FROM: FEDERAL DEPOSIT INSURANCE CORPORATION
For Immediate Release November 7, 2014
Credit Risk in the Shared National Credit Portfolio is High; Leveraged Lending Remains a Concern
The credit quality of large loan commitments owned by U.S. banking organizations, foreign banking organizations (FBOs), and nonbanks is generally unchanged in 2014 from the prior year, federal banking agencies said Friday. In a supplemental report, the agencies highlighted findings specific to leveraged lending, including serious deficiencies in underwriting standards and risk management of leveraged loans.
The annual Shared National Credits (SNC) review found that the volume of criticized assets remained elevated at $340.8 billion, or 10.1 percent of total commitments, which approximately is double pre-crisis levels. The stagnation in credit quality follows three consecutive years of improvements. A criticized asset is rated special mention, substandard, doubtful, or loss as defined by the agencies' uniform loan classification standards. The SNC review was completed by the Federal Reserve Board, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency.
Leveraged loans as reported by agent banks totaled $767 billion, or 22.6 percent of the 2014 SNC portfolio and accounted for $254.7 billion, or 74.7 percent, of criticized SNC assets. Material weaknesses in the underwriting and risk management of leveraged loans were observed, and 33.2 percent of leveraged loans were criticized by the agencies.
The leveraged loan supplement also identifies several areas where institutions need to strengthen compliance with the March 2013 guidance, including provisions addressing borrower repayment capacity, leverage, underwriting, and enterprise valuation. In addition, examiners noted risk-management weaknesses at several institutions engaged in leveraged lending including lack of adequate support for enterprise valuations and reliance on dated valuations, weaknesses in credit analysis, and overreliance on sponsor's projections.
Federal banking regulations require institutions to employ safe and sound practices when engaging in commercial lending activities, including leveraged lending. As a result of the SNC exam, the agencies will increase the frequency of leveraged lending reviews to ensure the level of risk is identified and managed.
In response to questions, the agencies also are releasing answers to FAQs on the guidance. The questions cover expectations when defining leveraged loans, supervisory expectations on the origination of non-pass leveraged loans, and other topics. The FAQ document is intended to advance industry and examiner understanding of the guidance, and promote consistent application in policy formulation, implementation, and regulatory supervisory assessments.
Other highlights of the 2014 SNC review:
Total SNC commitments increased by $379 billion to $3.39 trillion, or 12.6 percent from the 2013 review. Total SNC outstanding increased $206 billion to $1.57trillion, an increase of 15.2 percent.
Criticized assets increased from $302 billion to $341 billion, representing 10.1 percent of the SNC portfolio, compared with 10.0 percent in 2013. Criticized dollar volume increased 12.9 percent from the 2013 level.
Leveraged loans comprised 72.9 percent of SNC loans rated special mention, 75.3 percent of all substandard loans, 81.6 percent of all doubtful loans, and 83.9 percent of all nonaccrual loans.
Classified assets increased from $187 billion to $191 billion, representing 5.6 percent of the portfolio, compared with 6.2 percent in 2013. Classified dollar volume increased 2.1 percent from 2013.
Credits rated special mention, which exhibit potential weakness and could result in further deterioration if uncorrected, increased from $115 billion to $149 billion, representing 4.4 percent of the portfolio, compared with 3.8 percent in 2013. Special mention dollar volume increased 29.6 percent from the 2013 level.
The overall severity of classifications declined, with credits rated as doubtful decreasing from $14.5 billion to $11.8 billion and assets rated as loss decreasing slightly from $8 billion to $7.8 billion. Loans that were rated either doubtful or loss account for 0.6 percent of the portfolio, compared with 0.7 percent in the prior review. Adjusted for losses, nonaccrual loans declined from $61 billion to $43billion, a 27.8percent reduction.
The distribution of credits across entity types—U.S. bank organizations, FBOs, and nonbanks—remained relatively unchanged. U.S. bank organizations owned 44.1 percent of total SNC loan commitments, FBOs owned 33.5 percent, and nonbanks owned 22.4 percent. Nonbanks continued to own a larger share of classified (73.6 percent) and nonaccrual (76.7 percent) assets than their total share of the SNC portfolio (22.4 percent). Institutions insured by the FDIC owned 10.1percent of classified assets and 6.7 percent of nonaccrual loans.
The SNC program was established in 1977 to provide an efficient and consistent review and analysis of SNCs. A SNC is any loan or formal loan commitment, and asset such as real estate, stocks, notes, bonds, and debentures taken as debts previously contracted, extended to borrowers by a federally supervised institution, its subsidiaries, and affiliates that aggregates $20 million or more and is shared by three or more unaffiliated supervised institutions. Many of these loan commitments also are participated with FBOs and nonbanks, including securitization pools, hedge funds, insurance companies, and pension funds.
In conducting the 2014 SNC Review, the agencies reviewed $975 billion of the $3.39 trillion credit commitments in the portfolio. The sample was weighted toward noninvestment grade and criticized credits. In preparing the leveraged loan supplement, the agencies reviewed $623 billion in commitments or 63.9 percent of leveraged borrowers, representing 81 percent of all leveraged loans by dollar commitments. The results of the review and supplement are based on analyses prepared in the second quarter of 2014 using credit-related data provided by federally supervised institutions as of December 31, 2013, and March 31, 2014.
Friday, November 7, 2014
ISS AGENCY HEADS MEET IN PARIS
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International Space Station Agency Heads Image Credit: NASA
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Recognizing the full mission breadth of the ISS from research that benefits all of humanity, to technology development, to expanding commercial use of low Earth orbit, to enhancing international cooperation and understanding, the agency heads reaffirmed their support for continued ISS operations.
The heads discussed the many ways that research on ISS is benefitting people on Earth, from biomedical breakthroughs to new materials and technologies. The international partnership is increasing scientific output of the space station through collaboration to meet the needs of the expanding user community and serve as a foundation for future exploration endeavors.
The ISS partner agencies are working through their respective governmental procedures for continued ISS utilization through at least 2020 and noted the U.S. commitment to extend ISS utilization to at least 2024. They also noted the ongoing work by other governments for a similar extension. In reviewing the strong commitment that enabled 14 years of continuous human presence on ISS in low-Earth orbit, the agency leaders noted the stable, solid, and robust ISS partnership that will serve as the basis for working together in future human exploration.
The heads reaffirmed the ISS is the foundation for human exploration beyond low-Earth orbit highlighting its technical, scientific, and developmental capabilities. The ISS partnership will continue to advance the use of the ISS for the benefit of humanity.
SECRETARY KERRY'S PRESS AVAILABILITY IN PARIS, FRANCE
FROM: U.S. STATE DEPARTMENT
Press Availability in Paris, France
Press Availability
John Kerry
Secretary of State
Chief of Mission Residence
Paris, France
November 5, 2014
SECRETARY KERRY: Well good evening, and thank you for being here. It’s a pleasure for me to be back in Paris on my way to the Asia Pacific Economic Cooperation summit in Beijing. And in the meantime, I was able to have a number of important and constructive meetings here today, particularly with Foreign Minister Laurent Fabius of France and also with Foreign Minister Nasser Judeh of Jordan.
I want to express my appreciation to Minister Fabius for his generous welcome and for his hosting us here today in Paris, and I’m particularly pleased with the extent and breadth of the discussion that we were able to have.
I’m also able to welcome – though she isn’t here right now because she was presenting her credentials in Monaco today – but I want to welcome our new ambassador to France, Jane Hartley and just mention I know Jane. And whether it’s been as a top staffer at the Department of Housing and Urban Development or at the White House, in the private sector, she comes here with a huge understanding of our country and the values that we stand for, and also with a huge commitment to public service which has been enduring over a long period of time. And we’re delighted to have her in Paris, finally, to continue and to deepen the partnership with the oldest alliance that the United States has.
Foreign Minister Fabius and I covered a lot of ground in our discussion this afternoon, and we went through – particularly focused on, among other things, the nuclear negotiations with Iran, our shared fight against ISIL, the complications of Syria, the challenges of Syria, the Mideast peace process itself; as well as other subjects such as turning the tide on Ebola, the situation in Lebanon, and of course, the larger issues of a Europe that is whole, free, and at peace; and particularly the challenge of Ukraine and the implementation of the Minsk agreement.
Nowhere is the mission of a Europe that is whole and free and at peace more clear at this particular moment than in the challenge of Ukraine. The United States and France remain deeply committed to Ukraine’s sovereignty, to its territorial integrity. And the parliamentary elections in Ukraine last month were a very bold and very clear statement about the choice for change that the people of Ukraine have made. They want an inclusive, accountable government, and they made it clear that they also want a future that was connected to Europe. They want a European future, as well as respect for their sovereignty and their right of choice.
As I discussed with President Poroshenko, who I talked to while I was flying here yesterday, we are concerned, obviously, about the lack of follow-through on some aspects of the Minsk agreement. And I particularly urged President Poroshenko to take the next step by naming a broadly inclusive governing coalition and articulating a concrete reform agenda in order to address the voters’ demands that they expressed in their election for a transparent, open government; a clean, modern judiciary; long-term energy security; and strengthening the investment climate, among other priorities.
We also talked about the need to continue to take the high road of adhering to the Minsk agreement, and not to fall into the possibility invited by measures taken by Russia to engage in a tit-for-tat process. I think President Poroshenko could not have been more clear about his determination to maintain that high moral ground, to continue to press for the implementation of Minsk, to continue to press for the ability of the people of Ukraine to determine their future, and he expressed his desire to honor the special law with respect to the separatist’s desires within Luhansk and Donetsk, but he wants to do so within the context of the process that had been agreed upon. It is essential to resolving the conflict in eastern Ukraine and the country’s other challenges that they take transparent political steps to bring people to the political process in a way that resolves the conflict, not exacerbates it.
By contrast, unlawful voting in eastern Ukraine over the weekend is a blatant violation of Ukrainian sovereignty and the Minsk agreement. And President Obama has been clear, as have I during my conversations with Foreign Minister Lavrov, that neither the United States nor the international community will recognize the results. The only legitimate local elections in Donetsk and Luhansk will be those that conform with Ukrainian law and with the Minsk agreement, and that is where the focus of Ukrainians, Russians, and the international community should be.
We also call on Russia and its proxies in eastern Ukraine to end the violence around Mariupol and the Donetsk airport and to enforce the ceasefire and to begin working in good faith on restoring Ukrainian control over the international air border. And the President and I have repeatedly said if the Minsk agreement is fully implemented, sanctions can be rolled back; and if it isn’t and violations continue, pressure will only increase. The choice is Russia’s.
So Foreign Minister Fabius and I also spent a good deal of time discussing the EU-coordinated P5+1 nuclear negotiations with Iran. The United States and France remain in lockstep with our international partners on the importance of making certain that Iran does not have a pathway to a nuclear weapon. This is the policy of the international community, of everybody, and of the United Nations as expressed through a number of United Nations Security Council resolutions.
With the November 24th deadline rapidly approaching, I will travel to Oman later this week to meet with Foreign Minister Zarif and Cathy Ashton. A unified P5+1 has put on the table creative ideas to be able to achieve our objective, and now we will see if Iran is able to match the public words that they are prepared to prove to the world that they have a peaceful program, to match those words with the tough and the courageous decisions that need to be made by all of us. The time is now to make those decisions.
And during my meetings today with Foreign Minister Fabius and Foreign Minister Judeh, I also discussed the best way to coordinate international efforts against the ISIL threat. The size and strength of ISIL demands a broad-based coalition. The nature of their actions demands a broad-based coalition. And we are working intensively with our partners along five reinforcing lines of effort to shrink ISIL’s territory, cut off its financing, stop the flow of foreign fighters, expose the hypocrisy of its absurd religious claims, and provide humanitarian aid to the victims of its aggression.
More than 60 countries have come forward with critical commitments and many others have expressed strong opposition to ISIL’s campaign of terror and of horror. The world is united against this threat, and President Obama’s strategy will succeed because doing it with allies and partners isn’t just smart, it is absolutely essential and it is the strong way to deal with this challenge. And I will continue to work to build support for the coalition at the APEC meeting in Beijing.
In my conversation with Foreign Minister Judeh, we also discussed the increasing tensions recently in areas across Jerusalem, and particularly surrounding the Haram al-Sharif/Temple Mount. We condemn the terrorist attack in Jerusalem this morning that killed at least one person when a car was driven wantonly, purposefully into pedestrians. And the confrontation at the al-Aqsa Mosque is also of particular concern where reports of damage are deeply disturbing. Holy sites should not become the sites of tension, and concrete steps need to be taken now by all sides to de-escalate this situation.
We also note the importance of the special role of Jordan in the Muslim holy places in Jerusalem, a role confirmed in the Jordan-Israel treaty of peace. And we obviously believe that peace between Israel and Jordan is central to stability in the region, and we are in touch with both sides on this matter and hope that all parties will draw back and reduce these tensions.
Finally, the United States is committed to intensify every aspect of our engagement in the challenge of Ebola, and we call on our international partners to join in doing the same. We are deeply appreciative of the contributions that so many have made. We’re deeply appreciative of the contributions France has made, and we appreciate the leadership that they are taking particularly with respect to Guinea.
I’ve been making phone calls each day to counterparts in order to try to encourage concrete steps from one country or another. Each country may choose to do something different. But the important point to make is that no one country is going to resolve this by itself. This needs to be a global initiative, a global effort. And we believe that already the steps that we are taking is having impact that can be measured. And literally, we are raising this issue in every single bilateral meeting that we are having.
So I am very proud that the people of the United States have contributed more than $360 million to the response effort; directly to the response, another billion-plus to the military deployment of our folks who are over there now putting themselves at risk in order to build the capacity to be able to help to deal with this. We are delivering support in some very unique ways that only the American military is able to provide.
But we know, as I said a moment ago, even that will not be able to do it on its own. Every country has a contribution to be able to make of people, of money, of humanitarian assistance, medical supplies, beds, airlift. There are countless ways to be able to help, and we hope that more yet will join in that initiative. Everything that we do literally depends on how we all coordinate together, and I want to thank our many partners in this effort for the tremendous contributions from as far away as China and in Asia, to those right in the epicenter in Africa who are helping to fight back.
With that, I’d be very happy to take any questions.
MS. HARF: Great. The first question is from Pam Dockins of Voice of America. And wait, the mike will be coming to you. We only have one mike.
SECRETARY KERRY: Excuse me? Oh, we only have one mike.
PARTICIPANT: (Off-mike.)
SECRETARY KERRY: Good.
QUESTION: Clearly, the Iran nuclear talks were front and center for you today. Can the negotiations go past the November 24th deadline, and what is the likelihood of that happening? Additionally, is there a new urgency to reach an agreement before the new Republican majority in the Senate takes over? And then finally, also, how do you see last night’s election results impacting U.S. foreign policy and America’s standing with the rest of the world?
SECRETARY KERRY: Well, thank you. On the issue of the Iran nuclear talks, we are gearing up and targeting November 24th. We’re not talking about or thinking about going beyond that date. That’s a critical date. And we believe it is imperative for a lot of different reasons to get this done. Most people don’t understand why, if you’re simply trying to show that a program is peaceful, it would take so long. People want to know that the transparency and accountability necessary to get this done is on the table, and we ought to be able to reach agreement. So our press is to try to get this done. And I think that it gets more complicated if you can’t. It’s not impossible if you’re not able to, but I think let’s see what happens when we bear down as we are.
An enormous amount of work has gone into this. For months upon months, we’ve had expert teams sitting down, working through details, looking at all of the technical information that is necessary to be able to make a judgment about what the impact of a particular decision is. Some of it’s very complicated, and we’ve tried to reduce it to as simple and understandable a format as possible. And it’s been very constructive. The Iranian team has worked hard and seriously. The conversations have been civil and expert.
And my hope is that now is the moment for really political decisions to be made that make a judgment that we can show the world that countries with differing views, differing systems, but with a mutual interest of trying to prove a peaceful program can in fact do that and get the job done. So we’re very hopeful about that, and I have every intent of making myself available and doing everything necessary to try to do that. And I’m confident that Foreign Minister Zarif will likewise make himself available and continue to push forward.
On the subject of the elections, let me just say that it was 10 years ago this afternoon that I conceded in a race for the presidency. And I have nothing but the greatest respect for the American political electoral process. There are winners and there are losers. Sometimes it’s your friends; sometimes it’s yourself. What you learn, if you’re in the process, is nothing but respect for the voters and for the system.
Now, I’m out of politics now. I’m in a different role, and I’m not going to comment on the – any of the political aspects of it, except to say that America will remain joined together with a strong voice with respect to our foreign policy. Our values are our values, shared by all Americans, and they are at the core of American foreign policy and of what we try hard to enforce and stand up for and advocate about around the world. That will not change. Sometimes there’s a different view or another about a particular subject, but in our process, traditionally the United States of America has been strongest when partisanship is left at the water’s edge and we stand up for America’s interests. I’m confident that is what will continue to happen over the course of these next months.
The one thing I would ask for with this election is I hope that, now that the election is over, the 60 outstanding nominees who have been the prisoner of the political process for these past – over a year now will be able to be passed very, very quickly. Thirty-nine of them are already on the Senate calendar. And some of them, I might say – I happen to have it here with me right now, no accident – well, one of them has been waiting 477 days, 473 days to be passed. Another, 466 days; another, 460 days; another, 460 – 460, 460, 418, 418, 399 – excuse me, 382. And yes, 399.
So I mean, I could run through a long list here. These are professionals. These are career people. They got kids. They need to know where they’re going to school. They need to be able to go out and do their jobs. My hope is that with this election now, in the next days when Congress comes back, I really hope that they will get affirmed very quickly in a bloc form or otherwise, because I think they deserve it, and I think our country is stronger and better served when we have the full team on the playing field.
MS. HARF: Our final question is from Lara Jakes of the Associated Press.
QUESTION: Thanks. I wanted to ask you about the Mideast peace process, but wondering if you would mind clarifying something you just said about the Iran negotiations. You said we ought to be able to reach an agreement; it gets more complicated if you can’t, but it’s not impossible. So the question was: Do you see these negotiations going past November 24th? Are you saying it’s not impossible for them to go past November 24th?
SECRETARY KERRY: What I’m saying is we have no intention at this point of talking about an extension, and we’re not contemplating an extension. If we were inches away, and most of the logical, achievable, expectable – expected issues are dealt with, but you have some details you just got to fill in, could I see a – under those circumstances, perhaps. But it would depend entirely on what’s outstanding. If big issues are hanging out there that are really fundamental and pretty simple, no, I don’t. I think that under those circumstances, something’s wrong. And so we’re going to have to see. And I think if it becomes more complicated to manage in terms of externals, if it is prolonged for reasons that are harder to explain – that’s the point I’m making.
So we have no expectation of a continuation. We’re not – I’m not contemplating it. I want to get this done. I think they do. I think the team does. And we are driving towards the finish with a view to trying to get it done.
QUESTION: But it gets more complicated with Republicans controlling the House and the Senate.
SECRETARY KERRY: No, it’s not a question – no, it has no – I don’t believe that changes either side. I honestly don’t. I believe that the same substantive issues would be there regardless of who is in control of the United States Senate. And remember, the United States Senate is still going to be subject to 60 votes to pass anything. So while it may be Republican or Democrat, it’s still subject to 60 votes. And as we have learned in the last few years, the minority has enormous power to stop things from happening, so this really is going to depend on other things. That is not what I am referring to. What is complicated is managing internal expectations in other places outside of us that may or may not have a profound impact on the longer term.
QUESTION: Okay. Can I go back to my original question about Mideast peace? I appreciate your indulgence. You met today with former Prime Minister Tony Blair; you expressed concerns about continued Israeli settlements after your meeting with Foreign Minister Fabius. And then you heard Foreign Minister Judeh call for a new round of Mideast peace talks.
At this point, how do players from the U.S., France, Britain, and Jordan convince Israel and the Palestinians back to the negotiating table? Do you see this happening anytime within the next three to six months? And how harshly do you expect the international community to respond to the new settlements? Also, if you have any readout on your meeting with Mr. Blair, we’d appreciate it.
SECRETARY KERRY: So we got three more questions there as an add-on, right?
QUESTION: You know – (laughter) --
QUESTION: You see this (inaudible).
QUESTION: You read that whole list of numbers, so this is my payback. (Laughter.)
SECRETARY KERRY: I’m actually not – let me just say this, that Foreign Minister Judeh very effectively said that the only way to resolve these issues of the Middle East, whether it’s the Haram al-Sharif, the Mount – the Temple Mount, the issues of East Jerusalem, the issues of settlements, the issues – the only way to resolve them is through a negotiated settlement in the end.
As President Obama said very directly at the United Nations in his speech a few weeks ago, there is nothing sustainable about the status quo, and we’re seeing that unfold. It’s not sustainable. So we need to get back to those negotiations. But I am not going to speculate and I’m not going to get into any of the internals of what those expectations are or aren’t. I think it’s important to leave space here politically for the leaders to be able to make their decisions in the next days. We are in touch. I’m talking constantly with all of the leaders involved in this issue, both immediately and tangentially in the neighborhood, and we’re going to continue to be pressing forward.
Obviously, we’ve all been reading about the potential of issues going to the United Nations at some point in time, and individual countries have already engaged in their own initiatives – Sweden, Great Britain, and others may. But for the moment, I think my role is better defined by saying less rather than more with respect to what the expectations may or may not be and what we may or may not do.
Thank you all.
MS. HARF: Great, thank you very much.
SECRETARY KERRY: Appreciate it.
QUESTION: Thank you.
SECRETARY KERRY: Thank you all.
QUESTION: And their building activity?
SECRETARY KERRY: You know we’re opposed. We’ve said that very clearly.
QUESTION: Your meeting with Mr. Blair – is it on Mideast?
SECRETARY KERRY: Among other things.
MS. HARF: Thank you. Thank you, guys.
QUESTION: There’s no more misunderstanding with Mr. Netanyahu (inaudible)?
QUESTION: Only tonight?
SECRETARY KERRY: No, no, no. That’s not --
MS. HARF: Thank you.
Press Availability in Paris, France
Press Availability
John Kerry
Secretary of State
Chief of Mission Residence
Paris, France
November 5, 2014
SECRETARY KERRY: Well good evening, and thank you for being here. It’s a pleasure for me to be back in Paris on my way to the Asia Pacific Economic Cooperation summit in Beijing. And in the meantime, I was able to have a number of important and constructive meetings here today, particularly with Foreign Minister Laurent Fabius of France and also with Foreign Minister Nasser Judeh of Jordan.
I want to express my appreciation to Minister Fabius for his generous welcome and for his hosting us here today in Paris, and I’m particularly pleased with the extent and breadth of the discussion that we were able to have.
I’m also able to welcome – though she isn’t here right now because she was presenting her credentials in Monaco today – but I want to welcome our new ambassador to France, Jane Hartley and just mention I know Jane. And whether it’s been as a top staffer at the Department of Housing and Urban Development or at the White House, in the private sector, she comes here with a huge understanding of our country and the values that we stand for, and also with a huge commitment to public service which has been enduring over a long period of time. And we’re delighted to have her in Paris, finally, to continue and to deepen the partnership with the oldest alliance that the United States has.
Foreign Minister Fabius and I covered a lot of ground in our discussion this afternoon, and we went through – particularly focused on, among other things, the nuclear negotiations with Iran, our shared fight against ISIL, the complications of Syria, the challenges of Syria, the Mideast peace process itself; as well as other subjects such as turning the tide on Ebola, the situation in Lebanon, and of course, the larger issues of a Europe that is whole, free, and at peace; and particularly the challenge of Ukraine and the implementation of the Minsk agreement.
Nowhere is the mission of a Europe that is whole and free and at peace more clear at this particular moment than in the challenge of Ukraine. The United States and France remain deeply committed to Ukraine’s sovereignty, to its territorial integrity. And the parliamentary elections in Ukraine last month were a very bold and very clear statement about the choice for change that the people of Ukraine have made. They want an inclusive, accountable government, and they made it clear that they also want a future that was connected to Europe. They want a European future, as well as respect for their sovereignty and their right of choice.
As I discussed with President Poroshenko, who I talked to while I was flying here yesterday, we are concerned, obviously, about the lack of follow-through on some aspects of the Minsk agreement. And I particularly urged President Poroshenko to take the next step by naming a broadly inclusive governing coalition and articulating a concrete reform agenda in order to address the voters’ demands that they expressed in their election for a transparent, open government; a clean, modern judiciary; long-term energy security; and strengthening the investment climate, among other priorities.
We also talked about the need to continue to take the high road of adhering to the Minsk agreement, and not to fall into the possibility invited by measures taken by Russia to engage in a tit-for-tat process. I think President Poroshenko could not have been more clear about his determination to maintain that high moral ground, to continue to press for the implementation of Minsk, to continue to press for the ability of the people of Ukraine to determine their future, and he expressed his desire to honor the special law with respect to the separatist’s desires within Luhansk and Donetsk, but he wants to do so within the context of the process that had been agreed upon. It is essential to resolving the conflict in eastern Ukraine and the country’s other challenges that they take transparent political steps to bring people to the political process in a way that resolves the conflict, not exacerbates it.
By contrast, unlawful voting in eastern Ukraine over the weekend is a blatant violation of Ukrainian sovereignty and the Minsk agreement. And President Obama has been clear, as have I during my conversations with Foreign Minister Lavrov, that neither the United States nor the international community will recognize the results. The only legitimate local elections in Donetsk and Luhansk will be those that conform with Ukrainian law and with the Minsk agreement, and that is where the focus of Ukrainians, Russians, and the international community should be.
We also call on Russia and its proxies in eastern Ukraine to end the violence around Mariupol and the Donetsk airport and to enforce the ceasefire and to begin working in good faith on restoring Ukrainian control over the international air border. And the President and I have repeatedly said if the Minsk agreement is fully implemented, sanctions can be rolled back; and if it isn’t and violations continue, pressure will only increase. The choice is Russia’s.
So Foreign Minister Fabius and I also spent a good deal of time discussing the EU-coordinated P5+1 nuclear negotiations with Iran. The United States and France remain in lockstep with our international partners on the importance of making certain that Iran does not have a pathway to a nuclear weapon. This is the policy of the international community, of everybody, and of the United Nations as expressed through a number of United Nations Security Council resolutions.
With the November 24th deadline rapidly approaching, I will travel to Oman later this week to meet with Foreign Minister Zarif and Cathy Ashton. A unified P5+1 has put on the table creative ideas to be able to achieve our objective, and now we will see if Iran is able to match the public words that they are prepared to prove to the world that they have a peaceful program, to match those words with the tough and the courageous decisions that need to be made by all of us. The time is now to make those decisions.
And during my meetings today with Foreign Minister Fabius and Foreign Minister Judeh, I also discussed the best way to coordinate international efforts against the ISIL threat. The size and strength of ISIL demands a broad-based coalition. The nature of their actions demands a broad-based coalition. And we are working intensively with our partners along five reinforcing lines of effort to shrink ISIL’s territory, cut off its financing, stop the flow of foreign fighters, expose the hypocrisy of its absurd religious claims, and provide humanitarian aid to the victims of its aggression.
More than 60 countries have come forward with critical commitments and many others have expressed strong opposition to ISIL’s campaign of terror and of horror. The world is united against this threat, and President Obama’s strategy will succeed because doing it with allies and partners isn’t just smart, it is absolutely essential and it is the strong way to deal with this challenge. And I will continue to work to build support for the coalition at the APEC meeting in Beijing.
In my conversation with Foreign Minister Judeh, we also discussed the increasing tensions recently in areas across Jerusalem, and particularly surrounding the Haram al-Sharif/Temple Mount. We condemn the terrorist attack in Jerusalem this morning that killed at least one person when a car was driven wantonly, purposefully into pedestrians. And the confrontation at the al-Aqsa Mosque is also of particular concern where reports of damage are deeply disturbing. Holy sites should not become the sites of tension, and concrete steps need to be taken now by all sides to de-escalate this situation.
We also note the importance of the special role of Jordan in the Muslim holy places in Jerusalem, a role confirmed in the Jordan-Israel treaty of peace. And we obviously believe that peace between Israel and Jordan is central to stability in the region, and we are in touch with both sides on this matter and hope that all parties will draw back and reduce these tensions.
Finally, the United States is committed to intensify every aspect of our engagement in the challenge of Ebola, and we call on our international partners to join in doing the same. We are deeply appreciative of the contributions that so many have made. We’re deeply appreciative of the contributions France has made, and we appreciate the leadership that they are taking particularly with respect to Guinea.
I’ve been making phone calls each day to counterparts in order to try to encourage concrete steps from one country or another. Each country may choose to do something different. But the important point to make is that no one country is going to resolve this by itself. This needs to be a global initiative, a global effort. And we believe that already the steps that we are taking is having impact that can be measured. And literally, we are raising this issue in every single bilateral meeting that we are having.
So I am very proud that the people of the United States have contributed more than $360 million to the response effort; directly to the response, another billion-plus to the military deployment of our folks who are over there now putting themselves at risk in order to build the capacity to be able to help to deal with this. We are delivering support in some very unique ways that only the American military is able to provide.
But we know, as I said a moment ago, even that will not be able to do it on its own. Every country has a contribution to be able to make of people, of money, of humanitarian assistance, medical supplies, beds, airlift. There are countless ways to be able to help, and we hope that more yet will join in that initiative. Everything that we do literally depends on how we all coordinate together, and I want to thank our many partners in this effort for the tremendous contributions from as far away as China and in Asia, to those right in the epicenter in Africa who are helping to fight back.
With that, I’d be very happy to take any questions.
MS. HARF: Great. The first question is from Pam Dockins of Voice of America. And wait, the mike will be coming to you. We only have one mike.
SECRETARY KERRY: Excuse me? Oh, we only have one mike.
PARTICIPANT: (Off-mike.)
SECRETARY KERRY: Good.
QUESTION: Clearly, the Iran nuclear talks were front and center for you today. Can the negotiations go past the November 24th deadline, and what is the likelihood of that happening? Additionally, is there a new urgency to reach an agreement before the new Republican majority in the Senate takes over? And then finally, also, how do you see last night’s election results impacting U.S. foreign policy and America’s standing with the rest of the world?
SECRETARY KERRY: Well, thank you. On the issue of the Iran nuclear talks, we are gearing up and targeting November 24th. We’re not talking about or thinking about going beyond that date. That’s a critical date. And we believe it is imperative for a lot of different reasons to get this done. Most people don’t understand why, if you’re simply trying to show that a program is peaceful, it would take so long. People want to know that the transparency and accountability necessary to get this done is on the table, and we ought to be able to reach agreement. So our press is to try to get this done. And I think that it gets more complicated if you can’t. It’s not impossible if you’re not able to, but I think let’s see what happens when we bear down as we are.
An enormous amount of work has gone into this. For months upon months, we’ve had expert teams sitting down, working through details, looking at all of the technical information that is necessary to be able to make a judgment about what the impact of a particular decision is. Some of it’s very complicated, and we’ve tried to reduce it to as simple and understandable a format as possible. And it’s been very constructive. The Iranian team has worked hard and seriously. The conversations have been civil and expert.
And my hope is that now is the moment for really political decisions to be made that make a judgment that we can show the world that countries with differing views, differing systems, but with a mutual interest of trying to prove a peaceful program can in fact do that and get the job done. So we’re very hopeful about that, and I have every intent of making myself available and doing everything necessary to try to do that. And I’m confident that Foreign Minister Zarif will likewise make himself available and continue to push forward.
On the subject of the elections, let me just say that it was 10 years ago this afternoon that I conceded in a race for the presidency. And I have nothing but the greatest respect for the American political electoral process. There are winners and there are losers. Sometimes it’s your friends; sometimes it’s yourself. What you learn, if you’re in the process, is nothing but respect for the voters and for the system.
Now, I’m out of politics now. I’m in a different role, and I’m not going to comment on the – any of the political aspects of it, except to say that America will remain joined together with a strong voice with respect to our foreign policy. Our values are our values, shared by all Americans, and they are at the core of American foreign policy and of what we try hard to enforce and stand up for and advocate about around the world. That will not change. Sometimes there’s a different view or another about a particular subject, but in our process, traditionally the United States of America has been strongest when partisanship is left at the water’s edge and we stand up for America’s interests. I’m confident that is what will continue to happen over the course of these next months.
The one thing I would ask for with this election is I hope that, now that the election is over, the 60 outstanding nominees who have been the prisoner of the political process for these past – over a year now will be able to be passed very, very quickly. Thirty-nine of them are already on the Senate calendar. And some of them, I might say – I happen to have it here with me right now, no accident – well, one of them has been waiting 477 days, 473 days to be passed. Another, 466 days; another, 460 days; another, 460 – 460, 460, 418, 418, 399 – excuse me, 382. And yes, 399.
So I mean, I could run through a long list here. These are professionals. These are career people. They got kids. They need to know where they’re going to school. They need to be able to go out and do their jobs. My hope is that with this election now, in the next days when Congress comes back, I really hope that they will get affirmed very quickly in a bloc form or otherwise, because I think they deserve it, and I think our country is stronger and better served when we have the full team on the playing field.
MS. HARF: Our final question is from Lara Jakes of the Associated Press.
QUESTION: Thanks. I wanted to ask you about the Mideast peace process, but wondering if you would mind clarifying something you just said about the Iran negotiations. You said we ought to be able to reach an agreement; it gets more complicated if you can’t, but it’s not impossible. So the question was: Do you see these negotiations going past November 24th? Are you saying it’s not impossible for them to go past November 24th?
SECRETARY KERRY: What I’m saying is we have no intention at this point of talking about an extension, and we’re not contemplating an extension. If we were inches away, and most of the logical, achievable, expectable – expected issues are dealt with, but you have some details you just got to fill in, could I see a – under those circumstances, perhaps. But it would depend entirely on what’s outstanding. If big issues are hanging out there that are really fundamental and pretty simple, no, I don’t. I think that under those circumstances, something’s wrong. And so we’re going to have to see. And I think if it becomes more complicated to manage in terms of externals, if it is prolonged for reasons that are harder to explain – that’s the point I’m making.
So we have no expectation of a continuation. We’re not – I’m not contemplating it. I want to get this done. I think they do. I think the team does. And we are driving towards the finish with a view to trying to get it done.
QUESTION: But it gets more complicated with Republicans controlling the House and the Senate.
SECRETARY KERRY: No, it’s not a question – no, it has no – I don’t believe that changes either side. I honestly don’t. I believe that the same substantive issues would be there regardless of who is in control of the United States Senate. And remember, the United States Senate is still going to be subject to 60 votes to pass anything. So while it may be Republican or Democrat, it’s still subject to 60 votes. And as we have learned in the last few years, the minority has enormous power to stop things from happening, so this really is going to depend on other things. That is not what I am referring to. What is complicated is managing internal expectations in other places outside of us that may or may not have a profound impact on the longer term.
QUESTION: Okay. Can I go back to my original question about Mideast peace? I appreciate your indulgence. You met today with former Prime Minister Tony Blair; you expressed concerns about continued Israeli settlements after your meeting with Foreign Minister Fabius. And then you heard Foreign Minister Judeh call for a new round of Mideast peace talks.
At this point, how do players from the U.S., France, Britain, and Jordan convince Israel and the Palestinians back to the negotiating table? Do you see this happening anytime within the next three to six months? And how harshly do you expect the international community to respond to the new settlements? Also, if you have any readout on your meeting with Mr. Blair, we’d appreciate it.
SECRETARY KERRY: So we got three more questions there as an add-on, right?
QUESTION: You know – (laughter) --
QUESTION: You see this (inaudible).
QUESTION: You read that whole list of numbers, so this is my payback. (Laughter.)
SECRETARY KERRY: I’m actually not – let me just say this, that Foreign Minister Judeh very effectively said that the only way to resolve these issues of the Middle East, whether it’s the Haram al-Sharif, the Mount – the Temple Mount, the issues of East Jerusalem, the issues of settlements, the issues – the only way to resolve them is through a negotiated settlement in the end.
As President Obama said very directly at the United Nations in his speech a few weeks ago, there is nothing sustainable about the status quo, and we’re seeing that unfold. It’s not sustainable. So we need to get back to those negotiations. But I am not going to speculate and I’m not going to get into any of the internals of what those expectations are or aren’t. I think it’s important to leave space here politically for the leaders to be able to make their decisions in the next days. We are in touch. I’m talking constantly with all of the leaders involved in this issue, both immediately and tangentially in the neighborhood, and we’re going to continue to be pressing forward.
Obviously, we’ve all been reading about the potential of issues going to the United Nations at some point in time, and individual countries have already engaged in their own initiatives – Sweden, Great Britain, and others may. But for the moment, I think my role is better defined by saying less rather than more with respect to what the expectations may or may not be and what we may or may not do.
Thank you all.
MS. HARF: Great, thank you very much.
SECRETARY KERRY: Appreciate it.
QUESTION: Thank you.
SECRETARY KERRY: Thank you all.
QUESTION: And their building activity?
SECRETARY KERRY: You know we’re opposed. We’ve said that very clearly.
QUESTION: Your meeting with Mr. Blair – is it on Mideast?
SECRETARY KERRY: Among other things.
MS. HARF: Thank you. Thank you, guys.
QUESTION: There’s no more misunderstanding with Mr. Netanyahu (inaudible)?
QUESTION: Only tonight?
SECRETARY KERRY: No, no, no. That’s not --
MS. HARF: Thank you.
MAN SENTENCED FOR ROLE IN DEADLY FIREBOMBING OF FEDERAL WITNESS'S FAMILY
FROM: U.S. JUSTICE DEPARTMENT
Wednesday, November 5, 2014
Philadelphia Man Sentenced to 40 Years in Prison for Deadly Firebombing of Federal Witness's Family
A Philadelphia man was sentenced today in the Eastern District of Pennsylvania to serve 40 years in prison for his role in the retaliatory firebombing that killed six members of a federal witness’s family, including four children.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania and Special Agent in Charge Edward J. Hanko of the FBI’s Philadelphia Division made the announcement.
Lamont Lewis, 38, of Philadelphia, pleaded guilty in 2011 for his role in the firebombing of Eugene Coleman’s family home in retaliation for Coleman’s cooperation with law enforcement. Lewis also pleaded guilty to an additional five murders murder-for-hire, and drug trafficking charges, and agreed to testify against Kaboni Savage and his cousin, Robert Merritt, who assisted Lewis in carrying out the firebombing. U.S. District Judge R. Barclay Surrick of the Eastern District of Pennsylvania imposed the sentence after considering Lewis’s cooperation in the prosecution of Savage and others.
According to Lewis’s testimony at trial, at Savage’s direction, Lewis and Merritt firebombed the Coleman family home in retaliation for Coleman’s testimony against Savage. Lewis admitted that he spoke to Savage in the evening hours of Oct. 8, 2004, at which time Savage asked for a favor and told Lewis that his sister, Kidada Savage, would explain the plan after the phone call. Shortly thereafter, Kidada Savage advised Lewis of the plan to firebomb the Coleman residence, and drove Lewis to the location to identify the house. In the early morning hours of Oct. 9, 2004, Lewis contacted Merritt and explained the plan to him. Lewis and Merritt filled up two gas cans while en route to the Coleman residence. Then, while Lewis gained entry and fired warning shots into the residence, Merritt threw a gas can with a lit cloth fuse, and then a second gas can, into the occupied Philadelphia row house. Six people, including four children ranging in age from 15 months to 15 years, were killed in the fire.
Co-defendants Kaboni Savage,Kidada Savage, and Merritt were also convicted for their roles in the firebombing at the May 2013 trial. Kaboni Savage, who was also convicted of other crimes, was sentenced to death for 12 counts of murder in aid of racketeering. Kidada Savage and Robert Merritt were sentenced to life in prison.
The case was investigated by the FBI, the Internal Revenue Service – Criminal Investigation, the Philadelphia Police Department, the Philadelphia District Attorney’s Office, and the Maple Shade, New Jersey Police Department. The United States Bureau of Prisons, the United States Marshals Service, and the Philadelphia / Camden High Intensity Drug Trafficking Area Task Force also assisted in the investigation. The case is being prosecuted by Trial Attorney Steve Mellin of the Criminal Division’s Capital Case Section and Assistant U.S. Attorneys David E. Troyer and John M. Gallagher of the Eastern District of Pennsylvania.
Wednesday, November 5, 2014
Philadelphia Man Sentenced to 40 Years in Prison for Deadly Firebombing of Federal Witness's Family
A Philadelphia man was sentenced today in the Eastern District of Pennsylvania to serve 40 years in prison for his role in the retaliatory firebombing that killed six members of a federal witness’s family, including four children.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania and Special Agent in Charge Edward J. Hanko of the FBI’s Philadelphia Division made the announcement.
Lamont Lewis, 38, of Philadelphia, pleaded guilty in 2011 for his role in the firebombing of Eugene Coleman’s family home in retaliation for Coleman’s cooperation with law enforcement. Lewis also pleaded guilty to an additional five murders murder-for-hire, and drug trafficking charges, and agreed to testify against Kaboni Savage and his cousin, Robert Merritt, who assisted Lewis in carrying out the firebombing. U.S. District Judge R. Barclay Surrick of the Eastern District of Pennsylvania imposed the sentence after considering Lewis’s cooperation in the prosecution of Savage and others.
According to Lewis’s testimony at trial, at Savage’s direction, Lewis and Merritt firebombed the Coleman family home in retaliation for Coleman’s testimony against Savage. Lewis admitted that he spoke to Savage in the evening hours of Oct. 8, 2004, at which time Savage asked for a favor and told Lewis that his sister, Kidada Savage, would explain the plan after the phone call. Shortly thereafter, Kidada Savage advised Lewis of the plan to firebomb the Coleman residence, and drove Lewis to the location to identify the house. In the early morning hours of Oct. 9, 2004, Lewis contacted Merritt and explained the plan to him. Lewis and Merritt filled up two gas cans while en route to the Coleman residence. Then, while Lewis gained entry and fired warning shots into the residence, Merritt threw a gas can with a lit cloth fuse, and then a second gas can, into the occupied Philadelphia row house. Six people, including four children ranging in age from 15 months to 15 years, were killed in the fire.
Co-defendants Kaboni Savage,Kidada Savage, and Merritt were also convicted for their roles in the firebombing at the May 2013 trial. Kaboni Savage, who was also convicted of other crimes, was sentenced to death for 12 counts of murder in aid of racketeering. Kidada Savage and Robert Merritt were sentenced to life in prison.
The case was investigated by the FBI, the Internal Revenue Service – Criminal Investigation, the Philadelphia Police Department, the Philadelphia District Attorney’s Office, and the Maple Shade, New Jersey Police Department. The United States Bureau of Prisons, the United States Marshals Service, and the Philadelphia / Camden High Intensity Drug Trafficking Area Task Force also assisted in the investigation. The case is being prosecuted by Trial Attorney Steve Mellin of the Criminal Division’s Capital Case Section and Assistant U.S. Attorneys David E. Troyer and John M. Gallagher of the Eastern District of Pennsylvania.
Thursday, November 6, 2014
U.S. CENTRAL COMMAND REPORTS AIRSTRIKES CONTINUING IN SYRIA, IRAQ
FROM: U.S. DEFENSE DEPARTMENT
Airstrikes Continue Against ISIL in Syria, Iraq
From a U.S. Central Command News Release
TAMPA, Fla., Nov. 5, 2014 – U.S. military forces continued to attack Islamic State of Iraq and the Levant terrorists in Syria Nov. 3 through today, using attack and fighter aircraft to conduct four airstrikes, U.S. Central Command officials reported.
Separately, officials said, U.S. and partner-nation military forces conducted 10 airstrikes in Iraq over that period using fighter, attack and remotely-piloted aircraft against ISIL terrorists.
Airstrike Details
In Syria, three airstrikes near Kobani struck a small ISIL unit, two ISIL fighting positions and an ISIL dump truck used in construction of fighting positions. An airstrike north of Sinjar destroyed an ISIL fighting position used to launch mortar attacks and struck a small ISIL unit manning the position, and two additional strikes north of Sinjar struck a small ISIL unit and destroyed an ISIL armored vehicle.
In Iraq, an airstrike near Mosul destroyed ISIL-occupied buildings, including one housing a generator used for oil production and another used to manufacture explosive devices. Three airstrikes near Bayji struck two small ISIL units, destroyed an ISIL vehicle, an ISIL-occupied bunker and an ISIL anti-aircraft artillery piece.
Also in Iraq, an airstrike near Fallujah struck a small ISIL unit and destroyed an ISIL vehicle. Three airstrikes near Ramadi damaged an ISIL vehicle and destroyed an ISIL checkpoint.
All aircraft left the strike areas safely, officials said, noting that airstrike assessments are based on initial reports.
Part of Operation Inherent Resolve
The strikes were conducted as part of Inherent Resolve, the operation to eliminate the terrorist group ISIL and the threat they pose to Iraq, the region and the wider international community. The destruction of ISIL targets in Syria and Iraq further limits the terrorist group's ability to project power and conduct operations, Centcom officials said.
Coalition nations conducting airstrikes in Iraq include the United States, Australia, Belgium, Canada, Denmark, France, Netherlands and the United Kingdom. Coalition nations conducting airstrikes in Syria include the United States, Bahrain, Jordan, Saudi Arabia and the United Arab Emirates.
Airstrikes Continue Against ISIL in Syria, Iraq
From a U.S. Central Command News Release
TAMPA, Fla., Nov. 5, 2014 – U.S. military forces continued to attack Islamic State of Iraq and the Levant terrorists in Syria Nov. 3 through today, using attack and fighter aircraft to conduct four airstrikes, U.S. Central Command officials reported.
Separately, officials said, U.S. and partner-nation military forces conducted 10 airstrikes in Iraq over that period using fighter, attack and remotely-piloted aircraft against ISIL terrorists.
Airstrike Details
In Syria, three airstrikes near Kobani struck a small ISIL unit, two ISIL fighting positions and an ISIL dump truck used in construction of fighting positions. An airstrike north of Sinjar destroyed an ISIL fighting position used to launch mortar attacks and struck a small ISIL unit manning the position, and two additional strikes north of Sinjar struck a small ISIL unit and destroyed an ISIL armored vehicle.
In Iraq, an airstrike near Mosul destroyed ISIL-occupied buildings, including one housing a generator used for oil production and another used to manufacture explosive devices. Three airstrikes near Bayji struck two small ISIL units, destroyed an ISIL vehicle, an ISIL-occupied bunker and an ISIL anti-aircraft artillery piece.
Also in Iraq, an airstrike near Fallujah struck a small ISIL unit and destroyed an ISIL vehicle. Three airstrikes near Ramadi damaged an ISIL vehicle and destroyed an ISIL checkpoint.
All aircraft left the strike areas safely, officials said, noting that airstrike assessments are based on initial reports.
Part of Operation Inherent Resolve
The strikes were conducted as part of Inherent Resolve, the operation to eliminate the terrorist group ISIL and the threat they pose to Iraq, the region and the wider international community. The destruction of ISIL targets in Syria and Iraq further limits the terrorist group's ability to project power and conduct operations, Centcom officials said.
Coalition nations conducting airstrikes in Iraq include the United States, Australia, Belgium, Canada, Denmark, France, Netherlands and the United Kingdom. Coalition nations conducting airstrikes in Syria include the United States, Bahrain, Jordan, Saudi Arabia and the United Arab Emirates.
THE NORTH AMERICAN HALLOWEEN WEATHER SYSTEM
FROM: NASA
 |
| A potent weather system with origins in Manitoba, Canada moved south across the Great Lakes on Halloween and blew all the way to Florida, bringing snow and hard frost to regions that do not see either in some winters. The storm system then moved back up the U.S. East Coast and pounded New England with a Nor'easter. This image shows the southern Appalachian Mountain range, along the border of Tennessee, North Carolina, and South Carolina, as fall color was turned to winter white. The natural-color image was acquired by the Visible Infrared Imaging Radiometer Suite on the Suomi NPP satellite on Nov. 2, 2014. Six inches of snow fell in Asheville, North Carolina, where snow usually doesn't fall before Christmas. Higher in the mountains, near Gatlinburg, Tennessee, LeConte Lodge (elevation 6400 feet) reported 22 inches of snow and temperatures of 9 degrees Fahrenheit. In Columbia, South Carolina, measurable snow fell nine days earlier than ever recorded for that city. More information. Image Credit: NASA Earth Observatory. |
POLITICAL CONSULTANT PLEADS GUILTY IN ILLEGAL POLITICAL CONTRIBUTION CASE
FROM: U.S. JUSTICE DEPARTMENT
Wednesday, November 5, 2014
Washington Political Consultant Pleads Guilty in Fraud and Corruption Scheme
Political consultant Thomas Lindenfeld, 59, of Washington, D.C., pleaded guilty today in the Eastern District of Pennsylvania to conspiracy to commit wire fraud for his role in a fraud and corruption scheme related to illegal campaign contributions.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania, Special Agent in Charge Edward J. Hanko of the FBI’s Philadelphia Field Office and Acting Special Agent in Charge Richard Gross of the Internal Revenue Service – Criminal Investigation (IRS-CI) made the announcement.
According to admissions in his plea agreement, Lindenfeld agreed to route an illegal $1 million political contribution for “Elected Official A” during a 2007 campaign for elected office. The contribution was in the form of a loan routed through Lindenfeld’s political consulting firm, LSG Strategic Services Corporation (LSG). When the campaign donor attempted to collect on the outstanding balance of the $1 million loan, however, Lindenfeld and his co-conspirators, at the direction of Elected Official A, engaged in a complicated series of transactions using federal grant money and monies from Sallie Mae’s charitable arm illegally to repay the loan. These transactions were routed through several entities, including LSG, and were all falsely labeled as payments for services that were never actually rendered.
Lindenfeld admitted that, in exchange for the work he had done on the campaign, which included concealing the illegal campaign contribution, Elected Official A agreed to use his elected position to steer federal funding to Lindenfeld’s proposed environmental advocacy group, Blue Guardians. Lindenfeld further admitted that he created Blue Guardians at the direction of Elected Official A for the purpose of receiving the federal funding.
According to Lindenfeld, Elected Official A advocated for $15 million in federal funding for Blue Guardians as a reward for Lindenfeld’s services. Five hundred thousand dollars was approved in 2009 as an earmark through the National Oceanic and Atmospheric Administration (NOAA). Lindenfeld admitted, however, that the Blue Guardians did not exist in December 2009, and that he only created an email address, articles of incorporation, and a tax identification number for Blue Guardians in April 2010. After receiving questions from NOAA and members of the press, Lindenfeld declined the funding, stating that he and Elected Official A decided it could be better spent on the oil spill in the Gulf. NOAA did not disburse the $500,000 to Lindenfeld or Blue Guardians.
U.S. District Court Judge Harvey Bartle III scheduled a sentencing hearing for March 25, 2015.
The case is being investigated by the FBI and the IRS-CI with assistance provided by NASA’s Office of Inspector General and the Department of Commerce’s Office of Inspector General. This case is being prosecuted by Assistant U.S. Attorney Paul L. Gray of the Eastern District of Pennsylvania and Trial Attorney Eric L. Gibson of the Criminal Division’s Public Integrity Section.
Wednesday, November 5, 2014
Washington Political Consultant Pleads Guilty in Fraud and Corruption Scheme
Political consultant Thomas Lindenfeld, 59, of Washington, D.C., pleaded guilty today in the Eastern District of Pennsylvania to conspiracy to commit wire fraud for his role in a fraud and corruption scheme related to illegal campaign contributions.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania, Special Agent in Charge Edward J. Hanko of the FBI’s Philadelphia Field Office and Acting Special Agent in Charge Richard Gross of the Internal Revenue Service – Criminal Investigation (IRS-CI) made the announcement.
According to admissions in his plea agreement, Lindenfeld agreed to route an illegal $1 million political contribution for “Elected Official A” during a 2007 campaign for elected office. The contribution was in the form of a loan routed through Lindenfeld’s political consulting firm, LSG Strategic Services Corporation (LSG). When the campaign donor attempted to collect on the outstanding balance of the $1 million loan, however, Lindenfeld and his co-conspirators, at the direction of Elected Official A, engaged in a complicated series of transactions using federal grant money and monies from Sallie Mae’s charitable arm illegally to repay the loan. These transactions were routed through several entities, including LSG, and were all falsely labeled as payments for services that were never actually rendered.
Lindenfeld admitted that, in exchange for the work he had done on the campaign, which included concealing the illegal campaign contribution, Elected Official A agreed to use his elected position to steer federal funding to Lindenfeld’s proposed environmental advocacy group, Blue Guardians. Lindenfeld further admitted that he created Blue Guardians at the direction of Elected Official A for the purpose of receiving the federal funding.
According to Lindenfeld, Elected Official A advocated for $15 million in federal funding for Blue Guardians as a reward for Lindenfeld’s services. Five hundred thousand dollars was approved in 2009 as an earmark through the National Oceanic and Atmospheric Administration (NOAA). Lindenfeld admitted, however, that the Blue Guardians did not exist in December 2009, and that he only created an email address, articles of incorporation, and a tax identification number for Blue Guardians in April 2010. After receiving questions from NOAA and members of the press, Lindenfeld declined the funding, stating that he and Elected Official A decided it could be better spent on the oil spill in the Gulf. NOAA did not disburse the $500,000 to Lindenfeld or Blue Guardians.
U.S. District Court Judge Harvey Bartle III scheduled a sentencing hearing for March 25, 2015.
The case is being investigated by the FBI and the IRS-CI with assistance provided by NASA’s Office of Inspector General and the Department of Commerce’s Office of Inspector General. This case is being prosecuted by Assistant U.S. Attorney Paul L. Gray of the Eastern District of Pennsylvania and Trial Attorney Eric L. Gibson of the Criminal Division’s Public Integrity Section.
SECRETARY KERRY'S REMARKS WITH JORDANIAN FOREIGN MINISTER JUDEH
FROM: U.S. STATE DEPARTMENT
Remarks With Jordanian Foreign Minister Nasser Judeh Before Their Meeting
Remarks
John Kerry
Secretary of State
Paris, France
November 5, 2014
SECRETARY KERRY: (In progress) -- we’ll talk about. He’s been a critical partner, together with King Abdullah of Jordan, in the efforts to try to work for stability and peace in the Middle East. That remains an urgent priority, notwithstanding the very serious complications that have grown up over the course of the last months. We urge everybody to try to step back and find a way to create enough calm and enough space to be able to negotiate these difficult issues. None of them lend themselves to unilateral resolution, and I condemn today’s terrorist act of somebody driving in another car into innocent people standing on the roadside. That is not just a terrorist act and an act of – an atrocity, but it only makes matters worse. It only raises tensions.
There are those who oppose peace, and people need to not allow those who oppose peace to control what is happening in the region. The peacemakers need to control it, and they need to take steps to begin to move in a different direction. That’s what’s important. Thank you.
FOREIGN MINISTER JUDEH: Well, I just want to add to that that it’s a great opportunity to meet the Secretary of State yet again, and our close consultation is something of mutual benefit. I think we have a lot to discuss. But the only way – just to reiterate what the Secretary’s saying, the only way that we can prevent these unilateral measures from continuing to take place is to have a comprehensive settlement of the Arab-Israeli conflict, at the core of which is the Palestinian-Israeli. So I think this is what we will want to work on achieving so that we don’t have another Gaza and we don’t have these continuous violations and unilateral actions.
Remarks With Jordanian Foreign Minister Nasser Judeh Before Their Meeting
Remarks
John Kerry
Secretary of State
Paris, France
November 5, 2014
SECRETARY KERRY: (In progress) -- we’ll talk about. He’s been a critical partner, together with King Abdullah of Jordan, in the efforts to try to work for stability and peace in the Middle East. That remains an urgent priority, notwithstanding the very serious complications that have grown up over the course of the last months. We urge everybody to try to step back and find a way to create enough calm and enough space to be able to negotiate these difficult issues. None of them lend themselves to unilateral resolution, and I condemn today’s terrorist act of somebody driving in another car into innocent people standing on the roadside. That is not just a terrorist act and an act of – an atrocity, but it only makes matters worse. It only raises tensions.
There are those who oppose peace, and people need to not allow those who oppose peace to control what is happening in the region. The peacemakers need to control it, and they need to take steps to begin to move in a different direction. That’s what’s important. Thank you.
FOREIGN MINISTER JUDEH: Well, I just want to add to that that it’s a great opportunity to meet the Secretary of State yet again, and our close consultation is something of mutual benefit. I think we have a lot to discuss. But the only way – just to reiterate what the Secretary’s saying, the only way that we can prevent these unilateral measures from continuing to take place is to have a comprehensive settlement of the Arab-Israeli conflict, at the core of which is the Palestinian-Israeli. So I think this is what we will want to work on achieving so that we don’t have another Gaza and we don’t have these continuous violations and unilateral actions.
SECRETARY KERRY'S REMARKS WITH FRENCH FOREIGN MINISTER FABIUS
FROM: U.S. STATE DEPARTMENT
Remarks With French Foreign Minister Laurent Fabius After Their Meeting
Remarks
John Kerry
Secretary of State
Quai d'Orsay
Paris, France
November 5, 2014
FOREIGN MINISTER FABIUS: (In French.)
SECRETARY KERRY: Merci. Thank you, Laurent. As Foreign Minister Fabius has just said to you, we had a broad discussion on all of the topics that he mentioned to you. We agree that we are living in very, very complicated times with enormous challenges, but we also believe that we are up to those challenges. And whether it is Ebola or ISIL, Syria, Iraq, the challenge of the nuclear program in Iran, Afghanistan, France and the United States are cooperating more than ever before, hand in hand closely, driven by our values, as Laurent said, and mindful of the fact that the world is looking for leadership on these issues.
We did talk, as he said, about our approaches to and our concerns about the negotiations with respect to Iran’s program, and I agree with Laurent. They have a right to a peaceful program but not a track to a bomb. We believe it is pretty easy to prove to the world that a plan is peaceful. And so we talked today about our common positions, about our common interests. We are hand in hand, linked in this effort, and we will work extremely closely together in the next weeks to try to find a successful path.
In addition, we are very committed to continuing to press for the stability and ability to find peace in the Middle East. We talked about that today. We both have deep concerns about the continued settlements that are taking place and the need for all parties involved to avoid confrontation and try to find a way back to the negotiations, which are critical and the only way, in the end, to be able to bring about the stability and peace that people want.
So there are many challenges beyond even the ones we talked today – Libya, North Africa, counterterrorism – but I’m very grateful to Laurent Fabius for the leadership of France, for their engagement, for their initiative individually in certain countries – Mali, elsewhere, Central African Republic, where France has been willing to take the lead and help to make a difference. And we remain committed, particularly in these next weeks when so much is at stake, to continuing to work together extremely closely.
So I’m grateful for the opportunity to be here today and I thank Laurent for his good counsel and for his good food. (Laughter.) Thank you, sir.
FOREIGN MINISTER FABIUS: Thank you, sir. Merci.
Remarks With French Foreign Minister Laurent Fabius After Their Meeting
Remarks
John Kerry
Secretary of State
Quai d'Orsay
Paris, France
November 5, 2014
FOREIGN MINISTER FABIUS: (In French.)
SECRETARY KERRY: Merci. Thank you, Laurent. As Foreign Minister Fabius has just said to you, we had a broad discussion on all of the topics that he mentioned to you. We agree that we are living in very, very complicated times with enormous challenges, but we also believe that we are up to those challenges. And whether it is Ebola or ISIL, Syria, Iraq, the challenge of the nuclear program in Iran, Afghanistan, France and the United States are cooperating more than ever before, hand in hand closely, driven by our values, as Laurent said, and mindful of the fact that the world is looking for leadership on these issues.
We did talk, as he said, about our approaches to and our concerns about the negotiations with respect to Iran’s program, and I agree with Laurent. They have a right to a peaceful program but not a track to a bomb. We believe it is pretty easy to prove to the world that a plan is peaceful. And so we talked today about our common positions, about our common interests. We are hand in hand, linked in this effort, and we will work extremely closely together in the next weeks to try to find a successful path.
In addition, we are very committed to continuing to press for the stability and ability to find peace in the Middle East. We talked about that today. We both have deep concerns about the continued settlements that are taking place and the need for all parties involved to avoid confrontation and try to find a way back to the negotiations, which are critical and the only way, in the end, to be able to bring about the stability and peace that people want.
So there are many challenges beyond even the ones we talked today – Libya, North Africa, counterterrorism – but I’m very grateful to Laurent Fabius for the leadership of France, for their engagement, for their initiative individually in certain countries – Mali, elsewhere, Central African Republic, where France has been willing to take the lead and help to make a difference. And we remain committed, particularly in these next weeks when so much is at stake, to continuing to work together extremely closely.
So I’m grateful for the opportunity to be here today and I thank Laurent for his good counsel and for his good food. (Laughter.) Thank you, sir.
FOREIGN MINISTER FABIUS: Thank you, sir. Merci.
MEMBER ANDROID PIRACY GROUP PLEADS GUILTY FOR ROLE IN DISTRIBUTING PIRATED APPS
FROM: U.S. JUSTICE DEPARTMENT
Monday, November 3, 2014
Conspirator in Android Mobile Device App Piracy Group Pleads Guilty
A leading member of an online piracy group pleaded guilty today for his role in a scheme to distribute more than one million pirated copies of copyrighted Android mobile device applications, or “apps,” with a total retail value of more than $1.7 million.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Sally Quillian Yates of the Northern District of Georgia and Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Field Office made the announcement.
Scott Walton, 28, of Cleveland, Ohio, pleaded guilty today to one count of conspiracy to commit criminal copyright infringement before U.S. District Judge Timothy C. Batten Sr. of the Northern District of Georgia. Walton will be sentenced at a later date. A second co-conspirator, Kody Jon Peterson, 22, of Clermont, Florida, pleaded guilty to an information on April 14, 2014, for his role in the conspiracy.
According to statements made in court, Walton and his fellow conspirators identified themselves as members of the SnappzMarket Group. From May 2011 through August 2012, they conspired to reproduce and distribute over one million copies of copyrighted Android mobile device apps. The apps had a total retail value of over $1.7 million and were distributed through the SnappzMarket alternative online market without permission from the victim copyright owners, who would otherwise sell copies of the apps on legitimate online markets for a fee.
The indictment charges Walton and two other leading members of the SnappzMarket Group with conspiracy to commit criminal copyright infringement and related charges for allegedly distributing the copyrighted Android mobile devices apps through the group’s website, www.snappzmarket.com [external link]. On Aug. 21, 2012, the FBI executed a seizure order against the website, which was the first time a website domain involving mobile device app marketplaces had been seized.
The charges contained in an indictment are merely accusations, and a defendant is presumed innocent unless and until proven guilty.
The investigation was conducted by the FBI. The case is being prosecuted by Assistant Deputy Chief John H. Zacharia of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) and Assistant U.S. Attorney Christopher Bly of the Northern District of Georgia. Significant assistance was provided by the CCIPS Cybercrime Lab and the Criminal Division’s Office of International Affairs.
Wednesday, November 5, 2014
WHITE HOUSE READOUT: PRESIDENT OBAMA'S CALL WITH MONROVIA MEDICAL UNIT
FROM: THE WHITE HOUSE
Readout of the President’s Call with the Monrovia Medical Unit
The President on Wednesday morning spoke by phone with the U.S. Public Health Service (PHS) Commissioned Corps who are staffing the Monrovia Medical Unit (MMU), the 25-bed hospital constructed by the U.S. Military that will open its doors later this week. The President underscored the indispensability of the MMU’s mission—to treat national and international healthcare workers who fall ill with Ebola in their brave service to others. He noted that these PHS officers will offer hope to their patients while also reassuring other healthcare workers in the region and those around the globe whose services are needed to end this epidemic. The President thanked the members of the Corps as well as their families for taking on this challenge, commenting that, of the 71 officers selected, all of them accepted the assignment, a testament to their selfless service to the nation. The President specifically commended Rear Admiral Scott Giberson, who is heading the contingent, on his leadership, and reminded the full team that, through their service, we will bring this epidemic under control at the source, the only way to prevent additional cases of Ebola domestically.
Readout of the President’s Call with the Monrovia Medical Unit
The President on Wednesday morning spoke by phone with the U.S. Public Health Service (PHS) Commissioned Corps who are staffing the Monrovia Medical Unit (MMU), the 25-bed hospital constructed by the U.S. Military that will open its doors later this week. The President underscored the indispensability of the MMU’s mission—to treat national and international healthcare workers who fall ill with Ebola in their brave service to others. He noted that these PHS officers will offer hope to their patients while also reassuring other healthcare workers in the region and those around the globe whose services are needed to end this epidemic. The President thanked the members of the Corps as well as their families for taking on this challenge, commenting that, of the 71 officers selected, all of them accepted the assignment, a testament to their selfless service to the nation. The President specifically commended Rear Admiral Scott Giberson, who is heading the contingent, on his leadership, and reminded the full team that, through their service, we will bring this epidemic under control at the source, the only way to prevent additional cases of Ebola domestically.
U.S. EXTENDS BEST WISHES TO SIKHS ON BIRTH OF GURU NANAK DEV JI
FROM: THE STATE DEPARTMENT
Anniversary of the Birth of Guru Nanak Dev Ji
Press Statement
John Kerry
Secretary of State
Washington, DC
November 5, 2014
On behalf of the people of the United States and the Department of State, I extend my best wishes to Sikhs around the world as they celebrate the birth of Guru Nanak Dev Ji, the founder of Sikhism and the first Sikh Guru.
Guru Nanak’s timeless teachings and principles—the equality of all people, pluralism within diverse societies, and compassion towards one another—are shared not only by Sikhs, but also by people of all faiths. That shared spirit is at the heart of everything the Department of State strives to accomplish throughout the world. We recently celebrated these values as Sikhs, Hindus, Jains, Buddhists, and members of other faiths came together to celebrate Diwali at the Department of State.
Now on the anniversary of Guru Nanak Dev Ji’s birth, as friends and family gather to celebrate this special day, know that the people of the United States stand with you in recognition of our shared values and with a mutual commitment to human dignity, compassion, and service.
Anniversary of the Birth of Guru Nanak Dev Ji
Press Statement
John Kerry
Secretary of State
Washington, DC
November 5, 2014
On behalf of the people of the United States and the Department of State, I extend my best wishes to Sikhs around the world as they celebrate the birth of Guru Nanak Dev Ji, the founder of Sikhism and the first Sikh Guru.
Guru Nanak’s timeless teachings and principles—the equality of all people, pluralism within diverse societies, and compassion towards one another—are shared not only by Sikhs, but also by people of all faiths. That shared spirit is at the heart of everything the Department of State strives to accomplish throughout the world. We recently celebrated these values as Sikhs, Hindus, Jains, Buddhists, and members of other faiths came together to celebrate Diwali at the Department of State.
Now on the anniversary of Guru Nanak Dev Ji’s birth, as friends and family gather to celebrate this special day, know that the people of the United States stand with you in recognition of our shared values and with a mutual commitment to human dignity, compassion, and service.
SECRETARY HAGEL CONGRATULATES TUNISIAN COUNTERPART FOR PARLIAMENTARY ELECTION SUCCESS
FROM: U.S. DEFENSE DEPARTMENT
Hagel Praises Tunisia’s Election Process as Model for Region
DoD News, Defense Media Activity
WASHINGTON, Nov. 3, 2014 – During a meeting with Tunisian Defense Minister Ghazi Jeribi at the Pentagon today, Defense Secretary Chuck Hagel congratulated his counterpart for the successful parliamentary elections underway in Tunisia and praised the vote as an important model for the region, Pentagon Press Secretary Navy Rear Adm. John Kirby said.
In a statement summarizing the meeting, Kirby said the two defense leaders followed up on previous bilateral Joint Military Commission discussions held in Tunis in May.
“Minister Jeribi and Secretary Hagel discussed ways in which the U.S. and Tunisia could cooperate in fighting terrorism, given continuing instability in the region,” the admiral said.
Regional Concern About Foreign Fighters
The two leaders also discussed the growing regional concern over foreign fighters from North Africa moving to Iraq and Syria, Kirby said, as well as the threat of the Islamic State of Iraq and the Levant and other al-Qaida splinter groups emerging in Africa.
Jeribi thanked the United States for ongoing security cooperation programs, and Hagel underscored the strong U.S. commitment for continued support to Tunisia, the press secretary said.
Hagel Praises Tunisia’s Election Process as Model for Region
DoD News, Defense Media Activity
WASHINGTON, Nov. 3, 2014 – During a meeting with Tunisian Defense Minister Ghazi Jeribi at the Pentagon today, Defense Secretary Chuck Hagel congratulated his counterpart for the successful parliamentary elections underway in Tunisia and praised the vote as an important model for the region, Pentagon Press Secretary Navy Rear Adm. John Kirby said.
In a statement summarizing the meeting, Kirby said the two defense leaders followed up on previous bilateral Joint Military Commission discussions held in Tunis in May.
“Minister Jeribi and Secretary Hagel discussed ways in which the U.S. and Tunisia could cooperate in fighting terrorism, given continuing instability in the region,” the admiral said.
Regional Concern About Foreign Fighters
The two leaders also discussed the growing regional concern over foreign fighters from North Africa moving to Iraq and Syria, Kirby said, as well as the threat of the Islamic State of Iraq and the Levant and other al-Qaida splinter groups emerging in Africa.
Jeribi thanked the United States for ongoing security cooperation programs, and Hagel underscored the strong U.S. commitment for continued support to Tunisia, the press secretary said.
SEC, FINRA ISSUE ALERT TO INVESTORS REGARDING SHELL COMPANIES BEING SOLD AS PENNY STOCKS
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission’s Office of Investor Education and Advocacy and the Financial Industry Regulatory Authority (FINRA) today issued an alert warning investors that some penny stocks being aggressively promoted as great investment opportunities may in fact be stocks of dormant shell companies with little to no business operations.
The investor alert provides tips to avoid pump-and-dump schemes in which fraudsters deliberately buy shares of very low-priced, thinly traded stocks and then spread false or misleading information to pump up the price. The fraudsters then dump their shares, causing the prices to drop and leaving investors with worthless or nearly worthless shares of stock.
“Fraudsters continue to try to use dormant shell company scams to manipulate stock prices to the detriment of everyday investors,” said Lori J. Schock, Director of the SEC’s Office of Investor Education and Advocacy. “Before investing in any company, investors should always remember to check out the company thoroughly.”
Gerri Walsh, FINRA’s Senior Vice President for Investor Education, said, “Investors should be on the lookout for press releases, tweets or posts aggressively promoting companies poised for explosive growth because of their ‘hot’ new product. In reality, the company may be a shell, and the people behind the touts may be pump-and-dump scammers looking to lighten your wallet.”
The investor alert highlights five tips to help investors avoid scams involving dormant shell companies:
Research whether the company has been dormant – and brought back to life. You can search the company name or trading symbol in the SEC’s EDGAR database to see when the company may have last filed periodic reports.
Know where the stock trades. Most stock pump-and-dump schemes involve stocks that do not trade on The NASDAQ Stock Market, the New York Stock Exchange or other registered national securities exchanges.
Be wary of frequent changes to a company's name or business focus. Name changes and the potential for manipulation often go hand in hand.
Check for mammoth reverse splits. A dormant shell company might carry out a 1-for-20,000 or even 1-for-50,000 reverse split.
Know that "Q" is for caution. A stock symbol with a fifth letter "Q" at the end denotes that the company has filed for bankruptcy.
The Securities and Exchange Commission’s Office of Investor Education and Advocacy and the Financial Industry Regulatory Authority (FINRA) today issued an alert warning investors that some penny stocks being aggressively promoted as great investment opportunities may in fact be stocks of dormant shell companies with little to no business operations.
The investor alert provides tips to avoid pump-and-dump schemes in which fraudsters deliberately buy shares of very low-priced, thinly traded stocks and then spread false or misleading information to pump up the price. The fraudsters then dump their shares, causing the prices to drop and leaving investors with worthless or nearly worthless shares of stock.
“Fraudsters continue to try to use dormant shell company scams to manipulate stock prices to the detriment of everyday investors,” said Lori J. Schock, Director of the SEC’s Office of Investor Education and Advocacy. “Before investing in any company, investors should always remember to check out the company thoroughly.”
Gerri Walsh, FINRA’s Senior Vice President for Investor Education, said, “Investors should be on the lookout for press releases, tweets or posts aggressively promoting companies poised for explosive growth because of their ‘hot’ new product. In reality, the company may be a shell, and the people behind the touts may be pump-and-dump scammers looking to lighten your wallet.”
The investor alert highlights five tips to help investors avoid scams involving dormant shell companies:
Research whether the company has been dormant – and brought back to life. You can search the company name or trading symbol in the SEC’s EDGAR database to see when the company may have last filed periodic reports.
Know where the stock trades. Most stock pump-and-dump schemes involve stocks that do not trade on The NASDAQ Stock Market, the New York Stock Exchange or other registered national securities exchanges.
Be wary of frequent changes to a company's name or business focus. Name changes and the potential for manipulation often go hand in hand.
Check for mammoth reverse splits. A dormant shell company might carry out a 1-for-20,000 or even 1-for-50,000 reverse split.
Know that "Q" is for caution. A stock symbol with a fifth letter "Q" at the end denotes that the company has filed for bankruptcy.
MEDICAL DIAGNOSTICS COMPANY TO PAY $14.35 MILLION TO RESOLVE FOREIGN CORRUPT PRACTICES ALLEGATIONS
FROM: U.S. JUSTICE DEPARTMENT
Monday, November 3, 2014
Bio-Rad Laboratories Resolves Foreign Corrupt Practices Act Investigation and Agrees to Pay $14.35 Million Penalty
A California-based medical diagnostics and life sciences manufacturing and sales company, Bio-Rad Laboratories Inc. (Bio-Rad), has agreed to pay a $14.35 million penalty to resolve allegations that it violated the Foreign Corrupt Practices Act (FCPA) by falsifying its books and records and failing to implement adequate internal controls in connection with sales it made in Russia.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office made the announcement.
“Public companies that cook their books and hide improper payments foster corruption,” said Assistant Attorney General Caldwell. “The department pursues corruption from all angles, including the falsification of records and failure to implement adequate internal controls. The department also gives credit to companies, like Bio-Rad, who self-disclose, cooperate and remediate their violations of the FCPA.”
“The FBI remains committed to identifying and investigating violations of the Foreign Corrupt Practices Act,” said Special Agent in Charge Johnson. “This action demonstrates the benefits of self-disclosure, cooperation, and subsequent remediation by companies.”
According to the company’s admissions in the agreement, Bio-Rad SNC, a Bio-Rad subsidiary located in France, retained and paid intermediary companies commissions of 15-30 percent purportedly in exchange for various services in connection with certain governmental sales in Russia. The intermediary companies, however, did not perform these services. Several high-level managers at Bio-Rad, responsible for overseeing Bio-Rad’s business in Russia, reviewed and approved the commission payments to the intermediary companies despite knowing that the intermediary companies were not performing such services. These managers knowingly caused the payments to be falsely recorded on Bio-Rad SNC’s and, ultimately, Bio-Rad’s books. Bio-Rad, through several of its managers, also failed to implement adequate controls, as well as adequate compliance systems, with regard to its Russian operations while knowing that the failure to implement such controls allowed the intermediary companies to be paid significantly above-market commissions for little or no services.
The department entered into a non-prosecution agreement with the company due, in large part, to Bio-Rad’s self-disclosure of the misconduct and full cooperation with the department’s investigation. That cooperation included voluntarily making U.S. and foreign employees available for interviews, voluntarily producing documents from overseas, and summarizing the findings of its internal investigation. In addition, Bio-Rad has engaged in significant remedial actions, including enhancing its anti-corruption policies globally, improving its internal controls and compliance functions, developing and implementing additional due diligence and contracting procedures for intermediaries, and conducting extensive anti-corruption training throughout the organization.
In addition to the monetary penalty, Bio-Rad agreed to continue to cooperate with the department, to report periodically to the department for a two-year period concerning Bio-Rad’s compliance efforts, and to continue to implement an enhanced compliance program and internal controls designed to prevent and detect FCPA violations.
In a related matter, the U.S. Securities and Exchange Commission (SEC) today announced that it had entered into a cease and desist order against Bio-Rad in which the company agreed to pay $40.7 million in disgorgement and prejudgment interest in connection with the company’s sales in Russia, as well as in Thailand and Vietnam.
The department acknowledges and expresses its appreciation for the assistance provided by the SEC’s Division of Enforcement.
The case is being investigated by the FBI’s San Francisco Field Office. The case is being prosecuted by Trial Attorney Andrew Gentin of the Criminal Division’s Fraud Section.
Monday, November 3, 2014
Bio-Rad Laboratories Resolves Foreign Corrupt Practices Act Investigation and Agrees to Pay $14.35 Million Penalty
A California-based medical diagnostics and life sciences manufacturing and sales company, Bio-Rad Laboratories Inc. (Bio-Rad), has agreed to pay a $14.35 million penalty to resolve allegations that it violated the Foreign Corrupt Practices Act (FCPA) by falsifying its books and records and failing to implement adequate internal controls in connection with sales it made in Russia.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office made the announcement.
“Public companies that cook their books and hide improper payments foster corruption,” said Assistant Attorney General Caldwell. “The department pursues corruption from all angles, including the falsification of records and failure to implement adequate internal controls. The department also gives credit to companies, like Bio-Rad, who self-disclose, cooperate and remediate their violations of the FCPA.”
“The FBI remains committed to identifying and investigating violations of the Foreign Corrupt Practices Act,” said Special Agent in Charge Johnson. “This action demonstrates the benefits of self-disclosure, cooperation, and subsequent remediation by companies.”
According to the company’s admissions in the agreement, Bio-Rad SNC, a Bio-Rad subsidiary located in France, retained and paid intermediary companies commissions of 15-30 percent purportedly in exchange for various services in connection with certain governmental sales in Russia. The intermediary companies, however, did not perform these services. Several high-level managers at Bio-Rad, responsible for overseeing Bio-Rad’s business in Russia, reviewed and approved the commission payments to the intermediary companies despite knowing that the intermediary companies were not performing such services. These managers knowingly caused the payments to be falsely recorded on Bio-Rad SNC’s and, ultimately, Bio-Rad’s books. Bio-Rad, through several of its managers, also failed to implement adequate controls, as well as adequate compliance systems, with regard to its Russian operations while knowing that the failure to implement such controls allowed the intermediary companies to be paid significantly above-market commissions for little or no services.
The department entered into a non-prosecution agreement with the company due, in large part, to Bio-Rad’s self-disclosure of the misconduct and full cooperation with the department’s investigation. That cooperation included voluntarily making U.S. and foreign employees available for interviews, voluntarily producing documents from overseas, and summarizing the findings of its internal investigation. In addition, Bio-Rad has engaged in significant remedial actions, including enhancing its anti-corruption policies globally, improving its internal controls and compliance functions, developing and implementing additional due diligence and contracting procedures for intermediaries, and conducting extensive anti-corruption training throughout the organization.
In addition to the monetary penalty, Bio-Rad agreed to continue to cooperate with the department, to report periodically to the department for a two-year period concerning Bio-Rad’s compliance efforts, and to continue to implement an enhanced compliance program and internal controls designed to prevent and detect FCPA violations.
In a related matter, the U.S. Securities and Exchange Commission (SEC) today announced that it had entered into a cease and desist order against Bio-Rad in which the company agreed to pay $40.7 million in disgorgement and prejudgment interest in connection with the company’s sales in Russia, as well as in Thailand and Vietnam.
The department acknowledges and expresses its appreciation for the assistance provided by the SEC’s Division of Enforcement.
The case is being investigated by the FBI’s San Francisco Field Office. The case is being prosecuted by Trial Attorney Andrew Gentin of the Criminal Division’s Fraud Section.
13 FIRMS SANCTIONED BY SEC FOR VIOLATING RULE TO PROTECT SMALL INVESTORS
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
November 3, 2014
The Securities and Exchange Commission sanctioned 13 firms for violating a rule primarily designed to protect retail investors in the municipal securities market.
All municipal bond offerings include a “minimum denomination” that establishes the smallest amount of the bonds that a dealer firm is allowed to sell an investor in a single transaction. Municipal issuers often set high minimum denomination amounts for so-called “junk bonds” that have a higher default risk that may make the investments inappropriate for retail investors. Because retail investors tend to purchase securities in smaller amounts, this minimum denomination standard helps ensure that dealer firms sell high-risk securities only to investors who are capable of making sizeable investments and more prepared to bear the higher risk.
In its surveillance of trading in the municipal bond market, the SEC Enforcement Division’s Municipal Securities and Public Pensions Unit detected improper sales below a $100,000 minimum denomination set in a $3.5 billion offering of junk bonds by the Commonwealth of Puerto Rico earlier this year. The SEC’s subsequent investigation identified a total of 66 occasions when dealer firms sold the Puerto Rico bonds to investors in amounts below $100,000. The agency instituted administrative proceedings against the firms behind those improper sales: Charles Schwab & Co., Hapoalim Securities USA, Interactive Brokers LLC, Investment Professionals Inc., J.P. Morgan Securities, Lebenthal & Co., National Securities Corporation, Oppenheimer & Co., Riedl First Securities Co. of Kansas, Stifel Nicolaus & Co., TD Ameritrade, UBS Financial Services, and Wedbush Securities.
The enforcement actions are the SEC’s first under Municipal Securities Rulemaking Board (MSRB) Rule G-15(f), which establishes the minimum denomination requirement. Each firm agreed to settle the SEC’s charges and pay penalties ranging from $54,000 to $130,000.
“These actions demonstrate our commitment to rigorous enforcement of all types of violations in the municipal bond market,” said Andrew J. Ceresney, Director of the SEC’s Division of Enforcement. “We will act quickly and use all available tools to protect investors in municipal securities.”
LeeAnn G. Gaunt, Chief of the SEC’s Municipal Securities and Public Pensions Unit added, “These firms violated a straightforward investor protection rule that prohibits the sale of muni bonds in increments below a specified minimum. We conduct frequent surveillance of trading in the municipal bond market and will penalize abuses that threaten retail investors.”
The SEC’s orders against the 13 dealers find that in addition to violating MSRB Rule G-15(f) by executing sales below the minimum denomination, they violated Section 15B(c)(1) of the Securities Exchange Act of 1934, which prohibits violations of any MSRB rule. Without admitting or denying the findings, each of the firms agreed to be censured. They also agreed to review their policies and procedures and make any changes that are necessary to ensure proper compliance with MSRB Rule G-15(f).
The SEC’s investigation, which is continuing, is being conducted by Joseph Chimienti, Sue Curtin, Heidi M. Mitza, and Jonathon Wilcox with assistance from Kathleen B. Shields. The case is supervised by Kevin B. Currid and Mark R. Zehner. The SEC appreciates the assistance of the MSRB.
November 3, 2014
The Securities and Exchange Commission sanctioned 13 firms for violating a rule primarily designed to protect retail investors in the municipal securities market.
All municipal bond offerings include a “minimum denomination” that establishes the smallest amount of the bonds that a dealer firm is allowed to sell an investor in a single transaction. Municipal issuers often set high minimum denomination amounts for so-called “junk bonds” that have a higher default risk that may make the investments inappropriate for retail investors. Because retail investors tend to purchase securities in smaller amounts, this minimum denomination standard helps ensure that dealer firms sell high-risk securities only to investors who are capable of making sizeable investments and more prepared to bear the higher risk.
In its surveillance of trading in the municipal bond market, the SEC Enforcement Division’s Municipal Securities and Public Pensions Unit detected improper sales below a $100,000 minimum denomination set in a $3.5 billion offering of junk bonds by the Commonwealth of Puerto Rico earlier this year. The SEC’s subsequent investigation identified a total of 66 occasions when dealer firms sold the Puerto Rico bonds to investors in amounts below $100,000. The agency instituted administrative proceedings against the firms behind those improper sales: Charles Schwab & Co., Hapoalim Securities USA, Interactive Brokers LLC, Investment Professionals Inc., J.P. Morgan Securities, Lebenthal & Co., National Securities Corporation, Oppenheimer & Co., Riedl First Securities Co. of Kansas, Stifel Nicolaus & Co., TD Ameritrade, UBS Financial Services, and Wedbush Securities.
The enforcement actions are the SEC’s first under Municipal Securities Rulemaking Board (MSRB) Rule G-15(f), which establishes the minimum denomination requirement. Each firm agreed to settle the SEC’s charges and pay penalties ranging from $54,000 to $130,000.
“These actions demonstrate our commitment to rigorous enforcement of all types of violations in the municipal bond market,” said Andrew J. Ceresney, Director of the SEC’s Division of Enforcement. “We will act quickly and use all available tools to protect investors in municipal securities.”
LeeAnn G. Gaunt, Chief of the SEC’s Municipal Securities and Public Pensions Unit added, “These firms violated a straightforward investor protection rule that prohibits the sale of muni bonds in increments below a specified minimum. We conduct frequent surveillance of trading in the municipal bond market and will penalize abuses that threaten retail investors.”
The SEC’s orders against the 13 dealers find that in addition to violating MSRB Rule G-15(f) by executing sales below the minimum denomination, they violated Section 15B(c)(1) of the Securities Exchange Act of 1934, which prohibits violations of any MSRB rule. Without admitting or denying the findings, each of the firms agreed to be censured. They also agreed to review their policies and procedures and make any changes that are necessary to ensure proper compliance with MSRB Rule G-15(f).
The SEC’s investigation, which is continuing, is being conducted by Joseph Chimienti, Sue Curtin, Heidi M. Mitza, and Jonathon Wilcox with assistance from Kathleen B. Shields. The case is supervised by Kevin B. Currid and Mark R. Zehner. The SEC appreciates the assistance of the MSRB.
Tuesday, November 4, 2014
NASA SATELLITE SHOWS HURRICANE VANCE ADVANCING TOWARD MEXICO
NASA's Aqua satellite saw Hurricane Vance off Mexico's west coast on Nov. 3. Clouds covered Socorro Island and stretched as far east as Puerto Vallarta. Image Credit: NASA Goddard MODIS Rapid Response Team
NASA's Aqua Satellite Sees Hurricane Vance Headed for Landfall in Western Mexico
NASA's Aqua satellite passed over Vance on Nov. 3 as it started moving in a northeasterly direction toward the northwestern coast of Mexico. On Nov. 4, a Tropical Storm Watch was in effect from Mazatlan northward to Topolobampo, Mexico. Hurricane Vance is forecast to make landfall in northwestern mainland Mexico on Nov. 5.
On Nov. 3 at 20:50 UTC (3:50 p.m. EST) the Moderate Resolution Imaging Spectroradiometer or MODIS instrument that flies aboard NASA's Aqua satellite captured a visible image of Hurricane Vance off Mexico's west coast. The eastern quadrant of the storm covered Socorro Island and stretched as far east as Puerto Vallarta. Around the center of circulation were a thick band of strong thunderstorms that appeared bright white on the MODIS image. Vance's eye was no longer visible as it had filled in with clouds.
The National Hurricane Center (NHC) reported at 10 a.m. EST (7 a.m. PST/1500 UTC) on Nov. 4 that Vance's maximum sustained winds had decreased to 85 mph (140 kph) and rapid weakening was forecast. The center of Hurricane Vance was located near latitude 19.3 north and longitude 109.6 west. That puts the center of Vance about 100 miles (155 km) east-northeast of Socorro Island. Vance is moving toward the north-northeast near 13 mph (20 kph) and is expected to continue for the next couple of days.
Vance is expected to bring large amounts of rainfall to northwestern Mexico. Rainfall totals of 4 to8 inches with isolated amounts near 12 inches through Wednesday, Nov. 5 over the states of Sinaloa, Nayarit and Durango in western Mexico. NHC noted that swells generated by Vance will be affecting portions of the coast of southwestern Mexico and Baja California Sur today and tonight.
Over the next 24 to 36 hours, Vance could weaken to a tropical depression by the time it reaches the coast of Mexico. Landfall is expected mid-day Wednesday, Nov. 5.
SECRETARY KERRY'S REMARKS ON U.S.-CHINA RELATIONS
FROM: U.S. STATE DEPARTMENT
Remarks on U.S.-China Relations
Remarks
John Kerry
Secretary of State
Johns Hopkins School of Advanced International Studies
Washington, DC
November 4, 2014
SECRETARY KERRY: Well, thank you very much, Dean Nasr. I’ve had the privilege of knowing Vali for a while. When I was in the Senate, he was a very valuable advisor, and I can remember coming down to the State Department and meeting with him and with Richard Holbrooke and others in the early days of working on what was then called AfPak – Afghanistan, Pakistan, and particularly Afghanistan. So Vali, thank you for your journey. Thanks for imparting your wisdom here at SAIS.
And thank you all very, very much here at SAIS for allowing me to come here today to share a few thoughts with you about this special relationship with China, an important relationship. And I’m happy to be here, staring at a lot of mobile devices. (Laughter.) It’s a whole new world out there. I’ll tell you, when I ran for president in 2004 I never saw this barrage of rectangular devices facing you when you were talking. (Laughter.) It was usually just one, and it was the opposition guy, listening to everything you said in order to get you into trouble, if you didn’t get yourself into trouble.
Anyway, I’m getting ready to leave in a very few hours – in fact, I go directly from here to the airport – on a typical Secretary of State journey – to Paris this evening, meetings tomorrow, then to Beijing, to Muscat, discussions on Iran nuclear program, then back to Beijing for bilateral meetings with the Chinese Government, then back to somewhere, perhaps Washington, but at this moment, with a lot of things in the air, it’s hard to say. So it’s nice for me to get a chance before I take off to talk substance with all of you and to talk about a critical issue before I depart.
This school was founded during World War II by Paul Nitze and Christian Herter, both of whom I’m very proud to say were from Massachusetts. (Laughter.) They could – they had a great skill, those of you who have read about them, to see that even then, the world was going to be a fundamentally changed place after World War II and that foreign policy makers would need to change with it, not just to keep pace but to set the pace, to express a vision, to be able to see over the horizon and define how the United States would stay strong and lead and join with other countries, increasingly in empowering those other countries. And we did with the Marshall Plan, which as many of you may know, was unpopular at the time, but succeeded in rebuilding whole nations, creating democracies, and setting a new direction.
The world has continued to change in the 70-plus years since, almost certainly in ways that Herter and Nitze could only have dreamed of. And it has changed, I might say, for the better, despite the headlines and the challenges of religious, radical extremism and terrorism. It has nevertheless changed for the better in large measure precisely because of the careful and creative analysis that these men so believed and hoped would, in fact, shape a world that is more free, more prosperous, and more humane. And despite the headlines and places of tension, the world is, in fact, those things.
The great American philosopher Yogi Berra once said, “It’s tough to make predications, especially about the future.” (Laughter.) He really said that. (Laughter.) While I am reminded that speculating about the future is obviously always risky, there are two predictions that I am very certain about. The Asia Pacific is one of the most promising places on the planet, and America’s future and security and prosperity are closely and increasingly linked to that region.
Back in August, when I was returning from a trip to Burma and Australia, I delivered a speech at the East-West Center in Honolulu about President Obama’s rebalance towards the Asia Pacific and the enormous value that we place on longstanding alliances with Japan, South Korea, Australia, Thailand, and the Philippines and our bourgeoning relationships with ASEAN and countries in Southeast Asia. In that speech, I outlined four specific opportunities that define the rebalance, goals if you will.
First, the opportunity to create sustainable economic growth, which includes finalizing the Trans-Pacific Partnership. The TPP is not only a trade agreement, but also a strategic opportunity for the United States and other Pacific nations to come together, to bind together, so that we can all prosper together. Second, powering a clean energy revolution that will help us address climate change while simultaneously jumpstarting economies around the world. Third, reducing tensions and promoting regional cooperation by strengthening the institutions and reinforcing the norms that contribute to a rules-based, stable region. And fourth, empowering people throughout the Asia Pacific to live with dignity, security, and opportunity.
These are our goals for the rebalance. These are the objectives that we are working to pursue. And we are working together with our allies and our partners across Asia. And these are the goals that the President will discuss with other leaders next week at the Asia Pacific Economic Cooperation meeting in Beijing and also at the East Asia Summit that follows in Burma.
The goal of the rebalance is not a strategic initiative to affect one nation or push people in any direction. It is an inclusive invitation to join in this march towards prosperity, dignity, and stability for countries. I can reaffirm today that the Obama Administration is absolutely committed to seeing through all of these goals.
But there should be no doubt that a key component of our rebalance strategy is also about strengthening U.S-China relations. Why? Because a stronger relationship between our two nations will benefit not just the United States and China, not just the Asia Pacific, but the world. One of the many very accomplished alumni of this school is China’s Ambassador to the United States Cui Tiankai, and we’re delighted that he’s here today. Thank you, Mr. Ambassador, for being here with us.
Ambassador Cui spoke at SAIS about one year ago and he described the U.S.-China relationship as, quote, “the most important as well as the most sensitive, the most comprehensive as well as the most complex, and the most promising as well as the most challenging.” All of those attributes are true, but I would respectfully add one more to that list: The U.S.-China relationship is the most consequential in the world today, period, and it will do much to determine the shape of the 21st century.
That means that we have to get it right. Since President Obama first took office, that’s exactly what he has focused on doing. What he has worked to build over the past six years and what we are committed to advancing over the next two as well is a principled and productive relationship with China. That’s why he and I have both met each with our Chinese counterparts in person dozens of times. It’s why President Obama hosted the Sunnylands summit last June, shortly after President Xi took office. It’s why a couple of weeks ago, I invited Chinese State Councilor Yang Jiechi and the ambassador and others in his delegation to my hometown of Boston, where we spent a day and a half together charting new opportunities for our bilateral relationship. And it’s why I will join the President in China next week on what will be my fourth trip to the country since I became Secretary of State less than two years ago.
The sheer size of China and its economy, coupled with the rapid and significant changes that are taking place there, means that our relationship by definition has vast potential. As two of the world’s major powers and largest economies, we have a profound opportunity to set a constructive course on any number of issues, from climate change to global trade, and obviously, we have a fundamental interest in doing so. For that reason, our relationship has to be carefully managed and guided – not by news hooks and grand gestures, but by a long-term strategic vision, by hard work, by good diplomacy, and by good relationships.
It’s important to remember that not too long ago U.S.-China ties were centered on a relatively narrow set of bilateral and regional matters. But today, thanks to focused diplomacy on both sides, the leadership President Obama and President Xi have displayed, our nations are collaborating to tackle some of the most complex global challenges that the world has ever seen. And we’re able to do that because together our nations are working closely in order to avoid the historic pitfall of strategic rivalry between an emerging power and an existing power. Instead, we’re focused on the steps that we need to ensure that we not only coexist, but that we cooperate.
America’s China policy is really built on two pillars: Constructively managing our differences – and there are differences – and just as constructively coordinating our efforts on the wide range of issues where our interests are aligned. Now make no mistake, we are clear-eyed about the fact that the United States and China are markedly different countries. We have different political systems, different histories, different cultures, and most importantly, different views on certain significant issues. And the leaders of both nations believe it is important to put our disagreements on the table, talk through them, and manage and then work to narrow the differences over time. And these debates, frankly, don’t take place in the spotlight, and much of what we say usually doesn’t end up in the headlines. But I assure you that tough issues are discussed at length whenever our leaders come together.
And when we talk about managing our differences, that is not code for agree to disagree. For example, we do not simply agree to disagree when it comes to maritime security, especially in the South and East China Seas. The United States is not a claimant, and we do not take a position on the various territorial claims of others. But we take a strong position on how those claims are pursued and how those disputes are going to be resolved. So we are deeply concerned about mounting tension in the South China Sea and we consistently urge all the parties to pursue claims in accordance with international law, to exercise self-restraint, to peacefully resolve disputes, and to make rapid, meaningful progress to complete a code of conduct that will help reduce the potential for conflict in the years to come. And the United States will work, without getting involved in the merits of the claim, on helping that process to be effectuated, because doing so brings greater stability, brings more opportunity for cooperation in other areas.
We do not agree to disagree when it comes to cyber issues. We’ve been very clear about how strongly we object to any cyber-enabled theft of trade secrets and other sensitive information from our companies, whoever may be doing it. And we are convinced that it is in China’s interest to help put an end to this practice. Foreign companies will invest more in China if they can be confident that when they do their intellectual property will be safeguarded. Chinese markets will be more attractive to international industries if China shows that it’s serious about addressing global cyber concerns. And China’s own industries will only prosper if they are generating their own intellectual property, ultimately, and if their government enforces the rules fully and fairly for everybody. The United States is committed to using an open and frank dialogue to help build trust and develop common rules of the road on those pressing economic and security challenges.
And we certainly do not agree to disagree when it comes to human rights. The United States will always advocate for all countries to permit their citizens to express their grievances freely, publicly, peacefully, and without fear of retribution. That’s why we’ve spoken out about the situation in Hong Kong and human rights issues elsewhere in China, because respect for fundamental freedoms is now and always has been a centerpiece of American foreign policy, and because we have seen again and again that respect for rule of law and the protection of human rights are essential to any country’s long-term growth, prosperity, and stability, and to their respect in the world.
Let me be clear: The United States will never shy away from articulating our deeply held values or defending our interests, our allies, and our partners throughout the region. And China is well aware of that. But the relationship between our two countries has developed and matured significantly over time. Our differences will undoubtedly continue to test the relationship; they always do, between people, between families, between countries. But they should not, and in fact, must not prevent us from acting cooperatively in other areas.
So what are those areas? Where are the great opportunities? Well, it starts with economics. Thirty-five years ago when diplomatic relations began between the United States and China, trade between our two countries was virtually nonexistent. Today, our businesses exchange nearly $600 billion in goods and services every single year. Our mutual investments are close to $100 billion. You read a lot about American businesses going over to China. Well, let me tell you something. The truth is that today, even more Chinese businesses are setting up shop in the United States. And we welcome that. In fact, we do a lot to encourage Chinese investment here, while our embassies and consulates in China are simultaneously doing great work in order to identify opportunities for American companies over there.
Even as U.S. and Chinese businesses compete in the marketplace, we each have a huge stake in the economic health of the other. And the fact is that the world as a whole has a huge stake in the economic vibrancy of both China and the United States. That is why we’re focused on enhancing trade and investment between our countries, including through the ongoing negotiations of a high-standard bilateral investment treaty. Established rules of the road that do more to protect businesses and investors on both sides of the Pacific will help both of our economies to be able to continue to grow and to prosper. One recent study by the Peterson Institute for International Economics found that if we’re able to open up trade and investment significantly, our countries could share gains of almost half a trillion dollars a year.
So let me underscore: Our aligned interests are more than just economic and cooperation is more than just commercial. As China pursues interests well beyond the Asia Pacific, there is both opportunity and necessity to coordinate our efforts to address global security concerns. Our shared efforts to respond to the global threat of climate change are a perfect example. The UN climate report that was released over this last weekend is another wakeup call to everybody. The science could not be clearer. Our planet is warming and it is warming due to our actions, human input. And the damage is already visible, and it is visible at a faster and greater rate than scientists predicted. That’s why there’s cause for alarm, because everything that they predicted is happening, but happening faster and happening to a greater degree. The solutions are within reach, but they will require ambitious, decisive, and immediate action.
Last year in Beijing, State Councilor Yang and I launched the U.S.-China Climate Change Working Group, which is already engaged in pilot projects, policy exchanges, and more. We raised the climate change issue to the ministerial level so that we would be dealing with it on an ongoing high-level basis. And we’ve also been engaged since then in constant discussions aimed at ensuring that the global community can do everything possible to be able to reach a successful, ambitious climate agreement when we all meet in Paris next year. In February, we announced plans to exchange information and to discuss policies to develop respective plans to strengthen domestic emissions targets for the 2015 UN climate negotiations, what I just referred to. And by the way, we’ll be meeting shortly in Lima, Peru as the lead-up to this particular meeting next year in Paris. So there’s a lot of work going into this.
Next year, countries are supposed to come forward with their stated goals. And we hope that the partnership between China and the United States can help set an example for global leadership and for the seriousness of purpose on those targets and on the negotiations overall. If the two countries that together are nearing 50 percent of all the emissions in the world, which happen to be also the two largest economies in the world – if they can come together and show seriousness of purpose, imagine what the impact could be on the rest of the world. The United States and China are the two largest consumers of energy, and we are the world’s two largest emitters of global greenhouse gases. Together, we account for that roughly – it’s about 45 percent and climbing, unfortunately.
So we need to solve this problem together. Why? Because neither one of us can possibly solve it alone. Even if every single American biked to work or carpooled to school or used only solar panels to power their homes – if we reduced our emissions to zero, if we planted each of us in America a dozen trees, if we somehow eliminated all of our domestic greenhouse gas emissions, guess what? That still wouldn’t be enough to counteract the carbon pollution coming from China and the rest of the world. And the same would be true for China if they reduced everything and we continued. We would wipe out their gains; they would wipe out our gains. Because today, if even one or two major economies neglects to respond to this threat, it will erase the good work done everywhere else.
Never before has there been a greater urgency to countries around the world coming together to meet what is not just an environmental threat but an economic threat, a security threat, a health threat, and a security threat because we will see refugees in certain parts of the country displaced by vast changes in the ability to grow food, the ability to receive water, and the ability to survive, and that will change the nature of security and conflict in the world. That’s the reality of what we’re up against. And that’s why it is so imperative that the United States and China lead the world with genuine reductions that put us on a path to real progress.
The good news is that our shared responsibility to address climate change brings with it one of the greatest economic opportunities in history. With shared responsibility can come shared prosperity. The solution to climate change is as clear as the problem itself. And it’s not somewhere out there, pie in the sky, over the horizon, impossible to grab ahold of; it’s staring us in the face. The solution is energy policy. It’s as simple as that. Make the right choices in your energy policy, you solve the problem of climate change.
Guess what? You also happen to kick your economies into gear. You produce millions of jobs. You create economic opportunity unlike any that we have ever known, because the global energy market of the future is poised to be the largest market the world has ever known. Between now and 2035, investment in the sector is expected to reach nearly $17 trillion. The market that made everybody wealthy in America – everybody saw their income go up in the 1990s, and the greatest wealth in the history of our nation was created in the 1990s. It was a $1 trillion market with one billion users. The energy market is a $6 trillion market with four to five billion users today, and it’s going to grow to maybe nine billion users over the next 30, 40, 50 years. Think of that. Seventeen trillion dollars is more than the entire GDP of China and India combined. And with a few smart choices, together we can ensure that clean energy is the most attractive investment in the global energy sector and that entrepreneurs around the world can prosper as they help us innovate our way out of this mess and towards a healthier planet.
And none of this will happen if we don’t make it happen. How our two countries lead – China and the United States – or don’t lead on climate and clean energy will make the difference as to whether or not we’re able to fully take advantage of this unprecedented economic opportunity and whether the world is able to effectively address climate change and the threat that it poses to global security, prosperity, and health.
Our cooperation also makes a difference when it comes to nuclear proliferation. We are very encouraged by China’s serious engagement on the Iran negotiations as a full partner in the P5+1, and we’re very hopeful that working more closely together the United States and China will ultimately bring North Korea to the realization that its current approach is leading to a dead end, and the only path that will bring it security and prosperity is to make real progress towards denuclearizing the Korean Peninsula. Our cooperation there also can make a difference.
It can also make a difference in countering violent extremist groups like ISIL, which seek to harm people in every corner of the globe. And it can help in bringing stability to places like Afghanistan, where today we are partnering to support political cohesiveness and prevent Afghanistan from again becoming a safe haven for terrorists. We welcome China’s role as a critical player in the Afghan region. And just last week, in fact, President Ghani, our Special Representative for Afghanistan and Pakistan Dan Feldman, and President Obama’s counselor John Podesta all traveled to Beijing to participate in a conference focused on supporting Afghan peace and reconstruction.
And as we’ve seen recently with the Ebola epidemic, China has also shown that it is prepared to take on a bigger role in addressing international crises – including those that emerge far from Asia, even those on the opposite side of the globe. We’re very grateful that China has committed more than $130 million to date in aid and supplies to help address the Ebola crisis. And last week, China announced its plans to dispatch a unit from the People’s Liberation Army to Liberia to help manage the crisis. That’s global leadership, and it’s important, and that cooperation with us is more than welcome.
We all need to do more, and fast. But the kind of support from China that we’ve seen is critical, and it speaks to China’s understanding of global interests and responsibilities. The fact is that among the major threats and crises that face the world today, there really isn’t one that couldn’t be addressed more effectively with expanded U.S.-China cooperation.
But as State Councilor Yang and I discussed earlier this month in Boston, with China engaged more and more on the global stage, our cooperation can also be used to seize opportunities for change and for growth, like the many opportunities for development in Africa, Central America, and other parts of Asia. And we talked about that in Boston, about the possibility of the United States and China cooperating on specific development targets.
There are countries across these regions where both China and the United States are already deeply invested. If we double-down on coordinating our assistance and development work, if we ensure that our approaches are complementary and coordinated, we can bring more communities into the 21st century faster, we could help millions of families lift themselves out of poverty, we can give more people across the world the tools and the data to shape their own future. And as we help more countries to make the transition from foreign aid to foreign trade, we’ll all benefit in terms of economic growth, expanded export markets, job creation, and ultimately, the stability and the prosperity and the dignity that comes from that. Beyond that, as these regions become more prosperous, believe me, they’re going to become more stable. And that, in the end, means we can all be more secure.
The bottom line is this: The United States and China comprise one quarter of the global population. We make up one third of the global economy. We generate one fifth of the global trade. And when we are pulling in the same direction on any issue, we can bend the curve in a way that few other nations on Earth can accomplish.
Between governments, we’re doing more than ever in order to ensure that that is the case. Jack Lew, our Secretary of Treasury, and I meet regularly with our counterparts in the Strategic and Economic Dialogue with China. Today, although we have more than a hundred different bilateral dialogues on everything from trade to transportation, we are, in fact, focused at the highest level on a regular basis.
But I’ll tell you, if this relationship is going to live up to its full potential, government-to-government cooperation alone is not enough. We have to continue also to deepen our people-to-people ties. A recent poll indicated that Americans view China less favorably than they did just a few years ago, and vice versa; Chinese view us less favorably. So obviously, we need to do more to connect our peoples and to make sure that we’re communicating effectively between each other so that we are communicating to our peoples effectively. We need to build on the sense of common purpose and camaraderie that can be essential to sustaining our relationship for decades to come. And that is the logic behind the dialogue on exchange that I co-chair with China’s Vice Premier Madame Liu.
One of the best ways for us to improve our connection is by expanding the student exchanges – I just stopped and met with a bunch of students who have been part of the exchange here from SAIS, and we all – I hope you’re all aware of President Obama’s 100,000 Strong initiative. Today, more students from China study in the United States than any other foreign country, and we are actively investing in ways to expand study abroad opportunities for American students in China, because we recognize that nothing brings about a common understanding more than effectively getting the chance to live in another country, see the world through another lens, and forge friendships that can last for decades.
I’ll just tell you very quickly the number of foreign ministers that I interact with very regularly in the Middle East and elsewhere, proudly sit in front of me and talk to me about their graduate school or undergraduate school experiences in the United States. It has lasted with them forever, and it helps them and us to be able to work through difficult moments.
Let me take this opportunity to note that this is not an earthshattering new principle I’ve just articulated. It is something that SAIS has long understood. You’ve had an international campus in Nanjing for nearly 30 years, and it focuses on everything, from facilitating student exchanges to all the prospects of business and relationships in the future. And as a result, its students are better prepared than most for the globalized world that we live in. But believe it or not, there are a lot of places that don’t take it for granted the way you do, for whom this would actually be a new enterprise, even now in 2014.
So I want to thank David Lampton and the others as SAIS for their leadership on this effort. Ultimately, the United States and China need to find more ways to interact at more levels of government, across more sectors and among more people who live in all the corners of our nations. And these connections will help us to understand each other better and to forge a better relationship going forward. They’ll help us work through our differences, and these connections will ultimately erase the misperceptions and stereotypes that fuel mistrust, and these connections will help us pull in the same direction and take advantage of the unique opportunities our countries have to help each other and ultimately to help the world.
We don’t underestimate – I certainly don’t – the complexity of the world we’re living in today and the sensitivity of this challenge that we face. The path to a productive relationship between the United States and China has seen its bumps, and it may see more. But the fact is that it has never been more important to us to be able to continue down the path that we are on. Our two nations face a genuine test of leadership. We have to make the right choices in both Washington and in Beijing.
In many ways, the world we’re living in today is much more like 19th-century and 18th-century global diplomacy, the balance of power and different interests, than it is the bifurcated, bipolar world we lived in in the Cold War and much of the 20th century. This is a new bursting on the scene of new powers. But guess what? They’re doing the things we wanted them to do. At least 15 of today’s donor countries giving aid to other countries were only 10 and 15 years ago recipient countries of aid themselves. And we welcome the growth of these nations to their global responsibilities and to the assumption of increased global ability to make a difference.
But it’s more complicated. When other countries have stronger economies and when there’s more competition for goods and services and for market share, it’s a more complicated world. And with the release of sectarianism and radical religious extremism and other things that have come with this transformation and confrontation with modernity, we all face a more difficult, complex diplomatic path.
But it is clear that coming from the different places we come from, China and the United States, we actually do have the opportunity as two leading powers to find solutions to major challenges facing the world today. And if we can cooperate together and help show the way, that will help bring other nations along and establish the norms for the rest of the world. We have an opportunity to demonstrate how a major power and an emerging power can cooperate to serve the interests of both, and in doing so, improve the prospects for stability, prosperity, and peace around the equator, from pole to pole, throughout this world we live in.
Maybe that’s a lofty objective; I don’t think it’s too lofty. I think it’s easy to say it in a speech, yes – a lot harder to produce it. But it will be in the doing of it, in the quality of our dialogue, in the persistent search for solutions to issues large and small, in the determination to manage the differences and find the big places to cooperate, and in order to seize the opportunities when they arise, that will provide the real measure of failure or success in this approach.
When he was in the twilight of his life, Paul Nitze was asked about the extraordinary contributions he had made to the Marshall Plan, to NATO, to the U.S.-Soviet relations. He didn’t brag, he didn’t boast, he just said: “I have been extremely lucky. I have been around at a time when important things needed to be done.”
There has never been a demand more than there is today for important things to be done. I hope that the United States and China – who are both blessed with great strength, with ample resources, with extraordinary people – can do important things now and can do them together. And I hope that as we come together in Beijing in the days ahead, as we work together in the months and years to come, that we are going to meet that charge and live up to the standard that Paul Nitze said, not just when he founded this school but when he lived his life.
Thank you all very much. (Applause.)
Remarks on U.S.-China Relations
Remarks
John Kerry
Secretary of State
Johns Hopkins School of Advanced International Studies
Washington, DC
November 4, 2014
SECRETARY KERRY: Well, thank you very much, Dean Nasr. I’ve had the privilege of knowing Vali for a while. When I was in the Senate, he was a very valuable advisor, and I can remember coming down to the State Department and meeting with him and with Richard Holbrooke and others in the early days of working on what was then called AfPak – Afghanistan, Pakistan, and particularly Afghanistan. So Vali, thank you for your journey. Thanks for imparting your wisdom here at SAIS.
And thank you all very, very much here at SAIS for allowing me to come here today to share a few thoughts with you about this special relationship with China, an important relationship. And I’m happy to be here, staring at a lot of mobile devices. (Laughter.) It’s a whole new world out there. I’ll tell you, when I ran for president in 2004 I never saw this barrage of rectangular devices facing you when you were talking. (Laughter.) It was usually just one, and it was the opposition guy, listening to everything you said in order to get you into trouble, if you didn’t get yourself into trouble.
Anyway, I’m getting ready to leave in a very few hours – in fact, I go directly from here to the airport – on a typical Secretary of State journey – to Paris this evening, meetings tomorrow, then to Beijing, to Muscat, discussions on Iran nuclear program, then back to Beijing for bilateral meetings with the Chinese Government, then back to somewhere, perhaps Washington, but at this moment, with a lot of things in the air, it’s hard to say. So it’s nice for me to get a chance before I take off to talk substance with all of you and to talk about a critical issue before I depart.
This school was founded during World War II by Paul Nitze and Christian Herter, both of whom I’m very proud to say were from Massachusetts. (Laughter.) They could – they had a great skill, those of you who have read about them, to see that even then, the world was going to be a fundamentally changed place after World War II and that foreign policy makers would need to change with it, not just to keep pace but to set the pace, to express a vision, to be able to see over the horizon and define how the United States would stay strong and lead and join with other countries, increasingly in empowering those other countries. And we did with the Marshall Plan, which as many of you may know, was unpopular at the time, but succeeded in rebuilding whole nations, creating democracies, and setting a new direction.
The world has continued to change in the 70-plus years since, almost certainly in ways that Herter and Nitze could only have dreamed of. And it has changed, I might say, for the better, despite the headlines and the challenges of religious, radical extremism and terrorism. It has nevertheless changed for the better in large measure precisely because of the careful and creative analysis that these men so believed and hoped would, in fact, shape a world that is more free, more prosperous, and more humane. And despite the headlines and places of tension, the world is, in fact, those things.
The great American philosopher Yogi Berra once said, “It’s tough to make predications, especially about the future.” (Laughter.) He really said that. (Laughter.) While I am reminded that speculating about the future is obviously always risky, there are two predictions that I am very certain about. The Asia Pacific is one of the most promising places on the planet, and America’s future and security and prosperity are closely and increasingly linked to that region.
Back in August, when I was returning from a trip to Burma and Australia, I delivered a speech at the East-West Center in Honolulu about President Obama’s rebalance towards the Asia Pacific and the enormous value that we place on longstanding alliances with Japan, South Korea, Australia, Thailand, and the Philippines and our bourgeoning relationships with ASEAN and countries in Southeast Asia. In that speech, I outlined four specific opportunities that define the rebalance, goals if you will.
First, the opportunity to create sustainable economic growth, which includes finalizing the Trans-Pacific Partnership. The TPP is not only a trade agreement, but also a strategic opportunity for the United States and other Pacific nations to come together, to bind together, so that we can all prosper together. Second, powering a clean energy revolution that will help us address climate change while simultaneously jumpstarting economies around the world. Third, reducing tensions and promoting regional cooperation by strengthening the institutions and reinforcing the norms that contribute to a rules-based, stable region. And fourth, empowering people throughout the Asia Pacific to live with dignity, security, and opportunity.
These are our goals for the rebalance. These are the objectives that we are working to pursue. And we are working together with our allies and our partners across Asia. And these are the goals that the President will discuss with other leaders next week at the Asia Pacific Economic Cooperation meeting in Beijing and also at the East Asia Summit that follows in Burma.
The goal of the rebalance is not a strategic initiative to affect one nation or push people in any direction. It is an inclusive invitation to join in this march towards prosperity, dignity, and stability for countries. I can reaffirm today that the Obama Administration is absolutely committed to seeing through all of these goals.
But there should be no doubt that a key component of our rebalance strategy is also about strengthening U.S-China relations. Why? Because a stronger relationship between our two nations will benefit not just the United States and China, not just the Asia Pacific, but the world. One of the many very accomplished alumni of this school is China’s Ambassador to the United States Cui Tiankai, and we’re delighted that he’s here today. Thank you, Mr. Ambassador, for being here with us.
Ambassador Cui spoke at SAIS about one year ago and he described the U.S.-China relationship as, quote, “the most important as well as the most sensitive, the most comprehensive as well as the most complex, and the most promising as well as the most challenging.” All of those attributes are true, but I would respectfully add one more to that list: The U.S.-China relationship is the most consequential in the world today, period, and it will do much to determine the shape of the 21st century.
That means that we have to get it right. Since President Obama first took office, that’s exactly what he has focused on doing. What he has worked to build over the past six years and what we are committed to advancing over the next two as well is a principled and productive relationship with China. That’s why he and I have both met each with our Chinese counterparts in person dozens of times. It’s why President Obama hosted the Sunnylands summit last June, shortly after President Xi took office. It’s why a couple of weeks ago, I invited Chinese State Councilor Yang Jiechi and the ambassador and others in his delegation to my hometown of Boston, where we spent a day and a half together charting new opportunities for our bilateral relationship. And it’s why I will join the President in China next week on what will be my fourth trip to the country since I became Secretary of State less than two years ago.
The sheer size of China and its economy, coupled with the rapid and significant changes that are taking place there, means that our relationship by definition has vast potential. As two of the world’s major powers and largest economies, we have a profound opportunity to set a constructive course on any number of issues, from climate change to global trade, and obviously, we have a fundamental interest in doing so. For that reason, our relationship has to be carefully managed and guided – not by news hooks and grand gestures, but by a long-term strategic vision, by hard work, by good diplomacy, and by good relationships.
It’s important to remember that not too long ago U.S.-China ties were centered on a relatively narrow set of bilateral and regional matters. But today, thanks to focused diplomacy on both sides, the leadership President Obama and President Xi have displayed, our nations are collaborating to tackle some of the most complex global challenges that the world has ever seen. And we’re able to do that because together our nations are working closely in order to avoid the historic pitfall of strategic rivalry between an emerging power and an existing power. Instead, we’re focused on the steps that we need to ensure that we not only coexist, but that we cooperate.
America’s China policy is really built on two pillars: Constructively managing our differences – and there are differences – and just as constructively coordinating our efforts on the wide range of issues where our interests are aligned. Now make no mistake, we are clear-eyed about the fact that the United States and China are markedly different countries. We have different political systems, different histories, different cultures, and most importantly, different views on certain significant issues. And the leaders of both nations believe it is important to put our disagreements on the table, talk through them, and manage and then work to narrow the differences over time. And these debates, frankly, don’t take place in the spotlight, and much of what we say usually doesn’t end up in the headlines. But I assure you that tough issues are discussed at length whenever our leaders come together.
And when we talk about managing our differences, that is not code for agree to disagree. For example, we do not simply agree to disagree when it comes to maritime security, especially in the South and East China Seas. The United States is not a claimant, and we do not take a position on the various territorial claims of others. But we take a strong position on how those claims are pursued and how those disputes are going to be resolved. So we are deeply concerned about mounting tension in the South China Sea and we consistently urge all the parties to pursue claims in accordance with international law, to exercise self-restraint, to peacefully resolve disputes, and to make rapid, meaningful progress to complete a code of conduct that will help reduce the potential for conflict in the years to come. And the United States will work, without getting involved in the merits of the claim, on helping that process to be effectuated, because doing so brings greater stability, brings more opportunity for cooperation in other areas.
We do not agree to disagree when it comes to cyber issues. We’ve been very clear about how strongly we object to any cyber-enabled theft of trade secrets and other sensitive information from our companies, whoever may be doing it. And we are convinced that it is in China’s interest to help put an end to this practice. Foreign companies will invest more in China if they can be confident that when they do their intellectual property will be safeguarded. Chinese markets will be more attractive to international industries if China shows that it’s serious about addressing global cyber concerns. And China’s own industries will only prosper if they are generating their own intellectual property, ultimately, and if their government enforces the rules fully and fairly for everybody. The United States is committed to using an open and frank dialogue to help build trust and develop common rules of the road on those pressing economic and security challenges.
And we certainly do not agree to disagree when it comes to human rights. The United States will always advocate for all countries to permit their citizens to express their grievances freely, publicly, peacefully, and without fear of retribution. That’s why we’ve spoken out about the situation in Hong Kong and human rights issues elsewhere in China, because respect for fundamental freedoms is now and always has been a centerpiece of American foreign policy, and because we have seen again and again that respect for rule of law and the protection of human rights are essential to any country’s long-term growth, prosperity, and stability, and to their respect in the world.
Let me be clear: The United States will never shy away from articulating our deeply held values or defending our interests, our allies, and our partners throughout the region. And China is well aware of that. But the relationship between our two countries has developed and matured significantly over time. Our differences will undoubtedly continue to test the relationship; they always do, between people, between families, between countries. But they should not, and in fact, must not prevent us from acting cooperatively in other areas.
So what are those areas? Where are the great opportunities? Well, it starts with economics. Thirty-five years ago when diplomatic relations began between the United States and China, trade between our two countries was virtually nonexistent. Today, our businesses exchange nearly $600 billion in goods and services every single year. Our mutual investments are close to $100 billion. You read a lot about American businesses going over to China. Well, let me tell you something. The truth is that today, even more Chinese businesses are setting up shop in the United States. And we welcome that. In fact, we do a lot to encourage Chinese investment here, while our embassies and consulates in China are simultaneously doing great work in order to identify opportunities for American companies over there.
Even as U.S. and Chinese businesses compete in the marketplace, we each have a huge stake in the economic health of the other. And the fact is that the world as a whole has a huge stake in the economic vibrancy of both China and the United States. That is why we’re focused on enhancing trade and investment between our countries, including through the ongoing negotiations of a high-standard bilateral investment treaty. Established rules of the road that do more to protect businesses and investors on both sides of the Pacific will help both of our economies to be able to continue to grow and to prosper. One recent study by the Peterson Institute for International Economics found that if we’re able to open up trade and investment significantly, our countries could share gains of almost half a trillion dollars a year.
So let me underscore: Our aligned interests are more than just economic and cooperation is more than just commercial. As China pursues interests well beyond the Asia Pacific, there is both opportunity and necessity to coordinate our efforts to address global security concerns. Our shared efforts to respond to the global threat of climate change are a perfect example. The UN climate report that was released over this last weekend is another wakeup call to everybody. The science could not be clearer. Our planet is warming and it is warming due to our actions, human input. And the damage is already visible, and it is visible at a faster and greater rate than scientists predicted. That’s why there’s cause for alarm, because everything that they predicted is happening, but happening faster and happening to a greater degree. The solutions are within reach, but they will require ambitious, decisive, and immediate action.
Last year in Beijing, State Councilor Yang and I launched the U.S.-China Climate Change Working Group, which is already engaged in pilot projects, policy exchanges, and more. We raised the climate change issue to the ministerial level so that we would be dealing with it on an ongoing high-level basis. And we’ve also been engaged since then in constant discussions aimed at ensuring that the global community can do everything possible to be able to reach a successful, ambitious climate agreement when we all meet in Paris next year. In February, we announced plans to exchange information and to discuss policies to develop respective plans to strengthen domestic emissions targets for the 2015 UN climate negotiations, what I just referred to. And by the way, we’ll be meeting shortly in Lima, Peru as the lead-up to this particular meeting next year in Paris. So there’s a lot of work going into this.
Next year, countries are supposed to come forward with their stated goals. And we hope that the partnership between China and the United States can help set an example for global leadership and for the seriousness of purpose on those targets and on the negotiations overall. If the two countries that together are nearing 50 percent of all the emissions in the world, which happen to be also the two largest economies in the world – if they can come together and show seriousness of purpose, imagine what the impact could be on the rest of the world. The United States and China are the two largest consumers of energy, and we are the world’s two largest emitters of global greenhouse gases. Together, we account for that roughly – it’s about 45 percent and climbing, unfortunately.
So we need to solve this problem together. Why? Because neither one of us can possibly solve it alone. Even if every single American biked to work or carpooled to school or used only solar panels to power their homes – if we reduced our emissions to zero, if we planted each of us in America a dozen trees, if we somehow eliminated all of our domestic greenhouse gas emissions, guess what? That still wouldn’t be enough to counteract the carbon pollution coming from China and the rest of the world. And the same would be true for China if they reduced everything and we continued. We would wipe out their gains; they would wipe out our gains. Because today, if even one or two major economies neglects to respond to this threat, it will erase the good work done everywhere else.
Never before has there been a greater urgency to countries around the world coming together to meet what is not just an environmental threat but an economic threat, a security threat, a health threat, and a security threat because we will see refugees in certain parts of the country displaced by vast changes in the ability to grow food, the ability to receive water, and the ability to survive, and that will change the nature of security and conflict in the world. That’s the reality of what we’re up against. And that’s why it is so imperative that the United States and China lead the world with genuine reductions that put us on a path to real progress.
The good news is that our shared responsibility to address climate change brings with it one of the greatest economic opportunities in history. With shared responsibility can come shared prosperity. The solution to climate change is as clear as the problem itself. And it’s not somewhere out there, pie in the sky, over the horizon, impossible to grab ahold of; it’s staring us in the face. The solution is energy policy. It’s as simple as that. Make the right choices in your energy policy, you solve the problem of climate change.
Guess what? You also happen to kick your economies into gear. You produce millions of jobs. You create economic opportunity unlike any that we have ever known, because the global energy market of the future is poised to be the largest market the world has ever known. Between now and 2035, investment in the sector is expected to reach nearly $17 trillion. The market that made everybody wealthy in America – everybody saw their income go up in the 1990s, and the greatest wealth in the history of our nation was created in the 1990s. It was a $1 trillion market with one billion users. The energy market is a $6 trillion market with four to five billion users today, and it’s going to grow to maybe nine billion users over the next 30, 40, 50 years. Think of that. Seventeen trillion dollars is more than the entire GDP of China and India combined. And with a few smart choices, together we can ensure that clean energy is the most attractive investment in the global energy sector and that entrepreneurs around the world can prosper as they help us innovate our way out of this mess and towards a healthier planet.
And none of this will happen if we don’t make it happen. How our two countries lead – China and the United States – or don’t lead on climate and clean energy will make the difference as to whether or not we’re able to fully take advantage of this unprecedented economic opportunity and whether the world is able to effectively address climate change and the threat that it poses to global security, prosperity, and health.
Our cooperation also makes a difference when it comes to nuclear proliferation. We are very encouraged by China’s serious engagement on the Iran negotiations as a full partner in the P5+1, and we’re very hopeful that working more closely together the United States and China will ultimately bring North Korea to the realization that its current approach is leading to a dead end, and the only path that will bring it security and prosperity is to make real progress towards denuclearizing the Korean Peninsula. Our cooperation there also can make a difference.
It can also make a difference in countering violent extremist groups like ISIL, which seek to harm people in every corner of the globe. And it can help in bringing stability to places like Afghanistan, where today we are partnering to support political cohesiveness and prevent Afghanistan from again becoming a safe haven for terrorists. We welcome China’s role as a critical player in the Afghan region. And just last week, in fact, President Ghani, our Special Representative for Afghanistan and Pakistan Dan Feldman, and President Obama’s counselor John Podesta all traveled to Beijing to participate in a conference focused on supporting Afghan peace and reconstruction.
And as we’ve seen recently with the Ebola epidemic, China has also shown that it is prepared to take on a bigger role in addressing international crises – including those that emerge far from Asia, even those on the opposite side of the globe. We’re very grateful that China has committed more than $130 million to date in aid and supplies to help address the Ebola crisis. And last week, China announced its plans to dispatch a unit from the People’s Liberation Army to Liberia to help manage the crisis. That’s global leadership, and it’s important, and that cooperation with us is more than welcome.
We all need to do more, and fast. But the kind of support from China that we’ve seen is critical, and it speaks to China’s understanding of global interests and responsibilities. The fact is that among the major threats and crises that face the world today, there really isn’t one that couldn’t be addressed more effectively with expanded U.S.-China cooperation.
But as State Councilor Yang and I discussed earlier this month in Boston, with China engaged more and more on the global stage, our cooperation can also be used to seize opportunities for change and for growth, like the many opportunities for development in Africa, Central America, and other parts of Asia. And we talked about that in Boston, about the possibility of the United States and China cooperating on specific development targets.
There are countries across these regions where both China and the United States are already deeply invested. If we double-down on coordinating our assistance and development work, if we ensure that our approaches are complementary and coordinated, we can bring more communities into the 21st century faster, we could help millions of families lift themselves out of poverty, we can give more people across the world the tools and the data to shape their own future. And as we help more countries to make the transition from foreign aid to foreign trade, we’ll all benefit in terms of economic growth, expanded export markets, job creation, and ultimately, the stability and the prosperity and the dignity that comes from that. Beyond that, as these regions become more prosperous, believe me, they’re going to become more stable. And that, in the end, means we can all be more secure.
The bottom line is this: The United States and China comprise one quarter of the global population. We make up one third of the global economy. We generate one fifth of the global trade. And when we are pulling in the same direction on any issue, we can bend the curve in a way that few other nations on Earth can accomplish.
Between governments, we’re doing more than ever in order to ensure that that is the case. Jack Lew, our Secretary of Treasury, and I meet regularly with our counterparts in the Strategic and Economic Dialogue with China. Today, although we have more than a hundred different bilateral dialogues on everything from trade to transportation, we are, in fact, focused at the highest level on a regular basis.
But I’ll tell you, if this relationship is going to live up to its full potential, government-to-government cooperation alone is not enough. We have to continue also to deepen our people-to-people ties. A recent poll indicated that Americans view China less favorably than they did just a few years ago, and vice versa; Chinese view us less favorably. So obviously, we need to do more to connect our peoples and to make sure that we’re communicating effectively between each other so that we are communicating to our peoples effectively. We need to build on the sense of common purpose and camaraderie that can be essential to sustaining our relationship for decades to come. And that is the logic behind the dialogue on exchange that I co-chair with China’s Vice Premier Madame Liu.
One of the best ways for us to improve our connection is by expanding the student exchanges – I just stopped and met with a bunch of students who have been part of the exchange here from SAIS, and we all – I hope you’re all aware of President Obama’s 100,000 Strong initiative. Today, more students from China study in the United States than any other foreign country, and we are actively investing in ways to expand study abroad opportunities for American students in China, because we recognize that nothing brings about a common understanding more than effectively getting the chance to live in another country, see the world through another lens, and forge friendships that can last for decades.
I’ll just tell you very quickly the number of foreign ministers that I interact with very regularly in the Middle East and elsewhere, proudly sit in front of me and talk to me about their graduate school or undergraduate school experiences in the United States. It has lasted with them forever, and it helps them and us to be able to work through difficult moments.
Let me take this opportunity to note that this is not an earthshattering new principle I’ve just articulated. It is something that SAIS has long understood. You’ve had an international campus in Nanjing for nearly 30 years, and it focuses on everything, from facilitating student exchanges to all the prospects of business and relationships in the future. And as a result, its students are better prepared than most for the globalized world that we live in. But believe it or not, there are a lot of places that don’t take it for granted the way you do, for whom this would actually be a new enterprise, even now in 2014.
So I want to thank David Lampton and the others as SAIS for their leadership on this effort. Ultimately, the United States and China need to find more ways to interact at more levels of government, across more sectors and among more people who live in all the corners of our nations. And these connections will help us to understand each other better and to forge a better relationship going forward. They’ll help us work through our differences, and these connections will ultimately erase the misperceptions and stereotypes that fuel mistrust, and these connections will help us pull in the same direction and take advantage of the unique opportunities our countries have to help each other and ultimately to help the world.
We don’t underestimate – I certainly don’t – the complexity of the world we’re living in today and the sensitivity of this challenge that we face. The path to a productive relationship between the United States and China has seen its bumps, and it may see more. But the fact is that it has never been more important to us to be able to continue down the path that we are on. Our two nations face a genuine test of leadership. We have to make the right choices in both Washington and in Beijing.
In many ways, the world we’re living in today is much more like 19th-century and 18th-century global diplomacy, the balance of power and different interests, than it is the bifurcated, bipolar world we lived in in the Cold War and much of the 20th century. This is a new bursting on the scene of new powers. But guess what? They’re doing the things we wanted them to do. At least 15 of today’s donor countries giving aid to other countries were only 10 and 15 years ago recipient countries of aid themselves. And we welcome the growth of these nations to their global responsibilities and to the assumption of increased global ability to make a difference.
But it’s more complicated. When other countries have stronger economies and when there’s more competition for goods and services and for market share, it’s a more complicated world. And with the release of sectarianism and radical religious extremism and other things that have come with this transformation and confrontation with modernity, we all face a more difficult, complex diplomatic path.
But it is clear that coming from the different places we come from, China and the United States, we actually do have the opportunity as two leading powers to find solutions to major challenges facing the world today. And if we can cooperate together and help show the way, that will help bring other nations along and establish the norms for the rest of the world. We have an opportunity to demonstrate how a major power and an emerging power can cooperate to serve the interests of both, and in doing so, improve the prospects for stability, prosperity, and peace around the equator, from pole to pole, throughout this world we live in.
Maybe that’s a lofty objective; I don’t think it’s too lofty. I think it’s easy to say it in a speech, yes – a lot harder to produce it. But it will be in the doing of it, in the quality of our dialogue, in the persistent search for solutions to issues large and small, in the determination to manage the differences and find the big places to cooperate, and in order to seize the opportunities when they arise, that will provide the real measure of failure or success in this approach.
When he was in the twilight of his life, Paul Nitze was asked about the extraordinary contributions he had made to the Marshall Plan, to NATO, to the U.S.-Soviet relations. He didn’t brag, he didn’t boast, he just said: “I have been extremely lucky. I have been around at a time when important things needed to be done.”
There has never been a demand more than there is today for important things to be done. I hope that the United States and China – who are both blessed with great strength, with ample resources, with extraordinary people – can do important things now and can do them together. And I hope that as we come together in Beijing in the days ahead, as we work together in the months and years to come, that we are going to meet that charge and live up to the standard that Paul Nitze said, not just when he founded this school but when he lived his life.
Thank you all very much. (Applause.)
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