Condoleezza Rice Interview on Kudlow & Company

Interview on Kudlow & Company with Larry Kudlow

Secretary Condoleezza Rice
Washington, DC
October 31, 2006

QUESTION: Secretary of State Condoleezza Rice, thank you for coming on Kudlow and Company. We appreciate it.

SECRETARY RICE: It's a pleasure to be with you.

QUESTION: A breakthrough today in the six-party talks over in North Korea presumably, some say, brokered by China. What can you tell us?

SECRETARY RICE: Well, indeed, the North Koreans today agreed to come back to the six-party talks. I think several things have happened here. The international community spoke with one voice with Resolution 1718 after the North Koreans tested a nuclear weapon. China has been an effective member -- an effective important member of this coalition of states that is dealing with the North Korean issue. And the Chinese asked if we would be prepared to attend a meeting that the North Koreans had suggested, an informal meeting in Beijing. We did. The North Koreans agreed to come back to the talks. And now, Larry, we have to make certain that we really prepare the talks well so that we can have a good outcome and can get some implementation of the agreement that was actually signed in September of 2005.

QUESTION: When might these talks begin?

SECRETARY RICE: Well, we want to make sure that they're well prepared, but I think we're talking about certainly before the end of the year. We have -- in the next several weeks, we have the APEC meetings in Vietnam and, certainly, it wouldn't happen before that. But I think not too long after that we would hope to have talks.

QUESTION: President Bush's statement today coming over from the White House said the talks have to be effective; there has to be an end to the nuclear program in North Korea; and it has to be verifiable. I just wanted to check the word "effective." How do you interpret that?

SECRETARY RICE: Well, effective talks meaning that it really doesn't make sense again for us just to go back and talk. We have an agreement. The six parties came to an agreement in September of 2005. The North agreed to denuclearize the Korean peninsula verifiably, meaning to abandon their nuclear weapons programs. What we need now are concrete steps that will demonstrate that we are making progress on that agreement. And so we will be working with our allies, with our colleagues over the next several weeks to try and make sure that we prepare the ground, lay the groundwork for successful talks.

QUESTION: On the UN sponsored trade sanctions, the financial sanctions, the weaponry sanctions, are you satisfied with the Chinese response?

SECRETARY RICE: Yes, well, Resolution 1718 which does indeed place sanctions on North Korea so that it can't engage in this illicit trade in nuclear weapons and other dangerous materials so that we can stop assistance in any way to its program. And by the way, there is a ban on luxury goods, which goes right at the regime's tendency to have luxury goods while the North Korean people, of course, are seeking humanitarian assistance. And so --

QUESTION: They're eating bark off the trees. That's the news reports.

SECRETARY RICE: Well, yes. Sadly, these are people who have suffered way too long, and we hope the North Korean regime will make other choices so that their people can have a better life.

But Resolution 1718, which is a Chapter 7 resolution, meaning that it's mandatory, a resolution that I think many would never have believed China would actually sign on to given its relationship with North Korea. We are very confident, after my discussions out in the region and subsequent discussions by other U.S. officials that these states, China, Russia, others, intend to implement 1718, to do so fully because no one wants North Korea to continue its nuclear weapons program, particularly after the North Koreans tested a nuclear device.

QUESTION: As I'm sure you might imagine, critics of the Administration are going to charge that this comes on the eve of the election, a breakthrough for political purposes. Do you have a repast to that?

SECRETARY RICE: Well, Larry, I'm not worrying about the calendar here. I'm just trying to move the diplomacy forward. And in fact, this is a request for this meeting that came from the Chinese, the Chinese having heard from the North Koreans that they would like to have discussions in Beijing, having heard from the North Koreans that they wanted the United States to be a part of these trilateral discussions. The Chinese approached us several days ago, five or six days ago, setting a very close timeline, October 31st for the talks. We agreed and the talks took place on that timeline, on no other timeline but the diplomatic one.

QUESTION: Treasury Secretary Henry Paulson, the new man, distinguished Wall Street player is nominally in charge of the economic portfolio with China. It's a complicated account I'm sure. How do you interact with Mr. Paulson on this?

SECRETARY RICE: Well, first, Hank Paulson and I sat right in the room that you're sitting in now when he first became Treasury Secretary and talked about how to have a more effective strategic economic dialogue with China that would reinforce our overall strategic dialogue with China. And I think it was in part out of that conversation and the fact that Hank has very longstanding relations in China that this notion of a strategic economic dialogue that would really bring together all elements of the American economic policies toward China was born. And I think it's going to work very, very well.

The Chinese are very excited about it. I was there, as you know, a couple of weeks ago. They're looking forward to those talks. But they'll be mutually reinforcing because we maintain an overall strategic relationship, vis-Ã -vis China. We have to work on the economic issues, we also have to work on issues that are sometimes difficult, human rights issues, religious freedom issues, because ultimately we believe that China is going to be a strong partner and the strongest partner when the domestic transition, domestic transformation of China toward a more open, pluralistic society also takes place. And so I think these dialogues will be mutually reinforcing.

QUESTION: On the economic point, it's interesting. Since 9/11, when you take a look at the world economy, it has boomed. The IMF is looking for a four to five percent economic growth last year, this year, maybe even next year. Even more interesting, global stock markets that peer into the future, whether it's the stock markets for the Middle East or across Europe or the United States, Asia, have absolutely boomed. Most of them are up two and three-fold.

With all of the tensions in global politics, is it possible that these stock markets are saying, look, capitalism is triumphing worldwide and that may be more important than the jihadist attack on this very economic freedom? Is it possible that economic freedom could be a major card in the global terror war going forward?

SECRETARY RICE: Oh, I definitely think that economic freedom is a major card. Outside of the real extremes -- people who want to put suicide belts on themselves and blow up innocent people and a few repositories of socialist economics like Cuba -- there are very few places in the world where when I sit down to have a conversation with my counterparts, those conversations don't start with trade and open markets and getting foreign direct investment into countries and dealing with structural economic problems and trying to find reliable energy supplies so that economies can grow. And that's true whether you're talking about the discussions that we would have in India or China or Vietnam where we're going to hold the APEC meetings very soon or in Latin America where even governments from the left with which we have no difficulty dealing, Brazil or Chile, are still devoted to sound macroeconomic principles, still devoted to opening markets, still devoted to bringing in foreign direct investment. So I think since the end of the Cold War this question of what economic model and what economic conditions actually produce growth and stability, that question has been settled.

QUESTION: Milton Friedman always argued that economic liberalization would precede political liberalization and democratization and political freedom. And I think it's fair to say China is an example of that at least in some measure. Is it possible, Madame Secretary, that that rule could be applied to some of the darker corners of the world including Iran, including Syria, including, heaven forbid, North Korea? Does that model work? Is it part of your diplomacy?

SECRETARY RICE: Well, there is no doubt that economic openings -- countries that want to join the world economy, that want to be welcoming places for economic investment are going to have a hard time doing that if they're closed off from the normal diplomatic course, and I would certainly hope so. It's not automatic. I think we have to recognize that we need an agenda that promotes both economic freedom and political freedom.

I sometimes hear it's as if it's almost an automatic matter that when there's economic freedom there will be greater political freedom. Well, I think you have to work at both. But certainly in parts of the world where you are seeing reformers even in some places that don't have very much political freedom make an argument to people like us, well, you see, if we're in the WTO, if we are working for foreign direct investment that begins to change the way that our laws are applied. It begins to change the openness of the society. It begins to enshrine rule of law because you can't get investments, you can't get contracts unless people believe that there's going to be a stable rule of law environment. And of course, rule of law in the economic sphere is hard to bring about if there isn't general respect for rule of law.

So I think these work very well together. And indeed, when I go out for conversation in, for instance the developing world, it's a set of principles which go together. Good governance, fighting corruption, opening markets, advancing free trade, these all go together.

QUESTION: But that's -- even -- let me go to the darker corners, okay? They're eating the bark off the trees in North Korea. That's incredible how much poverty. They're migrating out of there. I mean there's in fact some news reports that they're storming the U.S. Embassy over the line in China to seek safe haven and so forth. Is it possible, as we apply sanctions to stop the nuclearization of North Korea, that there is a way to put in some economic liberalization rules? After all, you know, when China gave some liberalization to the farming peasants, what, 30 years ago, that seemed to open the door. Can that be part of the deal here with North Korea?

SECRETARY RICE: Well, nothing would be better than a North Korea that is opening up to the world and, therefore, opening up possibilities for its people. And obviously, Larry, as you're just noting, we're talking about even the smallest of openings in a place like North Korea that could potentially make a very big difference.

It's interesting that when we talked about the agreement that was signed in September 2005, it doesn't just talk about the nuclear area. It talks about the possibilities for moving toward more openness, moving toward more engagement. And you can't help but think that if you were opening up more to investment, opening up so that international financial institutions could go in and deal with issues in North Korea that that would have a positive effect. I don't know that the North Korean regime has really decided to go there, but it's really the only way that their people, these long-suffering people who are really living in the most appalling circumstances are going to be able to take advantage of what is there for every population in the world.

QUESTION: I just think that the apparent global triumph of capitalism and free markets, which in no small measure was launched by Ronald Reagan and Margaret Thatcher 25 years ago, is the greatest antidote to this jihadist fundamentalist anti-western concept. But let me move on.

Your former Deputy, Mr. Stephen Hadley, now the NSC Director, he's over in Iraq. And I want to ask you just this. Is it possible to find a solution in Iraq without looking regionally, without looking at Iran and Syria? And may I, Madame Secretary, ask -- we haven't really asked Iran and Syria to pay a cost for what they've done, their negative interventions, their sponsorship of mischief, finance, arms, manpower and so forth, in Iran. Can we solve Iran -- Iraq in Iraq or mustn't we have some kind of policy towards Iran and Syria?

SECRETARY RICE: Oh, there's no doubt that Iraq has to be solved both in Iraq and in a regional context. First of all, in Iraq the Iraqis have to take some very difficult decisions on national reconciliation. One of the things that they need to do is they need a hydrocarbons law because obviously the big resource of that country is oil and all Iraqis have to be able to believe that that resource is going to be used to their benefit, not to the benefit of sectarian groups, in order for them to reach a political bargain. And so there are a number of things that the Iraqis themselves have to do.

But beyond that, there are a number of things that their neighbors have to do and some of the neighbors -- states like Saudi Arabia, Jordan, others -- are playing a quite positive role in trying to encourage, for instance, Sunnis and through tribal connections that many of them have, to really participate in the politics. I think you will see them through what we're calling an international compact for Iraq make resources available to the Iraqis to do reconstruction and development. But their troublesome neighbors, Syria and Iran, really do need to take a hard look at what it is they're contributing to it.

QUESTION: And they seem to have paid no real cost down through the years. It's hard to plan -- I mean, somebody like myself, who still believes we can win the war, and these bad-behaving neighbors. Where are the consequences for them?

SECRETARY RICE: Well, Syria has gotten itself more and more isolated. That's very clear. It really has very few friends in the world anymore. The isolation from its Arab colleagues like Saudi Arabia and Egypt is very clear. There are sanctions on Syria. There could be other sanctions on Syria. We talk to states. It's not yet resolved what the investigation into the assassination of former Prime Minister Rafik Hariri in Lebanon is going to bring in terms of culpability of people who were either associated with Syria or actually working for the regime, and I think that is still work to be done.

Iran, on the other hand, does need to understand that it is not going to improve its own situation by stirring instability in Iraq. It's going to simply create a neighbor with which it will have problems well into the future. The Iraqis themselves are telling the Iranians that they expect Iran to behave in a neighborly fashion.

And there is a cost to creating that kind of instability in your own neighborhood, and I think we have to work very, very hard to make very clear to those troublesome states that their policies are not beneficial certainly for Iraq, but they're also not beneficial for Iran and for Syria.

QUESTION: Coming back home, two final questions, ma'am. Appreciate your time very much. On the campaign trail in Georgia, President Bush has said the Democrats have come up with a lot of creative ways to leave Iraq before the job is done. He also indicated today he said, "America will lose under the Democrats, terrorists will win." Would you like to weigh in on those statements? They're tough, tough statements.

SECRETARY RICE: Well, the President has laid out an agenda for the war on terror. And by the way, it's one that has always envisioned a long struggle to win the war on terror. I remember on September 20th, just a few days after September 11th, when the President addressed the joint session of Congress, he said this war may not be won on our watch; it will go well into the future.

And so the President has a positive agenda. We are fighting al-Qaida and taking down their leadership. We are stabilizing places like Afghanistan. And yes, the enemy is going to fight back. But we, with our NATO allies, are fighting and winning that struggle. In Iraq it's very tough going. Americans -- I don't have to tell Americans that it's tough going in Iraq. But an Iraq that is left to the kind of forces of al-Qaida, left to the terrorist forces, left to the destabilizing forces, is going to be bad for Iraqis and it's going to be bad for Americans.

QUESTION: But if I may, in your judgment, if there is a Democratic House and Senate, as some polls indicate, would that disrupt, interfere and stop the processes you're describing?

SECRETARY RICE: The key to me is that this President has a program for the war on terror and it's a program that is going to win, and he needs the support of everyone for that program. I frankly haven't heard an alternative posed for how we fight the war on terror except on the offense. Yes, I know that there are people who say we can do more to protect our ports, we can do more to protect our airports. Yes, we can do all of those things and we are. That's why we created a Department of Homeland Security.

But you know, the problem is that the terrorists have to be right once; we have to be right 100 percent of the time. That's why you can't fight the war simply on the defense. This President has an agenda and a program and we are fighting this war on the offensive, and that needs to be supported by the American people.

QUESTION: Do you still believe from the President's 2005 inaugural speech that spreading democracy, liberty and freedom around the world is not only good for the unfree countries but is essential for American security? Do you still believe that? Is that the backbone of your thinking?

SECRETARY RICE: Oh, absolutely. I think when democracy is on the march, America is always more secure; and when democracy is in retreat, we're always more vulnerable. And we should have learned that lesson several times. We helped to create a stable environment in Europe by insisting on a democratic Germany. We helped to create a stable environment in Asia because there's a democratic Japan and a democratic South Korea.

We will help to create a stable environment in the Middle East when it is not authoritarian regimes that give no space for people's legitimate political goals, but rather partners who are reforming toward more open societies where people can find ways to express their political grievances and to act on them. The only system that I know that allows people peacefully to express their grievances and to act on them is democracy. And that's why it's so important to security and peace in the world.

QUESTION: Secretary of State Condoleezza Rice, thank you for coming on CNBC's Kudlow & Company. We appreciate it.

SECRETARY RICE: Thank you. It's a pleasure to be with you.

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