KERRY, HAGEL MAKE REMARKS IN MUNICH, GERMANY

FROM:  STATE DEPARTMENT
Remarks at Munich Security Conference
Remarks
John Kerry
Secretary of State
Secretary of Defense Chuck Hagel
Bayerischer Hof Hotel
Munich, Germany
February 1, 2014

MBASSADOR ISCHINGER: Thanks very much. I think now we can continue. It’s my great pleasure now to open our second panel this morning. We have two longtime friends of the Munich Security Conference. Both of our panelists have been with the Munich Security Conference when they served in the U.S. Senate for many years. So let me welcome both Secretary John Kerry and Secretary Chuck Hagel, both now no longer in the Senate but both now for a year, for practically a year, Secretary of State and Secretary of Defense. Welcome, Mr. Secretaries. (Applause.)

I think the way we want to use these 45 minutes or so is that both Secretaries will offer introductory comments; and if you have a question to ask, please put it on one of the slips of paper and hand it to the staff, and then we’ll use whatever time we have to have a discussion, a Q&A session, in just a few minutes.

John, would you like to start? Thank you.

SECRETARY KERRY: Well, thank you very much, Ambassador Ischinger. I’m very grateful for the opportunity to be here. (In German.) Nice to be with everybody. And I am – I want to remark that Ambassador Ischinger had the pleasure of going to the renowned Fletcher School at Tufts University, but it sounds to me like he lost his Boston accent. I don’t know what happened to him along the way. (Laughter.)

This is a very real and special pleasure for Chuck and me to be here at this conference. We do know this conference well. And as Walter said, we are not just friends from the Senate but we’re friends from a common experience of a long period of time. So it’s a pleasure for us now to be working together as partners with respect to the national security issues that challenge all of us.

So the fact is also that both Chuck and I feel this Atlantic relationship very much in our bones. Both of our families emigrated to the United States from Europe, and both of our fathers signed up to fight tyranny and totalitarianism in World War II. And we both watched the Berlin Wall go up as we grew up, and we grew up as Cold War kids.

So we come to these discussions – both of us – with part of our formative years planted in the post-Cold War/post-World War period, and certainly deeply in the Cold War period. As a kid who grew up in school doing drills to get under my desk in the event of nuclear war, this is something that still conditions my thinking.

It was during that period of time that I first encountered what I came to understand as one of the unmistakable symbols of the enduring American-European partnership. I was a young kid who served – who was with my father in Berlin when he served as the legal advisor to the then High Commissioner to Germany, James Conant. And I spent a piece of my childhood getting on trains in Frankfurt and going through the dead of night to arrive in Berlin and be greeted by the American military man, and move between a British sector, a French sector, an American sector, and a Russian sector. So I can remember cold signs warning you about where you were leaving, and I can remember guns rapping on the windows of my train when I dared to lift the blinds and try to look out and see what was on the other side.

I’ll also never forget walking into a building – I used to ride my bicycle down to Kurfurstendamm when it was still rubble. We’re talking about the early 1950s, just to date myself. And you could see a plaque on a building that said: “This was rebuilt with help from the Marshall Plan.” But the truth is today, as we gather in Munich in 2014, George Marshall’s courageous vision – resisting the calls of isolationism and investing in this partnership – requires all of us to think about more than just buildings. That period of time saw the Marshall Plan lead America’s support for the rebuilding of a continent. But it was more than just the rebuilding of a continent; it was the rebuilding of an idea, it was the rebuilding of a vision that was built on a set of principles, and it built alliances that were just unthinkable only a few years before that.

And I say all of this to try to put this meeting and the challenges that we face in a context. So long as I can remember, I have understood that the United States and Europe are strongest when we stand united together for peace and prosperity, when we stand in strong defense of our common security, and when we stand up for freedom and for common values. And everything I see in the world today tells me that this is a moment where it’s going to take more than words to fulfill this commitment. All of us need to think harder and act more in order to meet this challenge.


With no disrespect whatsoever – in fact, only with the purest of admiration to the strategic and extraordinary vision of Brent Scowcroft sitting over here, Henry Kissinger, Zbig Brzezinski, who I don’t see but I know is here somewhere. There he is. These are men who helped to shape and guide us through the Cold War and the tense moments and the real dangers that it presented. But the fact is that this generation of confluence of challenges that we’re confronting together are in many ways more complex and more vexing than those of the last century. The largely bipolar world of the Cold War, East-West, was relatively straightforward compared to the forces that have been released with the fall of the Berlin Wall, the rise of sectarianism, the rise of religious extremism, and the failure of governance in many places. In fact, we should none of us be surprised that it is the wisdom and vision of Henry Kissinger in his brilliant book Diplomacy – which, if you’ve read it, reread it; if you haven’t, read it for the first time – lays all of this out in his first chapter as he talks about the balance – the old game of balance of power and interests. And as he predicts that this is more convoluted because of the absence of a structure to really manage and cope with this new order that we face. Those were his words.

So today we are witnessing youth populations, huge youth populations: 65 percent of a country under the age of 30, under the age of 25 in some places; 50 percent under the age of 21; 40 percent under the age of 18 – unemployed, disenfranchised, except for what globalization has brought them in their capacity to be able to reach out and see what the rest of the world is doing even as they are denied the opportunity to do it too – an enormous, desperate yearning for education, for jobs, for opportunity. That’s what drove Tahrir Square, not the Muslim Brotherhood, not any religious extremism, but young kids with dreams. That’s what led that fruit vendor in Tunisia to self-immolate after he grew too tired of being slapped around by a police officer, denied his opportunity just to sell his fruit wares where he wanted to.

We are facing threats of terrorism and untamed growth in radical sectarianism and religious extremism, which increases the challenge of failed and failing governments and the vacuums that they leave behind. And all of this is agitated by a voracious globalized appetite and competition for resources and markets that do not always sufficiently share the benefits of wealth and improved quality of life with all citizens.

And this is all before you get to the challenge of global food security, water availability, and global climate change. These are the great tests of our time. Now, even as our economies in the United States and Europe begin to emerge from the economic trials of the last years, we are not immune to extremism or to the natural difficulties of nurturing democracy, and particularly as we measure what is happening with the number of jihadists who are attracted by the magnet of the Assad regime to Syria, where from Europe and from America and from Australia and from Great Britain and from many other places they now flock to learn the trade of terror, and then perhaps to return to their home shores.

The task of building a Europe that is whole and free and at peace is not complete. And in order to meet today’s challenges both near and far, America needs a strong Europe, and Europe needs a committed and engaged America. And that means turning inward is not an option for any of us. When we lead together, others will join us. But when we don’t, the simple fact is that few are prepared or willing to step up. That’s just a fact. And leading, I say respectfully, does not mean meeting in Munich for good discussions. It means committing resources even in a difficult time to make certain that we are helping countries to fight back against the complex, vexing challenges of our day.

I’ll tell you, I was recently in Korea and reminded that 10 of the 15 countries that used to receive aid from the United States of America as recently as in the last 10 years are today donor countries. Think about that: 10 of the 15 and the others are on their way to being donor countries. Now let me be fair. We need to have this debate in America too right now. The small fraction of our budget that we invest in our diplomacy and in foreign assistance is a miniscule investment compared to the cost of the crises that we fail to avoid.

So as a transatlantic community, we cannot retreat and we must do more than just recover – all of us. What we need in 2014 is a transatlantic renaissance, a new burst of energy and commitment and investment in the three roots of our strength: our economic prosperity, our shared security, and the common values that sustain us.

Now first, our shared prosperity: Who would have imagined at the first Munich conference in 1963 that $2.6 billion in goods and services would flow between us every day? That didn’t happen by accident, nor did the 4 trillion that we invest in each other’s economies every single year, or the more than 13 million jobs that we support mutually because of it. The depth and breadth of our economic position and partnership was a conscious choice of the men I described and other men and women during that period of time who had a vision, and they need to be a conscious reflection of our vision today.

Today, as our economies recover, we also have to do more to put this indispensable partnership to work, a shared prosperity that benefits us all. And we can start, frankly, by harnessing the energy and the talents of our people, which is what the Transatlantic Trade and Investment Partnership is all about. T-TIP is about more than growing our economies. It will promote trade, investment, innovation. It will bring our economies closer together while maintaining high standards in order to ensure that we create good jobs for these young people who are screaming about the future. And it will cement our way of doing business as the world’s gold standard. Imagine what happens when you take the world’s largest market and the world’s largest single economy and you marry them together with the principles and the values that come with it. It will – if we’re ambitious enough, T-TIP will do for our shared prosperity what NATO has done for our shared security, recognizing that our security has always been built on the notion of our shared prosperity.

We are the most innovative economies in the world, the United States and Europe, and as such we have a major responsibility to deal with this growing potential catastrophe of climate change. I urge you, read the latest IPCC report. It’s really chilling. And what’s chilling is not rhetoric; it’s the scientific facts, scientific facts. And our history is filled with struggles through the Age of Reason and the Renaissance and the Enlightenment for all of us to earn some respect for science. The fact is that there is no doubt about the real day-to-day impact of the human contribution to the change in climate.

Next year, the United States will assume responsibility for the Arctic Council, and I can tell you just looking at what’s happening in the Arctic – and there are others here who are deeply invested in that – we have enormous challenges. None of them are unsolvable. That’s the agony of this moment for all of us. There are answers to all of these things, but there seems to be an absence of will, an absence of collective leadership that’s ready to come together and tell our people not what they’re necessarily telling us through this crazy social media, incredible confluence of information that they’re sort of told they’re interested in, but for us as leaders to suggest to them this is what you ought to be interested in because it actually affects your life and your livelihood and your future.

President Obama is implementing an ambitious plan that sees climate change not only as a challenge, but as an incredible set of opportunities for all of us, and I believe that. The marketplace that created the great wealth in our country in the 1990s which saw every single quintile of our income earners see their income go up, every quintile saw their income go up, and we created the greatest wealth the world has seen during the 1990s, greater even in America than the period of the Pierponts and the Morgans and the Rockefellers, Carnegies, Mellons, much greater. You know what it was? It was a $1 trillion market with 1 billion users. It was the high-tech market, the personal computer mostly, communications.

The energy market that we are staring at – that is the solution to the climate change. Energy policy is the solution to climate change. That market, my friends, is a $6 trillion market today with 4 to 5 billion users today, and it will grow to some 9 billion users over the course of the next 20 to 30 years. It is the mother of all markets, and only a few visionaries are doing what is necessary to reach out and touch it and grab it and command its future.


I spoke last week at Davos about the diplomatic work that the United States is engaged in, that I am engaged in, at the direction of President Obama, who believes in this vision and in all of these issues, and our European partners are jointly with us undertaking on three of the most important initiatives right now to make the Middle East and the world more secure.

With the help of countries like Germany, the U.K., Italy, Denmark, Norway, Russia, we reached an agreement, ratified by the United Nations, to remove chemical weapons from Syria. Obviously, I’m sure there’ll be some questions about that, and there ought to be, but together, we need to all keep the pressure on the Assad regime to stop making excuses and fulfill Syria’s promises and obligations and meet the UN deadlines.


With the help of the EU, Germany, U.K., France, and Russia – as well as China – Iran agreed to freeze and roll back its nuclear weapons program for the first time in a decade. And in the coming months, we will remain unified – or I hope we will – to guarantee Iran’s willingness to reach a comprehensive agreement that resolves the world’s concerns about its nuclear program, hopefully through diplomacy backed up by the potential of force.

With the help of the EU and the Quartet, we are pursuing a long-sought and much-needed peace between Israelis and Palestinians. I have to tell you, the alternatives to successfully concluding the conflict, when you stop and list them, are or ought to be unacceptable to anybody. If you look at it hard, you ought to come out and say failure is not an option, though regrettably the dynamics always present the possibility.

And so together we need to help the parties break through the skepticism, which is half the challenge, and begin to believe in the possibilities that are within their grasp. As President Obama said on Tuesday, “In a world of complex threats, our security and leadership depend on all the elements of our power – including strong and principled diplomacy.” And it depends on harnessing the power of our strongest alliances, too. No one country can possibly hope to solve any of the challenges that I have listed on its own.

That’s why this kind of meeting and the alliance that it represents, more importantly, and the work that we do out of here after these meetings – that’s why it’s so important that the United States and Europe stick together, that we continue to understand the importance of the strength of our unity and unity in action, whether we’re working on Afghanistan, the Central African Republic, the challenge of the Maghreb, the Levant, the DPRK, global challenges like cyber security, infectious disease, or the pursuit of a world without nuclear weapons. Plain and simply, our shared prosperity and security are absolutely indivisible. And in a shrinking world where our fundamental interests are inseparable, a transatlantic renaissance requires that we defend our democratic values and freedoms. Don’t for an instant underestimate how important that it is or that the difference that it makes to courageous people like those in the Ukraine, in Ukraine who are standing up today for their ability to have a choice about their future.

As I say all of this, the United States is the first to admit that our democracy too has always been a work in progress. We know that. We’re proud that we work at it openly, transparently, accountably to reform it, to fix it, and to strengthen it when needed. President Obama’s review and revision of our signals intelligence practices is a case in point. So I assure you we come to this conversation with humility. But humility is not a reason to avoid calling it the way you see it. And the fact is that we see a disturbing trend in too many parts of Central and Eastern Europe and the Balkans. The aspirations of citizens are once again being trampled beneath corrupt, oligarchic interests, interests that use money to stifle political opposition and dissent, to buy politicians and media outlets, and to weaken judicial independence and the rights of nongovernmental organizations.

Nowhere is the fight for a democratic European future more important today than in Ukraine. While there are unsavory elements in the streets in any chaotic situation, the vast majority of Ukrainians want to live freely in a safe and a prosperous country, and they are fighting for the right to associate with partners who will help them realize their aspirations. And they have decided that that means their futures do not have to lie with one country alone, and certainly not coerced. The United States and EU stand with the people of Ukraine in that fight. Russia and other countries should not view the European integration of their neighbors as a zero-sum game. In fact, the lessons of the last half century are that we can accomplish much more when the United States, Russia, and Europe work together. But make no mistake, we will continue to speak out when our values and our interests are undercut by any country in the region. President Obama leaves no doubt about America’s commitment to this relationship, and he will come to Europe three times already scheduled this year to reinforce the investment in our shared future.

For more than 70 years – this year we will celebrate the 70th anniversary of D-Day – the United States and Europe have fought side by side for freedom, and that is what binds us. Those ties have grown stronger in the 25 years since the fall of the Berlin Wall, in the 15 years since our post-Cold War NATO enlargements began, in the 10 years since the EU began expanding again. It is important to understand this is more than just a measure of years; it is a measure of the most productive partnership in the history of international affairs, nothing less.

Our challenge today is to ensure opportunity, security, and liberty for Americans and Europeans, but also for people all over the world who look to us for that possibility. Our challenge is to renew this partnership and to live up to the legacy of the world’s strongest alliance. The 21st century will demand these commitments from all of us, and I believe we have to rise to this occasion as Americans and Europeans always have, and that’s the only thing that will give meaning to this kind of a meeting and meaning to the legacy that we need to honor in our generation. Thank you. (Applause.)

My pleasure to introduce to you my friend from the Senate. We are both in different parties, but believe me, we share a vision and we are really enjoying working together these days. Chuck Hagel, the Secretary of Defense. (Applause.)

SECRETARY HAGEL: John, thank you. Thank you very much, and to Ambassador Ischinger, thank you for once again hosting this conference, an important conference. It’s good to be back in Munich. As you noted, I have been here many times, and I especially appreciate being here with my friend and former colleague and now cabinet partner John Kerry.

I want to also recognize our United States congressional delegation, which I have been part of a number of times, led by an unfamiliar face here, John McCain. John, I see you. Thank you. Sheldon Whitehouse, Senator, thank you for your leadership. And many of the delegation are individuals who have led on this issue for many years, and you are all quite familiar with most of the U.S. congressional delegation. So thank you for your continued leadership and involvement.

I also want to recognize our American Ambassador to Germany John Emerson, who is here somewhere, for his work and his efforts. And it is not easy, as we all know, for an ambassador in any country at any time, but Ambassador Emerson has done a tremendous job and we very much appreciate his good work and his leadership as well. (Applause.)

In preparing for these remarks, I was looking through the memoirs of Henry Stimson, who over a long and distinguished career held both my job – actually, he held my job when it was Secretary of War, and he held it twice. He also held John Kerry’s job, Secretary of State. The book I thumbed through contained a handwritten letter from McGeorge Bundy. Many of you know – knew McGeorge Bundy, worked with McGeorge Bundy, and certainly, everyone knows who he was. He helped in this particular case Henry Stimson write his memoirs, and that book was published in 1952.

In Bundy’s letter to an admirer, Bundy described Stimson’s recollections of life as a picture of history worth going on with, whatever the ups and downs. I recall these words here in Munich this morning because this conference is itself a picture of history, the history of the transatlantic partnership. And that history is very much worth going on with. That’s why we’re celebrating this gathering’s 50th anniversary.

The transatlantic partnership has been successful because of the judicious use of diplomacy and defense. Over the last year, John and I have both worked to restore balance, balance to the relationship between American defense and diplomacy. With the United States moving off a 13-year war footing, it’s clear to us, it’s very clear to President Obama that our future requires a renewed and enhanced era of partnership with our friends and allies, especially here in Europe.

As this panel acknowledges, we need what John just described and as Ambassador Ischinger has noted, a transatlantic renaissance. The foundation of our collective security relationship with Europe has always been cooperation against common threats. Throughout most of the 20th century, these common threats were concentrated in and around Europe, but today the most persistent and pressing security challenges to Europe and the United States are global. They emanate from political instability and violent extremism in the Middle East and North Africa, dangerous non-state actors, rogue nations such as North Korea, cyber warfare, demographic changes, economic disparity, poverty, and hunger.

And as we confront these threats, nations such as China and Russia are rapidly modernizing their militaries and global defense industries, challenging our technological edge in defense partnerships around the world. The world will continue to grow more complicated, interconnected, and in many cases more combustible. The challenges and choices before us will demand leadership that reaches into the future without stumbling over the present. Meeting this challenge of change will not be easy, but we must do so and we must do so together. As our strategy in defense investments will make clear, the U.S. sees Europe as its indispensable partner in addressing these threats and challenges, as well as addressing new opportunities.

The centerpiece of our transatlantic defense partnership will continue to be NATO, the military alliance that has been called the greatest peace movement in history. In Afghanistan, NATO-led forces are doing extraordinary work to help the Afghan people by strengthening the Afghan army and police so that they can assume responsibility for their nation’s security. European nations have maintained remarkable cohesion and commitment in the face of sacrifice, uncertainty, and challenges in Afghanistan.

As we bring our combat mission to a conclusion after 13 years, we should all be very proud of what our alliance has accomplished. Members of the International Security Assistance Force, especially smaller nations, have greatly benefited from the experience of training and working alongside other partners in Afghanistan. We must continue to hone the capabilities we’ve fielded and sustain these deep and effective defense relationships. And NATO must continue to develop innovative ways to maintain alliance readiness as we apply our hard-earned skills to new security challenges.

In reviewing U.S. defense priorities tempered by our fiscal realities, it’s clear that our military must place an even greater strategic emphasis on working with our allies and partners around the world. That will be a key theme of the Department of Defense’s upcoming Quadrennial Defense Review which will articulate our defense strategy in a changing security and fiscal environment.

The United States will engage European allies to collaborate more closely, especially in helping build the capabilities of other global partners. We’re developing strategies to address global threats as we build more joint capacity – joint capacity with European militaries. In the face of budget constraints here on this continent as well as in the United States, we must all invest more strategically to protect military capability and readiness.

The question is not just how much we spend, but how we spend together. It’s not just burdens we share, but opportunities as well. The Department of Defense will work closely with our allies’ different and individual strengths and capabilities, from the training of indigenous forces to more advanced combat missions. We’re looking at promising new initiatives, including Germany’s framework nations concept, which could help NATO plan and invest more efficiently and more effectively.

In Africa, the U.S. military and our European allies are already partners in combating violent extremism and working alongside our diplomats to avert humanitarian catastrophes. In Mali, in the Central African Republic, the U.S. and European partners are providing specialized enablers such as air transport and refueling. We’re there to support a leading operational role for French forces. The U.S. has supported France’s leadership and efforts. And we also welcome the German Defense Minister von der Leyen’s recent proposal to increase German participation in both countries.

All of us must work closely together with African nations in helping them build their security forces and institutions. A more collaborative approach to global security challenges will require more defense establishments to cooperate not just on the operational level, but on the strategic level as well. We are working with two allies – the U.S., UK, and Australia, building the three of us closer collaboration between our militaries across a broad range of areas from force development to force posture.

For example, the United States is helping the UK regenerate its aircraft carrier capability, which will enable more integrated operation of our advanced F-35 fighters and more broadly enhance our shared ability to project power. And last year, an Australian army officer became the deputy commanding general of U.S. Army forces in the Pacific. This is helping connect our forces more strategically with our allies and partners in the regions.

We believe this collaboration offers a model – a model for closer integration with other allies and partners, including NATO as a whole, and it’ll influence U.S. strategic planning and future investments. Sustaining and enhancing these cooperative efforts will require shared commitment and shared investment on both sides of the Atlantic. That includes United States commitments to a strong military posture in Europe.

Since the end of the Cold War, the United States has continuously adjusted its defense posture to new strategic realities around the world. As our force structure draws down following the end of our longest war, there will be, there must be, adjustments in our posture to meet new challenges. For example, to respond to elevated threats to our diplomatic facilities in North Africa and the Middle East, we have partnered with Spain to position U.S. Marines in Moron, and we have put other forces throughout the region on heightened alert status. These forces not only enable us to respond to crises or support ongoing operations, but they also expand our diplomatic options amid the recent violence in South Sudan. The rapid availability of nearby forces allowed American diplomats to remain on the ground and help broker a ceasefire.

An important posture enhancement is European missile defense in response to ballistic missile threats from Iran. Over the last two days, I’ve been in Poland, where I reaffirmed the United States commitment to deploying missile defense architecture there. As you all know, that’s part of Phase 3 of our European Phased Adaptive Approach. Yesterday afternoon, the USS Donald Cook departed the United States for Rota, Spain, where over the next two years she will be joined by three additional missile defense-capable destroyers.

Despite fiscal constraints, the budget that we will release next month fully protects our investment in European missile defense. Our commitment to Europe is unwavering. Our values and our interests remain aligned. Both principle and pragmatism secure our transatlantic bonds.

In 1947, a time of widespread doubt about the continued value of the transatlantic partnership, Henry Stimson argued that America could, in his words, no sooner stand apart from Europe than desert every principle by which we claim to live. He helped persuade Americans that, in his words, our policy toward the world – in that policy, “There is no place for grudging or limited participation… Foreign affairs are now our most intimate domestic concern.” Americans know well the wisdom in Stimson’s warning. We also know well the responsibilities we shoulder in partnership with all of you.

As President Obama told the American people in his State of the Union Address this week, our alliance with Europe remains the strongest the world has ever known. I have every confidence that our successors will be there 50 years hence to again celebrate the most successful and effective collective security alliance in history. But as we all know, it will require continued strong and visionary leadership, attention, resources, and strong commitment.

In 2064, there will still be a Wehrkunde, and there will still be a strong and enduring transatlantic alliance. Thank you. (Applause.)

AMBASSADOR ISCHINGER: Thank you very much, Mr. Secretary. We have not a lot of time, so we’ll call on a few questions. I have a huge number of cards, and I apologize – I have to apologize to most of those who have written down their questions. We can literally take two or three or maximum of four depending on the length of the answers.

Let me start with a question of my own, which I’d like to address – (laughter) – to Secretary Kerry. We had the very interesting panel discussion yesterday between Tzipi Livni and Saeb Erekat, who were both sitting right here in the first row with Martin Indyk, on the situation as where we are right now. How optimistic are you that you can actually nail this down? Question one.

And if I may add one to you, Mr. Secretary of Defense, a couple years ago, one of your predecessors, Bob Gates, gave a pretty strong valedictorian speech admonishing us, European allies, to do more, because if we didn’t do more, we would be not as useful as your allies as we should be. Now, are you today as unhappy as Bob Gates was with us?

Maybe we start with the Secretary of State.

SECRETARY KERRY: Well, Mr. Ambassador, I am willing to take risks, but I’m not willing to hang myself here. (Laughter.) So I’m not going to tell you how optimistic I am. I’m going to tell you that I’m hopeful. I believe in the possibility or I wouldn’t pursue this. President Obama believes in the possibility. I don’t think we’re being quixotic and un – I’m a little surprised by some of the articles that tend to write about an obsession or a fanatical effort to try to achieve this, et cetera. We’re just working hard. We’re working hard because the consequences of failure are unacceptable.

I mean, I want you all to think about it. Ask yourselves a simple question: What happens if we can’t find a way forward? Is Fatah going to be stronger? Will Abu Mazen be strengthened? Will this man who has been committed to a peaceful process for these last years be able to hold on if it fails? What is the argument for holding on? Are we going to then see militancy? Will we then see violence? Will we then see transformation? What comes afterwards? Nobody can answer that question with any kind of comfort.

By the same token, for our friends, I see good Minister Tzipi Livni here, who has been absolutely spectacular in this process, committed to it. Prime Minister Netanyahu has taken very tough decisions to move this down the road, very tough decisions, as has President Abbas, who had the right to go to the United Nations and has foresworn it in an effort to try to keep at the table and keep the process moving.

For Israel, the stakes are also enormously high. Do they want a failure that then begs whatever may come in the form of a response from disappointed Palestinians and the Arab community? What happens to the Arab Peace Initiative if this fails? Does it disappear? What happens for Israel’s capacity to be the Israel it is today – a democratic state with the particular special Jewish character that is a central part of the narrative and of the future? What happens to that when you have a bi-national structure and people demanding rights on different terms?

So I think if you – and I’m only just scratching the surface in talking about the possibilities, and I’ve learned not to go too deep in them because it gets misinterpreted that I’m somehow suggesting, “Do this or else,” or something. I’m not. We all have a powerful, powerful interest in resolving this conflict. Everywhere I go in the world, wherever I go – I promise you, no exaggeration, the Far East, Africa, Latin America – one of the first questions out of the mouths of a foreign minister or a prime minister or a president is, “Can’t you guys do something to help bring an end to this conflict between Palestinians and Israelis?” Indonesia – people care about it because it’s become either in some places an excuse or in other places an organizing principle for efforts that can be very troubling in certain places. I believe that – and you see for Israel there’s an increasing de-legitimization campaign that has been building up. People are very sensitive to it. There are talk of boycotts and other kinds of things. Are we all going to be better with all of that?

So I am not going to sit here and give you a measure of optimism, but I will give you a full measure of commitment. President Obama and I and our Administration are as committed to this as anything we’re engaged in because we think it can be a game-changer for the region. And as Foreign Minister Abdullah bin Zayed said – he’s here somewhere – to a Paris meeting of the Arab League the other day, spontaneously he said, “You know, if peace is made, Israel will do more business with the Gulf states and the Middle East than it does with Europe today.”

This is the difference of 6 percent GDP per year to Israel, not to mention that today’s status quo absolutely, to a certainty, I promise you 100 percent, cannot be maintained. It’s not sustainable. It’s illusionary. There’s a momentary prosperity, there’s a momentary peace. Last year, not one Israeli was killed by a Palestinian from the West Bank. This year, unfortunately, there’s been an uptick in some violence. But the fact is the status quo will change if there is failure. So everybody has a stake in trying to find the pathway to success.

The final comment I would say, Mr. Ambassador, is after all of these years, after Wye, after Madrid, after Oslo, after Taba, after Camp David, after everything that has gone on, I doubt there’s anyone sitting here who doesn’t actually know pretty much what a final status agreement actually looks like. The question is: How do you get there? That’s political courage, political strength, and that’s what we have to try to summon in the next days. And I’ll just tell you I am hopeful and we will keep working at it. And we have great partners of good faith to work with, and I’m appreciative for that.

AMBASSADOR ISCHINGER: Thank you very much. Thank you. (Applause.)

SECRETARY HAGEL: Ambassador, thank you. Let me just add a couple of sentences to what Secretary Kerry said. First, I enthusiastically support what Secretary Kerry is doing. We all know there is risk in everything. There is risk in status quo. The risk is always there in anything in complicated areas of the world. But I believe there is far more risk in letting this slide.

I noted in my comments that – not in the context of this particular issue but overall on security issues, it’s going to continue to take – as the world is very instructive on this point and the history has been particularly instructive – committed leadership and vision to address any big challenge. And as much risk and uncertainty that is in this one, I do strongly applaud and support what John’s doing here. It’s clearly in everyone’s interest.

As to your question, Secretary Gates may have said it a little differently than I did, but essentially, I said the same thing as Secretary Gates did. This is a partnership. Partnerships mean partnership. Everybody has to participate. Everyone has to contribute. Everybody has a role to play. Because not only is something new today with restrained resources in everyone’s budgets. I get that, the realities of what we’re each dealing with in our own respective countries, own respective political dynamics and dimensions – but if your nation’s security is not worth an investment, is not worth leadership in fighting for that investment, then you’ve got the wrong leadership or – again, history’s been instructive on this point – then the future of that country is in some peril. It’s going to take some courage and vision and strong leadership to make this point clear to all of our constituents. And the Europeans must play their role as well. Thank you.

AMBASSADOR ISCHINGER: Thank you very much. Among the many questions that were handed to me, there are two that are almost identical, and I’m going to take these two together.

The first one is from Lord Powell from the UK, and they’re both on the T-TIP. Now, they’re both addressed to both of you as former senators, and I read the first question from Charles Powell: “T-TIP is indeed vital, as Secretary Kerry says. Is it achievable now that the Senate majority leader intends to deny the President fast-track trade promotion authority?”

And the other question is from an American, Charles Kupchan from Georgetown University. Professor Kupchan raises the following question: “T-TIP is ‘the next big thing’ for the Atlantic relationship. As former senators, please discuss the prospects for congressional support, especially in light of Senator Reid’s recent comments.”

This is exactly the same question. I don't know which one of you wants to take that one.

SECRETARY KERRY: Well, I don’t – look, I respect Harry Reid. I’ve worked with him for a long time, obviously. Our colleagues are here – Lindsey Graham and John McCain and former Senator Joe Lieberman. And I think all of us have learned to interpret a comment on one day in the United States Senate as not necessarily what might be the situation in a matter of months or in some period of time.

Let’s get T-TIP done, put it in its context, then we wage the fight. And I’m not at all convinced that what we’ve heard is going to – I just think that there’s a lot of room here still, so I wouldn’t let it deter us one iota, not one iota. I’ve heard plenty of statements in the Senate on one day that are categorical, and we’ve wound up finding accommodation and a way to find our way forward. So this should not be a deterrent, and I hope nobody will let it stand in the way.

On the merits, this is a major initiative for us, for Europe, for the relationship, for the world. And when you combine it with the TPP, it really has a capacity to achieve what the WTO has not been able to succeed in, and it could have a profound impact on jumpstarting the economies for all of us. It’s worth millions of jobs, and in the end, jobs are a very powerful political persuasion.

SECRETARY HAGEL: This TPP is clearly in the self-interest of both sides of the Atlantic, clearly. And I would suspect that our senators here this morning would have a better sense of this than two former senators, but this is a good example of what I was referring to in my remarks about let’s be smart and let’s be wise and let’s be collaborative and use all of the opportunities and mechanisms that we have to enhance each other – culturally, trade, commerce, exchanges.

We all know that a secure economic base – a dynamic, strong economy – is the anchor of any nation’s freedom. Without the money, without the resources, your options become very limited very quickly. So I would hope that this would get done by the United States Senate. It’s clearly in everyone’s interest. Thank you.

AMBASSADOR ISCHINGER: Thank you very much. I have one concluding question because we have already run out of time for a while. This is from Jo Joffe, whom both of you know. His question is the following, and I read it: “The U.S. keeps going through cycles of withdrawal. Is this another one? And if so, who is going to mind the store?”

A question addressed, again, to both of you.

SECRETARY KERRY: Well, I think – look, I think everything I said in my comments make it clear – and I said it at Davos – we’re not withdrawing from anything, folks, except we’re drawing down our troops in Afghanistan because that’s an agreed-upon approach with ISAF, some 50 nations, and because it is time for the full transition to the Afghan Armed Forces and the Afghan people. So that’s a planned process, but it is also contemplating maintaining a presence for the purpose of continuing to train, equip, and advise the Afghan Armed Forces and to maintain a platform to do counterterrorism. So we’re hardly withdrawing; we’re transitioning.

Even as we do that, right now we have just finished helping to conclude a ceasefire in the Sudan. I spent most of the Christmas break on the phone with President Kiir, former Vice President Riek Machar, with the foreign minister and prime minister of Ethiopia, the president of Uganda. That’s not disengagement. In the Great Lakes, we have a special envoy who has just succeeded in working with Mary Robinson of the UN and with President Kabila and Paul Kagame. And we have succeeded in disarming the M23, creating a structure by which we will now be able to begin doing development and helping those nations to stabilize.

We’re working in the Central African Republic and we’re working to help the French in Mali. We are deeply engaged in Iran negotiations for some two years. We have been working – I began that work as a United States senator to begin to open up that opportunity of a dialogue. We have an interim first-step agreement – not an interim agreement – a first step to lead to final conclusion. We are working with Geneva II, with Russia. That came from diplomacy and cooperation. And we are trying to press for transition. I think we need to do more. John McCain, Senator Graham and I are talking. There are powerful feelings for why we believe Assad needs to feel even more sense of urgency to come to the table. We’re deeply involved there.

We’re deeply involved in the Middle East peace process. We’re involved with the Emirates, with the Saudi Arabians, and others working with respect to Egypt and Egypt’s transition. We’re rebalancing with Asia. We’re working on North Korea. I will be in China in two weeks working on the North Korean issue, working with Korea, Japan, reunification – you name the issue – South China Sea.

I can’t think of a place in the world that we are retreating, not one. And I believe we are engaged in a profoundly proactive and visionary way to try to give life to this partnership in ways that make a difference. We’re working in Libya. We’re working together with our friends from Italy, Great Britain, and France to stabilize and work with President – with Prime Minister Zaydan to build a legitimate security force. We’re deeply engaged in that training and otherwise.

So as I think – I mean, there isn’t a part of the world that I can think of. We’re working on Cyprus quietly. You’re not hearing about it. We’re working on Nagorno-Karabakh, the Caucasus. We have an extraordinary amount of diplomatic reach at this particular moment, including in Latin America. And most recently, I just concluded a summit with the foreign minister of Mexico and the foreign minister of Canada leading up to a summit between the president and the prime minister which will further cement the North American hemispheric interests and our work on the TPP and the T-TIP.

So I think this narrative, which has, frankly, been pushed by some people who have an interest in trying to suggest that the United States is somehow on a different track, I would tell you it is flat wrong and it is belied by every single fact of what we are doing everywhere in the world.

SECRETARY HAGEL: I would just add, Ambassador – (applause) – that we have just heard the Secretary of State of the United States inventory some of the things we’re doing, some of the places we’ve been. I have never seen a full inventory of exactly what we’re doing everywhere, but I would venture to say the United States is more present doing more things in more places today than maybe ever before. How we’re doing it is differently, and it’s what I talked about, what John talked about – capacity-building for our partners, working closer with our partners, being able to do more as we are more creative with these initiatives.

So we’re not going anywhere, and I would just add this as I end my comment. I’ve been Secretary of Defense almost a year. I have had three major trips to the Asia Pacific. I have had countless trips to Europe. I’ve had a number of trips to the Middle East, Afghanistan. He’s the traveler. I’m not. But when you have a Secretary of Defense dealing with the things that we’re dealing with in the Pentagon, with budget restraints and force posture reductions and so on, and still we in DOD are doing the kinds of things we’re doing with our combatant commanders to assist our diplomatic effort, which I talked about, we’re doing a lot of things all over the world. And if that narrative is not getting out there, then maybe that’s our fault, but I hope no one will leave here with any kind of misunderstanding that somehow we’re withdrawing from the world or we’re doing limited work. It’s just the opposite.

SECRETARY KERRY: Mr. Ambassador, can I just add to that important areas? We just concluded a security – a High-Level Strategic Dialogue with Pakistan. And I’ve just concluded, as you know, some two months ago a negotiation with President Karzai for a bilateral security agreement, which we are waiting for a signature for. But we continue our anti-terror initiatives not just there, but in Yemen, in many other parts of the world, and particularly now, we are focusing in on Syria where there are increasing numbers of extremists. And so I think you’ll be hearing and seeing more of this over the course of the next weeks and months. But I think Chuck may be right; I think we need to be more assertive about what we are doing.

AMBASSADOR ISCHINGER: Thank you very much. Thank you also, both of you, for deciding to show up here jointly together. I can’t think of a better demonstration of the commitment of the Obama Administration to keep the transatlantic link, keep the transatlantic relationship strong and alive. So thank you for that strong message here today. Let’s give these two gentlemen a hand. Thank you very much. (Applause.)

U.S. TRADE POLICY AND PROGRAMS AS OUTLINED BY THE STATE DEPARTMENT

FROM:  STATE DEPARTMENT 

Trade Policy and Programs (TPP), led by Acting Deputy Assistant Secretary Robert Manogue, advances U.S. trade policy objectives by opening new export opportunities for American businesses, farmers, ranchers and workers through global, regional and bilateral trade initiatives - including free trade agreements (FTAs) and the World Trade Organization (WTO). In partnership with agencies across the federal government, the more than 50 TPP professionals and staff work to maximize the benefits of open markets for global economic development, address and resolve trade disputes, strengthen intellectual property enforcement, and improve access for U.S. goods and services abroad.

TPP is composed of four offices:

Office of Agriculture, Biotechnology, and Textile Trade Affairs
Office of Bilateral Trade Affairs
Office of Intellectual Property Enforcement
Office of Multilateral Trade Affairs

Agriculture, Biotechnology, and Textile Trade Affairs

The Office of Agriculture, Biotechnology and Textile Trade Affairs, led by Office Director Edward Kaska, supports and advances American agricultural interests, which are integral to the State Department’s critical global trade and food security goals. We address trade barriers to open markets for American farm products. In Fiscal Year 2013, the United States is forecasted to export $145 billion in agricultural products, which is $9.2 billion above fiscal 2012 exports, and have a trade surplus of $30 billion in our agricultural sector. We contribute to the development of effective food aid policies, promote rural development and increasing agricultural productivity through biotechnology, and handle issues within the State Department regarding textiles, including wool and cotton. We work to ensure the health and well-being of our consumers by monitoring food safety, animal health, and plant health. On food security, we bring stakeholders and policymakers together to address the needs of small scale farmers. Additionally, our office leads new agricultural technologies outreach to promote transparent, predictable, and science-based regulatory frameworks.

Bilateral Trade Affairs

The Office of Bilateral Trade Affairs (BTA), led by Director Robert Manogue, is at the center of U.S. bilateral trade relations with countries around the world. We are frequently called on by the Secretary, Deputy Secretaries and other senior officials because of our expertise in trade and economic relations with all the regions of the world. BTA plays a key role in the development, negotiation and implementation of Free Trade Agreements, Trade and Investment Framework Agreements, and trade preference programs. We also collaborate closely with State Department regional bureaus, the Office of the U.S. Trade Representative, and the Departments of Agriculture, Treasury, Commerce, and Homeland Security. Additionally, we engage with Congress, foreign government officials, the private sector, academia, and think tanks.

Intellectual Property Enforcement

The Office of International Intellectual Property Enforcement (IPE) promotes U.S. innovation by advocating for the effective protection and enforcement of intellectual property rights (IPR) around the world. IPE’s advocacy seeks to strengthen economic rules and norms, increase U.S. business and private sector growth and investment, and create market access for U.S. goods and services. The IPE team works closely with economic, commercial, and public diplomacy officers at the State Department’s embassies, consulates, and missions to ensure that the interests of American rights holders are represented overseas, and to highlight the integral role of IPR protection in supporting global economic stability.

IPE actively participates in multilateral and bilateral negotiations and discussions on IPR-related issues, and distributes training and technical assistance funds to help build IPR law enforcement capacity in developing countries. The office also directs an international public diplomacy initiative to broaden awareness of IPR’s important role in addressing international concerns, such as counterfeit medicines and internet piracy. IPE is also active in interagency efforts to combat trade in counterfeit and pirated goods worldwide.

Multilateral Trade Affairs

The Office of Multilateral Trade Affairs, headed by Director Paul A. Brown, leads the State Department's trade policy activities in multilateral institutions, including the World Trade Organization (WTO) and Organization for Economic Cooperation and Development (OECD). It provides technical expertise in regional and bilateral trade negotiations including labor, environment, services, government procurement, customs trade remedies, and trade capacity building. MTA also supports bilateral WTO accession negotiations and U.S. Trade programs to include the Generalized System of Preferences (GSP) program.

SECRETARY OF STATE KERRY'S REMARKS AT 50TH U.S.-JAPAN BUSINESS CONFERENCE

FROM:  U.S. STATE DEPARTMENT 
Remarks at a Dinner for the 50th U.S.-Japan Business Conference
Remarks
John Kerry
Secretary of State
The Willard Hotel
Washington, DC
November 14, 2013

SECRETARY KERRY: Thank you very much. Thank you, thank you. Thank you very much, Ambassador. Thank you very much. (Applause.) Please, thank you, thank you, thank you. I am enormously grateful (inaudible). Winston Churchill said the only reason people ever give a standing ovation is they desperately need an excuse to shift their underwear. (Laughter.) I know you had a much more noble cause in mind. (Laughter.) And I thank you for that.

Charles, thank you for a very warm introduction. I’m very grateful. And there’s nothing worse than parachuting into a dinner, interrupting people’s meal. You don’t have any idea what everybody’s been talking about and you’re going to give a speech for a few minutes. But I’m going to try and do that as effectively as I can.

I’m really honored to be here. As you all know – it was mentioned in the introduction by Charles – I used to be an elected official. I was a senator for 29 years. So I used to go to things and say, “It’s nice to be invited anywhere.” (Laughter.) And now that may be more true, I don’t know. (Laughter.)

I was walking through an airport a few months before I was nominated to be Secretary of State, and it was up in Boston. This guy points at me – you know that note of recognition as you’re walking and you see the eyes fix on you or something – and he said, “Hey you. Hey, anybody ever tell you, you look like that Kerry guy we sent down to Washington?” (Laughter.) And I said perfectly normally, I said, “Yeah, they tell me that all the time.” (Laughter.) He says, “Kind of makes you mad, doesn’t it?” (Laughter.) So I’m really lucky to be out of that and happy to be here.

It’s wonderful to be here with Tom Donohue and with all of you celebrating the 50th year of the U.S.-Japanese Business Conference. And I can tell looking out at the ballroom – and I think – where’s Tom Nides? Is he here somewhere? No, not Tom Donohue. Tom Nides. Is he here? Somebody told me Nides was going to be here. Well, anyway – well, I’ve now outed him. He skipped the dinner. (Laughter.) Trouble.

But I know a lot of the folks who are here, and this is a very powerful group of smart business people, all of whom understand the new global economy that we are dealing with, and as Tom and I were talking just walking in here, a much more complex world in many ways than the world that we grew used to through the latter part of the 20th century. The Cold War was really simple compared to what we’re looking at today, with the rise of sectarianism, religious extremism, the challenges of global barriers breaking down, masses of young people all around the planet desperate for education, for jobs, for opportunity, for a reach at the brass ring.

And relationships like ours, the relationship between Japan and the United States, are even that much more important when you think about the complexity and the importance of alliances in this new global economy and with these multiple challenges that we all face. If anybody doubts the importance of this particular relationship, let me just tell you that all you have to do is look at my schedule just for this week. This is my third event with Ambassador Sasae this week. (Laughter.) And I think it underscores the importance – I had the privilege of being with him when we swore in Caroline Kennedy and a wonderful reception at his home to toast her, and literally within hours she is on an airplane right now and she will land in a couple of hours in Tokyo and begin her journey there.

So Mr. Ambassador, I can promise you, as I’ve said previously, President Obama is sending somebody to represent the United States in Japan who truly has his ear and his respect. And she is a very accomplished individual – author, lawyer, a convener of people for all kinds of things through her lifetime. In many ways, she’s been an ambassador all her life, as I said at her swearing-in. And obviously, with her work with the Kennedy Library, her work as the chief of the partnership for schools and education in New York City, and so many other efforts, I believe she’s going to really take our relationship to new heights, and we’re excited about that.

It’s not inappropriate with Caroline Kennedy on that airplane and as we mark the 50th anniversary of the loss of President Kennedy that we remember what President Kennedy said 50 years ago. He urged Americans to look inter-continentally instead of inwardly, to bridge oceans with purposeful partnerships. And he said that we must “look outward to cooperate with all nations in meeting their common concerns.” I don’t think that that charge has ever been more important than it really is today.

Fifty years later, with President Obama’s leadership with respect to our outreach, to the rebalance in Asia, we are bringing that commitment and we are particularly bringing that commitment to our partnership with Japan. As the President said in Tokyo on his first visit in his first year in office, the Pacific Ocean doesn’t separate us as much as it connects us. And I think the same can be said and most of us here would feel the same way about the shared values that have brought us through these 50 years and more in a period of enormous transformation for both of our countries.

We also know, however, that you can’t rest on the past. It never works. You need to keep revitalizing the alliance and reframing it. Secretary Hagel and I paid a visit just a short time ago to Japan. We were in Tokyo for what we call a 2+2, which is Defense Secretary and Secretary of State meeting their counterparts. And we worked very closely there in order to forge a new framework for our alliance for the first time in nearly twenty years. We are not just recommitting to the partnership that has been the cornerstone of Asia’s security and prosperity for the past six decades, we are reinvigorating and redefining the ways that we need to carry that relationship into the future.

And I think as you look at our work together, whether it’s on security, on trade, on global challenges and people-to-people ties, we are proving true what Prime Minister Abe said in Washington: No one should ever doubt the strength of this remarkable alliance. Now, we could not be more pleased with the initiative of Prime Minister Abe and the work that he is doing now to strengthen Japan and its alliance and also, frankly, to play a more robust and more engaged role within the region, which is important, and we welcome that initiative and that effort.

Today, we have the opportunity to, frankly, break new ground in how we keep countries safe, how we help economies to mature, how we create new jobs and embrace partnerships for the future. And I was telling Tom as we came in here one of the things that I have said since day one when I became Secretary of State is that in many ways foreign policy today, more than almost at any time in recent memory, foreign policy is economic policy, and economy policy is foreign policy. And we need to really focus in on that – all of us – as we think about the ways in which we’re going to grow our economies and provide for this rapidly increasing demand for services and opportunity on a global basis.

I think that we’ve seen this partnership grow in other ways. Right now, Japan and the United States are working together in order to provide emergency assistance in the Philippines because of the devastation from the typhoon. That’s the kind of cooperation that redefines security and partnership in the region. And as I said in my remarks at Tokyo Tech when I spoke just last spring, we believe not in some specific set of commandments about how we ought to behave, but rather in a mutual recognition that, as you say in Japan, we are all in this together, otagai-sama. (Laughter.) Not bad. (Applause.)

Every one of you comes to these tables tonight and most importantly to this 50-year partnership with an understanding of your own businesses and of this new, more competitive, more voracious, fast-moving economy that we’re all working in. And it is the success of your businesses and the strength of the ties between them and the United States and your own countries – Japan or America – that is really the proof of what I’m talking about here tonight. For those of you representing Japanese companies who have invested in the United States, we thank you. We also invite you to do more, to recognize what is happening here in America with respect to our productivity, our competitiveness, and the extraordinary fact that we have suddenly become the number one oil and gas producer in the world and will be energy-independent by the year 2035. It’s extraordinary. I can’t tell you that it was something that was absolutely, totally planned. It came about because of the extraordinary productivity and innovation of some of our companies, and that innovation is now producing a different future for people all over the world.

We also hope that you will recognize that we, I think, are the number one leading nation in the world with respect to foreign direct investment from very, very many places, and now increasingly we are finding ourselves manufacturing competitive with manufacturing coming back as a consequence of a whole bunch of different ingredients that I won’t go into tonight.

I also want to point out that through the work of a program called SelectUSA, we are working aggressively to reach out to countries to market something that we haven’t always done as aggressively in the past but which we think is important in this new dynamic.

For those American companies among you who have invested in the Japanese market, likewise we say thank you, because your investments abroad create jobs back here at home and they generate wealth that not only supports our economy but becomes invested and helps to deal with challenges on a global basis.

To harness the full strength of our alliance, I would respectfully say to you that we need to actually deepen our economic ties, and we need to unlock the full potential for growth in the Asia Pacific, a fast – remarkably, one of the fastest-growing parts of the world, obviously. I was just in Brunei and Bali for the summits, and I could feel this incredible energy as well as just see the remarkable set of opportunities.

But the great catalyst for this effort, we believe, is the Trans-Pacific Partnership. We are absolutely convinced that the multilateral free trade agreement under negotiation with some of the world’s most vibrant economies represents something good for everybody in the world and it will make a difference by raising standards, opening up markets, and creating, literally, millions of more jobs in our country, in yours, and across the Asian Pacific. This is the future.

And with Japan’s entry, the TPP markets are going to comprise nearly 40 percent of the world’s GPP. You put that together with the TTIP and Europe, and you have the most powerful economic force on this planet, raising the standards of everybody, breaking down barriers, breaking down the sometimes government-placed barriers, and creating a fair playing field which improves everybody’s sense of the future, and certainly sends a message to capital about investment, which really is important to the kind of growth that we need in all of our countries.

So the TPP is not only going to be a job creator here at home and in Japan and throughout East Asia, but it’s going to ensure that the highest standards that we set in our own economies become the standard by which everybody then begins to measure their own judgments about investment and about the marketplace. And that improves the certainty of investment as well as creates a stability from which every single one of us will benefit.

We also know that the vitality of our partnership for the future depends on innovation. This has been proven over the last years, ever since World War II. Almost all of the productivity that we saw in our country – I think about 85, 90 percent of it – came through increases in innovation. And the foundation for innovation – none of us dare forget – is people. It’s the ability to be able to have people take ideas and take risks and be willing to cross oceans and create the new products and new possibilities of that future.

Through our exchange of technology and talent, U.S. and Japanese researchers right now are making historic breakthroughs in creating new – in helping to build the International Space Station, in helping to find cures for cancer and treatments for cancer. And from the tragedy of the 2011 earthquake and tsunami, we have actually been able to cooperate and find ways to make great strides in disaster response, recovery, and risk mitigation.

But as with any profitable partnership, every single one of you here knows that growth requires investment. And when it comes to the educational exchange, I just want to single out for you we can do better and we need to do better. In recent years, the number of Japanese students studying full-time in the United States for their university degrees has dropped by nearly 60 percent. Meanwhile, the number of U.S. students studying in Japan, while growing steadily, has actually remained relatively low despite the growth. So each of you here can actually engage in proactive ways to help us continue that exchange which is going to be critical to the vitality of our innovation and the growth of this partnership.

And it’s important because in today’s world, whether it’s climate change, or the problem and challenge of youth unemployment or global health, every one of these issues transcend borders. They don’t belong to any one country. And so the result is we have to find new thinking that brings people together on an international basis willing to cooperate, willing to share the values and share the solutions to these particular problems.

I think the reality is that the United States and Japan’s ability to create shared prosperity tomorrow rests almost exclusively in what we do to build the stronger ties today. And I invite all of you to find ways for your businesses to create these stronger partnerships and move us forward. As we work to grab ahold of these opportunities in the future, there are some special things we’re going to need to pay attention to. Everybody knows about the tensions over islands between Japan and China. We’re all very cognizant of still some unfinished business with respect to the Republic of Korea and the need to move to the future and not be held by the past. We also know that North Korea presents a very special challenge to all of us, and one in which our cooperation with China will be as critical as any other single thing that we do, because China above all has the ability to make the greatest difference in the choices that North Korea makes. And we have been having that dialogue very directly, and that policy is moving, and I believe it is the only way ultimately to – the only way that we want to rationally accept to force the denuclearization of the peninsula, which is critical to the non-nuclearization of the entire region.

So these are the challenges. They’re not small. And because of what so many of you in this room have helped to achieve, I believe we have a chance to turn our potential into the promise of the future and to address each of these. I think we have the opportunity to live up to our generational responsibility to meet these challenges, and I look forward to passing that generational test with you in an effort to make certain that we make wise decisions, that we protect the future, and importantly in that effort, that we continue to build this extraordinary relationship.

Thank you for letting me be here to celebrate with you. Thank you. (Applause.)