· 9 years ago · Oct 17, 2016, 08:34 PM
1
2*****************************************************
3
4 SECRETARY HILLARY RODHAM CLINTON
5 SPEAKER AT GOLDMAN SACHS
6 BUILDERS AND INNOVATORS SUMMIT
7 Ritz-Carlton Dove Mountain
8 Marana, Arizona
9 Tuesday, October 29, 2013
10
11*****************************************************
12
13
14
15Reported by: Carolyn T. Sullivan, RPR
16
17
18
19
20
21
22
23 ELLEN GRAUER COURT REPORTING CO. LLCC
24 126 East 56th Street, Fifth Floor
25 New York, New York 10022
26 212-750-6434
27 REF: 105182
28
29
30
31
32
33
34
35
36
37
38 MR. BLANKFEIN: That's the first of a ten-minute spiel, but let me introduce somebody who needs no introduction. Secretary Hillary Clinton.
39 (Applause.)
40 MR. BLANKFEIN: Now, when I say I want no introduction, I'm really only kidding because I want a real introduction and long.
41 SECRETARY CLINTON: I was waiting for it.
42 MR. BLANKFEIN: Well, I'll tell you, I'm more interested in the future. So, anyway, why don't we just start.
43 If you don't mind, can we start with a little bit of a tour of the world and say, you know, if you were -- if you were -- let's take a hypothetical. Let's say you were Secretary of State.
44 (Laughter.)
45 MR. BLANKFEIN: What would you be focused on? What would you be focused on today? And tell a little bit about how your priorities would be and how you would deal with some of it now.
46 SECRETARY CLINTON: Well, gee, I'll just have to cast my mind back.
47 (Laughter.)
48 SECRETARY CLINTON: Well, first, thanks for having me here and giving me a chance to know a little bit more about the builders and the innovators who you've gathered. Some of you might have been here last year, and my husband was, I guess, in this very same position. And he came back and was just thrilled by --
49 MR. BLANKFEIN: He increased our budget.
50 SECRETARY CLINTON: Did he?
51 MR. BLANKFEIN: Yes. That's why we --
52 SECRETARY CLINTON: Good. I think he -- I think he encouraged you to grow it a little, too. But it really was a tremendous experience for him, so I've been looking forward to it and hope we have a chance to talk about a lot of things.
53 But clearly, what's going on in this complicated world of ours is on the top of a lot of people's minds. And, you know, let me just briefly say that one of the ways I look at domestic as well as international issues is by trying to focus not just on the headlines, although those are insistent and demand your attention, but to keep an eye on the trend lines. And many of you in this room are masters of the trend lines. You see over the horizon, you think about products that nobody has invented, and you go about the business of trying to do that.
54 Well, in diplomacy or politics and national security, foreign policy, it's somewhat similar. You have to keep your eye on the trend lines even while you're dealing with all of the crises because the trend lines will eventually materialize and could be the crisis of next year or in five years. And if you're taken totally by surprise, it could be a crisis of long-lasting and severe impacts.
55 So on the headlines, if you look around right now, obviously people are focused on the Middle East, which is a perennial crisis. In Syria, what's happening with the charm offensive by Iran and the negotiations that are taking place on the nuclear program. The somewhat slow but I think glib signs of some economic activity finally in parts of Europe, but that's combined with the huge brouhaha over surveillance and the fights that are incumbent upon the United States and our intelligence services to respond to.
56 But you also have, if you look a little farther afield, some of the fastest growing economies in the world now. In sub-Saharan Africa, an area that I still think has more promise and potential than is realized by many American businesses and entrepreneurs. You've got the continuing problems in Afghanistan and Pakistan, South Asia. In broad terms, particularly Pakistan remains a very difficult, complex challenge for the United States. And with the withdrawal from Afghanistan, it's going to continue to be so. The situation in East Asia, it was an unfortunate consequence of the government shutdown that the President had to cancel his trip to two major events in Asia, the Asia Pacific Economic Community that the United States actually started and has served as a very good convening forum around economic issues, and the East Asia Summit, which we joined two years ago. And the fact that the President of the United States couldn't be there because literally the people who manage government travel for the President had been furloughed was not exactly a smart message to send to those who are looking to see how reliable the United States is, whether it's economic or strategic or any other aspect. So it's a constantly challenging environment because things are changing so rapidly.
57 But the trend lines are both positive and troubling. There is a still continuing movement toward open markets, toward greater innovation, toward the development of a middle class that can buy the products. As Lloyd was talking in his intro about the work that you do creating products and then making sure there's markets by fostering the kind of inclusive prosperity that includes consumers is a positive trend in many parts of the world now. Democracy is holding its own, so people are still largely living under governments of their own choosing. The possibilities of technology increasing lifespan and access to education and so many other benefits that will redound to not only the advantage of the individual but larger society.
58 At the same time, you've got other trend lines. There is an increasing cooperation among terrorist groups. They're, unfortunately, not defeated because they were driven largely out of Afghanistan and have been decimated in Pakistan, and they've taken up residence in Somalia and North Africa. The Arab Spring, which held such great promise, has not yet been realized. And the situation in Syria posits a very difficult and dangerous Sunni-Shiite divide that would have broad repercussions across the region. You've got all kinds of threats from weapons of mass destruction. One of the positives of the last month is getting ahold of the Syria chemical weapons program, which in and of itself is a good, even though it doesn't stop the civil war and the increasing radicalization of a lot of the groups fighting Assad.
59 So we can go down the list, Lloyd, and you can see that, you know, it's like anybody's balance sheet. There are promising, positive developments, opportunities that you want to take advantage of and you want to push toward and expand. And then there are threats and negative developments that you want to try to contain insofar as possible, eliminate in the rare instance, and try to keep that balance more on the positive side of the ledger so that it does promote and protect the values that the people in this room represent, freedom and opportunity as well as other underlying aspirations, that so many people around the world still look to our country to try to help them realize.
60 MR. BLANKFEIN: Just on that, is another trend, perhaps the isolationist may be too strong, but let's say the isolationist tendency now. I think the President might well have lost his vote on Syria, got a little bit bailed out, may turn out to be for the best, may have been the best outcome, but it doesn't augur well. There may be a lot of factors. It may be that because maybe the Syrian situation is so complicated that we just don't know what to do. So, therefore, doing nothing. But, you know, from the left side of the Democrat Party, the right side of the Republican Party, it seems like there's a kind of a antipathy now for intervention. What do you think the trend line is for the United States [unintelligible]?
61 SECRETARY CLINTON: Well, I'm an optimist, so I think the trend line continues to be positive, but I think you have highlighted one of the issues that, you know, concerns me on the -- you know, if you look at the -- the Syria vote is a bit of a challenging one to draw large conclusions from because it is a wicked problem. There are so many factors at play there. But the underlying rejection of a military strike to enforce the red line on chemical weapons spoke more about, you know, the country's preoccupation with our own domestic situation, the feeling that we need to get our own house in order, that we need to get that economy that everybody here is so deeply involved in producing more, getting back to growth, dealing with the unemployment figures that are still unacceptably high in too many places.
62 So it was both a rejection of any military action in the Middle East right now and a conclusion that, you know, people of considerable analytical understanding of the region could also reach that, you know, you -- we're in -- we're in a time in Syria where they're not finished killing each other, where it's very difficult for anybody to predict a good outcome and maybe you just have to wait and watch it. But on the other side of it, you can't squander your reputation and your leadership capital. You have to do what you say you're going to do. You have to be smart about executing on your strategies. And you've got to be careful not to send the wrong message to others, such as Iran.
63 But I think in this particular instance, it was primarily the feelings that I see as I travel around the country speaking at college campuses, speaking at other business kinds of events, different audiences, people are nervous about what we're doing here at home. The gridlock, the government shutdown, flirting with defaulting on our debt. You know, just really focused people's attention on our own shortcomings. And I think that had as much to do with it as anything.
64 MR. BLANKFEIN: Do you think when -- again, another trend, which is a surprising, shocking trend, but nevertheless a trend, the energy sufficiency of the United States. What does that mean for, you know, I guess the geopolitical politics, implications that will play out over decades. But how much are we going to invest in defending the ceilings between Iran and China when we're not tied to the oil from the Middle East. China is now importing more oil from the Middle East than we are.
65 SECRETARY CLINTON: Right.
66 MR. BLANKFEIN? So what does that augur for our own commitment?
67 SECRETARY CLINTON: Well, look, I think it's mostly, again, on the balance sheet metaphor of where we are in the world today. I think it's mostly a positive that we are more energy sufficient. Obviously it's imperative that we exploit the oil and gas in the most environmentally careful way because we don't want to -- we don't want to cause problems that we also will have to deal with taking advantage of what is a quite good windfall for us in many other respects.
68 We were never dependent upon Iranian oil, but the fact that we are now moving toward and not only energy independence but potentially using that energy to bring more manufacturing back to the United States as well as possibly creating an export market from the United States, it just changes the whole equation. It puts a lot of pressure on China, in particular, to continue to exploit as many energy sources. And I would argue that even though we are not worried about getting as much energy from the Middle East as perhaps we were in the past that the United States still has to keep those ceilings open.
69 48 percent of the world's trade, obviously that includes energy but includes everything else, goes through the South China Sea. Some of you may have seen the long article in the New York Times Magazine on the South China Sea this past weekend, an issue that I worked on for the entire time was in the State Department because China basically wants to control it. You can't hold that against them. They have the right to assert themselves. But if nobody's there to push back to create a balance, then they're going to have a chokehold on the sea lanes and also on the countries that border the South China Sea.
70 MR. BLANKFEIN: It's an unfortunate name.
71 SECRETARY CLINTON: What, the South China Sea?
72 MR. BLANKFEIN: Yeah.
73 SECRETARY CLINTON: Yeah, well, it's an unfortunate position they've taken.
74 MR. BLANKFEIN: Yeah.
75 SECRETARY CLINTON: They have --
76 MR. BLANKFEIN: Ours is called the Caribbean. We don't call it the South United States Sea.
77 (Laughter.)
78 SECRETARY CLINTON: Well, you may be forgetting James Madison.
79 I think that -- you know, one of the greatest arguments that I had on a continuing basis was with my Chinese counterparts about their claim. And I made the point at one point in the argument that, you know, you can call it whatever you want to call it. You don't have a claim to all of it. I said, by that argument, you know, the United States should claim all of the Pacific. We liberated it, we defended it. We have as much claim to all of the Pacific. And we could call it the American Sea, and it could go from the West Coast of California all the way to the Philippines. And, you know, my counterpart sat up very straight and goes, well, you can't do that. And I said, well, we have as much right to claim that as you do. I mean, you claim it based on pottery shards from, you know, some fishing vessel that ran aground in an atoll somewhere. You know, we had conveys of military strength. We discovered Japan for Heaven sakes. I mean, we did all of these things.
80 MR. BLANKFEIN: These are more technical conversations than I thought they would be.
81 (Laughter.)
82 SECRETARY CLINTON: Yes, yes. And then he says to me, well, you know, we'll claim Hawaii. And I said, yeah, but we have proof we bought it. Do you have proof you brought any of these places you're claiming? So we got into the nitty-gritty of --
83 MR. BLANKFEIN: But they have to take New Jersey.
84 (Laughter.)
85 SECRETARY CLINTON: No, no, no. We're going to give them a red state.
86 (Laughter and applause.)
87 MR. BLANKFEIN: I'll discuss that after I leave here. Let me ask you another question because this is also a topical question.
88 Let's say, hypothetically, that one country was eavesdropping on another country.
89 (Laughter.)
90 MR. BLANKFEIN: And I didn't hear the crisp denials, but I didn't hear any confirmation of it. How would you -- would you be looking forward to giving that explanation? How do you go -- what do you do now?
91 SECRETARY CLINTON: So, all right. This is all off the record, right? You're not telling your spouses if they're not here.
92 MR. BLANKFEIN: Right.
93 SECRETARY CLINTON: Okay. I was Secretary of State when WikiLeaks happened. You remember that whole debacle. So out come hundreds of thousands of documents. And I have to go on an apology tour. And I had a jacket made like a rock star tour. The Clinton Apology Tour. I had to go and apologize to anybody who was in any way characterized in any of the cables in any way that might be considered less than flattering. And it was painful. Leaders who shall remain nameless, who were characterized as vain, egotistical, power hungry --
94 MR. BLANKFEIN: Proved it.
95 SECRETARY CLINTON: -- corrupt. And we knew they were. This was not fiction. And I had to go and say, you know, our ambassadors, they get carried away, they want to all be literary people. They go off on tangents. What can I say. I had grown men cry. I mean, literally. I am a friend of America, and you say these things about me.
96 MR. BLANKFEIN: That's an Italian accent.
97 SECRETARY CLINTON: Have a sense of humor.
98 MR. BLANKFEIN: And so you said, Silvio.
99 (Laughter.)
100 SECRETARY CLINTON: So, fast forward. Here we are. You know, look, I have said, and I will continue to say, we do need to have a conversation with and take a hard look at the right balance that we could strike between, you know, privacy and security because there's no doubt, and I've seen this and understand it, there's no doubt that much of what we've done since 9/11 has kept us safer. That's just a fact. It's also kept our friends and our partners and our allies safer, as well. The sharing of intelligence requires the gathering of intelligence and the analysis of intelligence.
101 And so as we have alerted our friends and worked with them on plots and threats that we had information about, they've done the same for us. And, clearly, they have their own methods of collection. So it's not good enough to say, everybody does it, because we should hold ourselves to the highest standards, and we should have the right checks and balances in this whole system.
102 MR. BLANKFEIN: We should do better.
103 SECRETARY CLINTON: Well, we do better. I mean, that's the problem. We have a lot of information. And not the kind of information that most of our citizens are worried about because I really have no evidence and have no reason to believe that, you know, we've got people listening to American citizens' conversations. But the collection of the metadata is something that has proven to be very useful.
104 And anybody who has ever traveled in other countries, some of which shall remain nameless, except for Russia and China, you know that you can't bring your phones and your computers. And if you do, good luck. I mean, we would not only take the batteries out, we would leave the batteries and the devices on the plane in special boxes. Now, we didn't do that because we thought it would be fun to tell somebody about. We did it because we knew that we were all targets and that we would be totally vulnerable.
105 So it's not only what others do to us and what we do to them and how many people are involved in it. It's what's the purpose of it, what is being collected, and how can it be used. And there are clearly people in this room who know a lot about this, and some of you could be very useful contributors to that conversation because you're sophisticated enough to know that it's not just, do it, don't do it. We have to have a way of doing it, and then we have to have a way of analyzing it, and then we have to have a way of sharing it.
106 And it's not only on the government side that we should be worried about. I mean, the cyber attacks on businesses, and I'm sure many in this room have experienced that, is aimed at commercial advantage. In some instances, when it's aimed at defense businesses, it's aimed at, you know, security and strategic advantage. But, you know, the State Department was attacked hundreds of times every day, some by state-sponsored groups, some by more independent operators. But it was the same effect. People were trying to steal information, use it for their own purposes.
107 So I think maybe we should be honest that, you know, maybe we've gone too far, but then let's have a conversation about what too far means and how we protect privacy to give our own citizens the reassurance that they are not being spied by their own government, give our friends and allies the reassurance that we're not going beyond what is the necessary collection and analysis that we share with them and try to have a mature conversation.
108 MR. BLANKFEIN: Maybe embedded you've already given part the answer, but how serious, how bad was it what Snowden and Assange did? What are the -- I mean, Assange -- if this were a destroyer and innovator conference, we might have had Assange here.
109 SECRETARY CLINTON: I wouldn't be here.
110 MR. BLANKFEIN: But how much did that hurt us? Aside from the embarrassment, clearly some avenues now, some things we relied on that, have been closed off for us. I know it was very important to try to get some legislation that would have made it legal to get some more of this metadata that's been very helpful without having the carriers face liability. That's probably been put on the back burner. What are the consequences long term for this in terms of our own safety and the safety of the Republic.
111 SECRETARY CLINTON: Well, separate the two. The WikiLeaks problem put at risk certain individuals. We had to -- we had to form a kind of investigative team that looked at all the names and all the documents, which was quite a challenge, to make sure that identities that were either revealed or described in enough detail that they could be determined would not put people who were at risk. I mean, without going into detail, you know, maybe they're -- let's just hypothetically say there was somebody serving in a military in a certain country who was worried about some of the activities of the military that he served because he thought they were doing business with rogue states or terrorist networks, and so he would seek out an American diplomat to begin a conversation. And the American diplomat would report back about the concerns that were being expressed about what was happening in this country. And then it's -- you know, it's exposed to the world. So we had to identify, and we moved a number of people to safe -- to safety out of where they were in order for them to be not vulnerable.
112 So on the WikiLeaks, there was the embarrassment factor, there were the potential vulnerability factors that individuals faced. The WikiLeaks issue was, you know, unfortunate. Private Manning should have never had access to a lot of what he did have access to. So, in effect, it was a problem. But it didn't expose the guts of how we collect and analyze data.
113 A lot of -- without knowing exactly because I don't think we yet have an accurate picture of what Snowden put out. You saw where Clapper and Alexander and others were testifying that reporters didn't understand what they were looking at. That's totally possible. I don't discount that at all. A lot of the information that is conveyed is difficult to understand without some broader context. So Alexander and Clapper said, look, a lot of what Snowden had, which has been interpreted by the press, is not accurate. I can't speak one way or the other on that. But what I think is true, despite Snowden's denials, is that if he actually showed up in Hong Kong with computers and then showed up in Mexico with computers, why are those computers not exploited when my cellphone was going to be exploited.
114 So I do think that there has been a real loss of important information that shouldn't belong to or be made available to people who spend a lot of their time trying to penetrate our government, our businesses. And even worse, you know, some who are engaged in terrorist activities. I mean, the Iranians did a disruption of service attack on American banks a year ago. The Iranians are getting much more sophisticated. They run the largest terrorist networks in the world.
115 So, you know, if Snowden has given them a blueprint to how we operate, why is that in any way a positive. We should have the debate. We should have the conversation. We should make the changes where they're necessary. But we shouldn't put our systems and our people at risk. So I think that WikiLeaks was a big bump in the road, but I think the Snowden material could be potentially much more threatening to us.
116 MR. BLANKFEIN: Let me just introduce one more topic with you, and I'll urge everybody to think of some questions if we have time for that.
117 But just a general question to start you off on the domestic situation. Is the American political system just hopeless? Should we just throw it away, start over? You know, go home. Get a parliamentary system. Is it -- because I will tell you -- I'm kidding. We -- talking here, and I didn't do this in a formal survey, but when we ask entrepreneurs, whether they were social entrepreneurs, the people who were talking represented the work they're doing in the cities and the businesses represented here, every conversation referred to either what the government was doing or what the government wasn't doing that it was obvious that they should be doing.
118 And then I guess a corollary question to my first approach, should we chuck it away, will the elections make a difference. Is the system so gummed up where a single senator can so gum up appointments and basically extort legislation or stop legislation, is the system so screwed up now that really that we just have to have some cataclysm that just gets everybody so frustrated that we de facto start over, you know, or practically start over.
119 SECRETARY CLINTON: Well, look, I -- I think that everyone agrees that we're in a bad patch in our political system and in Washington. It's -- you know, there's a lot of good things happening elsewhere in the country. There are a lot of mayors, you had Mitch Landrieu here, I was with Rahm Emanuel yesterday. There's a lot of innovative, interesting, new ideas being put into practice by mayors, by some governors. So I think when we talk about our political system, we're really focusing more on what's happening in Washington. And it is dysfunctional right now. And it is for a variety of reasons, some of them systemic, as you suggested.
120 You know, I really have come to believe that we need to change the rules in the Senate, having served there for eight years. It's only gotten more difficult to do anything. And I think nominees deserve a vote up or down. Policies deserve a vote up or down. And I don't think that a small handful of senators should stand in the way of that, because, you know, a lot of those senators are really obstructionist. They should get out. They should make their case. They should go ahead and debate. But they shouldn't be able to stop the action of the United States Senate. So I think there does have to be some reworking of the rules, particularly in the Senate.
121 I think that, as has been discussed many times, the partisan drawing of lines in Congressional districts gives people -- gives incumbents certainly a lot more protection than an election should offer. And then they're only concerned about getting a challenge from the left of the Democratic Party or a challenge from the right in the Republican Party. And they're not representing really the full interests of the people in the area that they're supposed to be.
122 California moved toward this non-partisan board, and I think there should be more efforts in states to do that and get out of the ridiculous gerrymandering that has given us so many members who don't really care what is happening in the country, don't really care what the facts are. They just care whether they get a primary opponent.
123 And then it comes down to who we vote for and what kind of expectations we set and who we give money to. Those who help to fund elections, I think it's important that business leaders make it clear, why would you give money to somebody who was willing to wreck the full faith and credit of the United States. I mean, that just makes no sense at all because the economic repercussions would have been very bad, and the long-term consequences with, you know, the Chinese saying, let's de-Americanize the world and eventually move to a different reserve currency wouldn't be, you know, beneficial, either.
124 So I think there are steps that citizens have to take. It's not just about how we rearrange the levers of power and the institutions in Washington.
125 But there has to be a new ethos. I mean, we can't let people, as you say, be extortionists. And the President was absolutely right not to negotiate with people who were acting the way that the minority of the minority was acting on the shutdown and the debt limit issue.
126 But it's going to take a concerted effort --
127 MR. BLANKFEIN: Does it have to get worse first in order for the -- because, obviously, in America, we've gone through cycles. Somebody said, boy, politics have never been this bad. It's so poison. And I said, well, we did have the Civil War, and we got through that. And we had the McCarthy era. And so we've gotten into and out of these cycles before. But do you need to bounce off some bottom? In other words, does it have to get so bad that the electorate rallies to want the spirit of compromise instead of sending -- because ultimately, it's really the vote -- you know, we blame the legislators, but it's the voters. The voters have to realize that the only stable, sustainable government is one in which the moderates compromise and the fringes get rejected, not the other way around.
128 SECRETARY CLINTON: That is exactly. And, you know, post the shutdown/debt limit debacle, you know, the Republican Party's ratings dropped dramatically. You can see it in Virginia where the Democratic candidate has opened a big lead and in part because the Republican candidate for governor looks as though he's of the extremists. He's of the Tea Party-like Republicans, and he's being punished for it.
129 MR. BLANKFEIN: Utah, also.
130 SECRETARY CLINTON: Yeah. So you're seeing people say, wait a minute. Enough. You know. I may be conservative, but I'm not crazy. And I don't want to be represented by people who are crazy and who are threatening, you know, the entire structure --
131 MR. BLANKFEIN: "I'm not crazy." That's going to be the new rallying cry.
132 SECRETARY CLINTON: I think it would be. I like when people say, you know, I may be conservative, but I'm not crazy. I'm very reassured.
133 MR. BLANKFEIN: Prove it.
134 SECRETARY CLINTON: Yeah. You want them to prove it by saying, you know, we're going to act differently in our voting and our giving. And it could make a very big difference.
135 Now, some of the Republicans are also fighting back. I mean, somebody like Lamar Alexander, who's been a governor and a senator of Tennessee, and they're mounting a Tea Party challenge against him. He's going right at it. He is not afraid to take them on. And more moderate Republicans have to do that as well. Take back their party from the extremists and the obstructionists.
136 And you're right, we've gone through these periods before. We have always had this kind of streak of whether it's know-nothingism or isolationism or, you know, anti-Communism, extremism. Whatever. We've had it forever from the beginning. So it's important that people speak out and stand up against it, and especially people who are Republicans, who say, look, that's not the party that I'm part of. I want to get back to having a two-party system that can have an adult conversation and a real debate about the future.
137 MR. BLANKFEIN: Yeah, and one thing, I'm glad -- I'm proud that the financial services industry has been the one unifying theme that binds everybody together in common.
138 (Laughter.)
139 MR. BLANKFEIN: So with that, let me -- you notice how I don't make that a question.
140 Questions from the audience? I think we have microphones coming your way.
141 MALE ATTENDEE: Madam President --
142 (Laughter and applause.)
143 MALE ATTENDEE: My question is, as entrepreneurs, we risk a lot. And Mike Bloomberg had 30 billion other reasons than to take office. Do we need a wholesale change in Washington that has more to do with people that don't need the job than have the job?
144 SECRETARY CLINTON: That's a really interesting question. You know, I would like to see more successful business people run for office. I really would like to see that because I do think, you know, you don't have to have 30 billion, but you have a certain level of freedom. And there's that memorable phrase from a former member of the Senate: You can be maybe rented but never bought. And I think it's important to have people with those experiences.
145 And especially now, because many of you in this room are on the cutting edge of technology or health care or some other segment of the economy, so you are people who look over the horizon. And coming into public life and bringing that perspective as well as the success and the insulation that success gives you could really help in a lot of our political situations right now.
146 MALE ATTENDEE: How about in the Cabinet?
147 SECRETARY CLINTON: Yeah. Well, you know what Bob Rubin said about that. He said, you know, when he came to Washington, he had a fortune. And when he left Washington, he had a small --
148 MR. BLANKFEIN: That's how you have a small fortune, is you go to Washington.
149 SECRETARY CLINTON: You go to Washington. Right.
150 But, you know, part of the problem with the political situation, too, is that there is such a bias against people who have led successful and/or complicated lives. You know, the divestment of assets, the stripping of all kinds of positions, the sale of stocks. It just becomes very onerous and unnecessary.
151 MR. BLANKFEIN: Confirmation.
152 SECRETARY CLINTON: The confirmation process is absurd. And it drives out a lot of people. So, yes, we would like to see people, but it's a heavy price for many to pay and maybe not one that they're ready to pay.
153 MR. BLANKFEIN: Garrett.
154 MALE ATTENDEE: Madam Secretary, thank you for everything you've done for the country. I think I speak on behalf of most of the entrepreneurs here, we're optimists. Understandably, post 9/11, most of our framing of United States with respect to the rest of the world has been about fear and threat. I can speak for myself and a lot of people in this room. For us from outside of the country before we immigrated here, America was a symbol of hope.
155 How do we reframe what we talk about in terms of the good that America does in the world and bringing about the message of hope. Even in this discussion what we talked about, we talk mostly about fear and threat. Can you speak to us about the hope and the good that we bring to the world.
156 SECRETARY CLINTON: Well, yes. I mean, you have to blame Lloyd for the questions.
157 (Laughter.)
158 MR. BLANKFEIN: I'm more associated with fear than hope.
159 SECRETARY CLINTON: Well, you're absolutely right. And that still is the American character. It's in our DNA. We are a generous, hopeful, optimistic, confident people. As you know, I was a senator from New York on 9/11. And, you know, the comeback of New York City, its resilience, its confidence in the face of a devastating attack was one of the most inspiring chapters of American history.
160 So there's no doubt that we have a great story to tell. I think, understandably, there was a lot of overreaction as well as appropriate reaction following 9/11, which is why now, you know, 12 years on, we're talking about having a conversation about getting into the right balance on privacy and security, but it would also be fair to say, you know, on optimism and skepticism. We've got to get back on the optimist scale.
161 And, you know, I see it everywhere I go. I mean, a lot of the people I meet with and talk to are excited about the future. They want to make a contribution, whether it's, you know, in business or in some kind of non-profit. There's an enormous amount of pent-up excitement and anticipation.
162 But a lot of people are worried that there's another shoe that's going to drop. That somehow our government, our culture is going to not reflect that sense of forward movement. So yes, we do have to get back to telling the American Story and telling it to ourselves first and foremost. That's why immigration reform is so important. I mean, get immigration reform done you. It sends exactly the signal you're talking about.
163 (Applause.)
164 SECRETARY CLINTON: Get it fixed so that the people who have been here working hard, building futures, are given the chance to become American citizens. There's no requirement that they do, but they would be given that path to citizenship.
165 So it still is the case that more people want to come here than anywhere else in the world. People still, despite all of the problems of the last decade, see through it and see the underlying reality of what a life in America can offer them and their children.
166 But we need to get back to believing our own story. We need to jettison a lot of the skepticism. I mean, there's not a skeptic among you when it comes to being an entrepreneur. You couldn't get up in the morning. You couldn't face how hard it was. You couldn't do the work that's required. You have to believe you're going to make it, you're going to get that breakthrough, you're going to be successful, you're going to get those investors. I mean, that is a representation of what America has stood for, and we have to champion that.
167 And I tell you, I see any society like a three-legged stool. You have to have an active free market that gives people the chance to live out their dreams by their own hard work and skills. You have to have a functioning, effective government that provides the right balance of oversight and protection of freedom and privacy and liberty and all the rest of it that goes with it. And you have to have an active civil society. Because there's so much about America that is volunteerism and religious faith and family and community activities. So you take one of those legs away, it's pretty hard to balance it. So you've got to get back to getting the right balance.
168 And what I really resent most about the obstructionists is they have such a narrow view of America. They see America in a way that is no longer reflective of the reality of who we are. They're against immigration for reasons that have to do with the past, not the future. They can't figure out how to invest in the future, so they cut everything. You know, laying off, you know, young researchers, closing labs instead of saying, we're better at this than anybody in the world, that's where our money should go. They just have a backward-looking view of America. And they play on people's fears, not on people's hopes, and they have to be rejected. I don't care what they call themselves. I don't care where they're from. They have to be rejected because they are fundamentally unAmerican. And every effort they make to undermine and obstruct the functioning of the government is meant to send a signal that we can't do anything collectively. You know, that we aren't a community, a nation that shares values.
169 I mean, American was an invention. It was an intellectual invention, and we have done pretty well for all these years. And these people want to just undermine that very profound sense of who we are. And we can't let them do that.
170 So it's not just about politics or partisanship. It really goes to the heart of what it means to be American. And I'll just say that I've been reading a lot of de Tocqueville lately because he was a pretty smart guy, and he traveled around and looked at this country and came up with some profound observations about us. But he talked about how unique early Americans were because they mixed a rugged individualism with a sense of, you know, community well being. So the individual farmer would quit farming for a day to go somewhere to help raise a barn, for example. People understood that the individual had to be embedded in a community in order to maximize -- if you were a merchant, you needed people to sell to. If you were a farmer, you needed people to buy your products. And he talked about the habits of the heart. And he said, that's what set us apart from anybody else. And, you know, I think there's a lot of truth to that. We are a unique breed, and people come here from all over and kind of sign on to the social compact of what it means to be an American.
171 And we can't afford to let people, for their own personal reasons, whether they be political, commercial, or whatever, undermine that. So, yeah, there's a lot of to be said. And we need to say it more, and it doesn't just need to come from, you know, people on platforms. It needs to come from everybody.
172 (Applause.)
173 MALE ATTENDEE: Madam Secretary, what is the most important competitive advantage that you think the U.S. will keep as compared to a country like China?
174 SECRETARY CLINTON: Freedom. I think freedom. Freedom of the mind, freedom of movement, freedom of debate, freedom of innovation. You know, I just -- I don't think we fully value -- we sometimes take it for granted, and we sometimes even dismiss it, how much stronger we are. Because in addition to that individual freedom that we have in great abundance compared to China, for example, we do have checks and balances. We have constitutional order. We have protection of intellectual property, we have a court system that we use for that purpose. We have a lot of assets that support the free thinking and free acting of individuals. And in the long run, that's what I would place my bet on. I think that is what gives us such a competitive advantage.
175 Now, in the short run, we have to protect ourselves, not in protectionism, but in, you know, protecting intellectual property, for example, from every effort to undermine what you all do every single day, and we have to be smart about it. We have to invest better in education, starting at zero, not starting in even kindergarten, because we have to better prepare kids to be competitive in a global economy. There's a lot of problems that we have to solve that are community, national problems.
176 But fundamentally, you know, it's that feeling that, you know what, if you really work hard and you have a good idea, you can make something of yourself, you can produce something. You know, we have traditionally been a country that invented things and made them. Now, we don't do that as much, but I think there's a little bit of an understanding we've got to get back to doing more of that because that ultimately will give us more jobs, give you more opportunities for producing things without fear of being taken advantage of in other markets. So I just think the freedom is just absolutely priceless.
177 MR. BLANKFEIN: The best people in the world still want to come here.
178 SECRETARY CLINTON: Well, and we need to let them. That's the other part of the immigration piece. You know, we shut down our borders, we build fences. We were talking at the table, you know, we ask people and entice them to come here and do their undergraduate and graduate work. And then as soon as they get their degree, we tell them we don't want them anymore because our system is so messed up that we can't even keep the people we helped educate and want to stay here.
179 So we have a lot of work to do to fix the systemic bumps in the road that we're dealing with, but our underlying strengths are so much greater than anybody else. And we need to start celebrating those. Not in some kind of empty rhetoric, arm-waving, carrying on which is not rooted in any tough decisions, but in a really, you know, positive assessment about what we do well and what we can do better and what we need to fix and how we go about fixing it, whether it's immigration or education or anything else.
180 MR. BLANKFEIN: I don't know what the statistic is this year because I just don't know it, but I bet it's the same as last year. I know last year, for the entrepreneurs that we had, more than a quarter were born outside the United States. And we didn't recruit them for being outside the United States. They were going to build their companies in the United States. But over a quarter were born outside the United States.
181 SECRETARY CLINTON: Well, I think there's even a higher percentage of that on the -- what was it, the Fortune list or the Forbes list.
182 FEMALE ATTENDEE: Secretary Clinton, I'm Patty Greene from Boston College's Goldman Sachs 10,000 Small Businesses. And first off, thank you for all the work you've done with women entrepreneurs both domestically and globally over your career. That's really meant a lot.
183 My question is more domestic based. We have the rather unusually organized Small Business Administration, we have the Department of Commerce, and we have programs for entrepreneurs with small business pretty much scattered across every single other agency. How do you see this coming together to really have more of a federal policy or approach to entrepreneurship and small businesses?
184 SECRETARY CLINTON: I would welcome your suggestions about that because I think the 10,000 Small Business Program should give you an opportunity to gather a lot of data about what works and what doesn't work. Look, neither our Congress nor our executive branch are organized for the 21st Century. We are organized to be lean and fast and productive. And I'm not -- I'm not naive about this. It's hard to change institutions no matter who they are. Even big businesses in our country are facing competition, and they're not being as flexible and quick to respond as they need to be.
185 So I know it wouldn't be an easy task, but I think we should take a look at how we could, you know, better streamline the sources of support for small businesses because it still remains essential. You know, one of the things that I would love to get some advice coming out of the 10,000 Small Businesses about is how do we get more access to credit in today's current system for small businesses, growing businesses, because that's one of the biggest complaint I hear everywhere as I travel around the country. People who just feel that they've got nowhere to go, and they don't know how to work the federal system. Even if they do, they don't feel like they've got a lot of opportunities there. So we doo -- this is something we need to look at.
186 You know, I don't think -- I don't think our credit access system is up to the task right now that is needed. I mean, there are a lot of people who would start or grow businesses even in this economic climate who feel either shut out or limited in what they're able to do. So we need to be smarter about both private and public financing for small businesses.
187 MR. BLANKFEIN: I think this may well be our last question, so No. 1. That must be the best.
188 FEMALE ATTENDEE: Great. Lots of pressure. Thank you so much.
189 My question is, you know, we've talked a lot over the last couple of days about how more and more young people are looking to start their own businesses and moving to entrepreneurship as a career. And I run a company that connects a lot of millennials to meaningful work, and I see this interest in technology careers, finance careers, non-profit careers, but we don't see as much in government careers. And I guess my question is, do you think government is a great place for young people to begin their career? And if so, how do we make sure that more of our so-called best and brightest consider that as a path?
190 SECRETARY CLINTON: Well, I do think it is, but I can understand why people would be turning away. I mean, it's not a pretty site what's going on when people get furloughed and governments shut down and, you know, the jobs are not as rewarding because of all kinds of restrictions. I mean, it's a tough environment right now.
191 Personally, having, you know, lived and worked in the White House, having been a senator, having been Secretary of State, there has traditionally been a great pool of very talented, hard-working people. And just as I was saying about the credit market, our personnel policies haven't kept up with the changes necessary in government. We have a lot of difficulties in getting -- when I got to the State Department, we were so far behind in technology, it was embarrassing. And, you know, people were not even allowed to use mobile devices because of security issues and cost issues, and we really had to try to push into the last part of the 20th Century in order to get people functioning in 2009 and '10.
192 And I think we need to make it clear that if we're going to have young people of talent who have different choices going into government service where they can learn a lot, where they can get a lot of responsibility, there has to be a more welcoming environment, there has to be support for young people to feel like they're making a meaningful contribution, and that requires, you know, changes in some of those same systems that currently don't offer that.
193 But, yeah, I do think there are great places in the federal government to learn a lot of about substantive issues, about maneuvering through difficult systems, about political trade-offs, and I would encourage people to look at that.
194 MR. BLANKFEIN: Madam Secretary, thank you very much for coming here this evening. And I just want to echo the comments that a couple of people have made. Just thank you so much for your service. America is so lucky to have had you, to have you, and to continue to have you as a servant for us. Thank you very much.
195 SECRETARY CLINTON: Thank you, sir.
196 (Applause.)
197 (Concluded at 9:36 p.m.)
198
199
200---------------------------------------X
201GOLDMAN SACHS
202ASSET MANAGEMENT
203
204AIMS ALTERNATIVE INVESTMENTS
205SYMPOSIUM 2013
206
207FORMER UNITED STATES
208SECRETARY OF STATE
209HILLARY RODHAM CLINTON
210---------------------------------------X
211
212 200 West Street
213 New York, New York
214
215 October 24, 2013
216 12:50 p.m.
217
218 Before Rita Persichetty, a Notary Public
219of the State of New York.
220
221
222 ELLEN GRAUER COURT REPORTING CO. LLC
223 126 East 56th Street, Fifth Floor
224 New York, New York 10022
225 212-750-6434
226 REF: 105177
227
228
229
230
231
232
233
234
235
236
237
238 P R O C E E D I N G S
239 * * * *
240 MR. O'NEILL: Welcome. This has been a great day and a half here at the AIMS Symposium, and it is my distinct honor to introduce today's lunch conversation. Please join me in welcoming Secretary Clinton, who will be hosted in a discussion with our own Tim O'Neill, who is the cohead of investment management.
241 Well, thanks again, Madam Secretary. Everyone is very interested in what you have to say, so why don't we get right to it and start talking about the political process in Washington, D.C.
242 I think it's fair to say that the government shutdown and debates that surrounded it were not the finest hours in political history, but democracy is an evolving process, and nobody has a more refined perspective of that than you, having served in the executive branch as well as Congress.
243 So my first question is: How do we get past this partisan gridlock?
244 SECRETARY CLINTON: Well, Tim, thank you. Thanks for having me here to have this conversation with you. And I know we have many people who are not Americans who are here from other parts of the world.
245 So let me start by saying that we have evolved our system, it is a durable, resilient system, and from the outside, it can look quite dysfunctional from time to time, but it has a capacity for regeneration and focus that has really stood up in good stead for so many years.
246 What happened in the last two years, really, three years was a growing sense on the part of some who are very ideologically disposed, to try to move out of the usual order in the Congress where you win some, you lose some, you keep working. You can't win on legislative issues, you win elections, you have a rhythm to it, and it requires a certain amount of compromise and acceptance because of the broad cross-section of views and experiences that our country embodies.
247 Back in July of 2011, I was in Hong Kong during the last debate over our debt limit. And it was very striking to me how the business leaders I was speaking with in a big conference there were quite concerned. At that time, I could be very reassuring, I said, don't worry, we'll get through it, we're going to work it out, we would never default.
248 So we fast-forward to this last episode, and it is troubling that there is a hard core of extremist politicians who have views about decisions as monumental as shutting down our government and defaulting on our debt that have a small but a disproportionate influence on the debate in Washington.
249 So what you saw was a relatively small group in the House of Representatives and very few in the Senate who were trying to achieve one objective, namely make a political point about the health care law by holding hostage the entire rest of the government and putting the full faith in credit of the United States at risk.
250 Although it went up to the last hour, the fact that they were a minority and that there were much more level heads, even in the same political party, that the business view started speaking out after having been relatively silent, thinking this is going to work out, but then people of experience and expertise began speaking out, it was possible to get through that crisis.
251 But it does raise the larger issue about what to do. And I think there are three answers to that. Voters have to quit rewarding people who take uncompromising stands in the face of reality and evidence, and that is something that each one of us can contribute to.
252 Obviously I'm a Democrat, but there are a lot of level-headed, smart Republicans who were biting their nails over this. They should be rewarded, not threatened by the far right and people who either don't know or don't care about the importance of our being in reserve currency, about the importance of our paying the bills that we've already run up, about the importance of confidence in the global economy should pay a price, and you pay that price at the ballot box.
253 Secondly, running for office in our country takes a lot of money, and candidates have to go out and raise it. New York is probably the leading site for contributions for fundraising for candidates on both sides of the aisle, and it's also our economic center.
254 And there are a lot of people here who should ask some tough questions before handing over campaign contributions to people who were really playing chicken with our whole economy.
255 And thirdly, I think that there has to be greater education and understanding about what's at stake. I think too many people for too long thought raising the debt limit was so you could borrow more and spend more instead of pay bills you've already incurred. That's a pretty big. The guy goes out, has a really nice meal, puts it on his credit card, the restaurant turns the credit card in, and the company gets paid, the company bills the guy, and the guy says, you know, I didn't like that meal very much after all, I'm not paying, and that in a very small, microcosmic way is what people who were willing to default were basically saying.
256 So it's a worrisome situation, but I always come back to my first point, I mean, that we always have a way of righting ourselves and getting back into that great big messy middle that you've operated in for more than 200 plus years, and I think that's where this will move towards, everybody, citizens as well as leaders do their part.
257 MR. O'NEILL: Part of that process is called compromise, so let me just test that hypothesis to an issue that you know a lot about, health care reform.
258 So obviously the Affordable Care Act has been upheld by the supreme court. It's clearly having limitation problems. It's unsettling, people still -- the Republicans want to repeal it or defund it. So how do you get to the middle on that clash of absolutes?
259 SECRETARY CLINTON: Well, this is not the first time that we rolled out a big program with the limitation problems.
260 I was in the Senate when President Bush asked and signed legislation expanding Medicare benefits, the Medicare Part D drug benefits. And people forget now that it was a very difficult implementation.
261 As a senator, my staff spent weeks working with people who were trying to sign up, because it was in some sense even harder to manage because the population over 65, not the most computer-literate group, and it was difficult. But, you know, people stuck with it, worked through it.
262 Now, this is on -- it's on a different scale and it is more complex because it's trying to create a market. In Medicare, you have a single market, you have, you know, the government is increasing funding through government programs to provide people over 65 the drugs they needed.
263 And there were a few variations that you could play out on it, but it was a much simpler market than what the Affordable Care Act is aiming to set up.
264 Now, the way I look at this, Tim, is it's either going to work or it's not going to work. We have an election next November, make it an issue. If it doesn't work, it's been, as you said, voted on, you know, signed by the President, passed by -- on constitutionality by the supreme court, so it's the law of the land.
265 Everybody knows there are problems getting the software right and getting the information in. They'll either work it out or they won't. You know, by February, March, you'll either see that the system is working, because if you compare the federal system, which for all kinds of reasons has to be more complex, the state systems that ran their own exchanges, states like New York, California, Maryland, et cetera, are actually rolling it out quite sufficiently because they had a smaller universe, they had a better collection of the data, and they had willing participants on all sides of the transaction.
266 But when you have huge states like Texas, which is dead set against it, and you have a large state like Florida, which is ambivalent, you know, it's difficult to run a federal exchange, you know, being able to get the information, get it up and get it out.
267 So I think the way our system is supposed to work is if, by next November, people running for office are either defending or not the Affordable Care Act, it will be an electoral issue. And if it is still unacceptable to people or not running right, then the Congress that will come in after, will have every right in the world to go after it and figure out what they can do.
268 Now, if they still have a Democratic President in the White House, who may not want to go as far as some would, in fact, I'm sure of that, but then there can be a discussion about, okay, what worked and what didn't work.
269 But, you know, elections are about winning and losing and who gets to make decisions. The President is a two-term President. We have a Democratic senate and a Republican house, so people had to compromise.
270 And on the Affordable Care Act, I think there's going to be a few months to see whether or not it can be operating the way it should, and then people can have a rational discussion about what, if anything, can be done, and then they can be arguing it out in the election.
271 MR. O'NEILL: So can I follow up on that perspective of President Obama's role in all of this process.
272 Do you think that if he were more personally engaged with Congress on these issues, that we would have a different result?
273 SECRETARY CLINTON: I don't know, Tim. I mean, I've obviously been asked this and I've seen the critique. You know, different presidents have different strengths, they bring different life experiences.
274 I had the opportunity of working with the President closely for four years on some very tough national security issues. He's an incredibly intelligent, thoughtful, decisive person in pursuing the agenda he sets.
275 But he may not, you know, be someone who we think of as spending a lot of time in a give and take of politics; however, I know that he spent a lot of time early on in the first term with the Republicans in trying, as you recall, to put together the brand barbie (phonetic) and it turned out that the Republicans' side, particularly in the house, couldn't deliver on even a small market.
276 So you can get to the point of saying, okay, we can live with this, you say you can live with that, I can sell it to the Democrats, you sell it to the Republicans, and the answer would come back, I can't sell it to Republicans, so we have to jigger it around somehow. Whether that was a negotiating tactic or the hard reality that it was hard to sell it to the caucus, I don't know.
277 But I do remember quite well the President working diligently to reach out to people and trying very hard on the health care bill, for example, spending more time than a lot of Democrats wanted him to, trying to figure out how he can get some Republicans on board.
278 So let me switch gears for a minute and go back to the '90's with my husband, and there isn't anybody that I can think who would doubt that my husband is an incredibly active engager of people, whatever side of the aisle, (audible over laughing) and ask their opinion on something, he's going to have you over, he's going to play golf with you, et cetera, et cetera. That didn't stop them from trying to destroy him. And his agenda and his economic program was passed without a single Republican vote after an enormous amount of personal effort to get some Republican, you say you care about the deficit, at that time we had $250 billion deficit, help me bring it down. The arithmetic I learned in Little Rock, Arkansas is you add and subtract with both revenues and cuts, let's work together, nowhere.
279 So it's not always that being, you know, personally engaged and working with people is going to get you the results you want if the people on the other side are doing their political calculations that is in their interests not to compromise, not to give in.
280 So, you know, there's always -- you can always try more things, you can work harder at it. I'm a big believer in that, but it's not always the case you will get it done.
281 Now, back in the '90's when, you know, Republicans shut the government down twice with Bill in the White House, and he did just what President Obama did, I will not negotiate with you until you open the government, I'm not going to be put into that position. They opened it once and then demanded that he agree with them on some issues he wouldn't agree with them on. They shut it again. And he took the same position, I'm not going to compromise in this posture, I'll be glad to talk to you later.
282 So got the government back opened, began to try to work together. And there's a lot of theater in politics just as there is in any other human enterprise.
283 So Newt Gingrich was the speaker, and he would rail against Bill and occasionally me all daylong beyond -- I think we had at least one cable station back then, but we seemed to be on there when it was being broadcast, and then 9:00 o'clock at night, he'd sneak into the White House, I mean, you really can't sneak into the White House, it wouldn't be advertised, let me put it that way. So he would go into the White House, go up to the second floor, and he and Bill would pound things out for a couple of hours trying to work towards welfare reform, and eventually, a couple years later, a balanced budget, et cetera.
284 And he -- and Gingrich was a very forceful leader of the Republicans, but he had people to his right that didn't want any negotiation or any compromise.
285 At one point the then, I think he was -- I don't know if it was Tom DeLay or Dick Armey told Gingrich, we don't want you going to the White House any longer talking to Bill alone. You make too many deals. We're going to stop that.
286 So it's a constant effort. And I think the presidents that I've known and even my working with President Bush, you know, different styles, but every president I've ever known well has really tried to put the pieces together.
287 MR. O'NEILL: There's no doubt that the President has a tough job, but as you said, politics is not for the fainthearted, but probably the most impossible job is the speaker's job.
288 SECRETARY CLINTON: Yes.
289 MR. O'NEILL: Would John Boehner even try to sneak into the White House?
290 SECRETARY CLINTON: Well, I personally like Speaker Boehner. I've sympathized with him because he's in a tough spot, and I don't pretend to understand all of the dynamics in the Republican caucus, but I do think that, you know, the speaker needs to try to figure out how to exercise more direction for his caucus.
291 I think his theory this time was, you know, these guys are going to exhaust themselves, we'll get to the 11th hour, the senate will save us, we'll pass something, we'll get beyond it. And that's pretty much the way it played out.
292 And that wasn't a, you know, that wasn't a wrongheaded view on how it would unfold, because even though the people leading the charge of the shutdown and default got a lot of air time, they did not get a lot of support beyond what they had to start with.
293 So the speaker wasn't wrong about that. The problem is, we can't keep doing this. This is really, you know, this is really dangerous to our entire system.
294 So I think the speaker has to see if he can figure out a way to isolate as much as possible the really hard core, absolute evidence deniers and get them over here and then try to bring the rest of the caucus with him.
295 It may mean that it will threaten his speakership, but my view on that, and it's easy for me to say, he will be historically a more important figure if he stands up to his own extreme wing and makes clear that he is putting his country first. He's obviously a rock solid Republican, conservative, but he's not going to (inaudible) go so don't even think about all of you guys ever doing this again while I'm the speaker. And I personally think he would stay in office, but, you know, that's not for me to say.
296 MR. O'NEILL: Well, we can all hope for a profile (inaudible) encourage speaker for, Madam Secretary, but let me take a different prospective as foreign governments were watching all of this, what do you think they were saying and thinking about the United States?
297 SECRETARY CLINTON: Well, I think we know, because some of them went public with what they were thinking about. And it was painful because it's difficult to see a self-inflicted wound like the one we just went through having such consequences.
298 And it's not just what they were saying at the moment, it's what they were planning for the future. When, you know, you see countries saying that we don't know how reliable the United States is, they don't know how much we can count on us and our leadership, that has real consequences. It has economic consequences but also has consequences when you read that, you know, one of the high-ranking Chinese officials who publicly commented on it, said, look, it's time to de-Americanize the world. These people can't run their own country, why should they be permitted to exercise a disproportionate influence on the rest of the world.
299 So it was something that I regret, and probably the best symbol of it was because the government shutdown, President Obama could not go to the East Asian Summit or the Asia-Pacific Economic Committee, two of the linchpins of what we call the Asia pivot, which was our desire to both reassure and reassert American presence and power in the Pacific as a balance and as a duty to those with whom we have treaties, Japan and South Korea, Philippines and Thailand and Australia.
300 And so because of the shutdown, it wasn't just the fact of the shutdown, literally a lot of the people furloughed who would do a President's trip couldn't work, just imagine, that is no way to run a great country, right?
301 And so the President didn't go, but, you know, President Putin was there, President Xi Jinping was there and, you know, it's a very symbolic moment when it's -- not because of any external problem, but it's because of the internal political dysfunction that keeps the President of the United States, I don't care what party, I don't care what your political preferences are, keeps the President of the United States from being on the world stage at a really important time, to look over the horizon about, you know, trading opportunities and the Trans-Pacific partnership, other kinds of work that needs to be done in the region to keep, you know, commerce flowing across the South China Sea to work with our friends in Japan and China to prevent further escalation over the contested islands. I mean, there's a lot going on in the region.
302 And it was a very sad commentary on what this kind of political standoff done for totally partisan and personal advantage does to our overall foreign policy.
303 MR. O'NEILL: We agreed there's a lot of going on in Egypt and in China, (inaudible) new leadership there. Your views?
304 SECRETARY CLINTON: Well, I've met the new president, and certainly I'm impressed by his, you know, mental and physical energy and vigor. He seems to have created a stable transition from Hu Jintao power and the former leadership to the new team.
305 I think China has some big challenges that they're going to have to confront. You guys know more about economic challenges than most people, but there are other demographic challenges that feed into that. There's a lot of discontent in a growing middle class about, you know, what is the future holding for them, what kind of opportunities are they going to have, there's no real social safety net whatsoever, pensions and the like.
306 So I think that he has his job cut out for him. He's very much committed to coming up with some plans. I know there will be a meeting shortly to try to look at the plans for the next five to ten years, so I think he's shown steady leadership, which is very welcome, both inside China and outside China, but I also believe that there's growing nationalism in China and in Japan and in other places in the region that we have to be watchful about.
307 This dispute over what are called by the Japanese as Senkaku Island has really unleashed some very old grievances and a lot of heated rhetoric going back and forth between China and Japan that needs to calm down. It is not in anyone's interest that this spiral out of control.
308 Similarly, Korea and Japan have disputes over Takeshima (phonetic/audible) and some territory, again, without the United States playing a leading role in making sure there's an opportunity to resolve this. North Korea, which under its new leader, seems unpredictable at best, and I think even the Chinese leadership today recognizes that.
309 And you go down the roll call, and there are so many tremendous opportunities, but in order for those opportunities to be realized, it requires a rules-based order. I mean, everybody from the biggest China, to the smallest Singapore, to the most developed, to the least developed, which is why I spent so much time in the region trying to knit together the sort of regional rules-based order that I think is important for the people in the region first and foremost, but for all the rest of us.
310 And it will all come down to whether China wants to exercise that (inaudible) that responsible stakeholder position.
311 And I think eventually that will be the decision of the Chinese government, because it's in their interest because while they focus on internal challenges, they don't need a lot of agitation and problems on their borders and outside, so it's something that we watch carefully, and we obviously want China to be successful and to be responsible.
312 MR. O'NEILL: Within the administration, do you think there's any risk that the Asia pivot focus that you started, Madam Secretary, loses momentum because of the Middle East and the shift there?
313 SECRETARY CLINTON: Well, Tim, I hope not. I mean obviously there's a lot going on in North Africa and the Middle East that requires our attention, but I've said repeatedly that the real future lies in the Asia-Pacific, and no country is better situated to take advantage of what happens in the Asia-Pacific than we are because we are a Pacific nation, just like we are an Atlantic region, thanks to the gift of our geography.
314 But it was troubling that the President couldn't go to that event. That signaled to a lot of academics and scholars, well, that so-called pivot I went around talking about is certainly slowing down, that it's not realizing the continuity that is required to establish policy.
315 You know, if you look at what we did in Europe with NATO, our promotion of the European Union, our close alliances with many countries there, our constant support for freedom behind the old Iron Curtain and our willingness to help fund and help the countries that came out from behind it get on their feet, we had a long-term strategy.
316 If you look at Korea, after the Korean War, we could have said, man, we have a world war, now we have a Korean War, we're done, we're going home, but we had very, you know, very smart leadership that said, okay, we've protected the lower half of the peninsula, they need a chance to develop.
317 And think about what they went through. I mean, South Korea has coups, have assassinations, have, you know, really terrible politics for a very long time. They didn't become what we would consider a functional democracy overnight, but we never gave up. We had troops there, we had aid there, we had a presence of American business there. We were there for the long run.
318 And what I worry about is that in a time of shrinking resources and well-deserved demands that we pay attention here at home to what's happening to the American people, that we're not going to maintain that continuity of attention and support that is needed in Asia and elsewhere.
319 So I'm hoping that it, you know, certainly is maintained despite the hiccups, but it takes time and resources to do that.
320 MR. O'NEILL: So let's go to the Middle East, complicated, could spend hours talking about it. I think all the problems -- the big problems for this group are sort of hiding in sight from our view, Iran, Iraq, Syria, Egypt.
321 What would be most helpful to us, given your intimacy with the issues and the personalities in the region, if you give us a six to 12-month look in the region and say, if this happens, that's important, or what is your biggest worry because opportunity wasn't (inaudible) influence?
322 SECRETARY CLINTON: Well, one thing I've learned is that there's no one that knows what's going to happen in the Middle East, and that even became clear after the Arab Spring, but I'll take a stab at it.
323 It's really important that Egypt stabilizes, and whatever one thinks about the military intervention that happened, it's a fact, but it's not at all clear to me that that military intervention has resulted in stability or in quashing a lot of the continuing uprisings from Islamists and even Jihadists.
324 So how Egypt navigates through this next six to 12 months is crucial for the entire region. There are a lot of proxy battles going on, you know, there's proxy battles between the Saudis and the Iranis and the Jordanians and the Iranians and the Turks and, you know, it goes on and on, and you can look at individual countries and try to sort out who is on what side.
325 So in Egypt, the election of Morsi was not by any means an overwhelming mandate, in fact, it was a rather small turnout in the second election. And instead of recognizing that, Morsi and the Freedom and Justice Party, which was the political arm of the Muslim Brotherhood, really began to try to consolidate their own games.
326 And again, I -- kind of the manual for foreign policy is, you know, human nature. People had been on the outs, they've been in prison, they've been abused under Mubarak. They won an election in part because the other side was so poorly organized and would not get their act together, despite our best efforts to encourage them to.
327 So they think, okay, we want to now get all our people, you know, give them the position in the government, make the decisions that will please our supporters. They ignored the economy. They wouldn't make the tough decisions that the IMF was demanding for many months, still to this day, and they began to do things which really raised concerns among the vast majority of nonactive Islamists in Egypt. And you all know that the military then basically came in, but they had a 22 million signature petition asking them to, so it was all very unusual.
328 So the military's in, what are they going to do? Are they going to be any better at developing the country than Mubarak was? Mubarak and his wife were people I knew quite well, had many conversations starting in the '90's literally up until weeks before he left, but there was no plan. You know, the literacy rate did not go up, the education rate for the average Egyptian did not improve. Women's positions did not change. Agricultural got worse. They started importing wheat instead of exporting. You go down the list and the military controls a significant percentage of the economy. Some say 40 percent, some say 50 percent.
329 So some of what you're seeing is not just political and patriotic, it's just purely self-interest, you know, we don't want anybody going after our industries and our resources.
330 So my hope is, and I really can't tell you how realistic a hope it is, is that whoever runs, and it's likely to be a general, and it's more than likely to be el-Sisi taking off his uniform running for president, probably given the way that they're managing the system, get elected, but then what? What is he going to do? What role is he going to play? So Egypt is (inaudible).
331 If you look at what's happening in Syria, it's clearly a multiply leveled proxy battle. We've got Iran with their agents in Hezbollah, and they're being taken on by indigenous rebels but increasingly a collection of Jihadists who are funded by the Saudis, funded by the Emiratis, funded by Gotter (phonetic), and you have the Turks that were very active in the beginning, but then began to be concerned by some of the development inside Syria, particularly among the northern and northeastern Kurdish population in Syria.
332 So there is a lot of maneuvering still going on. I'm hopeful that there will be success with the chemical weapons peace, and I'm hopeful there will be a peace conference, but I'm doubtful that Asad will move out of the way, so I think you're in for six to 12 months at least of further stalemate where it is still a very active, you know, civil conflict.
333 I think that the other places that you have to watch is what's, you know, what's happening in the gulf, both the Saudis and the (inaudible) becoming much more active participants in Egypt, in Lybia, in Syria. There's a lot of moving parts here. Gutter (phonetic) with the new premiere is, you know, finding his way, he's been very active under his father, we'll see what he does.
334 And then we have the peace process which, you know, Secretary Kerry and his team are plugging away on, but moving over all of it is Iran, and the, you know, the fact that the Israelis and the Saudis are both in the same boat without being suspicious of anything that could be agreed to by the Iranians, give you some sense of how the calculation here is in a state of constant motion.
335 The Iranians are on their charm offensive. If it's real, which is hard to tell, then you could see a breakthrough of some sort by the international community. Whether that would meet the demands of Israel and Saudis, who knows, but at least they're talking and trying to explore it.
336 And, you know, I think it's very tough to reach a credible deal with Iran, but I think you have to try. And I just don't think you can walk away from that possibility. And so I hope that something can come of it.
337 MR. O'NEILL: Speaking of that term, as President Reagan once said about the Russians, trust but verify. Recently in response to the Iranians turn if he was smiled but enriched.
338 SECRETARY CLINTON: Well, I think you got it, I think if -- the Iranian's position for as long as I've been closely following it and involved in it is we have a right to enrich. Now, technically they don't. They're signatory to the nonproliferation, they do not have a right to enrich, but that is their bottom line demand, and that's what they're trying to obtain international recognition for.
339 And it will be very difficult for the right safeguards and conditions to actually be constructed that would hold water enabling them to do that, but there are really three things you should look at.
340 We should look at the uranium production through centrifuges, (inaudible) are the two major centers, but you should also look at their continuing work to build a heavy water reactor in a place called Arak, A R A K, which is a half form of plutonium which is the fastest path for weapons-grade material for nuclear bomb.
341 And you have to look at their missile program, because why do they continue to develop intercontinental ballistic missiles that work on miniaturizing warheads if they don't have some intention of being prepared at least to hold out the threat over their neighbors and beyond.
342 So this is, I mean, you know, if you had an arms expert here, he or she would go into great detail about how difficult it is to find all of the production, to control all of the production that Iranians keeping saying they have a Fatwa against nuclear weapons.
343 And the problem with that is even if you were to believe it, and there are some very skeptical, smart people who do believe it, who believe that the Fatwa is legitimate, it doesn't go on to say, and we will not construct the pieces to give us the nuclear capacity whenever we choose to assemble them. It just says, no, we will not build nuclear weapons.
344 So it's a wicked problem, as we like to say, because Iran is not only troubling because of its nuclear program, although that's the foremost threat, it's the primary conductor and exporter of terrorism.
345 I mean, if you had a big map here behind us, literally from North America to Southeast Asia, there are so many thoughts, so many bombs, so many arrests that are all traced back to the Iranian revolutionary guard, and their constant efforts to sell (inaudible).
346 And we have a lot of friends around the world, even people who say, look, I need their oil, I need their gas, I don't particularly trust them or like them, but I'm going to do business with them, besides that's an American problem, that's Israeli's problem, it's a Middle Eastern problem. It's not.
347 They want (inaudible), they want as broad a span of control as they can have, so even if a miracle were to happen and we came up with a verifiable nuclear deal, there would still be problems that Iran is projecting and causing around the world that had real consequences for our friends and ourselves.
348 I mean, they did hire, you know, they did hire that gunman to kill the Saudi ambassador, and people thought that was so outrageous. It was made up. We're sitting around the situation room saying, let's think of something really bad about the Iranians, like you had to think of something, and, okay, let's make up a story that they sent agents to Mexico to hire a drug cartel enforcer and fortunately they were led to somebody who was a double agent working for the drug administration -- the Drug Enforcement Administration in the United States, so we were able to capture the guy when he came to Texas to transfer the money, but they were going to kill the ambassador from Saudi Arabia in Washington, and the plan was to get him when he was at a public place, a big restaurant some of you may know, Cafe Milano. I mean, absurd.
349 And we had -- the guy, once he was caught, gave names and dates and money transfers and all the rest, but people kind of shrugged it off like, oh, that's so ridiculous. Who would do that? The Iranians, they do it all the time.
350 So yeah, trust but verify and then verify again, again and again. We have to figure out some modus vivendi with them but not at the risk of putting ourselves and others under their thumb.
351 MR. O'NEILL: Let's come back to the US. Since 2008, there's been an awful lot of seismic activity around Wall Street and the big banks and regulators and politicians.
352 Now, without going over how we got to where we are right now, what would be your advice to the Wall Street community and the big banks as to the way forward with those two important decisions?
353 SECRETARY CLINTON: Well, I represented all of you for eight years. I had great relations and worked so close together after 9/11 to rebuild downtown, and a lot of respect for the work you do and the people who do it, but I do -- I think that when we talk about the regulators and the politicians, the economic consequences of bad decisions back in '08, you know, were devastating, and they had repercussions throughout the world.
354 That was one of the reasons that I started traveling in February of '09, so people could, you know, literally yell at me for the United States and our banking system causing this everywhere. Now, that's an oversimplification we know, but it was the conventional wisdom.
355 And I think that there's a lot that could have been avoided in terms of both misunderstanding and really politicizing what happened with greater transparency, with greater openness on all sides, you know, what happened, how did it happen, how do we prevent it from happening? You guys help us figure it out and let's make sure that we do it right this time.
356 And I think that everybody was desperately trying to fend off the worst effects institutionally, governmentally, and there just wasn't that opportunity to try to sort this out, and that came later.
357 I mean, it's still happening, as you know. People are looking back and trying to, you know, get compensation for bad mortgages and all the rest of it in some of the agreements that are being reached.
358 There's nothing magic about regulations, too much is bad, too little is bad. How do you get to the golden key, how do we figure out what works? And the people that know the industry better than anybody are the people who work in the industry.
359 And I think there has to be a recognition that, you know, there's so much at stake now, I mean, the business has changed so much and decisions are made so quickly, in nano seconds basically. We spend trillions of dollars to travel around the world, but it's in everybody's interest that we have a better framework, and not just for the United States but for the entire world, in which to operate and trade.
360 You know, I remember having a long conversation with Warren Buffett, who is obviously a friend of mine, but I think he's the greatest investor of our modern era, and he said, you know, I would go and I'd talk to my friends and I'd ask them to explain to me what a default credit swap was, and by the time they got into their fifth minute, I had no idea what they were talking about. And when they got into their tenth minute, I realized they didn't have any idea what they were talking about.
361 I mean, Alan Greenspan said, I didn't understand at all what they were trading. So I think it's in everybody's interest to get back to a better transparent model.
362 And we need banking. I mean, right now, there are so many places in our country where the banks are not doing what they need to do because they're scared of regulations, they're scared of the other shoe dropping, they're just plain scared, so credit is not flowing the way it needs to to restart economic growth.
363 So people are, you know, a little -- they're still uncertain, and they're uncertain both because they don't know what might come next in terms of regulations, but they're also uncertain because of changes in a global economy that we're only beginning to take hold of.
364 So first and foremost, more transparency, more openness, you know, trying to figure out, we're all in this together, how we keep this incredible economic engine in this country going. And this is, you know, the nerves, the spinal column.
365 And with political people, again, I would say the same thing, you know, there was a lot of complaining about Dodd-Frank, but there was also a need to do something because for political reasons, if you were an elected member of Congress and people in your constituency were losing jobs and shutting businesses and everybody in the press is saying it's all the fault of Wall Street, you can't sit idly by and do nothing, but what you do is really important.
366 And I think the jury is still out on that because it was very difficult to sort of sort through it all.
367 And, of course, I don't, you know, I know that banks and others were worried about continued liability and other problems down the road, so it would be better if we could have had a more open exchange about what we needed to do to fix what had broken and then try to make sure it didn't happen again, but we will keep working on it.
368 MR. O'NEILL: By the way, we really did appreciate when you were the senator from New York and your continued involvement in the issues (inaudible) to be courageous in some respects to associated with Wall Street and this environment. Thank you very much.
369 SECRETARY CLINTON: Well, I don't feel particularly courageous. I mean, if we're going to be an effective, efficient economy, we need to have all part of that engine running well, and that includes Wall Street and Main Street.
370 And there's a big disconnect and a lot of confusion right now. So I'm not interested in, you know, turning the clock back or pointing fingers, but I am interested in trying to figure out how we come together to chart a better way forward and one that will restore confidence in, you know, small and medium-size businesses and consumers and begin to chip away at the unemployment rate.
371 So it's something that I, you know, if you're a realist, you know that people have different roles to play in politics, economics, and this is an important role, but I do think that there has to be an understanding of how what happens here on Wall Street has such broad consequences not just for the domestic but the global economy, so more thought has to be given to the process and transactions and regulations so that we don't kill or maim what works, but we concentrate on the most effective way of moving forward with the brainpower and the financial power that exists here.
372 MR. O'NEILL: So let me talk a little bit about an issue that you've been very articulate and inspirational on, and that is women's rights. From 1994 in Beijing --
373 SECRETARY CLINTON: '95.
374 MR. O'NEILL: Beijing not only humans rights you've been a very forceful advocate of the economic empowerment of women. Can you give us a mark to market progress report?
375 SECRETARY CLINTON: Well, Japan is doing well, because Prime Minister Abe, as part of his economic plan, became convinced that encouraging more women to get into the workforce would be a big boost to the Japanese GEP.
376 So there are leaders around the world who are coming to this recognition because of the evidence that is being presented, the IMF has done some really good work on this, obviously the World Bank and other organizations as well, but the bottom line, when you talk about economic empowerment, is that there are three big objectives, one, tearing down the still existing barriers, legal, regulatory, cultural barriers to women's participation in the economy.
377 The IMF has just done a study about the legal obstacles to women working in professions all over the world, and some countries have very few, other countries are surprising, like I think Russia has 150 jobs that women can't be employed.
378 So instead of saying, you know, here are the -- if you are going to be a miner in Siberia, here's the pack you have to carry and the work you're going to have to do. If you can do it, fine. If you can't, no. Man or woman, doesn't matter.
379 So there are existing legal obstacles. There are regulatory obstacles. You know, a lot of countries back in '95 did not allow women to inherit property. They couldn't inherit from their fathers. They couldn't inherit from their husbands. And this was particularly onerous on small holder women farmers who do all the work. Sixty to 80 percent of the women farmers in the world, depending upon the region you're in, are women, and they're farming, you know, 2, 3 acres maybe at the most, but they're the ones in the field, the baby strapped to their back, they are the ones taking the food to market after they feed their family. If their husband dies, it goes to his father or his brother, and in many instances, the woman and her children have to leave.
380 So there were legal obstacles we were able to break down, but then in practice, nobody enforced them. There weren't the regulations or the expectations that it would be carried through on.
381 And then there are the, you know, lingering cultural barriers. And, you know, Angela Merkel last spring, who is a very conservative, cautious politician whom I deeply admire, I think she is an incredible leader, she said she favored a requirement that German companies have 30 percent women on their boards.
382 Now, when somebody as cautious and conservative as Angela, who I have known for 20 years says that there's a problem. The problem is that (inaudible) is there's not a pipeline, it doesn't have enough people in it, but the fact is that there are a lot of women now who have achieved in their careers, who have a lot of great attributes to contribute to boards, but they're not being sought out, they're not being invited, they're not assuming that role. And the same, you know, in the CEO ranks.
383 So whether it's legal obstacles, sort of regulatory, judicial obstacles or cultural attitudes, we have to continue to try to remove those.
384 And I don't say this just because, you know, I think it would be wonderful if every girl in the world got the education she needed and the health care she needed and access to credit and politics, I think that would be great, and it's a moral imperative, but it is an economic imperative.
385 And the work that Goldman has done that the OACD had done, the IMF has done shows unequivocally that we're leaving money on the table at the time of slower-than-hoped-for growth globally. And one of the reasons is that women are not encouraged and permitted in many instances to be full participants in the economy.
386 So I go around making this case to a greater or lesser agreement, but I keep making it because I think it's very much in our interest and it's in the interest of our economic system globally to do more to make sure those doors are opened.
387 MR. O'NEILL: Thirty years, now you're officially a private citizen, again, outside the bubble, flying commercial, I assume. So does the world look differently?
388 SECRETARY CLINTON: The world looks different, yeah, Tim, I'm glad to be back in the world, I have to confess, and I'm glad to be on the shuttle instead of on a 16-hour flight somewhere, you know.
389 I've traveled mostly in our own country since leaving the state department, and there's, you know, there are a lot of questions out there. People are struggling to figure out what we're going to do next and how we're going to get there.
390 And a lot of young people who are not employed where they thought they would be employed now, college graduates not really working in the area they need to, sort of mismatched between the skills businesses need and what people are producing, so there are some structural issues that we have to address as a society.
391 And it's not all about what the federal government does with the budget, but mostly I'm impressed that we just keep moving forward. And we have to honor and celebrate that spirit of resilience we saw here in the city after 9/11 when it was so devastated and people were shocked for all that was happening before their eyes. And there were a lot of questions, would downtown ever come back, would they work here. If you look at it now, it's just extraordinary, and it's a tribute to everybody who helped to make that happen.
392 So when I look at the future of our country, you know, I'm an optimist by nature and I'm confident that we'll work our way through it, but it won't happen by accident. It will happen because both the public and the private sector decided it is in our interest to make some tough decisions. And the list of tough decisions are known to everybody from entitlement reform to revenues to future growth investments in R&D and, you know, education and skills and all the rest.
393 But I think that we will once again fulfill the comments that Winston Churchill allegedly made, that the Americans finally get around to doing the right thing after trying nearly everything else, we're in the trying everything else stage right now.
394 MR. O'NEILL: So last question, if -- what would you advise someone if he or she came to you and said, I'm thinking about running for the Democratic presidential nomination?
395 SECRETARY CLINTON: Another one of those hypotheticals. Well, I would probably say, are you crazy?
396 MR. O'NEILL: Wait, wait.
397 SECRETARY CLINTON: Look, I think whoever runs next time has to have a very clear idea of where he or she wants to take the country and has to run on those ideas, because the election cannot be about personalities, participants sniping, all of the irrelevant stuff the day after the election sort of dissipates, and you wake up and say, okay, now what am I going to do? It needs to be an election about the future.
398 So win or lose, people know what you want to do. You took it to the country, you tried to build a consensus for it, which can hopefully avoid some of the end runs that we've been seeing in the last few weeks, and then you have to have enough of an understanding of how government works to be able to execute the operational side of it, the slow, hard boring of hard boards as (inaudible) said about politics, there's nothing glamorous about it.
399 And a lot of what I did as secretary of state, you know, people say, oh, well, what were you doing, well, I was trying to protect internet freedom which is under attack from some of the countries around the world that don't want their people to have access to the internet. I was trying to figure out what we could do about climate change that we could get around the Congress because they weren't going to give anything dramatic, but also was going to fit with our economic impairments, you know, things that aren't -- they're not in the headlines, they're in trend lines. So you can't govern from the headlines, you have to be responsive to them, but you have to have a plan about what it is you think that the country can do and then how you can harness people's energies.
400 Now, I'll end with this. I mean, you know, my father was a veteran of World War II, he was in the Navy for five years. He gets out of the Navy, all he wants to do is restart his very small business, he was a printer of drapery fabrics in Chicago, and start a family with my mother, that was it, you know, that was the GI dream, and get a nice house and raise the family.
401 So when Truman and Marshall said, you know what, we have to rebuild Europe and we have to support Japan, yes, you know, Germany and Japan were our enemies, and we just lost 400,000 plus people in the war and countless billions of dollars, but we have to do that.
402 So we're going to have to keep taxing you, Hugh Rodham, my father's name, to rebuild your enemies. My father, who was a lifelong Republican, is like, what is that about, you know, what do you mean? I mean, come on, give me a break.
403 But we had visionary leaders who said, trust us, and there was enough trust in the system so that people could. We are going to help create a world that will be a more peaceful, more prosperous world and good for the United States.
404 So when Truman and Marshall came up with what's known as the Marshall Plan, people were not immediately enamored, so they went to businesses, they went to the big banks and the industrial firms, and they sat down and they said, look, you guys are going to need markets, you're going to need consumers to be able to buy your stuff, if we don't rebuild, who knows whether that will happen.
405 And then a lot of our leaders in businesses and presidents of colleges fanned out across America and made the case. And everybody was speaking with one voice. And we spent about $13 billion, which in, you know, current dollars is 120, 125 billion, rebuilding our enemies, and it was one of the best investments America ever made.
406 So somehow and I -- you know, look, I know we're more cynical. We have a television station for every prejudice, bias and bigotry anyone would want to invest themselves in, so it's harder, it's harder to bring people together, but I think that's what is needed, and somebody would have to be willing to do politics differently than it's been done, win or lose, and say, look, here's what you get, no games, no hidden tricks, this is what we have to do, you know, if you agree with me, vote for me, if you don't agree with me, vote for somebody else, but I want to have a conversation with the country that is in keeping with who we are as a people.
407 MR. O'NEILL: Thank you, Madam Secretary, for today and everything that you've done for the country. Ladies and gentlemen, Hillary Rodham Clinton.
408 (Time noted: 1:50 p.m.)
409
410
411 1
412
413
414
415- - - - - - - - - - - - - - - - - - - - - - - x
416
417GOLDMAN SACHS, CO.
418
419 2013 IBD CEO ANNUAL CONFERENCE
420
421KEYNOTE SPEAKERS:
422FORMER UNITED STATES
423SECRETARY OF STATE
424HILLARY RODHAM CLINTON and
425LLOYD BLANKFEIN
426- - - - - - - - - - - - - - - - - - - - - - - x
427
428 The Inn at Palmetto Bluff
429 Bluffton, South Carolina
430
431 June 4, 2013
432 8:05 P.M.
433
434
435
436 Before Patricia T. Morrison, Registered
437Professional Reporter and Notary Public of the
438State of South Carolina.
439
440
441
442 ELLEN GRAUER COURT REPORTIN CO. LLC
443 126 East 56th Street, Fifth Floor
444 New York, New York 10022
445 212-750-6434
446 REF: 104014
447
448
449
450 2
451
452
453 MS. CLINTON: Let's start with the
454chairman.
455 MR. BLANKFEIN: China. We're used to
456the economic team in China. We go there all the
457time. The regulations -- and then every once in a
458while you hear about South China, the military
459side.
460 How do you from the state department
461point of view -- less familiar to us -- think about
462China, the rise of China, and what that forebodes
463for the next couple of decades?
464 MS. CLINTON: Well, you start off with
465an easy question, but first let me thank you.
466Thanks for having me here and giving me an
467opportunity both to answer your questions and maybe
468later on some of the questions that some of the
469audience may have.
470 I think it's a good news/maybe not so
471good news story about what is going on right now in
472China. On the good news side I think the new
473leadership -- and we'll see more of that when Xi
474Jinping gets here in the United States after having
475gone to Latin America. He's a more sophisticated,
476more effective public leader than Hu Jintao was.
477 He is political in the kind of generic
478sense of that word. You can see him work a room,
479which I have watched him do. You can have him make
480small talk with you, which he has done with me.
481His experience as a young man coming to the United
482States in the 1980s -- going to Iowa, spending time
483there, living with a family -- was a very important
484part of his own development.
485 MR. BLANKFEIN: His daughter is at
486Harvard?
487 MS. CLINTON: Yes. They don't like you
488
489
490 3
491
492
493to know that, but most of the Chinese leadership
494children are at American universities or have been.
495 I said to one very, very high ranking
496Chinese official about a year, year and a half ago
497-- I said: I understand your daughter went to
498Wellesley. He said: Who told you? I said: Okay.
499I don't have to punish the person then.
500 So I think that the leadership -- and
501for me that's important, because you've seen the
502clever moves that he's made already. He not only
503went to Russia on the first trip, he went to Africa
504and then to South Africa. Now in Latin America.
505 Some of it is the same old commodity
506hunt, but some of it is trying to put a different
507phase on that and to try to assuage some of the
508doubts and some of the concerns that have been
509bubbling up over the last couple of years about
510Chinese practices, both governmental and
511commercial.
512 So he's someone who you at least have
513the impression is a more worldly, somewhat more
514experienced politician. And I say that as a term
515of praise, because he understands the different
516levers and the constituencies that he has to work
517with internally and externally. That's especially
518important because of the recent moves he's making
519to consolidate power over the military.
520 One of the biggest concerns I had over
521the last four years was the concern that was
522manifested several different ways that the PLA, the
523People's Liberation Army, was acting somewhat
524independently; that it wasn't just a good cop/bad
525cop routine when we would see some of the moves and
526some of the rhetoric coming out of the PLA, but
527that in effect that were making some foreign
528
529
530 4
531
532
533policy. And Hu Jintao, unlike Jiang Zemin before
534him, never really captured the authority over the
535PLA that is essential for any government, whether
536it's a civilian government in our country or a
537communist party government in China.
538 So President Xi is doing much more to
539try to assert his authority, and I think that is
540also good news.
541 Thirdly, they seem to -- and you all
542are the experts on this. They seem to be coming to
543grips with some of the structural economic problems
544that they are now facing. And look, they have
545them. There are limits to what enterprises can do,
546limits to forcing down wages to be competitive, all
547of which is coming to the forefront; limits to a
548real estate bubble. All of the cyclical business
549issues that they're going to have to confront like
550every other economy, and they seem to be making
551steps to do so.
552 On the not so good side there is a
553resurgence of nationalism inside China that is
554being at least condoned, if not actively pushed by
555the new Chinese government. You know, Xi Jinping
556talks about the Chinese dream, which he means to be
557kind of the Chinese version of the American dream.
558There has been a stoking of residual anti-Japanese
559feelings inside China, not only in the leadership
560but in the populace. It's ostensibly over the
561dispute that is ongoing, but it's deeper than that
562and it is something that bears very careful
563watching. Because in my last year, year and a half
564of meetings with the highest officials in China the
565rhetoric about the Japanese was vicious, and I had
566high Chinese officials in their 60s and 50s say to
567me: We all know somebody who was killed by the
568
569
570 5
571
572
573Japanese during the war. We cannot let them resume
574their nationalistic ways. You Americans are naive.
575You don't see what is happening below the surface
576of Japan society.
577 Riots that were not oppressed by the
578police against Japanese factories, against the
579Japanese ambassador's car -- those kinds of actions
580that were acting out in the sense of nationalism,
581which could well be a tool that the new government
582uses to try to manage some of the economic changes.
583Divert people's attention. Get them upset at the
584Japanese. Not upset the party.
585 We're a little concerned about that.
586 MR. BLANKFEIN: Does it make any of the
587other Asian countries nervous and therefore
588gravitate closer to the US?
589 MS. CLINTON: There is a lot of
590anxiety, but it's a schizophrenic, I guess is the
591way I put it. On the one hand, no nation wants to
592be viewed as hostile to China. That's not in their
593interests. They have -- if you're Japan or South
594Korea in particular, you have a lot of business
595that you have to do. So you're going to want to
596keep the relationship on an even keel at the same
597time this assertiveness, which we first saw most
598particularly around the South China seas starting
599in 2010, kind of ended the charm offensive that
600Chinese were conducting with all of their neighbors
601in Southeast Asia and the assertion of control over
602the entire sea.
603 If you Goggle up what the Chinese claim
604is, it's the entire South China sea. And I would
605have these arguments with the state counselor, Dai
606Bingguo, with the foreign minister, Yang Jiechi,
607and I would say: You know, if you believe this,
608
609
610 6
611
612
613take it to arbitration.
614 MR. BLANKFEIN: An unfortunate name.
615 MS. CLINTON: Which one?
616 MR. BLANKFEIN: The South China sea.
617 MS. CLINTON: Yes, it is. And there
618are a lot of people who refuse to call it that
619anymore. The Filipinos now call it the Filipino
620sea and the East China Sea is called the Japanese
621Sea.
622 So yeah. We've got all these
623geographic and historic challenges that are coming
624to the forefront, which seems a little strange when
625you think about the economic development and growth
626that has gone on in the last 30 years, to be
627harkening back to the 1930s and the second world
628war at a time when you've surpassed Japan.
629 You're now the second biggest economy
630in the world. It really does raise questions about
631what is going on in the calculus of the leadership
632that would encourage them to pursue this kind of
633approach. Nationalism, of course. Sovereignty, of
634course. And if you want to go into it there is --
635I can give you their side of the question on what
636the Japanese called the -- you know, you can go
637into why they are so agitated about it. But the
638fact is, they have bigger fish to fry in the South
639China Sea and elsewhere.
640 So why are they intent upon picking
641this fight and asserting this at this time? Why
642are they slamming into Filipino fishing vessels?
643You know, a poor country that is just desperately
644trying to get its growth rate up and making some
645progress in doing that. So it bears watching, and
646obviously it matters to all of us.
647 MR. BLANKFEIN: The Japanese -- I was
648
649
650 7
651
652
653more surprised that it wasn't like that when you
654think of -- all these different things. It's such
655a part of who they are, their response to Japan.
656If you bump into the Filipino fishing boats, then I
657think you really -- while we're in the
658neighborhood, the Chinese is going to help us or
659help themselves -- what is helping themselves?
660North Korea? On the one hand they wouldn't want --
661they don't want to unify Korea, but they can't
662really like a nutty nuclear power on their border.
663 What is their interests and what are
664they going to help us do?
665 MS. CLINTON: Well, I think their
666traditional policy has been close to what you've
667described. We don't want a unified Korean
668peninsula, because if there were one South Korea
669would be dominant for the obvious economic and
670political reasons.
671 We don't want the North Koreans to
672cause more trouble than the system can absorb. So
673we've got a pretty good thing going with the
674previous North Korean leaders. And then along
675comes the new young leader, and he proceeds to
676insult the Chinese. He refuses to accept
677delegations coming from them. He engages in all
678kinds of both public and private rhetoric, which
679seems to suggest that he is preparing himself to
680stand against not only the South Koreans and the
681Japanese and the Americans, but also the Chinese.
682 So the new leadership basically calls
683him on the carpet. And a high ranking North Korean
684military official has just finished a visit in
685Beijing and basically told: Cut it out. Just stop
686it. Who do you think you are? And you are
687dependent on us, and you know it. And we expect
688
689
690 8
691
692
693you to demonstrate the respect that your father and
694your grandfather showed toward us, and there will
695be a price to pay if you do not.
696 Now, that looks back to an important
697connection of what I said before. The biggest
698supporters of a provocative North Korea has been
699the PLA. The deep connections between the military
700leadership in China and in North Korea has really
701been the mainstay of the relationship. So now all
702of a sudden new leadership with Xi and his team,
703and they're saying to the North Koreans -- and by
704extension to the PLA -- no. It is not acceptable.
705We don't need this right now. We've got other
706things going on. So you're going to have to pull
707back from your provocative actions, start talking
708to South Koreans again about the free trade zones,
709the business zones on the border, and get back to
710regular order and do it quickly.
711 Now, we don't care if you occasionally
712shoot off a missile. That's good. That upsets the
713Americans and causes them heartburn, but you can't
714keep going down a path that is unpredictable. We
715don't like that. That is not acceptable to us.
716 So I think they're trying to reign Kim
717Jong in. I think they're trying to send a clear
718message to the North Korean military. They also
719have a very significant trade relationship with
720Seoul and they're trying to reassure Seoul that,
721you know, we're now on the case. We couldn't pay
722much attention in the last year. We've got our own
723leadership transition. But we're back focused and
724we're going to try to ensure that this doesn't get
725all the rails.
726 So they want to keep North Korea within
727their orbit. They want to keep it predictable in
728
729
730 9
731
732
733their view. They have made some rather significant
734statements recently that they would very much like
735to see the North Koreans pull back from their
736nuclear program. Because I and everybody else --
737and I know you had Leon Panetta here this morning.
738You know, we all have told the Chinese if they
739continue to develop this missile program and they
740get an ICBM that has the capacity to carry a small
741nuclear weapon on it, which is what they're aiming
742to do, we cannot abide that. Because they could
743not only do damage to our treaty allies, namely
744Japan and South Korea, but they could actually
745reach Hawaii and the west coast theoretically, and
746we're going to ring China with missile defense.
747We're going to put more of our fleet in the area.
748 So China, come on. You either control
749them or we're going to have to defend against them.
750 MR. BLANKFEIN: Wouldn't Japan --
751I mean, isn't the thinking now what is going to
752happen? But why wouldn't Japan at that point want
753to have a nuclear capability?
754 MS. CLINTON: Well, that's the problem
755with these arms races.
756 MR. BLANKFEIN: Nuclear technology --
757 MS. CLINTON: But they don't have a
758military. They have a currently somewhat
759questionable and partially defunct civilian nuclear
760industry. So they would have to make a huge
761investment, which based on our assessments they
762don't want to have to make.
763 You know, there is talk in Japan about
764maybe we need to up our economic commitments to our
765military forces. Maybe we have to move from
766basically a self-defense force to a real military
767again, which would just light up the sky in terms
768
769
770 10
771
772
773of reactions in China and elsewhere.
774 So the Japanese have not -- and with
775Abe trying to focus on the economy and deal with
776the political problems with the structural reforms,
777he doesn't want to have to do that. But there are
778nationalistic pressures and leaders under the
779surface in governship and mayor positions who are
780quite far out there in what they're saying about
781what Japan should be doing. And part of the reason
782we're in the mess on the Senkakians is because it
783had been privately owned. And then the governor of
784Tokyo wanted to buy them, which would have been a
785direct provocation to China because it was kind of
786like: You don't do anything. We don't do
787anything. Just leave them where they are and don't
788pay much attention to them. And the prior
789government in Japan decided: Oh, my gosh. We
790can't let the governor of Tokyo do this, so we
791should buy them as the national government.
792 And I watched the most amazing argument
793-- you know, Hu Jintao was always so impassive in
794public, especially around us. And I was in
795Vladivostok last September representing the
796president at the APEC meeting, and they had the
797leaders in a holding room, and we were all in there
798waiting to go out to some event. And you had Hu
799Jintao in a corner screaming at them, and we all
800were listening because their interpreters could
801translate from Chinese to English to English to
802Japanese and vice versa. So we got to hear the
803whole thing. And so we tried to prevent the
804problem. That's why we bought it. That is
805unacceptable. We never should have done it. The
806national government should never own these things.
807But we can control it better. It wouldn't be in
808
809
810 11
811
812
813the hands of a nationalist.
814I don't care. This is breaking the -- it was
815really fascinating.
816 You can actually have four translators
817in your home. This is something that most
818families --
819 MR. BLANKFEIN: The next area which I
820think is actually literally closer to home but
821where American lives have been at risk is the
822Middle East, I think is one topic. What seems to
823be the ambivalence or the lack of a clear set of
824goals -- maybe that ambivalence comes from not
825knowing what outcome we want or who is our friend
826or what a better world is for the United States and
827of Syria, and then ultimately on the Iranian side
828if you think of the Korean bomb as far away and
829just the Tehran death spot, the Iranians are more
830calculated in a hotter area with -- where does that
831go? And I tell you, I couldn't -- I couldn't
832myself tell -- you know how we would like things to
833work out, but it's not discernable to me what the
834policy of the United States is towards an outcome
835either in Syria or where we get to in Iran.
836 MS. CLINTON: Well, part of it is it's
837a wicked problem, and it's a wicked problem that is
838very hard to unpack in part because as you just
839said, Lloyd, it's not clear what the outcome is
840going to be and how we could influence either that
841outcome or a different outcome.
842 So let's just take a step back and look
843at the situation that we currently have in Syria.
844When -- before the uprising started in Syria it was
845clear that you had a minority government running
846with the Alawites in lead with mostly the other
847minority groups -- Christians, the Druze, some
848
849
850 12
851
852
853significant Sunni business leaders. But it was
854clearly a minority that sat on top of a majority.
855And the uprisings when they began were fairly mild
856in terms of what they were asking for, and Assad
857very well could have in my view bought them off
858with some cosmetic changes that would not have
859resulted in what we have seen over the now two
860years and the hundred thousand deaths and the
861destabilization that is going on in Lebanon, in
862Jordan, even in Turkey, and the threat throwing to
863Israel and the kind of pitched battle in Iran well
864supported by Russia, Saudi, Jordanians and others
865trying to equip the majority Sunni fighters.
866 I think that we have tried very hard
867over the last two years to use the diplomatic tools
868that were available to us and to try to convince,
869first of all, the Russians that they were helping
870to create a situation that could not help but
871become more chaotic, because the longer Assad was
872able to hold out and then to move offensively
873against the rebels, the more likely it was that the
874rebels would turn into what Assad has called them,
875terrorists, and well equipped and bringing in
876Al-Qaeda and its affiliates.
877 The Russian's view of this is very
878different. I mean, who conceives Syria as the same
879way he sees Chechnya? You know, you have to
880support toughness and absolute merciless reactions
881in order to drive the opposition down to be
882strangled, and you can't give an inch to them and
883you have to be willing to do what Assad basically
884has been willing to do.
885 That has been their position. It
886pretty much remains their position, and it is a
887position that has led to the restocking of
888
889
890 13
891
892
893sophisticated weapon systems all through this. The
894Russians' view is that if we provide enough weapons
895to Assad and if Assad is able to maintain control
896over most of the country, including the coastal
897areas where our naval base is, that's fine with us.
898Because you will have internal fighting still with
899the Kurds and with the Sunnis on the spectrum of
900extremism. But if we can keep our base and we can
901keep Assad in the titular position of running the
902country, that reflects well on us because we will
903demonstrate that we are back in the Middle East.
904Maybe in a ruthless way, but a way that from their
905perspective, the Russian perspective, Arabs will
906understand.
907 So the problem for the US and the
908Europeans has been from the very beginning: What
909is it you -- who is it you are going to try to arm?
910And you probably read in the papers my view was we
911should try to find some of the groups that were
912there that we thought we could build relationships
913with and develop some covert connections that might
914then at least give us some insight into what is
915going on inside Syria.
916 But the other side of the argument was
917a very -- it was a very good one, which is we don't
918know what will happen. We can't see down the road.
919We just need to stay out of it. The problem now is
920that you've got Iran in heavily. You've got
921probably at least 50,000 fighters inside working to
922support, protect and sustain Assad. And like any
923war, at least the wars that I have followed, the
924hard guys who are the best fighters move to the
925forefront.
926 So the free Syrian Army and a lot of
927the local rebel militias that were made up of
928
929
930 14
931
932
933pharmacists and business people and attorneys and
934teachers -- they're no match for these imported
935toughened Iraqi, Jordanian, Libyan, Indonesian,
936Egyptian, Chechen, Uzbek, Pakistani fighters that
937are now in there and have learned through more than
938a decade of very firsthand experience what it takes
939in terms of ruthlessness and military capacity.
940 So we now have what everybody warned we
941would have, and I am very concerned about the
942spillover effects. And there is still an argument
943that goes on inside the administration and inside
944our friends at NATO and the Europeans. How do
945intervene -- my view was you intervene as covertly
946as is possible for Americans to intervene. We used
947to be much better at this than we are now. Now,
948you know, everybody can't help themselves. They
949have to go out and tell their friendly reporters
950and somebody else: Look what we're doing and I
951want credit for it, and all the rest of it.
952 So we're not as good as we used to be,
953but we still -- we can still deliver, and we should
954have in my view been trying to do that so we would
955have better insight. But the idea that we would
956have like a no fly zone -- Syria, of course, did
957have when it started the fourth biggest Army in the
958world. It had very sophisticated air defense
959systems. They're getting more sophisticated thanks
960to Russian imports.
961 To have a no fly zone you have to take
962out all of the air defense, many of which are
963located in populated areas. So our missiles, even
964if they are standoff missiles so we're not putting
965our pilots at risk -- you're going to kill a lot of
966Syrians. So all of a sudden this intervention that
967people talk about so glibly becomes an American and
968
969
970 15
971
972
973NATO involvement where you take a lot of civilians.
974 In Libya we didn't have that problem.
975It's a huge place. The air defenses were not that
976sophisticated and there wasn't very -- in fact,
977there were very few civilian casualties. That
978wouldn't be the case. And then you add on to it a
979lot of the air defenses are not only in civilian
980population centers but near some of their chemical
981stockpiles. You do not want a missile hitting a
982chemical stockpile.
983 We have a big set of issues about what
984is going to happen with those storehouses of
985chemicals since a lot want their hands on them.
986The Al-Qaeda affiliates want their hands on them,
987and we're trying to work with the Turks and the
988Jordanians and NATO to try to figure out how we're
989going to prevent that. The Israelis are --
990 MR. BLANKFEIN: Israel cares about it.
991 MS. CLINTON: Israel cares a lot about
992it. Israel, as you know, carried out two raids
993that were aimed at convoys of weapons and maybe
994some other stuff, but there was clearly weapons.
995Part of the tradeoff that the Iranians negotiated
996with Assad.
997 So I mean, I've described the problem.
998I haven't given you a solution for it, but I think
999that the complexity of it speaks to what we're
1000going to be facing in this region, and that leads
1001me to Iran.
1002 Our policy -- and President Obama has
1003been very clear about this. Our policy is
1004prevention, not containment. What that means is
1005that they have to be prevented from getting a
1006nuclear weapon.
1007 Now, the definition of that is debated.
1008
1009
1010 16
1011
1012
1013I have a very simple definition. If they can
1014produce the pieces of it and quickly assemble it,
1015that's a nuclear weapon, even if they keep three
1016different parts of it in different containers
1017somewhere. If they do that it goes back to Lloyd's
1018first point. The Saudis are not going to stand by.
1019They're already trying to figure out how they will
1020get their own nuclear weapons. Then the Emirates
1021are not going to let the Saudis have their own
1022nuclear weapons, and then the Egyptians are going
1023to say: What are we? We're the most important
1024Arab country in the world. We're going to have to
1025have our own nuclear weapons. And then the race is
1026off and we are going to face even worse problems in
1027the region than we currently do today.
1028 MR. BLANKFEIN: What do you -- I've
1029always assumed we're not going to go to war, a real
1030war, for a hypothetical. So I just assumed that we
1031would just back ourselves into some mutually
1032assured destruction kind of -- you know, we get
1033used to it. That it's hard to imagine going to war
1034over that principle when you're not otherwise being
1035threatened.
1036 So I don't see the outcome. The
1037rhetoric is there, prevention, but I can't see us
1038paying that kind of a price, especially what the
1039president has shown. We're essentially withdrawing
1040from Iraq and withdrawing from Afghanistan. It's
1041hard to imagine going into something as open ended
1042and uncontainable as the occupation of Iran. How
1043else can you stop them from doing something they
1044committed to doing?
1045 MS. CLINTON: Well, you up the pain
1046that they have to endure by not in any way
1047occupying or invading them but by bombing their
1048
1049
1050 17
1051
1052
1053facilities. I mean, that is the option. It is not
1054as, we like to say these days, boots on the ground.
1055 MR. BLANKFEIN: Has it ever worked in
1056the history of a war? Did it work in London during
1057the blitz or --
1058 MS. CLINTON: No. It didn't work to
1059break the spirit of the people of London, but
1060London was a democracy. London was a free country.
1061London was united in their opposition to Nazi
1062Germany and was willing to bear what was a terrible
1063price for so long with the blitz and the bombings.
1064 Everybody says that Iran, you know, has
1065united --
1066 MR. BLANKFEIN: Many -- they held out
1067for an awful --
1068 MS. CLINTON: They wanted -- yeah. But
1069I mean, people will fight for themselves. They
1070will fight for themselves, but this is fighting for
1071a program. I mean, the calculation is exactly as
1072you described it. It's a very hard one, which is
1073why when people just pontificate that, you know, we
1074have no choice. We have to bomb the facilities.
1075They act as though there would be no consequences
1076either predicted or unpredicted. Of course there
1077would be, and you already are dealing with a regime
1078that is the principal funder and supplier of
1079terrorism in the world today.
1080 If we had a map up behind us you would
1081be able to see Iranian sponsored terrorism directly
1082delivered by Iranians themselves, mostly through
1083the Revolutionary Guard Corps, the operatives, or
1084through Islah or other proxies from to Latin
1085American to Southeast Asia. They were caught in
1086Bulgaria. They were caught in Cyprus. They were
1087caught in Thailand. They were caught in Kenya. So
1088
1089
1090 18
1091
1092
1093it's not just against the United States, although
1094they did have that ridiculous plot of finding what
1095they thought was a drug dealer to murder the Saudi
1096ambassador.
1097 They really are after the sort of
1098targets of anyone they believe they can terrorize
1099or sort of make pay a price because of policies.
1100So the fact is that there is no good alternative.
1101I mean, people will say, as you do, mutually
1102assured destruction, but that will require the gulf
1103states doing something that so far they've been
1104unwilling to do, which is being part of a missile
1105defense umbrella and being willing to share their
1106defense so that if the best place for radar is
1107somewhere that can then protect the Saudis and the
1108Emirates, the Saudis would have to accept that.
1109That is not likely to happen.
1110 So mutually assured destruction as we
1111had with Europe in the '40s, '50s, '60s, '70s, '80s
1112until the fall of the Soviet Union is much harder
1113to do with the gulf states and it will be unlikely
1114to occur because they will think that they have to
1115defend themselves. And they will get into the
1116business of nuclear weapons, and these are -- the
1117Saudis in particular are not necessarily the
1118stablest regimes that you can find on the planet.
1119So it's fraught with all kinds of problems.
1120 Now, the Israelis, as you know, have
1121looked at this very closely for a number of years.
1122The Israelis' estimate is even if we set their
1123program back for just a couple of years it's worth
1124doing and whatever their reaction might be is
1125absorbable. That has been up until this recent
1126government, the prior government, their position.
1127But they couldn't do much damage themselves.
1128
1129
1130 19
1131
1132
1133 We now have a weapon that is quite a
1134serious one, and it can do a lot of damage and
1135damage that would --
1136 MR. BLANKFEIN: Two miles before it
1137blows up or something?
1138 MS. CLINTON: Yes. It's a penetrator.
1139Because if you can't get through the hardened
1140covering over these plants into where the
1141centrifuges are you can't set them back. So you
1142have to be able to drop what is a very large
1143precision-guided weapon.
1144 Nobody wants either of these outcomes.
1145That's the problem. And the supreme leader,
1146Khamenei, keeps going around saying: We don't
1147believe in nuclear weapons. We think they are
1148anti-Islam. But the fine print is: We may not
1149assemble them, but we'll have the parts to them.
1150That's why we keep testing missiles. That's why we
1151keep spinning centrifuges. That's why we are
1152constantly looking on the open market to steal or
1153buy what we need to keep our process going.
1154 So that's what you get paid all these
1155big bucks for being in positions like I was just in
1156trying to sort it out and figure out what is the
1157smartest approach for the United States and our
1158allies can take that would result in the least
1159amount of danger to ourselves and our allies going
1160forward, a contained Iran or an attacked Iran in
1161the name of prevention? And if it were easy
1162somebody else would have figured it out, but it's
1163not. It's a very tough question.
1164 MR. BLANKFEIN: Isn't it amazing that
1165we can go through and think of Europe as an
1166afterthought?
1167 MS. CLINTON: Our allies?
1168
1169
1170 20
1171
1172
1173 MR. BLANKFEIN: Our allies. The US is
1174now oriented towards the Pacific and looking that
1175way. It's another surprise, having grown up as we
1176did, that our attention would be so focused on
1177Asia. But I guess we have a training issue with
1178the EU.
1179 MS. CLINTON: Yes.
1180 MR. BLANKFEIN: Of course everybody
1181here in the financial service industry is very
1182focused on trying to harmonize different -- but
1183from our point of view what is incomprehensible is
1184the governance of Europe and the consequences of
1185Brussels and the single currency that no one has
1186any account of, and the fact is they may not be as
1187important if they don't get their economy in shape
1188and they don't grow over the course of the next --
1189any observations there?
1190 MS. CLINTON: Well, certainly we are
1191always looking to Europe as our allies of first
1192resort. Our common values, our common history.
1193All of that is really just baked into the DNA of
1194how we think about our future, and NATO remains the
1195most important and really remarkable military
1196alliance, I think, in human history.
1197 So there is a lot that we are still
1198very attentive to and working on. There is no
1199doubt that Europe is going through -- you know
1200better than I -- some serious readjustments. Where
1201they will come out I don't think any of us are in a
1202position yet to predict. It may be in Europe what
1203Winston Churchill used to say about us: The
1204Americans will finally get to the right answer
1205after trying nearly everything else, and maybe they
1206will stumble and work their way toward more
1207accommodation in recognizing the realities of what
1208
1209
1210 21
1211
1212
1213it means to have a common currency without a common
1214system to back up that currency.
1215 So I would certainly not count the
1216Europeans out, but I think they have a lot of work
1217to do. And I'm actually more concerned from
1218another perspective. I think that unless the
1219national leaders and the European union and
1220Eurozone leaders get their act together, you will
1221see some pretty unpredictable leaders and political
1222parties coming to the forefront in a lot of
1223countries.
1224 You'll see a lot of nationalism. You
1225will see a lot of chauvinism. You'll see UK
1226parties that is -- winning elections in UK is going
1227to push Cameron and his coalition government to the
1228right as it moves towards an election -- I think in
12292015. What does that mean for Europe? What does
1230that mean for our relationship?
1231 You've got the NATO military alliance
1232already being starved of necessary funds because of
1233all the budgets, and most of the European countries
1234have been so decimated. So I think that -- it's
1235not clear to me where it's going to come out yet.
1236They have to take a lot of really unpleasant
1237medicines, and some are more willing to do that
1238that others and see whether or not they have the
1239political will to make these hard decisions
1240individually and collectively, and right now I
1241think the jury is out.
1242 But on the trade and regulatory
1243harmonization, we are very serious about that and
1244something that I strongly supported. The
1245discussions are ongoing. It will come down, as it
1246often does, to agriculture, particularly French
1247agriculture, and we'll just have to see how much we
1248
1249
1250 22
1251
1252
1253can get done by that process. And there is no
1254doubt that if we can make progress on the trade
1255regulatory front it would be good for the
1256Europeans. It would be good for us. And I would
1257like to see us go as far as we possibly can with a
1258real agreement, not a phony agreement. You know,
1259the EU signs agreements all the time with nearly
1260everybody, but they don't change anything. They
1261just kind of sign them and see what comes of it.
1262 I think we have an opportunity to
1263really actually save money in our respective
1264regulatory schemes, increase trade not only between
1265ourselves but also be more effective in helping to
1266keep the world on a better track for a rural spaced
1267global trading system by having us kind of set the
1268standards for that, along with the TPC, which we
1269didn't mention when we talked about Asia, which I
1270think is also still proceeding.
1271 MR. BLANKFEIN: I think we need to open
1272it up to some questions now, and if there is a
1273pregnant pause I know what to follow up with.
1274 PARTICIPANT: One question for you.
1275 MR. BLANKFEIN: Do me a favor? Why
1276don't we introduce ourselves to the secretary when
1277you ask a question.
1278 PARTICIPANT: Secretary, Jeff Gordon
1279with Diverse Technologies.
1280 As you examine the global situation, if
1281you were to turn back toward the domestic side and
1282look here at the US and after the 2012 elections
1283and give your own kind of third-party assessment of
1284what do we have to do on each side of the aisle to
1285get America back to a functional government.
1286Because we've heard a lot even today that the
1287government has really gotten to a point of
1288
1289
1290 23
1291
1292
1293dysfunctionality that may be almost unprecedented.
1294 So just stepping back a little while
1295and just saying: What do you think? What is your
1296perspective on where the parties are and what we
1297have to do to kind of solve the problems here
1298domestically so that we can come up with a unified
1299approach?
1300 MS. CLINTON: I know -- I heard Leon
1301was here and was his usual shy and reluctant self
1302to express an opinion and certainly never to use
1303any colorful language, but I'm sure "dysfunctional"
1304was probably the best of the words he used to
1305describe what is going on in Washington.
1306 Look, I think there is a couple of
1307things. One, I talk a lot about it, and I talked
1308about it when I was a senator. I talked about it
1309as Secretary. I'm talking about it now.
1310 You know, we have to get back to at
1311least trying to make evidence based decisions.
1312I know that sounds so simplistic, but the
1313ideological partisan position on all sides --
1314because there are people who refuse to look at
1315facts and deal with them, coming from many
1316different perspectives -- really undermines
1317confidence in the people. The American people are
1318smart. They may not be living and breathing
1319politics, but they're looking and they're thinking:
1320Come on, guys. Get it together. You ought to be
1321able to make a deal of some sort.
1322 You know, when my husband spoke at the
1323the Democratic Convention he basically touted the
1324virtues of arithmetic. Can you imagine a major
1325speech having to be made about how arithmetic needs
1326to be used as the basis for budgetary discussions?
1327But in fact, we do need more of an outcry and
1328
1329
1330 24
1331
1332
1333pressure from the rest of the American system, not
1334just the politicians but business leaders and
1335others who are saying: Let's try to figure out how
1336we're going to move forward based on as near an
1337evidence-based foundation as we possibly can
1338manage.
1339 Secondly, you know, people get rewarded
1340for being partisan, and that's on both sides. The
1341biggest threat that Democrats and Republicans face
1342today, largely because of gerrymandering in the
1343House, is getting a primary opponent from either
1344the far right or the far left.
1345 You know, there is no reason you would
1346have noticed this, but there was a woman in the
1347Senate -- and I think it was Kentucky -- recently
1348who had an A plus rating from the NRA. A
1349plus rating. She was a country legislator, highly
1350regarded, and she was a chairman of a committee in
1351the state legislature. And somebody introduced a
1352bill with -- you know, it's not too much
1353exaggeration to say that you should have your gun
1354in your car at all times and it should be visible.
1355And she said: Let's table it for a minute and
1356think about the consequences.
1357 So the NRA recruited an opponent for
1358her who beat her. They put a lot of money into it
1359and basically: You couldn't be reasonable. You
1360couldn't say let's try to reason this out together.
1361You had to tow the line, and whether it's a
1362financial line or gun control line or whatever the
1363line might be. But people let that happen. Voters
1364let that happen.
1365 I mean, the number of people who ask me
1366questions very similar to what you asked I'm sure
1367is representative of millions of people who feel
1368
1369
1370 25
1371
1372
1373the same way. If you look at the polling and all
1374the rest of it that's clear. But you need people
1375who will stand up and say: I want somebody who
1376exercises some judgment. I want somebody who is
1377not just a mouthpiece for one point of view or
1378another. I may have my own opinions, but let's
1379have a debate here. That's what we were always
1380good at in the past.
1381 MR. BLANKFEIN: Wasn't it a virtue
1382compromise at one point?
1383 MS. CLINTON: Yes.
1384 MR. BLANKFEIN: A compromise --
1385 MS. CLINTON: Because in a democracy,
1386especially as diverse as this one, which is not a
1387theocracy or an autocracy. We don't think anybody
1388or any party or any interest group has a lock on
1389the truth. We actually think people bring their
1390experience, their ability to think to the table,
1391and then you hammer it out. And the compromise may
1392not be perfect. In fact, it rarely is, but it
1393represents the big thinking and the political will
1394that is currently available in order to make a
1395decision.
1396 And I was in Hong Kong in the summer of
13972011 and I had a preexisting program with a big
1398business group there, and before we had a reception
1399and there were about a hundred business leaders,
1400many of them based in Hong Kong, some of them from
1401mainland China, some of them from Singapore and
1402elsewhere. They were lining up and saying to me:
1403Is it true that the American Congress might default
1404on America's full faith and credit, their standing,
1405that you won't pay your bills?
1406 And you know I'm sitting there I'm
1407representing all of you. I said: Oh, no. No.
1408
1409
1410 26
1411
1412
1413No. That's just politics. We'll work it through.
1414And I'm sitting there: Oh, boy. I hope that is
1415the case.
1416 So for all of their efforts to take
1417advantage of whatever mistake we might make or
1418whatever problem we might have, they know right now
1419at least in 2013, the beginning of this century,
1420the United States isn't strong at home and abroad.
1421They've got problems, and it is for me pretty
1422simple. If we don't get our political house in
1423order and demonstrate that we can start making
1424decisions again -- and that takes hard work. I
1425mean, don't -- I've served. I've been an elected
1426official, an appointed official. There is nothing
1427easy about working toward a compromise. I give a
1428lot of credit to the eight senators, four
1429Republicans and four Democrats in the Senate. You
1430go from very conservative to what we would call
1431very liberal. And they have sat down and they
1432hammered out a compromise, and then they made a
1433pledge they would stick to it as it went through
1434the regular order of the committee hearing. How
1435unusual. That used to be what we did in Congress.
1436You know, people would get together and they would
1437have hearings and then they would introduce bills
1438and then they would mark them up, and you would win
1439some and you would lose some, and then you go to
1440the floor. And we need to get back to doing that,
1441but the American people need to demand that that is
1442what is expected.
1443 And I don't care if you're a liberal
1444icon or a conservative icon. If you are not
1445willing to be active in your democracy and do what
1446is necessary to deal with our problems, I think you
1447should be voted out. I think you should just be
1448
1449
1450 27
1451
1452
1453voted out, and I would like to see more people
1454saying that.
1455 PARTICIPANT: Secretary, Ann Chow from
1456Houston, Texas. I have had the honor to raise
1457money for you when you were running for president
1458in Texas.
1459 MS. CLINTON: You are the smartest
1460people.
1461 PARTICIPANT: I think you actually
1462called me on my cell phone, too. I talked to you
1463afterwards.
1464 I think the biggest question in this
1465room is: Do you think you're going to run for
1466president again?
1467 MR. BLANKFEIN: I was going to bet that
1468wouldn't come up.
1469 MS. CLINTON: I don't believe you.
1470 Well, look. I don't know. I'm
1471certainly not planning it. I've been out of the
1472state department for what, four months? Four
1473months.
1474 MR. BLANKFEIN: You look like you are
1475ready to get back.
1476 MS. CLINTON: I am ready to continue to
1477kind of think through what I'm doing and what I
1478want to do. So I haven't made any decision and I'm
1479not prepared to make any decision. I mean, on the
1480one hand, as you could probably tell from my
1481answers, I feel very strongly about our country and
1482what is happening, and for me it just defies reason
1483that we are in this paralysis at a time when we've
1484got so much going for us and we could be so strong
1485again and we could deal with so many of our
1486problems.
1487 We were talking at dinner. I mean, the
1488
1489
1490 28
1491
1492
1493energy revolution in the United States is just a
1494gift, and we're able to exploit it and use it and
1495it's going to make us independent. We can have a
1496North American energy system that will be
1497unbelievably powerful. If we have enough of it we
1498can be exporting and supporting a lot of our
1499friends and allies. And there are other ways that
1500we can put ourselves on a better footing, like
1501passing a decent immigration law and dealing with
1502our budget and being smart about it and realizing
1503there is two sides to the equation. You've got to
1504have spending restraints and you've got to have
1505some revenues in order to stimulate growth.
1506 I happen to think that part of the
1507reason we are coming out of where we were a few
1508years ago in part is because we did do that, unlike
1509some of the choices the Europeans made. So I mean,
1510we have teed up well if we just keep going and make
1511these hard political decisions.
1512 And so I very much want to watch and
1513see what happens in the next couple of years before
1514I make any decision. Because honestly, it's kind
1515of nice being on my own schedule. It's kind of
1516nice living in my own house.
1517 MR. BLANKFEIN: In South Carolina?
1518 MS. CLINTON: Yeah. Right. Here in
1519South Carolina. Just traveling around. It's the
1520first time I've been traveling in my own country
1521for four years. It's kind of nice.
1522 So I'm just taking it kind of easy, but
1523thank for what you did for me in two 2008.
1524 MR. BLANKFEIN: Just as a hypothetical,
1525if someone were going to eventually have an entry
1526in this and given that people line up and other
1527people test the waters and people put their hat in
1528
1529
1530 29
1531
1532
1533and start to raise money but they wouldn't want to
1534do the impossible or intervene -- you know, at what
1535point would somebody -- not you, but would somebody
1536have to manifest some interest? Or would it start
1537to become clear or would the observer start to say:
1538This was some critical moment we see what she did
1539here. For example, our very own governor declared
1540that he was going to wait. You can't let people
1541wait forever.
1542 MS. CLINTON: You think not?
1543 MR. BLANKFEIN: In his case it might be
1544the best thing to wait.
1545 MS. CLINTON: Well, this is just
1546hypothetical and not about me.
1547 MR. BLANKFEIN: I'm saying for myself.
1548 MS. CLINTON: If you were going to run
1549here is what I would tell you to do --
1550 MR. BLANKFEIN: Very hypothetical.
1551 MS. CLINTON: I think you would leave
1552Goldman Sachs and start running a soup kitchen
1553somewhere.
1554 MR. BLANKFEIN: For one thing the stock
1555would go up.
1556 MS. CLINTON: Then you could be a
1557legend in your own time both when you were there
1558and when you left.
1559 MR. BLANKFEIN: Enough about me.
1560 MS. CLINTON: Look, I am of the mind
1561that we cannot have endless campaigns. It is bad
1562for the candidates. It's bad for the country.
1563I mean, part of the reason why it's difficult to
1564govern is because an election ends and then the
1565next day people start jockeying for the next -- do
1566your job. Get up and do the job you were elected
1567to do. I believe that doing your job actually is
1568
1569
1570 30
1571
1572
1573the right thing to do.
1574 So I mean, I am constantly amazed at
1575how attention deficit disordered the political
1576punditry is. Because there is a lot to cover.
1577There is so much that you could actually be
1578educating people about. The difference that I
1579experienced from running for the Senate, being in
1580the Senate, running for president and being
1581Secretary of State is that the press which covered
1582me in the state department were really interested
1583in the issues. I mean, they would drill them.
1584They would have asked a hundred more questions
1585about everything Lloyd has asked in the time that
1586they had with me because they really cared about
1587what I thought, what the US government was doing in
1588these issues.
1589 Our political press has just been
1590captured by trivia. I mean, to me. And so you
1591don't want to give them any more time to trivialize
1592the importance of the issues than you have to give
1593them. You want to be able to wait as long as
1594possible, because hopefully we will actually see
1595some progress on immigration, for example. Maybe
1596circumstances will force some kind of budget deal.
1597It doesn't look too promising, but stranger things
1598have happened.
1599 So let's give some space and some
1600attention to these issues instead of who is going
1601to run and what they're going to do and: Oh, my
1602gosh. What is happening tomorrow? But if someone
1603were going to run, given the process of raising
1604money, given the -- you know, for better or worse I
1605apparently have about a hundred percent name
1606recognition. Most of it my mother would say is not
1607true, but I live with it.
1608
1609
1610 31
1611
1612
1613 So for me it might be slightly
1614different than for somebody else, but you certainly
1615would have to be in raising money sometime next
1616year or early the following year.
1617 MR. BLANKFEIN: It's like the traffic
1618in New York. No rush hour.
1619 MS. CLINTON: Well, you know, I really
1620admire Peter King. He's a Republican
1621representative from Long Island. He and I did a
1622lot of work together after 9/11 on terrorism and
1623all of that. But when the vote on Sandy came up --
1624and a lot of Republicans voted against aid for New
1625York and New Jersey, Peter King said to the New
1626York funders: Don't give any of them any money
1627because somehow you have to get their attention.
1628So I thought it was pretty clever. I know what
1629it's like. I mean, everybody is New York on
1630Mondays.
1631 MR. BLANKFEIN: All the senators
1632declined to give aid to New York.
1633 MS. CLINTON: Which ones?
1634 MR. BLANKFEIN: The senator from
1635Oklahoma.
1636 MS. CLINTON: Yeah, I know, but that's
1637what I mean. Peter King said: Don't give any of
1638them money.
1639 Emergency aid used to be off what was
1640called off budget. You would go in with an
1641appropriations request for a hurricane, like
1642hurricane Andrew, I remember, back in '92 or
1643whatever. You would have floods in the midwest and
1644you would have tornadoes and you would have forest
1645fires and on and on. And there are some people who
1646as a matter of principle say: We shouldn't do it
1647like that. We should not do it off budget. But
1648
1649
1650 32
1651
1652
1653it's very hard to budget for disasters. I mean,
1654you can fund FEMA, you can have a pool of money,
1655but given what we're going through right now with
1656one thing after another it's a difficult challenge.
1657 So I think that we're going to have to
1658take seriously how we fund disasters, but I think
1659Peter's point was a larger one, which is -- you
1660know, New York is kind of an ATM machine for both
1661Democrats and Republicans, and people come up and
1662they visit with many of you and they ask for money,
1663and often they're given -- if they're coming
1664they're going to get it. And at some point the
1665American public -- and particularly political
1666givers -- have to say: Here -- and it's not just
1667about me. It's not just about my personal
1668standings. Here are things I want you to do for
1669the country and be part of that debate about the
1670country.
1671 MR. BLANKFEIN: I have to say we
1672Republicans -- we obviously reach out to both sets.
1673To a person -- a person regarded as someone who may
1674be expected to be more partisan and has spent so
1675much time is is very, very well liked by the
1676Republicans.
1677 PARTICIPANT: First off I would like to
1678thank you for all the years. Of course, I'm on the
1679other side.
1680 MS. CLINTON: The dark side?
1681 PARTICIPANT: It's the dark side right
1682now, but otherwise the sun does come through. You
1683have to be an optimist. But you have to put a
1684great, great effort, and I commend you for it. But
1685I would like two things. No. 1, you just talked
1686about Sandy. And since you were First Lady and a
1687senator -- forget the Secretary. But what is wrong
1688
1689
1690 33
1691
1692
1693with our politicians -- I served in the Corps of
1694Engineers. Whether it's in Iraq, Iran -- anyplace
1695outside the US you can build bridges overnight.
1696You could have gone into Sandy. You could have
1697gone into New Orleans.
1698 The actual problem is the law from the
16991800s. No military, which is the only force, not
1700the National Guard. They don't have crap. It's
1701the military. Like down in New Orleans. If we
1702would just change the dumb law -- because it hasn't
1703been changed because politicians have no say once
1704the president declares it martial law. Put the
1705military up. They would have cleaned up that
1706coast. You wouldn't have the frigging mess you
1707have today. But we can do it for everybody else in
1708the world, but we don't do it because the state
1709judges don't have no authority. The mayor don't
1710have no authority, because you're going to put a
1711military officer in charge. That's one question
1712why you haven't looked at --
1713 MR. BLANKFEIN: They did that in New
1714Orleans.
1715 PARTICIPANT: Forget the -- the second
1716thing you mentioned about Afghanistan. Most people
1717don't realize the Russians were there before us for
1718ten years and whatever, and we supported Tannenbaum
1719to beat the hell out of them. A lot of our
1720problems is because we have a competition with the
1721Russians. If we would -- the Russians by nature
1722hate the Chinese, but forget that.
1723 If we were more or less kind of like
1724forget that superpower, superpower, and work with
1725them -- two superpowers equal a hell of a lot more
1726in the world. You wouldn't have an Iranian
1727problem, we wouldn't have the Syrian problem, and
1728
1729
1730 34
1731
1732
1733why don't we just cut Israel loose? Give them the
1734frigging bomb and just blow the thing up. That's
1735my question to you.
1736 MS. CLINTON: Those are interesting
1737questions for sure.
1738 First, I think you're referring to the
1739posse comitatus, which has been actually in
1740existence -- if not from the end of the 18th
1741century, the very beginning, as you said, of the
174219th century. And it is a law that really limits
1743what the military, the US military, can do on our
1744soil, and it has been supported all these years in
1745part because there is a great suspicion by many of
1746US government power -- and there is no more obvious
1747evidence of that than the US military.
1748 However, we do call out the National
1749Guard, which is under the control, as you know, of
1750the governor and the adjutant general. But it is
1751clearly in the line of command as well from the
1752Pentagon. So although it took some difficulties
1753with Katrina we did get the National Guard out.
1754With Sandy we got the National Guard out. But
1755you're right, that if you were to want to have the
1756military, the actual US military involved in
1757disaster recovery, you would have to change the
1758law. And it's something that would be a big fight
1759in Congress because a lot of people would not vote
1760to change a law that would give any additional
1761authority to any president, Republican or
1762democratic, to order the US military to go anywhere
1763in the United States.
1764 We kid about it, but I used to see it
1765all the time when I was a senator. There is this
1766great fear that the US military is going to show up
1767and take away your guns and confiscate your
1768
1769
1770 35
1771
1772
1773property. I think it's --
1774 MR. BLANKFEIN: Was the last time that
1775happened with Eisenhower?
1776 MS. CLINTON: Yes. That was to enforce
1777a court order.
1778 MR. BLANKFEIN: It was shocking,
1779jarring.
1780 MS. CLINTON: It was. Wasn't it the
178182nd? I mean, they flew through to desegregate the
1782central high school, and it was viewed as a very
1783provocative action.
1784 PARTICIPANT: The fact is it proved
1785what was right. Not what the politicians think.
1786It's a case of sometimes the politicians, which
1787includes --
1788 MS. CLINTON: The politicians for more
1789than 200 years have been united on this issue.
1790There was a posse comitatus law before that. But
1791the sensitivity about it was heightened and new
1792regulations were put in after the Civil War, but --
1793 PARTICIPANT: No disrespect, but if you
1794were right you could not have had Illinois,
1795Oklahoma, California join you. You had governors
1796that were appointed there. Military law.
1797 MS. CLINTON: Well, you can declare
1798martial law. You can declare martial law.
1799 PARTICIPANT: Military was always --
1800 MS. CLINTON: Well, I personally could
1801not favor turning control over to the United States
1802military as much as I respect the United States
1803military. I guess I'm on the other side of this
1804with you.
1805 I think that the civilian rule has
1806served us well, and I don't want to do anything
1807that upsets it even though I have a very personal
1808
1809
1810 36
1811
1812
1813experience. You remember when Castro opened the
1814prisons and sent all the criminals to the United
1815States?
1816 MR. BLANKFEIN: The --
1817 MS. CLINTON: A lot of those prisoners
1818were ordered to go to a fort in Ft. Smith,
1819Arkansas, Ft. Chaffee, and my husband was governor
1820of Arkansas at the time. It was a military fort,
1821so the United States military ran it. So if you
1822were on the fort you were under US military
1823authority, but if you stepped off the fort you were
1824not. And the result was there was a riot where
1825prisoners were breaking through the gates, and the
1826US military would not stop them.
1827 So my husband as governor had to call
1828out the state police. So you had the military
1829inside basically saying under the law we can't do
1830anything even to stop prisoners from Cuba. So it
1831is complicated, but it's complicated in part for a
1832reason, because we do not ever want to turn over to
1833our military the kind of civilian authority that
1834should be exercised by elected officials. So I
1835think that's the explanation.
1836 And finally on Afghanistan and Russia.
1837Look, I would love it if we could continue to build
1838a more positive relationship with Russia. I worked
1839very hard on that when I was Secretary, and we made
1840some progress with Medvedev, who was president in
1841name but was obviously beholden to Putin, but Putin
1842kind of let him go and we helped them get into the
1843WTO for several years, and they were helpful to us
1844in shipping equipment, even lethal equipment, in
1845and out of out of Afghanistan.
1846 So we were making progress, and I think
1847Putin has a different view. Certainly he's
1848
1849
1850 37
1851
1852
1853asserted himself in a way now that is going to take
1854some management on our side, but obviously we would
1855very much like to have a positive relationship with
1856Russia and we would like to see Putin be less
1857defensive toward a relationship with the United
1858States so that we could work together on some
1859issues.
1860 We've tried very hard to work with
1861Putin on shared issues like missile defense. They
1862have rejected that out of hand. So I think it's
1863what diplomacy is about. You just keep going back
1864and keep trying. And the President will see Putin
1865during the G20 in Saint Petersburg, and we'll see
1866what progress we can make.
1867 MR. BLANKFEIN: Secretary, all of us
1868thank you for our service, but I think almost --
1869maybe all of us are hungry for more.
1870 MS. CLINTON: Well, I'm not sure about
1871all of us, but thank you.
1872 (Event concluded at 9:15 P.M.)
1873
1874
1875
1876
1877
1878
1879
1880
1881
1882
1883
1884
1885
1886
1887
1888
1889
1890 38
1891
1892
1893 CERTIFICATE OF REPORTER
1894
1895 I, Patricia T. Morrison, Registered
1896Professional Reporter and Notary Public for the
1897State of South Carolina at Large, do hereby certify
1898that the foregoing transcript is a true, accurate
1899and complete record.
1900 I further certify that I am neither related
1901to nor counsel for any party to the cause pending
1902or interested in the events thereof.
1903 Witness my hand, I have hereunto affixed by
1904official seal this 5th day of June 2013 at
1905Charleston, Charleston County, South Carolina.
1906
1907
1908
1909
1910
1911___________________________
1912Patricia T. Morrison
1913Registered Professional Reporter
1914My Commission Expires
1915October 19, 2015