>> translator: i don't think putin is in a simple position right now. things aren't going that well inside the country. and he's always had a simple explanation for that. he says, well, there's this enemy, america. everything that's bad is america's fault. the people joke about -- they say if your doorstep has mud on it, it's obama's fault. putin put his stakes on hillary winning. >> but he backed donald trump. in fact, he interfered in the election.

>> translator: and yet he was counting on hillary winning. >> how do you know? >> but what's important in this situation, everything is quite simple for him. we have the enemy. >> right. do you think he's quietly unhappy about donald trump's victory? >> translator: his inner circle is happy about it. you may have heard that when trump won, the state duma gave a standing ovation. but i don't think putin is particularly happy with the result because now he still

needs to make america into the enemy, but it's now going to be more difficult. >> he needs that because internally the russian economic situation is very bad after the imposition of sanctions? >> i wouldn't say it's because of the sanctions per se. that's 10% of the answer. >> okay. >> translator: 50% of the answer is the drop in oil prices. and the rest is just poor management of the country. but it's -- it wouldn't be good idea for the president to tell the people, your standard of living has been falling for the past two years because i am an ineffective manager. >> that's not putin's style, is it?

>> translator: absolutely not. he was asked do you have any regrets about anything you have done and he said no, i did everything just fine. >> let me be very blunt. i'm sure the audience would like to know the answer to this question because we had a question yesterday from arthur suls berger about how dangerous is the proximity of president-elect trump's finger to the nuclear button, and we got a long answer which in essence said there are lots of stages that have to be gone through before he can press the button. but what is the likelihood of some major conflict in the next four years? for example, might president putin do in estonia what he's done in ukraine, and in that case, if president-elect trump hasn't already dismembered nato,

nato would be obliged to react. are you worried about some -- if not global at least major war breaking out? >> translator: i don't even want to joke about that topic. because i truly am afraid. yes. putin is used to being the only unpredictable player on the playing field. and now there's a second one and in terms of his opportunities, you know, what he's capable of, he's the number one. >> so you're worried, very worried?

>> translator: yes, i am very afraid that if putin continues to play the way he has been playing in the past -- >> and where do you think that comes from? >> translator: -- we'll be closer to such a conflict. >> where do you think that conflict could erupt? what would be the spark, the catalyst? >> translator: something that's the most unpredictable. some -- let's say flyover over an american frigate. >> right. >> translator: it's been said a hundred times over, don't do this. it's idiotic, don't do it and yet they still keep doing it. >> you are the founder of open russian. you want to change russia. you want to get away from this nationalism/imperialism of president putin.

but look, putin is ascendant. a little while ago, obama called russia a regional power and now he calls it a major military power. we have seen over the last few years president putin really moving center stage again after a period of geo-strategic decline in russia since the end of the cold war. do you feel you're losing the battle? what can you build upon in terms of creating a more open, accountable, transparent, democratic russia that is closer to the west and its values? aren't you engaged in a losing battle? >> translator: this is the difference between the picture on the wall and the room in which you

actually live. i think most russians would say that they would like to see better roads, better health care, better education in their country than we have now. rather than some kind of achievements in donbass and syria. most regrettably, putin is asking the russian people to pay for this picture on the wall at

a time when they in a very real way don't have enough money for food and clothing. >> but he's very popular. >> translator: your russian colleagues do their jobs very well. >> that job is a little different than mine, i hope. but i mean, seriously, he's muzzled the press. he's muzzled tv. he's thrown out pretty much a lot of ngos. resistance to him has been crumbling. what i don't get is, mikhail, what are your building blocks? a lot of the resistance to president putin is outside russia, not even inside the country. so are you just some quick study dreamer or do you actually have a program?

. >> translator: my colleagues and i have the experience of the past 150 years behind us. which showed that authoritarian regimes in the 20th century were already not viable. they live for a while and then they die. we see that in nearly 20 years of rule, putin has pretty much destroyed all institutions of state. what we are very concerned about

is that once he does go that the situation needs to improve very quickly, not slowly. >> once he does go, you actually envisage that? >> translator: i do assume that putin will leave before 2024. >> 2024? so that's eight years from now, right? >> yeah. yeah. >> he's a legalist. >> translator: he has given himself two six-year terms. and i think he takes that seriously. >> yeah, but can he come up with some other medvedev type of stand in for a couple of years and be back? >> translator: for now, as of today at least, he has closed off such an opportunity for himself. but of course he could change everything.

except the country. he can't change the country. and that means that everything will end both for him and for the country that much worse. he really has no nice way out right now at all. after 2011 when he finished his back and forth with medvedev. >> right, but don't you feel -- you know a quarter century ago at the end of the cold war, we all assumed or many assumed the victory of liberal democracy and people predict the end of history. what we seem to be seeing right now is the rise of autocratic models whether they're russian, chinese, in the united states we have a president-elect who many regard as a demagogue and feel that the american constitutional system could even be tested. so isn't the tide actually going away right now from what you

believe in. in france, an election in may, where the national frond is a serious contender. throughout the world, the paradox of increasing interconnectedness, but growing nationalism, emerging from growing anger. so don't you feel historical drift today is a wave from what -- from your convictions? >> translator: i have my view of this problem. i think that we have gotten too fixated on building institutions that reflect public opinion.

you can't follow society blindly. you need to take society's opinion into account. no question. but you shouldn't just be parroting it blindly. people have begun to feel they're lacking political leadership. and because the traditional parties have stopped offering them this political leadership, they've started looking for political leadership where it has always been, out on the fringes. society has a demand for political leadership, and the traditional parties have stopped supplying it. >> let me ask you a personal question.

what does ten years in prison do to somebody? how have you changed? >> translator: ten years is a long time. i changed in this time simply because i got ten years older. i began to better understand people whom i had never even associated with before. this is important, because i understand the russian power better today, because of that. the psychology of the people in power in russia is very similar to the psychology of those people that i spent ten years with. i spent all my life working in business.

but ten years in jail beat any interests in business out of me. i continue to believe this is an important aspect of human life. but i discovered that human life consists of a lot of other things as well. which i had managed to forget about. >> a cynic might say you can afford not to be interested in business any longer. >> translator: yes, this is one of the advantages that i have, yes. >> did your values change? >> translator: i think they started changing somewhat before that even.

it is one of the reasons why this huge conflict that putin and i had occurred in the first place. we had a split on values. his values remain the same. mine changed. >> what do you do with your anger? >> translator: you know, i didn't have any. >> no? ten years for totally trumped up charges. sorry to use that word, "trumped up." [ laughter ] >> translator: that's an interesting question. i'm sorry. that was an interesting experience.

it is apart of my life. i can't say that i fell in lov with putin. i'm not saying that i have forgotten or will forget these ten years of mine and my family's life. >> do you fear for your life? >> translator: i don't think about that. in fact, i don't think about putin all that much. until i come to america. because in america, people ask me about putin a lot for some reason. >> i'm going to throw this open in a minute, so please prepare your questions. do you fear for the direction of the united states of america right now?

>> translator: i would say a better answer would be i'm finding it interesting. >> along with the rest of us. >> translator: i had a meeting with some specialists in the political area here. and they said to me that they wished they had as much faith in the american political system as i seem to. >> what do you think the -- such as they are. what do you think of the economic or business opportunities in russia right now? a lot of these, the people here come from the fashion luxury businesses. there are other businesses represented, technology and so on. if you were investing in russia

today and in the past, you proved a wily investor. what would you invest in, in russia? >> translator: there is a big risk. big possible profits, though. i would probably invest in retail. >> online retail, or physical? >> translator: any field that doesn't have -- doesn't require big capital investments. because i know that there are no institutional guarantees. there is no guarantee of property ownership. so you need to dive in.

play your game and get out. or dive out. >> let me take a couple of questions. maybe i'll take two here. any questions? yes, sir? grab a mike, please. [ inaudible ] >> translator: if something were to happen to him today, the next leader of the country would be medvedev.

i would hope that putin would have the brains and courage to hold -- i'm sorry. that medvedev would have the brains to write a new constitutional order. after this, a transition period will be required. some 24 months approximately. during which political reform would need to take place, and the ground set for free and fair elections. and after that, at these free and fair elections, the person to be elected would be someone who in your terminology would be a left social democratic of some sort. >> okay, last -- yes, sir, your hand was up, yeah. the mike, please.

>> so if putin hangs around for another eight years as you said, what's the role you see for russia, both politically and economically in the world? after, post putin. >> translator: i think that russia has very great potential, irrespective of putin. this is, like it or not, the biggest country in europe. both in territory and in population. so at any rate, russia is going to play a very big role on the european continent.

as for the economic side of it, we know from the experience of germany after world war ii that any crisis takes several decades to resolve. >> thank you very much. thank you. [ applause ] this week is authors week on "washington journal,

", on saturday, robert jones with his book "the end of white christian america." final on sunday, author tevi troy. be sure to watch author's week on "washington journal" beginning at 8:30 a.m. eastern. and we return to this business leaders' conference as the managing director and vice chair of the jp morgan chase asia pacific division talks about u.s./china economic relations. >> i'm joined now by jing ulrich, a senior executive at jp

morgan chase based in hong kong, responsible for the investment of trillions of dollars across the region, known as the unofficial voice of china. grew up in china, educated in harvard, stanford, a u.s. citizen. jing, let me start with the election of donald trump. what impact do you think his election is going to have on u.s./chinese relations, the most important relationship in the world today? he's said some pretty menacing things. he's said a lot of things. how worried are you about a sharp decline in the quality of the u.s./chinese relationship? >> well, good morning, roger, thank you very much for your

kind introduction. and good morning, everyone. in terms of u.s./china relations, clearly there will be a lot of uncertainties. mr. trump on the campaign trail said that he would grant chibra china a currency manipulator on day one and impose a tariff on chinese exports. let's look at the economic factors. to brand a country a currency manipulator, there needs to be three conditions. number one, this country needs to run a large current account surplus in excess of 3% of gdp. number two, this country needs to have a very large bilateral trade surplus with the united states. and number three, this country would have to engage in constant

one-sided foreign exchange intervention with a view to devalue the currency. so on all three measures, china actually only fulfills one, which is trade with the united states. on the other two measures, china doesn't meet the requirement. based on fundamental factors, china should not be named a currency manipulator. >> do you think donald trump cares? >> well, you know, hopefully he does, hopefully he will behave in a for responsible way than just talking about it on the campaign trail. we know there has been a lot of rhetoric of course on the campaign trail. but we also need to remember that the bilateral relationship between china and the united states is the single most important bilateral relationship in the world. remember, china also holds $1.1

trillion u.s. dollars in treasuries. it's been quite interesting, china is still a relatively poor country, and the united states is the wealthiest nation in the world but the u.s. has come to rely upon the poor country, china, to finance its deficits. if china were named a currency manipulator, if a tariff were put on chinese exports -- >> penny pritzker this morning was saying she had been speak to a chinese delegation and said, well, we would have no choice to retaliate, not enthusiastically, but that's the way of the world. >> it wouldn't be very productive for the world economy if two of the largest nations in the world -- >> it would be very negative? >> it would be very negative. china has adopted now pretty much a strategy of wait and respond. they haven't done anything. mr. trump hasn't done anything. we must also remember that china

has a lot of power in its toolkit, you know? think about the tpp, which has collapsed. now that's been replaced by a china-championed regional trade pact, basically some 50 countries i think will sign on. >> hasn't donald trump just handed, asp penny pritzker was saying, who has stepped into the vacuum created by the collapse of tpp? china. so far from weakening, hasn't the first thing donald trump said he would do on day one, hasn't it strengthened china quite considerably in its region? >> you know, china is the largest trading nation in the world. so tpp in its initial form had 12 countries, not including china. so it did seem strange to the chinese that the trans-pacific trade partnership excluded the largest trading nation in the world. >> because it was strategic to offset china.

>> well, you know, u.s. and china are economic partners but strategic competitors. so we must remember that. so now countries in the region, including korea, japan, australia, the philippines, which had been under the u.s. security umbrella perhaps have to rethink whether they can count on the same level of reassurance from the united states in terms of strategic alliances. >> that must be creating a lot of anxiety. >> there has been some anxiety. they have to rebalance their relationship with china and with the u.s. >> there's a global supply chain these days. couldn't china in the event of the kind of trade war we've just been talking about, couldn't it in effect stop production of the iphone tomorrow? >> it could. it would hurt apple first and foremost. it would hurt consumers around the world. if tariffs were put on chinese

exports to imagine, you can imagine what that would do to inflation in the united states, what that would do to consumer sentiment. so many american companies have invested tens of billions of dollars in china. and their production, their supply chain would be hurt first and foremost. >> so are you saying that china and the united states are like siamese economic twins, they're simply condemned to get along? >> it's a symbiotic relationship, right? for the past many years, china has exported huge quantities of goods to america. and china then recycled all the winnings, earnings from exports into u.s. treasuries, helping keep u.s. interest rates low so that americans could buy more chinese goods. i suppose a virtuous circle, in a way. but these imbalances cannot get too large, because as we remember, during the financial crisis, some of the imbalances got so large, and then we had the implosion.

but these days, roger, i must say, it's very interesting, as i travel around the world meeting with many jpmorgan clients, they're telling me china at least in the near term is not a threat to global growth. in fact that's a big departure from a year ago this time, when china was suffering from a major collapse in the stock market, after the currency devaluation, august 11th of last year. everyone at that time, a year ago, cited china as a near term threat to global growth and people were looking for possibly a china implosion. but these days, china seems to be a sea of calm. and if you look at gdp growth, the leadership at the beginning of the year set a gdp growth target at between 6.5 and 7%. guess where we are at gdp growth these days. 6.7 at the first quarter.

6.7 at the second quarter. and 6.7 in the third quarter. so remarkably stable. >> so the economy has stabilized, turned around in some sense? >> well, the economy has stabilized because of extraordinary fiscal and monetary stimulus. we also had an amazing recovery in the housing market. on top of that, the service industry is driving the economy. these days the service sector accounts for about 51.6% of gdp. and in the past, manufacturing was much larger, over 50%. these days, we have the manufacturing sector becoming much less important while the service economy is powering ahead. so that actually speaks very positively to the rising middle class, rising affluence, and also the luxury industry in china, as everyone knows, has been booming. of course we had a slowdown in the recent two years. but compared to five years ago or ten years ago, the trajectory

has been very, very positive. >> don't china's leaders know they need 7% growth in the end for survival, that if china ever went to 3 or 4% growth, and with this ever more sophisticated middle class, that the one-party system could look more fragile? >> well, you know, that gdp target has been a moving target. it used to be 10%. and then it came down to 8%. now it's at 7%. so as china faces more demographic challenges, as the country's economic base gets larger, i would say the growth rate would definitely slow. so if you think about it today, let's put this until the global context. gdp in china today is 11 trillion u.s. dollars. the u.s. gdp is $17 trillion. china is growing at 6%, the u.s. is growing at 2%.

>> 3. >> just looking at today's numbers, roger, china basically is adding about 700 billion u.s. dollars to is 700 billion? that's basically the size of the dutch economy. so every year china's adding 700 billion. >> adding the netherlands to that. >> yeah, every year. >> i hope there's none of those in the audience. >> so that's basically 35% of global growth. the u.s. is a bigger economy but it's growing 2%, 3% but it's adding about half of that, right? 50% of gdp to global growth. >> talk about luxury a moment. there have been warnings that there's a period of rapid growth. there was concern about the

future of the fashion industry in china. how do you see the possibilities today and the outlook and where do you think -- where do you think the greatest potential lies? >> china's consumers have developed this love affair with everything luxury. this basically started 15 years ago. now -- >> is that a cultural thing? >> i think it's a cultural thing. remember, when i left china in the '80s to come to harvard college, at that time i still remember china had colors. everyone wore black, blue, gray. everything was uni-sex. men and women, you couldn't tell. there was no cosmetics sold. the luxury industry, it was money.

in country and outside. they account for the global industry. china's consumer now accounts for 30% of the market. the americans are the second largest grouping, about 24% followed by the europeans, maybe 18%. >> so china is almost double the europeans? >> absolutely. just like china's contributions to global growth is more than u.s. and europe combined. of course, we all have to remember that china's consumer travels so much these days. in 2016 about 150 million chinese people would travel overseas. and that compares to the peak in japan back in the 1980s when 16 million japanese people traveled

in the peak year. that's ten times. china's population is ten times larger than that of japan. 1.3 billion versus 120 million. the chinese consumer, everywhere they go, whether it's paris, milan, london, new york, they spend more than any other visitor to these places. but the industry is shifting. in the first five years we have had rapid, tremendous growth. some of the companies were growing 35% a year from 2010 to 2014 and then we had the campaign kicking in in china. so now the industry is what we call the new normal. growth rates will be lower. in 2017 and 2020 the growth rate of the industry will be 2 ou 3%

rather than 20 or 30%. the millennials in china are just like millennials anywhere else. they're tech savvy. they're sophisticated. they have discerning taste and they travel. they are very much engaged with social media. so i think all of these are changing the landscape of the lucks ourly industry in china and the consumer as they travel are changing the luxury industry. >> so the disruption campaign to wear a rolex or beautiful sh chanel, that's too conspicuous. >> they used to call china the bling dynasty. >> not the bling dynasty anymore? >> no, i think people have a more subtle taste in what represents their new social

status. >> what's hip? what's cool? >> in the olden days people had the labels on the sleeve. they used to cut it out just so everywhere could see they're wearing a product, but these days people are becoming much more sophisticated in their taste. they want to wear a wonderful made to order suit, they want to feel the luxury of the fabric but they don't want anyone else to know what they're wearing, you know? so i think the chinese consumer has gone from conspicuous consumption to self-reward. they also used to buy for gifting to government officials. of course, that's all gone now. so the market has undergone rapid shift away from gifting to self-consumption and the pricing points that people are willing to pay have really come down. in the past people would equate

quality, price, with quality. so the most expensive -- the more expensive the item, the better. these days people say, look, i don't have to pay this much for a watch or for a hand bag because they're using their own money to purchase these goods. but the other shift is that -- >> doesn't that mean profits are going to come down? >> profits have come down. executives in this room, you know, profits or profitability of the industry has peaked maybe two years ago. so we have had a dramatic shift in terms of which brands are popular among consumers. we also have had margins coming down. although the industry is making huge sums of money. the luxury industry is still very well positioned. margins are still very well high. looking at marginmargins, they' still very high. they're nowhere near what they

were in 2012 and 2013. >> there's the rapid strengthening of the dollar that we were seeing, is that going to affect things a lot in your region? the dollar is strengthening pretty much in pretty dramatic fashion. people predict that could continue through the next year at least or more. what impact's that going to have? >> it will have a dramatic impact. the luxury industry in many ways is about currency arbitrage. in the wake of the u.s. election we have witnessed a dramatic appreciation of the u.s. dollar against just about every currency. >> why do you think that is? >> well, because mr. trump said america first. also, we have had in talking about cutting taxes in america, which would boost corporate profits. also, if you see the curve in america has really risen. inflation has ticked up.

$1 trillion on infrastructure. for u.s. ten year treasury, something i watch every day, you know, on election night was 1.7%. today it's approaching 2.3%. so with the new curve steepening we're seeing inflation concerns coming back, we're seeing money being poured out of emerging markets to come back to the u.s. because we're on the cusp of a u.s. fed rate hike just in the coming days in december followed perhaps by more hikes in 2017 and as u.s. interest rates rise, they're taking money out of countries where the interest rate is zero and putting it into u.s. markets. that means asian currencies has taken a tumble. every single currency from the japanese yen to the malaysian

ringet and chinese yuan have taken a beating in the recent days. >> what's that going to mean? >> well, it's going to mean these people, these travelers when they go overseas they'll have less money to spend, particularly when they come to america. however, we must -- in the china context we must remember we cannot be too fixated on the bilateral relationships between the chinese yen and the u.s. dollar. we need to look at a trade weighted basket. that measures the chinese yuan against 13 currencies in a trade weighted basket. against that basket the chinese yuan hasn't depreciated so much. the euro, for example, has been very weak against the dollar. that means more travelers from china will be headed to europe rather than the u.s. the pound has come down quite a lot against the dollar in the wake of brexit. again, everyone here can stay

for their own business or perhaps business in the past couple of quarters have been very good in the u.k. because of the weakening british pound. japanese yen, it's an interesting case in point because earlier in the first half of this year it was very strong so we're seeing a decisive move on the part of the chinese consumer to stay away from japan. now the yen is weakening from 101 to 13 today. they're saying it could head to 120. so many times travelers will be heading back to japan perhaps in the coming few months. >> yeah. >> so they go where the best bargains are. the chinese consumers are extremely astute in terms of analyzing not just the products they wish to purchase but also the currencies of the countries they are traveling to. >> how anxious are you about the global economy sitting in hong kong allocating these trillions,

listening to your client's anxieties and concerns, observing all the things that president-elect trump has said on the campaign trail, the volatility in politics, south korea, how anxious are you and what kind of investment decisions that's not indiscrete that you're advising? >> even though there are lots of concerns and uncertainties, roger, i remain quite optimistic about the u.s. economy and the global economy. also, people in the luxury industry, they have to be optimistic because you're selling a dream. you are selling authenticity. you are selling heritage. you are selling a lifestyle. if you become all doom and gloom, what would your consumers say? why would they buy your brand? why would they stay at your

hotel? why would they travel with you? so i think people in business, if you're in luxury industry, you have to be inherently optimistic. and i do think there are reasons for optimism. just taking china, it's growing 9% a year. that's remarkable. you have people are aspirational. i tend to compare the china today with the china on the left over 30 years ago. it's night and day, you know? and china's consumers, even though their tastes are changing, evolving every day, they're for quality, for authenticity, heritage will remain. the luxury industry is moving from fashion to jewelry to hotel

hospitality to cars and there's a huge future for the industry. >> on that up beat note i'm going to throw it out to the optomists out there. who's got a question? yes, sir. >> some economies link inequality with the success of luxury markets. do you think that the recent downturn in the luxury market in china is somehow linked to anti-corruption and the efforts by the government to renew inequality in china? >> well, you know, inequality in the world, income gaps basically have risen, right, in the last many years, especially in the last five years i would say. but in china you have the same

situations, the income gap between the have and the have notes. so when president xi jinping came into power, he released the anti-corruption program which has been very popular among china's people, and he had to do it. basically he had to cleanse the system, otherwise, the system could collapse, you know, with corruption being so prevalent. now four years on, you know, we have a degree of success in the anti-corruption campaign. in the past maybe 20, 30% of goods were going towards officials to curry favor and win contracts. that's all gone. that shouldn't have happened in the first place. now what we have is a new normal for the luxury industry. people are buying for self-consumption, for self-use. you do have, you know, lots of

wealth being created in china every day and the country has more billionaires than any other country but america. and the newly rich chinese have several aspirations to consume quality products, they consume quality things and they buy things for self-reward. the initial anti-corruption campaign wasn't targeting the luxury industry. now that the base has normalized, i think the luxury industry in some cases, you are seeing them getting rejuvenated but also i think executives should know you should never blame the macro environment for the failure of a particular business, right? it's down to execution. even when these more challenging

times, some brands are doing very well. so at the end of the day we need to look inwardly at the management, at your brand, at your creative designs to see if you're catering to the consumers of today. it's down to the execution of your team, of your particular brand whether you're appealing to the new consumer of today. >> another question. yes, sir? and then -- >> thank you. this morning we heard about u.s. needing china as an ally against north korea. could you comment on the chinese/north korean relationship? >> well, it's been a tricky relationship. clearly north korea is very dependent on china for food supplies, energy and many other things.

china, of course, has a degree of influence over north korea, but i don't think anyone in the world has control over what north korea might do. so that creates a very sensitive geopolitical situation in north asia with south korea, japan right there near north korea. china, of course, has a pretty long border with north korea as well. so at the end of the day this remains a geopolitical flash point. >> they're going down the river. going into north korea.

it's cold energy. there's a huge amount of dependency on china. this situation, the stalemate has lasted for some time and until the leadership changes in north korea, until the regime changes, i'm afraid the situation will remain one of the biggest uncertainties in north asia. >> you could bring -- china could bring north korea and it's all over. >> well, no, you can't. the collapse of a north korean regime wouldn't be good for anyone, right? also, you wouldn't want to contemplate a possible a ghal mags of north korea and south korea. >> why not?

>> very different income gap. it does, of course, but i think given the leadership in north korea you wouldn't want to get linked up to a democratic south korea. >> madam, and then we have to stop. i'm sorry. >> i wonder if you could speak to intellectual property law in china and what you think the government is prepared to do. you spoke about authenticity. we all know that counter fits, especially on line, is a massive problem especially at the luxury level. whether you think enforcement of intellectual property law could be a weapon in the back and forth if trump were to initiate policies that angered the government. thank you. >> well, intellectual property in china in the past was a huge issue. it remains an issue, but chinese companies now are beginning to create intellectual properties. so they want to see their own

i.p. protected. so that's why we've had a turning point, right, in china's attitude towards protection of intellectual properties because more and more chinese companies are filing patents, they are creating brands. they don't want to see their products, their technology copied. so i think this is improving. also, as you know, alibaba is the largest marketplace for online shopping in china, and this in trying to clean up the website especially taubau which is the c 2 c which had a lot of fake products in the past, and i think that issue is being resolved. i think china knows to become a responsible stakeholder in the world economy, to be the second largest economy in the world, it needs to be -- it needs to act responsibly towards intellectual

property and there have been many lawsuits, many actions against counter fit products. the situation is evolving, it is improving. it's better than five years ago or ten years ago, but i think consumers, the media, the brands will have to keep pressure on china's government in their effort to protect china's intellectual properties. they're a big creator of the intellectual properties. they want to see their own creations being protected. i think at least now as far as i can see the interests of governments, consumers and brands are much more allied compared to ever before. >> thank you very much, jing. thank you, everybody. >> thank you.

this week on c-span, jerry greenfield talks about creative and responsible business practices. >> the idea that we couldn't sell enough ice cream in the summer in vermont to stay in business, that forced us to look for other markets. >> wednesday night, former vice president dick cheney and leon panetta oftn the future of the defense department under president-elect trump. >> i think the challenges are great and i think we have over the last many years done serious damage to our capabilities to be able to meet those threats. >> we're moving in that period. there are a lot of flash points. and a new administration is going to have to look at that

kind of world and obviously define policy that we need in order to deal with that but then develop the defense policy to confront that kind of work. >> thursday at 8:00 p.m. eastern, a look at the career of vice president-elect mike pence. >> and we have stood without apology for the sanctity of life, the importance of marriage, and the freedom of religion. >> on friday night beginning at 8:00, farewell speeches and tributes to several outgoing senators, including harry reid, barbara boxer, kelly ayotte and dan coates. this week in primetime on c-span. we have more now from the foreign policy and defense with national security experts talking about innovation and cyber security challenges.

welcome back. my name, again, is chris griffin, executive director at the foreign policy initiative. i ask that you kindly make your way back to your seats. once again, as i courtesy i ask that please make sure you put your cellphones in silent mode for the courtesy of those around you and of course for our speakers. the next panel discussion will be on opportunities and challenges for defense innovation and reform. this really will continue on some of the threads that came up in our first discussion between chairman thornberry and senator talent, which should be no surprise. the major topics they discussed were immediate challenges to defense readiness today and the points that chairman thornberry raised, as he described it, the eroding technological advantage enjoyed by united states forces going forward. our group will be moderated by dr. thomas mahnken, the chairman and ceo for the chairman of

senior and budgetary perspectives. ben fitzgerald is with the center for a new american security, if i can get that correct. rebeccah heinrichs with the hudson institute. and last on the panel is mr. rob weiss who leads the skunk works team at lockheed martin. i greatly look forward to your comments. thanks for joining us. i ask you to join me in thanking them for joining us today. [ applause ] >> thanks, chris. the panel's topic or charge is a very apropos one, not just as was brought up by chain thornberry and senator talent this morning. at least since world war ii, the united states has sought to maintain a qualitative advantage

over prospective competitors and adversaries. that was the focus of a lot of effort during the cold war. over the last quarter century, the u.s. has enjoyed unquestioned dominance, at least from a qualitative standpoint. in the 1990s, as charles krauthammer famously dubbed the unipolar moment. and then over the last 15 years, the focus of defense has been quite, quite rightly, counterinsurgency and counterterrorism. but now, you know, we face the reemergence of competition and increasing possibility or probability of great power conflict, whether because of russia's aggression in eastern europe, china's assertiveness in

maritime asia. and so i think it's quite appropriate, as we close out the obama administration and look to the trump administration, we kind of take stock of where we are and where we need to be. so certainly in recent years, the obama defense department has placed emphasis on the so-called third offset strategy, the defense innovation initiative. and as we approach the end of the obama administration, i wanted to ask our panel, you know, how they would take stock of those efforts from their -- you know, from their standpoint, whether it's running a science and technology program at a think tank, focusing on missile defense and other areas, or from defense industry. where do we stand with the third offset strategy and whatever it will become in future months and

years? >> so there's a lot to unpack in there. and i think sort of my bottom line up front would be, i think that leadership in the pentagon and also frankly on the hill have created a window of opportunity for some fairly significant change. we're going to see i think at noon today more details of the ndaa for 2017. but we already have seen some fairly significant structural changes. and also under the leadership of secretary carter and deputy secretary work, we've seen a focus on the need to improve our military technical advantage. that's great. it's unclear to me if that's actually going to move forward or what it's going to look like. while it's great that we all have a common understanding that we need to improve, how we get there is not clear. the third offset strategy i think is important, and helps us address one very particular problem, which is our ability to continue to project power, conventional military power. that's one thing that's separate from in some ways all this other

innovation conversation. a lot of those actions have been very good. the dca instantiation has been great. those have been innovations sort of outside the bureaucracy, around the bureaucracy, we're going to create a new office. what we haven't seen is a fundamentally different approach to how we generate technical military advantage and how we pair that military, that technology, with new concepts of operation. and i think that that's what we need. i'm happy to unpack that in detail but i don't want to monopolize the whole conversation. >> rebeccah? how about you? >> happy to be here. if i could go back a little bit to 2014, when then secretary of defense hegel introduced the third offset strategy, he talked about what the threats were and why we needed this third offset strategy. some of the things he talked

about were that sort of less sophisticated actors like al qaeda and hezbollah were beginning to challenge the united states in ways we haven't seen before. then of course on the higher end, near peer competitors china and russia were advancing in military modernization programs in ways the united states hadn't seen in decades. and then he listed some specific technologies that they were spending a lot of time and resources and energy in. they were in areas in which they saw a vulnerability that the united states had so they were taking advantage of that vulnerability and exploiting it. and so they were developing new missile technologies. advanced aircraft, submarines, longer range, more accurate missiles. he mentioned missiles multitimes. the undersecretary i think has been one of the most helpful administration officials in laying out specifically where we

are get behind. and i like specificity. and i think in the age of trump we're going to have more specificity and less vagueness, which i'm excited about. that will i think do a lot to help us move forward so we know what we're talking about here, so we're not just talking about things in vague terms. undersecretary kendall mentioned in a memo he sent over to congress that the united states was getting behind in missile technology, that he specifically mentioned china, but then made clear he wasn't only talking about china, but china and russia were challenging the united states in space. and that posed a unique problem, because everything else we do in the pentagon depends on what we do in space. space is unprotected or does have vulnerabilities or getting behind or others are challenging us in this particular domain, that portends very, very bad things for the united states across the rest of the pentagon.

and so i think that is going to be, if i had my way, i think that we're going to be focusing more on space, what we do in space, national security space, surveillance in space. i think that, you know, president-elect trump is a new kind of president-elect, will be a new kind of president. sorts of things -- we sort of have gotten used inside the beltway and inside the pentagon, we sort of know what each other means when we say very vague terms and phraseology where the new president is going to want to be convinced and persuaded. everything is going to have to start doing their homework when we talk about what we want the administration to do, and that's a very good thing. it will have to make sense, it will have to be the most cost effective way to do it. things like oh, we just don't put kinetic kill capabilities in space because it might be provocative, i think you're going to have to make your case if that's what you think. i take another perspective and

say, we can't just have passive space capabilities, we're going to have to have more active defense capabilities in space. and so i think that's going to be the next phase in our ballistic missile defense capabilities in addition to directed energy technologies. the mokv we're putting on the gmd system to protect the united states homeland. i think we're going to see more investments in that. and so all of this means that we've just -- we've taken too long to come to this place where it's no longer a matter of should we do it some day. it's that we have to do that, there are adversaries that are challenging us in those ways and we have to do that. my last point on this, when we began to talk about the think tank world and inside the pentagon, how we're going to pay for this new offset strategy, a lot of people talk about legacy systems, we'll build legacy systems. but now we see, oh, no, we're still fighting wars in which we

need these legacy systems, the f-35 isn't quite ready so we're keeping the a-10 now, which i'm very excited about because i love that airplane and so does john mccain. so it's going to be around longer, we need it, we're using it. so now where are we going to get this money? that means of course we'll have to increase the top line. i'm optimistic that with the new administration we will be increasing the top line and we won't just be bill paying with legacy systems for advanced technologies, we'll have to do both. that means getting ready of the bca, which i think is the direction that we're headed. >> thanks, rebeccah. rob, where do you think we stand with defense innovation more broadly? >> thanks, tom, great to be here this morning representing the defense industry in the conversation. i would like to begin by talking about where we are in the nation from my point of view. one of the great things in my

job, i get to go out and interface with many of our young women and men who are defending the nation. and i would contend that we remain to have the best fighting force across the globe, bar none. we have the best people. they're well-trained. and they frankly have the best equipment compared to any other nation in the world. that said, there's real challenges, many of which we talked about earlier this morning by chairman thornberry. we're spread too thin. we have a readiness decline, and we have an acquisition system that needs to be more agile. specifically regarding the third offset, we are investing in virtually every technology that's highlighted in the third offset. hypersonics, big data analytics, open system architectures, autonomy, big energy, on and on.

and we're demonstrating a lot of those technologies right now, our competitors and teammates across the defense industry. i believe we have a qualitative advantage in the technology today. the question is how do we field it more quickly, i believe. and when we look at the adversaries we face around the globe, a lot of this is presence. we're talking about western pacific, eastern europe. in order to enable that presence we do need substantial force structure that has been on the decline for many years now. and i think that's one of the big challenges, is transitioning this technology to a larger force structure as we move forward. that will in my view enable us to maintain the qualitative advantage across the globe. >> a response to that. i think while we're sitting here, we have a fundamentally like strategic problem.

while i'm very sympathetic about the need for acquisition reform, i believe the need for that, we've seen some positive steps in the last couple of years, we've had an acquisition stop that hasn't been great since arguably like the 1970s, yet we were able to maintain qualitative advantages. what's changed? we've seen in the latter part of the 20th century we still had a neat strategic alignment between our strategic needs, which was really until the fall -- until the end of the cold war, containment. we had a fairly finite set of technologies we needed to invest in. we had very clear business models in terms of requirements defining threats out of the defense industry and lock that in with export controls. none of those things pertain today. we have a range of threats from terrorism to cyber threats to great power competition. we have shown no appetite to pick which ones of those we're going to try to address, we want

to do everything. we have a much wider range of technology as we've heard. to your point, we still need to maintain legacy systems, we can't walk away from that. we want all of those things as well. yet we're still trying to using the same business models. it doesn't add up. that's what we need to look at, not just acquisition reform or the top line. what's our approach, how are we going to make those choices? we have not yet had the conversation. >> that's a topic i want us to address in a minute. but before we get there, i want to pick up on something a couple of you mentioned, which is, yeah, we can't do it all. so what are the areas -- and rebeccah addressed this a little bit, but what are the areas that are particularly promising in your view as we think about innovation and we think about maintaining an advantage going forward? again, i'll be kind of straightforward about this and i'll go back down this way. >> i'll answer quickly, given that i just started monologuing spontaneously. i'm increasingly skeptical of

trying to pick technology winners. i don't think we can do that. things change too rapidly. we need to maintain a broader portfolio of investments in a range of technologies and figure out internal methods where we can be more agile in deciding, based on the threat environment we're going to put these things forward or leave these things back. we need to take things from prototyping and move them forward quickly. i'm more interested in that type of innovation. rather than saying, like lacers. i know they've been five years away since 1972 but they're really five years away. i don't know. and i don't know if we'll be facing an enemy that addresses that. the one gap that i see in what we do is the ability to incorporate commercial technology and adapt it for military purposes. that's where we have the most opportunity to move forward. it's great to see that there's commercial technology and they're moving ahead. we have no process for actually adapting that for truly military purposes and to generate unique military advantage from

broadly available commercial technology. >> rebeccah, you mentioned space and missile defense. would you add to that? >> sure. again, i'm encouraged and optimistic by the new opportunities that this administration means for the pentagon, because we get to sort of take a fresh look at where these vulnerabilities are, where is the united states being targeted. again, i talked about this is the new missile age. i talk about missiles a lot, not because i randomly selected them of all the different threats, but because that is becoming how, all the way from north korea on the low end to china on the high end, that is how they they're investing in these technologies in order to coerce and deter and dissuade the united states from doing things in the region. several months ago i had the privilege of authoring a report that had a senior review board including the former director of

the missile defense agency, former administrator of nasa, so a whole slew of people who were very familiar with the high end threats, the missile threats, the acquisition process and what would need to be done in order to close these gaps. they all agreed with the findings and recommendations in the study. what we found was that the united states, it's not a matter of can the united states -- are our engineers smart enough to come up with technologies that can close these gaps. of course they are. of course they are. it really is, if you go back to what is the problem, what is the hindrance in order to move forward with some of these more advanced technologies. and it's been policy. the united states has been intentionally holding back in particular areas of advanced technologies for fear of becoming provocative or of trailblazing in a particular area or of weaponizing space, some of these buzz phrases we've heard for many decades because they simply don't make sense anymore, which is where the chinese are going, the iranians, et cetera.

some of these challenges get to the resources, there are problems with resources, but i think that's a shorter hurdle that i think we can clear. i think some of the bigger problems have been a matter of policy. and so i'm excited about the opportunity that we can have in terms of changing those policies and actually we talk about america's technological edge or technological advantage. i like to just say american primacy. once you sort of say that go committee is that out of the way, that's what we're doing, we're moving forward in that way. we're not going to maintain peer status with china and russia. we're moving forward, we're plowing ahead. and then i really do think the sky is the limit. it comes down to where are we going to get some of the money. the budget control act has always been confusing to me because nobody wants it, the

congress doesn't want it, the president doesn't want it, yet here we are, we have it, the president threatens to veto bills that go above the budget control act even though he says he doesn't want it. the conference report that was just settled, i don't know if these figures are official but this is what the media is reporting now, it's $3.2 billion above the pb. so congress is excited about spending more money on the pentagon, which it should, if we're going to spend money anywhere, it's on american security. so i think we'll see what happens with president obama in his last few weeks here and what he decides to do with this bill and if we can pass it. i do think it means we're sort of headed in a different direction. >> rob, how about you? >> well, i think rebeccah made several good points there about maintaining an american primacy. going back to your point, ben, about the spanse of tasks that we're asking our military to do today, i don't see it changing. i think we're going to have to maintain a capability against

near peer threats, major regional actors, and counterterrorism. and so we've got to be able to address all of them. and i think the priorities and what we invest in as a nation to address those priorities are very important. so clarity in the national military strategy i think is something that is going to be key. then we're going to have to budget accordingly, to rebeccah's point. that will enable us to do what we need to do around the globe. i think the other points have been made, we are invest in these technologies, as i mentioned earlier. we are prototyping and proving out these technologies. we're seeing mature capabilities that now need to transition to programs of record so that we can in fact bring about the force we need. i can tell a lot of stories of skunk works, one that just pops into my head, i think the f-1/17, when it was fielded as the first stealth fighter, it came out in desert storm in the

early '90s, and a tremendous capability that demonstrated something the united states had that no adversary had at the time. but it began with a program that many of you may not know called have blue, that was the prototype. and it proved that we could actually fly this hopeless diamond, as it was called. we proved that out. and then it transitioned to a program of record. and i think that's what's going to be key going forward, is we prove out these technologies, that they actually transition and move forward quickly. >> and there is a challenge there, right? so the challenge of being in an era of budgetary constraints on the one hand, there's a lot of reluctance to transition to programs of record. on the other hand, there's a different set of challenges coming with opening up the budgetary spigot, right? the tendency is, well, if you

have a lot of money, just keep doing more of the same, perhaps less urgency for doing things differently. so -- and maybe we'll start with rob and come back this way. talk about a little more about the budgetary dimension of all this. you know, how big a constraint is the budget right now? and, you know, what's the best way to move forward sensibly? >> well, i think i might start by answering your question, we talked about a little bit about f-35 earlier today, and if we think about just in the air dominance spectrum, for example, so we have a program that the nation has invested considerably in over the last decade, the f-35. it is now, we recognize it's had

some challenges along the way. it's now a mature, capable system. but the rate that we're buying airplane is insufficient. all the services are ready for new equipment. and so we should start by buying the leading edge technologies that are already available to us today, because that will not only provide us more capability, but it's going to get us out of these older airplanes that are costing a substantial amount of money to maintain and are insufficient against future threats. so i could begin there. and again, speaking in the air dominance arena, the next step is to modernize these airplanes. over the life cycle of all aircraft, all assumption aircraft programs have had robust modernization, continue to add capability over its life cycle. we need to be doing that with our more advanced systems as well, not just airplanes but everything we've invested in.

again, coming back to air dominance, we're investing in those technologies today. someday we will field another fighter. but right now we should buy the one that's available to us and get on an aggressive modernization path. so the budget is not there to do that today. and frankly, coming back to the f-35, it becomes the bill payer for everything else we want to do. that's not the best way to go about an acquisition. >> rebeccah, you pointed out quite right that dca makes no sense other than the fact that it's the law of the land. assuming, and i think it is an assumption, but assuming that that changes, how do we go about spending money the most effective way, the most responsible way, but also the way that gives us the greatest advantage? >> sure. every time i talk about wanting to get rid of the dca and talk about how we need to increase the defense budget, people immediately think i don't care about waste, i don't care about

defense waste, i don't care about acquisition costs. that's not true, we can do both. we have been planning and spending money in ways that don't make sense at all in the pentagon. i think everybody in the room would agree with that. some of the things we can do differently is buy more of a particular item at once. this sort of buying a couple of items, procuring a couple of them and then buying a couple of more when we need them and letting production lines go cold, having to restart them and finding the people to build them and the expertise to build them, that is incredibly expensive. it is a -- it's incredibly shortsighted. it's not thinking through in the long run how the country can spend money more efficiently. if this is how families ran their own personal budgets, we would, you know, see a lot of bankrupt people. so we need to start thinking

about how do we spend, how do we plan, how do we prioritize. we talked about the f-35 a little bit. but i also heard, as we put the together the new budget, as the air force was considering major big-ticket items, i heard that -- and these were just people thinking out loud, but maybe we should kick the new icbm down the road, the gbsd down the road, because we need to pay for the f-35 now. why in the world is the f-35 competing with our nuclear triad? that doesn't make sense. we need to have the f-35 fighter jet. in no reality does it make sense to punt on what i would argue is quite possibly the backbone of our nuclear triad, something that we abilities need and we can't afford to kick it down to the right. we need to prioritize programs, figure out what the united states is going to prioritize, what we need, what we can no longer afford to punt on. then we need to figure out how many of these items we can buy

at once so we're not having this trickle effect and just creating a lot of extra cost on that end as well. i'll leave it at that. i've got more ideas but -- >> okay. >> so i'm not sure about that. yes, we want efficiency in the programs that we do, but we've seen certainly since the end of the cold war this push towards efficiency, a sort of putative efficiency, we'll have a single role aircraft, and that's less expensive. i'm not sure that turns out to be the case. not criticizing the good work done by lockheed martin, but from a dod perspective, was that the right approach. if you have an aircraft that has a cost per hour flight of $40,000, and we're going to potentially be rolling that out to people in $10,000 trucks, that's not a cost-imposing strategy on the part of our enemy. that's a cost-imposing strategy.

other people might question it. i agree bca is irresponsible. we need to think about what is an actual portfolio investment strategy across this range of things and what are the ways to buy down risk depending how you count it. since early 1990s, tax payer funds with zero capability, look at future come bast systems, cost overruns. i don't think we're starving for dollars but i don't think we have the right approach. how do we have a more diverse mix so we don't get into mono cultures where we're putting in platforms that assume efficiencies over 50, 60 year life cycles. we don't know what's going to happen next year. we are continually surprised in

the strategic environment, and we need to have a portfolio that allows you to respond to that. it's going to be expensive and less efficient as we go but less likelihood of massive, multi-billion dollar failures or strategic failures in the future. >> okay. we have about 15 minutes left for this session. if previous sessions are a clue, you probably have lots of questions to ask our panelists. so we've got microphones out here. sir, in the front row center. >> my name is dick kaufman, former cia officer, u.s. marine. i've been in the private sector. you all are very smart, but i haven't heard one word about the ground forces who do 80% of the fighting, 80% of the dying and get 1% of the budget. 1%.

our guys out there are still using the same family of infantry weapons that i used in vietnam. i'm hearing about icbms, f-35s. we have to put more attention i think and energy and resources into the people that are doing the fighting. thank you. >> responses? >> i don't think you'll find anybody here that disagrees with you. i think your point is well taken. i think, you know, it's exactly right. one of the best ways to increase moral of troops is give them newer stuff, better stuff. make sure they are protected and well cared for. i certainly don't disagree with you at all, and i think your point is incredibly well taken. >> we've actually been investing a lot in the army and a lot in the marine corps but for a

particular type of war, the wars we've been fighting, right? i've done this a couple of times in a couple of contexts. take a picture of a soldier in 2001 and compare that with a soldier in 2016 and you'll actually see a lot of change. i know the army likes to -- and marine corps also -- i say that as proud son of a marine, but technology does matter in ground combat we've invested in some areas of technology. the body armor that soldier, marines, airmen, sailors too, marines is much better than it was 15 years ago. tactical awareness, commanding

control, all that is much better than it was 15 years ago. but other areas that could be crucial or decisive in a high-intensity conflict against a capable adversary, things like electronic warfare. things like active protection systems for armored vehicles. because we've been investing in other technology, those areas have been deferred, right? we retrained whole artillery units away from artillery because of the exigencies of iraq and afghanistan. now we're entering a period where artillery and artillery threats are more important. i don't know it's lack of investment. we've invested for a set of wars we've been fighting. i think the challenge for the army and marine corps, requirements in the future likely to look much different. >> i will say this, though, if

hook at percentage of budget and where we're spending it, the army has it, in terms of percentage, in terms of what things cost. that's not necessarily indicative that they're getting everything that they need, but, again, the point is well taken. the army tends not to. i will say some of the things i mentioned specifically, our dependency on space. who is dependent on space? the army is dependent on space. you want to take care of our guys, they need to see. they need to see where the enemy is moving and what they are doing. that's why i talk about and try to emphasize a little bit on surveillance as well. you have to make sure the army has access to great technologies that might end up in the budget of the air force, for instance. >> guys on the ground needs situational awareness -- [ inaudible ]. >> that's exactly right. >> not surprised by a affirm bush of 17 raggedy taliban.

>> there are going to be structural differences, structural changes, i think, that we are going to have to figure out over the next couple of years as we advance in these technologies in order to make sure that the people who need them most actually have access to them. >> two important points. our conversation has been self-deterministic if the united states does these things then we'll win. we're also engaged in a multi-party conflict here where other people get a vote. we're seeing advance of commercial technology has really enabled non-state actors in the ground domain. it's not that hard for our adversaries to have encrypted coms, their own satellite imaging. that's available now. they have moved ahead relative to us more than we've seen in some of the other domains. the other thing i would say, we'll hear with general mcmaster, he'll disagree with

what i'm about to say. the army is its own worse energy right now. the army doesn't have a clear vision of what it needs to do in the future. it hasn't started vehicle modernization program. it's not that there's not money for it, they don't know what's there to do, that's fundamentally problematic. the army today is where the marine corps was in 2010. the marine corps has done great work between 2010 to 2014 figuring out here is what the marine corps needs to do and the army is less clear. the frustrating thing, in eastern europe, they can articulate that vision and hopefully will come good capability. >> did you want to weigh in? >> quickly. first of all, thank you for your service and thank you for recognizing the women and men out there defending our country in the army and marine corps on

the ground. i would just add, yes, we talked a lot about airplanes. technologies across surface, subsurface army, open system subsurface army, open system architectures, communications. we've done a number of demonstrations where it's all about communicating, what we're seeing in space, air, and putting that information in the hands of the men and women on the ground. that's key. we're going to continue to do that, those types -- advance those types of technologies. so i think we are addressing this. the other thing i would say, many of the things we're doing are related to special forces. not everything we can talk about in this particular form but there's a lot going on behind the scenes. >> thank you. like to move onto our next question. gentleman in the back on the far, far right. hold on.

you've got a mike coming. >> nicholas romero. my question is about protection against compromise of technologies. something that's probably not seen so much but is incredibly important to prevent bandwagoning from near peers. i'm wondering if you believe we're spending enough on that to prevent reverse engineering, compromise, we're seeing a lot of news about infiltrators. there was news yesterday about a german intelligence officer who was exposed in the domestic intelligence agency over there. and we've had very recent revelations of information breaches at the national security agency. i'm wondering if you see that the prevention of compromise and reverse engineering as a focus area or something we should spend more time on.

>> i'm actually going to go to rob first from an industry perspective. i'll give you the first crack at it. if anybody else wants to weigh in briefly, happy to as well. >> great. i'll be quick. cyber security is a top priority and security across the board for that matter. cyber is one of the big issues we are paying a lot of attention to. it's a continuous challenge, because the enemy gets better, we've got to get better. they get better, we've got to get better. we are continuing to try to keep that advantage versus what our adversaries are doing to basically steal our technology. so it's at the forefront of what we're doing every day. i would also say that there's an element of taking the fight to the enemy, if you will, that offensive cyber. so you don't want to just be playing defense all the time. there are things that are happening that will keep them

playing some defense. i'll leave it at that. but great question. at the top of the list for things we're paying attention to. >> do you want -- >> i think very briefly, i agree with everything rob said. also, we need to assume these things are going to keep happening. even if they aren't happening from espionage, people will figure out technology or something similar. we can't let the features of capability be the key differentiator for our military advantage. we need more diversity and pair with new and innovative concepts of operation. even if the adversary can reverse engineer technology, we can still kill them 27 different ways. >> next question, gentleman with the glasses. >> we've heard today quite a bit about acquisitions and engineering, but one of the other things the dod does is research. i want to ask the role of research and mixture of funding

and especially the new administration, i'm speaking about basic research, aims to yield, capabilities 10 to 20 years down the line. thank you. >> rob, you want to -- >> well -- >> basic research by definition occurs in academia and outside of industry. >> i think it's balance. does need obviously to be funding in basic research, which is going on. some of it in the skunkworks and advanced programs alike. we do some network. we tend to be in more six two, six three arena versus earlier technologies. there are parts of our corporation that are doing it as well as the rest of industry. but what we're trying to figure out is, you know, limited resources is where is the balance. when you invest in these early technologies, you want to see them mature. as the mature technologies are available, you want to

transition those into the program of record. the way i have our organization set up, we have a technology arm, we have a program record arm. i'm always looking for challenging the technology arm on how we're going to advance it to the programs of record. so great point. i think we're -- again, comes to finding that right balance of resources. we definitely need to continue to invest in basic research. >> the only thing that i would add is for the last several years, we have a lot of technologies that have been sort of in limbo in research and development that really, again, are ready to move beyond. so though i'm a huge proponent of investing in research for the next generation because you have to continually look ahead, we've got plenty of really good stuff. we talked about lasers, directed technology. but we always talk about how it's five years away, get some people who are serious about it

for a matter of policy and get some money behind it and see what happens to these programs that really have been five years away and we'll start seeing them up close. remember the airborne laser program. right before it was cut up into many pieces and sent away it shot down a missile. conops, people had problems, directed energy on a 747, had some questions about the concept of operations but we proved technology was doing what we wanted it to do, now we're looking at it on a more usable platform. that's just one example that we really are ready to go with some of these technologies we've been sitting on for a while. >> i'll just say that the united states' basic research capability, especially through the dod lab network is one of our key differentiators. and i worry over the four to

eight years, funding will be cut and we will be eating our own seed corn. we do need better methods which we can harvest things done and moving forward but shouldn't be at the expense of fundamental research. other people can't do it the way we can. >> the sign of any good panel is we leave questions on the table. i see a number of hands up. in the interest of keeping us on schedule, that will have to be the last question. i want to ask you to join me in thanking our panelists and thank you for the discussion. [ applause ] sunday, january 1st, in depth will feature a live discussion on the presidency of barack obama.

we're talkiking tweets, calls, e-mails during the program. and we'll have april ryan, the author of presidency in black and white. eddie glaude, author of democracy in black. and david maraniss, author of barack oba barack obama: the story. in 1979, c-span was created as a public service by america's cable television companies, and is brought to you today by your cable or satellite provider. >> general joseph volel on

military operations against isis, and u.s. relations with egypt and turkey. my name is chris griffin, with the foreign policy initiative. i ask that you would kindly return to your seats so we can begin our next condition. -- conversation. featuring general joseph votel, who is the commander of the united states central command and moderated by michael o'hanlon of the brookings institution. we'll give folks a couple of minutes to take your seats a couple of courtesy reminders before you get there. kindly make sure your phones are set to silent. however, do not necessarily turn your phones off. feel free to join the conversation on twitter, #fpiforum. more than welcome to do so.

if you're perhaps watching on tv, feel free to visit our website www.foreignpolicyi.org. one again, it's a pleasure to welcome general votel on crisis and challenge in the east and excellent moderator, senior fellow at the brookings institution and co-director on 21st century security intelligence there. he's the author of too many books to list in the time we have available but most recently would want to emphasize $650 billion bargain, the case for moderate growth in america's defense budget which i highly recommend to you. michael, thank you for moderating the conversation today and ask you to please join me in welcoming general votel. [ applause ] >> well, thank you, chris, and

good afternoon, everyone. it's a real honor to be with general joseph votel, give a brief introduction. i think many are familiar with his great work around the country and world when he was in uniform he was commissioned in 1980 after growing up in st. paul, minnesota, went to west point. spent a lot of time in various ranger units and activities early in his career and thereafter. also a lot of time with the 82nd airborne division, time in europe, including sarajevo, bosnia, some backdrop and kinds of missions slightly foreshadowed by that particular set of operations in the balkans we've seen him be preoccupied by in the 21st century with a lot of activity in iraq, afghanistan. and elsewhere. he was the combatant commander special operations command, now combatant commander at central command. a real privilege. general votel, as you surely know, you are widely respected and admired and therefore we're

looking to you for a lot of good wisdom in this key transition moment, not only in the middle east but our own country. i think many of you know general votel has 20 countries to worry about in central command. that's a smaller number than the average command but an average higher headache ratio per country. therefore, it adds up to a pretty robust portfolio. i thought if we can, general, maybe begin with a few words on a number of countries, maybe in this case working west to east, if we could. starting with egypt. so luckily we get to hear from you when you testify in other forums. i just want to have a very focused particular question on egypt. i know you've had a lot of important counter-terrorism collaboration in egypt, they are an important partner. it also strikes me as a country that we as a nation, we have a dilemma in our relationship because, of course, the leader is essentially there by virtue of a coup. we're in this uneasy position of not knowing how to relate to his government, how to influence his government.

i would just ask, how do you think through this issue of how to make the egypt under president sisi a full partner not only in specific counter-terrorism missions but more strategically and broadly at a time when they are in such flux themselves? >> thank you for the question. interestingly when i came into this position, i took the opportunity to reach out to a number of officers who had been the centcom commander to get their advice. one of the common themes from that, the importance of the role of egypt in the region. the strong encouragement from all of them, to make sure egypt was one of the first cubs we visited, and it was. it was one of the countries we went to first as on the first trip i made in this position. so you know, i think the importance of egypt, i think certainly there are some challenges, as you have highlighted here.

i think the way that i am trying to think about egypt is through a longer term relationship with them and what they have meant to us over a lengthy period of time. you know, there certainly are some challenges that president al sisi and his team are dealing with on a regular basis there, economically, with security wise challenges. so what i've tried to do is when we go there, first of all, listen to what they are telling us and try to hear them. i do hear a concern from them about ensuring that they are stable. they have established stability within the security environment there. i think that weighs very, very heavily on them. i think that is a priority for them and i think it's something we have to recognize.

he is very concerned about making sure the country is stable and has a stable security environment. and then i think we have to look at the relationship with egypt not just through the lens of just the last couple of years but over a period of time. what it's meant to us in the past, now, and what it will be to us in the future. one of the things i was quickly reminded of, the important role egypt plays in just the facilitation throughout the middle east. suez canal, support we get from them for our commerce and ships is extraordinary. we get what i would describe as premium service, head of the line privileges, if you will, in some cases to move our resources through. that's a key aspect. so i think what we have to do is we have to take a longer term look at egypt. we have to recognize the importance they play in the

region, recognize the relationship we've had with them in the past. we have to continue to work through the current political challenges that we're dealing with here and look long-term with them. they are an important player in the region. they have been. they will continue to be. they are the most populous country in the region. we have to recognize that. and they sit at a very critical point. so looking for ways to cooperate with them, looking for opportunities, big and small, where we can work with them is extraordinarily important. i think as we've looked at things like our presence in the sinai as part of the multinational force there, i think we've been able to do some things with them that have helped ensure the stability and security of that mission, that critically important mission in the sinai. so i think we have to continue to stay engaged with them. we have to look for opportunities to move forward

with them and we have to weather through the political waves that do take place. >> one or two follow-ups on each if i could before i swing over to the arabian peninsula, of course we had a complicated period dealing with egypt 2011 through 2013. everything from the slightly confusing signals about when president mubarak should step down to president morsi and his period, president sisi and the way he's pushed back very hard into the muslim brotherhood. some of this is getting into the relationship but in some ways you're the highest level american official dealing with egypt and therefore i know all these issues are on your mind. so the follow-up question would be, have you seen consequences, fallout that affects the relationship between united states and egypt from that 2011 to 2013 period in a harmful way, that pushed them away from us, therefore not as much trust as

there might have been? >> certainly, i think we've seen some outreach to russia lately. certainly something we ought to take notice of here and look at what that means to us long-term. i don't know that is particularly helpful to the things we're trying to accomplish in the region to push them into the arms of others here. so i think we do have to pay attention. i think those are good examples of something we've seen most recently. >> one last question and the rest of my focus will be more specifically military and security, other countries. on the issue of egypt, one thing i noticed, president al sisi seemed to soften a little in some of his crackdown on the brotherhood. at least he's taken president morsi off death row, an important step, a bit overdue. how do these issues affect you and the way you deal with egypt? in other words, internal governance.

>> they are helpful to us. frankly, i think the military and military relationship and certainly like all relationships has its highs and has its lows, but i think it's remained pretty steady. so i talk to the general on a regular basis. we visited back and forth several times just in the relatively short period we've been here, but things like that i think help give us space to develop the relationship and to move forward and look for opportunities to move forward and to try to capitalize on. i know as i work with their military leaders, mostly through chief of defense there, i think he agrees with that. so we are. one thing we are trying to do, we are trying to get our exercise program back in place. as many of you recall, we've had an exercise program called bright star that's long been a staple of security cooperation in the region. we stopped doing it back in about 2009 timeframe largely due

to the tempo of what's going on. we've been challenged to get it started. but they agree, we agree this is something we ought to investigate, so we are. we're looking for those type of opportunities where we can capitalize. >> i know before i get to the arabian peninsula, by the way, the format here i get to have the fun. i can ask questions for an hour and 40 minutes and then you. in the last 15 or 20. that's the game plan. please be preparing your questions in addition to what i cover here. as we think about one more country in that general neck of the woods, i know libya is not within your command. however, obviously thinking a lot about egypt, you are a key observer and participant in all things libya, i'm sure. as a new administration prepares to come in in washington, is there any advice -- if you were asked, for example, how well are centcom and european command working together on the libya

problem, is there any need for new kind of mechanism, new collaborative vehicle, or is the system in institutional terms more or less working. would you have any thoughts there to share? >> i think you're hitting on an extraordinarily important point. i come to the centcom job having been the socom commander and we have a tendency to think a little more globally. i don't think that as a critique of my partners out there but we do have an approach that had soft forces around the world. i think the thing that is important to recognize for me as centcom commander is that i'm not in this by myself. the seams around centcom as you point out, libya, turkey, russia, india, sudan, horn of africa as just some examples. these are areas that have challenges as well. so we have to think

transregional. we have to look at the threats that transcend across these. i think when we limit ourselves, we limit our thinking, limit operations, limit how we organize to bureaucratic boundaries, we limit our options to address the threats we have. i think there's been some very good work done, largely through the leadership of the chairman to develop a national military strategy that capitalizes on the transregional aspect of our threats. transregional, multi-functional, multi-domain aspects of all of our threats. it is going to begin to change how we think about command and control and how we think about relationships between the various combatant commanders. my advice to the incoming administration is build on that. i think it's the right direction for us to move here in the future. >> thank you. let me now go to the arabian peninsula and start and work northward over to iran and

afghanistan and pakistan. i wanted to ask briefly about yemen, which, of course, has been an extraordinarily complicated conflict itself. our saudi friends have struggled and learn what we learned historically hoping air power -- i don't want to put words in your mouth but curious how you would see evolution of the war in yemen. in broad terms, we have a transition coming in the united states, it's good to think about the big story on yemen. where is this conflict in its long-standing history and what opportunities do we have now to influence it? >> it remains a military conflict between saudi-led air coalition and houthi supported by iran and former regime elements there. it unfortunately remains a military conflict.

my personal opinion is this is an area where we will require a political solution at one point. i think what we're finding, we're finding both sides trying to use military means to gain leverage to support their positions in political negotiations. unfortunately that's sometimes a protracted process. that's kind of how i view the situation right now. it's a struggle for leverage between both sides to try to gain a leg up in any kind of political negotiations that will ultimately address real problems here. >> is this a country where the united states should think about doing more? when i say that i'm using that in a vague, broad sense. more could be more things of the special operations variety or could be more efforts to influence saudi arabia's behavior, or more diplomatic flexibility at the negotiating table, maybe thinking about confederation instead of one new

central government. is there a case, at least as an option, to think about doing a lot more? >> i think we are doing a lot in all three of the areas you just highlighted. certainly our excellent diplomats are well engaged in cessation of hostility discussions and continue to provide a leadership role in that. we've seen that play out with secretary of state and ambassadors in the region very, very engaged, remain fully engaged in that. long-term ct interests here in yemen. i would just remind you that one of the most capable franchises of al qaeda still remains there. al qaeda in the arabian peninsula. this is an organization that has demonstrated capability to come after us in the homeland. so we have to take that seriously. certainly ongoing capabilias