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- ---------------------------------------X
- GOLDMAN SACHS
- ASSET MANAGEMENT
- AIMS ALTERNATIVE INVESTMENTS
- SYMPOSIUM 2013
- FORMER UNITED STATES
- SECRETARY OF STATE
- HILLARY RODHAM CLINTON
- ---------------------------------------X
- 200 West Street
- New York, New York
- October 24, 2013
- 12:50 p.m.
- Before Rita Persichetty, a Notary Public
- of the State of New York.
- ELLEN GRAUER COURT REPORTING CO. LLC
- 126 East 56th Street, Fifth Floor
- New York, New York 10022
- 212-750-6434
- REF: 105177
- P R O C E E D I N G S
- * * * *
- MR. O'NEILL: Welcome. This has been a great day and a half here at the AIMS
- Symposium, and it is my distinct honor to introduce today's lunch conversation.
- Please join me in welcoming Secretary Clinton, who will be hosted in a
- discussion with our own Tim O'Neill, who is the cohead of investment management.
- Well, thanks again, Madam Secretary. Everyone is very interested in what you
- have to say, so why don't we get right to it and start talking about the
- political process in Washington, D.C.
- I think it's fair to say that the government shutdown and debates that
- surrounded it were not the finest hours in political history, but democracy is
- an evolving process, and nobody has a more refined perspective of that than you,
- having served in the executive branch as well as Congress.
- So my first question is: How do we get past this partisan gridlock?
- SECRETARY CLINTON: Well, Tim, thank you. Thanks for having me here to have
- this conversation with you. And I know we have many people who are not
- Americans who are here from other parts of the world.
- So let me start by saying that we have evolved our system, it is a durable,
- resilient system, and from the outside, it can look quite dysfunctional from
- time to time, but it has a capacity for regeneration and focus that has really
- stood up in good stead for so many years.
- What happened in the last two years, really, three years was a growing sense on
- the part of some who are very ideologically disposed, to try to move out of the
- usual order in the Congress where you win some, you lose some, you keep working.
- You can't win on legislative issues, you win elections, you have a rhythm to it,
- and it requires a certain amount of compromise and acceptance because of the
- broad cross-section of views and experiences that our country embodies.
- Back in July of 2011, I was in Hong Kong during the last debate over our debt
- limit. And it was very striking to me how the business leaders I was speaking
- with in a big conference there were quite concerned. At that time, I could be
- very reassuring, I said, don't worry, we'll get through it, we're going to work
- it out, we would never default.
- So we fast-forward to this last episode, and it is troubling that there is a
- hard core of extremist politicians who have views about decisions as monumental
- as shutting down our government and defaulting on our debt that have a small but
- a disproportionate influence on the debate in Washington.
- So what you saw was a relatively small group in the House of Representatives and
- very few in the Senate who were trying to achieve one objective, namely make a
- political point about the health care law by holding hostage the entire rest of
- the government and putting the full faith in credit of the United States at
- risk.
- Although it went up to the last hour, the fact that they were a minority and
- that there were much more level heads, even in the same political party, that
- the business view started speaking out after having been relatively silent,
- thinking this is going to work out, but then people of experience and expertise
- began speaking out, it was possible to get through that crisis.
- But it does raise the larger issue about what to do. And I think there are
- three answers to that. Voters have to quit rewarding people who take
- uncompromising stands in the face of reality and evidence, and that is something
- that each one of us can contribute to.
- Obviously I'm a Democrat, but there are a lot of level-headed, smart Republicans
- who were biting their nails over this. They should be rewarded, not threatened
- by the far right and people who either don't know or don't care about the
- importance of our being in reserve currency, about the importance of our paying
- the bills that we've already run up, about the importance of confidence in the
- global economy should pay a price, and you pay that price at the ballot box.
- Secondly, running for office in our country takes a lot of money, and candidates
- have to go out and raise it. New York is probably the leading site for
- contributions for fundraising for candidates on both sides of the aisle, and
- it's also our economic center.
- And there are a lot of people here who should ask some tough questions before
- handing over campaign contributions to people who were really playing chicken
- with our whole economy.
- And thirdly, I think that there has to be greater education and understanding
- about what's at stake. I think too many people for too long thought raising the
- debt limit was so you could borrow more and spend more instead of pay bills
- you've already incurred. That's a pretty big. The guy goes out, has a really
- nice meal, puts it on his credit card, the restaurant turns the credit card in,
- and the company gets paid, the company bills the guy, and the guy says, you
- know, I didn't like that meal very much after all, I'm not paying, and that in a
- very small, microcosmic way is what people who were willing to default were
- basically saying.
- So it's a worrisome situation, but I always come back to my first point, I mean,
- that we always have a way of righting ourselves and getting back into that great
- big messy middle that you've operated in for more than 200 plus years, and I
- think that's where this will move towards, everybody, citizens as well as
- leaders do their part.
- MR. O'NEILL: Part of that process is called compromise, so let me just test
- that hypothesis to an issue that you know a lot about, health care reform.
- So obviously the Affordable Care Act has been upheld by the supreme court. It's
- clearly having limitation problems. It's unsettling, people still -- the
- Republicans want to repeal it or defund it. So how do you get to the middle on
- that clash of absolutes?
- SECRETARY CLINTON: Well, this is not the first time that we rolled out a big
- program with the limitation problems.
- I was in the Senate when President Bush asked and signed legislation expanding
- Medicare benefits, the Medicare Part D drug benefits. And people forget now
- that it was a very difficult implementation.
- As a senator, my staff spent weeks working with people who were trying to sign
- up, because it was in some sense even harder to manage because the population
- over 65, not the most computer-literate group, and it was difficult. But, you
- know, people stuck with it, worked through it.
- Now, this is on -- it's on a different scale and it is more complex because it's
- trying to create a market. In Medicare, you have a single market, you have, you
- know, the government is increasing funding through government programs to
- provide people over 65 the drugs they needed.
- And there were a few variations that you could play out on it, but it was a much
- simpler market than what the Affordable Care Act is aiming to set up.
- Now, the way I look at this, Tim, is it's either going to work or it's not going
- to work. We have an election next November, make it an issue. If it doesn't
- work, it's been, as you said, voted on, you know, signed by the President,
- passed by -- on constitutionality by the supreme court, so it's the law of the
- land.
- Everybody knows there are problems getting the software right and getting the
- information in. They'll either work it out or they won't. You know, by
- February, March, you'll either see that the system is working, because if you
- compare the federal system, which for all kinds of reasons has to be more
- complex, the state systems that ran their own exchanges, states like New York,
- California, Maryland, et cetera, are actually rolling it out quite sufficiently
- because they had a smaller universe, they had a better collection of the data,
- and they had willing participants on all sides of the transaction.
- But when you have huge states like Texas, which is dead set against it, and you
- have a large state like Florida, which is ambivalent, you know, it's difficult
- to run a federal exchange, you know, being able to get the information, get it
- up and get it out.
- So I think the way our system is supposed to work is if, by next November,
- people running for office are either defending or not the Affordable Care Act,
- it will be an electoral issue. And if it is still unacceptable to people or not
- running right, then the Congress that will come in after, will have every right
- in the world to go after it and figure out what they can do.
- Now, if they still have a Democratic President in the White House, who may not
- want to go as far as some would, in fact, I'm sure of that, but then there can
- be a discussion about, okay, what worked and what didn't work.
- But, you know, elections are about winning and losing and who gets to make
- decisions. The President is a two-term President. We have a Democratic senate
- and a Republican house, so people had to compromise.
- And on the Affordable Care Act, I think there's going to be a few months to see
- whether or not it can be operating the way it should, and then people can have a
- rational discussion about what, if anything, can be done, and then they can be
- arguing it out in the election.
- MR. O'NEILL: So can I follow up on that perspective of President Obama's role
- in all of this process.
- Do you think that if he were more personally engaged with Congress on these
- issues, that we would have a different result?
- SECRETARY CLINTON: I don't know, Tim. I mean, I've obviously been asked this
- and I've seen the critique. You know, different presidents have different
- strengths, they bring different life experiences.
- I had the opportunity of working with the President closely for four years on
- some very tough national security issues. He's an incredibly intelligent,
- thoughtful, decisive person in pursuing the agenda he sets.
- But he may not, you know, be someone who we think of as spending a lot of time
- in a give and take of politics; however, I know that he spent a lot of time
- early on in the first term with the Republicans in trying, as you recall, to put
- together the brand barbie (phonetic) and it turned out that the Republicans'
- side, particularly in the house, couldn't deliver on even a small market.
- So you can get to the point of saying, okay, we can live with this, you say you
- can live with that, I can sell it to the Democrats, you sell it to the
- Republicans, and the answer would come back, I can't sell it to Republicans, so
- we have to jigger it around somehow. Whether that was a negotiating tactic or
- the hard reality that it was hard to sell it to the caucus, I don't know.
- But I do remember quite well the President working diligently to reach out to
- people and trying very hard on the health care bill, for example, spending more
- time than a lot of Democrats wanted him to, trying to figure out how he can get
- some Republicans on board.
- So let me switch gears for a minute and go back to the '90's with my husband,
- and there isn't anybody that I can think who would doubt that my husband is an
- incredibly active engager of people, whatever side of the aisle, (audible over
- laughing) and ask their opinion on something, he's going to have you over, he's
- going to play golf with you, et cetera, et cetera. That didn't stop them from
- trying to destroy him. And his agenda and his economic program was passed
- without a single Republican vote after an enormous amount of personal effort to
- get some Republican, you say you care about the deficit, at that time we had
- $250 billion deficit, help me bring it down. The arithmetic I learned in Little
- Rock, Arkansas is you add and subtract with both revenues and cuts, let's work
- together, nowhere.
- So it's not always that being, you know, personally engaged and working with
- people is going to get you the results you want if the people on the other side
- are doing their political calculations that is in their interests not to
- compromise, not to give in.
- So, you know, there's always -- you can always try more things, you can work
- harder at it. I'm a big believer in that, but it's not always the case you will
- get it done.
- Now, back in the '90's when, you know, Republicans shut the government down
- twice with Bill in the White House, and he did just what President Obama did, I
- will not negotiate with you until you open the government, I'm not going to be
- put into that position. They opened it once and then demanded that he agree
- with them on some issues he wouldn't agree with them on. They shut it again.
- And he took the same position, I'm not going to compromise in this posture, I'll
- be glad to talk to you later.
- So got the government back opened, began to try to work together. And there's a
- lot of theater in politics just as there is in any other human enterprise.
- So Newt Gingrich was the speaker, and he would rail against Bill and
- occasionally me all daylong beyond -- I think we had at least one cable station
- back then, but we seemed to be on there when it was being broadcast, and then
- 9:00 o'clock at night, he'd sneak into the White House, I mean, you really can't
- sneak into the White House, it wouldn't be advertised, let me put it that way.
- So he would go into the White House, go up to the second floor, and he and Bill
- would pound things out for a couple of hours trying to work towards welfare
- reform, and eventually, a couple years later, a balanced budget, et cetera.
- And he -- and Gingrich was a very forceful leader of the Republicans, but he had
- people to his right that didn't want any negotiation or any compromise.
- At one point the then, I think he was -- I don't know if it was Tom DeLay or
- Dick Armey told Gingrich, we don't want you going to the White House any longer
- talking to Bill alone. You make too many deals. We're going to stop that.
- So it's a constant effort. And I think the presidents that I've known and even
- my working with President Bush, you know, different styles, but every president
- I've ever known well has really tried to put the pieces together.
- MR. O'NEILL: There's no doubt that the President has a tough job, but as you
- said, politics is not for the fainthearted, but probably the most impossible job
- is the speaker's job.
- SECRETARY CLINTON: Yes.
- MR. O'NEILL: Would John Boehner even try to sneak into the White House?
- SECRETARY CLINTON: Well, I personally like Speaker Boehner. I've sympathized
- with him because he's in a tough spot, and I don't pretend to understand all of
- the dynamics in the Republican caucus, but I do think that, you know, the
- speaker needs to try to figure out how to exercise more direction for his
- caucus.
- I think his theory this time was, you know, these guys are going to exhaust
- themselves, we'll get to the 11th hour, the senate will save us, we'll pass
- something, we'll get beyond it. And that's pretty much the way it played out.
- And that wasn't a, you know, that wasn't a wrongheaded view on how it would
- unfold, because even though the people leading the charge of the shutdown and
- default got a lot of air time, they did not get a lot of support beyond what
- they had to start with.
- So the speaker wasn't wrong about that. The problem is, we can't keep doing
- this. This is really, you know, this is really dangerous to our entire system.
- So I think the speaker has to see if he can figure out a way to isolate as much
- as possible the really hard core, absolute evidence deniers and get them over
- here and then try to bring the rest of the caucus with him.
- It may mean that it will threaten his speakership, but my view on that, and it's
- easy for me to say, he will be historically a more important figure if he stands
- up to his own extreme wing and makes clear that he is putting his country first.
- He's obviously a rock solid Republican, conservative, but he's not going to
- (inaudible) go so don't even think about all of you guys ever doing this again
- while I'm the speaker. And I personally think he would stay in office, but, you
- know, that's not for me to say.
- MR. O'NEILL: Well, we can all hope for a profile (inaudible) encourage speaker
- for, Madam Secretary, but let me take a different prospective as foreign
- governments were watching all of this, what do you think they were saying and
- thinking about the United States?
- SECRETARY CLINTON: Well, I think we know, because some of them went public with
- what they were thinking about. And it was painful because it's difficult to see
- a self-inflicted wound like the one we just went through having such
- consequences.
- And it's not just what they were saying at the moment, it's what they were
- planning for the future. When, you know, you see countries saying that we don't
- know how reliable the United States is, they don't know how much we can count on
- us and our leadership, that has real consequences. It has economic consequences
- but also has consequences when you read that, you know, one of the high-ranking
- Chinese officials who publicly commented on it, said, look, it's time to
- de-Americanize the world. These people can't run their own country, why should
- they be permitted to exercise a disproportionate influence on the rest of the
- world.
- So it was something that I regret, and probably the best symbol of it was
- because the government shutdown, President Obama could not go to the East Asian
- Summit or the Asia-Pacific Economic Committee, two of the linchpins of what we
- call the Asia pivot, which was our desire to both reassure and reassert American
- presence and power in the Pacific as a balance and as a duty to those with whom
- we have treaties, Japan and South Korea, Philippines and Thailand and Australia.
- And so because of the shutdown, it wasn't just the fact of the shutdown,
- literally a lot of the people furloughed who would do a President's trip
- couldn't work, just imagine, that is no way to run a great country, right?
- And so the President didn't go, but, you know, President Putin was there,
- President Xi Jinping was there and, you know, it's a very symbolic moment when
- it's -- not because of any external problem, but it's because of the internal
- political dysfunction that keeps the President of the United States, I don't
- care what party, I don't care what your political preferences are, keeps the
- President of the United States from being on the world stage at a really
- important time, to look over the horizon about, you know, trading opportunities
- and the Trans-Pacific partnership, other kinds of work that needs to be done in
- the region to keep, you know, commerce flowing across the South China Sea to
- work with our friends in Japan and China to prevent further escalation over the
- contested islands. I mean, there's a lot going on in the region.
- And it was a very sad commentary on what this kind of political standoff done
- for totally partisan and personal advantage does to our overall foreign policy.
- MR. O'NEILL: We agreed there's a lot of going on in Egypt and in China,
- (inaudible) new leadership there. Your views?
- SECRETARY CLINTON: Well, I've met the new president, and certainly I'm
- impressed by his, you know, mental and physical energy and vigor. He seems to
- have created a stable transition from Hu Jintao power and the former leadership
- to the new team.
- I think China has some big challenges that they're going to have to confront.
- You guys know more about economic challenges than most people, but there are
- other demographic challenges that feed into that. There's a lot of discontent
- in a growing middle class about, you know, what is the future holding for them,
- what kind of opportunities are they going to have, there's no real social safety
- net whatsoever, pensions and the like.
- So I think that he has his job cut out for him. He's very much committed to
- coming up with some plans. I know there will be a meeting shortly to try to
- look at the plans for the next five to ten years, so I think he's shown steady
- leadership, which is very welcome, both inside China and outside China, but I
- also believe that there's growing nationalism in China and in Japan and in other
- places in the region that we have to be watchful about.
- This dispute over what are called by the Japanese as Senkaku Island has really
- unleashed some very old grievances and a lot of heated rhetoric going back and
- forth between China and Japan that needs to calm down. It is not in anyone's
- interest that this spiral out of control.
- Similarly, Korea and Japan have disputes over Takeshima (phonetic/audible) and
- some territory, again, without the United States playing a leading role in
- making sure there's an opportunity to resolve this. North Korea, which under
- its new leader, seems unpredictable at best, and I think even the Chinese
- leadership today recognizes that.
- And you go down the roll call, and there are so many tremendous opportunities,
- but in order for those opportunities to be realized, it requires a rules-based
- order. I mean, everybody from the biggest China, to the smallest Singapore, to
- the most developed, to the least developed, which is why I spent so much time in
- the region trying to knit together the sort of regional rules-based order that I
- think is important for the people in the region first and foremost, but for all
- the rest of us.
- And it will all come down to whether China wants to exercise that (inaudible)
- that responsible stakeholder position.
- And I think eventually that will be the decision of the Chinese government,
- because it's in their interest because while they focus on internal challenges,
- they don't need a lot of agitation and problems on their borders and outside, so
- it's something that we watch carefully, and we obviously want China to be
- successful and to be responsible.
- MR. O'NEILL: Within the administration, do you think there's any risk that the
- Asia pivot focus that you started, Madam Secretary, loses momentum because of
- the Middle East and the shift there?
- SECRETARY CLINTON: Well, Tim, I hope not. I mean obviously there's a lot going
- on in North Africa and the Middle East that requires our attention, but I've
- said repeatedly that the real future lies in the Asia-Pacific, and no country is
- better situated to take advantage of what happens in the Asia-Pacific than we
- are because we are a Pacific nation, just like we are an Atlantic region, thanks
- to the gift of our geography.
- But it was troubling that the President couldn't go to that event. That
- signaled to a lot of academics and scholars, well, that so-called pivot I went
- around talking about is certainly slowing down, that it's not realizing the
- continuity that is required to establish policy.
- You know, if you look at what we did in Europe with NATO, our promotion of the
- European Union, our close alliances with many countries there, our constant
- support for freedom behind the old Iron Curtain and our willingness to help fund
- and help the countries that came out from behind it get on their feet, we had a
- long-term strategy.
- If you look at Korea, after the Korean War, we could have said, man, we have a
- world war, now we have a Korean War, we're done, we're going home, but we had
- very, you know, very smart leadership that said, okay, we've protected the lower
- half of the peninsula, they need a chance to develop.
- And think about what they went through. I mean, South Korea has coups, have
- assassinations, have, you know, really terrible politics for a very long time.
- They didn't become what we would consider a functional democracy overnight, but
- we never gave up. We had troops there, we had aid there, we had a presence of
- American business there. We were there for the long run.
- And what I worry about is that in a time of shrinking resources and
- well-deserved demands that we pay attention here at home to what's happening to
- the American people, that we're not going to maintain that continuity of
- attention and support that is needed in Asia and elsewhere.
- So I'm hoping that it, you know, certainly is maintained despite the hiccups,
- but it takes time and resources to do that.
- MR. O'NEILL: So let's go to the Middle East, complicated, could spend hours
- talking about it. I think all the problems -- the big problems for this group
- are sort of hiding in sight from our view, Iran, Iraq, Syria, Egypt.
- What would be most helpful to us, given your intimacy with the issues and the
- personalities in the region, if you give us a six to 12-month look in the region
- and say, if this happens, that's important, or what is your biggest worry
- because opportunity wasn't (inaudible) influence?
- SECRETARY CLINTON: Well, one thing I've learned is that there's no one that
- knows what's going to happen in the Middle East, and that even became clear
- after the Arab Spring, but I'll take a stab at it.
- It's really important that Egypt stabilizes, and whatever one thinks about the
- military intervention that happened, it's a fact, but it's not at all clear to
- me that that military intervention has resulted in stability or in quashing a
- lot of the continuing uprisings from Islamists and even Jihadists.
- So how Egypt navigates through this next six to 12 months is crucial for the
- entire region. There are a lot of proxy battles going on, you know, there's
- proxy battles between the Saudis and the Iranis and the Jordanians and the
- Iranians and the Turks and, you know, it goes on and on, and you can look at
- individual countries and try to sort out who is on what side.
- So in Egypt, the election of Morsi was not by any means an overwhelming mandate,
- in fact, it was a rather small turnout in the second election. And instead of
- recognizing that, Morsi and the Freedom and Justice Party, which was the
- political arm of the Muslim Brotherhood, really began to try to consolidate
- their own games.
- And again, I -- kind of the manual for foreign policy is, you know, human
- nature. People had been on the outs, they've been in prison, they've been abused
- under Mubarak. They won an election in part because the other side was so poorly
- organized and would not get their act together, despite our best efforts to
- encourage them to.
- So they think, okay, we want to now get all our people, you know, give them the
- position in the government, make the decisions that will please our supporters.
- They ignored the economy. They wouldn't make the tough decisions that the IMF
- was demanding for many months, still to this day, and they began to do things
- which really raised concerns among the vast majority of nonactive Islamists in
- Egypt. And you all know that the military then basically came in, but they had a
- 22 million signature petition asking them to, so it was all very unusual.
- So the military's in, what are they going to do? Are they going to be any
- better at developing the country than Mubarak was? Mubarak and his wife were
- people I knew quite well, had many conversations starting in the '90's literally
- up until weeks before he left, but there was no plan. You know, the literacy
- rate did not go up, the education rate for the average Egyptian did not improve.
- Women's positions did not change. Agricultural got worse. They started
- importing wheat instead of exporting. You go down the list and the military
- controls a significant percentage of the economy. Some say 40 percent, some say
- 50 percent.
- So some of what you're seeing is not just political and patriotic, it's just
- purely self-interest, you know, we don't want anybody going after our industries
- and our resources.
- So my hope is, and I really can't tell you how realistic a hope it is, is that
- whoever runs, and it's likely to be a general, and it's more than likely to be
- el-Sisi taking off his uniform running for president, probably given the way
- that they're managing the system, get elected, but then what? What is he going
- to do? What role is he going to play? So Egypt is (inaudible).
- If you look at what's happening in Syria, it's clearly a multiply leveled proxy
- battle. We've got Iran with their agents in Hezbollah, and they're being taken
- on by indigenous rebels but increasingly a collection of Jihadists who are
- funded by the Saudis, funded by the Emiratis, funded by Gotter (phonetic), and
- you have the Turks that were very active in the beginning, but then began to be
- concerned by some of the development inside Syria, particularly among the
- northern and northeastern Kurdish population in Syria.
- So there is a lot of maneuvering still going on. I'm hopeful that there will be
- success with the chemical weapons peace, and I'm hopeful there will be a peace
- conference, but I'm doubtful that Asad will move out of the way, so I think
- you're in for six to 12 months at least of further stalemate where it is still a
- very active, you know, civil conflict.
- I think that the other places that you have to watch is what's, you know, what's
- happening in the gulf, both the Saudis and the (inaudible) becoming much more
- active participants in Egypt, in Lybia, in Syria. There's a lot of moving parts
- here. Gutter (phonetic) with the new premiere is, you know, finding his way,
- he's been very active under his father, we'll see what he does.
- And then we have the peace process which, you know, Secretary Kerry and his team
- are plugging away on, but moving over all of it is Iran, and the, you know, the
- fact that the Israelis and the Saudis are both in the same boat without being
- suspicious of anything that could be agreed to by the Iranians, give you some
- sense of how the calculation here is in a state of constant motion.
- The Iranians are on their charm offensive. If it's real, which is hard to tell,
- then you could see a breakthrough of some sort by the international community.
- Whether that would meet the demands of Israel and Saudis, who knows, but at
- least they're talking and trying to explore it.
- And, you know, I think it's very tough to reach a credible deal with Iran, but I
- think you have to try. And I just don't think you can walk away from that
- possibility. And so I hope that something can come of it.
- MR. O'NEILL: Speaking of that term, as President Reagan once said about the
- Russians, trust but verify. Recently in response to the Iranians turn if he was
- smiled but enriched.
- SECRETARY CLINTON: Well, I think you got it, I think if -- the Iranian's
- position for as long as I've been closely following it and involved in it is we
- have a right to enrich. Now, technically they don't. They're signatory to the
- nonproliferation, they do not have a right to enrich, but that is their bottom
- line demand, and that's what they're trying to obtain international recognition
- for.
- And it will be very difficult for the right safeguards and conditions to
- actually be constructed that would hold water enabling them to do that, but
- there are really three things you should look at.
- We should look at the uranium production through centrifuges, (inaudible) are
- the two major centers, but you should also look at their continuing work to
- build a heavy water reactor in a place called Arak, A R A K, which is a half
- form of plutonium which is the fastest path for weapons-grade material for
- nuclear bomb.
- And you have to look at their missile program, because why do they continue to
- develop intercontinental ballistic missiles that work on miniaturizing warheads
- if they don't have some intention of being prepared at least to hold out the
- threat over their neighbors and beyond.
- So this is, I mean, you know, if you had an arms expert here, he or she would go
- into great detail about how difficult it is to find all of the production, to
- control all of the production that Iranians keeping saying they have a Fatwa
- against nuclear weapons.
- And the problem with that is even if you were to believe it, and there are some
- very skeptical, smart people who do believe it, who believe that the Fatwa is
- legitimate, it doesn't go on to say, and we will not construct the pieces to
- give us the nuclear capacity whenever we choose to assemble them. It just says,
- no, we will not build nuclear weapons.
- So it's a wicked problem, as we like to say, because Iran is not only troubling
- because of its nuclear program, although that's the foremost threat, it's the
- primary conductor and exporter of terrorism.
- I mean, if you had a big map here behind us, literally from North America to
- Southeast Asia, there are so many thoughts, so many bombs, so many arrests that
- are all traced back to the Iranian revolutionary guard, and their constant
- efforts to sell (inaudible).
- And we have a lot of friends around the world, even people who say, look, I need
- their oil, I need their gas, I don't particularly trust them or like them, but
- I'm going to do business with them, besides that's an American problem, that's
- Israeli's problem, it's a Middle Eastern problem. It's not.
- They want (inaudible), they want as broad a span of control as they can have, so
- even if a miracle were to happen and we came up with a verifiable nuclear deal,
- there would still be problems that Iran is projecting and causing around the
- world that had real consequences for our friends and ourselves.
- I mean, they did hire, you know, they did hire that gunman to kill the Saudi
- ambassador, and people thought that was so outrageous. It was made up. We're
- sitting around the situation room saying, let's think of something really bad
- about the Iranians, like you had to think of something, and, okay, let's make up
- a story that they sent agents to Mexico to hire a drug cartel enforcer and
- fortunately they were led to somebody who was a double agent working for the
- drug administration -- the Drug Enforcement Administration in the United States,
- so we were able to capture the guy when he came to Texas to transfer the money,
- but they were going to kill the ambassador from Saudi Arabia in Washington, and
- the plan was to get him when he was at a public place, a big restaurant some of
- you may know, Cafe Milano. I mean, absurd.
- And we had -- the guy, once he was caught, gave names and dates and money
- transfers and all the rest, but people kind of shrugged it off like, oh, that's
- so ridiculous. Who would do that? The Iranians, they do it all the time.
- So yeah, trust but verify and then verify again, again and again. We have to
- figure out some modus vivendi with them but not at the risk of putting ourselves
- and others under their thumb.
- MR. O'NEILL: Let's come back to the US. Since 2008, there's been an awful lot
- of seismic activity around Wall Street and the big banks and regulators and
- politicians.
- Now, without going over how we got to where we are right now, what would be your
- advice to the Wall Street community and the big banks as to the way forward with
- those two important decisions?
- SECRETARY CLINTON: Well, I represented all of you for eight years. I had great
- relations and worked so close together after 9/11 to rebuild downtown, and a lot
- of respect for the work you do and the people who do it, but I do -- I think
- that when we talk about the regulators and the politicians, the economic
- consequences of bad decisions back in '08, you know, were devastating, and they
- had repercussions throughout the world.
- That was one of the reasons that I started traveling in February of '09, so
- people could, you know, literally yell at me for the United States and our
- banking system causing this everywhere. Now, that's an oversimplification we
- know, but it was the conventional wisdom.
- And I think that there's a lot that could have been avoided in terms of both
- misunderstanding and really politicizing what happened with greater
- transparency, with greater openness on all sides, you know, what happened, how
- did it happen, how do we prevent it from happening? You guys help us figure it
- out and let's make sure that we do it right this time.
- And I think that everybody was desperately trying to fend off the worst effects
- institutionally, governmentally, and there just wasn't that opportunity to try
- to sort this out, and that came later.
- I mean, it's still happening, as you know. People are looking back and trying
- to, you know, get compensation for bad mortgages and all the rest of it in some
- of the agreements that are being reached.
- There's nothing magic about regulations, too much is bad, too little is bad.
- How do you get to the golden key, how do we figure out what works? And the
- people that know the industry better than anybody are the people who work in the
- industry.
- And I think there has to be a recognition that, you know, there's so much at
- stake now, I mean, the business has changed so much and decisions are made so
- quickly, in nano seconds basically. We spend trillions of dollars to travel
- around the world, but it's in everybody's interest that we have a better
- framework, and not just for the United States but for the entire world, in which
- to operate and trade.
- You know, I remember having a long conversation with Warren Buffett, who is
- obviously a friend of mine, but I think he's the greatest investor of our modern
- era, and he said, you know, I would go and I'd talk to my friends and I'd ask
- them to explain to me what a default credit swap was, and by the time they got
- into their fifth minute, I had no idea what they were talking about. And when
- they got into their tenth minute, I realized they didn't have any idea what they
- were talking about.
- I mean, Alan Greenspan said, I didn't understand at all what they were trading.
- So I think it's in everybody's interest to get back to a better transparent
- model.
- And we need banking. I mean, right now, there are so many places in our country
- where the banks are not doing what they need to do because they're scared of
- regulations, they're scared of the other shoe dropping, they're just plain
- scared, so credit is not flowing the way it needs to to restart economic growth.
- So people are, you know, a little -- they're still uncertain, and they're
- uncertain both because they don't know what might come next in terms of
- regulations, but they're also uncertain because of changes in a global economy
- that we're only beginning to take hold of.
- So first and foremost, more transparency, more openness, you know, trying to
- figure out, we're all in this together, how we keep this incredible economic
- engine in this country going. And this is, you know, the nerves, the spinal
- column.
- And with political people, again, I would say the same thing, you know, there
- was a lot of complaining about Dodd-Frank, but there was also a need to do
- something because for political reasons, if you were an elected member of
- Congress and people in your constituency were losing jobs and shutting
- businesses and everybody in the press is saying it's all the fault of Wall
- Street, you can't sit idly by and do nothing, but what you do is really
- important.
- And I think the jury is still out on that because it was very difficult to sort
- of sort through it all.
- And, of course, I don't, you know, I know that banks and others were worried
- about continued liability and other problems down the road, so it would be
- better if we could have had a more open exchange about what we needed to do to
- fix what had broken and then try to make sure it didn't happen again, but we
- will keep working on it.
- MR. O'NEILL: By the way, we really did appreciate when you were the senator
- from New York and your continued involvement in the issues (inaudible) to be
- courageous in some respects to associated with Wall Street and this environment.
- Thank you very much.
- SECRETARY CLINTON: Well, I don't feel particularly courageous. I mean, if
- we're going to be an effective, efficient economy, we need to have all part of
- that engine running well, and that includes Wall Street and Main Street.
- And there's a big disconnect and a lot of confusion right now. So I'm not
- interested in, you know, turning the clock back or pointing fingers, but I am
- interested in trying to figure out how we come together to chart a better way
- forward and one that will restore confidence in, you know, small and medium-size
- businesses and consumers and begin to chip away at the unemployment rate.
- So it's something that I, you know, if you're a realist, you know that people
- have different roles to play in politics, economics, and this is an important
- role, but I do think that there has to be an understanding of how what happens
- here on Wall Street has such broad consequences not just for the domestic but
- the global economy, so more thought has to be given to the process and
- transactions and regulations so that we don't kill or maim what works, but we
- concentrate on the most effective way of moving forward with the brainpower and
- the financial power that exists here.
- MR. O'NEILL: So let me talk a little bit about an issue that you've been very
- articulate and inspirational on, and that is women's rights. From 1994 in
- Beijing --
- SECRETARY CLINTON: '95.
- MR. O'NEILL: Beijing not only humans rights you've been a very forceful
- advocate of the economic empowerment of women. Can you give us a mark to market
- progress report?
- SECRETARY CLINTON: Well, Japan is doing well, because Prime Minister Abe, as
- part of his economic plan, became convinced that encouraging more women to get
- into the workforce would be a big boost to the Japanese GEP.
- So there are leaders around the world who are coming to this recognition because
- of the evidence that is being presented, the IMF has done some really good work
- on this, obviously the World Bank and other organizations as well, but the
- bottom line, when you talk about economic empowerment, is that there are three
- big objectives, one, tearing down the still existing barriers, legal,
- regulatory, cultural barriers to women's participation in the economy.
- The IMF has just done a study about the legal obstacles to women working in
- professions all over the world, and some countries have very few, other
- countries are surprising, like I think Russia has 150 jobs that women can't be
- employed.
- So instead of saying, you know, here are the -- if you are going to be a miner
- in Siberia, here's the pack you have to carry and the work you're going to have
- to do. If you can do it, fine. If you can't, no. Man or woman, doesn't
- matter.
- So there are existing legal obstacles. There are regulatory obstacles. You
- know, a lot of countries back in '95 did not allow women to inherit property.
- They couldn't inherit from their fathers. They couldn't inherit from their
- husbands. And this was particularly onerous on small holder women farmers who
- do all the work. Sixty to 80 percent of the women farmers in the world,
- depending upon the region you're in, are women, and they're farming, you know,
- 2, 3 acres maybe at the most, but they're the ones in the field, the baby
- strapped to their back, they are the ones taking the food to market after they
- feed their family. If their husband dies, it goes to his father or his
- brother, and in many instances, the woman and her children have to leave.
- So there were legal obstacles we were able to break down, but then in practice,
- nobody enforced them. There weren't the regulations or the expectations that it
- would be carried through on.
- And then there are the, you know, lingering cultural barriers. And, you know,
- Angela Merkel last spring, who is a very conservative, cautious politician whom
- I deeply admire, I think she is an incredible leader, she said she favored a
- requirement that German companies have 30 percent women on their boards.
- Now, when somebody as cautious and conservative as Angela, who I have known for
- 20 years says that there's a problem. The problem is that (inaudible) is
- there's not a pipeline, it doesn't have enough people in it, but the fact is
- that there are a lot of women now who have achieved in their careers, who have a
- lot of great attributes to contribute to boards, but they're not being sought
- out, they're not being invited, they're not assuming that role. And the same,
- you know, in the CEO ranks.
- So whether it's legal obstacles, sort of regulatory, judicial obstacles or
- cultural attitudes, we have to continue to try to remove those.
- And I don't say this just because, you know, I think it would be wonderful if
- every girl in the world got the education she needed and the health care she
- needed and access to credit and politics, I think that would be great, and it's
- a moral imperative, but it is an economic imperative.
- And the work that Goldman has done that the OACD had done, the IMF has done
- shows unequivocally that we're leaving money on the table at the time of
- slower-than-hoped-for growth globally. And one of the reasons is that women are
- not encouraged and permitted in many instances to be full participants in the
- economy.
- So I go around making this case to a greater or lesser agreement, but I keep
- making it because I think it's very much in our interest and it's in the
- interest of our economic system globally to do more to make sure those doors are
- opened.
- MR. O'NEILL: Thirty years, now you're officially a private citizen, again,
- outside the bubble, flying commercial, I assume. So does the world look
- differently?
- SECRETARY CLINTON: The world looks different, yeah, Tim, I'm glad to be back in
- the world, I have to confess, and I'm glad to be on the shuttle instead of on a
- 16-hour flight somewhere, you know.
- I've traveled mostly in our own country since leaving the state department, and
- there's, you know, there are a lot of questions out there. People are
- struggling to figure out what we're going to do next and how we're going to get
- there.
- And a lot of young people who are not employed where they thought they would be
- employed now, college graduates not really working in the area they need to,
- sort of mismatched between the skills businesses need and what people are
- producing, so there are some structural issues that we have to address as a
- society.
- And it's not all about what the federal government does with the budget, but
- mostly I'm impressed that we just keep moving forward. And we have to honor and
- celebrate that spirit of resilience we saw here in the city after 9/11 when it
- was so devastated and people were shocked for all that was happening before
- their eyes. And there were a lot of questions, would downtown ever come back,
- would they work here. If you look at it now, it's just extraordinary, and it's
- a tribute to everybody who helped to make that happen.
- So when I look at the future of our country, you know, I'm an optimist by nature
- and I'm confident that we'll work our way through it, but it won't happen by
- accident. It will happen because both the public and the private sector decided
- it is in our interest to make some tough decisions. And the list of tough
- decisions are known to everybody from entitlement reform to revenues to future
- growth investments in R&D and, you know, education and skills and all the rest.
- But I think that we will once again fulfill the comments that Winston Churchill
- allegedly made, that the Americans finally get around to doing the right thing
- after trying nearly everything else, we're in the trying everything else stage
- right now.
- MR. O'NEILL: So last question, if -- what would you advise someone if he or she
- came to you and said, I'm thinking about running for the Democratic presidential
- nomination?
- SECRETARY CLINTON: Another one of those hypotheticals. Well, I would probably
- say, are you crazy?
- MR. O'NEILL: Wait, wait.
- SECRETARY CLINTON: Look, I think whoever runs next time has to have a very
- clear idea of where he or she wants to take the country and has to run on those
- ideas, because the election cannot be about personalities, participants sniping,
- all of the irrelevant stuff the day after the election sort of dissipates, and
- you wake up and say, okay, now what am I going to do? It needs to be an
- election about the future.
- So win or lose, people know what you want to do. You took it to the country,
- you tried to build a consensus for it, which can hopefully avoid some of the end
- runs that we've been seeing in the last few weeks, and then you have to have
- enough of an understanding of how government works to be able to execute the
- operational side of it, the slow, hard boring of hard boards as (inaudible) said
- about politics, there's nothing glamorous about it.
- And a lot of what I did as secretary of state, you know, people say, oh, well,
- what were you doing, well, I was trying to protect internet freedom which is
- under attack from some of the countries around the world that don't want their
- people to have access to the internet. I was trying to figure out what we could
- do about climate change that we could get around the Congress because they
- weren't going to give anything dramatic, but also was going to fit with our
- economic impairments, you know, things that aren't -- they're not in the
- headlines, they're in trend lines. So you can't govern from the headlines,
- you have to be responsive to them, but you have to have a plan about what it
- is you think that the country can do and then how you can harness people's
- energies.
- Now, I'll end with this. I mean, you know, my father was a veteran of World War
- II, he was in the Navy for five years. He gets out of the Navy, all he wants to
- do is restart his very small business, he was a printer of drapery fabrics in
- Chicago, and start a family with my mother, that was it, you know, that was
- the GI dream, and get a nice house and raise the family.
- So when Truman and Marshall said, you know what, we have to rebuild Europe and
- we have to support Japan, yes, you know, Germany and Japan were our enemies, and
- we just lost 400,000 plus people in the war and countless billions of dollars,
- but we have to do that.
- So we're going to have to keep taxing you, Hugh Rodham, my father's name, to
- rebuild your enemies. My father, who was a lifelong Republican, is like, what
- is that about, you know, what do you mean? I mean, come on, give me a break.
- But we had visionary leaders who said, trust us, and there was enough trust in
- the system so that people could. We are going to help create a world that will
- be a more peaceful, more prosperous world and good for the United States.
- So when Truman and Marshall came up with what's known as the Marshall Plan,
- people were not immediately enamored, so they went to businesses, they went to
- the big banks and the industrial firms, and they sat down and they said, look,
- you guys are going to need markets, you're going to need consumers to be able to
- buy your stuff, if we don't rebuild, who knows whether that will happen.
- And then a lot of our leaders in businesses and presidents of colleges fanned
- out across America and made the case. And everybody was speaking with one
- voice. And we spent about $13 billion, which in, you know, current dollars is
- 120, 125 billion, rebuilding our enemies, and it was one of the best investments
- America ever made.
- So somehow and I -- you know, look, I know we're more cynical. We have a
- television station for every prejudice, bias and bigotry anyone would want to
- invest themselves in, so it's harder, it's harder to bring people together, but
- I think that's what is needed, and somebody would have to be willing to do
- politics differently than it's been done, win or lose, and say, look, here's
- what you get, no games, no hidden tricks, this is what we have to do, you know,
- if you agree with me, vote for me, if you don't agree with me, vote for somebody
- else, but I want to have a conversation with the country that is in keeping
- with who we are as a people.
- MR. O'NEILL: Thank you, Madam Secretary, for today and everything that you've
- done for the country. Ladies and gentlemen, Hillary Rodham Clinton.
- (Time noted: 1:50 p.m.)
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