creating jobs and opportunity here now with huge potential for the future. the u.s. is also the first to free up unlicensed spectrum. last year, the order represented the largest release in 25 years of unlicensed spectrum. the first release of high- powered unlicensed spectrum, a powerful new platform for an ovation. earlier this earlier this month, we took a huge step forward. we have developed a bps for spectrum and will be in a position to grow our economy here. the promise in the economy today is reflected by the private investment is attracting. despite the float -- the slowing economy, private investment is increasing substantially in both broadband infrastructure and in companies at the edge of the brown that networks. -- broadband networks.

companies have invested a double-digit increase from 2010. venture-capital investment in internet start-ups has returned to its highest level since 2001, attracting more than $2 billion in the most recent quarter. a new study estimates of that investment in 4g mobile broad band networks already under way will add up to $251 billion in gdp growth in the next four years, creating 771,000 new jobs. add in construction jobs to the broadband creation by catalog earlier. since i became chairman, the sec has taken a number of steps to promote innovation and advancement and the developing economy. in developing the first national broadband plan, we set out a vision and an ambitious agenda for seizing high-speed internet

and injuring a global broadband economy. last year, we adopted a balanced and strong framework to preserve internet freedom and openness. we set these widely supported rules of the road would increase stability in the market -- in the marketplace. we have removed more than 50 unnecessary regulations and lifted need less restrictions on the spectrum. we have streamlined the process of attaching wireless equipment utility poles. we adopted a tower to the shot clock, more schools and libraries and hospitals to faster internet, and increased access. we have gotten a lot done. but there's more to do. in our country, we overwhelmingly rely on private

sector to build infrastructure. government has and limited, but a central role to facilitate private messman and innovation, and insure that infrastructure gaps are addressed. government must officially utilize asset controls and the advantages, like spectrum and rights of way. in must ensure the programs it manages are fiscally responsible and meet the challenges of today, not the past. and it must take smart steps to promote broadband adoption by empowering consumers and promoting competition. the fcc is pursuing an ambitious agenda to mobilize america, connect america, and empower america. we need to close a four you are broadband gaps. we need to force close the spectrum gap. -- to first, close the spectrum got. demand for spectrum is rapidly outstripping supply. smart phones are now the

majority of phones being purchased. that percentage is increasing at a rapid rate. tablets are taking off. compared to the standard phones we upgraded from not that long ago, the demand smart phones place on spectrum is not double. it is not trouble. it is 24 times more. for tablets, is 120 times as much. failure to free up more spectrum for mobile broad band will stifle mobile innovation and resulting growing consumer frustration with congested networks and dropped connections. the spectrum crunch is the single biggest threat to one of the most promising part of our economy. the deloitte study that protect the creation of 771,000 jobs insufficient spectrum could cause the u.s. to go from leader to a laggard."

150 carriers in 50 countries have deployed 4g commitment and if those countries overtake us, the lloyd predicts new jobs in the u.s. could be cut in half or worse. the single biggest step we can take is voluntary incentive options to reallocate spectrum from older uses to flexible mobile broad band. under this proposal, spectrum licenses like broadcasters would voluntarily supply spectrum into an auction in exchange for a share of the proceeds from that option. it is a percentage of incentive based approach and would free up large blocks of beachfront spectrum for mobile broad band and to generate $25 billion for taxpayers. this proposal enjoys broad and bipartisan support, companies

representing $1 trillion in savings are rep. more than 110 of the nation's leading economists have endorsed it, including both republican and democratic administrations. it is even supported by tv station owners, who recognize that these options would be a win-win. it is exotic kind of step congress can take to help unleash invest -- exactly the kind of step congress can take to unleash innovation and investment. thanks to the commitment of senators rockefeller and hutcheson, this was approved by the commerce committee on a bipartisan vote. but it still has not become law. the spectrum crunch loses and costs are significant and growing every day. right now, about 20 billion

americans -- 20 million americans could not get broadband at home even if they wanted it. broadband is just not available in their communities. we cannot afford tens of millions of americans to be left out of the broadband economy. that is why we are moving to modernize the universal service fund for broadband. last century, our country made a bold commitment to achieve universal access to the predominant communications technology of the time, analog telephone service. but now, subsidizing the past is standing in the way of advancing the future. earlier this year, the sec launched a procedure to modernize this outdated program from telephone to broadband, transitioning wasteful spending to an efficient connect america fund. the performance we are pursuing will boost broadband and meaningfully create jobs. we are in the home stretch of our process now with extensive

focus and engagement by each of my colleagues on the commission and a commitment to get this reform done. we are also committed to taking further steps to accelerate broadband billed out, -- broadband billed out. unnecessary construction can increase costs by as much as 20%. i encourage congress and the relevant federal and state transportation agencies to implement the did it once concept, laying broadband fiber and other infrastructure whenever there is reconstruction or repair. congress has proposed legislation on this. another concept that can pay dividends for our economy, the plummet of ultra high-speed that works in centers -- deployment of ultra high-speed network centers. that would require an anchor in every community in america. i would encourage -- i was

encouraged recently to seek 30 universities are run the country committed to deploying of these accelerated networks. third, we need to close the broadband adoption gap. nearly 100 million americans, almost one-third of our population, are not signed up for broadband at home. that is about a 68% adoption rate. it is true across the country and in washington d.c. it compares to 90% adoption rate, for example, in south korea or singapore. broadband adoption is increasingly necessary for our economy. 80% of fortune 500 companies do all of their job postings on line and require online publications. teachers want all of their students to be able to access the internet for homework or research papers. over 50% of kids in low-income

and minority communities do not have broadband at home. a high schooler wrote to us that she did her homework by parking outside the local library at night and connecting to its wifi. we need a better solution for our students and all the people that could benefit from the innovation in cost savings on the internet. and we need to close not only the adoption gap, but the related broadband skills gap. many tech positions, entry-level and more advanced, are staying open for months on end, even in this down economy. the 63% of hiring managers say talent shortage is the primary reason. according to one company's data, there are 12 large metropolitan areas in which the ratio of job postings to unemployed people is one to one. a job open for every person who is unemployed. these jobs are not getting filled because too many job-

seekers do not have the right skills. as the link in ceo jeff winner wrote earlier this month, "at fixing this in balance and matching job openings with winning talent will go a long way to restarting a virtuous cycle. when companies expand, they consume more services, enabling others to expand an open opportunities for others to be promoted or hired." and as he pointed out that while some require engineering or extensive computer software expertise, many only require basic digital skills, knowing how to use a computer, how to search, how to process a basic internet transaction, basic digital literacy. other jobs require skills or certifications that can be gotten on line in a relatively short time frame. like training for entry-level positions in health care industry were being certified in the use of microsoft office. two companies have recently

announced significant progress to increase affordable access to broadband in the home and to digital skills training. i challenge other companies across the country to step up and take concrete steps to promote broadband adoption, while also working with new approaches to existing programs that can and should be reformed to support broadband access. we need to tackle all these challenges with a real sense of urgency because the cost of delay are significant and growing every day. if we mobilize america, connect america, and empower america, will grow our economy and create jobs, boosting confidence in our ability to compete and thrive in this changing world. let me close with this. a powerful indicator of the growing significance of the tech the sector is one apple surpassed exxonmobil as the most valuable company in the world. of course, in the mid-1990s,

everyone thought apple's best days were behind them. but not steve jobs. in an interview back then he said, "the cure is to innovate our way out of our current predicament." that is the right prescription for our country. now was not the time to think small or about backward. we need to build and build the future the way we have always done. as spoke today about the many ways in which that is already happening in the broadband economy. american inventors and entrepreneurs are creating opportunities today. let's build on these successes, accelerate them, and address the threats that could slow down our great american indiaengine of innovation. i encourage everyone to seize the opportunities that would

expand the visible spectrum -- the visible opportunities, spectrum, and empower opportunities -- empower others to seize the opportunities throughout the world. we can do this. america can do this. thank you. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> white house coverage for you at 8:00 p.m. this evening.

david axelrod spoke earlier today in manchester, new hampshire, at a politics and eggs breakfast. about 9:00 p.m., we will be live from the ronald reagan presidential library and museum. governor chris christie is the keynote speaker there. he was invited to speak by former first lady nancy reagan. that will start about 9:00 p.m. eastern. we will have it live for you on c-span. the chief economist for the american bankers association said today that the u.s. economy is in a time of slow and painful growth, citing unemployment and housing market as problem areas. from earlier today, this is about an hour. [applause] >> thank you very much, paul.

can everybody hear me? it is a pleasure to be back here when paul and valerie asked me to come once again. i did not think i had anything to say. but apparently, we do. you will notice the theme of the talk today is actually a song by green day. how many people know green day as a group? i am really stunned. you must have kids that are teenagers or young adults here. these are some lyrics out of that. we were really struggling and britney came up with the title. we were trying to think about the dean's and britney and ryan and morgan and others put these wonderful and slides together. this sort of captures the teams that we had. think back three years ago and lehman brothers failed. two years ago, we at the peak of unemployment in september. we tried to think about bad things that happen last september and we just did not find any.

i'm sure there were some. and now we are back in the mess. and the other thing that always happens in september is the imf always needs -- and with their big planning meeting, of course, we know what the outcome of that has been in the last several years. and of course, we have our congress that continues to create problems and after the latest round of the fights in shutting down the government, let's just all go to sleep. here are the key themes that i want to talk about today. the first is, it is not 2008. although, it feels that way. second, if your time frame is one or two years, you are way too short. we have talked a bit about that. i do have some of my favorites like to update you where we are with that. the third one is, it is a small world. meaning, everything we do in the

u.s. is affected by what happens in the rest of the world, and we cannot escape that. we will talk a bit about the sovereign debt crisis and greece. and the last is, self-inflicted head wounds. we manage to do this all the time. let's jump in. it is not 2008. it feels that way. i understand. in washington, it does not feel that bad, but i know that most of it -- most of you are not from washington and i know you feel the impact in other parts of the world. oddly, if you have been to a mall lately it does not feel like a recession. many are commenting that if people spend, it makes them feel better. this is the measure of market volatility. you can see what happened. i have a laser pointer, which is always exciting, as you know. do any of you have cats? laser pointers are the greatest

things on ours, right? -- on earth, right? [laughter] it is a reason to get a cat, frankly. [laughter] anyway, this is what happened we have the crisis. there is still a lot of volatility in the markets. it is still a big problem. but it is not rising to the level that we saw before. there is volatility in the markets, but risk spread remains very low. and we have shown you some of the immense -- events that occurred before. in contrast to before, we're almost at abnormally low levels. but even the debate that we had over the deficit, i did not create risk spread. that is a good sign. there are still liquidity issues. but the markets are not in the state they were three years ago. consumers are adjusting to --

this is a cole porter song, as you know. it is really one of my favorite lyrics and it kind of sums up all the things that were going on with consumers spending with great abandon. i want to tell you a story. you probably do not know that there is a self storage association. and you should, because they have the greatest fact sheet on earth. one of the things that happened, of course, was that people were spending a huge amount of money and they had to do something with that money. let me give you a sense of how much they were spending. between 2003 and 2007, cash out refinancing -- of the cash out part was $870 billion. if you add the cash out and home-equity lines for

refinancing in that five-year time frame, $1.3 trillion. a huge amount of money was pulled out of inflated house prices. and done what? put into things that people now have to store. [laughter] right question there is -- right? there is 2.2 billion square feet of storage space. that is the equivalent of 78 square miles of covered, self storage space. i want to ask how many of you have self storage. you know who you are. [laughter] you wonder each month why you are writing bad checks. and brian and i were talking

ing thatis -- write-in that' check. and brian i were to -- brian and i were talking about this. he told me a story about a friend who is destroying things for marriage and paying $200 per month for that. i said, wow, that is a lot. and he said, i gather, and she does not even have a boyfriend yet. that is an extreme. $200 a month for furniture once you are married. this is a financial obligation ratio with the fed. it is the old debt service ratio. you will notice by the trends that is down to what it was back

in 1994. some of that is the interest rates are low. that helps on the dead service interest rate payment -- the debt service interest repayments. some of that is with lenders because of his credit. you can also see the personal income growth is rising. in contrast with what the growth in personal income has been over the big expansion period. personal income growth is growing. it has made up the losses incurred in the recession. it is not enormous, but it is certainly positive. we tend to forget that when we forget all -- when we get all of the bad news. look at household net worth. this is financial and real property. trillions and trillions of dollars in decline that is the

green cars there. -- in decline, that is the green bars there. the first net worth increase was the inflated values of home prices, which were not sustainable. they were artificial. the other thing that happened was that savings rates have been much higher as a consequence. and just to put that in perspective, this drop, even if you assume it is less, still requires a savings rate of about 10% to make up for the losses in wealth that occurred. even though the savings rates are up around 6%, they should still be higher to make up for a loss of that wealth that happen. but the good news is, net worth is recovering. it is a slow process. consumers are saving more.

they are borrowing less. they are making the effort to get their balance sheets back in order. that is an important change that is occurring. it is a slow change, of course. businesses are doing better as well. one of the most interesting charts is this one, corporate cash levels. you can see it is up around $1 trillion in corporate cash. if you add other liquid assets, money market funds, mutual funds that businesses hold, you are up around $2 trillion. businesses are sitting on a lot of cash now. it is that uncertainty that exists that they are not willing to deploy the cash now. that is the biggest concern now. there is a huge amount of uncertainty. it is freezing business decisions. it is putting all of this cash vitally on the sidelines. but the point is, businesses are doing the right things to

prepare themselves as things turn around and uncertainty disappears. banks, too, are improving, as hopefully you are all aware. this is the level of capital. the level of their for the industry, the cap to assets -- the capital to acassets ratio is highest it has been in years. all of the assets, total risk- based, they're all at record levels in the united states since we have been collecting this info. very strong improvements, and sometimes we forget all the things that have happened. there are still challenges, and this is the asset quality is side. you can see charge-offs are nonperforming. they are still high relative to historic trends. but look at the trends now, very

sharply downward here in the changes of that. in fact, we have had many quarters over the year in improvement in the non-current loans. we are past the home. it still struggles for many institutions, but capital is at record high and assets are improving. same thing with the profitability of banks. you can see the profitability is at a low for a number of the institutions that were profitable. the recovery has been slow. we are now getting back to historical standards with a high percentage of the industry being profitable. the banking industry is certainly improving and that is very good news for the u.s. and the u.s. economy. this is jobs. that picture, while we know it is still struggling, it is certainly better than the job losses that were experienced in

the recession. you can just see that visually. it is just a stunning chart when you look at the magnitude of those losses. 8.5 million jobs were lost during that time. and you can see, there are still struggles. it look at the pattern before the big crisis. not too far out of line with that. but again, it is not 2008. we haven't moved through all lot of that. you always have -- we have moved through all lot of that. you always hear about high prices and liquidity. iece isther good news peac that we are back in a better equilibrium. is it enough to get the economy going? not so much. you need to hundred jobs on average -- 200 jobs on average

per month and about a 4% gdp to get the economy on a trajectory that moves us back to normal levels in five or six years. and i will show you that, but think of that magnitude. whenever you think of new job figures, if they are short of 200,000 jobs created, we are not moving fast enough to significantly reduce unemployment. i will have a chart on that in a moment. here's a look at payroll. let's back up for a second. if you look over here, we will break that down for you just over the course of the last year. the thing to recognize here is what is happening on the private sector verses the public sector. the interesting thing that is obvious from this chart is that you see that the private sector has been adding jobs for 18 months straight. it is not a huge increase.

it is not the kind of thing that grabs headlines, but it has been a fairly consistent pattern. of course, things have slowed down. and this month, the latest month, was at zero. but that was not because the private sector was not adding jobs. look up what is happening on the public sector side. they have been reducing jobs. that has been a drag. the drag is coming from the public sector, both on the federal level and certainly on the state and local level. again, the point is, it is not what it was before. it is not great, but let's not really of 2008. -- relive 2008. the time line is five or six years. that is the key message i want to leave you with. and it goes back to my chart. this is the unemployment rate.

i think i showed you this before where these are the trends in the previous recessions and all we have done is a straight line that out in the peak of that with others. this is a glass-is-half-full chart. and we are not generating enough jobs to really get down to that 2017 level. what is really disturbing, though, is that we have had some of our economists on some of our guys 3 committee who are not even convinced that the 9.1 is going to hold. paul is one of the outsiders who says, i do not believe any of this stuff. he has the album -- the unemployment rate next year at 9.5%. he is not confident we will follow any of this path.

and again, it takes 200,000 jobs, on average, each month, and a strong gdp to drive that break down. we are not there yet -- drive that rate down. the we are not there yet, and i will show you some things to convince you. how did start it is another -- is another enormous issue. you can visually see the contrast here with other recessions across the same time frame. you can see how sharply other recessions redounded. housing is such an important part of the u.s. economy. look at what is happening. we are barely treading water. this is the average rate across that time frame, 1.5 million housing starts. typically, the 1.5 million is in enough to handle the increase in population, the structural

rebuilding of houses that have deteriorated. we are nowhere close to that at all. and the obvious reason, of course, is we have a huge overhang of existing properties that are outstanding. there is no reason to build new houses. the other thing that is disturbing -- now, the housing starts include multifamily and single. you have to keep that in mind. but you may have noticed this week that new home sales were at $295,000. we are producing -- and this includes multi family -- we are producing at $571,000 -- we are producing at 571,000 and is still low because we have a huge overhang of existing houses.

in fact, there's 1.7 million houses in that shadow inventory, the ones in the process of being sold. whether they are in the process of foreclosure or serious the linwood. there are one in 10 properties that are nonperforming. it is still a huge overhang and that alone will take three months to wind down the current sales rates. the shuttle inventories lower than it was a year ago. that is a good thing. it is down about 18%, in fact. but we still have this enormous overhang, this pipeline of houses that are in the process of being sold. babel be a drag on this economy. if your -- that will be a drag on this economy. if your time on this one or two years, you will be short. you could look at this picture a year ago ended -- and there

would be no difference because we have not made any significant improvement on this. all of this if you wrap all of , is what one economist coined as a confidence recession. there is no confidence, and you can see that particularly on the consumer side. businesses are kind of hanging in there. they are wondering what is going on and they are building their balance sheet, so it is not quite as bad. but it is a recession based on a lack of confidence that we have in this country. the next thing is -- the next game is "its a small world." and i know some of you are singing the song, as painful as

it is for you. [laughter] but it did kind of capture what is happening around the world. and the first thing is, looking at a comparison of what the other countries are doing a run the world. -- b. of the countries around the world are doing. one positive thing when you look at the united states and say, what state is still in a recession, the only state that is still in a recession is nevada. a couple of years ago, every state was in recession. but in the united states you think more globally. ?hat is the nation's gdp you have movement of population and all kinds of things balance that out. take the view that we often have of the united states and blow it up to the world and ask yourself, is 4% world gdp all that bad? and you might say, well, no, it

is not, really. there are parts of the world that are doing better than others, and that is what happens in economies and resources flow to those places that are doing better. the interesting thing is, the merging companies -- the emerging countries, the developing countries used to be at about 24% investment. they are now up to 40% or more investment. money is flowing to the places where big changes are taking place. look at the strong growth. and they are not even too great for 2012, but look at the strong performance in these countries. and others worry about those economies, but those countries are driving resources. china is observing half of the cement in the world -- absorbing

half of the cement in the world. it is the biggest purchaser of aluminum and copper and other materials that often get exported back to us. and this is great, china consumed half of the pigs consumed in the world, and one- third of the eggs produced in the world. it is a very quickly growing economy that is sucking, a lot of the resources and is not far behind india and other countries. with all of the problems in europe, it is still projected to be doing better than the u.s. we should be careful not to be too critical. japan is still struggling, and they had that tsunami and other problems that have added to that. for the u.s., let's look at some of the risks for some of the things that make things work.

and we have looked at this with our eyes 3 committee about what would make the u.s. economy go slower -- our advisory committee about what would make the u.s. economy go slower. look at all these things. decline in equity values, yes. uighur external demand, -- weaker external demand, yes, because those countries are slowing down. it is everything that could happen drive the economy's slower has happened this year. and we have a self-inflicted havilland, which we have not talked about yet. -- self-inflicted head wounds, which we have not talked about yet. one of the things in thinking about china, and what of the things that struck me is that we're always looking at tons of

data and charts. this is commodity prices and indexes that start at the same level in 2003. you get a sense of how quickly they are growing, and growing relative to one another. look at all the changes that are occurring. you have doubling and tripling. the whole index, if you take that all together, is doubled or tripled with all of those things. think about what that means for the u.s. economy. we have had a strong increase in all of these commodity prices. it is because of these developing countries of or been a lot of these increases in demand. what does that mean in the u.s.? here's what happens to the price of a gallon of gasoline. it is back toward levels that we have seen. and to put this in perspective for the u.s. economy, a 1 cent increase in gasoline is $1 billion worth of added expenses.

it is a huge impact on what happens with the u.s. economy. whether you get high ones or low ones, you know do free up a lot of money when gas prices fall. we are back up absorbing a lot of spending that consumers would otherwise have. let's talk a little bit about what is happening in europe and the debt. this is a bit more complicated slide. we always try to keep it simple, but we are trying to show you is the different countries and focus, really, on this light blue line all the way across. that is the 2010 increase in debt that has occurred in every case. debt has been rising across europe and in the u.s. no surprise.

the only country, you may notice, where that line is down is sweden. good things, of course, often happen in sweden, i am sure. but sweden, 10 years ago, put in place changes to bring their debt levels back in place. i had the pleasure of listening to one of ththere of the elected officials -- one of their elected officials out aei. and he said the thing in sweden is, we know what to do to get elected as a politician. if we just did not know what to do when we do it. what they learned is that if they do the right thing, they get reelected. they took the hard decisions, cut back, and of all the countries that are out there, they have the best fiscal

position among all the countries that you see there. they took the hard things fast. we will come back to some of the factors that build upon that and what makes a credible plan, and some is based on the sweden experience. but we believe that for a little bit. this is a measure of portugal, ireland, greece. also be in there, and is often added as a second "i" in there. the problem is that we continue to let this thing continue to grow. greece is way up here. to-year greek bonds are trading at 70%. that is the interest rate. 70% interest rate, which has got to frighten you on this. the one thing we were looking at is that there was an

agreement on july 21 to try to move and reduce some of the debt, help fill holes in the stabilization fund that they had. and that would involve a 20% reduction in the outstanding debt. it was called a debt swap. and it had a tiny affect that this little downturn may have been responsible for that. but in the meantime, reece's debt because the economy is a week is almost up to 20% of gdp. it is almost at depression levels. it is also true of ireland and portugal. what i am told is that portugal and ireland have at least implemented systems that seem to be credible and seem to be working because they have the political will to do that. there does not seem to be the political will increase. the situation has gotten worse

as debt has built up. there are losses there that have to be written down. again, july 21, that 20% haircut on those losses, that has not been adopted by any of the 17 countries. there are some people saying that the losses really -- you know, the reduction, the year cut on that should be 50% now. but the key thing is, there are losses that have to be recognized and we have not recognize them yet. you've got to get to levels down to sustainable levels and the issue is, someone has to pay for that. a 20% reduction would be severe, particularly to greek banks and others. that may be doable, a 50% haircut -- that may be doable. a 50% hair cut, then you have problems with capital at all the

major banks. this is the chart that i asked morgan on my staff to put together because when the united states got downgraded, we said promote weight, what is happening with the faults and risk -- with the defaults and risk? and we still have the lowest credit rating of all of the other countries. it really bugs me that the s&p did that because it was not recognizing the overall strength of the u.s. specifically, one of the questions that we were trying to answer, which may have been of interest to you, is what the direct exposure is on greased's debt. we looked at -- on greece's debt. we looked at the sovereign debt, which is in yellow, but we also

looked at the bank and private debt. if bad things happen in greece, what does that mean for the rest of the country? you can see what the political issues are. france and germany obviously have big exposures to greece. they're worried about that and it gives them incentives to do things. look at the u.s., and it is a very low levels, particularly to the sovereign debt. even if you add up the private and bank sector debt, it is low exposure compared to the europeans. if you look at this as a share of gdp, you can see that the u.s. is very low. the direct consequence from greek debt to the u.s. is small. and even on the interbank transactions, that is declining as banks are positioning themselves to deal with the counterparty risk.

lowe direct exposure to greece. what is a good relative measure to capture the direct exposure to greece, both the public with the banks and on the private side. we compared the industry in 2010 -- sort of, stunningly, i guess -- charged off over $2 billion. that was a shocking year, of course. this year, it looks like it's going to be about $140 billion. still a lot of losses and the banking industry is working through that. the exposure to greece is tiny compared to what is relative to what the industry has charged off in the past. look at the gap between the two. there's plenty of capacity, assuming there is the capacity to be able to charge this off.

the banking industry's direct exposure to greece is very small, very manageable, not really an issue. the exposure changes, though, as we look to what happened with other countries and other countries exposure. we have greece along the bottom here. and then we have the exposure for other countries, and you can see france and germany again, very large exposures, particularly when you hear talks of italy. there are big issues for those countries, particularly spain. exposure is more on the indirect nature of what happened. this was at a recent imf report

that just talks about if you narrow down the greek diet. well, that is one thing. but then you get this exposure that spread across europe as you include all of the exposures, the counterparty exposures between them. the imf's conclusion is you have about 200 billion euro exposure just in the name countries at risk. and it is 300 billion euro if you spread that out across the high risk countries across europe. it gives you a feel for the magnitude. it is not small. and it has implications for the u.s. because 20% of our exports go to europe. if there is a problem created in europe, it directly affects u.s. exports. and i will remind you, u.s. exports have been a shining star throughout the recession that have kept gdp moving forward. that has been a huge benefit to

the u.s. and think about exports across the rest of the country and the rest of the world, including china and india. the point is, this has an impact because of the secondary effects that occur, not necessarily the direct effects. self-inflicted head wounds. there is a picture of our congress. they continue to do this. winston churchill reportedly said something like this and i've been unable to confirm it, but i like it. so i will say it. [laughter] winston churchill reportedly said, "americans can always be counted on to do the right thing after exhausting all of their options." [laughter] and that seems to be our congress, right? we lived through the biggest self-inflicted head wound, which was the debt ceiling debate. god help us win the super committee comes up.

-- when the super committee comes up. it is just a horrible situation. in my opinion, and i think this is shared more broadly, again, it is back to the confidence recession. we have no confidence that our government can take the steps to do the right things to get us back on track. they have done these last-minute moves that have created business uncertainty in the markets. i do not know how i'm doing with time. we will talk a little bit about what this means. i think it shows you something like the federal deficit last year. i may not have done this, but i think i asked you all to get out your checkbooks -- did i ask you to do this? and write a check for $4,000 for you and every person in your family. how many of you did that? a show of hands. and you wonder why we have a problem.

just to put a fine point on that, it takes about $4,000 per person in this country to eliminate that debt for one year. you have obviously not stepped up and add your obligations here. -- met your obligation to your. this is cbo's baseline estimates of what they think is a reasonable assumption of the government does certain things. this includes things like continuing the tax breaks for everybody except those -- couples over $250,000, individuals over $200,000. it also includes the act fakes and the fix on medicare. this is not very good at all. and it includes others, like the concorde resolution, who believe

it will not be -- and it does not include others, like the concorde resolution, who believe the deficit could be as much as $2 trillion at the end of this time frame. we want to contrast this between what the administration has proposed to give you a sense of what is being in -- give you a sense of the impact of what is being proposed. you can see where it is front loaded. you know, you need spending. you have small tax cuts for small businesses. that is extended not only for individuals, but businesses as an incentive to hire. that is a big portion of that. we're continuing long-term unemployment relief, which we could probably debate about. and tax breaks for families as a payroll deduction. some of these, like the tax

breaks, are a continuation of what we had. it is probably not a bad thing if you think that without that, we have a contraction in spending. it will have the impact of increasing taxes. and at the end of the day, some things are paid back as it goes on. here is the obama deficit plan. you can see the components. you get savings if you change things. you get savings every year and it continues to compound. you can see the different elements of what is involved. some of the war spending was built in. let's combine these two things. to give you a feel of the jobs plan and the deficit-reduction. because they have to work together if you are going to do a stimulus to try to keep the economy going. it is an interesting pattern. look at the deficit reduction

under the plan for 2012. it is tiny. it gets back to whether we are taking action quickly enough to encourage investors are run the world to put capital in the u.s.. -- in the u.s. all of these are back loaded things. remember, congress can do anything they want at any point in time, so this does not lock them into these changes. if you wrap all of that together, you get this blue line here. it improves the picture. notice how the deficit gets worse because you are doing all that spending to begin with. then you get the savings as it starts to kick in and then things go back on track. again, look at the position at the end. you are still adding to the

overall debt. you have not totally change that curve. understand what that means. to give you a better sense of the context, this is what omb's baseline adds up to a cross that time frame, 2012-2021. this is what the president has proposed. it does not come close to closing the gap that has been created. and this is what the super committee has to come up with, otherwise, you get the sequestration of spending cuts. as good as those savings are, it still does not change the fact that the debt is rising. the issue is dealing with the entitlements. what we have done is you can see

the path of the entitlements. this is the cbo's alternative scenario. there is the general assumption that revenue, if you even take it back in history, does not change back even with tax rates. it stays fairly consistent at about 18%. it is hard to influence tax revenue. if you go to an implication of the tax system, maybe you can improve some of that. i think that is a good idea. but look at this right here at about 2024. if revenue stays about the same there, we would only have enough money to pay for social security and medicare on the interest on our debt. we would have no other money left over for any other spending -- defense, social programs, things like that. no money left over. if you have got to deal with

medicare and social security. social security is not growing very quickly. that is one of the easier ones to deal with, particularly if you deal with that and say that it only applies to people under 40, or some level like that. here is the issue with the social security. look at the workers and the beneficiaries. the path is that we have less than -- what is it now? almost less than two people working for every retired person out there. you have got to deal with it, and with medicare and medicaid. to just kind of conclude this and then we will tie things up in a bow in a second, the states also have an issue. this is the state cumulative budget deficit. there are two interesting things to think about. if you look at the total bars, the state deficits are closing

and they are doing a better job of closing that deficit. that is a good thing. but the yellow component here is the part that was filled the stimulus package is going away. that's why in the president's proposal you got more money back to states because the burden, this red burden now, even though the total deficit is declining, the portion that has to be handled by the states alone is bigger than it was in previous years because you don't have that federal contribution. so a lot of pressure back on states to close that gap. a lot of the states of course, think about the obama plan, a lot of states is spending for teachers, spending for police, first responders, that sort of thing. that is the issue that he is trying to address in here is

this decrease in the stimulus that states have provided. all right. these are just some high-level principles. we've given this a lot of thought over the last year and just sort of my own personal thoughts. the first is you have to have a credible plan. and to me, what that means is more money up front. you have to have investors believe that you are dealing with the problem soon and pushing everything off is an issue. so i would be in favor of more up front things. you have to address it comprehensively which means medicare, medicaid, social security, on the table. and you got to talk about tax simplification and reform. not just rates for wealthy people. you got to change the structure of that. and the last one is you can preserve spending that does the right things you want. the infrastructure spending, one of my big disappointments, i may have mentioned this last

year, the original stimulus is it didn't have much money for infrastructure spending. which are investments in things that make a difference, and you can many ploy people. but we're having the same argument today when they say infrastructure spending, the response is there's no shovel-ready programs. well, we're three years into this, right? if you would have done infrastructure spending, you would be three years in, you would start to be getting the benefit of that kind of spending now. and you can also do things like education and research and development that preserves growth and puts spending in places that give you a positive return. so that's kind of the high-level principles that i've thought of. well, again, we have some things that we hope that you're looking at. one is the dodd-frank tracker, the web site for everything happening regular rsh regulatoryly and we produce the banks and economy so we're updating things and including the things that happen today. there's a lot of economic news

coming out today. so i don't know if i've totally exhausted my time. but i'm certainly happy to entertain your comments and questions. i do have this effect of stunning audiences into silence. thank you so much. i've done that. [laughter] yes. [question inaudible] yes. the question was would i choose to say when will congress wake up and do the right things? it was an interesting comment recently. i was at the international institute of finance meetings this past weekend. and it was a european -- i can't remember who -- that said you have to get the pain threshold high enough for congress to take action. and it obviously isn't there. we went through that hole thing

and it isn't there -- that whole thing and it isn't there. there was the turkish finance minister who was there. and they actually have taken a lot of steps to do things. they put in place 6.5% surplus target. and his comment was if you would ask anybody on the street what is the target for the surplus, they knew it. they would say 6.5%. and his comment was you walk out on the street in washington and ask, what's the target for the deficit? and they say deficit, what is the target? no one knows. so some is having a consistent message that everybody understands. i don't have a lot of faith that the supercommittee is going to come up with something great. i wish they would. it gives them an opportunity to back out of all of the politics so there is some hope there. but i don't know. the past history is everything goes down to the brinksmanship

so i don't have a lot of confidence that our congress is going to do it. and everything is being pushed to be a debate after the election. next year. so i think we'll struggle through. it's most likely we'll get the see questation result although i may be surprised by that which punts everything after the election. the see questeration doesn't come into effect until after the election and we'll deal with it and it's part of some politics. so i don't think congress believes that teles an issue that they have to come together -- that there's an issue that they have to come together and i don't think the general public believes there's an issue worth coming together. and some of the advice is backed to getting the media to focus on that, you have to make a convincing argument that people are going to totally lose something whether it's social security or medicaid and that's real. that's in your face. you are going to lose this unless we take some change. and then you change the public

sentiment. but i don't have a lot of great hopes that we're going to do anything over the next year. it's again back to we know what the right thing to do is and we don't know how to get re-elected and i think that's the attitude. [question inaudible] the question is what's the likelihood of another credit downgrade by one of the agencies? you know, i think that's a possibility. certainly. i was again, disappointed that s&p did it part had i because they did it because of the political -- lack of political will. and i appreciate that. i understand that. but had you made a $2 trillion mistake, too, it's a little odd to say it isn't that stuff anymore. it's the political will. so i think others are being more cautious. the one thing that's interesting when you do a downgrade, typically the banks also get downgraded and we've seen that in the united states and in europe. so there are implications to just even that first downgrade.

yes. [question inaudible] the question is what is the odds of slipping back into another recession? you know, the odds, i had a few months ago the odds being better than 30%. i think the odds have gone up to about 50%. so it's sort of a toss-up. i think different than that, i think we are in this very painfully slow growth period. i think there will be growth. i think it will feel like it's a recession. again, it's not 2008 but it feels that way. so i think we're in a 50-50. the worry is what economists call that stall speed. with the plane analogy. that you can climb but if you don't have enough forward momentum, you end up stalling and declining. and i think that's where the fear now is coming in.

but to me, it's all about uncertainty. it's not about -- again, coming back to some of the themes that i described. banks are better. businesses are stronger. the ones that have survived are doing things. consumers are doing better in this country. there's the right kind of base for that. there's plenty of money to be lent. there's just not a desire to borrow the money as there had been before. but there's uncertainty about what the prospects are. and i think about it. most businesses and individuals are now worried about what is my tax burden going to be? is it going to be higher? what am i going to do as a business? are there more regulations? what is my health care costs going to be if you're a business or individual? all these things are adding up. and people are saying i'm stopping. i'm not going to do anything because i don't have the certainty that things will change. so i would sea it's probably 50-50 that we would get that. but i think again, we're just -- it's going to be an ever so slow increase.

maybe not a technical recession but it going to feel painful. anything else? all right. well, it's a pleasure to be back here before you. [applause] >> road to the white house coverage here on c-span with david axelrod. senior strategist for the obama 2012 campaign. he spoke today at a politics and eggs breakfast in new hampshire. over on c-span2, a "washington post" summit looks at china's influence on the global economy. and on c-span 3, a discussion on the link between broadband high speed internet and the economy and job growth. it all starts tonight at 8:00 p.m. eastern on the c-span networks. tomorrow the united nations security council formally considers a palestinian statehood bid. today, scholars met to discuss

the implications of the long-standing conflict with israel on the u.s. and the international community. it's hosted by the potomac institute for policy studies. in arlington, virginia. and this is about two hourgs. -- about two hours. >> ladies and gentlemen, before we get started, i would like to ask you to turn off all the cell phones and the beepers and the noise makers that you have. we're all plugged in nowadays. and unfortunately, they make noise and get recorded and it interrupts things. it's my privilege to welcome you to the potomac institute for policy studies for another great forum put together by yona alexander. the potomac institute is a not for profit science and technology policy think tank here in the washington, d.c. area and it's been our privilege for more than a decade to sponsor international center for terrorism studies run by yona alexander that looks at a full range and spectrum of issues in and around terrorism and world palingse.

it has been our honor to be associated with the international law institute and professor don wallace is here. and we'll -- give a few words in that respect in a few minutes. all of these forums are about trying to find and identity issues and discussion points that can be used as a forum for the exchange of ideas and scholarship to help move forward the diplomacy and peace initiatives of our time. today is an example of that. and as i said a minute ago, we are very proud and privileged to be a part of it. we have also with us today a number of members of the potomac institute staff. and the chairman of our board of regents, al gray, who will have a few words it say in a moment as well. thank you very much for coming, sir. with that, i would like to turn the program over to professor wallace to kick it off and once

again, as i said a minute ago, it's been a real privilege to be associate and partnering with you and sponsoring many of these events. sir? >> mike, thank you very much. very glad to be here. i don't know what's going to happen to general gray. but we'll hear from him at some point. i'm the chairman of the international law institute and i guess my connection is that johan and i have worked there together for years. and one of the centers he runs on legal studies is housed at the institute. and i'm really very happy to join him, join him once again. we have done lots of things together and yona asked me to mention one or two of them. yona and his programs are very active with national owe. we recently had a program, actually -- almost a year ago in chonokule and produced this publication for the so-called partnership for peace training center wigs an impressive place.

turkey, i've lived in turkey and written books on turkey with all of its changes, seems to remain a rather steadfast part of nato. we have done many other things together, yona and future of measures to be taken with respect to terrorism. this is really yona's great specialty as you'll probably hear. the subject of this program, u.n. palestinian statehood, political, legal, social, economic, and strategic perspectives. as we all know the palestinians have made an application, the p.l.a., has made an application to the u.n. and we'll see what happens to that application. i'll say some things about strategy although i'm a law professor and not a strategist. and i was listening to program

on china. and when you think of asia you think of china, japan, korea, all these countries and the united states has an invaluable strategic position, notwithstanding the enmiment for these chints with each other. the middle east which is the home of the palestinians. i've lived in turkey. you think of turkey, iran, israel, i'm not so sure we have a similar happy situation there. and i expect that is really one of the great perspectives and backgrounds to this subject which we're going to deal with today. and at this point i'll turn the mic or the mics, there are two of them, over to yona, the professor alexander. >> i would yield now.

>> thank you. >> ok. we want to thank c-span for broad castcasting this event to bring some of the ideas to a wider audience. i would like to welcome the participants here and this distinguished panel and introduce them properly a little bit later on. i would like to mention also one of our programs is to train the new generation of scholars and professionals and i'm very proud to introduce the group that we have now for this semester, where is the group -- would you stand snup would you introduce them quickly -- would you stand up? would you introduce them quickly?

[inaudible] we have in the audience some true experts dealing with the middle east for decades. and i'm sure that they will participate actively in our decision later on. before i introduce our distinguished panel, i would like to make two quick remarks. one on the personal level, i would like to confess that i was at one time my life as a child, a palestinian.

a jewish palestinian during the british mandate. so certainly i have some interest in this issue and then subsequently the establishment of the state of israel. as a participant observer, we tried to follow both from the academic point of view, what the situation -- actually, we can total some 64 years. although the so-called palestinian question perhaps is 100 years old. going back to the first world war. now, what i tried to do is to prepare a couple of maps. i wanted to project it but with some technical problems, and hopefully this will be distributed. because there's a great deal of confusion what we're talking about. what does it mean, the

palestinian question? so one map deals with the middle east. in other words, all the concepts, they originated in europe from the european point of view, the near east, the middle east, the far east, and so on. and it's almost difficult to find a map that doesn't show all the countries in the region. the arab and the nonarab countries. we mentioned of course egypt and jordan and turkey and israel. but we have a total of 25 countries in the region. and i think we have to include also north africa and some of the sub-saharan and so forth. in other words, we're living with a vast area with great

concern with what's happening in the region. and the palestinian question. now, another comment, so you do have some of this -- the general map of the middle east. you have one map which relates to 1947, u.n. partition resolution. and you will have one map of the current situation, israel and the palestinians authority today. so when you have a chance, i suggest that you look at that. the second aspect that i would like to mention that obviously the focus today is on the palestinian-israeli question. let me remind all of us that we have to, in the earlier context, that there are many security challenges in the middle east. we have a -- i won't go through

all of them. but just to remind us that you cannot just resolve the so-called arab-israeli situation, particularly the palestinian, without looking at some of the other challenges, particularly when we have the ongoing arab spring. susm as theological and -- such as theological and propaganda and psychological warfare and violation of human rights and political and economic dislocations, organized criminal activity, state-sponsored terrorism, nonstate terrorism, piracy, and maritime threats, development of weapons of mass destruction, and finally, destabilization. now, we can learn a great deal

from history. this is what the chinese would like to teach us. and philosopher hagel said that we don't learn from history. and this month of september, marks the 1972 munich incident when the palestinian issue was placed on the world stage. and unfortunately we're dealing with the palestinian state and the united nations. and obviously we just marked the 9-11 anniversary. and the key questions obviously for the 9-11 as whether the worst is yet to come and whether civilization will survive? now, when we come to the issue of the -- the current issue of

the united nations, palestinian statehood, i think number one, as i mentioned before, it does mark the 63rd anniversary or the 64th if you take the 1947 united nations resolution, 181, which calls for the establishment of an arab state, palestine, and a jewish faith, israel. so the key question that i think the panel will consider is whether the expectations for the implementation of the 1947 resolution is realistic. and secondly, can we really expect the establishment of a palestinian state side by side with israel, within a year or within five years or 10 years or perhaps we have to wait

decades before this plan is going to be realized. so the bottom line is this -- is the conflict between the so-called enemies is permanent or we have to look at the strategic and interests of the parties. namely, that there are no permanent enemies and no permanent friends but permanent interests. so we have a very distinguished panel today. and what i would like to do is to first introduce our first speaker. mahmoud from jordan. and i would like to mention that on the personal level, i was honored to have the opportunity to attend this signing of peace between jordan

and israel in 1994. and following what the king just said at the united nations , he mentioned three main points, which i would like to repeat. one, he was talking about the global justice by peaceful process of law. in other words, this can be achievable. it tried to stress that. the second point, the central crisis is the question of the palestinian-israeli conflict. and the third point that the -- mentioned at the united nations is that the two-state solution would end the challenge. so with that, i would like to invite his honorable mahmoud

hamud, the deputy chief of mission of empathy jordan. and i'm not going to go into great detail on the bios of the speakers except to mention that it deals specifically with political, legal and the embassy. and also the director of the legal department and advisory of the ministry of foreign affairs. has served at the united nations and elsewhere and received these -- the masters degree from george washington university law school and another masters degree from the university of new hampshire. and he graduated from the university of jordan law school. he wrote extensively on this

issue. [applause] >> i would like to thank professor alexander and the potomac institute for their kind invitation and for the kind introduction. and also i would like to thank professor don wallace for introducing this important topic which of course now everybody who is involved in global affairs and international affairs is following what's happening at the u.n. within the next few weeks. of course, we'll have a very important implication, not only regionally, on the middle east, but also on several aspects of world affairs.

thank you. and i would like to say to professor alexander, i was there during the signing of the peace treaty and one of those who negotiated the peace treaty with israel in 1994 and drafted the peace treaty. and it was a very monday mental event. -- monumental event. it makes such a difference now that we see what the developments in the middle east has led to. the prospects of peace at that time were so high that everybody was thinking that within a few years, actually, people will have two states. a state of palestine and a state of israel. both secure. both living in peace side by side. it will be a peace between not only states and governments but between peoples. and unfortunately, the developments in the middle east happened -- put forth what this

goal of the peace process into effect. and it is, you know, people will say, well, who is to blame? in this regard? under stalemate, i think this is not the right question. i think what we all should strive for is strive to restore the vision and hope of peace, that eventually, one day, and hopefully soon, we'll have two states. one day, hopefully soon, we'll have peace in the middle east that acheaches the security and peace for both israel, the palestinians, and the rest of the countries in the middle east. now, the question comes, from -- the palestinians want to -- the united states. and what would this achieve?

1988, the p.l.o. has declared the creation of palestinian state. and i think within a couple of years' time, they had like 110 or 120 recognitions. and now i think they have more like 140 recognitions. but political declarations declare states, for a state to be established you need a territory, you need peoples and an effective government that -- to run the state. now, what happened in the past couple of years, i think it wasn't productive in pushing the vision forward. and to have a negotiated solution based on the oslo accords and based on the madrid process. and i think what happened is that the palestinians generally

felt that there is not much within the negotiation process that they can depend on to achieve the right to self-determination. and a right which was actually recognized not only by the united states -- by the united nations but even israel has recognized the right of self-determination to the palestinians. now, the issue, what do you achieve from going there? what the question should be, that what would israel lose by having a palestinian state declared? the issue as president abbas said a couple of days ago, three days ago when he submitted the application, it's not about israel. it's about the palestinians and for them to have a state. and i think it achieves a moral -- a moral value. that they are eventually being recognized by the international community through the united

nations as a state. and self-determination has been fulfilled. would this create a state on the ground? it would not. it will be -- it will remain an occupied state. for it to -- for the occupation to end, everybody agrees, all those who have stakeholders, including jordan, the united states, the europeans, the -- it has to be a negotiated solution. negotiated solution with a basis which is the 1967 borders. when there was controversy about the mutual exchange, people thought of, you know, the basis of 1967 borders. and what does that mean? the resolution accepted by everybody including israel talks about peace on the basis of exchange, a mutual exchange

of territory. so this is the premise. you have the 1967 line and then you have -- you do the exchange of territory on the basis of what makes the borders, palestine and israel, which makes it secure. what is happening is there are critical issues that need to be resolved. and these issues are again, it is by negotiations, that can resolve them. and the key issue is basically which was not mentioned the other day is settlements. and this is what led the palestinians to mainly to go to the united nations. settlement is something which effectively destroys any chances of a two-state solution. and these are facts. since the oslo accords until now, the number of settlers and

settlements have not only doubled, but tripled and quadrupled. and the peace and the lands that the palestinians have a state on, effectively, is diminishing day by day. this is the key problem. and if there is a genuine intention to have peace, there has to be a resolution of this courageous resolution on the part of israel with regard to the settlements and to deal with with the settlers and the settlements. then there's the issue of course of refugees. and president abbas made it clear the other day in the general assembly that there is a palestinian state, one that is a palestinian state, the issue of the refugee problem will be solved. i will not talk on their behalf but this gives a very strong signal on how the resolution of

the matter would be. professor alexander talked about 181 on the creation of two states and arab state and palestinian state and that is of course another important resolution with regard to the refugees which is resolution 194 which calls for a just settlement for the palestinian refugees problem. and this is the basis, one. -- one of the bases of the initiative that was presented. so there's another parameter that we can deal with and can be a basis for a solution. it's 1967 borders agreed solution for the refugee problem, a just resolution. and the resolution of the issue of the settlements. and that is -- can be mechanisms for this including to agree on borders and

security first. again, it is a negotiated settlement. what the palestinian -- it will not undermine the process of negotiated settlement. there's nothing that israel will lose from a declaration of a palestinian state. as such. it will actually be an incentive for all parties to go forward and to negotiate on the hard issues that i talked about. if you're talking about security, security can be achieved through peace. and the argument basically that it's only one side deserves security and the other side deserves peace doesn't work. it has to be peace and security for both sides. and this is where the two sides can agree on. and then the united states and

other stakeholders including jordan, including egypt, including the united nations, have to support any future solution. in this regard. i don't know if i want to -- do you want me to add anything on this, but i'm happy to answer a few questions later. about this. and thank you all for listening. [applause] >> thank you very much. >> don't worry. you will have plenty of questions and time, the purpose is to develop a dialogue within a very short period of time, we will provide a very broad perspective and obviously there were hundreds of resolutions at the united nations. and dealing with different

aspects. we can go through all of them. the 181 resolution, november 29, 1947, is critical in a sense that this was the vision of the international community to have two states living in peace side by side and the question is how can we realize that? to bring an israeli -- because there are many israeli views on this issue -- we are happy to have with us professor sevis and not going to go into details obviously. currently, in israel stud scompiss director of the --

israel studies and director of the institute for israeli studies of the university of maryland, again, on a personal and professional level, i was able to follow his work as an academic and a political advisor to prime minister yitzhak rabin. and set up some very important institutes of media and politics and a professor of sociology and communication at tel aviv university. was teaching in jerusalem. and he was editor-in-chief of the israeli daily. i can go on and on. he was educated at hebrew university and received -- and at the london school of economics. in addition to his academic work, he was a very prominent

journalist and political commentator. and during golda meir's term as prime minister was a spokesman. labour party, for the different labour party than it is today but at any rate, published extensively on many of the issues that we're going to deal with. so please, it's all yours. >> thank you, yona. thank you for inviting me to take part in this interesting meeting. it's the first time that i've participated in this institute and it looks very impressive. i'm sure i'll have more time after it to learn more about it. and like my two predecessors, i have participated as well at the peace treaty with -- or the signing of the peace treaty between israel and jordan. but i was also in washington

when the peace -- not peace but the recognition, the mutual recognition of israel and the p.l.o. was done by our -- by arafat and rabin and much more optimistic. so to answer your first question althoughor bottom line, is the conflict permanent using your term or not? during that time, i was sure it will be over within 10 years. today, i'm not so sure that it will be over within 10 years. i didn't look at my optimism but i'm sure it will take more time. and unfortunately, i'm afraid it will need few rounds of violence before we reach an agreement. but let me start more systematically by answering three questions. one, why have the palestinians decided to go to the u.n.? and why israel was against it? b, what happened last week at the u.n.? that's the second question. and the third question, what will happen in the near future? namely the next year or so?

and the advantage that i have over you, hamud, is i'm not representing an official position so i can be critical on all sides, not only on the other seed but also on the israeli position. so why did the palestinians decide to go to the u.n.? according to the palestinian leader, abu masin, it was very simple. to continue the discussion on the diplomatic domain, the direct negotiations did not reach anything. and therefore we are changing our strategy. we are moving it -- we are moving into the diplomatic arena to continue the negotiations. this is what he wrote. at the u.n. article, at the "new york times" article sometime ago. others will say, and this is the israeli -- most of the israelis' position, well, it's not to continue the negotiations. it's instead of negotiations. it's to use advantages to do -- which will be given to the palestinians if they move to

the u.n., that they don't have today. and the first school of thought in israel that will say no, it's not to negotiate at all. it's instead of negotiations. abu masin has decided not to negotiate because of the changes in the middle east. time works for us, the palestinians, why should we negotiate? we should have more patience and we'll get what we want without negotiations. so these are the three alternative answers. and i would guess that most of the israelis, the official position of the israeli government is the second one. the u.n. enterprise has -- was done to replace negotiations. so why did israel have a very -- the israeli government had very strong position against it? the first answer which i'm sure you all know, from any platform, was that peace can be

achieved only through negotiations between the two sides. without preconditions. and the palestinians are presenting preconditions. and they want to conclude an agreement without negotiations. and therefore, it cannot be done. the most so fitch indicated answer to that -- the most sophisticated answer to that which some people mention but not all of them, not in all debates which i heard or participated in washington at least. and that is that if you decide to move to the u.n., and to establish a palestinian state through the u.n. process, you decide to ignore, not only to ignore, but to abandon the land-for-peace solution. after all, the basis of the relations between israel and the palestinians was the idea of land for peace. if the palestinians are getting, even if it's symbolically getting a state,

namely the land without negotiating, then why should there be negotiations anymore? so what you are left with, the other solution, it will be minor it will be yours. but the idea of land for peace cannot be pursued anymore. and without the -- without that, you lose really the basis for negotiations and for conclusion. then you can ask, you can say there's another reason why israel decided not to go. and that is of course because the situation, it changes and israel has become weaker with the strategic new conditions. and the israelis feel that to negotiate today might put them under much more pressure than they were in the past. and you will have the fourth position, some israelis accept, that is netanyahu, prime minister netanyahu doesn't want to negotiate. and there are some israelis, there was a demonstration a week ago, who argued that netanyahu is using different reasons for not negotiations

because really deep in his heart he doesn't want to negotiate and israel should accept the p.l.o., the p.a. initiative and support the creation for state. again, that's -- that school of thought is very small. the majority of the israelis believe that the position that the government says, namely, that you cannot reach an agreement without negotiations, particularly not without -- particularly not if you have preconditions. and the whole issue of settlements suddenly became a precondition. for 20 years, we did negotiate. reach agreements woult these preconditions -- without these preconditions? why is it now on the table? it only shows the palestinians have changed their position and they are using the settlements today, which they did not for the last 20 years. so what's happened last week in the u.n.? well, it is clear that both prime minister netanyahu and

president abu masin spoke most to domestic audiences. that was the first target. to talk to the domestic audiences. indeed, they were both very successful and both changed their position dramatically. netanyahu came back home and public opinion is more supportive of him than they were two weeks ago and abu masin is now recognized as this israeli leader and like the image that he had before that. so they were successful in doing that. will that bring us closer to peace? i'm not sure. barcia the second outcome -- because the second outcome of the last week talks in in new york were widening the gap between the two positions. each one of the two added more elements, more ingredients, to the original position that was a month ago, a month earlier. the israelis, everybody, were furious with the speech of abu masin who spoke about

christianity and islam world or the christian and muslim attachment to the holy land and didn't mention the jews. and he spoke about -- and the entire state of israel, not only the occupied territories, those were occupied in 1967. if you compare this speech to speeches earlier, he moved far away from the israelis. and i'm sure that some pro-palestinian supporters will say that netanyahu did the same. so both sides moved -- took positions or added more elements that were not there earlier. so definitely we did not come closer. the good story, the good news is that the confrontation was prevented. defense minister barak spoke about tsunami at u.n. there was no tsunami at the u.n. and the security council

started yesterday discussing in the subcommittee the proposition put forward by the palestinians, it might take weeks. it might take months. so it will ease a little tension. and there was the quartet proposition that was put on the table. that can be discussed in the future which i guess you all know. so the buildup to a dramatic -- to a drama was -- seemed to be not as frightening as it is. things went down. so what will happen in the near future, well, i don't think that much can happen in the near future. i don't believe that yona asked us, where do -- whether the palestinian state will be established in the near future, not in the next year. i don't think that the timetable that the quartet put to the side will be -- no one will be able to fulfill that.

i believe that the cause for the renewal of negotiations, it will be very difficult to do that. and if it will be done, it will be done just for public opinion or public diplomacy and not seriously. and so the palestinians will bring their call to the u.n. general assembly and probably will get a majority there. but it will be only symbolic achievement. symbolic act. so i think that in the next year, things will continue. as they are, as they were in the last year. the year 2012 will be a transition period. don't forget that you are getting closer and close tore elections in the united states -- and closer to elections in the united states which will play a role. and i do not see much change in the near future unless one thing does happen. in the middle east that can happen within minutes. remember, the last war in

lebanon. if there are -- if violence starts, a peaceful palestinian demonstration could very easily turn into a violent demonstration. the israeli soldier will have to fire. and that, the genie will come out of the bottle. or a provocation by israeli settlers. so the transformation from a violence, a low-key into a drama could be very easily. if that doesn't happen, i believe that the next year, there will be more talks, and will be able to meet here again after the elections in the united states to ask in what way the new american president or the old american president or the renewed american president can support the process to get forward. thank you. [applause] >> thank you very much.

for an israeli view, not official. and as i said, our mission is to learn the lessons of history. and to try to anticipate the future. so as we say, after the elections, we'll meet again and we'll see what can be done. our next speaker, dr. duv zukeim i'm sure is a familiar figure if i may use this term in washington. and he currently is advisor at the cnac corporation and previously, has served as senior vice president of

hamilton and very well-known for his contributions, one of them the undersecretary of defense and chief of the department of defense. now, obviously, has a very long list of accomplishments and as i mentioned, you can relate. but what is really important, looked at some of the key challenges to the united states, afghanistan, and iraq, dealing with some of these issues. i met him, i think, in the late 1970's suspect early 1980's at c.s.s. and graduated from columbia university initially and then started in london, the london

school of economics and received the ph.d., actually, at oxford. and served academically as a professor at a number of institutions including the international war college, the university of columbia trinity college and so on. i would like to mention only one book, the most recent book that i got. a work on how the bush administration managed reconstruction of afghanistan. just was published several months ago. and obviously duv a frequent commentator on radio and tv and media in general. duv, please.

thanks very much, jonah. good to be here. i want to acknowledge my good friend al gray sitting in the front row who was one of the most dynamic congressman dants -- commendanes the marine corps has ever had. and i'm proud that i can call him a friend. like yurim, i will not speak for this things. anybody who knows me understand why i wouldn't. but i do want to give a sense of at least where the national security community in this town stands and is looking at things. and i want to start with the largest possible context and work my way down to the subject of the u.n. and the palestinian application. the largest context, frankly, is that we would like to look somewhere other than the middle

east. we have been swamped by the middle east for a decade. we're getting out of iraq. you can debate whether we should have gone in or not. that's irrelevant. we've been there. and the real question is when we get out, what will iraq look like? will it be wilsonian democracy? nobody says that. will it absorb american resources? it might. it already has, to a huge extent. but we'll have a relationship we're about to sell them f-16's so there's a change there. there are other parts of the world that have been literally demanding our attention for quite some time. and just think about it. for a start, there's europe. nobody pays much attention to europe until there's a huge crisis with the e.u. and all of a sudden on top of our economic crisis, this could be a massive disaster. and so you have our treasury secretary going out and meeting with the euro zone people and trying to give them advice at

the same time as he's trying to deal with them, a real big economic problem back home. so europe is on our agenda. east asia is on our agenda. we do talk about china and think about china and not sure how to relate to china. latin america is increasingly on our agenda. primarily because of brazil, but not only because of brazil. and when you add that to domestic concerns, and you recognize as anybody has been in government, recognizes that we have a hard time walking and chewing gum at the same time, you begin to realize why the middle east is not a place that we would like to continue to focus on endlessly, say for the next decade as we have for the past decade. then there's the context of the middle east itself. i already mentioned iraq. but there's so much more. where is the arab spring headed? i was talking to an arab foreign minister just on sunday who says, well, we're in autumn now. it's still going on. not too many things have been resolved. even in tunisia, which in many

ways is the easiest one to resolve. still fighting in libya. we don't know whether libya will turn into a kind of iraq vintage 2005-2006. we just don't know. yemen. president salas is back -- saleh is back. how does that play out? who knows? syria, everybody knows about it. everybody worries about it. not too much talk about it. meanwhile, president assad keeps on killing his own people. how will that play out? who knows? then there are the g.c.c. states. terrified of any kind of upheaval in bahrain. those troops have not left bahrain yet. the saudi and marati police as they're called. terrified of iran. saudi arabia, terrified of yemen. lots of terror -- not terror -- terror in terms of just pure fear in the region. and then israel, and egypt. we're talking about israel and palestine.

but what about a situation where after so many years of peace and quiet, the embassies overrun in cairo. and who knows when the israeli ambassador will ever come back to egypt. and you can worst case that even though there have been reashurns coming out of cairo -- have been reassurances coming out of cairo to jerusalem. and turkey. the latest round, prime minister netanyahu has shot back at prime minister erdwan. that's not a recipe for happiness, let's put it that way. so you got complications there. so even within the middle east, the peace process is just a part of a huge hole. well, you might say in that case, maybe the peace process isn't all that important to the united states. and there are, and i've said this before, and other locations, there certainly are israeli policymakers who think that if you wake an american policymaker up at 2:00 in the

morning they will admit to you that the peace process is not that important. and they are dead wrong. because whatever you might think of the merits of the peace process, it is probably the single highest priority we have in the middle east. whether it should be or not, again, is immaterial. i believe that is what it is. and that is why general petraeus has said what he said and that's why the former secretary of defense gates has said what he said. because that is the national security community's view. why is it the view? not because they think a deal between israel, which is relatively small, and palestine, which is even smaller, is going to solve the troubles of a region that as jonah pointed out is huge. no. but it eases them. anything that eases the difficulties, particularly of our allies and those in the g.c.c., and anything that allows the g.c.c. to work more closely with israel against

iran, is something that is a huge priority for us. so there's another point as well. which is not often stated but no one's ever accused me of being a diplomat and i don't think i ever will be one. i think there's a perception, no, i know there's a perception, in the national security community that israel over the long term is getting strategically weaker and there's a huge concern about that. it's not because people are anti-israel. on the contrary it's because people are pro israel. and don't want to see israel become strategically weaker. there's a sense that it's becoming weaker relative to its neighbors and becoming weaker relative to what might happen on becoming weaker relative to what might happen on the arab spring. it might become weaker because our interest in this country are less congress than they were 20 years ago or when the treaty was

signed. it is not that they are totally divergence. this is important. turning to the palestinian application. of course we're going to veto. everybody knows it. to be have said it. there is no way we can back off. we would distort our credibility. our credibility is pretty crummy. they see we through gaddafi under the bus and a lot mubarak to be thrown under the bus. whether it is true, i do not care. that is the perception. people in that part of the world, correct me if i'm wrong, have very long memories. they remember. people are saying there is a pattern. if we throw the israelis under the bus, no one will believe the

at. i am not sure of the them prompting negotiations. there is a perception that the administration could be more forceful. it expresses itself in a variety of ways. has he done anything to shuttle diplomacy.

same old same old does not work. if this prompts a really intensive effort on the parts of the united states. the palestinians have to make sure they do not make life so complicated that the opportunity is blown. the settlements issue. i heard them personally say what do you expect from us? it was the american administration. the box me into a corner. perhaps. if you focus or someone went to the baby and wanted to build an

extra bedroom and it will hold a piece of noncommittal ease, it will not. that is stupid. if you want to say do not start any more outpost, there would be huge sympathy for that. did not build another badger? will that turn the tide of the middle east? give me a break. you cannot go and say "wants to have an independent palestine, jews will not be able to live there." that will not work. the last time that was said it was during the nazis. palestinians officials have. not very smart. what to do about a moss 00 -- hamas? you are giving iran is -- is released -- is really is an

excuse. an excuse.s if they want to get a negotiation based on having some kind of status that is granted to them and is difficult to argue against that, will that including able to sue them into an international court of justice? the cannot expect people to negotiate with you if your branding them criminals. there are certain challenges for the palestinians as well. as for the timing of the quartet, you could argue that this would never happened. you could argue if you have it on the same page, to get the eu on the same pages pretty phenomenal.

four ministers are proud that they pulled this one off. -- foreign ministers are proud that they pulled this one out. you have partly economic countries pulling in same direction. the russians are still the influential. will it happen in year? i think president obama has a tremendous incentive. he is clearly appealing to his own base. he considers the jewish community part of his base. the latest polls show that by 45%-48% american jews think president obama is not doing a good job. i would be nervous. he has an incentive to make this work. it might. i do not know. if it does, then he has to deal with it.

they talk as if congress kills the both houses. we don't. it is clear that the sympathy for mr. netanyahu and for israel is exceedingly strong. the deal would have the one that israel can live with. otherwise, you wind up with not only a divided government but mixed signals for the region. when the united states sends mixed signals, it does not work well. there are quite a few challenges here. i will not to do what prof. perry did any predictions as to what will happen. can better things happened that i think they can. can people make mistakes? absolutely. [applause]

>> we would like to invite the professor to expand a little bit on the concerns. it is referred to whether it is the e du -- the eu or nato or some of the other organizations. is there a role for diplomacy in particular issue? have d.c. this in the coming months and years?

i think in terms of the difference the government goes all the way back. we were able to mobilize and participate in many activities over the years. particularly when you read the investor at large the other

reason is the obvious one. i want to note to you the brevity of my bio. i do not want anyone to jump to the conclusion that i was with the cia and not with the foreign service. not true. they both contested and oppose british rule. the struggle for dominance in wii jim. in the resolution of november 29 was intended to provide a peaceful change to that

situation. then the partitioning the other. that event was clearly a combination of long-term changes going on at in world ever since the treaties. particulate the spread of nationalism. it had grown. it was well beyond the original participants in the treaties. in '90s century, and nationalism was a major cause a conflict - between self i defied groups and foreign powers. by the end of world war ii one, it have been pretty much accepted by everyone. with that the dissolution of the colonial powers.

most are rather old fashioned traditional nationalism. there is the mode of trying to achieve national independence on one hand. in passing the 1947 resolution, they assumed it contained article 19. the irresponsibility and task of providing a legal avenue for the resolution of conflict and in keeping peaceful change ran across problems. any recommendation for change acceptable to all parties is essentially superfluous. it will happen. a recommendation opposed by one of the parties either means is either done better or requires

enforcement. in the u.n. system, and an action by the security council if it is willing and able. the situation was accurately described in 1945 after the creation of the u.n.. the general offices and -- the general assembly is charged with recommendations of a peaceful situation of any likely to impact the general relations among nations. he added the role of security council is predominantly negative. it is to stop the nation's from public brawling. they were proving unable to enforce the recommendation. to stop the public brawling we have had.

all during this, many outsiders have attempted to assist in finding a solution to the conflict, most notably the united states. the palestinians have decided to seek a new intermediary and have gone back to the united nations. we have decided that the conflict cannot be resolved except directly by the two protagonists. this is despite the fact that for some time the two state solution has been the accepted solution in principle. despite this general agreement, this has become the most prominent example today in in world of a situation where the

devil is in the details. the new initiative can only return it to that of the immediate post-1947 arab in sense that it will require the resolution. it is clear that nothing will veto it. it to produce a recommendation challenge by the parties. they have been doing this for decades. i would not make any prediction about what this would be. i would like to talk a little bit about the other players in

this situation. either we get a negotiated settlement or others will continue. whether that is meaningful or not is an interesting question. the history of outside involvement has not been encouraging. they made the description of this. it is probably still valid. there's nothing similar to the relationship between the united states and israel given the enormous disparity of power between the two partners. from the moment of the active in church, the united states carried on its shoulders a consciousness of response ability. i think this remains essentially valid. israel's success has somewhat

diminished the disparity. it has consequently increased israel since of independent action. there have been to developments that affect the united states. they ended the cold war produced somewhere -- somewhat of the global role. the increasingly partisan character is on foreign affairs. it has narrowed the scope of american administrations. public positions made it quite clear that unequivocal support is the same for any non- government. despite this, the unequivocal opposition to any cigna began the american initiative in situation is now clear.

they have made it almost a matter of faith. president obama's effort to revise the process quickly became dead. he is in a state jury has promised to veto regardless of the situation or a visa -- regardless of the situation. peace between the israelis and palestinians was only possible by negotiations. even the u.s. takes the position that only direct negotiations can resolve the problem. all outsiders are no takers. we have been involved in a quartet.

they have drafted a compromise. it has been rejected. even in the future, it is an interesting proposition. it might well break up the quartet. it tested me for years that most countries in the middle east would really prefer that went away. this government to government. if you are more less limiting this to the support, it went as far as concluding the peace treaties. it is as little as possible.

the two possible game changers are the two new emerging powers. it is interesting to note that neither are an error. it has obvious again implications. one of the other striking aspects is both of the government's conducted very close intimate relations with israel. they conducted a very close bilateral relationship. the current i iranian reached for predominance has caused them to adopt because quite openly and it dramatically. it has made them the top is really worry list. the interest does not appear to

focus on a two-stage resolution. it is doubtful they would support that to any degree. the shift in turkish policy is to match it, rising from the events brought from the turkish flotilla. i do not know about others. it is difficult for me to tell which was caused and what region which was cause and which was affect. -- it is difficult for me to tell which was caused and which was of that. turkey intends to play parma net -- to play a prominent role. i will not say much about the europeans. they have moved too much more new ones positions, reflecting changed in public opinions.

part to relieve the reversal of roles by many that have been seen as the underdogs. a widespread shift. it is certainly produced great changes. europeans have been relatively enthusiastic of a quartet. the greens of the subject of russia. it to be difficult to see it is much more the mischievous dabbling. this is the role of non state actors. ande are humanitarian ngo's

political movements. they have played a civic and roll and the growing change of attitude toward the relationships. more dramatic has been the role of noncyclical organizations. we have different varieties. we see hamas as violence supporting their goal of violence. there are conscious political decisions. the position is determined by real concern appearing for did real concern. they now seek aid to state

political solution. this has been noted. the rest of the world are basically onlookers. there are articles near papers. it they played no significant role. we get to actual votes in the u.n. it to have some effect on the security council. there is one other aspect that is causing serious concern. international pressure to end the occupation grows daily.

it is tied to questioning the very existence of israel itself. a growing concern for this trend is souring the mood of the israeli public. it is leading to a this minish said -- diminished ability. what they show support and israel's right to exist, many of in israel cannot see it that way. while it is true that israel often approves -- proves to be paranoid, it assured that even paranoid and have enemies. most onlookers lacked the power to determine a resolve.

they can exert influence for both parties. they are resulting air response. it is solely in the hands of the two parties. perhaps it was always sold. thank you. >> thank you very much. i may know that one article was published in the partnership. .t relates to nato's response nato is moving to a global security provider.

they have raised some very critical and important issues both historical and contemporary. we would like to develop some sort of discussion. we have to give the podium to kick off this discussion. >> i think the audience has really had enough talk. why don't we open it up for questions? >> i have a microphone available. >> i touched on the particular historical issue of the

palestinians and israelis. there are some economic realities. economic integration is on the forefront. we may have some economic integration. thank you. >> i know that the dream of a lot of people in is really right push up the political decisions and keep hoping that the economics will make people fat and happy. i did not say what you wear. this is the dream of people. there is no dell that the west

bank is doing exceedingly well with gross domestic product growth. it is still very impressive. this is like china. it is very impressive. that also may have motivated him. there is this political impulse that is almost divorced from economic reality. they destroyed all sorts of economic infrastructure that would have created a much more comfortable likeness of their own people. they did it for political reasons. sometimes the politics and the economics overlapped per degree. it may well be that to some extent there will be a willingness to take economic

risk. it will harm the economy on the west bank in order to achieve political objectives. it is a reality. history has proved that. britain and germany with their biggest trading partners before world war ii one. that does not seem to have stopped them. >> the idea of prime minister feel god -- fiyad was to build this from the bottom. they did not see the difference between the political and economic development. he gained a way by building an institution. the building process was very

careful and thorough. i am not so sure about the economics. the huge economic development is due to foreign investment. i will not build on the economic development. why they're stronger and stronger. >> any other comments? >> just a footnote. with the instability, i think there is a common bond between israel and egypt and jordan and turkey. that is security.

much interested in making sure that this particular sector of the economy liable. the only way to deal with that is to deal with the parties. it gives them an opportunity to cooperate. >> i think the jordon/palestinian economies are so intertwined. there is not imagining of having the solution without the three countries. you cannot add egypt. eventually, there has to be some kind of economic integration in future. there are so much -- they are so close together. you have palestinian money and israeli money in the west bank.

it has to be integrated in a proper manner. the economy can be integrated. >> thank you. >> was loose -- let's use the microphone. >> boss tweed i intended a meeting. -- last week i attended a meeting.

his answer was israeli intelligence has been cooperating for many years h. i wonder if you shared his optimism? >> please. the cooperation, particularly on these are continuing. both regimes not have an interest for a wave of violence. the palestinian authority is bought from israel a new non- legal weapon.

it gave them to them openhanded. the interest was to prevent violence. they understood that violence would not work. i guess it would continue. if things deteriorate, it could have a negative impact on the relationship between israel and the palestinian authority. >> one thing that could undermine the situation -- i agree with what prof. perry just said. is a congress cut off aid. to be a serious mistake. this is a young man going to work, they will have other things to do. they could provoke reactions.

then you could see a downward spiral. i know how strongly people on the hill fill -- feel about what the palestinians are doing in the u.n. if they were to react in a knee- jerk way, reactions to be very severe. >> in narrow situation, i would suggest the key would be the israeli reaction. what we diplomats called the shake of the table of credentials. they say colonel so and so, republic of palestine. they could rejected. it would be up to the israelis to continue by excepting the

credentials of someone who pretends to be the representative of the established date. -- established state. >> i am the advisor to apec. he said that for them to go to the icj it to be counterproductive the fed -- counterproductive. the other side is the new york times. he said they can go to the icj. >> they do not need to be a

state. the assembly also sent the legality of building a war. we all know what has happened. 14-1 the decision was in favor of the palestinians. it undermines the determination. they do not really need that. with regards to the icc, this is a complicated matter. it is not straight forward. they have to decide on this matter. i was on the matters before.

it is intended to protect the rights of people. this is one of the purposes of that. you have one from his or her state. a person goes unpunished. it is regard to that. it takes into account. thank you. >> there are very many opinions on every issue in issue. on some issues, there's almost anonymity. one is the anti-israel bias.

you mentioned this before. if there be a motion to be u.n., there would be 90 boats going forward. the same applies to this. i do not see it as an objective and more of the institution. there are very many cases where they felt were it had proven itself. the mayor pronunciations of this is being seen by israel. it is a hand that we will not negotiate. will you did we do we will use it in fields where you are very -- we will use it in fields or

you are very weak. >> you hear that this is the last chance for a two-stage solution. what does that mean? isn't the only alternative in the long run? what does that mean? >> it is a wonderful question. it looks into the the question of when does a state withdraw from other territories that it is occupying? it took some cases for ireland and the west bank. it is an interesting theoretical model to say when you reach the

stage rican not withdraw any more. is becoming an integral part of the metropolitan. you sure that israel would be able to withdraw. after 15 or 17 years, he believes it will be much more difficult. he has reached the stage and no return. i beg to differ. i use it for the political will. they can be achieved. we know the power we have put on the table by president clinton. they have almost agreed about the territorial issue.

the question is whether it would be to% -- 2% here or there. it is the political will. >> despite what i said about the essential revlon's historical a , i suggested given the question that this situation offered an opportunity for an outsider. never should a good crisis good to waste. we have missed the chance here. once the announcer situation, and the united states tabled a resolution of the security council, calling for palestinian statehood on the basis of the details of the last accord. what if a putt that resolution on the table?

>> i also see it as an opportunity. until the security council passed to vote, the opportunity is there. some said the real mistake the israelis made was when he put his proposal forward. they should have said great we support you. then they would have withdrawn it. the opportunity says in terms of, the more settlements have become cities. that is what most of them really are. there's big as american small towns. the longer it goes on the more difficult to get. a still pretty much holds a.

they're still focusing on the wrong thing. by focusing on every bit of construction, which the administration open the door for them to do, they have wondered it impossible for netanyahu to follow up that way. but someone has a baby, they want to build a bedroom. they're creating new settlements. if they were to say we want a commitment for the top post at all, no expansion, that is a different story. the goes and verse -- a disciplined exchanges. >> this number has quadrupled.

without territorial continuity. if cassie's elements. -- it has the capabilities. it is a one state resolution. asia has to decide. they would not take more refugees in total. the number -- water we going to do?

are a kind of a jewish state s?at's >> last week they did the interviews with charlie rose. he did an interview. he said he has maps. i assume it is the basis for the palestinians. he needs to hear a number of israel before he can do it.

he said i just want to hear one sentence. it is to states for two people. is this a bluff to? is this real? of this for show? when the palestinians want this, they use this historical rate. they have to have this. did they or didn't they? >> i am not sure about this. again, they have very similar to that. i do not think it will change much.

if i delay, the negotiations will mean more. he will not be sorry to say that. >> is regarding the whole process. you are talking about security and territory. the general understanding i have is them being included in the palestinian state.

they are into separate governments. how will that were? due to make to palestinian states or one palestinian state in no one really knows how true sovereignty? how does that work? >> that is another thing. it was taken with them at that time. this is a big problem. this is a big problem. since he took over, it is the thorniest issue.

that does not mean it cannot be negotiated. has already been created. then you worry about gaza. let's see burst of we can have some framework for an agreement that we can work on. without giving too much details, it would be not a problem if we have the frame work. >> one has to look at the negotiations already since 1980. they're starting to negotiate. fascine them to put forward their positions. we know what they are. we were negotiating.

there were close to an agreement. it is irrelevant. we know israel will give back. we know that most of the settlements remain debt to% or 3%. -- at 2% or 3%. without that there would be no agreement. i believe the politicians know the answer as well. israel will have to give up demands.

there be no capital in jerusalem. this is the position of government. without that, they're a beano government. there the security issues. israel asked to present the demands. with the changes, what is the future? in the past, they were more lenient. if there were be a change in jordan are the american influence will diminish, it is much more likely today that was 10 years ago. it still demand a permanent position. there are some other new

elements that will be discussed. the others are unknown. we're wasting our time talking about it. >> please. >> i have a question for professor carey. you say the issue is political will. the political will of the netanyahus a demonstration. i would be curious what that will is. others have said that the united states should have welcome this opportunity for the security council and not be automatically-to the palestinian situation. you think that is realistic given the issue of political will? >> i will follow you. >> i am proposing we should use

the opportunity under specific conditions. i'm not just talking about a resolution. putting forward one that encapsulates the last negotiated agreement. there were still a couple of points. they were not accepted. so what? let negotiate with the united states still holding the veto. then you forced the two parties to negotiate that little bit of difference. you would put on the question of statehood. do you guys wanted?

negotiated. >> this is one of the most difficult questions for any israeli analyst. what does not now who feel deeply in his heart? that is because his political makeup is complicated. on one hand, he is the son of his father. all three would never give back the west bank to the palestinians to make peace. on the other hand, it is a very clever politician who understands the world reality. he understands the gap between the belief in dreams and reality. which part of his personality will be stronger depends on the political game.

this is the reason why president perry changed his position in last two years. whatever president netanyahu met with them, he said he will make peace. you will be suppressed, i am willing to compromise. other times, he said he was not willing to do so. it will not be what is in his heart but in his mind. the way he reads the situation and forces within israel -- let me give you one example. the labor party won a victory last week when the new -- with the new leader. the republican poll gave the party 22 seats. if there will be a change, it

will not be a major change. you only need three foresees to move from the right to the left. he will probably be reelected. if he has a difficult one, and no one can give you an answer. there is no answer. it depends on what is the nature of the game and the future. -- in the future. >> i know nothing nothing about netanyahu and what he is like. there are two things that have been in in israel. he is an elected leader. and both of these developments illustrate that the primal of the universe still worse, the role of unintended consequences.

the engagement and israel of the community welcomes the population. it has helped push the politics more to the right. the arrival in israel of a million russian citizens are allegedly jewish to of turned out to be soviet aggression types in terms of their political views. these have shifted and the public position here. >> do not forget the million young voters. they gave obama and tic