them, and what we can expect to do. hence, what i said about having a 10,000 deployment capability we can sustain. hence the reason to project a long way from home. two new 60,000 ton aircraft carriers, both under construction. one recently launched, one to be completed soon. together with state of the art f-35s, and a whole bunch of other cutting-edge technologies are an indication of what we believe we need to do. we were maintain our territory. we will spend more on cyber defenses. we will spend more on new technologies in a number of different areas. so we're trying to insure that what we do is not just fair burden sharing but it's also relevant and capable in terms of a threat that lies ahead. we believe that's an important part of the debate at home for nato, not just on the u.k., so that's why it's on the agenda for the summit that will be

taking place. >> you mentioned the capabili capabilities and the f-35s. are you so sure about the f-35s? they just made a no show, and they're constantly delayed. is there a plan b for your country, as has been discussed in this country for carriers that need aircraft that can launch off them? >> we won't be disappointed that we didn't have the f-35 at two air shows in the u.k. last week. it was because there was an engine fire in one of those aircraft. new products, unfortunately, have troubles, but i have to say that we remain confident in the product, convinced that it's what we need, proud of the partnership the u.k. has with the united states as a pretty much prime contractor in this project, and we're sure to come out in the end. we're a bit concerned, some people talk about the price. we would like, of course, the best possible value for money, but we're absolutely not

wavering in our commitment to this aircraft. >> you mentioned burden sharing. this is high-end capabilities, committing to the nuclear deterrents. in a world where we have these low-end threats, as you also describe. how has either the budget or what's happening now with russia changed either great britain and nato's commitment to both defending the homeland of europe farther out from its actual borders or changed its calculus of how far around the world the united kingdom can be or should be involved in global security? >> i think one of the results of what's been going on in ukraine lately has been a reconfirmation, if you like, within the alliance of the importance of the commitments we have given each other and in particular of the commitment of article 5. article 5, which means that an armed attack against one is an armed attack against all.

it's only been used once, i think, in afghanistan in the context of 9/11, but it is there. it is a commitment, and because of its importance, we have seen a number of rotations and deployments of nato, armed capabilities into some of the nato countries which are closer to ukraine. we have reminded people through reassurance programs of the importance of the alliance and of the seriousness with which we take our commitments. we have also been trying to engage with non-nato partners to try to insure them we care about their security as well. we need to be clear that article 5 applies to nato allies and not others, and that's one reason why the united states government, my own government have made clear in terms of dealing with ukraine, we need to look at a number of different means of insuring that our security is protected, that what's been going on in ukraine is regarded as unacceptable and there is a price to pay for what

the russians have been up to, but which stops short of military deployment, boots on the ground in non-nato countries. that's not on the agenda, but we have to include some of the things i mentioned of different policy responses. >> isn't that the criticism of ukraine, simply because there is no article 5 requiring it, ukraine is going to suffer? that even with an airplane shootdown, what really can the west do or is the west willing to do? you mention eed holding them accountable. is accountability going to be stronger sanctions with every one of these events, there seems there's more and more of a clamor for actual military response, a strike, some sort of punishment, some show of force. >> i believe i heard the president say when he spoke to president putin late last week, there was a strong complaint about the sanctions which had been ratcheted up by the united states last week.

it's much more than possible, probable in the event that the russians do not change their tack. the president does not meet the requirements which have been spelled out by the president and my own prime minister, by a number of people in the last few days, that there will be further pressure through sanctions and other measures. there are already a lot of individuals and entities on the sanction list. more can be done in different sectors. we think it is not reasonable that a russia which destabilizes its next door neighbor in the way it has been in ukraine should continue to have access to high technology and finance and financial services and the means to maximize its energy resources, for example, on all of which it depends on the west, without being any response from us to say, no, we're not prepared to play that game if you're going to carry on behaving in this unacceptable way. there are a number of leavers we have, we are by no means at the end of the road, and i think one

of the consequences of the terrible event of the shooting down of the malaysian airlines aircraft is a number of european governments which have been a little wary of going down the sanctions route will now be more robust. >> i want to remind everybody watching, we'll get to questions shortly from the viewers and from here in the room. we'll pass around a microphone. on european collective defense, you mentioned the 2% number again, which is one we have heard for a long time now, and there's been a lot of succession of american defense secretaries that go to nato and usually in their final speech, wrap nato of the knuckles for not meeting that goal. it seems to me there's a divide here about what level of security for europe needs that washington thinks versus what european capitals either believe they need or are willing to spend. and that is if the europeans don't step up the number, that's either the 2% or the number that

makes the pentagon happy, either the pentagon is going to stay there and do the job for them or have to accept a lesser european defense. is there -- is there any real reason to believe that the other members of nato are going to reach that number, and is that number even needed anymore or is this 2% thing a red herring by now? >> the 2% thing is an agreed target of the alliance. we think it has a value. we are proud of the fact that we exceed it. we would like to see our fellow members of the alliance do as much. as i said, the business of insuring that nato is capable, fit for purpose, ready to respond, is not just about numbers and the amount of money you can spend. there are countries which spend quite a lot of money on defense but don't actually do anything with what they get for that money. so this is one reason why we want to have a really adult debate about this when the nato

summit gets together in just under two months' time. we think it's important to look at all this. we feel in the light of recent developments, european security has rarely been more important. i know on television, senator feinstein, when asked when we're back in the cold war era, she said yes. >> do you believe that? >> well, i'm going to leave senator feinstein to speak for herself, but i think we are in new and dangerous territory. and i think one of the unhappy consequences of recent events is that we are now more and more focused on the importance of insuring that european security and mutual defense is robust and credible. so that's a debate we're going to have in south wales, it's very important. >> let's move from nato into the middle east and israel. i guess we'll get into iraq after. in your remarks with lots of the other world leaders have

mentioned frequently, israel has its right to defend itself, yet calling for a proportionate response. does that mean you believe israel's response is not portionate? >> i think we are united with many other governments, including many, many people in israel in being very distressed to see the number of civilian casualties in gaza rising above the 500 mark. this is a very high level. there are horrific stories each day of children in schools and cafes and so on, children on the beach losing their lives. we would very much hope that this ground incursion comes to an end quickly. we would very much hope to see a cease-fire. that's why i'm very pleased to see secretary kerry on his way there at the moment to see whether he can build on the initiative that's been taken by the egyptians and see whether we can bring the fighting to a stop. >> is there -- in thinking of hamas, hezbollah and other groups, all the way into isis,

it's been on our minds, we have the u.s./mexican border as an existential crisis. you were talking about the border. what's the difference between that and calling these groups flatty an existential threat to britain, to the united states, to nato? if they're an existential threat to order, is that enough to send troops to get military involved or realistically, are all our countries going to sit back in this defensive posture after the fatigue of the last 12 years of war and allow a lot of violence, a lot of destabilization, a lot of power control shifts to occur without real military-led types of reactions? >> the conclusions of these two very lengthy, very costly

conflicts, both of which lasted longer than the first or second world war in iraq and afghanistan, has been the public opinion has become very wary in most western democracies of the use of military action. people can see how you get into wars. they are not so good at seeing how you get out of them. the question that we hear so much more often now than used to be the case is what's the exit strategy? or put another way, i can see how we get in there, but how can we be sure we're going to make things better rather than make things worse? and what about the cost at a time of considerable economic difficulty in many countries? i have seen estimates that iraq and afghanistan cost the american taxpayers between $5 trillion and $6 trillion. my own country has taken a lot of sacrifices as well, a lot of lives lost, a lot of blood and treasure. if you look at the polling in britain, france, the united states for example, what does public opinion think about the use of military action, the use

of boots on the ground to deal with another country mfs internal turmoil, even a humanitarian disaster, let alone an existential threat to international order? people are wary. they have become more conscious about whether the use of armed force is necessarily the right answer. they want to be very sure that it is going to make things better. sometimes it does. in the united kingdom, for example, i went to sierra leone about three times in one of my previous responsibilities. there was a brief war, it lasted about six weeks, we were able to turn back a brutal campaign from a bunch of drug-crazed kids chopping off the arms and legs of civilians in that country, restore a form of government and make things better. it isn't always that straightforward. sometimes it's more difficult. we need to be very sure before you're going to take military action that you're comfortable with the thought that there's a strategy there, a plan in place, that means you will be able to go in and you will be able to come out and that you will be

leaving things in better shape. and i think the answer to those questions are necessary for the public opinion increasingly sasing to governments we need you to be sure before you commit more blood and treasure. >> with that, i'll open to question, and keep in mind the thought of talking about a group going in, leaving things better than they were than coming out is not something i think a military might be designed to do. these are instruments of destruction. we have been asking to do a lot of different things in the counter insurgency era. >> they need to be part of a strategy that makes sense. with other measures in place that do make a difference. at the same time, as i was saying, george shuchultz again, democracy is not backed by use of force is ineffecttual, and we need to bear that in mind, too. >> in the room, we'll start. we have a microphone to pass around. i think we'll go up there to sir george. he's from our building.

>> sir george? >> national journal. >> george condon, national journal. mr. ambassador, if i can take you back to the summit, you said the second theme of the summit would be how to deter further aggression by russia, and just looking at the situation in ukraine, do you see the summit discussion as more planning for the future or assessing what has been done in ukraine and how the alliance could respond? >> i think we're talking about a bit of both. that is to say we want to have in place credible defense arrangements which mean that there is going to be no threat to members of the alliance. that is the fundamental purpose for which nato exists. but we're also conscious that we have got a broader responsibility, which goes outside of the territory of the member states, and that's why nato has been involved in many other places, including, as i

mentioned, the balkans and the waters of somalia and so on, trying to make things for the better. but i think also that unless we have a change of heart on the part of the crimea in the coming days and weeks, we're going to have to be looking seriously at how we're going to deal with the specific issue of the way russia is treating its neighbors in europe. it will be a little bit of both. i don't want to anticipate in detail what heads will be saying to each other or indeed what the situation will be by the time we get to the beginning of september, but i suspect it will be a bit of both. >> from the department of state, i have a question about kind of these two themes that often seem to reoccur in european security. one is the burden sharing between the united states and europe and wib europe, and the other is within europe, nato

versus the eu, you mentioned this new and dangerous territory, that might have impacts on the burden sharing debate. i'm curious what impact you think that this new environment might have on the respective roles of the european union and nato and european security. >> thank you. the respective roles of europe and nato, as you know probably better than i, it's complicated. and it gets tied up in a number of different issues, including questions of sovereignty and the question of how far and nato as opposed to the european union, are responsible for collective defense. that said, we have got some pretty good examples of how the european union and nato have been working together. either offshore or onshore in trying to make a difference in africa, in the balkans, and in dealing with somali piracy, for example. so we've got some good examples

of working together, but from our point of view, we think it is important that we don't either undermine or dilute the nato command structures and the way the alliance functions by mixing things up too much. and it's important that we remain also clear where competence falls, defense policy lies, but i think as threats evolve, as the importance of working together becomes more and more apparent, the scope for the eu and for nato to work together will grow. it should grow. there are now increasing number of capabilities within both organizations, and there is also growing evidence of individual members of nato which are also members of eu doing stuff together. so i think that's an important area of future capability as well. >> ywhen it comes to the burden sharing, it's also inclusive of nato, but the u.s. is not thought of as part of that.

is the u.s. helping in line with the burden sharing conversation, or is it considered the u.s. is going to take care of itself no matter what. this is for the rest of the members sort out? >> well, the united states pays the share for a long way by the moment. i don't think anyone thinks the united states should be doing more. but what the united states can do is engage with the rest of us in a number of different ways. one of the opinions that i happen to hold is that if we are to continue to persuade public opinion across the alliance that their valuable taxes should be spent on defense, that there's got to be an extent to which they see this contributing to their own industrial defense, employment, prosperity, objective. that is to say, if you're going to spend lots of money, it can't always be buying stuff from somebody else, and where you've got a defense