JIM LEHRER: Madam Secretary. While you put on your mic, I – there’s some discussion earlier about – one of the participants said if there were more women involved in business and all these other things, that there would be more innovation and all of that. And it occurred to me that three out of the last four secretaries of state have been women. Now, that’s gender diversity at its peak, is it not – at the very – yeah?
SECRETARY OF STATE HILLARY CLINTON: Well, I think it’s a good start. (Laughter, applause.)
JIM LEHRER: Touché. (Chuckles.) Touché. Madam Secretary, in October you made a speech about the economy and you said – let me – let me quote to you a sentence or two. “Today our foreign and economic relations remain indivisible. Only now our great challenge is not deterring any single military foe, but advancing our global leadership at a time when power is more often measured and exercised in economic terms.” Explain what you mean.
HILLARY CLINTON: Well, Jim, first thanks to you and thanks to Bob Steele and Walter Isaacson and the Aspen Institute and to Intel for sponsoring this, because I think this kind of conversation is absolutely essential. My point in that speech is that if we didn’t know already, the events of 2008 and the follow-on consequences should have taught us that we are living at a time when our economic means – the forces of the global economy – are going to perhaps more dramatically than at previous times in history shape how the world is organized, who is leading it and for what purposes, the role and place of the United States.
And what we’ve tried to do in the State Department is to demonstrate clearly that economic statecraft is an essential part of American diplomacy. And we want to use all of the tools and the forces of the global economy, harnessed with our diplomacy on behalf of America’s interest and values, and on behalf of the job creation that we need here at home.
So our goal is to firmly anchor economic work, and not just the traditional State Department role of commercial diplomacy, which has been around a long time – you know we have a thousand economic officers around the world, 300 people here in the State Department; we do business investment treaties, Open Skies agreements, lots of advocacy on behalf of American business – but to really look at the global economy now, to understand how we’re going to influence and, to an extent, manage it in furtherance of global prosperity, American economic leadership, job growth and all the other goals we seek.
JIM LEHRER: But as a practical matter, in the foreign policy world of today where – there are problems with Russia, with Iran, with China, with all kinds of other – Iran – I mean, Iraq – the war, of course, ending today, more or less – there’s Afghanistan. There are all kinds of things that you’re having to deal with all of the time. How in the world does a priority for innovation and a global marketplace fit into those kinds of things, as a practical matter?
HILLARY CLINTON: Well, very well and by necessity. I mean, just looking at the countries you mentioned, you know, starting with Russia – you know, the United States worked very hard to make the case that Russia should be a member of the WTO. And that required that Russia finally had to make some changes in their regulatory framework; they had to open up their markets more. So very shortly, they will be voted into the WTO. Now, why does this matter to us? Well, because now we have tools, through the WTO, to deal with some of the economic challenges and distortions coming from the Russian economy.
Take China; obviously we are well aware of the enormous indebtedness in our country, which is a different subject and we have to in part innovate our way forward, but China is now going to have to come to grips with being a responsible stakeholder in the global economy as well as in the traditional areas of diplomacy.
So we are engaged in conversations all the time. Certainly Secretary Geithner is, USTR rep, the new Commerce Secretary John Bryson – all of us are talking about the economy because it is one thing to be a developing country and, frankly, get cut some slack. It’s entirely different when your economy is growing at 10 percent annual GDP growth and you have enormous influence on what’s happening. We need new rules of the road. So that’s a traditional area for economic statecraft.
Or take Iran – we’re using economic sanctions to try to influence their behavior. I just came from a conference about South Sudan, a new country that was just literally born last year. The economic development is as important as their political development if people are going to see the results. You could go on and on.
Now what we’re trying to do is more firmly embed all of these issues deeply within the State Department. So on a – on a specific issue we have rejiggered our economic efforts. We have put into one place the work we do on the economy, the work we do on energy and the work we do on the environment, because they are all interconnected.
And we are looking for new ways to innovate. So I’ll give you just two quick ideas that we’re working on. One is, we’re having an impact investing conference in January at the State Department, where, you know, we’re bringing businesses, investors together to try to explore what new innovative ways we can think about, number one, growing our own economy here at home, creating jobs for Americans, and number two, creating an environment around the world where it’s a much more even playing field, where our companies, our workers, are not from the get-go disadvantaged.
But secondly, we are also looking for ways to do what we have historically done more effectively. So, working with USAID and its director Raj Shah, we came up with something called the Grand Challenge program where we’re asking people around the world, OK, how do we get more information about rainfall or irrigation or drought, and seeds that can survive, to these poor, small, stakeholder farmers in Africa and Asia? Well, cellphones. How do we try to keep babies alive when they’re born in very difficult situations, when the nearest hospital is a long way away? What can we do to innovate to create a kind of package of interventions that is available in even the – you know, the poorest community? And there’s lots of examples like that, where economic statecraft, where innovation which is mostly carried out by interacting with entrepreneurs, inventors and scientists, are all part of how we see our mission now.
JIM LEHRER: Going back to my original list, and the question here – let’s start with Russia. Putin has accused you of inciting unrest in his country and of making his situation, and the situation for the people of Russia, worse. Now does that kind of thing walk on the desire to improve all these economic things that the United States also wants to do with Russia?
HILLARY CLINTON: Well, that’s the balancing act we do literally every day. You know, we carry forward high priorities that are not necessarily in conflict, but which are always, you know, in need of attention and sometimes rebalancing in terms of their sequencing. So, you know, I think one of our strongest values is our protection and advocacy for human rights, and in particular our support for democracy, and the recognition that although elections are not by any means the only definition of democracy, they are a kind of, you know, condition that would be – that has to be satisfied to go forward.
And so we’re always looking at how we can communicate clearly what the United States stands for, and in this case what the Russian people deserve. I mean, this was not about the United States; this was about the people of Russia, you know. Independent observers had reached the conclusion that there was unfortunately a lot of interference, manipulation of the election. And I – you know, I mean, Russia has one of the most highly educated populations in the world, and now a growing middle class, with all the aspirations that middle-class, you know, families have. And so, you know, this didn’t come from the outside; it came from within.
JIM LEHRER: But when you made the decision to criticize what was going on in that election, did you consider the possible fallout that that would have, economically and otherwise, with the ongoing relationships with Russia?
HILLARY CLINTON: Well you always take all of that into account.
JIM LEHRER: OK.
HILLARY CLINTON: And, you know, there might be times when our criticism is private and other times when it’s public, when it’s a one-off, and other times when it’s persistent – because you’re always trying to calibrate what will work. I mean, I’m not into, you know, just criticizing for the sake of criticizing. You’re trying to, you know, give voice to and support to people who are standing up for values that are important.
But to kind of link your point in a – in a way directly to the economy, I think the evidence proves – and we certainly believe – that, you know, middle-class people, societies that have upward mobility, the opportunity for entrepreneurs to start businesses, grow those businesses, create jobs and wealth, you know – all of that is in America’s interests. And when the government is either heavy-handed, or largely the economy of a country is driven through state-owned enterprises, that disadvantages our businesses and by extension our workers, our investors, our people. Or if you have oligarchs that control so much of the wealth that it’s difficult for people with a good idea in their own country to be able to break through to start that business, well, you know, that doesn’t add to the intellectual property of the entire world or create additional opportunities for our investment.
So all of this is played out against the backdrop of what we believe – granted, it’s what we believe, based on our experience, but I think it’s been proven to be pretty universal – you know, both for political freedom and economic freedom, which are the best routes to social and economic success – you know, more openness, you know, more responsiveness, more accountability and transparency, whether it’s in elections or being able to start a business are, in the overall calculation, a benefit to us as well as the people who themselves are experiencing it.
JIM LEHRER: These earlier panels, much, much time and many, many words were used to talk about the relationship with China, and how it affects all the things that are of concern to everybody in the world. First of all, let me ask you, how would you describe the relationship with China? Is – are – is China a competitor? Is it an enemy? Is it a collaborator? Is it a friend? What – describe it.
HILLARY CLINTON: Well, I mean, we describe our relationship – and I think it’s accurate at this point in time – as a positive one, a cooperative one and a comprehensive one. Now that doesn’t mean we are also not competitors in the economic field and for political influence. That kind of goes with the territory. We, you know, we compete with countries all over the world on a range of issues.
But in the Obama administration, what we have tried to do is to be very clear that we want a positive relationship with China. We do not begrudge or fear a peaceful rise of China. We think that that is in the interests of the Chinese people, and it’s a remarkable story of economic growth over the last 30 years. We also think that it’s in our interests as well. I mean, we want to have a positive relationship.
At the same time, though, countries go through phrases – you know, kind of like individuals do. And, you know, China is off and running. You know, they have developed a strong economic engine for growth that is not only benefiting the Chinese people, but also having quite dramatic effects elsewhere in the world. I mean, their hunt for natural resources is almost inexhaustible because of their population and the rising expectations of their people. There are ways to do it that will be sustainable and ways to do it that are not. So we engage with the Chinese as we do with others around the world on – you know, there are mining practices that will not have damaging environmental effects, and there are those that do. And so let’s work together in the global community to try to be more responsible.
And you can go down the list.
JIM LEHRER: Sure.
HILLARY CLINTON: And there are many issues like that where, under the umbrella of something we call the Strategic and Economic Dialogue that Tim Geithner and I jointly chair, we have working groups on a vast array of subjects that don’t break into the headlines, but which are advancing science and technology cooperation, sending 100,000 students to study in China, increasing dramatically the visas that we offer; we have increased, just in the last year, by 32 percent. We’re hiring 100 more visa adjudicators because we want to have those relationships on and on and on.
But we also have differences, as we do with even our closest friends.
JIM LEHRER: One of the differences that was discussed at length. It was in a context that one of the – one of the main things the United States has always contributed to the world and does to this day is its ideas. We are an idea society. And China is stealing them.
HILLARY CLINTON: That’s right.
JIM LEHRER: And it all comes into the – under the term “intellectual property.”
HILLARY CLINTON: That’s right.
JIM LEHRER: What are you doing about that?
HILLARY CLINTON: Well, besides raising Cain, which we do regularly, on behalf of our companies, as well as on behalf of our entire economy – you know, we’re looking for leverage points – as I say, these new rules of the road – to protect intellectual property, to tighten up our own controls so that we don’t see the leakage or the theft of intellectual property.
But again, this is – you know, on the scale that it’s occurring, it’s quite large, but it’s not a new problem, you know. Americans have faced intellectual property challenges and outright espionage from other countries and businesspeople and many places. But the scale of this is different. And the control over the economy – because, I mean, you’re not – you’re not dealing with a free-market economy; you’re dealing with a, still, very government-controlled economic system, which means that you have different challenges in trying to compete in China.
And when China was opening up, you know, they were very welcoming, and American businesses took advantage of that. Well, you know, now, they’re trying to say to themselves, OK, you know, we want to do this ourselves now. And we think we have advanced to the point where we can begin doing this. So what’s the shortcut? And we see it. We see the shortcuts being taken. And it’s deeply distressing. Well, it’d be one thing if you were competing against a – another business doing that. But you basically have the whole Chinese, you know, trade and governmental apparatus that you have to deal with, and – so we have to come to the defense of and champion our businesses in fighting this out on a case-by-case basis, but we also have to begin to move China along with others to accept new global rules about how we’re going to protect global intellectual property.
JIM LEHRER: Horval Shell (ph), one of the panelists this morning, made the point that from his perspective, he thinks that China has yet to come to grips with the – with accepting its leadership responsibilities.
HILLARY CLINTON: Well, Horval (ph) is an expert, and he’s right. And that’s one of the arguments we’re making on a almost daily basis.
JIM LEHRER: And how do you make that argument? What are you – who do you – how do you do that?
HILLARY CLINTON: Well, there –
JIM LEHRER: Who do you say it to?
HILLARY CLINTON: Well, we say it at the highest levels of the Chinese government in our constant interactions with them. And, you know, you can – you can imagine the ambivalence by the Chinese because, you know, they look at what they’ve accomplished in 30 years, and they see how much more they have yet to do. They see still the lack of development in many parts of the countryside, the problems they think they might run into, unemployment as their wages naturally rise, and then businesses – even Chinese businesses – start to look elsewhere for cheaper labor. I mean, they’re trying to manage a galloping horse, so to speak. And we come in and say, OK, you know, you’re now second-largest economy in the world. Your gross trajectory is still incredibly fast and high. You are influencing what is going on and you need to be more thoughtful about that. And you need to engage in a more responsible leadership role.
You know, look. This is not a conversation that’s by any means over. It’s an ongoing conversation. We’ve engaged the Chinese in talking about, you know, their business and development practices in places like Africa and South America. We talked to them about, you know, water management, damming rivers that can dramatically affect their neighbors. I mean, we have a long list of what we talked to them about under the sort of rubric of responsible leadership.
JIM LEHRER: Do you feel any movement? I mean, any response to – yeah?
HILLARY CLINTON: Well, yeah. A perfect example, you know, it hasn’t gotten a lot of publicity, but, you know, the Durban climate conference, which just concluded, turned out a whole lot better than a lot of us would have thought going into it. And our negotiating team was just superb – because when the president and I went to Copenhagen back in 2009 for the climate conference, and we had these intense, never-ending meetings with high levels of officials, heads of state and government from all over the world – and the Chinese were there with, you know, Premier Wen Jiabao; we really pushed hard to make some progress. And you might recall, the president and I crashed a meeting that, you know, Brazil and China and India and South Africa were holding.
And I just kind of walked in, sat down and said, hey, what’s happening, guys? (Laughter.) You know, sort of – you know, we pulled up to the table, and we hammered out what became known as the Copenhagen Accord. And it was quite dramatic, because the Chinese climate negotiator was absolutely dead set against it. But again, on this appeal to responsibility, you know, Wen Jiabao, Prime Minister Singh from India, President Zuma from South Africa – you know, they see the larger picture. So we reached the accord; then, you know, we couldn’t put enough meat on the bones.
But coming out of Durban, just now, you know, the Chinese were dead set against accepting responsibilities that were in any way comparable to what they still referred to as developed countries. You know, they want to keep growing like the – you know, the engine that they are, but without those responsibilities, to go back to Horval’s (ph) point. Our position is, you are now the largest greenhouse gas emitter in the world; we cannot act as though you are Botswana, I mean – or the Seychelles. I mean, you have to take responsibility.
The deal that was hammered out – by no means perfect, before any expert in, you know, climate claims otherwise here – was to, for the first time, end this differentiation between the developed and the developing in terms of what we all have to do to meet this global challenge.
So it was – you know, it took – they had to stay there longer. They had to hammer it out. You know, we still have a lot of work to do to actually, you know, get it in writing by 2015, get it enforced by 2020. But this is the kind of slow, hard, persistent work that is required, because, you know, if you were China, you’d rather just keep growing and, you know, not have anybody hold you to account. But that will – you know, we talk about rebalancing the global economy; that would unbalance not only the global economy, but the way we do work together around the world on a range of issues. So we have to move towards that responsible, you know, stakeholder position.
JIM LEHRER: Move to another part of the world – the Arab spring. What have been the economic consequences for the United States from that?
HILLARY CLINTON: Well, first, Jim, I think it’s important to remember that the Arab spring really started in Tunisia because of the total frustration of a young Tunisian vegetable vendor to make a good living for himself and his family. I mean, he wasn’t protesting for what we think of as civil or political or human rights, except in the broadest definition of that. He was protesting because the corruption and the greed of local officials, the interference with the ability to do business in the market, the constant demand for bribes, finally was just too much. And he protested by, you know, burning himself to death. But it was, you know, the spark that ignited the Arab spring.
And in much of the work we are now doing in supporting the democratic transitions, it is as much about the economy as it is about, you know, political freedom, democracy building, et cetera. And you can understand why, because if you look at any of the last decades’ worth of U.N. reports on Arab development, you know, other than the elite, you know, the oil-producing countries that were able to spend very broadly with lots of largesse, you know, there wasn’t a lot of trade, there wasn’t a lot of innovation. The governments were incredibly hostile and cumbersome to deal with if you wanted to start business and on and on.
So our – you know, our emphasis has been, how do we support their democratic aspirations? And how do we ensure that their economic aspirations are married to that? Because in all of these transitions, people expect change immediately. You know, they expect a better job. They expect a rising income. They expect to have their business, you know, left alone by the many hands of government officials who are holding them out. And we know that if we can’t bring some economic progress, then, you know, we’re not going to see the kind of institutional foundation for these changes that we want.
JIM LEHRER: But in general, good for America, right?
HILLARY CLINTON: Look, I think we are always better off being on the side of democracy, but we have to keep our eyes wide open. There is no guarantee that this will be an easy road for the people themselves or, frankly, for us. And, you know, it wasn’t so long ago in our history when we were engaged in the Cold War that when countries had democratic elections, sometimes if they elected people we didn’t like, we took some action on that which, you know, didn’t always turn out as well as it should have.
Well, now, you know, in the 21st century with interconnectivity and information, you know, so broadly available, I think, number one, you know, we are for democracy, but we’re for democracy that actually meets the definition that is more appropriate than just saying, OK, have an election one time; whoever wins, good for you, you’re now in charge.
No. I mean, you have to embed the habits of the heart that, you know, de Tocqueville wrote about, so that you have a free press, you have an independent judiciary, you protect minority rights; I mean, that’s one of our biggest concerns now is, you know, religious minorities, ethnic minorities – are they going to be protected? Are they going to be viewed as full citizens? You know, there’s a lot of history, culture, religious discrimination pushing the other way. Women – you know, are women who were in the squares in Tunis or Cairo or, you know, supporting the fighters in Libya, are they going to be given a chance to fulfill their own potential? So there are a lot of unanswered questions, to say nothing of the kind of, you know, geopolitical implications for Israel and for our interests and so much else. But supporting democratic transformation and economic transformation is in America’s interests.
JIM LEHRER: Speaking of Israel, was what Newt Gingrich said about the “invented” people of Palestine helpful?
HILLARY CLINTON: No. No. (Laughter.) And I think he recognized that, from what I – what I read. I think he realized that was, you know, one of those innovative moments that happen in politics. (Laughter.)
JIM LEHRER: See, we’re still on subject. Still on subject, still on subject, still on subject.
Pakistan and that part of the world: Pakistan, of course, coupled always with India, Pakistan being the trouble – the trouble spot – that relationship has really deteriorated, hasn’t it, with the United States?
HILLARY CLINTON: Well, it’s a difficult relationship. It has been for many years. You can go back and trace the difficulties that our country has encountered. You know, we’ve gone through periods of closeness and periods of distance. And part of the reason we keep going back and working at it is because it’s a very important relationship, and it’s especially important with respect to our work in Afghanistan.
But this actually links to some of your previous questions, Jim, because, you know, Pakistan is so poor and needs so much reform in their government and in the delivery of fundamental services that it is a – it’s a constant vicious cycle of – you know, if you can’t have a decent tax base so that you can actually have schools for universal education, then you’re going to have families desperate to get their sons educated, turn them over to madrasas that are going to inculcate them in extremism and on and on, and on.
And so part of what we’ve tried to do with Pakistan in the last three years is, you know, provide support for them to make the tough decisions. They have to reform their agricultural sector, their energy sector. They’ve got to begin to wean their citizenry off of subsidies in order to generate some kind of competitive economic environment. But the fact is that so few people pay taxes in Pakistan, and hardly anybody among the feudal-landed elites and the rich pay taxes. So there’s no base on which to build the kind of system of services that people would at least feel like: Well, maybe it hasn’t gotten to me yet, but my children’s life will be better.
So you – you know, you have turmoil, you have extremism, you have all kinds of internal difficulties. So it’s not only the political choices that are made, it’s the – it’s the weak economic leadership that has gripped the country, and – frankly, one of the problems which I see throughout the world – an elite that is not willing to invest in the future prosperity and success of their country, in part because they’re doing pretty well, they have regeneration, in part because they don’t see a connection between, you know, if you grow the pie, you actually have a chance to do even better than if you shrink the pie and, you know, your piece is comparatively not growing. So it’s a troubling set of economic conditions as well as political ones that we’re trying to work with them on.
JIM LEHRER: On Iraq, the president is speaking, as we speak, at Fort Bragg.
HILLARY CLINTON: Right.
JIM LEHRER: We’ve kind of closed down the American involvement. How would you summarize the accomplishment or the meaning of the Iraq War?
HILLARY CLINTON: Well, I think it is too soon to tell. You know, I believe that it’s going to be some years before we can make a final judgment. But having spent the last, you know, two days working on Iraq, meeting with Prime Minister Maliki, with various ministers of his government, obviously, in the Oval Office with the president, it is a functioning state. It is a democratically elected leadership. It is able to protect its own internal security – mostly – although, you know, they face a lot of challenges. And there is a great commitment to investment and trade that they have made. I think the prime minister was over at the Chamber of Commerce yesterday.
So the agenda is a good agenda. Translating it into the hard daily work of setting up, you know, government ministries that actually function in a productive way, of opening up to businesses, you know, that’s going to take time. Now, everybody points to the north, to the Kurdish part of Iraq, and, you know, lots of business flooding in. I mean, you know, people – obviously, when you think about Iraq, and you think about Iran’s influence – worry about Iran. But you know, Turkey has invested twice as much as Iran has in Iraq in the last decade.
So the north is booming in many ways, and they do – look, they live in a very dangerous neighborhood, and they do have real enemies internal and, to some extent, external. So they’re moving in the right direction; we just have to keep, you know, doing everything we can to keep them on that path.
JIM LEHRER: And worth the cost in U.S. lives and resources?
HILLARY CLINTON: Look, I think, you know, again that’ll be a retrospective for historians. But you know, the Iraqi people now have a chance to chart their own future, which they didn’t have before.
JIM LEHRER: Madam Secretary, thank you very much.
HILLARY CLINTON: Thank you, Jim.