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2GOLDMAN SACHS
3ASSET MANAGEMENT
4
5AIMS ALTERNATIVE INVESTMENTS
6SYMPOSIUM 2013
7
8FORMER UNITED STATES
9SECRETARY OF STATE
10HILLARY RODHAM CLINTON
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13200 West Street
14New York, New York
15
16October 24, 2013
1712:50 p.m.
18
19Before Rita Persichetty, a Notary Public
20of the State of New York.
21
22ELLEN GRAUER COURT REPORTING CO. LLC
23126 East 56th Street, Fifth Floor
24New York, New York 10022
25212-750-6434
26REF:  105177
27
28P R O C E E D I N G S
29*   *   *   *
30MR. O'NEILL:  Welcome.  This has been a great day and a half here at the AIMS
31Symposium, and it is my distinct honor to introduce today's lunch conversation.
32Please join me in welcoming Secretary Clinton, who will be hosted in a
33discussion with our own Tim O'Neill, who is the cohead of investment management.
34Well, thanks again, Madam Secretary. Everyone is very interested in what you
35have to say, so why don't we get right to it and start talking about the
36political process in Washington, D.C.
37I think it's fair to say that the government shutdown and debates that
38surrounded it were not the finest hours in political history, but democracy is
39an evolving process, and nobody has a more refined perspective of that than you,
40having served in the executive branch as well as Congress.
41So my first question is:  How do we get past this partisan gridlock?
42SECRETARY CLINTON:  Well, Tim, thank you.  Thanks for having me here to have
43this conversation with you.  And I know we have many people who are not
44Americans who are here from other parts of the world.
45So let me start by saying that we have evolved our system, it is a durable,
46resilient system, and from the outside, it can look quite dysfunctional from
47time to time, but it has a capacity for regeneration and focus that has really
48stood up in good stead for so many years.
49What happened in the last two years, really, three years was a growing sense on
50the part of some who are very ideologically disposed, to try to move out of the
51usual order in the Congress where you win some, you lose some, you keep working.
52You can't win on legislative issues, you win elections, you have a rhythm to it,
53and it requires a certain amount of compromise and acceptance because of the
54broad cross-section of views and experiences that our country embodies.
55Back in July of 2011, I was in Hong Kong during the last debate over our debt
56limit.  And it was very striking to me how the business leaders I was speaking
57with in a big conference there were quite concerned.  At that time, I could be
58very reassuring, I said, don't worry, we'll get through it, we're going to work
59it out, we would never default.
60So we fast-forward to this last episode, and it is troubling that there is a
61hard core of extremist politicians who have views about decisions as monumental
62as shutting down our government and defaulting on our debt that have a small but
63a disproportionate influence on the debate in Washington.
64So what you saw was a relatively small group in the House of Representatives and
65very few in the Senate who were trying to achieve one objective, namely make a
66political point about the health care law by holding hostage the entire rest of
67the government and putting the full faith in credit of the United States at
68risk.
69Although it went up to the last hour, the fact that they were a minority and
70that there were much more level heads, even in the same political party, that
71the business view started speaking out after having been relatively silent,
72thinking this is going to work out, but then people of experience and expertise
73began speaking out, it was possible to get through that crisis.
74But it does raise the larger issue about what to do.  And I think there are
75three answers to that.  Voters have to quit rewarding people who take
76uncompromising stands in the face of reality and evidence, and that is something
77that each one of us can contribute to.
78Obviously I'm a Democrat, but there are a lot of level-headed, smart Republicans
79who were biting their nails over this.  They should be rewarded, not threatened
80by the far right and people who either don't know or don't care about the
81importance of our being in reserve currency, about the importance of our paying
82the bills that we've already run up, about the importance of confidence in the
83global economy should pay a price, and you pay that price at the ballot box.
84Secondly, running for office in our country takes a lot of money, and candidates
85have to go out and raise it.  New York is probably the leading site for
86contributions for fundraising for candidates on both sides of the aisle, and
87it's also our economic center.
88And there are a lot of people here who should ask some tough questions before
89handing over campaign contributions to people who were really playing chicken
90with our whole economy.
91And thirdly, I think that there has to be greater education and understanding
92about what's at stake.  I think too many people for too long thought raising the
93debt limit was so you could borrow more and spend more instead of pay bills
94you've already incurred.  That's a pretty big.  The guy goes out, has a really
95nice meal, puts it on his credit card, the restaurant turns the credit card in,
96and the company gets paid, the company bills the guy, and the guy says, you
97know, I didn't like that meal very much after all, I'm not paying, and that in a
98very small, microcosmic way is what people who were willing to default were
99basically saying.
100So it's a worrisome situation, but I always come back to my first point, I mean,
101that we always have a way of righting ourselves and getting back into that great
102big messy middle that you've operated in for more than 200 plus years, and I
103think that's where this will move towards, everybody, citizens as well as
104leaders do their part.
105MR. O'NEILL:  Part of that process is called compromise, so let me just test
106that hypothesis to an issue that you know a lot about, health care reform.
107So obviously the Affordable Care Act has been upheld by the supreme court.  It's
108clearly having limitation problems.  It's unsettling, people still -- the
109Republicans want to repeal it or defund it.  So how do you get to the middle on
110that clash of absolutes?
111SECRETARY CLINTON:  Well, this is not the first time that we rolled out a big
112program with the limitation problems.
113I was in the Senate when President Bush asked and signed legislation expanding
114Medicare benefits, the Medicare Part D drug benefits.  And people forget now
115that it was a very difficult implementation.
116As a senator, my staff spent weeks working with people who were trying to sign
117up, because it was in some sense even harder to manage because the population
118over 65, not the most computer-literate group, and it was difficult.  But, you
119know, people stuck with it, worked through it.
120Now, this is on -- it's on a different scale and it is more complex because it's
121trying to create a market.  In Medicare, you have a single market, you have, you
122know, the government is increasing funding through government programs to
123provide people over 65 the drugs they needed.
124And there were a few variations that you could play out on it, but it was a much
125simpler market than what the Affordable Care Act is aiming to set up.
126Now, the way I look at this, Tim, is it's either going to work or it's not going
127to work.  We have an election next November, make it an issue.  If it doesn't
128work, it's been, as you said, voted on, you know, signed by the President,
129passed by -- on constitutionality by the supreme court, so it's the law of the
130land.
131Everybody knows there are problems getting the software right and getting the
132information in.  They'll either work it out or they won't.  You know, by
133February, March, you'll either see that the system is working, because if you
134compare the federal system, which for all kinds of reasons has to be more
135complex, the state systems that ran their own exchanges, states like New York,
136California, Maryland, et cetera, are actually rolling it out quite sufficiently
137because they had a smaller universe, they had a better collection of the data,
138and they had willing participants on all sides of the transaction.
139But when you have huge states like Texas, which is dead set against it, and you
140have a large state like Florida, which is ambivalent, you know, it's difficult
141to run a federal exchange, you know, being able to get the information, get it
142up and get it out.
143So I think the way our system is supposed to work is if, by next November,
144people running for office are either defending or not the Affordable Care Act,
145it will be an electoral issue.  And if it is still unacceptable to people or not
146running right, then the Congress that will come in after, will have every right
147in the world to go after it and figure out what they can do.
148Now, if they still have a Democratic President in the White House, who may not
149want to go as far as some would, in fact, I'm sure of that, but then there can
150be a discussion about, okay, what worked and what didn't work.
151But, you know, elections are about winning and losing and who gets to make
152decisions.  The President is a two-term President.  We have a Democratic senate
153and a Republican house, so people had to compromise.
154And on the Affordable Care Act, I think there's going to be a few months to see
155whether or not it can be operating the way it should, and then people can have a
156rational discussion about what, if anything, can be done, and then they can be
157arguing it out in the election.
158MR. O'NEILL:  So can I follow up on that perspective of President Obama's role
159in all of this process.
160Do you think that if he were more personally engaged with Congress on these
161issues, that we would have a different result?
162SECRETARY CLINTON:  I don't know, Tim.  I mean, I've obviously been asked this
163and I've seen the critique.  You know, different presidents have different
164strengths, they bring different life experiences.
165I had the opportunity of working with the President closely for four years on
166some very tough national security issues.  He's an incredibly intelligent,
167thoughtful, decisive person in pursuing the agenda he sets.
168But he may not, you know, be someone who we think of as spending a lot of time
169in a give and take of politics; however, I know that he spent a lot of time
170early on in the first term with the Republicans in trying, as you recall, to put
171together the brand barbie (phonetic) and it turned out that the Republicans'
172side, particularly in the house, couldn't deliver on even a small market.
173So you can get to the point of saying, okay, we can live with this, you say you
174can live with that, I can sell it to the Democrats, you sell it to the
175Republicans, and the answer would come back, I can't sell it to Republicans, so
176we have to jigger it around somehow.  Whether that was a negotiating tactic or
177the hard reality that it was hard to sell it to the caucus, I don't know.
178But I do remember quite well the President working diligently to reach out to
179people and trying very hard on the health care bill, for example, spending more
180time than a lot of Democrats wanted him to, trying to figure out how he can get
181some Republicans on board.
182So let me switch gears for a minute and go back to the '90's with my husband,
183and there isn't anybody that I can think who would doubt that my husband is an
184incredibly active engager of people, whatever side of the aisle, (audible over
185laughing) and ask their opinion on something, he's going to have you over, he's
186going to play golf with you, et cetera, et cetera.  That didn't stop them from
187trying to destroy him.  And his agenda and his economic program was passed
188without a single Republican vote after an enormous amount of personal effort to
189get some Republican, you say you care about the deficit, at that time we had
190$250 billion deficit, help me bring it down. The arithmetic I learned in Little
191Rock, Arkansas is you add and subtract with both revenues and cuts, let's work
192together, nowhere.
193So it's not always that being, you know, personally engaged and working with
194people is going to get you the results you want if the people on the other side
195are doing their political calculations that is in their interests not to
196compromise, not to give in.
197So, you know, there's always -- you can always try more things, you can work
198harder at it.  I'm a big believer in that, but it's not always the case you will
199get it done.
200Now, back in the '90's when, you know, Republicans shut the government down
201twice with Bill in the White House, and he did just what President Obama did, I
202will not negotiate with you until you open the government, I'm not going to be
203put into that position.  They opened it once and then demanded that he agree
204with them on some issues he wouldn't agree with them on.  They shut it again.
205And he took the same position, I'm not going to compromise in this posture, I'll
206be glad to talk to you later.
207So got the government back opened, began to try to work together.  And there's a
208lot of theater in politics just as there is in any other human enterprise.
209So Newt Gingrich was the speaker, and he would rail against Bill and
210occasionally me all daylong beyond -- I think we had at least one cable station
211back then, but we seemed to be on there when it was being broadcast, and then
2129:00 o'clock at night, he'd sneak into the White House, I mean, you really can't
213sneak into the White House, it wouldn't be advertised, let me put it that way.
214So he would go into the White House, go up to the second floor, and he and Bill
215would pound things out for a couple of hours trying to work towards welfare
216reform, and eventually, a couple years later, a balanced budget, et cetera.
217And he -- and Gingrich was a very forceful leader of the Republicans, but he had
218people to his right that didn't want any negotiation or any compromise.
219At one point the then, I think he was -- I don't know if it was Tom DeLay or
220Dick Armey told Gingrich, we don't want you going to the White House any longer
221talking to Bill alone.  You make too many deals.  We're going to stop that.
222So it's a constant effort.  And I think the presidents that I've known and even
223my working with President Bush, you know, different styles, but every president
224I've ever known well has really tried to put the pieces together.
225MR. O'NEILL:  There's no doubt that the President has a tough job, but as you
226said, politics is not for the fainthearted, but probably the most impossible job
227is the speaker's job.
228SECRETARY CLINTON:  Yes.
229MR. O'NEILL:  Would John Boehner even try to sneak into the White House?
230SECRETARY CLINTON:  Well, I personally like Speaker Boehner.  I've sympathized
231with him because he's in a tough spot, and I don't pretend to understand all of
232the dynamics in the Republican caucus, but I do think that, you know, the
233speaker needs to try to figure out how to exercise more direction for his
234caucus.
235I think his theory this time was, you know, these guys are going to exhaust
236themselves, we'll get to the 11th hour, the senate will save us, we'll pass
237something, we'll get beyond it.  And that's pretty much the way it played out.
238And that wasn't a, you know, that wasn't a wrongheaded view on how it would
239unfold, because even though the people leading the charge of the shutdown and
240default got a lot of air time, they did not get a lot of support beyond what
241they had to start with.
242So the speaker wasn't wrong about that.  The problem is, we can't keep doing
243this.  This is really, you know, this is really dangerous to our entire system.
244So I think the speaker has to see if he can figure out a way to isolate as much
245as possible the really hard core, absolute evidence deniers and get them over
246here and then try to bring the rest of the caucus with him.
247It may mean that it will threaten his speakership, but my view on that, and it's
248easy for me to say, he will be historically a more important figure if he stands
249up to his own extreme wing and makes clear that he is putting his country first.
250He's obviously a rock solid Republican, conservative, but he's not going to
251(inaudible) go so don't even think about all of you guys ever doing this again
252while I'm the speaker.  And I personally think he would stay in office, but, you
253know, that's not for me to say.
254MR. O'NEILL:  Well, we can all hope for a profile (inaudible) encourage speaker
255for, Madam Secretary, but let me take a different prospective as foreign
256governments were watching all of this, what do you think they were saying and
257thinking about the United States?
258SECRETARY CLINTON:  Well, I think we know, because some of them went public with
259what they were thinking about.  And it was painful because it's difficult to see
260a self-inflicted wound like the one we just went through having such
261consequences.
262And it's not just what they were saying at the moment, it's what they were
263planning for the future.  When, you know, you see countries saying that we don't
264know how reliable the United States is, they don't know how much we can count on
265us and our leadership, that has real consequences.  It has economic consequences
266but also has consequences when you read that, you know, one of the high-ranking
267Chinese officials who publicly commented on it, said, look, it's time to
268de-Americanize the world.  These people can't run their own country, why should
269they be permitted to exercise a disproportionate influence on the rest of the
270world.
271So it was something that I regret, and probably the best symbol of it was
272because the government shutdown, President Obama could not go to the East Asian
273Summit or the Asia-Pacific Economic Committee, two of the linchpins of what we
274call the Asia pivot, which was our desire to both reassure and reassert American
275presence and power in the Pacific as a balance and as a duty to those with whom
276we have treaties, Japan and South Korea, Philippines and Thailand and Australia.
277And so because of the shutdown, it wasn't just the fact of the shutdown,
278literally a lot of the people furloughed who would do a President's trip
279couldn't work, just imagine, that is no way to run a great country, right?
280And so the President didn't go, but, you know, President Putin was there,
281President Xi Jinping was there and, you know, it's a very symbolic moment when
282it's -- not because of any external problem, but it's because of the internal
283political dysfunction that keeps the President of the United States, I don't
284care what party, I don't care what your political preferences are, keeps the
285President of the United States from being on the world stage at a really
286important time, to look over the horizon about, you know, trading opportunities
287and the Trans-Pacific partnership, other kinds of work that needs to be done in
288the region to keep, you know, commerce flowing across the South China Sea to
289work with our friends in Japan and China to prevent further escalation over the
290contested islands.  I mean, there's a lot going on in the region.
291And it was a very sad commentary on what this kind of political standoff done
292for totally partisan and personal advantage does to our overall foreign policy.
293MR. O'NEILL:  We agreed there's a lot of going on in Egypt and in China,
294(inaudible) new leadership there.  Your views?
295SECRETARY CLINTON:  Well, I've met the new president, and certainly I'm
296impressed by his, you know, mental and physical energy and vigor.  He seems to
297have created a stable transition from Hu Jintao power and the former leadership
298to the new team.
299I think China has some big challenges that they're going to have to confront.
300You guys know more about economic challenges than most people, but there are
301other demographic challenges that feed into that.  There's a lot of discontent
302in a growing middle class about, you know, what is the future holding for them,
303what kind of opportunities are they going to have, there's no real social safety
304net whatsoever, pensions and the like.
305So I think that he has his job cut out for him.  He's very much committed to
306coming up with some plans.  I know there will be a meeting shortly to try to
307look at the plans for the next five to ten years, so I think he's shown steady
308leadership, which is very welcome, both inside China and outside China, but I
309also believe that there's growing nationalism in China and in Japan and in other
310places in the region that we have to be watchful about.
311This dispute over what are called by the Japanese as Senkaku Island has really
312unleashed some very old grievances and a lot of heated rhetoric going back and
313forth between China and Japan that needs to calm down.  It is not in anyone's
314interest that this spiral out of control.
315Similarly, Korea and Japan have disputes over Takeshima (phonetic/audible) and
316some territory, again, without the United States playing a leading role in
317making sure there's an opportunity to resolve this.  North Korea, which under
318its new leader, seems unpredictable at best, and I think even the Chinese
319leadership today recognizes that.
320And you go down the roll call, and there are so many tremendous opportunities,
321but in order for those opportunities to be realized, it requires a rules-based
322order.  I mean, everybody from the biggest China, to the smallest Singapore, to
323the most developed, to the least developed, which is why I spent so much time in
324the region trying to knit together the sort of regional rules-based order that I
325think is important for the people in the region first and foremost, but for all
326the rest of us.
327And it will all come down to whether China wants to exercise that (inaudible)
328that responsible stakeholder position.
329And I think eventually that will be the decision of the Chinese government,
330because it's in their interest because while they focus on internal challenges,
331they don't need a lot of agitation and problems on their borders and outside, so
332it's something that we watch carefully, and we obviously want China to be
333successful and to be responsible.
334MR. O'NEILL:  Within the administration, do you think there's any risk that the
335Asia pivot focus that you started, Madam Secretary, loses momentum because of
336the Middle East and the shift there?
337SECRETARY CLINTON:  Well, Tim, I hope not.  I mean obviously there's a lot going
338on in North Africa and the Middle East that requires our attention, but I've
339said repeatedly that the real future lies in the Asia-Pacific, and no country is
340better situated to take advantage of what happens in the Asia-Pacific than we
341are because we are a Pacific nation, just like we are an Atlantic region, thanks
342to the gift of our geography.
343But it was troubling that the President couldn't go to that event.  That
344signaled to a lot of academics and scholars, well, that so-called pivot I went
345around talking about is certainly slowing down, that it's not realizing the
346continuity that is required to establish policy.
347You know, if you look at what we did in Europe with NATO, our promotion of the
348European Union, our close alliances with many countries there, our constant
349support for freedom behind the old Iron Curtain and our willingness to help fund
350and help the countries that came out from behind it get on their feet, we had a
351long-term strategy.
352If you look at Korea, after the Korean War, we could have said, man, we have a
353world war, now we have a Korean War, we're done, we're going home, but we had
354very, you know, very smart leadership that said, okay, we've protected the lower
355half of the peninsula, they need a chance to develop.
356And think about what they went through.  I mean, South Korea has coups, have
357assassinations, have, you know, really terrible politics for a very long time.
358They didn't become what we would consider a functional democracy overnight, but
359we never gave up.  We had troops there, we had aid there, we had a presence of
360American business there.  We were there for the long run.
361And what I worry about is that in a time of shrinking resources and
362well-deserved demands that we pay attention here at home to what's happening to
363the American people, that we're not going to maintain that continuity of
364attention and support that is needed in Asia and elsewhere.
365So I'm hoping that it, you know, certainly is maintained despite the hiccups,
366but it takes time and resources to do that.
367MR. O'NEILL:  So let's go to the Middle East, complicated, could spend hours
368talking about it.  I think all the problems -- the big problems for this group
369are sort of hiding in sight from our view, Iran, Iraq, Syria, Egypt.
370What would be most helpful to us, given your intimacy with the issues and the
371personalities in the region, if you give us a six to 12-month look in the region
372and say, if this happens, that's important, or what is your biggest worry
373because opportunity wasn't (inaudible) influence?
374SECRETARY CLINTON:  Well, one thing I've learned is that there's no one that
375knows what's going to happen in the Middle East, and that even became clear
376after the Arab Spring, but I'll take a stab at it.
377It's really important that Egypt stabilizes, and whatever one thinks about the
378military intervention that happened, it's a fact, but it's not at all clear to
379me that that military intervention has resulted in stability or in quashing a
380lot of the continuing uprisings from Islamists and even Jihadists.
381So how Egypt navigates through this next six to 12 months is crucial for the
382entire region.  There are a lot of proxy battles going on, you know, there's
383proxy battles between the Saudis and the Iranis and the Jordanians and the
384Iranians and the Turks and, you know, it goes on and on, and you can look at
385individual countries and try to sort out who is on what side.
386So in Egypt, the election of Morsi was not by any means an overwhelming mandate,
387in fact, it was a rather small turnout in the second election.  And instead of
388recognizing that, Morsi and the Freedom and Justice Party, which was the
389political arm of the Muslim Brotherhood, really began to try to consolidate
390their own games.
391And again, I -- kind of the manual for foreign policy is, you know, human
392nature. People had been on the outs, they've been in prison, they've been abused
393under Mubarak. They won an election in part because the other side was so poorly
394organized and would not get their act together, despite our best efforts to
395encourage them to.
396So they think, okay, we want to now get all our people, you know, give them the
397position in the government, make the decisions that will please our supporters.
398They ignored the economy.  They wouldn't make the tough decisions that the IMF
399was demanding for many months, still to this day, and they began to do things
400which really raised concerns among the vast majority of nonactive Islamists in
401Egypt. And you all know that the military then basically came in, but they had a
40222 million signature petition asking them to, so it was all very unusual.
403So the military's in, what are they going to do?  Are they going to be any
404better at developing the country than Mubarak was? Mubarak and his wife were
405people I knew quite well, had many conversations starting in the '90's literally
406up until weeks before he left, but there was no plan.  You know, the literacy
407rate did not go up, the education rate for the average Egyptian did not improve.
408Women's positions did not change.  Agricultural got worse.  They started
409importing wheat instead of exporting.  You go down the list and the military
410controls a significant percentage of the economy.  Some say 40 percent, some say
41150 percent.
412So some of what you're seeing is not just political and patriotic, it's just
413purely self-interest, you know, we don't want anybody going after our industries
414and our resources.
415So my hope is, and I really can't tell you how realistic a hope it is, is that
416whoever runs, and it's likely to be a general, and it's more than likely to be
417el-Sisi taking off his uniform running for president, probably given the way
418that they're managing the system, get elected, but then what?  What is he going
419to do?  What role is he going to play?  So Egypt is (inaudible).
420If you look at what's happening in Syria, it's clearly a multiply leveled proxy
421battle.  We've got Iran with their agents in Hezbollah, and they're being taken
422on by indigenous rebels but increasingly a collection of Jihadists who are
423funded by the Saudis, funded by the Emiratis, funded by Gotter (phonetic), and
424you have the Turks that were very active in the beginning, but then began to be
425concerned by some of the development inside Syria, particularly among the
426northern and northeastern Kurdish population in Syria.
427So there is a lot of maneuvering still going on.  I'm hopeful that there will be
428success with the chemical weapons peace, and I'm hopeful there will be a peace
429conference, but I'm doubtful that Asad will move out of the way, so I think
430you're in for six to 12 months at least of further stalemate where it is still a
431very active, you know, civil conflict.
432I think that the other places that you have to watch is what's, you know, what's
433happening in the gulf, both the Saudis and the (inaudible) becoming much more
434active participants in Egypt, in Lybia, in Syria. There's a lot of moving parts
435here.  Gutter (phonetic) with the new premiere is, you know, finding his way,
436he's been very active under his father, we'll see what he does.
437And then we have the peace process which, you know, Secretary Kerry and his team
438are plugging away on, but moving over all of it is Iran, and the, you know, the
439fact that the Israelis and the Saudis are both in the same boat without being
440suspicious of anything that could be agreed to by the Iranians, give you some
441sense of how the calculation here is in a state of constant motion.
442The Iranians are on their charm offensive.  If it's real, which is hard to tell,
443then you could see a breakthrough of some sort by the international community.
444Whether that would meet the demands of Israel and Saudis, who knows, but at
445least they're talking and trying to explore it.
446And, you know, I think it's very tough to reach a credible deal with Iran, but I
447think you have to try.  And I just don't think you can walk away from that
448possibility.  And so I hope that something can come of it.
449MR. O'NEILL:  Speaking of that term, as President Reagan once said about the
450Russians, trust but verify.  Recently in response to the Iranians turn if he was
451smiled but enriched.
452SECRETARY CLINTON:  Well, I think you got it, I think if -- the Iranian's
453position for as long as I've been closely following it and involved in it is we
454have a right to enrich.  Now, technically they don't.  They're signatory to the
455nonproliferation, they do not have a right to enrich, but that is their bottom
456line demand, and that's what they're trying to obtain international recognition
457for.
458And it will be very difficult for the right safeguards and conditions to
459actually be constructed that would hold water enabling them to do that, but
460there are really three things you should look at.
461We should look at the uranium production through centrifuges, (inaudible) are
462the two major centers, but you should also look at their continuing work to
463build a heavy water reactor in a place called Arak, A R A K, which is a half
464form of plutonium which is the fastest path for weapons-grade material for
465nuclear bomb.
466And you have to look at their missile program, because why do they continue to
467develop intercontinental ballistic missiles that work on miniaturizing warheads
468if they don't have some intention of being prepared at least to hold out the
469threat over their neighbors and beyond.
470So this is, I mean, you know, if you had an arms expert here, he or she would go
471into great detail about how difficult it is to find all of the production, to
472control all of the production that Iranians keeping saying they have a Fatwa
473against nuclear weapons.
474And the problem with that is even if you were to believe it, and there are some
475very skeptical, smart people who do believe it, who believe that the Fatwa is
476legitimate, it doesn't go on to say, and we will not construct the pieces to
477give us the nuclear capacity whenever we choose to assemble them.  It just says,
478no, we will not build nuclear weapons.
479So it's a wicked problem, as we like to say, because Iran is not only troubling
480because of its nuclear program, although that's the foremost threat, it's the
481primary conductor and exporter of terrorism.
482I mean, if you had a big map here behind us, literally from North America to
483Southeast Asia, there are so many thoughts, so many bombs, so many arrests that
484are all traced back to the Iranian revolutionary guard, and their constant
485efforts to sell (inaudible).
486And we have a lot of friends around the world, even people who say, look, I need
487their oil, I need their gas, I don't particularly trust them or like them, but
488I'm going to do business with them, besides that's an American problem, that's
489Israeli's problem, it's a Middle Eastern problem.  It's not.
490They want (inaudible), they want as broad a span of control as they can have, so
491even if a miracle were to happen and we came up with a verifiable nuclear deal,
492there would still be problems that Iran is projecting and causing around the
493world that had real consequences for our friends and ourselves.
494I mean, they did hire, you know, they did hire that gunman to kill the Saudi
495ambassador, and people thought that was so outrageous.  It was made up.  We're
496sitting around the situation room saying, let's think of something really bad
497about the Iranians, like you had to think of something, and, okay, let's make up
498a story that they sent agents to Mexico to hire a drug cartel enforcer and
499fortunately they were led to somebody who was a double agent working for the
500drug administration -- the Drug Enforcement Administration in the United States,
501so we were able to capture the guy when he came to Texas to transfer the money,
502but they were going to kill the ambassador from Saudi Arabia in Washington, and
503the plan was to get him when he was at a public place, a big restaurant some of
504you may know, Cafe Milano.  I mean, absurd.
505And we had -- the guy, once he was caught, gave names and dates and money
506transfers and all the rest, but people kind of shrugged it off like, oh, that's
507so ridiculous. Who would do that?  The Iranians, they do it all the time.
508So yeah, trust but verify and then verify again, again and again.  We have to
509figure out some modus vivendi with them but not at the risk of putting ourselves
510and others under their thumb.
511MR. O'NEILL:  Let's come back to the US.  Since 2008, there's been an awful lot
512of seismic activity around Wall Street and the big banks and regulators and
513politicians.
514Now, without going over how we got to where we are right now, what would be your
515advice to the Wall Street community and the big banks as to the way forward with
516those two important decisions?
517SECRETARY CLINTON:  Well, I represented all of you for eight years.  I had great
518relations and worked so close together after 9/11 to rebuild downtown, and a lot
519of respect for the work you do and the people who do it, but I do -- I think
520that when we talk about the regulators and the politicians, the economic
521consequences of bad decisions back in '08, you know, were devastating, and they
522had repercussions throughout the world.
523That was one of the reasons that I started traveling in February of '09, so
524people could, you know, literally yell at me for the United States and our
525banking system causing this everywhere.  Now, that's an oversimplification we
526know, but it was the conventional wisdom.
527And I think that there's a lot that could have been avoided in terms of both
528misunderstanding and really politicizing what happened with greater
529transparency, with greater openness on all sides, you know, what happened, how
530did it happen, how do we prevent it from happening?  You guys help us figure it
531out and let's make sure that we do it right this time.
532And I think that everybody was desperately trying to fend off the worst effects
533institutionally, governmentally, and there just wasn't that opportunity to try
534to sort this out, and that came later.
535I mean, it's still happening, as you know.  People are looking back and trying
536to, you know, get compensation for bad mortgages and all the rest of it in some
537of the agreements that are being reached.
538There's nothing magic about regulations, too much is bad, too little is bad.
539How do you get to the golden key, how do we figure out what works?  And the
540people that know the industry better than anybody are the people who work in the
541industry.
542And I think there has to be a recognition that, you know, there's so much at
543stake now, I mean, the business has changed so much and decisions are made so
544quickly, in nano seconds basically.  We spend trillions of dollars to travel
545around the world, but it's in everybody's interest that we have a better
546framework, and not just for the United States but for the entire world, in which
547to operate and trade.
548You know, I remember having a long conversation with Warren Buffett, who is
549obviously a friend of mine, but I think he's the greatest investor of our modern
550era, and he said, you know, I would go and I'd talk to my friends and I'd ask
551them to explain to me what a default credit swap was, and by the time they got
552into their fifth minute, I had no idea what they were talking about.  And when
553they got into their tenth minute, I realized they didn't have any idea what they
554were talking about.
555I mean, Alan Greenspan said, I didn't understand at all what they were trading.
556So I think it's in everybody's interest to get back to a better transparent
557model.
558And we need banking.  I mean, right now, there are so many places in our country
559where the banks are not doing what they need to do because they're scared of
560regulations, they're scared of the other shoe dropping, they're just plain
561scared, so credit is not flowing the way it needs to to restart economic growth.
562So people are, you know, a little -- they're still uncertain, and they're
563uncertain both because they don't know what might come next in terms of
564regulations, but they're also uncertain because of changes in a global economy
565that we're only beginning to take hold of.
566So first and foremost, more transparency, more openness, you know, trying to
567figure out, we're all in this together, how we keep this incredible economic
568engine in this country going.  And this is, you know, the nerves, the spinal
569column.
570And with political people, again, I would say the same thing, you know, there
571was a lot of complaining about Dodd-Frank, but there was also a need to do
572something because for political reasons, if you were an elected member of
573Congress and people in your constituency were losing jobs and shutting
574businesses and everybody in the press is saying it's all the fault of Wall
575Street, you can't sit idly by and do nothing, but what you do is really
576important.
577And I think the jury is still out on that because it was very difficult to sort
578of sort through it all.
579And, of course, I don't, you know, I know that banks and others were worried
580about continued liability and other problems down the road, so it would be
581better if we could have had a more open exchange about what we needed to do to
582fix what had broken and then try to make sure it didn't happen again, but we
583will keep working on it.
584MR. O'NEILL:  By the way, we really did appreciate when you were the senator
585from New York and your continued involvement in the issues (inaudible) to be
586courageous in some respects to associated with Wall Street and this environment.
587Thank you very much.
588SECRETARY CLINTON:  Well, I don't feel particularly courageous.  I mean, if
589we're going to be an effective, efficient economy, we need to have all part of
590that engine running well, and that includes Wall Street and Main Street.
591And there's a big disconnect and a lot of confusion right now.  So I'm not
592interested in, you know, turning the clock back or pointing fingers, but I am
593interested in trying to figure out how we come together to chart a better way
594forward and one that will restore confidence in, you know, small and medium-size
595businesses and consumers and begin to chip away at the unemployment rate.
596So it's something that I, you know, if you're a realist, you know that people
597have different roles to play in politics, economics, and this is an important
598role, but I do think that there has to be an understanding of how what happens
599here on Wall Street has such broad consequences not just for the domestic but
600the global economy, so more thought has to be given to the process and
601transactions and regulations so that we don't kill or maim what works, but we
602concentrate on the most effective way of moving forward with the brainpower and
603the financial power that exists here.
604MR. O'NEILL:  So let me talk a little bit about an issue that you've been very
605articulate and inspirational on, and that is women's rights.  From 1994 in
606Beijing --
607SECRETARY CLINTON:  '95.
608MR. O'NEILL:  Beijing not only humans rights you've been a very forceful
609advocate of the economic empowerment of women.  Can you give us a mark to market
610progress report?
611SECRETARY CLINTON:  Well, Japan is doing well, because Prime Minister Abe, as
612part of his economic plan, became convinced that encouraging more women to get
613into the workforce would be a big boost to the Japanese GEP.
614So there are leaders around the world who are coming to this recognition because
615of the evidence that is being presented, the IMF has done some really good work
616on this, obviously the World Bank and other organizations as well, but the
617bottom line, when you talk about economic empowerment, is that there are three
618big objectives, one, tearing down the still existing barriers, legal,
619regulatory, cultural barriers to women's participation in the economy.
620The IMF has just done a study about the legal obstacles to women working in
621professions all over the world, and some countries have very few, other
622countries are surprising, like I think Russia has 150 jobs that women can't be
623employed.
624So instead of saying, you know, here are the -- if you are going to be a miner
625in Siberia, here's the pack you have to carry and the work you're going to have
626to do.  If you can do it, fine.  If you can't, no.  Man or woman, doesn't
627matter.
628So there are existing legal obstacles.  There are regulatory obstacles. You
629know, a lot of countries back in '95 did not allow women to inherit property.
630They couldn't inherit from their fathers.  They couldn't inherit from their
631husbands.  And this was particularly onerous on small holder women farmers who
632do all the work.  Sixty to 80 percent of the women farmers in the world,
633depending upon the region you're in, are women, and they're farming, you know,
6342, 3 acres maybe at the most, but they're the ones in the field, the baby
635strapped to their back, they are the ones taking the food to market after they
636feed their family.  If their husband dies, it goes to his father or his
637brother, and in many instances, the woman and her children have to leave.
638So there were legal obstacles we were able to break down, but then in practice,
639nobody enforced them.  There weren't the regulations or the expectations that it
640would be carried through on.
641And then there are the, you know, lingering cultural barriers.  And, you know,
642Angela Merkel last spring, who is a very conservative, cautious politician whom
643I deeply admire, I think she is an incredible leader, she said she favored a
644requirement that German companies have 30 percent women on their boards.
645Now, when somebody as cautious and conservative as Angela, who I have known for
64620 years says that there's a problem.  The problem is that (inaudible) is
647there's not a pipeline, it doesn't have enough people in it, but the fact is
648that there are a lot of women now who have achieved in their careers, who have a
649lot of great attributes to contribute to boards, but they're not being sought
650out, they're not being invited, they're not assuming that role. And the same,
651you know, in the CEO ranks.
652So whether it's legal obstacles, sort of regulatory, judicial obstacles or
653cultural attitudes, we have to continue to try to remove those.
654And I don't say this just because, you know, I think it would be wonderful if
655every girl in the world got the education she needed and the health care she
656needed and access to credit and politics, I think that would be great, and it's
657a moral imperative, but it is an economic imperative.
658And the work that Goldman has done that the OACD had done, the IMF has done
659shows unequivocally that we're leaving money on the table at the time of
660slower-than-hoped-for growth globally.  And one of the reasons is that women are
661not encouraged and permitted in many instances to be full participants in the
662economy.
663So I go around making this case to a greater or lesser agreement, but I keep
664making it because I think it's very much in our interest and it's in the
665interest of our economic system globally to do more to make sure those doors are
666opened.
667MR. O'NEILL:  Thirty years, now you're officially a private citizen, again,
668outside the bubble, flying commercial, I assume.  So does the world look
669differently?
670SECRETARY CLINTON:  The world looks different, yeah, Tim, I'm glad to be back in
671the world, I have to confess, and I'm glad to be on the shuttle instead of on a
67216-hour flight somewhere, you know.
673I've traveled mostly in our own country since leaving the state department, and
674there's, you know, there are a lot of questions out there.  People are
675struggling to figure out what we're going to do next and how we're going to get
676there.
677And a lot of young people who are not employed where they thought they would be
678employed now, college graduates not really working in the area they need to,
679sort of mismatched between the skills businesses need and what people are
680producing, so there are some structural issues that we have to address as a
681society.
682And it's not all about what the federal government does with the budget, but
683mostly I'm impressed that we just keep moving forward.  And we have to honor and
684celebrate that spirit of resilience we saw here in the city after 9/11 when it
685was so devastated and people were shocked for all that was happening before
686their eyes.  And there were a lot of questions, would downtown ever come back,
687would they work here.  If you look at it now, it's just extraordinary, and it's
688a tribute to everybody who helped to make that happen.
689So when I look at the future of our country, you know, I'm an optimist by nature
690and I'm confident that we'll work our way through it, but it won't happen by
691accident. It will happen because both the public and the private sector decided
692it is in our interest to make some tough decisions.  And the list of tough
693decisions are known to everybody from entitlement reform to revenues to future
694growth investments in R&D and, you know, education and skills and all the rest.
695But I think that we will once again fulfill the comments that Winston Churchill
696allegedly made, that the Americans finally get around to doing the right thing
697after trying nearly everything else, we're in the trying everything else stage
698right now.
699MR. O'NEILL:  So last question, if -- what would you advise someone if he or she
700came to you and said, I'm thinking about running for the Democratic presidential
701nomination?
702SECRETARY CLINTON:  Another one of those hypotheticals.  Well, I would probably
703say, are you crazy?
704MR. O'NEILL:  Wait, wait.
705SECRETARY CLINTON:  Look, I think whoever runs next time has to have a very
706clear idea of where he or she wants to take the country and has to run on those
707ideas, because the election cannot be about personalities, participants sniping,
708all of the irrelevant stuff the day after the election sort of dissipates, and
709you wake up and say, okay, now what am I going to do?  It needs to be an
710election about the future.
711So win or lose, people know what you want to do.  You took it to the country,
712you tried to build a consensus for it, which can hopefully avoid some of the end
713runs that we've been seeing in the last few weeks, and then you have to have
714enough of an understanding of how government works to be able to execute the
715operational side of it, the slow, hard boring of hard boards as (inaudible) said
716about politics, there's nothing glamorous about it.
717And a lot of what I did as secretary of state, you know, people say, oh, well,
718what were you doing, well, I was trying to protect internet freedom which is
719under attack from some of the countries around the world that don't want their
720people to have access to the internet.  I was trying to figure out what we could
721do about climate change that we could get around the Congress because they
722weren't going to give anything dramatic, but also was going to fit with our
723economic impairments, you know, things that aren't -- they're not in the
724headlines, they're in trend lines.  So you can't govern from the headlines,
725you have to be responsive to them, but you have to have a plan about what it
726is you think that the country can do and then how you can harness people's
727energies.
728Now, I'll end with this.  I mean, you know, my father was a veteran of World War
729II, he was in the Navy for five years.  He gets out of the Navy, all he wants to
730do is restart his very small business, he was a printer of drapery fabrics in
731Chicago, and start a family with my mother, that was it, you know, that was
732the GI dream, and get a nice house and raise the family.
733So when Truman and Marshall said, you know what, we have to rebuild Europe and
734we have to support Japan, yes, you know, Germany and Japan were our enemies, and
735we just lost 400,000 plus people in the war and countless billions of dollars,
736but we have to do that.
737So we're going to have to keep taxing you, Hugh Rodham, my father's name, to
738rebuild your enemies.  My father, who was a lifelong Republican, is like, what
739is that about, you know, what do you mean?  I mean, come on, give me a break.
740But we had visionary leaders who said, trust us, and there was enough trust in
741the system so that people could.  We are going to help create a world that will
742be a more peaceful, more prosperous world and good for the United States.
743So when Truman and Marshall came up with what's known as the Marshall Plan,
744people were not immediately enamored, so they went to businesses, they went to
745the big banks and the industrial firms, and they sat down and they said, look,
746you guys are going to need markets, you're going to need consumers to be able to
747buy your stuff, if we don't rebuild, who knows whether that will happen.
748And then a lot of our leaders in businesses and presidents of colleges fanned
749out across America and made the case.  And everybody was speaking with one
750voice.  And we spent about $13 billion, which in, you know, current dollars is
751120, 125 billion, rebuilding our enemies, and it was one of the best investments
752America ever made.
753So somehow and I -- you know, look, I know we're more cynical.  We have a
754television station for every prejudice, bias and bigotry anyone would want to
755invest themselves in, so it's harder, it's harder to bring people together, but
756I think that's what is needed, and somebody would have to be willing to do
757politics differently than it's been done, win or lose, and say, look, here's
758what you get, no games, no hidden tricks, this is what we have to do, you know,
759if you agree with me, vote for me, if you don't agree with me, vote for somebody
760else, but I want to have a conversation with the country that is in keeping
761with who we are as a people.
762MR. O'NEILL:  Thank you, Madam Secretary, for today and everything that you've
763done for the country.  Ladies and gentlemen, Hillary Rodham Clinton. 
764(Time noted:  1:50 p.m.)