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U.S. Interview With Steve Leisman of CNBC

Interview With Steve Leisman of CNBC

Secretary Condoleezza Rice

New York City

September 23, 2008

QUESTION: Madame Secretary, thank you for joining us.

SECRETARY RICE: A pleasure to be with you.

QUESTION: I know you were just over at the United Nations, and – this nation in the middle of a rather extreme global financial crisis. Can you share with us what kind of concerns and what kind of comments your colleagues from around the world are expressing to you about what’s going on here in the United States?

SECRETARY RICE: Well, there’s no doubt that there’s concern, and the President addressed that concern in his speech to the United Nations General Assembly this morning. I think our colleagues also know from around the world that the United States recognizes the seriousness of this, and that the government is taking bold action to make sure that we address the root cause of the problem, because we recognize that this is something that needs to be addressed and addressed boldly and urgently. And that’s what Secretary Paulson and Fed Chairman Bernanke have done.

QUESTION: Last week was an interesting week in the sense that we heard that foreign governments were talking to the United States Have you played a role as a conduit for those concerns from the State Department over to, say, the Administration?

SECRETARY RICE: Well, I’m not going to get into the details of what we’ve done, but obviously we have moved to address questions, concerns of foreign governments, of financial officials around the world. The lead has been in Treasury, not just Secretary Paulson, but of course Deputy Secretary Robert Kimmitt, who has a lot of diplomatic experience as well as financial experience, has been a point man in that.

But I think we’ve tried to be responsive. I believe that governments believe that we’ve been responsive. But the most important response has been that they can see that the U.S. Government is prepared to take action, prepared to take bold action. And that, I believe, will reassure everyone.

QUESTION: How does a United States in the middle of a global financial crisis affect diplomatic efforts around the world and your efforts?

SECRETARY RICE: Well, in fact, the United States is still the United States, and so we are here involved in everything from proliferation issues, to the Middle East, to concerns about Latin America. But I don’t think that anyone should think that even though this is a very important and indeed serious financial crisis, that it has in any way diminished the ability of the United States to do our business diplomatically.

Everybody understands that this is a very specific, indeed once-in-a-lifetime – well, we certainly hope – circumstance. But people have confidence in the United States. As the President has said, this is a financial crisis, but the fundamentals of the U.S. economy are strong. Everyone understands our great ability to innovate, the productivity of our workers, the ability of the country to move quickly. And so I believe the United States’ standing has not been really affected.

QUESTION: Let me probe just a little more deeply on that in terms of diplomatic efforts. One of the things America does and has done successfully is try to promote democracy and free markets. In your efforts to do that, is a financial crisis like this – does it make it harder?

SECRETARY RICE: Well, people also know that there aren’t really any alternatives to democracy and free markets. Let’s take them in turn.

What better way for people to be creative, to express themselves, to be able to do the full range of human potential, than to have a say in how they’re governed. I don’t know anybody who is arguing that just because there’s difficulty in this financial situation that that’s a good argument for tyranny. I haven’t heard that argument, and I don’t expect that I’m going to hear that argument.

I also don’t think that you’re going to hear that argument that cutting off innovation, cutting off the ability of people to use their creativity to get ahead, that you’re going to hear arguments that that’s a good thing either.

And so democratic capitalism is a tried and true system that has brought prosperity and it has brought a lot of good for much of the world. That’s why you’re getting growth in these emerging markets. That’s why you’re getting governments that are governing more and more wisely. It’s not as if democratic capitalism comes without its problems.

Obviously, and I – it comes sometimes even with problems of the kind that we have now. It certainly comes with an obligation for democratically elected governments to deliver for their people. But I don’t know of any better system and I doubt that you’re going to have an argument that authoritarianism is better.

QUESTION: One more question along this vein here. When it comes to free trade, does what’s happening right now make that more difficult? I know it’s had some problems by itself before this happened, but does what’s happening right now with the global financial system make free trade agreements, which I know you’re a big supporter of, does it make it more difficult?

SECRETARY RICE: Look, everybody recognizes in times of crisis that we’re all interlinked. But the fact is we’re all interlinked. That’s not going to change in a world that is connected in the way that our world is connected. And free trade can be a tremendous engine of making that interconnectedness pay off for people throughout the spectrum, from the poorest farmer who can find markets for goods, to the innovator who wants to be able to get intellectual property rights protection so that that good can be sold across the world. And so free trade, in fact, is a kind of protection in an interconnected and global world.

What we need is we need a commitment to free trade. And here, the President today again made an appeal for the countries of the world not to miss the opportunities of the Doha round. We’re going to continue to work right up until the end to see if we can’t bring a conclusion to – a successful conclusion to the Doha round. I was with my colleague Susan Schwab, our Trade Representative, just yesterday. She’s working the hallways here at the UNGA. Because nothing would send a stronger signal of the potential for greater economic growth for taking advantage of the interconnectedness of the global financial system than to have a successful trade round.

QUESTION: Speaking of things that happened today, I believe we learned that Russia opposes this meeting of the six powers to talk sanctions about Iran, which I assume we support sanctions. What is your reaction to Russia’s opposition to the six-power meeting?

SECRETARY RICE: Well, let me start by saying that we all know that we’re committed to two tracks: One is negotiation if the Iranians are prepared to accept the goodwill of the international community and the quite generous package that the six parties have put on the table; the other is that we have a Security Council track that has already produced three Security Council resolutions and we can – we will talk about another.

I happen to agree with the Russians that the time is not right for a ministers meeting. We called them. We said we think you’re right; the political directors have more work to do, all of the ministers here have a lot of other things to do, and so let’s not have that meeting at the level of ministers, let’s wait and do it when the meeting is prepared.

QUESTION: And is your patience endless here? Is there some timetable in your mind as to when we need to have that meeting?

SECRETARY RICE: Well, we’ll have the meeting when the meeting is well prepared. The political directors met on Friday in Washington. They’ll meet again. We believe very strongly that the Iranians have given us every reason to pursue the Security Council track. There was a recent IAEA report, International Atomic Energy Agency report, that essentially says the Iranians are not cooperating, that they’ve reached an impasse. We know that the latest discussions between the Iranians and Javier Solana, the European Union representative, didn’t go anywhere. So of course we’re going to pursue the second track. But the Russians said that they didn’t think the time was right for a meeting. We called them and said you’re absolutely right; let’s do it when we’re ready.

QUESTION: So shall I say that’s a rare instance of agreement with Russia? I mean, we’ve had our disagreements and I know you have an abiding interest there. And when it comes to areas of concern, how much does the Russian military push into Georgia give you concerns that there are greater designs for Russia when it comes to the former Soviet republics, that it’s an issue just beyond Georgia?

SECRETARY RICE: Well, a lot of that’s going to be up to those of us in NATO, at the European Union and the United States, to make certain that Russia understands that any further push would not be beneficial to them. But the truth of the matter is they achieved none of their strategic objectives in attacking Georgia. They attacked a small neighbor with overwhelming regional military force. Now, you and I would have known that that was possible before they did it. They did not succeed in bringing down Georgian democracy. They did not succeed in destroying the Georgian economy. They have recognized Abkhazia and South Ossetia, these breakaway regions, and their diplomatic company is Hamas and Nicaragua. That’s hardly a diplomatic triumph.

And there has been – and all that they’ve done is to call into question their suitability for the diplomatic, economic, and security institutions of an integrated international community. And for a country whose president, whose new president has said that he understood that Russia’s future really rested in integration into the international community, that Russia doesn’t want to be just an energy supplier for the world, it wants to be a country that draws on its brainpower, its ability to do the kinds of things that we do in the Silicon Valley where I’m from, that Russia is never going to succeed trying to be 19th century Russia that beats up on small neighbors.

So this hasn’t been – this hasn’t worked out very well for Russia, I think.

QUESTION: Madame Secretary, when I was in Russia ten years ago, Russia was a debtor nation, on the verge of, and in the middle of, an economic collapse, a financial collapse. Now Russia has a tremendous surplus. Back when Russia was a debtor nation, it appeared as if America had tremendous leverage over Russia. Now it appears as if we don’t. How has money and the incredible surpluses of Russia changed our relationship and, apparently, diminished our leverage?

SECRETARY RICE: Well, we all know that Russia is not a debtor nation because it is – because of the price of oil, essentially. That’s really what this is. And Russia can continue to be a kind of tertiary resource supplier for its entire existence, or it can try to diversify its economy. It can try to deal with, by the way, the crippling problems that it has, including a sadly unhealthy population, a birthrate that is not going to even succeed in replacing the Russian population. It can deal with the fact that it doesn’t have the infrastructure that it needs to be a diversified economy. Or it can be a resource supplier. And the leverage, really, rests in the fact that I think that Russians have become accustomed to some of the benefits of having broken out of Russia’s – or of the Soviet Union’s isolation, whether it is travel or the 30-year mortgages that are very popular in Russia, or the ability for Russian businesses to actually have a role in the international economy. That’s what’s at risk if Russia tries to have it both ways: 19th century Russia or Soviet tactics, and trying to be a part of the international economy. Russia can’t have it both ways, and that’s the leverage.

QUESTION: But if I could make an observation, the leverage has changed, rather – you know, before we could point out what the right thing to do is with what the right thing to do was, and also prod them in that direction. Now, we are at a point where we can point out what the right thing to do is, as you’ve just done, but we have less leverage to prod them in that direction, as in our ability to help them renegotiate their debt and/or provide aid and assistance to them.

SECRETARY RICE: Well, now, there are still many parts of the international system that Russia still desires to be a part of. But let’s realize, Russia has one foot in the international system, the integration, and one foot out. That’s actually not a very comfortable place to be. And right now, Russia’s WTO membership is going nowhere. Right now, their OECD membership is going nowhere. They have just lost, unfortunately, from our point of view, a 123 civil nuclear cooperation agreement with the United States, which is just going nowhere.

And it’s not just the United States. I think that there are those in Europe who really wonder about Russia’s future with some of the institutions that really are the engine of economic growth and opportunity and globalization in the world.

I have to just underscore the United States doesn’t want Russia to be isolated. We don’t. We believe that a Russia that is integrated, a Russia that is acting responsibly, a Russia that can bring all of the talents of this great population – and you were there, you know what a tremendously talented population the Russians are. They’re wonderful people. The world would benefit from their talents and their creativity and their contribution to the international community.

So it would be a real loss if Russia opts out of that kind of integration. I don’t believe that Russia will, but the choice is really up to the Russians.

QUESTION: I want to look ahead to the future, but I also want to ask you to look back, especially on this issue. Being a Russian expert, do you feel as if the Administration miscalculated when it came to Putin?

SECRETARY RICE: I believe that the Administration and the President did everything that we could to open a path for a 21st century Russia, a path of integration, a path of active engagement with the international community, and that some things succeeded. We and Russia have really cooperated very well when it comes to terrorism, cooperated very well on proliferation. We’ve cooperated well on North Korea and the Six-Party Talks. We’ve even cooperated well, frankly, on Iran. And so there have been benefits.

We’ve hoped for more, which is that we would develop a relationship built on values, not just based on interest. But the President has reached out a hand of friendship to the Russians. It hasn’t always been easy. We’ve sometimes ignored Russian rhetoric that was very harsh. But I think it was the right choice, and I – we will see whether President Medvedev, who has talked about a different kind of Russia, wants to follow through.

QUESTION: You know, I’m sorry we’ve had to spend all this time on the news of the day. I know we originally wanted to talk about this other subject which I’m fascinated by. As you talk to your predecessor, or to your successor – sorry – and you leave a world that has tremendously different wealth ratios around, emerging market countries, as you said before, how is the job of the next Secretary of State – how is the diplomatic mission of America different because of the changed wealth in this world?

SECRETARY RICE: Well, I really believe that the diplomatic mission of the United States is not very much any longer in paneled rooms sitting across from other government officials. It’s really in helping people who are emerging to develop well-governed, democratic states that can deliver for their people and that can therefore add to the number of responsible states of the international community that can do everything from fight human trafficking to fight terrorism to be responsible citizens of the international community.

And we’ve tried through assistance programs like the Millennium Challenge Account, which is a huge infusion of American assistance to countries that are governing wisely, investing in their people, democratic leaders who are fighting corruption. That’s really the best part of this job is when you go to a place like Ghana or a country that’s doing all those things – governing wisely and fighting corruption – a country that just at independence had a GDP that was similar to that of South Korea, and look at the distance between Ghana and South Korea now That Ghana can be born again, and it will make a big difference if emerging countries are emerging as democratic, emerging as non-corrupt and emerging as responsible citizens and – in international politics. And that’s what American diplomacy through USAID and all of the programs we’ve run – that they can do.

But it’s also recognizing that the number of countries that have real clout – that list if changing, too. And it’s why the United States has reached out to the big, emerging, multiethnic democracies like Brazil, where we have excellent relations, or India, where we have unprecedentedly good relations, because those are really the international players, the global players of the future. And the United States has had really good relations with them.

QUESTION: So it’s a world of new partners, in a way?

SECRETARY RICE: It’s a world – it’s building networks now of good relations among different stakeholders. I know people talk about unipolar worlds or bipolar worlds or multipolar worlds. The world’s not polar in any of those senses any longer. What you need is unique relations with unique states to form a network of countries that can help resolve the greatest challenges. And for us, I think the work that we’ve done, everybody would expect that you would want to get the big relationships, like the relationship with China, where we have an excellent relationship, right. But it’s also relations with these countries that are emerging, like Brazil or India.

QUESTION: I mean, which is the good side. And I’m not saying that the relationship with China is the bad side, but it certainly is the tougher side. What about the challenge of America in a world where we’re competing for resources?

SECRETARY RICE: Well, we have to make certain that we’re doing everything that we can in terms of our own energy independence so that the competition for resources doesn’t warp diplomacy in the way that I think it actually has over the last several years. I really think over the last several years you’ve seen the search for energy have a disproportionate effect on diplomacy.

The President has been a big advocate of reducing our dependence on foreign oil, using our own resources, whether it is the ability to have offshore drilling or to drill in ANWAR or the ability to develop alternatives – alternative energy supply, to use our extraordinary technology to give ourselves diversity of energy supply, which by the way has, of course, great environmental impact as well and can help us with issues like climate change.

And so I don’t like what I see in diplomacy when there are sometimes countries, really with the only thing they’ve got going for them is the price of oil, having a disproportionate effect in diplomacy. That means that we have to be smarter about developing our own resources.

QUESTION: All right. One other news item I need to ask you about, which is Kim Jong-il’s stroke and how – I mean, what we hear is that they’re restarting this nuclear program. Are we reading that wrong? And what are the concerns that you have now (inaudible)?

SECRETARY RICE: Well –

QUESTION: Has it made our job harder?

SECRETARY RICE: Something is going on in North Korea. I don’t think any of us know precisely what. We are reading all of the reports that you’ve talked about. But we have to deal with the North Korean Government as the North Korean Government, and our message to the North Koreans is that the Six Parties, the other five, know very well what North Korea needs to do, which is that they need to sign the verification protocol so that we can continue with the Six-Party process that has a lot of benefits for North Korea.

Now, I will say that we are using this time to consult with our colleagues in the Six Parties. I was with the Chinese Foreign Minister. I’ve been with the South Koreans. I’ll see the Russians later. And that will give us an opportunity to look at what next steps we need to take. But right now, we’re just all concentrating on getting the North Koreans to do what they need to do, which is to get this verification protocol signed.

QUESTION: When I told everybody I was going to be interviewing Secretary of State Condoleezza Rice, everybody said they had a special question they wanted me to ask.

SECRETARY RICE: Oh, right.

QUESTION: It was, “What is Condoleezza Rice going to do next?”

SECRETARY RICE: Ah. Well, I will most certainly go back west of the Mississippi, which is where I belong, undoubtedly back to Stanford and the Hoover Institution. Look, I want to do some reflection, perhaps some writing on what I’ve done. And I am also a person who cares deeply about the United States of America. I have had the greatest job in the world. I remember my predecessor George Shultz saying, being Secretary of State is the greatest job and it’s because you get to represent this great country. I love America. I love what we stand for. I love who we are And I want to make certain that we remain a confident nation. And to remain a confident nation, we have to be confident in our ability to compete and we have to be confident that the essence of who we are is safe.

And for me, that says that the strength of our educational system is absolutely key to our confidence. We can no longer afford, we simply can’t afford, to have great disparity in what kind of education you’ll get depending on where you happen to grow up. And I’ve been a longtime advocate of educational excellence for underprivileged kids. It breaks my heart as an educator and as somebody who benefitted from education myself that there are so many kids who are not being educated for the jobs of the future, for the opportunities of the future. But as Secretary of State, it worries me deeply because I know that if Americans do not feel that they are educated for the jobs of the future, we will turn inward, we will turn protectionist. That will be a problem for the world.

And I know one other thing. You know, every country has a myth. It’s not something that’s untrue. It’s just something that you see yourself. And ours is the log cabin, that it doesn’t matter where you came from, it matters where you’re going. And the key to that is educational excellence for every kid.

So I’ll go back and do work in that, which I’ve done before, and I look forward to it in the future.

QUESTION: Madame Secretary, thank you very much for your time.

SECRETARY RICE: Thank you.

QUESTION: Appreciate it.

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

ENDS

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