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Deputy Secretary Steinberg’s Remarks to the Center for Strategic and International Studies Colombia Conference

DEPUTY SECRETARY STEINBERG: Well, thanks, Mack, for that exceedingly generous introduction. I’m touched, and it means a lot coming from you because of all that you’ve done for your country and especially on Latin America. And the ambassador and to so many good friends, current and former colleagues in the audience and in and out government, it’s a really pleasure for me to be here. I was telling Lourdes on the way over, this could be my last speech as Deputy Secretary. I’ve only got about two weeks to go. And I was particularly eager to do it, frankly, for the reasons that Mack outlined because it has been an especial privilege for me to come back into government and continue the work that was begun in my last time in government under the Clinton Administration and to see both the enormous progress that was made and the realization of the vision we had back in the late 1990s and to be able to be a small part of carrying that work forward to a new height.

And it has, in every respect, been gratifying because, as Mack said, first, it is a wonderful case study in successful policymaking, which makes it useful for me going back to academic life to have a case study of – of a success story rather than what went wrong, which is the kind of standard case study, but also because it really does reflect an incredibly broad set of actors in both countries working together over an extended period of time, and it really does demonstrate that if you’re going to be successful in policy, you have to establish a broad base of support not just among policymakers, but among publics. And I think that has been a key feature of why this policy has been so successful – the strong commitment of both the American people and the Colombian people as well as the political and government leaders.

And it has been in the last two and a half years, really, just a tremendous opportunity to work with the two administrations in Colombia and now with President Santos, Foreign Minister Holguin, and the ambassador to take this forward. Over the two and a half years since I’ve been a deputy secretary, I’ve had the privilege of making this an important part of my job. I’ve made two trips to Colombia since becoming deputy secretary, and on my last trip, I had a chance to launch the high-level partnership dialogue and just a few weeks ago, host the second meeting of the high-level partnership dialogue here in Washington. So – and we’ve seen in very concrete terms and ways that I’ll outline in a minute just how much has been done.

But I also think it’s important to just remember how far we have come. When I came into government and not that long ago, people were – some quarters were talking about Colombia as a near- or potentially failed state. And yet today, Colombia is the fourth largest recipient of foreign direct investment in Latin America behind Brazil, Chile, and Mexico. And along with tremendous economic growth and the achievements on the security front, we have now seen a movement to an even more broad-based strategy – the democratic prosperity agenda that makes sure that not only will Colombia and Colombians be secure and that the country will be prosperous, but all of the people in Colombian society will share in these great achievements.

It’s true; you can talk about statistics, and statistics are really important. You can just think, for example, that since 2002, terrorist attacks are down 77 percent, homicide is down 56 percent, and kidnapping is down 92 percent. But what’s even more important – and I know many of you in the audience know – is the palpable sense of a future and security that so many people have. The work has not ended, but the sense of optimism, the sense that Colombia can not only survive, but thrive is really critical. And these most recent presidential elections, I think, are a strong reflection of the great democratic tradition of Colombia and the strength of the democratic commitment of Colombian society. This is a model that serves as an exemplar all through the region and around the world that people can look to as an example of societies that come together to vindicate that democratic objective.

And since the election of President Santos, you can see what a remarkable step forward that has been taken and the broad-based commitment of President Santos and his administration. In just a short period of time, we have seen the recently enacted land restitution and victims reparation law addressing the foundational causes of conflict within Colombia and assisting hundreds of thousands of displaced persons and other vulnerable populations recover land, which is both an important political achievement, but also a strong commitment of resources. He’s begun to heal the breach between the executive branch and the legislative branch and strengthening the independent prosecutor’s office as well as moving forward on a host of human rights cases. He’s working to strengthen relations with civil society, working with Vice President Garzon to build a sense of trust between civil society and the government rather than a sense of conflict and adversarialism.

And President Santos and his administration, led by the foreign minister, have made improving relations with their neighbors a priority, which is paying dividends already, including, as we’ve seen, the extradition to Colombia of important narco-traffickers. And the continued work that the Santos administration is doing at going after the FARC network and its key leaders, with the recent successful operations, is just a further example of the broad-based effort to deal with the full range of challenges.

And we in the United States are honored to partner with Colombia across this full set of issues. And to make sure that it is not a one-dimensional relationship, we instituted the High-Level Partnership Dialogue to broaden and strengthen the range of our engagements. And if you look at the topics that we have established as our formalized working groups, science and technology , energy, environmental protection and climate change, culture and education, social and economic opportunities, and of course, the very important set of issues around democracy, human rights, and good governance.

And at our last meeting, we had more than 60 Colombian Government officials, including Vice President Garzon, Foreign Minister Holguin, and many other cabinet and sub-cabinet officials, who met with more than 120 U.S. Government representatives from more than 19 agencies. And this is more than a talk shop. As the Vice President and I agreed at the very first meeting of our group, the Human Rights Working Group, we’re focused on concrete agenda, concrete results, to demonstrate to our people in both countries that this is a partnership that delivers the goods.

So, for instance, on the human rights side, we agreed to jointly track certain key human rights cases on a monthly basis and to identify obstacles and better direct our assistance to Colombia. And we on the United States side reiterated our support to help build the fiscalia and make sure that we can continue the important work that’s taking place there.

On energy, a topic close to Mack’s heart, we reviewed existing partnerships in renewable and fossil fuel energy, as well as exploring additional avenues of collaboration in regional electrical interconnection, shale gas, and mining.

And Colombia will soon host the first plenary meeting for the Action Plan on Racial and Ethnic Equality, a plan – a commitment that we jointly signed during my first visit to Colombia.

Beyond these efforts, we are supporting Colombia’s aspirations to become a member of the OECD. And in these HLPD meetings, we also agreed to enhance cultural and educational cooperation in Colombia and encourage economic and social opportunities for Afro descendents and indigenous communities, which are such an important part of the fabric of Colombian society.

And together, we’re working on the United Nations Framework Convention on Climate Change, the UNFCCC, including implementing the Cancun outcome and looking forward to working together at the next meeting in Durban, South Africa.

Now, having said that we broadened the partnership to all these issues, we continue to recognize that we can’t neglect the issue of drug trafficking on both the supply and the demand side and the impact that it has on all our societies. And so while we have not achieved all of our counternarcotics goals, our cooperation together has helped Colombia become more stable, denied millions of dollars in illegal drug revenues to the FARC, and reduced the amount of pure cocaine capable of being produced in Colombia by 59 percent, from 700 metric tons in 2001 to 290 metric tons in 2009, which has had a positive impact here on our society. And we must continue, and Secretary Clinton has made clear that we take responsibility for continuing to do our side of the business, which is dealing with the problem of drug demand.

Now, this is – I’ve talked so far primarily about our work together on bilateral issues and helping to strengthen Colombia’s security, economic prosperity, and inclusivity. But what has been especially rewarding for me is to see the growing role that Colombia is playing on the regional and international stage. As we like to say in our business, Colombia has gone from being a consumer of security to a provider of security and support for others who face even greater challenges.

Today, Colombia sits on the UN Security Council, trains police to help other nations meet their law enforcement challenges, and is playing a leading role, now successfully, in bringing Honduras back into the Inter-American system. And I think that is, as we’ve taken examples from our collective and successful work together, Colombia continues to help others deal with these challenges. So, for example, the institutional capability in counternarcotics built in Colombia over the last decade has allowed Colombia to share its security expertise with others. Over the last two years, Colombia has trained more than

9,000 police from 18 Latin American and three West African states. It’s trained hundreds of Mexican investigators and dozens of Mexican helicopter pilots. It’s offered similar assistance to its Central American neighbors, who are deeply affected by transnational crime and drug trafficking.

Now, of course, as Mack previewed, I wouldn’t want to end my discussion here without touching on the U.S.-Colombia Free Trade Agreement, the U.S.-Colombia Trade Promotion Agreement, which will open new markets and create new jobs and opportunities for both of our peoples. We’ve been impressed by the level of commitment and, more importantly, by the quick action by the Colombian Government to address labor-related concerns. In April, the U.S. and Colombian governments agreed to an ambitious and comprehensive action plan that includes major, swift, and concrete steps that the Colombian Government has agreed to take to address outstanding labor concerns, in addition to the good work it is doing on the human rights front.

The action plan contains several milestones, including 20 milestones due by April 22nd, which the Colombian Government needed to accomplish for the Administration to initiate technical discussions with the Congress. On May 4th, we finished our review of those accomplishments and announced that we were ready to move forward to the next stage in the process. Specific improvements that have already occurred under the action plan include expanded eligibility for Colombia’s protection program to include not only labor leaders but also rank and file activists and those seeking to form a union. Over 95 judicial police investigators have been assigned exclusively to pursuing cases of labor violence, with early identification of any union affiliation now mandatory. And ahead of schedule, Colombia enacted legislation to move up the effective date of new penalties for abuse of cooperatives, which try toevade worker protections.

And I’m pleased to see that there’s been strong support, not only here in the United States but in Colombia, for the Action Plan. According to Julio Roberto Gómez, the secretary general of the Confederación General del Trabajo, it is, in his words, “Positive that President Santos has put forth an agreement that includes issues such as freedom of association, human rights, and guarantees for workers as they are related to the FTA.” Or as José Luciano Sanín, director of the – general of the Escuela Nacional Sindical, has observed, “We are witnessing a moment that we have not had in at least 20 years. After the 1991 constitution this would be our most important agenda for the labor movement.”

All of these steps are a strong indication of Colombia’s commitment to working to address the issues that the Administration and others have identified. Now, of course, there’s still more work to be done under the action plan, including several items that we’ve agreed to see completed before June 15th. We are confident and optimistic about the steps that Colombia will take, and allow us to move our own process forward to pass the FTA this year, as the Secretary has said.

This is really a set of remarkable achievements. Just think, in the last two weeks, separate from commitments under the Action Plan, the Colombian Government has engineered a breakthrough protection agreement with the teachers union; moved forward on a decree for collective bargaining for the public sector; concluded a tripartite agreement signed by the country’s second-largest labor federation, itself, and business; achieved the first convictions in a controversial, so-called Soacha false positives murder case; and seen Colombians elected to the administrative tribunal of the ILO.

And in all these issues, President Obama said it best, “I believe,” in his words, “that in Americas – in the Americas today, there are no senior partners and there are no junior partners, there are only equal partners.” Of course, equal partnerships, in turn, demand a sense of shared responsibility. In Colombia, I have found, and we have, a true and willing partner. I am, as I say, truly impressed by what’s been achieved, but also know that you all understand that this is a never-ending effort and that each step needs to be succeeded by more determination to see the achievement of these goals of security and prosperity, of inclusivity, and to see that the fate of Colombia, as it seeks to achieve them, is deeply intertwined with our own.

This is a special partnership for us in the United States, and I have been privileged to be a small part of it over the last two and a half years. So thank you for your attention today, and I look forward to your questions. (Applause.)

Go ahead. Do we have mikes? There we go. Go ahead.

QUESTION: I’m sorry. I do not have a question. My name is Juan Carlos Isgara (ph), but there is an assessment I have to make. I was brought here to talk about justice, and if I was brought here to talk about justice, there is an act of justice that I have to make, and that is, Mr. McLarty, to say again, after all these years, I remember that when almost nobody believed, you believed. When almost everybody turned around, you gave us your hand, and you were a great supporter of Colombia in the middle of the night during very bad circumstances. And now that we are seeing a bright sky and a beautiful day, we have to remember the night just in order to say in the name of the Republic of Colombia and of every Colombian, thank you very much, Mr. McLarty. (Applause.)

QUESTION: Steve Lande, Manchester Trade. I don’t think there’s any question that a combination of Obama Administration education and Colombia action has really made this agreement ready to pass. The question, of course, is that we have a serious domestic political problem in the United States that has nothing to do with Colombia, well known. I’ve been in trade policy for umpteen years, and it is very strange that something as basic as trade adjustment assistance, which has been U.S. policy for 34 years is now being questioned.

But the real question to my mind is: Does Colombia understand this? Do they realize that this is not really aimed at them? What happens if because of trade adjustment assistance, if Colombia – or because of disagreement, if Colombia, which I assume they will live up to the obligations. And I’d like to ask Mack to speak a little bit on this question, too, because of his experience over the previous couple of – excuse me, during the previous democratic administration in this area about what do we do if the Republicans – and I know I shouldn’t say this, but I’m a Democrat – what do we do if the Republicans really keep their feet in and do not compromise on this trade adjustment assistance act?

Thank you.

DEPUTY SECRETARY STEINBERG: Let me just say a quick word and then I’ll either invite or allow our people sitting here who are not really part of the presentation to either decide whether they want to answer or not. I think – as you know well from the perspective of the Administration, in the long run, we have to – if we’re going to pursue a trade agenda, which is enormously important to our future for jobs and competitiveness, that there has to be a broad-base of support in society. And that there’s no doubt, from our perspective, that the Colombia FTA, like Panama and South Korea, are win-wins for both societies but not for every single person. And trade, inevitably, has some dislocating features.

And the best way to move forward is not to retreat from trade, but to make sure that everybody can benefit from it, that people who are inadvertently – at least in the short term – suffering from trade have an opportunity to have that blow cushioned and to be ready to compete in that world. And that’s why we want a comprehensive approach that includes active pursuit of FTAs, including new ones that we’re negotiating like the TPP in East Asia, but also to make sure that our – that the American worker and the American people are part of this and feel beneficiary. So that’s why we think this is all a part of a package and we strongly hope that the Congress sees that we won’t have the support of the American people if we don’t have a comprehensive strategy.

All right. Mack.

MR. MCLARTY: Well, I’ll be very brief. I think Secretary Steinberg outlined precisely the balance here that needs to be achieved, should be achieved. It started really with President Obama’s comments and remarks of doubling our exports and that really set the predicate for moving forward on trade agreements.

There’s not that big a gap in a dollar sense between the Republicans and Democratic position. Clearly, there needs to be a deal in the middle. I believe there will be. It should take about an hour. It’s going to take a little longer than that. (Laughter.) But I think at the end of the day, they’ll get there.

DEPUTY SECRETARY STEINBERG: One more.

QUESTION: Phil McLean from here in CSIS. Since you’re returning to academia, let me ask you a classic college-type question – compare and contrast. Compare and contrast what happened in Colombia and U.S. policy in Colombia with what – pick a country out there in the Middle East and how we did things differently and what’s to be recommended and not recommended.

DEPUTY SECRETARY STEINBERG: Well, I think – I’m glad it was a compare and contrast and not a what-if. I’ve spent two and a half years resisting hypotheticals, and I’m now going to go back to a world where I can actually ask them of my students all the time. (Laughter.)

I think that the biggest success of Plan Colombia, what we’ve done together, were really the things that Mack touched on, which is, first, we had a strong bipartisan basis for this in the United States. And on the big challenges, whether it’s providing security and moving forward on social inclusion in Colombia or dealing with democratic transformation in the Middle East, these things don’t happen overnight. They require a sustained commitment of both policy and resources to make it happen. And there needs to be a sense among all the parties that you’re in it for the long term. If you don’t have that, then people will game the system because they’ll assume it’s a flash in the pan or that the kinds of benefits – the costs are often upfront in – or front-loaded and the benefits are in the long term.

So let’s take Egypt for example. One of the biggest challenges and one of the biggest impulses to the revolution in Egypt was the lack of economic opportunity, the fact that the system, although there had been some economic reforms, was not providing jobs and opportunity, particularly for many of the reasonably well-educated young people who are coming out of universities or training programs.

And so addressing that economic need and those social and economic needs is critically important, but it doesn’t happen overnight. We can give some short-term economic assistance, but what’s really needed is to stimulate long-term economic opportunity. But that doesn’t happen overnight, and so the people of Egypt, like the people of Colombia, need to know that we have a long-term plan, that there will be some short-term sacrifices to get the Egyptian economy into a place which can produce good jobs for people over the long term, and we need to find ways to give them the confidence that if they take the necessary steps that the United States and Europe and others will be with them.

That’s what we did in Plan Colombia. We were ableto be convincing because we had bipartisan support, because there was a strong commitment to whatwe could do this; it wasn’t one congressional session or one presidential administration. Those are hard to do, as Mack will tell you. But when it’s done, it’s America at its finest. And I think that’s something that we all need to focus on is how do we build these strong commitments that have the support of both parties – the people as well as government, and in both countries – to sustain these kinds of long-term challenges. And the fact that we’ve done it together in Colombia, I think shows it can be done and that can give people some confidence and encouragement to look for ways to replicate that.

Okay, one more.

QUESTION: Thanks. And I wish you the very best. My question goes to the congressional play going on with the FTA. You thought and said you were confident that by the end of the year we would see something. In my conversations with, for example, with folks – I won’t say who – in connection with Korea, were thinking that they are going to see an FTA approved in Congress by the August 2nd recess. I guess my question is both to you and to Mack whether Colombia is prepared for the possibility that this thing will go beyond August 2nd? And how does – how do we explain this under the circumstances and do we really need to have to explain it? Do you think that deal that, Mack, you thought was so close to getting can be gotten by August 2nd?

DEPUTY SECRETARY STEINBERG: Well, I’d say just my reference to the end of the year, I’ve learned a couple of things in my government service, is first it never hurts to quote your boss. (Laughter.) And second, it’s never smart to say something different from your boss. (Laughter.)

But I think what the Secretary meant to imply with that is – I mean, she is realistic. She served in the Congress. I don’t think she wanted to set some commitments to make it feel like somehow if we don’t get it by June, July, whatever, that that’s a failure. I think it was a strong commitment that we ought to find a way to do it this year. Obviously, we’d all like to see the logjam broken and move forward on these things sooner. So I don’t mean to imply that it’s not possible to get it done sooner. I just want to err a bit on the side of caution because often, even as Mack says, even if we resolve the issues around the TAA, there are always floor scheduling things. I worked in the Senate myself. And so the unpredictability of congressional action is something we just all have to live with.

I don’t know if you want to add anything to that.

MR. MCLARTY: (Off-mike.)

DEPUTY SECRETARY STEINBERG: All right. Good. Well, thank you all. Really appreciate it. (Applause.)

 


Deputy Secretary Steinberg briefs the press on Iran sanctions

Click here for State.gov video of Deputy Secretary Steinberg’s briefing.

MS. FULTON: Good morning, ladies and gentlemen, and welcome to the Department of State. Today we have Deputy Secretary of State Steinberg here to speak to us about the – some actions the U.S. is taking under the Iran Sanctions Act. He will make a statement and then have some time for some brief Q&As, but time is a bit limited. So because of that, we’ve planned for a 12 o’clock telephone background briefing with several experts on the Iran sanctions actions. So if you have detailed technical questions, I encourage you to hold them for that call. We have already sent out the call information. If you don’t have it, please just contact the press office.

But otherwise, without further ado, Deputy Secretary Steinberg.

DEPUTY SECRETARY STEINBERG: Good morning everybody. I’m here this morning to announce that Secretary of State Clinton has decided to impose sanctions on seven foreign entities under the Iran Sanctions Act of 1996 as amended by the Comprehensive Iran Sanctions, Accountability, and Divestment Act, sometimes known as CISADA, of 2010, for their activities in support of Iran’s energy sector. These companies are Petrochemical Commercial Company International (PCCI), Jersey and Iran; Royal Oyster Group, UAE; Speedy Ship, UAE, Iran; Tanker Pacific, Singapore; Ofer Brothers Group, Israel; Associated Shipbroking, Monaco; and Petroleos de Venezuela, sometimes known as PDVSA, in Venezuela.

All of these companies have engaged in activities related to the supply of refined petroleum products to Iran, including the direct supply of gasoline and related products, as well as the provision of a product tanker to the Islamic Republic of Iran Shipping Lines (IRISL), an entity that has been designated by the United States and the European Union for its role in supporting Iran’s proliferation activities.

The intent of sanctions on Iran is to pressure it to comply with its international obligations. In its struggle to secure the resources it needs for its energy sector, Iran repeatedly has resorted to deceptive practices to evade sanctions. This Administration, which is the first to impose sanctions on firms under the Iran Sanctions Act, has been working aggressively to prevent Iran from developing its energy sector. Iran uses revenues from its energy sector to fund its nuclear program, as well as to mask procurement of dual-use items. Today’s actions add further pressure on Iran to comply with its international obligations.

Under the Iran Sanctions Act, the Secretary has the authority to calibrate sanctions on a case-by-case basis. Accordingly, different sanctions have been selected for each entity ranging from prohibitions on certain types of government assistance to broader sanctions on property transactions with U.S. persons. In some cases, our intent has been to shut down the activities of target firms; in others our intent is dissuasive. In all cases, we’ve examined transactions in detail and have made judgments about the likely impact of our actions on the global energy market.

For example, in the case of PDVSA, the sanctions we have imposed will cut off PDVSA’s access to U.S. Government contracts, U.S. Export – Import (inaudible) financing and licenses for controlled technologies. These sanctions will not prevent PDVSA’s sale of oil to the United States or other markets, and the sanctions do not affect the operations of PDVSA’s subsidiaries.

To counter Iran’s expanding nuclear program, the Department of State has spent considerable time and effort to discourage companies from doing business with Iran in sanctionable sectors. In fact, in September of last year, you may recall I held a similar briefing to announce that we had secured the withdrawal of four major international oil companies – Royal Dutch Shell, ENI, Statoil, and Total – from projects in Iran. And in October 2010, we secured the withdrawal of a fifth major oil company, INPEX, from its project in Iran. The impact of these withdrawals has cost Iran hundreds of millions of dollars.

In the refined petroleum sector, we’ve seen many indications that shipments of refined petroleum have dropped significantly since the passage of CISADA. Some reports indicate that imports in some months have dropped over 60 percent.

Iran has lost millions in potential revenue by converting petrochemical plants to produce gasoline to make up for their dramatic shortfall in gasoline imports. In addition, the State Department has also convinced the jet fuel suppliers in 17 cities in Europe and Asia to which IranAir flies to stop providing fuel. These firms have been joined by scores of other companies working in a variety of sectors that have recognized that the risk of doing business with Iran are just too high in light of Iran’s continuing efforts in its nuclear program and its support of terrorism.

When necessary we have imposed, and will continue to impose sanctions against firms that commit sanctionable activity, as we demonstrated with the sanctions against the oil firms Naftiran Intertrade Company and Belarusneft and the seven more companies we add to the list today.

By imposing these sanctions, we’re sending a clear message to companies around the world: Those who continue to irresponsibly support Iran’s energy sector or help facilitate Iran’s efforts to evade U.S. sanctions will face significant consequences.

Additionally, in a separate action, the United States today is imposing sanctions on 16 foreign entities – individuals pursuant to the Iran, North Korea, Syria, and Nonproliferation Act, sometimes known as INKSNA, for their activities in support of WMD or missile programs. These include companies – include three Chinese entities and one Chinese individual, two Belarusian entities, five Iranian entities, and one Iranian individual, one North Korean entity, two Syrian entities, and one Venezuelan entity.

These entities were sanctioned for the transfer to or acquisition from North Korea, Syria, or Iran of goods, services, or technologies controlled under the various export control regimes, or otherwise have the potential to make a material contribution to the developments of WMD or cruise or ballistic missile systems. The majority of these entities or individuals were sanctioned because of proliferation activity involving Iran.

We’ve also worked diligently with our foreign partners in order to urge them to develop their own sanctions measures. In addition to four UN Security Council resolutions imposing binding obligations on states to implement sanctions against Iran, the EU, Japan, South Korea, Canada, Norway, Switzerland, and Australia have all also imposed robust autonomous sanctions against Iran.

As a result, there’s an international consensus to raise the cost of Iran’s refusal to meet its international nuclear obligations, and these are not the end of our efforts. We continue to review reports of sanctionable activity, engaging with foreign governments and evaluating and applying U.S. sanctions laws.

Let me take a few of your questions.

QUESTION: Just on the PDVSA point, you said that you had considered the effect on the oil market before making a decision. Can you say how you arrived at that conclusion and a little bit more about what PDVSA was doing specifically to assist Iran’s –

DEPUTY SECRETARY STEINBERG: Well, I think that with respect to the impact, obviously, we consulted closely with the economic agencies, including DOE and the other economic agencies. And in terms of the specific methodologies, you may want to ask that when we have some experts from – I think DOE will be participating in the call later. So I can give – they can give you a little bit more detail of the methodology that they used.

In terms of PDVSA’s activities, these were sales and purchases of refined petroleum products, which are specifically covered by the act.

QUESTION: Can you discuss the specific case of the Israeli firm? It seems odd that they would be involved in trade with Iran.

DEPUTY SECRETARY STEINBERG: Again, I think we – in terms of the specific activities, we’ve got a fact sheet – is that out now – in terms of what the specific –

MS. FULTON: We’ll be handing it out at the end.

DEPUTY SECRETARY STEINBERG: But again, it was for trade in petroleum products, and this was a company that engages in this kind of trade.

QUESTION: Just one more: Could you discuss the state of play vis-à-vis Iran and the P-5+1 talks? They have sent a letter to the Europeans. Are we any closer to seeing talks? Are the sanctions pushing them toward this point?

DEPUTY SECRETARY STEINBERG: Well, I think it’s clear that the letter that they sent back was not responsive to what we feel is – the necessary willingness of them to engage directly on the issues concerned. They talked in very general terms about cooperative matters, and it’s very clear to us, though – the President has said that we’re prepared to engage on other issues with Iran, that the core is a real commitment for them to address the nuclear program, and we did not see that in the letter that was sent to Cathy Ashton.

So it’s very clear that’s why we’re continuing to pursue these measures, both by ourselves and with others, because I think we need to continue to keep the pressure on Iran. This clearly had an impact on their economy. At what point that will cause them to make different decisions obviously is something we have to watch carefully, but it is a reason for us to make sure that we are very clear both in terms of our application of the sanctions law and our diplomatic engagement with others, that we are going to continue to push this until and unless the Iranians take a different position.

Okay. Well, thank you all very much; appreciate your time.

 


Deputy Secretary Steinberg: Assessing the Situation in Libya

Click here for State.gov video of Deputy Secretary Steinberg’s Remarks.

I thank the Chairman and Senator Lugar for inviting me today. I appreciate this chance to update the committee on our efforts and answer your questions.

During my last appearance, I reviewed for the committee the developments that led up to the international community’s engagement in Libya. Colonel Qadhafi met the peaceful protests of his own people with violence. When the UN Security Council, the Arab League, and the United States all demanded that atrocities must end, Qadhafi responded with a promise to show ―no mercy and no pity.

We quickly reached two important conclusions. First, we would not stand by as Qadhafi brutalized his own people. Second, Qadhafi had lost the legitimacy to lead, and he had to go to allow the Libyan people to reclaim their own future.

And so we assembled an international coalition of European and Arab allies with a clear, limited mission to enforce UN Security Council Resolutions 1970 and 1973 and protect the Libyan people. We offered our unique military capabilities early on and then turned over full command and control responsibility to a NATO-led coalition. Three-quarters of the over 6,000 sorties flown in Libya have now been by non-US coalition partners, a share that has increased. All twenty ships enforcing the arms embargo are European or Canadian. And the overwhelming majority of strike sorties are now being flown by our European allies. We are proud of our continuing contribution and grateful as our allies increasingly carry the burden.

As the coalition continues to carry out its best efforts to protect Libya’s civilian population, we continue to pursue three tracks on the political and economic front: pressuring and isolating Qadhafi; supporting the Libyan people in determining their own future; and delivering humanitarian aid.

First, we are working to escalate the pressure, deepen Qadhafi’s isolation and convince those around him that Libya’s future lies elsewhere. 

The international community is increasingly united around a shared insistence that Qadhafi must go. Last week’s Contact Group – with the participation of 22 nations and representatives from the UN, Arab League, NATO, EU, OIC and GCC—issued its most forceful statement yet, including that ―Qadhafi, his family and his regime have lost all legitimacy. They must go so that the Libyan people can determine their own future.‖ Turkey, once an important partner to Qadhafi’s Libya, has now joined the chorus of nations demanding that he leave immediately. The British, Italians and French are expelling Qadhafi’s diplomats, as we did in March. And we are urging other nations to refuse their visits unless Qadhafi’s envoys are either defecting or coming to discuss his departure.

We are taking a wide range of steps to send a clear, forceful message to Qadhafi and those around him that there is no going back to the way things were. They now face a no-fly zone, an arms embargo, asset freezes, and travel bans. Libya’s National Oil Corporation and central bank are blacklisted. The United States and other countries are also taking further unilateral steps to tighten the squeeze on regime officials and regime-affiliated banks, businesses and satellite networks. This week, the Prosecutor of the International Criminal Court announced that he intends to apply for arrest warrants for three senior officials in Qadhafi’s regime ―who bear the greatest criminal responsibility for crimes against humanity.

These measures are having an effect. We have deprived the regime of funds and assets that could be used to support attacks against the Libyan people. Libya used to export 1.3 million barrels of oil per day. That has stopped, and the regime is having difficulty accessing refined petroleum. There are some indications that the regime can no longer afford to pay supporters to attend rallies and demonstrations. The longer international sanctions stay in place, the more the pressure will mount.

Second, we are supporting the legitimate aspirations of the Libyan people, who deserve a successful transition to democracy just as much as their neighbors in Egypt and Tunisia.

Last time I testified, there were a great many questions about the makeup and intentions of the Libyan opposition. Our envoy, Chris Stevens, has been in Benghazi for several weeks now and has held meetings with a wide range of Libyan opposition members, including but not limited to the Transitional National Council (TNC). Secretary Clinton has met three times with Libyan opposition leaders and urged others to do the same. Several of you met with TNC leader Mahmoud Jibirl, including Chairman Kerry, yesterday. I will host him and his delegation at the State Department on Friday and he will meet National Security Advisor Tom Donilon at the White House Friday afternoon as well. Though it will be important to ensure that words are matched by actions, we have been encouraged by the TNC’s public statements on democracy, treatment of prisoners, human rights and terrorism. We have continued to stress the importance of the TNC distancing itself from extremists who could seek to hijack the popular movement, and we have been pleased by the clear view of the TNC leadership rejecting extremism and calling for tolerant democracy.

As we have gotten to know the Libyan opposition, we have stepped up our political, financial and non-lethal military support. As we notified Congress, we are providing up to $25 million for the provision of non-lethal items to the TNC. The carefully-chosen list includes medical supplies, boots, tents, rations and personal protective gear. The first shipment, 10,000 MREs, arrived on Tuesday.

The TNC has also requested urgent financial assistance. The Treasury Department has published new rules to remove sanctions on oil sales that will benefit the TNC. In Rome, the Libya Contact Group created a Temporary Financial Mechanism to provide transparent financial assistance to the opposition. Kuwait has already committed to contribute $180 million.

As Secretary Clinton said in Rome, we hope to work quickly with Congress to begin unfreezing Libyan government assets to meet pressing humanitarian needs. On Wednesday, we continued our consultations with Congress and shared our proposal. The bill authorizes the President to vest Libyan government property within the jurisdiction of the United States and use it for costs related to humanitarian relief to and for the benefit of the Libyan people. We see this legislation as addressing unique circumstances in Libya for limited, humanitarian purposes. This money belongs to the Libyan people, and it should serve the Libyan people.

Third, protecting civilians remains at the core of our mission. We are engaged in robust humanitarian efforts to help those in need inside Libya and those who have fled the violence. Our government is providing more than $53 million in humanitarian assistance, which helps to evacuate and repatriate third-country nationals, care for refugees on Libya’s borders and deliver food and medicine. The international community has already contributed, committed or pledged $245 million. We continue to look for additional ways to support humanitarian operations in response to the Libyan crisis.

Unfortunately, the Qadhafi regime has tried to block the delivery of desperately-needed humanitarian assistance. The brave people of Misrata have withstood a month-long siege as well as repeated incursions, assaults and atrocities. Qadhafi has blocked water, gas, and electricity. And this week, his regime laid anti-ship mines in Misrata’s harbor in a failed attempt to block humanitarian aid and medical evacuations. What has happened in Misrata is an outrage. Despite Qadhafi’s best efforts, we have now established a safe route for assistance to reach Misrata and its people.

We salute the determination and resilience of the Libyan people in and around Misrata. We are inspired by the way they have stepped forward to protect and care for their neighbors who managed to escape from areas under attack. We are also proud that NGOs we fund have provided much needed medical personnel and supplies to these cities, despite Qadhafi’s attacks.

Qadhafi knows what he needs to do. The violence must end and the threats must stop. His troops must withdraw from the cities they have entered. Humanitarian goods must be allowed to move freely and vital services must be restored. Qadhafi must go to allow the people of Libya to chart their own future.

Our approach is one that has succeeded before. In Kosovo, we built an international coalition around a narrow civilian protection mission. Even after Milosevic withdrew his forces and the bombing stopped, the political and economic pressure continued. Within two years, Milosevic was thrown out of office and turned over to The Hague.

I understand the desire for quick results, and of course I share it. But history teaches us that patience and persistence can pay off. We have already seen international pressure change the calculations of some of Qadhafi’s closest advisors, who have defected. It is impossible to predict which step will tip the balance.

The way forward is not easy. It will take sustained effort. And it will take continued close consultation with Congress.

We know what needs to happen. And so we are using as many tools and levers as we can to bring about our ultimate objective: the end of Qadhafi’s rule and a new beginning for a peaceful, democratic Libya.

 


James Steinberg: Speech on Administration’s Vision of the U.S.-China Relationship

Click here for video of Deputy Secretary Steinberg’s Address.

James B. Steinberg
Deputy Secretary of State
Keynote Address at the Center for a New American Security

DEPUTY SECRETARY STEINBERG: Well, thank you, Nate, for that kind introduction.
It’s a great pleasure to be back and to be here at this CNAS event. It’s great to see, although I had no doubt about it, that CNAS is still thriving despite the Obama Administration’s best efforts to deprive you of each and every one of your leading lights. And every meeting I go to seems to be populated by so many of the good people – not only Kurt and Michele, obviously, but Jim Miller and so many others who made CNAS so successful, and the really remarkable achievement in such a short period of time that CNAS has become an indispensable feature on the Washington landscape, no mean feat with the number of competitors that you all have out here, including some that I used to work for. And I think that this study that you’re launching today really is a reflection of the continued critical role that CNAS plays in creative and timely work that you do.

Obviously, as everyone in this audience knows, and we will be seeing a lot of it in the coming week or so, this year marks the 60th anniversary of the founding of the People’s Republic of China, which, of course, is part of the reason you scheduled this event now. As we think back on those 60 years, for about half of them – for about 30 – the relationship between the United States was not exactly the best, ranging from hostile at its worst, to nonexistent through much of the time.

And so in some ways, from a policymaker’s perspective and from a U.S. perspective, the more significant and momentous anniversary is not so much the 60 years since the founding of the PRC, but the 30 years since the United States and China normalized relations under President Carter and Deng Xiaoping in 1979. And I think it’s not entirely coincidental that if you look for a date, that you could roughly time the rise of China and its remarkable transformation – it’s about that time as well that the rise began – part of which having to do with the bilateral relationship and obviously largely to do with decisions China made about its own internal developments.

I think it’s fair to say that despite – I know, the great ambitions and hopes of Kurt and Michele, I don’t think even they, perhaps, would have guessed how far CNAS has come. And in the same way, I think those who were present in 1979 probably could not imagine how far China has come in those 30 years. It’s really truly a remarkable story. And for those of us who have been visiting China over the years, it’s just amazing, each time you visit, how much change you see happening right before our eyes.

It is a remarkable period to reflect back on and the decisions that were made during that period and the transformation of the U.S.-China relationship, and the great insight that began with President Nixon and followed through by President Carter was the fundamental recognition that the long-term interests of the United States were better served not by trying to thwart China’s ambitions, but rather to explore the possibility of whether China could become a partner with the United States. And while the motivations for those decisions in the 1970s were largely rooted in the dynamics of the Cold War, when we were focused on getting Chinese help encountering the Soviet Union, it is even more important in today’s reality that we recall that basic insight.

Secretary Clinton described that reality recently in her Council on Foreign Relations speech as a reality characterized by two inescapable facts, and I’m quoting her: “First, no nation can meet the world’s challenges alone,” and “Second, most nations worry about the same global threats.”

In this world, and under those circumstances, the logic of international cooperation is overwhelming. Countries have a great deal to gain if we can work together, and much to lose if we don’t. But applying this insight to our relations with China poses a fundamental conundrum. Given China’s growing capabilities and influence, we have an especially compelling need to work with China to meet global challenges. Yet China’s very size and importance also raises the risk of competition and rivalry that can thwart that cooperation.

Now, you all know I’m a part-time academic and so I can’t resist this part of the speech, but historians since Thucydides have pointed to a long string of conflicts generated by the emergence of rising powers that disturb the old order and challenge the existing power structure and predict the same gloomy future for China’s rise. Political scientists and IR theorists talk darkly of security dilemmas that lead nations to take actions to protect their own security against potential adversaries, and that, by taking those actions, fuel the very conflicts they were hoping to avert.

These academic perspectives obviously have strong resonance in the political debates we hear not only in the United States, but in China today. So how do we square this circle? Adapting to the rise of China, as well as other emerging powers like India and Brazil, while protecting our own national interests. This, I believe, is one of the key strategic challenges of our time. And the key to solving it is what I would call strategic reassurance.

Strategic reassurance rests on a core, if tacit, bargain. Just as we and our allies must make clear that we are prepared to welcome China’s “arrival”, as you all have so nicely put it, as a prosperous and successful power, China must reassure the rest of the world that its development and growing global role will not come at the expense of security and well-being of others. Bolstering that bargain must be a priority in the U.S.-China relationship. And strategic reassurance must find ways to highlight and reinforce the areas of common interest, while addressing the sources of mistrust directly, whether they be political, military or economic.

Now part of this reassurance comes from sustained dialogue. It’s important to recall, and Secretary Kissinger just reminded me of it a few days ago, that we began the new era of our relationship with China with some 25 hours of extended dialogue between Henry Kissinger and Zhou Enlai. And the importance of broad-ranging dialogue is at the core of our decision to elevate and broaden the strategic and economic dialogue between the United States and China. Part of achieving strategic reassurance comes from enhancing transparency.

But if our efforts are truly to be successful, they must go beyond words to actions that reassure. We must each take specific steps to address and allay each other’s concerns. The first eight months of the Obama Administration, building on the important efforts of our predecessors – and I want to stress the importance of continuity in the U.S.-China relationship, which has brought us to this very important stage today – have provided solid evidence that there is a reason to believe that this approach can bear fruit.

When Secretary Clinton traveled to China in February on her first trip as Secretary of State, she set out to demonstrate our commitment to this objective. When President Obama and President Hu met on the margins of the London G-20 in April, they pledged to work together to build a positive, cooperative, and comprehensive relationship for the 21st century. And we have seen in the subsequent meetings, including just the other day in New York and in the President’s planned visit to China, our determination to sustain this momentum.

Now the global financial crisis has offered a clear example – both the importance of the United States and China working together and the real benefits that come from that cooperation. China and the United States have implemented the two largest stimulus packages in history – coordinating them with one another and with other governments around the globe. And as China leads the way with renewed growth, the good news is not just that we are seeing the beginnings of a turnaround in much of the world, but we are also beginning to see a new effort to find greater global structures to assure that this doesn’t happen again. Just as we have said about getting our own house in order, China understands that it too must play its part by becoming a more important source of global consumption. There is a common commitment to putting growth on a stronger foundation, and we’ll see this in the discussions in Pittsburgh.

Of course, this effort takes more than just the combined efforts of the United States and China, and that’s why our global cooperation is so important. But without the United States and China working together effectively, the prospects of success would be much dimmer. We’re building towards the same kind of cooperation on addressing climate change, driven by the knowledge that the United States and China are the two biggest emitters of greenhouse gases. We in the United States acknowledge our historic responsibility for the emissions that have created the dangers of climate change, the indispensability of our taking strong actions here at home, and the need to accommodate China and other developing countries’ legitimate development goals.

At the same time, China is increasingly acknowledging that it must find a way to mitigate the climate effects of its continued development. A memorandum of understanding signed at the Strategic and Economic Dialogue demonstrated a joint commitment to expanding cooperation on low carbon growth and forging a successful international agreement on climate change, a task that we will pursue together in Copenhagen. And the statements of both President Obama and President Hu at the UN Climate Summit, I think, reinforced this sense of mutual commitment.

Our cooperation has also been an essential in forging a common front in response to North Korea’s recent missile and nuclear tests. Working with our partners in the Six-Party Talks, we forged a unified position leading to a presidential statement after the missile test, and UN Security Council Resolution 1874 following the nuclear test. And since the adoption of that resolution, we have worked effectively together to implement strong measures, which we hope will lead to a resumption of Six-Party Talks and the North Koreans’ recommitment to complete denuclearization.

Now, it will be important for us to demonstrate the same possibility of cooperation in dealing with Iran’s nuclear programs through the P5+1. China has also played an active role in fostering security and stability along its western border in Pakistan and Afghanistan, and I’m not just talking about the economic investments that China has made, such as the Aynak copper mine. It’s also played a role in training Afghans as well as Iraqis to diffuse landmines, and helping to work to encourage the Pakistan Government to step up its efforts against dangerous extremists.

China is demonstrating its willingness to play a constructive role in securing the global commons by contributing its destroyers to anti-piracy efforts off the Horn of Africa.

We’ve worked together to address the threat of transnational terrorism, and China has begun to do more to support the international nonproliferation regime, starting by joining the Nuclear Suppliers Group. We continue to work and encourage China to enhance export controls and other measures, but it is clear that in recent years, China is increasingly sharing our concerns and beginning to assume greater responsibility for addressing them.

Now, this growing list of areas of cooperation is impressive. But it is important that we neither overlook nor downplay the continued areas of mistrust and disagreement, many of which are highlighted in the volume that CNAS is launching today.

Reassurance is especially critical when it comes to military activities. I think it’s timely that I came in just after the few words I heard of the previous panel. As China’s economy has grown and its global interests have expanded, its military spending has quite naturally increased, and its capabilities have been extended at sea, in the air, and in space. And in some cases, these enhanced capabilities have been coupled with actions, such as China’s over-broad assertion of its rights in the EEZs, that have caused the United States and China’s neighbors to question China’s intentions.

While China, like any nation, has the right to provide for its security, its capabilities and its actions also heighten its responsibility to reassure others that this buildup does not present a threat. That we have restarted high-level military-to-military dialogues is a positive step. And I’m hopeful that this will allow us to help resolve some of the ongoing tensions, for example, with respect to the South China Sea and the PLA Navy’s activities. These discussions between us must be stable and ongoing, not a stop-and-start conversation easily derailed by disagreement.

We also are urging China to increase its military transparency in order to reassure all the countries in the rest of Asia and globally about its intentions, averting instability and tension in its own neighborhood. We’re encouraged by the positive dialogue between China and Taiwan, and we encourage both China and Taiwan to explore confidence-building steps that will lead to closer ties and greater stability across the Taiwan Strait.

The risks of mistrust are especially acute in the arena of strategic nuclear weapons, space, and increasingly in the cyber realm. Achieving mutual reassurance in these areas is challenging, but as we learned during the Cold War, essential to avoiding potentially catastrophic rivalry and misunderstanding. Both sides need to devote creative thinking in how we might address these thorny challenges.

Resource competition is another area of concern. With its rapid growth and large population, China’s demand for resources, whether oil, gas, or minerals, is surging, but resource mercantilism is not the appropriate response. China’s moves in that direction have raised legitimate concern not only in the United States, but also among our other partners and among resource-rich developing nations.

The problem is not just that China’s mercantilist approach disrupts markets; it also leads China to problematic engagement with actors like Iran, Sudan, Burma, and Zimbabwe, and undermines the perception of China as a country interested in contributing to regional stability and humanitarian goals.

The United States and China share an interest in stable and sustainable energy supplies. And far from seeing China as a competitor, we’re eager to enlist China to help in developing well-functioning markets and bolstering our common energy security in the years ahead. China must, in turn, demonstrate that it will be a constructive participant in its efforts rather than seeking to secure its own energy needs at the expense of others.

Another area of frequent tension is our economic relationship. Our two-way trade and investment has benefited both of us enormously, and we both depend on it for our growth and prosperity. At the same time, it does create tension and misunderstanding. But that is why we have placed our economic relationship so central in our dialogue. And we’re making progress, for example, on a bilateral investment treaty while China takes steps to become a constructive member of the global economic architecture, including its membership in the WTO.

I want to say something about the recent dispute about tires. That dispute highlights some of the risks of our economic relationship, and there’s been no shortage of commentary warning of spiraling economic nationalism and a coming trade war. But it also is clear that this is a worst-case scenario, which is far from inevitable. We do disagree with the Chinese Government on the substance of this issue, which is why the President reached his decision, and we followed that decision with the imposition of a tariff.

But the important point is this all took place within the WTO framework accepted by the United States and China, as well as our own bilateral understandings. And I am convinced that both sides are intent on making sure that this particular disagreement does not spark a trade war or widespread protectionism. And if we succeed, it will be because we have established well designed avenues of cooperation and dialogue that allow us to handle these disputes in a broader context.

Now, some say that human rights have nothing to do with our strategic relationship, and therefore doesn’t belong in the list that I’m discussing today. Indeed, some in China have even argued that our interest in human rights and ethnic minorities and religious freedom is designed to weaken China and so inconsistent with the basic bargain I’ve been talking about. But I couldn’t disagree more.

Of course we stand up for human rights because, as President Obama has said, it is who we are as a people. But we also believe that a China that respects the rule of law and universal norms provides reassurance to others that it will bring the same approach to its international behavior, as well as providing greater stability and growth for its own people.

Now, strategic reassurance does not only apply to the relationship between China and the United States. Our partners, particularly in Asia, must have the same certainty that China’s expanding role will not come at the expense of their interests. And this not only requires that the United States bolster its own bilateral relationships, especially with key allies like Japan, South Korea and Australia, but also that we lead in updating and strengthening the regional and international institutions that shape the context in which China’s development occurs, so that change is constructive rather than destabilizing.

In what President Obama calls this new era of engagement, we are refining and reinforcing regional cooperation in Asia, which is why Secretary Clinton recently announced our accession to the ASEAN Treaty of Amity and Cooperation. And along with developing new forums for regional dialogue and cooperation, we will stay committed to our key alliances. They are consistent with a vision of a peaceful, stable Asia that we and China share.

When it comes to the international system, we must ensure that new powers like China – and there are others as well, of course – can take their rightful place at the table without generating fear or mistrust. That means making the institutions more inclusive so that they reflect the world of today, rather than the world of 1945 or the 1970s, and more effective so that we can collectively overcome the problems of interdependence. As we pursue these policies, we will be open to China’s growing role, but we will also be looking for signs and signals of reassurance from China. If China is going to take its rightful place, it must make those signals clear.

In the face of uncertainty, policymakers in any government tend to prepare for the worst to focus on the potential threat down the road, and of course, some of that is necessary. But we also have to make sure that by preparing for the worst, we don’t foreclose positive outcomes; that we leave ourselves open to the positive, and avoid the trap of self-fulfilling fears. Your volume quotes my predecessor Rich Armitage, “Nobody, including the leadership with China knows how it’s going to come out. If it comes out badly, this is bad for us; if it comes out well, it can benefit all of us. And that’s what we must dedicate ourselves to.” A wise man, that Deputy Secretary. (Laughter.)

And as President Obama said at the opening of the SE&D*, “I believe in a future where China is a strong, prosperous and successful member of the community of nations, a future where our nations are partners, not out of necessity, but also out of opportunity. This future is not fixed, but it is a destination that can be reached if we pursue a sustained dialogue like the one that you and we will commence today, and act on what we hear and what we learn.”

We in the Obama Administration will uphold the United States’ side of this bargain. We are ready to accept a growing role for China on the international stage, and in many areas, we have already embraced it. China too needs to demonstrate the same commitment to doing its part – reassuring the United States, its neighbors in Asia, and the rest of the world that we have nothing to fear from a more influential China, that Beijing shares our vision of a new geopolitics of win-win solutions rather than zero-sum rivalries. With such strategic reassurance and a shared commitment to building an international system based on mutual trust, I have no doubt that we can succeed in our common interests, not just in common actions, and that will be a great benefit to us all. Thanks for your time, and I look forward to your questions. (Applause.)

MODERATOR: Secretary Steinberg has graciously allowed to take – has graciously agreed to take a few questions. So we can start.

Yes, sir.

QUESTION: Thank you. I’m Kumar (ph) from Amnesty, International. Thank you, Ambassador, for mentioning human rights, which is a rarity* in Washington. My question to you is that President Obama has planned to visit China in a couple of months. What role will human rights play in that visit? Thanks.

Deputy Secretary Steinberg: Well, I – obviously, the specifics of the schedule is something that the President and his team is still working on, but I think he made clear in the speech that he gave to the – our Chinese counterparts at the Strategic and Economic Dialogue that this is an issue which he believes belongs centrally to our relationship, and I’m confident that he will address it while he’s there as well. I think he’s indicated very strongly that he thinks that having a full relationship with China requires us to address these issues. We’ve been pleased that in connection with the SE&D*, that China has agreed to move forward on the human rights dialogue that we have, and we will continue to address the full range of issues there.

So without being able to be specific about the concrete activities that will take place, I’m sure that you’re going to hear the President be very clear about our perspective on that, as he did here in Washington.

MODERATOR: Yes, sir.

QUESTION: Hi. Could you – Barry Schweid of AP – could you elaborate a bit, please, on China increasingly sharing our concern, I think you said, about the Iran situation? Or did I misunderstand you?

DEPUTY SECRETARY STEINBERG: You did. But – well, I’ll – what I said was that I hope that the same spirit that they brought to our cooperation on North Korea will be manifested in how we deal with the P5+1. I do think that we’ve had very productive conversations with the Chinese about it. This was an important topic in the President’s bilateral discussions with President Hu in New York. And I think the Chinese understand the dangers associated with China’s – with Iran’s pursuit of its nuclear program.

Right now, we’re all focused on exploring what Iran is prepared to offer through this dialogue, and we will continue to talk with China, as well as the other parties in the P5+1, about both how we hope to move forward on the positive side, if Iran is willing to engage in substantive dialogue, and what steps we will need to take if it’s not.

But thank you, Barry, and good to see you.

MODERATOR: Yes, sir.

QUESTION: I just want to follow up on that. Chris Nelson, Nelson Report. On North Korea, from the conversations you’ve had in the last week or so, there was some noise out of Beijing – about a week – that Kim Jong-il said, yeah, I’m coming back to the Six-Party Talks, and sure, I’m going to talk about denuclearization.

What elaboration, if any, have you been able to get from the Chinese? Do they take that seriously? Are there conditions involved that make it a meaningless offer? Can you give us a sense of what have you heard in the past week and what the North Korean intentions really are? Thank you.

DEPUTY SECRETARY STEINBERG: Chris, I think what we’ve heard as – at least in terms of statements by the North, is some suggestion that they may be willing to pursue that path. But I think we’re at the stage where what we’re interested in is what they’re actually prepared to do, as opposed to what they say they’re prepared to do. And we are in the process of finishing our consultations among the other five as to just how to pursue finding out what the North Koreans’ intentions are.

I think one of the things that has been very clear, both from the discussions in New York and from Ambassador Bosworth’s visit to the region, is that, first of all, there’s a very strong consensus about what we’re trying to achieve, both in terms of process and in terms of result, that all of us agree that we want to get back into a process that is focused on the Six-Party Talks, that this needs to involve all of the key countries of the region.

And second, that the objective of these talks are complete denuclearization of North Korea, and that we want to see this move forward in way that doesn’t create the kinds of problems we’ve seen in the past where there have been steps taken and undone that failed to make progress on the goals that we’re trying to achieve.

I think we also have a pretty clear consensus among us about how to begin to explore that, and I hope, in the coming days, that we’ll be able to say a little bit more detail about how we plan to pursue this. I will be in the region myself next week and talking to our partners in China, Japan, and South Korea about this as well.

MODERATOR: Yes, sir.

QUESTION: Thank you. Dana Marshall with Dewey & LeBoeuf. There’s a lot of discussion, of course, in Pittsburgh now about the need to rebalance various economic trends and the imbalances that we’ve seen; commitment, apparently, on the part of China to stimulate their own domestic economy, do something about the imbalanced trade picture. I wonder how – if you could characterize what you think their degree of commitment is, and what sort of milestones – if any, what metrics might the Administration use to judge performance, not only of their commitment, but ours, and the other of the G-20?

DEPUTY SECRETARY STEINBERG: Well, I’d hate to put it in terms of specific metrics. But I think that there are lots of ways of looking at the full range of tools that are available to the Chinese Government in terms of the way it manages its economy – fiscal policy, monetary policy, and the like – that reflect an overall strategy – and trade policy, including how they deal with rules governing exports, tariffs, export provisions and the like – that would reflect their overall approach to changing the focus from export-driven to a more balanced strategy for growth.

And so I don’t think there’s any single metric that you’d look for. But I think if you take the suite of economic tools, of economic management tools that a country like China can apply, and look at how they’re adjusting them, it’s pretty – it will be pretty clear as to whether they are designed to focus more on domestic consumption and using the tools that would support economic – domestic economic growth, as opposed to strategies that are focused on exports. And I think we’ve had a productive discussion with them about what those things are. I don’t think it’s necessary that we want them to do a specific one, so much as to look at the suite of tools that are available that lead to that rebalancing.

MODERATOR: We have time for two more. Yes, in the back.

QUESTION: (Inaudible) with CTI TV of Taiwan. Mr. Secretary, you said that the U.S. is encouraged by the relaxation of tension across the Taiwan Strait. But would the improvement in cross-strait relationship – has any impact on the U.S. decision whether or not to continue to sell weapons to Taiwan, like the F-16 CDs? Taiwan has an argument, because by buying those weapons and proceeding from a position of strength, it will feel more at ease to open up more relationship with the Chinese mainland. Thank you.

DEPUTY SECRETARY STEINBERG: Well, as you know, and almost everybody in this audience knows as well as I do, that the metric for our decisions about arms sales is very clear, and it’s set forth in the Taiwan Relations Act, which is that we are committed to help support Taiwan meet its legitimate defense needs. So obviously, as we make decisions about arms sales, we assess, together with our friends in Taiwan, what those needs are. And that’s the basis on which we do it. It’s – there’s no single answer to it, but it is a very straightforward calculation. And so as we look at the overall security environment, we make the judgments about what is necessary for Taiwan to provide for those security needs, and that’s the framework on which we’re going to do it.

MODERATOR: And our last question.

QUESTION: Hi. My name is (inaudible) from Chinese Embassy here in Washington. Just now, you mentioned that one of the – maybe the irritant will be the resources competition. In that context, you also mentioned particularly China’s relations with quite a few countries, which it happened to be the case U.S. is not very happy with them, or you are not getting along well with them. But the point, actually, for China is we have overall partnership relations, and with every country we like to be partners. So actually, you have – you don’t very happy to see the relations with China with those countries is not China’s problem, and you should sort it out.

The other points I’d like to make, actually, is this will put China in a position that will have more potential to cooperate with the United States to address –

MODERATOR: Sir, could you put a question mark on the end, perhaps?

QUESTION: The question, actually is –

DEPUTY SECRETARY STEINBERG: I’ll make a comment anyway.

(Laughter.)

QUESTION: Yeah. The question is: Don’t you think U.S. has a role to play in help China to get more access to resources by, for example, opening your market doors* for more Chinese investment? Thank you.

DEPUTY SECRETARY STEINBERG: Let me address the first part, and then the second. I think – we are going to have disagreements about global strategies and how to – what is the right mix of carrots and sticks in some places and how to deal with problematic countries.

My point here is that what we would – we’d like to discourage China from getting in a position where it sees its resource needs driving China to take a position which it might not otherwise do if not dependent on them. And what’s common about the countries that I identified was that in each case, China does have significant resource interests there. And so it’s hard to disentangle whether China’s strategy is driven by its genuine view that this is the best way to influence countries, which we may disagree about, but it’s a legitimate disagreement, as opposed to protecting its interest in equity and mercantilist interest in those economies.

And so what we would hope to do is disentangle those interests from our broader discussion about how to deal with a problem like Sudan. And to be fair, I think in both the case of Sudan, and maybe to a lesser but not zero extent, of the case of Burma, I do think we’ve had some constructive relations. And I think that China has increasingly recognized that it’s in its own interest to work with the rest of the international community to deal with the crisis in Darfur, to deal with the humanitarian situation in Sudan, to support the CPA between the North and South in Sudan and the like. And I do think there’s been improvement in our own bilateral engagement over those issues. But that’s my core point, is that it would be important for China to not allow its resource strategy to unduly influence its broader interest in global and regional stability.

In terms of access to markets, yes, I think that it is important for us all to find a way, because we believe, in the long run, that the most effective tools for dealing with energy security are open, free-functioning markets for all of us to work together. We have an interest in not seeing oligopolist suppliers control the markets, and we have an interest in making sure that we, as consumers, can see those markets function effectively.

There have been specific issues that we’ve had, and we can debate the specific merits about the way in which, particularly, when there are Chinese state-owned investments, as to whether those investments meet market tests. But I think the broad point you make, I think, is one that we would agree to, which is that if we want China to be supportive of market-based approaches to energy, that we should encourage China to participate in those global energy markets and facilitate that.

Okay. Thank you.

 


James Steinberg: Remarks at Nixon Center

DEPUTY SECRETARY STEINBERG: Thank you, it’s good to be here. We were coming up and Drew was describing the conversations taking place here beforehand. I offered to say nothing and just to listen to you all. If you want to do that, that’d be okay too. (Laughter.)

It is good to be here and you could not imagine a better gathering of people who are both experts and practitioners here, and so I don’t want to talk too much. I think it would be useful to have a dialogue, but it’s always useful to have a bit of a context setting, so I’ll just make a few brief points.

And I will begin, even though this was billed as a conversation about China, to put this in a slightly broader context, not least of which because we just had two weeks of a very extensive engagement in East Asia in every country but China, if you look at it. I just came back from Mongolia and Japan. As you know, the Secretary was in Korea and Vietnam. Secretary Gates was also out in the region. Bill Burns was in Southeast Asia.

And it really is a reflection of both the deep engagement we have in the region and the context in which it’s important to talk about our approach to China policy. And I think from the beginning, we’ve tried to stress that you have to think about the challenges of East Asia in a regional context. I’m now looking at Ambassador Beazley. I should just stress that while I was in Japan, it was for the trilateral U.S.-Japan-Australia dialogues. I don’t want you to feel like Australia was being neglected as part of the base touching that went on out there – (laughter) – with our good friend, Dennis Richardson, who represented Australia – it was excellent to see him.

But I think it is important, not least of which because a number of the significant events that took place during this visit really did deal with the regional context, whether it was the Secretary’s engagement in ASEAN and the indication of our intention to move forward with our engagement with the EAS, whether it was the 2+2 in Korea and thinking about the regional context of the situation on the Korean Peninsula, or even my discussions in Japan about issues like basing and host nation support. They really do provide the broader context in which we think about our engagement.

And we’ve always said that really there are three pillars to the way we engage in the region. We begin with the traditional alliances as the core, which remain quite central even though the context has changed from the Cold War, and the fact that our traditional alliances with Japan, South Korea, Australia, Thailand, and the Philippines remain very vibrant. Second, the need to engage with the new powers of the region, particularly China and India, but also the growing strength of Indonesia and others. And finally, providing a regional multilateral context for engagement, whether it’s through ASEAN, through the EAS, or APEC, which will be coming up first in Japan this year and then in the United States the following year. And I think that it’s in this context that we are looking at both the opportunities and the challenges in our relationship with China.

Having said that this last round of visits involved all the countries but China, I think it’s also important to look at the nature of our engagement with China over the last few months, the most significant of which I would say is the engagement and the attendance by President Hu at the Nuclear Security Summit. As many of you know, there was a lot of speculation about whether President Hu would participate in that.

But I think it’s a reflection of both the evolution of our relationship and the fact that China now recognizes that it really has a central and important role to play in meeting these global challenges; that despite the issues that are and remain in our bilateral relationship, that it was important that the Chinese participate at the highest level in the Nuclear Security Summit, and also not only to participate in that multilateral meeting but also to have a chance for another in a very extended series of bilateral engagements between President Obama and President Hu.

In addition, of course, we’ve been working very closely with China in conjunction with the situation in Iran, both through the P-5+1 mechanism but also in the Security Council in the negotiations that led up to Resolution 1929. And I do think that when all is said and done, that the outcome of that discussion in New York was really quite a strong one; that what we saw in response to Iran’s continued unwillingness to come to the table and deal seriously with its nuclear program, a recognition not only by the United States and EU, which had clearly shown strong views about this, but China and Russia, that the time had come to take another and stronger step.

And the importance of 1929 is not only in the specific measures that are mandatory measures under Chapter 7, but also as you’ve seen even as recently as yesterday by the EU action, that it has, in effect, enabled countries to go even further and take a number of stronger measures beyond those required by 1929, which has sort of a multiplier effect. And so I think it’s important to see that for a lot of countries, the permissive environment created by 1929 to take further steps in some ways will be as important as the formal provisions of 1929. We’ve seen that with the EU. I did discuss with Dennis [Richardson] in Japan steps that Australia is thinking about – Japan and others, South Korea, all sort of looking to see what additional measures would be appropriate in dealing with the Iranian problem. But clearly, having the engagement of China and Russia on that was critical to our success there.

We also see – we’ve had clearly an extensive series of discussions also in New York in connection with the response to the Cheonan. I think on the whole, we think it was an important outcome, it was very important to have a Security Council outcome to deal with the Cheonan. Clearly, it was not as explicit as the G-8 statement, which was a very important statement, but nonetheless, I don’t think anybody could come away from reading the presidential statement there with any conclusion other than the fact that – under the relentless pressure of the facts, that the clear concerns of the international community were expressed.

In addition, we just had the S&ED in May in Beijing with Secretary Geithner and Secretary Clinton – an extraordinary cast of close to 200 U.S. officials participating in broad-ranging discussions there, and in addition to the – sort of the government-to-government elements – an important outcome was moving forward on the people-to-people dimension with the announcement of our 100,000 students initiative, which I think in the long run could have as much impact as any of the specific things that we’re engaging with China.

So the intensity, the pace of the engagement, remains very strong. We continue to find a broad range of areas where we cooperate with China not only bilaterally, but regionally and globally. China’s involvement in the G-20 was and clearly continues to be an important part of our relationship there as we also try to sort out some of the bilateral economic issues with China. But at the same time, we also recognize that there are challenges in the relationship and we, I think, recognize that there remains work in progress on a number of issues that are important to us.

I think the most important – and I’m sure that this audience won’t disagree – is the continued unwillingness of China to deepen the mil-to-mil engagement between the United States and China. We continue to stress that this is not a favor to one country or the other, but it is absolutely critical to manage this very complex process of China’s own economic growth and military modernization, that a number of the issues that we have can only be satisfactorily addressed if we have direct dialogue, and that it’s, frankly, counterproductive for China to see this as a benefit to be offered or withheld in relationship to other issues when, in fact, both countries benefit from the dialogue and the risks to the relationship are significant in the absence of that kind of dialogue.

I think we’ve seen that in connection with our continued disagreements over the activities that we believe we’re entitled to undertake in China’s EEZ, which China disagrees with, but we don’t have a really good forum to discuss this. And also on the continuing discussion about exercises in and around the Yellow Sea, which would also be an appropriate item for a mil-to-mil dialogue.

Similarly, although we had a political discussion in Hanoi about our concerns and our desire to find a constructive way forward on the South China Sea, we clearly believe that if there were a bilateral mil-to-mil channel, that would also be an appropriate venue to discuss some of those issues. So I think that’s clearly one area where we do feel it’s important to make progress in the long term. The ability to manage this complex relationship does require that kind of dialogue.

We also continue to have concerns on the human rights front. We’ve seen a number of actions particularly in the last six months to a year that have raised concerns on our part about the overall direction of China’s policy on human rights. The good news, at least on that front, is that we have resumed the human rights dialogue. I myself participated in the meeting here in May. That doesn’t mean we’ve solved the problems, but at least we are beginning to have more direct engagement on those issues. And I think it will be important to continue that going forward.

So there is a lot of work to be done as well as things to be built on. I think another area where we need to continue to work to try to make progress is on the energy and climate-related issues. As we lead up to the Cancun meeting, it’s very important that we take the Copenhagen Accord as a glass half full in our approach to developing a global strategy on climate, and China made a contribution in Copenhagen. It agreed to sign up to the protocol, which is an important step. It is a step forward for China to accept that there is an international framework within which the climate issues have to be addressed.

But we need to go further, particularly on the transparency and the accountability side. If we’re going to work in a framework where each country pledges its own actions which begins kind of a ground-up basis for dealing with the global climate challenge, then there has to be some way, if not through formal enforcement mechanisms, that at least through international oversight, to have some sense about whether countries are living up to their own commitments. And so that will be an important thing to take forward just as we deal with issues like financing and support for adaptation going into the Cancun discussions.

So let me stop with that and open up the floor for your comments, thoughts, and your questions.

MODERATOR: I am not going to take the chair’s prerogative. I see a hand from Doug, I see one from Chris, and I see Ken, and then I’ll go to statement.

QUESTION: I’m Doug Paal from Carnegie Endowment. A quick aside on the mil-mil side on it – I had a chance to talk to somebody from the Chinese mission last night who is normally an extremely well-informed military officer, and he was parroting back to me truly half-informed statements about what’s going on in the Yellow Sea and the South China Sea. And I don’t think he’s talking to people in the Administration. I don’t think he has those meetings that he should be having. If he’s not getting the information at home, at least he’ll get (inaudible) information here and needs to get the dialogue going.

My specific question is: In light of the proposal made by Secretary Clinton in Hanoi for a discussion or a facilitation of discussion on the code of conduct, what’s the next step?

DEPUTY SECRETARY STEINBERG: You’ve heard the formal response from the Chinese side. They continue to insist that these are best handled through bilateral measures. But I think that it really will depend on how others in the region continue to articulate that. And I think that if it becomes clear to China that there is a desire on the part of the claimants in other countries with an interest in the freedom of navigation and the security of the region, that they really would like to have a forum and that they are concerned that the bilateral strategy puts the other claimants at a disadvantage, that China will have to think about the costs in its relationships with countries which are important to it, as to whether it’s willing to continue to resist that kind of thing.

What we’ve seen, I think, over the last decade is a desire on the part of China to build a more constructive relationship, particularly with its Southeast Asian neighbors. That’s what led to the code of conduct in the first place. And I think that this sort of sense that these issues should be resolved diplomatically has improved China’s standing vis-à-vis ASEAN countries, and conversely, an unwillingness to continue in that vein, and to act in a more assertive fashion within the South China Sea, both with respect to military operations and resource exploration, will cause concern. And I think that ultimately, the Chinese leadership is going to have to look at that and say: Are we better off showing more flexibility and a willingness to engage on a more multilateral basis, or just insist on our position at risk of raising questions in the minds of other countries in the region as to why it’s not willing to engage multilaterally?

MODERATOR: Thank you. Ken.

QUESTION: Thanks very much, Mr. Chairman. I want to be the only one here probably who will raise a question about the climate change agenda that you mentioned – (laughter) – and ask, effectively, what leverage do we have going (inaudible) with the Senate to adopt the climate change legislation domestically? And how much does that leave us without a serious leg to stand on (inaudible)?

DEPUTY SECRETARY STEINBERG: Well, I try to stay out of issues involving domestic issues, but I would simply say the President has always made clear that we have a variety of tools available to us to try to meet our own commitments with respect to reducing CO2 emissions. And clearly, his preference was to have a comprehensive bill, but we will have to look at other steps that we can take both through legislation and otherwise that can allow us to put us on our path. Some of that will be through regulatory measures, some of that will be through our continued significant contributions to R&D that can make a difference in terms of our own glide path.

I mean, there are lots of ways to get to meeting our own nationally set objectives there. And if we can’t do it through the framework that we had initially pursued, we’re just going to have to look at those other tools.

QUESTION: Those are longer term –

DEPUTY SECRETARY STEINBERG: Again, I mean, I think –

QUESTION: (Inaudible.)

DEPUTY SECRETARY STEINBERG: No, I understand. But I think that, again, the structure of Copenhagen is such that countries make pledges in terms of what their own national action plans are. And then we have urged transparency and accountability which people can be held to it. So what we would say is that we will have the same kind of openness to explaining to partners what we’re doing and transparency about our accountability. And so it’s not – I mean, it isn’t a question of leverage at this point. It’s a question of countries simply now saying, okay, you’ve made your own decisions, China has an action plan of its own, what is it prepared to do to give some confidence that it’s going to live up to that? And part of it is just the transparency measures.

MODERATOR: Thank you. Chris Nelson (ph) and then Ambassador Roy.

QUESTION: Thanks, Jim. You gave that whole brief in one breath. It was really impressive. (Laughter.) Let me try a narrative out on you and feel free to tell me I’m getting it wrong. It looks as though – and certainly in recent weeks, perhaps starting before some of the UN debate – that the U.S. and China have been sort of pushing each other to see how we’re going to be reacting to each other. And in some cases, you guys have been criticized as taking too much of China’s views into account. There were some people who felt that you should have just sent the George Washington into the Yellow Sea anyway and to hell with them. As you know, I didn’t defend that in my report.

And some people are seeing Hillary in Vietnam last week as perhaps pushing back on this notion that we are letting the Chinese set the agenda. How do you react to this notion that we’re starting to push back now on things that they’re defining as interests or even core interests? And I have a specific example because –

MODERATOR: Chris, is there a question coming?

QUESTION: There is. And here it comes. (Laughter.) Sometimes you’ve got to explain about the question, otherwise what the hell is he talking about. (Laughter.) With me, that’s always a question.

MODERATOR: It’s the summary that I’m looking for here.

QUESTION: At the S&ED, if memory serves, didn’t the Chinese offer some kind of consultation on the notion of – on Taiwan arms and things? And I forget exactly how they phrased it, but they wanted some kind of consultative committee. And on the one hand, we want to have mil-mil, we want to have talks. On the other hand, obviously, we can’t have a direct consult on that. Has the Administration reacted to that Chinese proposal? And how might the notion of Taiwan arms, if it comes up this year, fit into this pushing back that —

DEPUTY SECRETARY STEINBERG: Well, I don’t think I would necessarily subscribe to that narrative, and I think in part because I think you have to take each of these issues on their own. And with respect to the exercises, I think it should be clear: These exercises are about North Korea. They are designed to demonstrate, in response particularly to the Cheonan but more generally in terms of our relationship, that the United States and Korea are both working together and are capable of responding to any kind of provocation that North Korea might engage in. And if they were to, in any sense, draw the conclusion that there was doubts about our capabilities or ability to work together, that would be a serious miscalculation on their part. And sometimes you have to do this pretty explicitly. And so the exercise – we exercise all the time. As many of you know, and Chris certainly knows, we exercised in the Yellow Sea with the George Washington less than 12 months ago. But clearly, the timing of this was to demonstrate a clear need to bolster deterrence and dissuasion from further provocations by North Korea.

And it wasn’t about China. And I think trying to turn this narrative to be one about China misunderstands the purposes of the exercises. At the same time, so that there is no mistake about our intentions, we made clear that we will exercise when and where we want to when we need to consistent with international law. And that, as I’ve said, we’ve clearly indicated in the past. We’ve exercised in the Yellow Sea. We will exercise in the Yellow Sea again. But I think there were some people who wanted to turn this into an issue about China, and we wanted to keep the focus on what we think the proper focus ought to be –on North Korea both to dissuade them from further provocations and also to remind them that there is a more constructive path that they could move forward on, and that is to recommit to the 2005 joint statement and move seriously on the path of denuclearization.

With respect to the South China Sea, I think this is an issue that’s been bubbling around for a long time. I was in Vietnam last year. This was clearly a preoccupation there. We’ve seen this in other ASEAN countries. And I think what we’ve seen is a sense that there is a risk that without some more explicit discussion about these issues, that we could both have run the risk of an incident, which could be damaging to security in the region, but also to foster some long-term competition, which is in nobody’s interest; and frankly, that the time had come to just make this more explicit and to bring it out in the open, as it were, because it’s clearly on everybody’s mind.

And I think what the Secretary wanted to do was essentially to say, we know we’re all thinking about this and we know we’re all anxious about this; rather than let this fester and become a problem, let’s have an open discussion about how to take this forward and find a more constructive way to deal with it. And I think that was largely welcomed by the other ASEAN countries, because it is more comfortable to have others around when these are being discussed. And since it is obviously on everybody’s mind, rather than to have it sort of off in the background, to bring it out into the foreground. And so I think that’s the context there.

With respect to Taiwan arms, you all know the mantra. I’m looking at Doug Paal.We do not consult with China on Taiwan arms sales. We make a judgment based on what we believe are the legitimate defensive needs of Taiwan for arms sales. That doesn’t mean we don’t tell the Chinese after we’ve made our decisions what we’re doing and why we did it. And one of the things that we tell them why we did it is because of them. I mean, defensive needs are determined in response to the perceived security environment.

So there was, to my knowledge – I wasn’t at the S&ED – there was no formal proposal by the Chinese for a consultative mechanism, so there was nothing for us to say no to. But we have always been prepared to say we are prepared to discuss security in the region and we will articulate our concerns about China’s military modernization, and particularly its missile deployments there. And if they want to raise concerns, we listen to their concerns. They have raised their concerns about arms sales for as many years as we’ve been selling arms, and we’ve responded to them.

And that’s what dialogue is about. It doesn’t mean we’re there to conspire with them on what to do or give them a voice in what to do. But we can certainly hear their perspective on what their concerns are and that’s something that we can take into account as we formulate our own decisions about that, just as they need to hear what our concerns are about their activities, both their political orientation towards Taiwan and how they’re interacting with the Taiwanese authorities and in terms of their military modernization. So there is another place where dialogue is appropriate even if it isn’t about consulting about what to do.

MODERATOR: Dennis, you had (inaudible)?

QUESTION: Sure, Dennis Wilder, former fellow at Brookings – (laughter) – and other things.
You mentioned the offering of a path to the North Koreans and yet we seem to have offered them a path for a long time and they have rejected the path. When you think about this new leader, Kim Jong-un, and the fact that sooner rather than later, it looks like, he will be the new leader, what can we do? How can we approach this new leader of North Korea? What ideas have you developed (inaudible)?

DEPUTY SECRETARY STEINBERG: I think, as you know, trying to kind of suss out the dynamic and the thinking and reasoning of North Korean leadership is really a pretty perilous proposition. I mean, there are many theories, there are many arguments, and the analysts have exchanges and stuff about what’s going on. And I think that any of the theories are useful to sort of stimulate your own thinking about possible approaches, but it’s very dangerous to sort of think, well, this is what is really going on, so I’m going to build my strategy around it.

So I think – I always sort of think about this as my general philosophy about policy planning – is you try to minimax against the range of possibilities. And we can think of a range of scenarios that might take place as we contemplate what is obviously some element of transition. I think that part is indisputable. But whether – who this guy is, whether he’s really going to be the leader, whether the military would be stronger or the party would be stronger, you can trace out the scenarios, but you try to develop a strategy that will work – be most effective against the broadest range of scenarios.

And that, I think, is in some ways very straightforward, which is to make clear that even in their own terms they will be less well off if they continue down the path they’re going. They will be less secure. They will be less secure in both senses. They will be less secure in the military sense, but the regime will be less secure and they will less be able to pursue whatever this range of interests they may be interested in pursuing if they continue to move down. And conversely, they will be better off if they take the other path. And I think that’s true.

And I think that basic strategy holds irrespective of whether it’s Kim Jong-un or whether it’s the regent or whether it’s the party that’s going to rule. And I think it’s a more reliable strategy than trying to kind of guess what’s in his mind, especially because, one, I think it’s almost impossible for us to know, and second, it’s not clear whether he would be the one who’s making the decisions in any event.

But I do think what we’ve tried to do very clearly – and it’s a drawn out process and people have talked about strategic patience, I don’t know what the right word is – but I think we’ve had a long period of trying to condition the North Koreans into persuading them that the old tactics aren’t going to work, the tactics of provocation and payoff, the tactics of hoping to be salami-sliced and paid for talking rather than doing.

And that has, as a result, given a long period of time in which they’ve tested various avenues to try to get what they want without having to give up what they don’t want to give up. And one hopes that eventually they will come to the conclusion and really face that binary choice, which is if they really want to get these things, they really are going to have to do something serious.

There’s no guarantee that strategy is going to work, but I have yet to see a better one. And at least we’re not persuaded that strategy has played out unsuccessfully yet. I think there is a potential opportunity with the transition, but also risks in transition, and we have to be sensitive to that as well.

But I do think that the strong bond and collaboration that’s been built between us and the South Koreans is critical. I hope the ambassador shares that view. I think the fact that after some period of perhaps not having as good trilateral engagement over these issues, we now have a better trilateral engagement, which means we have a good alignment between South Korea and Japan and the United States on these issues, and that China and Russia understand that we’re not going to make concessions in the absence of significant indications by North Korea that they’re willing to move forward. And that’s – it is a little bit insensitive to the specifics of the individual who is going to be potentially the successor, but I think in some ways we’re on a safer course not trying to tailor it to a guess about what that might mean.

MODERATOR: Thank you. Ambassador Roy.

QUESTION: My question relates to things you’ve just been discussing and maybe you’ve said about all you can say on the subject, Jim. But the issue in my mind is this question of a roadmap and where we’re going on North Korea. Everything we’ve been doing around the Korean Peninsula is for a purpose. But there have been – and it’s a rational purpose. But there have been Shakespearean alarms and diversions that have muddied the water, and in particular the solidarity among the five, at the moment, seems less strong. The solidarity of the three, as you’ve just noted, is a very positive outcome of this. But among the five, it’s not so clear that we have.

There are two issues involved here. One is the nuclear issue and one is the question of the strategic interests with regard to the Korean Peninsula. It seems to me that on the nuclear issue, perhaps things haven’t changed. The five still have common view of what they would like to see, but now it looks as though the strategic alignment in terms of what comes out of all of this may be opening up fissures that are potentially quite severe.

And the question is: Does the Administration have a roadmap in terms of how we work our way through this, particularly given the timing factors? We have an election here in 2012, we have the 100th anniversary of Kim il-Sung in North Korea, and we have the succession issue. We have the party congress in China in 2012. And the last year of administrations is always you never see any progress in anything involving North Korea. So the timing factors are becoming important now. And at the moment, the climate is not very good for trying to move a process along.

DEPUTY SECRETARY STEINBERG: I’m not sure that I agree on the timing issues, because I think it’s uncertain how the Korean 2012 timetable plays into this. You can argue it either way. You can either argue that this may be a period of caution because it’s a period of succession in the North, or it may be a period of opportunity when legacies can be created and choices can be made. And I don’t know the answer to that. And I think we have to test the proposition that this is a time in which progress can be made. And, I think there’s frankly no harm in doing that.

With respect to the sort of strategic alignment, we’ve – unlike the mil-to-mil, where we don’t talk as much as we should, we do talk a lot with the Chinese and the Russians about these issues. And I think that part of what we have tried to stress is to try to reframe the way we see the choices and to try to get our Chinese counterparts to reframe for themselves the way they see these choices.

I think there are two indisputable facts about how China sees the issue of North Korea, which is, one, I genuinely believe, that they think that everybody would be better off with a nonnuclear North Korea. I don’t think there’s any doubt about that. I don’t think that even among hardliners in China that there’s any desire to see that. It’s not in China’s interest. Frankly, it’s not in China’s interest for anybody else to have nuclear weapons. If you’re going to be one of the five or whatever, you’re just better off not having others have it.

But second, they obviously worry about instability in the North. And so they tend to sort of have those two parameters and they’re kind of working between these two parameters. The way we have tried to encourage them to rethink this is that they seem to believe that if you just don’t rock the boat, that will help preserve stability on the peninsula – don’t push, don’t ask the North Koreans to do too much, more than they can do, nudge and encourage them, but not push them as much.

And what we’ve tried to convince them in extensive dialogues, and you know this well, is that, actually, that not pushing this and not pushing the issue more creates more instability rather than less, and that there are greater dangers from not pushing the issue and not trying to move forward, not only because it creates greater risks of conflict on the peninsula, but it also changes the broader strategic environment in Northeast Asia in ways that China presumably would not welcome.

The more we face a provocative and dangerous North Korea, the more we have to do exercises like the ones that China doesn’t particularly like to have us do, not because they’re directed against China, but clearly, China doesn’t like to have do. The more North Korea develops Taepodong-2s, the more we have to accelerate the deployment of missile defense in Northeast Asia, something also China is not that welcome to, the more we have to sustain various kinds of deployments in the region.

So we encourage China to think about this issue from a different landscape and hope that that will lead to a different set of outcomes. We need to have that dialogue, because we need to make clear that this is not done in any way to prejudice China’s interests. We’re perfectly prepared to have a conversation with China about the long-term future of the peninsula. I think our South Korean counterparts are eager to have that conversation with China too. We may agree, we may disagree, but we need to have those conversations.

So I don’t think there’s – it’s not that the gap is getting wider. It’s more that we need to deepen that conversation with China particularly and with Russia to some extent as well. But I don’t think it’s because there’s a fundamental divergence about these things so much as that because of their – the tactics that China is pursuing, there is a risk over time that could lead in a direction which would increase the problem.

MODERATOR: I’m going to jump in – I’m going to go a bit out of order and recognize Ambassador Han. But don’t we face a dilemma if we’re telling the Chinese that resolution of North Korean issues then will change U.S. deployments or missile defense or exercises of the right to operate in the EEZ?

DEPUTY SECRETARY STEINBERG: No, I think we face some choices. We will defend our interests and we will protect our alliances, and we will do that in the context of the threat that we face. If China can be helpful in reducing that threat and changing the situation in North Korea, obviously, we will make our adjustments accordingly.

But I think that it just – the point is for China to understand that there are consequences for the way in which it engages on the North Korea question – not directed against China. They are clearly not directed at China. We’ve made clear we don’t do this in any way to diminish China’s security, but we also can’t decline to protect our security and our allies’ security because China is concerned about the collateral consequences of what we feel is necessary to do.

MODERATOR: Thank you. I’ll do Ambassador Han and then Jack Logan (ph).

QUESTION: First a short remark. I fully agree with Secretary Steinberg that we should have some strategic patience concerning North Korea. If we are in a rush (inaudible) then that will be everybody will be embroiled in the tactics of North Korea and other (inaudible) actually spoil the (inaudible) rather than going in the right direction.

The second point is the question to Secretary Steinberg. We know that sometimes China’s view of the world is sometimes different from us and from others, some more democratized countries. Then we are sometimes worried whether the world outside China have the ample leverage in pushing China to go in the right way. Climate change is rather clear; if China is lagging on that, certainly, the world would be worse and China will also suffer, and so on.

But on other issues, it’s not very clear whether we have a strong leverage on that. Sometimes, China is saying to Prime Minister Merkel that, okay, we will support Europe. And that seems like Europe should depend on China for supporting the values of Europe. Well, China does not say explicitly, but sometimes we are worrying that they will pull much of the treasury bills of Chinese (inaudible).

So when they’re at some need to push China in a right way, I am anxious to know whether we have ample leverage for that. For example, on the nuclearization of North Korea, they’re saying that if North Korea is going nuclear, then Taiwan may think otherwise, Japan think otherwise, maybe South Korea may think otherwise. Then maybe enough leverage. I am curious to know whether, Secretary Steinberg, you are optimistic about finding ample leverage whenever there is a need against China.

DEPUTY SECRETARY STEINBERG: Well –

QUESTION: China is so an important country and we should engage China in major decisions on the global issues. But can we be confident that we can always have enough leverage to move China forward in the right way?

DEPUTY SECRETARY STEINBERG: Well, I think your example sort of points in the direction that I would go in terms of answering this. I’m not a neo-realist, but at the end of the day, I believe that countries pursue their own interests. And that leverage can be useful in some circumstances, but it tends to be a tactically limited thing because you use it and then there are consequences from using it. And so what you really want to do is try to find ways to convince other countries that what you want them to do is in their interest. And that goes back to the conversation that I was having with Ambassador Roy, but also your point about the risk of onward proliferation in the region.

That scenario that you outlined, which is if the North Korean program becomes more advanced, others might reconsider their nonnuclear status, it’s not leverage over China. It’s a reason why it’s not in China’s interest to let North Korea continue the program. And so the most effective technique in diplomacy is clearly to convince countries that the course that you want them to pursue is in their interests, and therefore, they’re not doing you a favor, you don’t owe them, or you’re not coercing them into doing something they don’t want to do.

Because occasionally, you can coerce countries, but they tend to not receive it well and they tend to spend all the rest of their time trying to get back to it in some ways, and there are a lot more experienced China hands than I am here who could say that the whole history of China for the last 150 years is their reaction to the coercion that took place in the 19th century. They’ve spent 150 years trying to get themselves to a place where they can’t be coerced.

So again, I don’t object to coercion or leverage under appropriate circumstances, but it’s clearly not the preferable course. And clearly, if you’re trying to build a partnership with a country like China, you would prefer not to “exercise leverage.” I also think that in many of these cases where people worry about the T-bill holdings and the like, the leverage tends to be a bit illusory. It’s very hard to exercise and use effectively.

And so on most issues, you really are most likely to be successful if you talk about common interests. And so we’ve had a lot of conversations with China on internet freedom, for example. I mean, there are ways that you can threaten them and impose cost. But at the end of the day, I think we’re convinced that the most effective strategy is to make clear that the costs that they impose on themselves for restricting freedom of expression, access to the internet, is sufficiently high that it’s counterproductive even in their own terms. It doesn’t always work, but it is at least a core of trying to make these things work.

And I certainly feel with respect to North Korea that we’re most likely to be successful if we don’t do this on a transactional basis. Because I worry if we try to do these things and say, well, if you help us on North Korea, then we have to help you on this, that you end up in a lot of Faustian bargains that you don’t want to be part of. And it’s better to build these things over time, to identify strategies that are win-win common interest type approaches.

MODERATOR: Thank you. Ambassador Chow and then Jim Hoagland (ph).

QUESTION: Thanks, Jim. Jack Chow with Rand’s Global Health Initiative. Much of the framing of China’s citizenship in the world is based on (inaudible) financial power. And you take that financial power and there’s a certain expected trajectory that China ought to be taking in contributing to some of the world’s collective problems in health and development. So as you manage the U.S.-China portfolio issues, do you see an opportunity to encourage China to do more in humanitarian work? And I’m thinking specifically about adding more funds to the Global Fund for AIDS, TB, and malaria? America contributes a billion dollars, China contributes $2 million a year.

DEPUTY SECRETARY STEINBERG: I think there is. I think there’s a tremendous opportunity. I think that one of the things that China is finding as a result of its going out strategy is that there are some costs associated with that as well in terms of their global image, the receptivity to their presence around the world. A lot of the places which they’re going in search of resources are countries that have huge development needs.

And they’re finding that it no longer checks the box just to build a sports stadium or parliamentary palace, and that in fact, if they’re going to go work in these countries and want to have a long-term relationship, that they have to be responsive to the broader sets of needs. I mean, I don’t want to overstate it, but even if you look at the trajectory of their policy towards Sudan, there’s a greater awareness that they cannot simply go there and pump oil and take the oil and sustain the relationship in a situation where they’ve become embroiled in a conflict, and that they need to take a more responsible attitude.

We have a long way to go, but there are signs at least, in some cases, that they recognize that they’re going to have to produce some public goods to go along with this engagement and that it can’t be a kind of rapacious or self-interested engagement. They have a long way to go in that thinking. I think there are different parts of the government that are more enlightened than others. And certainly, when it comes to supporting traditional development stuff, there is a tendency to hide behind, “Well, we’re just a developing country, a poor country too, we can’t do these things.” And you can tell the Chinese worry about a slippery slope, which is if they do it in one area, then they’ll be expected to do it in other areas, and they’ll kind of lose their cover as a developing country that doesn’t have to contribute as much.

But whether it’s in peacekeeping, which we see now a much greater willingness of China to engage in peacekeeping activities or collective activities like dealing with the piracy problem, you’re just beginning to see at least some recognition that in order to sustain this global role and their soft power, that they’re going to have to do some things that burnish their image. And these are the kinds of things that I think we need to push them on more. And your example – HIV, TB, malaria – are all things where they have a stake in being seen as being part of that solution. So I do think it ought to be something that we push.

MODERATOR: Paul Eckert next and someone in the back who –

DEPUTY SECRETARY STEINBERG: We lost Hoagland there.

MODERATOR: Oh, I’m sorry.

QUESTION: I did miss you, I apologize.

QUESTION: No problem. Jim, given your experience as a Sherpa, I’d be particularly interested in hearing your thoughts about the transfer of authority, and to some extent, legitimacy from the G-8 to the G-20, and China’s role in that, China’s view of that, whether or not we see China as a country that has a particular role to fulfill in the G-20 process that we can build with, or has China in fact become more of a problem?

DEPUTY SECRETARY STEINBERG: Well, I think it’s important to be clear about where the G-20 is now as opposed to where it might go at some point in the future. I think everybody involved in the process right now is very cautious about extending the role of the G-20 beyond global economic management issues. And so in that sense, the G-20 is really the successor of the G-7 and not the G-20.

In this context, I think on the whole – I mean, nobody’s perfect – but the Chinese have played quite a constructive role in terms of the global response to the financial and economic crisis of 2008-2009. They have participated constructively in the discussions about how to sustain global demand, about how to deal with the broader regulatory environment in which the global financial investment takes place. All these things have been positive, and hopefully, what they’re doing with their own currency, if they move in the right direction, would also be positive.

So in that context, I think it’s unimaginable that you would do this kind of global economic management without having the country which is the third, depending on how you measure, sized economy in the world not part of it. There are obviously differences of opinion at the G-20, but China wasn’t structurally different or in somehow a more difficult position than any of the others. So in that sense, I think it’s fine.

The question which is unresolved is what is going to happen with the G-8 agenda as opposed to the G-7 agenda, which is on the more political and security questions. The G-20 is not doing that right now, and at the moment, there’s little appetite to have the G-20 to do it. So there, the question becomes: What have we got going for us? Well, we have two mechanisms. We have the Security Council and we have the G-8, which were sort of the two kind of big power type frameworks within which to deal with some of the broader global challenges, as well as some of the ad hoc things like the Nuclear Security Summit and the like.

We do work with China in the P-5 context and are doing a lot of constructive things together. I mean, I don’t want to pretend these negotiations aren’t arduous and difficult and challenging, but we have gotten good results on all of the big questions before the Security Council. This is a glass which is 80 percent full, in my judgment. We’re not going to get a hundred percent of our way all the time.

But on the big things that have mattered to us in the Security Council, we have gotten results, starting with the PRST on the North Korean missile test, to Resolution 1874 on the nuclear test, to Resolution 1929 on Iran, and the PRST on the Cheonan. In each one of those cases, we may not have gotten a hundred percent of what we wanted, but we got a result by the Security Council with China’s support that was important.

So in that sense, in terms of some of the global management issues, China is playing a reasonably constructive role. Now, whether that leads to the G-20 taking on political and security issues or a different forum, I think that’s a work in progress. And we, at least as an Administration, have not yet taken a position on that. The G-8 still is there for the moment,but we have other ways of engaging with China on these big questions.

MODERATOR: Thank you. We’ve got about five or ten minutes left, so let’s go with Paul. Please keep your questions short if you can.

QUESTION: Paul Eckert of Reuters News Agency. The recently announced batch of sanctions on North Korea – some details have leaked out in the South Korean press almost daily. It would seem that you have a timeline for when you’re formally going to roll them out with some details. And to what extent do you expect China to help or perhaps introduce sanctions (inaudible)?

DEPUTY SECRETARY STEINBERG: The answer is we may have a timetable. I don’t know what it is. I’ve been away for the last week and they’ve been working on it. So I don’t know whether we actually have a date to do this.

What we are doing is largely a more robust implementation of some authorities that we currently have, which are authorities that we have and are not – they go beyond Resolution 1874 in some cases. We’re going to encourage others to do it, just as with Iran. We would like people to go beyond what they have to do under the UN measures. But we are largely focused on what more we can do and then we’ll use that to encourage others to do more as well.

But again, we think the stronger the signal we send to North Korea about the choices it has and the more others join us in that, the clearer and more likely it is we’re going to get the result that we were talking about before.

MODERATOR: Two final questions. The gentleman in the back and then Mark (inaudible). Maybe we’ll take both questions together and then give you a chance to wrap up.

Please.

QUESTION: Paul Richter with LA Times. I wanted to know what kind of cooperation you’ve been seeing with China so far on Iran sanctions at the UN, especially the more aggressive ones, such as on the issue of boarding ships. That’s one. And second, a European official told me that he thought China was picking up a lot of business recently as European countries have been disengaging Iran. Is that right?

DEPUTY SECRETARY STEINBERG: Well, that’s easier (inaudible). On the first, it’s too soon to say. Not enough time has passed to make a judgment about their implementation. I would say I don’t think we have seen yet China stepping into the breach, but it’s obviously a concern and we’ve made clear to the Chinese that we expect them not to do that. So that’s something we’re obviously going to be watching very carefully.

MODERATOR: Thank you. Mark, last question.

QUESTION: My question really builds on that one. The EU has promulgated new sanctions on Iran. China has joined us at the Security Council. Two big steps on (inaudible) towards isolating Iran, but China remains a major investor in Iran. And the Chinese premier has said that (inaudible) that they see an overlay between the commercial context, on the one hand, and their strategic context with Iran on the other. How do you see China’s (inaudible) interest in Iran and the steps we’re taking to try to align our efforts on Iran?

DEPUTY SECRETARY STEINBERG: I have no doubt, as I said in connection with North Korea, that China would prefer that Iran not develop a nuclear weapons capability. So that’s clear. And we have seen China take steps in a variety of contexts over the years to do something about that, going back to the time I was last in government when they ended their nuclear cooperation with Iran.

They clearly have economic interest there. The challenge that we all face is to make clear that a shortsighted pursuit of near-term economic interest could be counterproductive in terms of their long-term interest. And that’s the engagement that we have had and will continue to have with China, and we’ll see how they do the sums.

MODERATOR: On that note, please join me in thanking Secretary Steinberg. (Applause.)

 


James Steinberg: Remarks on U.S.-China Cooperation on Global Issues

The Brookings Institution
Washington, DC

DEPUTY SECRETARY STEINBERG: Well, thank you, Ken, for that kind introduction. It is always good to be back at Brookings and there are so many familiar faces and good friends here. It’s a pleasure to be back. It always feels like you never quite went away.

And you especially feel that, of course, because I have the honor and pleasure of having so many of my former Brookings colleagues being my current colleagues now in government, including the former leader here of the Thornton Center, Jeff Bader, who is doing such an extraordinary job for President Obama over at the White House and so many other colleagues. And so it’s nice to see both the former administration officials who are populating Brookings and vice versa.

And I’m particularly grateful to have a chance to talk about the issues that you raise, Ken, because I think your observations are quite right. I think the big change in our relationship has been the centrality of these global issues. And answering the questions that you put really, I think, are essential to understanding both where we are and potentially where we can go in this bilateral relationship which has such enormous consequences not only for the people of the United States and China, but for the world, given the central role that both of our countries play in both being part of the problem and part of the solution on so many of these issues like the economy, climate and the like.

I want to also express appreciation to my good friend, former colleague Richard Bush at CNAPS. I’m glad to see CNAPS continues to thrive. It’s something that I take a great deal of interest in. It has made a great contribution over the years under Richard’s extraordinary leadership. So I’m glad to see things remain in very good hands here.

I think it’s important to begin this discussion of our collaboration on global issues by reiterating the basic approach and sort of precepts under which President Obama has led our engagement with China. And as he said, we welcome a China that is strong, prosperous, and a successful member of the international community. Now is the time for our two great nations to join hands and commit to creating a prosperous future for our children. It’s a commitment, a very forward-looking and very positive commitment, which reflects the fact that we need to understand our bilateral relationship in a broader context.

This really goes to a point that Secretary Clinton made in a speech she gave to the Council on Foreign Relations last year, which is that given the nature of these challenges we face and the changed global agenda, we face a world in which the central problem of our time is how to generate effective collective action to deal with the problems that no country on its own, no matter how powerful, can solve. And I think this is an insight that both the United States and China share at the core of our effort to deal with these global problems.

So for us, the great challenge is to build these structures of cooperation which includes building on a multilateral basis institutions and mechanisms of cooperation for the 21st century, but also to undergird that with strong bilateral relationships with key players, beginning with our traditional allies, of course, but then also to the emerging powers. Not just China, but also India, Brazil, Turkey, Indonesia, South Africa and the like – all the countries which play an increasingly systemic role in dealing with the big global challenges of our time.

And I think, although the press tends to focus on the day-to-day ups and downs of our bilateral relationship with China, and from time to time proclaims near or imminent or virtual crises in that relationship, I think it’s fair to say that if you look back over the last 18 months, this has been a very strong and productive period in U.S.-China relations. It has demonstrated that the two countries, our two countries, are able to work together effectively to deal with these big structural challenges of our time.

This is not to say that everything is always perfectly smooth sailing. I don’t think any of us who have dealt with U.S.-China relations would ever expect this to be without its difficulties or the cooperation would be automatic, but I think we’ve demonstrated over time that where there are difficulties, we can work through them, and that when there are differences or disagreements either of goals, but more typically among means, that we can work through them through dialogue by building trust and trying to find common ground, by recognizing that on most of these big issues, the core objectives, the core interests are common between our two countries. And that while we may have differences about the best means to achieve them, that strong conviction about the common goal gives us a framework within which to work through these differences. And I’ll talk through a number of those issues in just a moment.

So I think if you looked at our strategy going forward, it has been to build a strong and comprehensive relationship that deals with the full range of issues. We don’t have the luxury of just narrowing it down to a handful, but to build a relationship of trust across a broad range of issues which then gives us a context in which to solve individual sets of issues that we face. And I think it’s particularly timely to look at some of these areas of cooperation because we in our Administration – and I’m pretty confident our counterparts in China – are right now very focused on working towards the second Strategic and Economic Dialogue which will take place in Beijing in just a few weeks under the leadership on our side of Secretaries Clinton and Geithner.

When we think about some of the areas of cooperation, some of the areas that Ken identified, on her first trip to China which is now almost a year and a half ago, Secretary Clinton highlighted three areas which she anticipated at the outset of her time as Secretary of State where there was great opportunity for increased collaboration. The first was international and regional security issues, especially Iran and North Korea. The second was clean energy and climate. And the third was the response to what was already then clear, substantial global economic crisis, and building a new foundation for balanced and sustainable growth. And I think on all three of those, they have proved to be the core issues of our relationship. I think we can see that we have made important progress on all three of them, and that’s what I’m going to spend the remainder of my time talking about today.

On security issues, something clearly we at the State Department are very focused on, I think you can see that there are a number of areas where we have made significant progress, beginning with global security challenges like counterterrorism and counter-piracy, the attempt to build a more sustained military-to-military relationship, and most urgently, and the one that captures the headlines, dealing with Iran and North Korea.

I think if you look at issues like counter-piracy, for example, the deepened engagement in China in supporting global efforts to deal with this common scourge really demonstrates the degree to which China increasingly sees its part of having to do its share and be part of the global solutions and wanting to work effectively with other navies and with other nations to deal with the common challenge, and not just to free-ride on the efforts of others. And I think this is a very welcome development. We see that as we understand this is a common threat to commerce and to safe shipping; the fact that we have so many countries working together, countries which have not historically participated in these multilateral ventures, is a strong example of how China can play an important and contributory role.

On the military-to-military front, there, too, we see progress, although it’s not as sustained as we would like because we believe that it’s important that military-to-military cooperation be an all-weather effort. And even where we have difficulties, it’s important to sustain the dialogue between our militaries. But we have had some important exchange of high-level visits on the military side which we think are critical to building trust between the two nations.

On Iran, I think the strategy that President Obama and Secretary Clinton have led since the beginning of our Administration, which is to reach out to Iran and demonstrate our willingness to engage and to seek a diplomatic solution to our differences, particularly on the nuclear question, has proven successful if not in inducing Iran to agree to the steps that we think it needs to take, then at least to demonstrating that we are serious about looking for a diplomatic solution and that clearly putting the onus on Iran for the failure to make progress up to date.

And I think as a result of that, we are seeing unprecedented international cooperation in sending a clear message to Iran that its actions are not supported by the international community and that it needs to work effectively with us, or it will subject itself to significant new cost. We saw that last fall in the very important decisions taken by the IAEA Board of Governors in which we had the strong support of China and Russia. And now, as we move forward in the Security Council, following on the P-5+1 process in which Iran is dealing with China, Russia, and our European partners. And while we have not fully adjusted our positions in terms of what precisely the action the Security Council should take, we’ve seen, particularly since President Hu’s visit to Washington for the Nuclear Security Summit, a growing willingness of our partners in the Security Council to recognize that the time has come to take significant action.

I think it’s clear from both their statements and their engagement in New York that China understands that an Iran which is seeking to develop nuclear weapons is not in its interest and that there is a need for a clear international message to go with that. And we are working very hard to reach common ground in the coming days in the Security Council to send that clear message to Iran. The path to diplomacy remains open. We clearly believe that’s the best way forward. But Iran will come to understand that there is a strong consensus in the international community that what it is doing is dangerous and it needs to change course.

Similarly, with respect to North Korea, our willingness to both engage and to offer the prospect of engagement with North Korea, but also to make clear that we have very clear expectations of what that engagement needs to produce has helped to build a strong international consensus both in support of diplomacy, but also in support of effective international measures where North Korea has turned its back on diplomacy. And I think that has paid off very substantially in the common actions we took along with China and the other members of the Security Council in response to North Korea’s missile tests last year and its announced nuclear test last year which led to, I think, both swift and unprecedented degree of consensus among the remaining parties in the Six-Party Talks, and then at the Security Council, to move forward with new sanctions on North Korea which we believe are having a significant impact there.

We obviously face a very challenging situation with the sinking of the Cheonan and it really underscores the precariousness of the situation on the Korean Peninsula. And I think that we all recognize that we need a thorough and complete investigation. No one is trying to hasten unduly the conclusions on this, but we are determined to pursue this thoroughly and to follow the facts where they point. And this will, in turn, have an impact on how we proceed in dealing with the challenge of North Korea and its actions, not only the nuclear front but in other provocative measures that it takes.

And how we proceed is going to depend first on clarity on the cause of the sinking of the Cheonan, second a clear understanding by North Korea that it must live up to its international obligations on the nuclear weapons program, on abiding with UN Security Council resolutions, and more broadly ending its belligerent and threatening behavior towards its neighbors. Throughout this process, as I say, China has played an important and constructive role through the Six-Party Talks and in our engagements, both bilaterally and in New York. And now, we are engaged in an intensive discussion with all of the key partners in the region, including China, on how to deal with this latest incident. And we very much hope that during this recent visit of Kim Jong-il to China that they had an opportunity to share with them their concerns about North Korea’s behavior and to make clear that we are watching very closely to see how events unfold in connection with the Cheonan. So that’s the first basket on security.

The second basket that the Secretary identified was on clean energy and climate. I don’t think I need to tell this or any audience why it is that the United States and China have such a significant role to play in dealing with the challenge of energy and climate change. We are the two largest energy consumers, the two largest greenhouse gas emitters, and there is simply no imaginable solution to the problems either of long-term energy security or of dealing with the problems of greenhouse gases and climate without significant engagement and contribution by both the United States and China. And so it’s now up to us to be the vanguards as it were, to accelerate the transition to a low carbon economy if we have any hope to meet the globally agreed objectives for limiting the concentration of greenhouse gases in the atmosphere and the risk of increased global temperatures.

And I think the evidence here suggests – and I know a lot of people here at Brookings are spending time looking at this question – that we are seeing a real sea change in the way that China is approaching this question. From its historical position of really sort of suggesting that either it wasn’t a problem or if it wasn’t a problem, it was somebody else’s problem to deal with and, therefore, not a responsibility for China, or somehow something that could impede China’s economic development, we now are beginning to see a recognition that China recognizes in its own self interest the need to deal with the problem of greenhouse gas emissions.

And so we’ve seen in China’s national plan and its actions in Copenhagen that we are beginning to see China address what I think are the key challenges, which is to see China reduce its emissions below business-as-usual levels as it goes forward with its economic development and put it on a long-term path to meet the global needs for what climate scientists told us is a sustainable level of greenhouse gas emissions or concentrations in the atmosphere, and to improve transparency and accountability so that all of us can judge the extent to which the kinds of plans and commitments that China is making its own at national level or something that can be essentially validated and perceived by the international community as well as to play a constructive role in international negotiations.

And I think we saw in the final outcome in Copenhagen a clear recognition of China taking at least positive steps, if not complete steps, on each of those elements. We’ve heard a lot about the difficulties of those negotiations. For those of us who were involved in Kyoto, I think this should come as no surprise in that like many fine soufflés or meals, the test is not in how it looked while it was being made, but how it came out of the oven. And I think if you look at how Copenhagen finally ended, we saw some very significant steps forward. And notably, for the first time, all major economies including China – that’s particularly significant that China was part of this – making national commitments to curb emissions and to transparently report on their mitigation efforts, which is critical to giving credibility to these commitments.

And now, we need to all work together going forward to make the Copenhagen Accord operational with balanced commitments by all major economies. And that international engagement has been complemented by our bilateral work on energy and climate. We signed a memorandum of understanding to enhance cooperation on climate change, clean energy, and environment at the last Strategic and Economic Dialogue. When the President visited Beijing last November, we had adopted a package of measures including a new clean energy research center, an electrical vehicles initiative, and a renewable energy partnership. We also had agreed on a public-private energy cooperation program and cooperation on clean coal development – all very practical steps which can offer benefits to both countries and to our private sector partners who were part of these efforts.

So I think while we have a substantial way to go forward and we also have some things that we need to do at home, we’re very much committed, the President’s committed to that. I understand that we’re going to see some movement forward in the Senate as early as today on new efforts to move legislation forward in the United States. We understand we need to do our part, but it’s something that we can do hand-in-hand with China to meet this common and collective good of a clean and predictable environment.

So the third topic that the Secretary identified in her initial remarks was the challenge of the economic crisis and global growth. And I think here, again, we saw the potential of the partnership between the United States and China. This is not a G-2. We recognize that however important our two countries are to dealing with these challenges, that we need the cooperation of all the systemic international players, but without the United States and China playing constructive roles, that the prospects for dealing both with the short-term challenges of the recent economic crisis as well as the long-term challenge of sustainable global economic growth simply cannot be met.

And on this, I think both countries did step up and do their part. China was a key player in the international coordination of the financial crisis. As you will all recall, this was the occasion of the President’s first meeting with President Hu, was in London for the G-20 meeting. Both the United States and China adopted historically large stimulus packages to support both our national economic activity, but also part of the global economic strategy.

And now we need to turn to the elements that will make this recovery sustainable over the long term. And that, of course, requires China to recognize the need to shift to more consumption of service-based economy, that that’s in China’s interest as well as the overall interests of the global economy. And I think we see clearly some signs that the Chinese leadership understands that basic insight. We, on our part, recognize that we need to do our part for global sustainability including the need to reduce our long-term debt. And that, of course, connects to the question of domestic consumption in China and other emerging economies as we try to sustain a more balanced economic growth.

Clearly, one element of this that we’ve made clear, we believe, is the importance of China moving to a market-based exchange rate, and I think this is a principle that China has embraced and has been reiterated by President Hu and Prime Minister Wen. And we look forward to our continued discussions on this topic. It’s something that is not done as a favor to any one country, but is actually part of China’s own national interests. Its economic leaders recognize it needs to be done in a way that recognizes that these are changes that take place over time, but we need to move in the right direction if we’re going to give the global economy and global markets confidence that we’re going in the right direction. And moving towards market-based exchange rates is a win-win because all of the economies will be stronger; there will be stronger markets for our exports, but also a more sustained basis for China’s own economic industries if we have a balanced growth.

At the same time, we recognize that as countries like China and other emerging economies play a greater role in the global economy, that we need to have their significant participation in the global economic institutions. And so we’ve seen, as I said, the role of the emerging economies in the evolution of the G-20. We now have China with the third-largest share of voting rights in the World Bank. And we support giving China a greater role in the IMF. This gives China an opportunity to exercise leadership – and responsible leadership – in this long-term strategy to keep the engine of global growth going.

So all of these issues are very much on our agenda and they all demonstrate that on the key global issues of our time, that there has been significant progress and a real convergence, I think, at the highest levels on common and shared visions about where we want to go, as I said, even if we don’t entirely agree in every detail on the means. And this really underscores the importance of the Strategic and Economic Dialogue, building on our very successful first meeting here in Washington. And in this upcoming meeting, we will have even more senior leadership participation than we had here in Washington with 15 U.S. cabinet members and agency heads traveling to Beijing.

And we used this meeting both to deal with long-term challenges, but also, frankly, as an action-forcing event to help us move forward on some issues to kind of crystallize the attention of leadership and to get things sort of taken out of the bureaucratic level to the leadership decision level.

It’s also a great opportunity to sustain the dialogue between key decision makers and policymakers in both governments – for them to understand our thinking, for we to understand theirs as well, and hopefully to influence decision making there. And the ability to do this across a crosscutting set of issues that intersect between the strategic, political, economic, environmental, energy is a particularly important feature of these dialogues, to break down the stovepipes that exist in both of our bureaucracies and to think in a more systematic and integrated way.

The S&ED sets out an opportunity both to give long-term priorities for engagement, but also to have concrete tasks. So again, as with last year, the S&ED will have two core tracks. The economic track, where we’ll be focusing on economic growth, including the importance of sustaining employment here in the United States, building and strengthening exports and investment opportunities for American firms, as well as to encouraging China to move forward to contribute to global economic rebalancing.

On the strategic track, we have three pillars. One is the pillar of counterterrorism, energy security, and military-to-military ties. The second is the international regional security issues. In addition to the two that I talked about, Iran and North Korea, Afghanistan and Pakistan increasingly figures in our discussions where we also are having a very positive set of dialogues and working together on common objectives there, and a third track focusing on cooperation through multilateral institutions on issues like climate change, health and pandemic disease, and food security.

Now, needless to say, in every one of these dialogues, each side is free to raise the issues of our concern, and we will have an opportunity, as we always do, to make our points about issues that are important to the United States, including human rights and religious freedom, the need to protect intellectual property, our concerns about aspects of the military modernization in China, as well as the issue of the overall global economic balance and the role of exchange rates. We will undoubtedly discuss core issues like peace and security in the Taiwan Straits, and from our perspective, the need for China to have a deeper engagement with the Dalai Lama over Tibet within the framework of the one China policy that we have continued to reiterate.

On the economic and trade front, we will discuss our concerns about aspects of Chinese economic policies which we think have protectionist casts, particularly China’s effort to link government procurement with innovation policy in ways that could undermine market access to key sectors of the Chinese economy. As I said, this is an opportunity in both the formal and informal sessions for us to have sustained dialogue, to exchange views in a friendly but fulsome way about each side’s perspectives, which allows us to move forward and deal with these issues of strategic importance to both.

So on the whole, the balance sheet is a pretty positive one. We don’t want to in any way underestimate the fact that important difficulties remain. But on these great global challenges, I think the answers to most of the questions that Ken raised are that we are heading in a positive direction. For the most part, the nature of these problems are such that our interests are shared in terms of the fact that we sink or swim together on issues ranging from global economic growth to health to terrorism to proliferation to protecting the sea lanes and other challenges that are in our common interest.

But we need to make sure that as we continue our support for China’s growing role in the global economy and the world political structure, that China’s growth is a positive-sum contribution to the security and economic growth of the world, and that its growth and prosperity do not come at the expense of others and that it’s ready to play a constructive role in addressing these global concerns in security, economic, political, environmental, health issues.

I think that’s a challenge that can be met. It’s one that we’re certainly committed to try to work with China to achieve. And we are looking forward to this very sustained engagement we will have in Beijing just two weeks’ time.

So thanks for your attention, and I look forward to your questions. (Applause.)

QUESTION: Thank you. John San with CTI TV of Taiwan. Is the Secretary talking about the Taiwan Strait? How do you see President Ma’s recent remarks to the fact that in an interview with the CNN he said that we will never ask the United States to fight for Taiwan? Are you encouraged by his determination to defend Taiwan on Taiwan’s own strength or are you relieved that the United States will never be dragged into a potentially bloody war, or are you concerned that President Ma may be distancing Taiwan from the United States?

Thank you, sir.

DEPUTY SECRETARY STEINBERG: Well, I think we’re generally quite encouraged by the direction of cross-straits relations between Taiwan and the PRC. I think we have long believed that a strategy of engagement by the two sides to look for a peaceful resolution of the issues is critical to their common future. This is something that in the end we have always believed that this is something that is best resolved through dialogue, and that we’ve encouraged Beijing to make clear that it can respond to these efforts by the leadership in Taiwan to try to find common ground to build trust across the strait. The discussions on the Economic Cooperation Framework are particularly important.

And so that provides a foundation for the two sides really to deal with each other, because this is a situation where conflict is in nobody’s interest. And I think it’s not particularly useful to speculate what would happen in the event that conflict comes about. The goal is to try to avoid it, and that comes about by a commitment by both sides to look for a peaceful resolution of their differences that takes into account the interests and the wishes of parties on both sides of the strait.

QUESTION: Eric McVadon, the Institute for Foreign Policy Analysis. Jim, you mentioned sea lane security a number of times. It warmed the cockles of my heart.

DEPUTY SECRETARY STEINBERG: Always happy to hear it, Admiral.

QUESTION: With respect to maritime cooperation, it seems to me that there’s a window for things like humanitarian assistance and disaster relief exercises with the Chinese, and antipiracy, of course, expanding that, and that folds right into energy security.

But let me ask a question that I pose with respect to the global climate change issue with the first panel this morning: Are we’re seeing that the Chinese have increasing interest in building trust and confidence or rather in demonstrating that they’re already pretty confident?

DEPUTY SECRETARY STEINBERG: I think, as I alluded briefly here and in more detail in an earlier speech I gave, I think one of the great challenges that we face is how we understand and how we adapt to China’s growing military power. We understand and accept the fact that along with economic growth that countries tend to develop their defensive capabilities, and that’s something by itself which is not necessarily objectionable. But at the same time, because China’s approach lacks the kind of transparency that we’d like, we do have questions about the long-term intentions, and that’s why we want to strengthen the opportunity for military-to-military exchanges and dialogues so that we have a better understanding of China’s goals, plans, and intentions and what’s driving its decisions over military modernization, not just in terms of equipment but also in terms of doctrine and its operations, to give us the assurance that what it is seeking to achieve is consistent with the security and broader security, political, and economic interests of others.

So to the extent that China has a greater naval and maritime capability to contribute, as you say, to counter-piracy and to humanitarian efforts, that’s clearly welcome. And the capacity to go further out and yet to contribute to those things is a contributor to global well-being and global security. But because there are other aspects of their modernization program, particularly in the maritime field, that are less clear, we would like to get greater clarity about what their goals and intentions are and to build the kind of trust between our militaries and our leaders that let us understand what that is about.

I think we hope to persuade the Chinese that the world we live in requires more cooperation not competition, and that neither side will benefit from a military competition between the United States and China or between China and any of its other neighbors. This is a situation where we’ve learned from long experience that the risks associated with those kinds of competition are severe and that nobody wins in the long term.

So I think that’s why dialogue is so critical in this sphere and why we’ve tried to persuade our Chinese counterparts to try to insulate that dialogue from our disagreements on substantive issues so that we don’t lose the opportunity to discuss areas where we have concerns, as well as where we have obvious common interests.

QUESTION: Thanks, Ken. Thanks, Jim, great talk.

On the – I’m sorry, Chris Nelson, Nelson Report. On the recently completed North Korea meeting, are you getting a sense that the Chinese are getting a little bit closer to seeing the U.S. argument that North Korea, as it is, is a strategic threat to China, or are they still trying to keep it going to somehow? And in that regard, as the Cheonan incident shows, regardless of who’s judged to be at fault ultimately, it does seem to have started a more considered discussion of the level of U.S.-South Korean military intelligence sharing, perhaps enlarged BMD, all that sort of thing.

Do you think it’s correct to be thinking about an enhanced U.S. relationship with South Korea in the military and strategic sphere, leveraging that on Chinese progress in seeing our point of view on North Korea? Or is that – am I mixing apples and oranges, going too far with that?

Thanks.

DEPUTY SECRETARY STEINBERG: No problem. Let me kind of being with a few general observations. I think, first, I think I’ll let the Chinese speak for themselves in terms of their own assessment of the situation in North Korea and I’m sure they’ll have some things to say about that. But I would say, first, that there is a strong understanding that stability in the region is in the interest of all of the neighbors, and that’s a common interest; and that aspects of North Korea’s behavior, particularly their nuclear activities, is a threat to that stability; and that we have a common interest that binds the other five parties in the Six-Party Talks together to address that, as well as other risks of instability coming out of North Korea.

And those are the subject of intense consultations both bilaterally and multilaterally among all of the various combinations and permutations in twos, threes, fours, and otherwise of the parties in the region. I think no country can feel entirely at ease with the situation in North Korea right now. We are looking for ways to work together to try to address that in ways that enhances the common security of all of North Korea’s neighbors.

I think in terms of our engagement with South Korea, it’s hard to imagine a much more enhanced capacity than the unique relationship that we have with South Korea, both on a political and a security level. I mean, the Combined Command is an almost unique example of two militaries that are deeply, deeply intertwined in dealing with the security challenges of the Korean Peninsula, and we work together in a remarkably united way together as two militaries to address those challenges.

So whether we need to make specific adjustments in our posture or operations is something I’m sure we’ll all take a look at. But in the terms of the need to get closer, it’s just hard to imagine. And that extends not only to the operational day-to-day of the two militaries, but I think on the political level, beginning with our two presidents, I think the level of cooperation and consultation between the United States and the Republic of Korea now is unprecedented in my experience, which now isn’t as long as Jack Pritchard’s, but it goes back a ways.

And I am really very encouraged and heartened by the degree to which we are working so closely together on a full range of issues, not just on the issues of stability on the Korean Peninsula but the strong contribution that South Korea’s making to our efforts in Afghanistan, its global commitment on piracy, and other issues. It really is a remarkably strong and important bilateral relationship, and so that’s why we’re working so closely together on the investigation of the Cheonan. It’s why we are consulting closely on all aspects of the challenges on the Peninsula, and I’m confident that that close collaboration will continue as we move forward.

QUESTION: Hi, Foster Klug with the Associated Press. You seem to be willing in your speech to link the Cheonan incident to the future of nuclear talks. Is there any other guidance you can give on what else the U.S. is prepared to do if, as appears will happen, there’s some sort of linkage to North Korea with this attack?

DEPUTY SECRETARY STEINBERG: I’m going to resist all of those “ifs” in your question. We have made no conclusions. We are continuing the investigation. We will do this thoroughly, objectively, and in close cooperation, not just with the South Koreans but this is actually a multinational effort with Australia, Norway, and others who are involved in this. So I think it’s been very important that it is a broad-based and very objective assessment. And I don’t propose to speculate on how this will turn out, because we don’t know yet and we really want the facts to lead us. But at the same time, we will follow the facts where they go and we’ll draw the conclusions from the facts.

But I do mean to say that we can’t be indifferent to this event. This was a deep tragedy for South Korea, and the people of South Korea are entitled to as full an explanation as possible as to what caused it. And we will work with them to do that. And until we have clarity about this, I think it’s important for us to be careful about how we move forward, leaving open any of the possibilities and without prejudging what the possibilities of this investigation are. But I think right now is a time to be prudent in terms of our actions going forward, and we’ve encouraged all sides to be prudent in every respect until we know what the results of those investigations are.

PARTICIPANT: Let me say, it’s a very serious issue. I was smiling as Jim was answering this only because I was recalling back when I joined the National Security Council, Jim sitting down with me and explaining to me that, as an academic, I probably liked to deal with hypothetical questions, but as a member of the Administration, never answer – never ever answer a hypothetical question from a member of the media. So it’s a pleasure to watch you. (Laughter.)

QUESTION: (Inaudible.) Deputy Secretary, China just announced last month that it wanted to supply two new nuclear reactors to Pakistan under an agreement which is probably not grandfathered by their NSG entry. How do you look at it and what are the conversations that you have with the Chinese on this subject?

DEPUTY SECRETARY STEINBERG: Well, I think as you suggested from your question, I think the question is: What is the status of this assistance and how does it fit into understandings with the IAEA? And I think this is something that is still under discussion among all of us. Obviously, it’s important from our perspective that all countries live up to their commitments. As you say, the Chinese have argued that it’s grandfathered. This is something that we haven’t, I think, reached the final conclusion on, but it’s something we’re obviously looking at very carefully. But I think it’s important to scrupulously honor these nonproliferation commitments, so we’ll want to continue to engage on the question about whether this is permitted under the understandings of the IAEA.

QUESTION: Thanks. (Inaudible) from National Defense University INSS. I just hope you could expand a bit on your comments on U.S.-China security dialogue on Afghanistan and Pakistan, where you said – sorry – you noted that there was – that it increasingly figures into the security dialogue and that that dialogue has been constructive. And I didn’t quite hear whether you’d said the dialogue was on common objectives or interests. And I wonder if there is, in fact, a meaningful distinction. And then just expand to dig a little deeper, is Chinese investment or commercial activity consistent with U.S. objectives in Afghanistan and/or Pakistan? And is it – or is it insufficient without greater coordination on political and security affairs?

DEPUTY SECRETARY STEINBERG: Well, we have, as I said, had an intensified conversation with China on these issues. Ambassador Holbrooke has been to Beijing several times. We’ve had conversations both in Beijing, elsewhere. The Chinese have participated in a number of the multilateral meetings involving Afghanistan.

And I think our objectives are largely coincident in Afghanistan. I think we all seek a stable Afghanistan that has an inclusive government, that’s responsive to its people, and in particular concern to both of us that it does not harbor violent extremists that can pose a threat to the United States, to Afghanistan’s neighbors, and the international community as a whole.

So I think the basic framework within which we approach these things does have a shared set of interests. We welcome Chinese economic investment in Afghanistan. Clearly, creating jobs and economic opportunity is part of the long-term strategy for creating a stable Pakistan, creating alternatives to illicit production of narcotics and other sources of income for the Afghan people. So investment is important. And as long as that investment is transparent and meets generally accepted international standards to the extent that it involves assistance, we welcome it. And it’s something we’ve had a dialogue with the Chinese about, but it’s largely a positive one.

Similarly, with respect to Pakistan, we think that China can play an important role in helping strengthen the capacity of the Pakistan Government to meet the needs of its people and to provide an alternative to the extremism which threatens the Pakistani state as well as the rest of us.

So I think in the main, our interests and objectives are common. They’re never identical in any case, but it’s important that all the neighbors who have a big stake in a stable and non-threatening Afghanistan work together. And we’ve been encouraged by China’s growing willingness to be part of that effort.

QUESTION: Mr. Secretary, Gary Mitchell from the Mitchell Report. Earlier today, we heard a very thoughtful panel talking about clean energy, environment, et cetera, and there was an interesting sort of factoid that came out of that about what happened at the tail end of the conversation between President Obama and his Chinese counterpart in Copenhagen that reflected a – what I think is fair to say is a significant difference within the China policy elite on questions related to clean energy and climate, which leads me to ask a question that has three component parts but they all should run together.

One is, are you seeing that kind of dissention on the other two components that you identified in Secretary Clinton’s speech – security and global financial crisis – are you seeing that kind of division or dissention, however you might describe it?

Second, is it growing or is it static?

And third, to the extent that it could be done, is there a way to characterize what the nature of political differences of opinion in China are like in the way that it would be easier to do, for example, in this country to talk about right versus left and Tea Party, et cetera?

DEPUTY SECRETARY STEINBERG: I don’t know whether there’s a Chinese equivalent of Tea Party, but I’m not going to go there. (Laughter.) Yeah, a lot of good tea.

I think the climate and energy issues, because they are so deeply caught up in economic issues, obviously have different impacts on different sectors of society and different sectors are impacted to a different degree by climate change and climate disruption, and the cost of adaptation and the cost of mitigation fall on different sectors. And that’s true in any society. And so I’m confident that there’s as lively a debate in China among the various stakeholders about these issues as there is in the United States.

But it’s the role of leadership to provide an overarching framework and to figure out where the national interest lies, and I think one of the positive signs that we’ve seen is that there seems to be a growing recognition at the most senior leadership in China that when you put it all together, that China’s future depends on China taking significant measures to address this challenge. There are lots of reasons why it’s in China’s interest and there are probably lots of internal political reasons why the Chinese leadership is moving in that direction. And I’ll leave it to Cheng Li and others to explicate their thoughts on this.

But I think it is significant that as they think about the sort of contending voices and perspectives within China that there is, it seems to me, a growing rate among the leadership to recognize that China needs to get out in front of this. It’s in China’s interest on economic grounds because it needs to adapt for the future and have an economy that will reflect what is the inevitable transition to a low-carbon economy. I’m confident of that and I think the Chinese leadership recognizes that China could benefit from being part of the solution rather than part of the problem.

I think it’s important to remember on so many of these issues that the effort to deal with carbon emissions and greenhouse gasses is deeply tied up with more localized forms of environmental damage in China, which also gives the Chinese a strong incentive. We’re talking about black carbon, we’re talking about particulates, lots of other aspects of the costs of environment, just as in our country the leading edge was clean air, clean water, and more localized environmental issues that come together and gives them a strong natural constituency. As China’s own economic well-being advances, its people increasingly are tired of polluted air, polluted water, and the like. And so these converge around issues and also a recognition that there’s a cost to China from being seen in the international community as not helping to contribute to the solution. And I do think that was an important part of what took place in Copenhagen was a recognition that China will be viewed in the court of global public opinion, just as we will, if we don’t meet our responsibilities.

So whatever the containing forces are, I think what we are seeing is that whosever is summing them up at the senior leaderships there seems to be willing to move forward, not as much as some would like to see, but at least in the right direction on these issues.

QUESTION: Hi. Scott Ottoman with Inside U.S. China Trade. At the end of President Obama’s visit to China last year, as part of the communiqué there was a mutual commitment by both sides to accelerate bilateral investment treaty talks. Since that time, the United States has been engaged in a review of its own bilateral investment treaty model. It was supposed to have initially, reportedly, come out at the end of last year. You’re still working on it. I wonder if you could give us a status report, if there’s likely to be any further acceleration of the talks with China, which are stuck at a technical level.

DEPUTY SECRETARY STEINBERG: We’re still working on it. (Laughter.)

QUESTION: How about then in terms of your talks on indigenous innovation with the Chinese that you mentioned you would speak about at the first S&ED?

DEPUTY SECRETARY STEINBERG: Yeah. No, this is obviously of considerable concern to us and we think it obviously has a huge impact on the United States and our firms and our investment in China. And we think in the long term, it’s counterproductive to China’s own interest. I think long history shows that this kind of (inaudible) industry protectionism or these kinds of tools, in the long run, tend to distort even the country whose nominally trying to promote its own interest. So we think that China’s own long-term interest would benefit from a free and open playing field that allows global firms, including U.S. firms, to come and compete on an even basis. It is the core principles behind the WTO. Clearly, we would like to see China extend that into the procurement field.

And I think I’ll leave it to Secretary Geithner to elaborate as he gets into his discussions in Beijing, but I think that the Chinese certainly understand our concerns and we hope that they will be responsive because we think that in the long term the system that China will want to belong to is one that promotes a true level playing field in China that will bring world-class investment to China by firms from around the world.

QUESTION: Mr. Secretary, Scott Herald of the Rand Corporation. Thank you for your remarks today and your service to our country. In interviews in Beijing across the last two weeks, as well as in Shanghai, the subject of S&ED came up quite frequently. It was always highly praised and almost always immediately followed with: We need this from our side, the Chinese side, as an opening for our top leaders to give the room for policy innovation and relationships to be built at the working level.

However, the follow-up would go: We would then like a secondary track, 1.5 or track 2, where our working-level officials could talk with your working-level officials to build the kind of ideas that can push up into that space that’s been opened up.

Without wanting to put you on the spot, sir, I wonder if this is something that the U.S. side would welcome, has thought about, or would be open to if the Chinese side were to propose it or if we were to propose it to them.

DEPUTY SECRETARY STEINBERG: Yeah. I mean, I would say first we would welcome it, and I think we kind of think we are doing some of that. I wouldn’t call it a track 1.5. It’s the intercessional work that takes place between the kind of the big high-level plenaries. But we’ve all recognized that for these things to be effective, we have to do the work in between the formal sessions of the S&ED. And I know many of my colleagues who are working on these individual issues would say that that’s exactly what they’re engaged in. We probably do need to do more. Certainly, I know that in at least one of the meetings between the Secretary and State Councilor Dai, we explicitly talked about the need to strengthen these ongoing mechanisms so that these aren’t just episodic engagements but really do produce sustained work. So I think it’s something that we feel we’re doing some of now. We clearly could do more and would welcome the opportunity to engage on a more systematic basis.

QUESTION: Thank you so much. I’m Teuan He, a correspondent from South Korean newspaper (inaudible) Ilbo. I’m trying not to use the term “if,” but – (laughter) – (inaudible) the question. Once the final investigation report by South Korean Government about (inaudible) finalized, can the schedule, the transfer of 2012 (inaudible) can be rearranged, in your opinion?

DEPUTY SECRETARY STEINBERG: The only thing I want to say on that issue is that I don’t see any linkage between the two issues. I think that we’ve had a long discussion and we will continue to have a discussion about the command relationships on the Korean Peninsula. But I would not see that whatever discussions we have or don’t have on that topic would be influenced by this particular incident, however it comes out. We want to make sure that whatever command relations we have serve the interests of our two countries and promotes stability on the Korean Peninsula.

MODERATOR: Jim, thank you very much for coming over here and giving this masterful overview. (Applause.)

 
 

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