 Hello, everyone. I'm Michael Reskis, and this is the Associated Press Davos Debate. Our topic might best be framed as, what keeps the world's leaders and its captains of industry awake at night? A World Economic Forum report says, conflict between states is the number one threat in 2015. The first time old fashioned war has been listed as the top global risk. So why don't we begin in Ukraine? Dr. Ursula van der Leyen is the first woman to serve as Defense Minister of Germany. Dr. van der Leyen, thank you for being here. NATO says that the rebels are preparing another offensive, and the truce seems barely a truce at all. What's the solution to the Ukrainian crisis? Well, the solution is certainly not a military one. But of course, we keep in mind that the Russian violation of international laws and the aggression towards the security architecture will not be forgotten. And I think this conflict is mostly a conflict about what type of instruments do we use when we have a conflict. Are they military ones? What we see is hybrid warfare in the Ukraine. Or what we answer, will we say we need an economic approach if there is a conflict? And want to sit down at the negotiation table and find a solution at the negotiation table. And this is what we see at the moment being that the economic sanctions, for example, driven by the West, have an impact on Russia. Of course, they have an impact on our economy, too. But they show how much our world is interlinked and what we think will be a way out is convince the other side that the destabilization of the Ukraine will not be accepted. The violation of the international law will not be accepted. But we have no interest in defeating Russia economically. But on the contrary, we do have or we share a common interest in other fields, like, for example, fighting terrorism. So on the long term, to have the perspective, if you return to the negotiation table and if we solve the question, what is our security architecture, we can build up again the economic path we have been on together in the former years and fight together, for example, terrorism, where we have a common interest to solve that. But will Russia understand these carrots of better economic conditions without the stick of the possibility of military action? As I said, there is no military solution to that conflict. And therefore, it's a fight of instruments. And I think the economic instrument is a quite sharp sword because Russia has a strong, has an economy that is very vulnerable, what demography is concerned, has an economy that should open up, that should build connections to the rest of the world, that should send out their young people to be educated, to come back with innovations, to bring forward the economy. And they did just the country by closing up. So the economy and, of course, the development of the old price does its own. What you see in Russia also is that the way they act has caused an enormous loss of confidence in potential investors. And all these are parts of a lesson to be learned that you cannot go out and be an aggressor with instruments of the last century just by land grab and annexation without any reaction that is felt by the country who does that. Mohammad Yavad Zarif is the foreign minister of the Islamic Republic of Iran. Russia's been your ally, and Iran is itself a target of a very similar-sounding strategy of sanctions and economic squeeze. What's your view of how the West is dealing with Russia? Well, I think the policy of imposing sanctions has not produced positive results, almost nowhere. And I do not believe that they will produce positive results. They haven't produced positive results with regard to Iran. Unfortunately, our Russian neighbors can't call anybody allies. Iran is an independent country. But our Russian neighbors, who are our friends, too, have participated in the process of imposing sanctions on Iran, maybe without many other choices that they had. But in fact, those sanctions have backfired. If you look at the Iranian situation, if you compare it with the situation in Ukraine with which I'm not that familiar, but I'm familiar with our own situation, when sanctions were imposed on Iran, Iran had less than 200 centrifuges spinning. Today, Iran has 20,000 centrifuges spinning. And the purpose of those sanctions were not ostensibly to put pressure on the Iranian people but to stop the nuclear program. And they failed miserably. Had they talked to the Iranian people? Had they talked to the Iranian government? The chances of success should have been much higher. And I think now that they're talking, there is a much better chance of reaching a positive conclusion. So I think with Russia, it is important to deal with anxiety. It is important to deal with concerns, geopolitical concerns that are under rise. Unfortunately, the name of the topic of our discussion is geopolitics. And we are going back to the geopolitics of Cold War. And that is extremely dangerous. That is even more dangerous than interstate conflict because that is something that we thought we had put behind us some 25 years ago. And unfortunately, we're back at it again with the vehemence, probably not seen for the last 25 years. And I see a very serious danger in that. We're going to come back to that issue as well as to the nuclear talks. But before we do, Kaspar Rosted is the CEO of Heinkel, the German consumer products company. And you do business in Ukraine, in Russia, in Iran. And I can go on with a list of other places that there have been conflicts. Are you hearing anything that gives you business confidence? First of all, I think you need to be very clear on what you're getting yourself into. And if you want to go as a global company into a number of countries where high growth opportunity are, you have high volatility. That is the price forward upfront. So of course, we know what most of the times are we going into. And we, of course, review the situation on an ongoing basis. And we look upon it in three dimensions. Legal risk, reputation risk, and business risk. And we think that when we look upon these countries, the balance is still OK. But we are in there for the long term. You can't go in and out. And I think that's very clear as a business. When you look upon these countries, you know that you will have issues to deal with. We've been in Russia since 1991. It's a fourth Russian crisis. We have not changed our strategy. And if you don't have the long term view, I think you get very quickly disrupted of where you're going to go. But of course, you have to take the situation into consideration all the time. Eastern Europe is only one of the major trouble spots in the world. East Asia may well be one as well. Yoon Byung-Sae is the foreign minister of the Republic of Korea. And you've described the rivalries in East Asia as a Pandora's box. Could you elaborate a bit on that? Oh, yes. When I said that I had the whole world in mind, not just the Northeast Asia or East Asia. But East Asia today is quite different from 10 years of post-Cold War era. For the last 20 years, until recently, it was North Korea's nuclear threat. And it was North Korea's strategy provocations that were single most important challenges to the peace and security of Northeast Asia. But now what you're seeing is multiple challenges and multiple crises. All problems, new problems. All problems like history and territory. But now we have a new set of problems like maritime security, space security, and recently, cybersecurity as well. But at its heart, what you see is now just symptoms. At the heart of this problem is the conflict of interest of the countries of the new kind of regional order. Rising China, Russia looking to East Asia, Japan, are trying to uncheck itself from the post-Cold War, post-World War II order, and the masochistic view of history. And North Korea is now trying to assert itself as the kind of nuclear weapon state. And the US is now rebalanced to Asia. So this is kind of a return of geopolitics again, or a return of history. So what you see is kind of a complex set of new configurational forces, new balance of power in Northeast Asia. So do you agree with Minister Zareef that we're seeing a level of geopolitical tensions that we've not seen since the Cold War? Well, of course, we see these kind of tensions all over the world. But I think what you see in Northeast Asia is very much different from what I said because of this convergence of different interests at the same time. I want to come back to that. But before we do, I do want to bring our final panelist in Pham Bin Minh, his deputy prime minister, and minister of foreign affairs of Vietnam. You've also made some comments about the situation in the region. You describe China's activities in the waters off Vietnam. I guess what you'd call the EC, what some of us might think of as the South China Sea. You've called those activities illegal. Could you tell us how dangerous you think China's activities are? Yes. In our region, the territory disputes is on the rise now. Not only in EC, we call it EC, or South China Sea, also in East China Sea. And that is the problem for the region, but also for the world. Because peace and stability in this region, if we cannot maintain peace and stability in the region, it will affect the peace and stability in the world. Why? Because in the East Sea or South China Sea, this is a very important road for transportation of goods through East Asia and from East Asia to other parts of the world. So this road is very important. And anything happened in East Sea or South China Sea will affect the freedom of transportation or freedom of navigation. And now, I mentioned that in 2014, the parking of the oil rig of China not in the ocean, but in the continental shell or the exclusive economic zone of Vietnam. And it's the violations of the international law. So what happened here is that could affect stability in the region. So no survey of the important conflict spots in the world would be complete without a little word on the Middle East. Minister Zarif, one of the driving dynamics in the Middle East is the rivalry between Iran and Saudi Arabia, between Shia and Sunni. The world today is mourning the death of King Abdullah of Saudi Arabia. He was 90. Do you see the king's death as changing the Middle East's Shia-Sunni dynamic in any way or the rivalry between Iran and Saudi Arabia? Well, let me, first of all, repeat our condolences to the people and government of Saudi Arabia on the demise of His Majesty the King of Saudi Arabia. I will be leaving. That was tonight to attend this funeral with sadness. Iran and Saudi Arabia are two important regional players. And in my view, we do not need to play a game of exclusion. Actually, we should not play a game of exclusion anywhere in the world. Exclusion is a paradigm, is an outdated paradigm that has led us to all these difficulties. But I want to emphasize that the problem in our region is not a Shia-Sunni problem, but a problem between extremists and more reasonable moderate forces in the region. Unfortunately, Daesh or ISIS and Jabhat al-Nusra and other extremist groups who claim to be defending the Sunni population in Iraq and Syria have killed more Sunnis than they have killed Shias. And it is important to look at that problem. And since we are talking to a Western audience, I want to ask them for soul searching. A good number of these people, if not a majority, are coming from Western societies. And we need to ask what went wrong. These are second-third generation citizens of European societies who have turned to such barbaric extremism in our region. And it is important to ask the question, why did? How were they brought up? How were they trained so that, I mean, they were not trained in non-democratic societies. They were not raised in non-democratic societies. They were raised in the West. But unfortunately, they are beheading people in Syria and Iraq. Beheading people they didn't know. And this is a very serious question that requires soul searching. So I'll come back to the issue that the problem in our region is not a rivalry between Shias and Sunnis. It's a problem of extremism. And extremism has its roots. It's roots in occupation. It's roots in depression. It's roots in disenfranchisement. And we need to deal with them if we want to avoid a very serious crisis in our region. Well, let's continue the conversation into the issue of terrorism. And I'm going to go to Dr. Wunderlein in a second. But let me just finish the thought with you, Minister Zarif. What can be done to curb Islamic state if we, whatever view you see as the roots of this, what's the answer for stopping it? Well, there are several answers. I mean, there cannot be a single strategy or tactic to deal with. I mean, I hate the name Islamic state because it's neither a state nor Islamic. I'd rather call it Daesh so that people will not have that connotation, at least not in the Western world. We understand what Daesh stands for in Arabic and in Persian, but not in the Western world. Let's at least think. Let me do a quick translation, though, for the matter. Islamic state. Right. Thank you. But at least we avoid repeating that. Understood. That will create this hysteria in the West that Islam is about extremism and terrorism. It has nothing to do with Islam or with the states in our region. So what needs to be done is, first of all, stop supporting them. They continue to be supported, unfortunately. They continue to receive assistance. They continue to be pawns in a geo-strategic game of regional dominance. And that should stop. People should abandon this notion, this perception, in my view, this illusion, that they can even make short-term tactical gains through using Daesh as an instrument of pressure against other states. We need a very serious soul searching, as I said, in the West, so that we stop the recruitment, fertile ground for recruitment. And that comes from economic inequality, disenfranchisement, the feeling of deprivation that exists among some people in the outskirts of major European cities. And that is an important source, to drive their human recruitment source. And also to have a concerted effort to deal with them militarily, because this is a military problem. And it cannot be done by bombardment. It has to be, we need to empower the governments on the ground to deal with them, rather than simply trying to use aerial bombardment as a means of dealing with them. So we need a multifaceted, coherent strategy to deal with this menace. We shouldn't have allowed it to emerge. It emerged as an instrument of undermining states that were not to the liking of some other states. But be it as it may, we cannot go back and we cannot remake history. History has happened, and we need to try to resolve the problems in the future. And I believe that's the way to deal with it. Dr. van der Leyen, is the West responsible for breeding its own nightmare? Well, we share common interests in fighting the causes and the sources for that. I want to emphasize that there was a soil in Iraq on which ISIS or Daesh could grow. That was the soil of an exclusive government that excluded some groups. And therefore, it is good to see now that the al-Abadi government focuses a lot on an inclusive policy, Sunni, Shia, Kurds, and the other groups, which is the absolute right way because this is the goal for a peaceful life together. And yes, the second factor is that ISIS, with its way to go forward in an extremely brutal way, has the means of being undefeatable. This attracts a lot of young people, also foreign fighters, who have a lack of self-identity, who have a lack of purpose in life, and seem to be attracted by this so-called ideology. Therefore, at home, we have to go to the cause where there's the lack of perspective, where there's the lack of purpose. We have to dismantle this myth of being undefeatable, and this has to be done on the ground because ISIS is an aggressive force. It has to be fought and fought back. For example, on the ground, the Iraq army or the Peshmerga, who are doing that in a very, very courageous and brave way. And you're right with the third part. In the region itself, especially for the Sunni population, there needs to be, of course, a perspective of economic development, of jobs, of lowering the unemployment, of taking part in empowerment in the government itself. So we have homework to do at home in the Western and European parts, but the solution will be, at the moment itself, fight back ISIS on a military context. But knowing on the long-term, the solution will be in the political-inclusive way to go in that area and economic development. And there has to be a strong, strong interest of the players around, whether it be Turkey, whether it be your country, whether it be Saudi Arabia, just to fight this enemy there because this is a common sorrow we have, a common interest we have, and there we should work together. Please. Well, what is missing in our debate right now is the problem related to FTF, foreign terrorist fighters. Now, already 82 countries were affected by these FTF problems. My own country has now one pending case, if you don't know what the actual state of affairs is now. But we have adopted a very important resolution at the UN Security Council September last year. And as my colleague from Iran has said, we need a multi-faceted approach and strategy to combat this new phase of terrorism. Some people say that in the last 20 years, we talked about the non-state actors. Now, some people say that this, we are not talking about non-state state, whether you like it or not. So this is a problem we should tackle jointly and with a very urgency. Dr. Vendorlein, do you believe what happened in Paris a few weeks ago will happen again in Europe? We, it might happen. So there is no 100% security that it will not happen. We do our best to prevent it, but this is very, very difficult because each foreign fighter coming back is a potential aggressor inside. So we have to be very, very cautious and attentive. You've been to Afghanistan at least three times to visit German forces there. It's been 14 years since the attack on the World Trade Center that triggered that war in Afghanistan. Yet here we are still fighting terrorism. What was the point of that war? Oh, the point was at the beginning, of course, to fight the breeding cell of al-Qaeda. And we have been successful because al-Qaeda is no more the basis for this huge aggression. It has been years and years before. We've learned a lot in Afghanistan. Also, what the enabling of Afghan forces is to take care of their own security. We build up right now to put a lot of focus beside the military intervention to put a lot of focus on economic development and social development and capacity building in the government. So this is, even if it's a very, very hard way we've been through and a long way still to go, it is a good example to see that we always need this comprehensive approach and not only the military one. Sometimes the military is necessary, but on the long term we need this comprehensive approach of capacity building of the government and economic development. And the ISIS phenomenon shows that these extremist movements occur in regions where you have either an exclusive or excluding policy or you have failing states. Therefore, we should put on the long term a lot of emphasis to identify in vulnerable regions the strong states, the anchor states, and make sure that they get not weakened but that we reinforce them and we stabilize them. And this will be a task in this region, for example, to identify the stable anchors to make sure that they keep their influence and they stay stable. Whose job is that to identify? This is the world's community. I mean, if you see now this new alliance of more than 60 states fighting ISIS or Daesh, we have a common interest. So we see that besides the institutionalized alliances, we have new alliance with a common interest to defend our values and to fight this emergent threat. Mr. Rarsad, these struggles obviously are very disruptive to business. I think you lost a facility in Aleppo, in Syria. Does they have stable states that must appeal to you? No, I think that you have to put the situation into perspective. We are, as I said before, present in most of these countries and I was just trying to do some thinking back. I've been CEO for almost eight years in the company and we've lost more people through car accidents in the West than through war in the Middle East or Asia. We have lost more plants through burnings or electricity accidents than through bombings. So I think that is one way of looking upon it. And I was speaking to a senior leader a couple of years ago here in Davos and I was trying to get a better understanding of the situation in the Middle East and in the context of stability. And he said to me, Kasper, your definition of stability is very different to our definition of stability. And I think you need to understand that. So in that context, I actually believe that business can play a major role in countries where you have high volatility because we offer jobs, we have a good jobs, we create stability in society, but you only do that if you're there for the long term and you also don't pull out. So when things like this happen, and unfortunately we have a great experiencing in disaster situations, the first and foremost thing that we care about is our people because you can rebuild a plant, you can't really rebuild the people. And if you do that very, very consistently, you can actually build a lot of strong leaders and a lot of local support, even in countries where you have a high level of unrest. Mr. Zarif, let me ask one last question on terrorism. The bombing of a Jewish center in Argentina in the early 90s is back in the headlines. And the issue is this, the Argentine president has been accused by a prosecutor who then died under rather mysterious circumstances of trying to cover up the alleged involvement of Iran in masterminding that attack. Was Iran responsible in any way for that attack or involved in a trade deal that was part of a cover-up? Well, it's interesting. There was an unfortunate incident in Argentina in the 90s, if I remember early 90s. It's been rehashed and rehashed for domestic consumption. It's a domestic struggle inside Argentina, a domestic debate, and Iran has been unjustly brought into this. We had an agreement with the government of Argentina a few years ago. Nothing was secret about that agreement and that agreement involved. It was under the previous administration. I had no part in it, but the agreement with the Iranian government and the Argentine government involved. Certain steps that each side should have taken in order to resolve that issue. Of course, Iran always believed that it was accused unjustly of this, but we were prepared to cooperate with Argentina in order to resolve that issue, and that agreement was transparent. That agreement went to the parliament of Argentina for approval, and the parliament turned it down. So there's nothing conspiratorial about that. It's unfortunate that certain people tried to keep this alive in Argentina in order to make a political mileage out of it, and it had nothing to do with Iran. I believe it's mostly domestic Argentinian political debate or competition or whatever else, rivalry, whatever else you want to call it. It is unfortunate that several prosecutors who came to this were either accused of corruption or have committed suicide as the latest cases, and it is unfortunate that certain people tried to keep it alive in order to prevent Iran and Argentina from enjoying the relations they should enjoy. According to the Argentine president, the question of whether it's a suicide is still open, but we don't need to pursue that here. I'm not an expert about what happened in Argentina. I just read the press. Good luck to you. Let me move then to a couple of other very important geopolitical issues. Let's talk about nuclear proliferation for a minute, because that's obviously important, both on the Korean Peninsula and in the Middle East. Minister Zarif, I understand that you're going from this stage to meet with Secretary of State Kerry to continue your discussions. Are you headed for an agreement with the West on your nuclear program or a confrontation? Oh, we're certainly prepared to go for an agreement. I hope that we don't have a confrontation. Confrontation doesn't help anybody, but if it comes to the point that in order to defend our dignity, we need a confrontation, then we will not shy away from that, but I do not believe that is necessary. I do not believe that 10 years of confrontation has produced any positive result for anybody. As I told you, 10 years of sanctions have produced 18,000 or 19,800 centrifuges, exactly what they wanted to avert, and it has produced economic hardship on the Iranian people. So it's a classic example of a negative sum game, or a lose-lose game. There is a need to approach it from a different perspective. Now, we have, we set out last year when we agreed in Geneva, two goals. One is for Iran to have a peaceful nuclear energy program, and that is the right of Iran to have. And in fact, all in our analysis, I mean, there are always different narratives about why a crisis exists, and we need to listen to all the narratives. People believe that Iran pursued a less than transparent nuclear program, and we believe that we pursued a nuclear program because we were deprived of the means of trying to gain that peaceful technology from open market sources. Unfortunately, we couldn't even get fuel for a reactor that the United States built into Iran in the 1950s under the Atoms for Peace program, and we needed to go to Argentina of all places to get fuel for that in the 90s, and then we started to almost beg for that fuel after the fuel from Argentina ran out, and nobody provided it to Iran. So we had to make and manufacture the fuel ourselves. This is the problem of checking an egg. So the first goal that we set out for ourselves between Iran and the EU3 Plus 3, which includes, in fact, Russia and China, and not just the Western countries, was for Iran to have a peaceful program, and the second goal was to make sure that this program is exclusively peaceful, and all the constraints and sanctions on Iran will be lifted. Now we have come a long way, we have discussed many alternatives, and I believe if our European friends, and particularly if the United States, abandons the hope that they can have the cake and eat it too, as they say, that they can keep the sanction and at the same time have an agreement with Iran. That will never happen. I mean, sanctions for them were designed to serve a purpose. Now the purpose is at hand. We can, in fact, achieve an agreement that will provide the guarantees that Iran's nuclear program is, and forever will remain peaceful. And we are all for it, because we believe that nuclear weapons have no positive impact on our security. In fact, we believe nuclear weapons are detrimental to our security. And mind you, to the security of anybody. We do not believe that mutually assured destruction or mad is a recipe for good living. For anybody, I do not believe that nuclear weapons prevented the United States from falling victim to the tragedies of 9-11. I mean, you had them and nothing happened. You were, and New York was blown up by a bunch of fanatics. So it is important for all of us to abandon the illusion that nuclear weapons are the panacea for resolving all the security problems. And I believe the nuclear fire need to reach that conclusion too. Not just the non-nuclear weapon states, but we're very happy to be a non-nuclear weapon state and to remain a non-nuclear weapon state. And we're very happy to provide all the assurances that we do not want this deadly device. And the religious verdict in Iran is that these weapons are inhuman and are against our very fundamental principles. So this is where we stand and we have nothing to lose by reaching an agreement. And we are prepared for an agreement. And I believe we can have an agreement soon. There are those who do not want to see an agreement. There are those who believe conflict and tension would best serve their interests. I think they are badly mistaken, but unfortunately, there are a lot of them around and a lot of them have a lot of influence on US Congress and a lot of them are pushing US Congress to in fact derail the process and torpedo the process. And that is why yesterday the foreign ministers of Germany, France, UK, and the High Commissioner of the European Union wrote an op-ed, which I didn't like in the Washington Post, urging them not to go ahead with this. So this is where we stand. There are people who want to torpedo this. And I think everybody should stand against that. What will Iran's response be if the United States Congress does pass a piece of legislation setting up new sanctions? Well, I believe Iran doesn't have to respond to that. It's the international community. We have an agreement, and that agreement has the prospect of reaching a comprehensive agreement. And if somebody comes and torpedo it, I believe it should be isolated by the international community, whether it's US Congress or anybody else. And I believe now it's the time for the international community to stand firm against a process that will unravel an extremely important achievement. So a sanctions bill by the United States Congress will unravel the negotiations? Well, a sanctions bill by the US Congress will kill the joint plan of action that we adopted last year in Geneva. Now, the president of the United States has the power to veto it, but our parliament will have its counteraction. And in our constitution, the president doesn't have the power to veto a parliamentary decision. So it will be out of our hands. If the United States Congress were to adopt a legislation, our parliament will retaliate sort of. The president can veto theirs. I don't know what we can do. And that legislation, this retaliatory legislation would do what? I don't know. I mean, it's up to our parliamentarians. They have threatened publicly that if the US Congress were to adopt a legislation, they will adopt something requiring the government that if new sanctions were actually imposed on Iran, that we will increase our enrichment. Now we have stopped enriching 20%, which we needed for the Tehran reactor, which I said we were deprived of the fuel for. There are other requirements that Iran has for even higher grade enrichment and they are asking for that. So there are all sorts of possibilities and I do not want to entertain them because I believe there is a possibility, a very good probability of reaching an agreement and we should not waste that opportunity. And Secretary Kerry and I, along with other ministers, I visited Berlin and Paris and I have spoken to other friends over the phone and we are insisting on pursuing this. Let's turn to the Korean Peninsula. Are sanctions making the Korean Peninsula safer or more dangerous? Well, I come back to that question, but I'm one of those who are very eager to see a very good news out of this ongoing talks between Iran on the one hand and the P5 plus one because through that successful agreement, North Korea could have some lesson, very important lesson. But now we are using a two-track strategy against the North Korea. Sanctions from the United Nations and some like-minded countries. On the other, we are also pursuing kind of a negotiate settlement through six-party talks or some kind of some kind of mini-natural talks, territorial consultation as well. Now, I think to certain extent sanctions are working because now North Korea in a very dire strait, economic plight, many problems, shortage of foreign exchanges. So now they are now at the very difficult relations with China because of these nuclear problems. Now they are trying to reach out to Russia, but even Russia is very much principled about these nuclear issues. So they are very much isolated, but nevertheless North Korea is still continuing to sticking to their position of continuing this nuclear weapons development. The constitution said they are already nuclear weapons state. So if they are right, they are now the ninth de facto nuclear weapons state, but nobody in the internet community can allow that, tolerate that. So our objective is CVID, comprehensive, verifiable and irreversible dismantlement of North Korea nuclear weapons. And for that, we are working very closely with all the important key players, US, China, Russia, Japan and EU and many others present here. So another thing we see on the Korean Peninsula is I guess what we could call the rise of war by other means. There have been many cyber attacks in the last few years, but the one now attributed to North Korea on the Sony Corporation got more attention than I think all the others put together. What is this telling us about both about North Korea and about the state of warfare in the world right now? Well, we have a sense of deja vu for many, many years. So they are linking everything to everything. Since 2009, we have gone through a series of cyber attacks on the banks, government institutions and many other companies. But now when I saw this attack on the Sony Pictures, now they are now trying to say that, well, unless they discontinue this kind of negative campaign against North Korea, they will hit White House, even they will hit Korea's Pretender House. So this is very much incredible argument because cyber attack, cyber space, it should be utilized for the common purpose. So now Korea as the previous chairman of the cyber conference, we are now trying to work very hard on how to adopt a new kind of norm to reconcile all the different interests of countries. Dr. Wenderlein, how much of your time as defense minister has taken up with this kind of warfare? Quite a bit because as we see we have, we do not, wherever we look at the crisis, it's not only the conventional types of warfare anymore, but the cyber dimension is getting stronger and stronger. So we have to be prepared for that as well in defense, as well as knowing what kind of attacks are the possible ones. And specifically we have to think in these terms that the attacks on other things, but military feels like banking system are way more difficult to predict the way they will hit. And therefore there is a lot of emphasis, even here at the WEF, we had a lot of talks about this topic, which will be certainly one of the major domains in the future. So the interconnectivity about the internet, globalized and the possibilities of cyber attacks are the warfare of the future or the conflicts, the potential conflicts of the future. So we have to invest a lot of knowledge and a lot of work to solve these problems, to get a set of rules, international ones to which the majority obeys too, and to define where the limits are and what the architecture of security is within the cyber topic that we wanna establish and that we wanna follow. Mr. Zarif? Well, we should not forget that North Koreans did not invent this. The United States started a cyber warfare against Iranian nuclear facilities some time ago, and it could have led to a catastrophe with huge environmental implications for ordinary citizens, trying to disrupt our nuclear facilities. So it is important to deal with cyber warfare. It is important to deal with this type of activity that can have irreversible consequences, particularly when it comes to catastrophic accidents as they called them, with Iran's nuclear industry. They did it with our heavy water reactor in the process of being built. They did it with our enrichment plan, and this is dangerous, not only unacceptable in terms of banking and other financial institutions or Sony Pictures, but it is dangerous when it comes to nuclear facilities. Let me move us to what, until perhaps this year, had been the dominant geopolitical issue for quite a number of years, which is the world economy. And let me start with both of our Asian representatives and ask you a question about China. China is now something like a third of the growth in the world economy in recent years, and yet now China's starting to slow down. Are we at a point where we have to worry about another recession brought on by the slowdown in Asia? Well, I'm not an economic expert, but nevertheless, we see a lot of reports on that, but when I talk with many Chinese colleagues, still they have very strong belief that their growth will continue despite certain ups and downs, so we should not underestimate the potential of continued growth. But nevertheless, we have to reinforce this kind of weakness in our Chinese economy. We need to cooperate in more the regional cooperation, economic cooperation in the form of, for example, the FTA AP or TPP or RCEP, even many bilateral FTAs. We have recently concluded a bilateral FTA with China, and many others are now doing that. So in that way, we could reinforce these weak links among the countries in the region. I'm not also an economist either. We think that with the China rise in economically, it can create opportunities for the countries, neighboring countries. For example, Vietnam. China is the biggest trade partners of Vietnam. Every year, we have the trade volume about 60 billion U.S. dollars. And surely, that the trade promotes the economy, the development of the economy of Vietnam. And if the slowdown of the economy of China, so it can affect the trade, for example, investment, so that is the way we see. Minister Zareef, let me just ask you about oil prices. Of course, to much of the world, this is good news. Is the collapse in oil prices good news or bad news? And if my friends are not economists, I'm a total illiterate in that field. There's a lot of humility here this morning. But the drop in oil prices, there is a question whether the entire spectrum of drop in oil prices is entirely economical, or whether they're political ingredients and what are the purposes of that, political dimension of the drop. But for Iran, according to Wall Street Journal, among the countries that will be harmed by the drop in oil prices, in terms of the percentage of their GNP, Iran is number 20. Of the 35 countries that will be harmed, Iran is number 20. Some of our friends who are driving the oil prices are number four and five. So they will be harmed much, much greater than Iran will. Now we have reduced our dependence on oil in our budget from something in the neighborhood of over 50% to something in the neighborhood of 30% now. This has been imposed on us by the drop in oil prices, which is somewhat good. And in terms of the area I'm an expert in, and that is our negotiations on the nuclear issue, it reduces the impact of sanctions on Iran, because now the oil prices are lower, the amount of, I mean, the impact of oil prices, and one of the most important areas of restrictions on Iran is the amount of oil we can sell. Since the oil prices are low, the impact on our economy is by far less than it was eight months ago or nine months ago. So the economic implications are that we are less interested in a deal and therefore less prepared to give concessions for a deal than we were a year ago because we have less to gain from a deal and it may have worked exactly in the opposite direction of the intended way. And there are people in Iran who believe we will gain by this, because they believe we will have to rely less on oil and more on internal taxation, on government austerity measures, on discipline, on economic discipline. This government, the current government in Iran was able to reduce inflation and improve growth rate in the country, not by any new revenues that we achieved throughout last year, because last year we didn't get anything new. All we got through these discussions and agreement was that there were no further sanctions on Iran. The previous sanctions are all still there, but we went from an economy that was in the red negative growth to an economy with 2% growth from 40% inflation to now 16% inflation, according to the latest statistics. So we can do that through discipline and the less we rely on oil, the more we are able to gain this and we call it resistance economy, so that we will be resistant to external factors that are there in order to impact our policies. A quick response from Dr. Wetterlein. This was very interesting. I said something provocative. Yeah, no, no, it was not provocative, but it was very interesting to hear that you talked quite a lot about the impact of the oil factor on the sanctions and what the sanction did to your country. And earlier you told us that sanctions didn't have any effect on your country. So this is contradictory, I think. No effect on policy. Oh, I think they had an effect on policy because I think the negotiations would never ever have been at the place where they are thanks God right now if we wouldn't have had the sanctions because obviously the sanctions had an impact on your country, which is the good part of it. Should I respond to that? Yes, of course. That's what the discussion is for. You see, if sanctions were the driving force of our negotiations, the negotiations provided us with the possibility of gaining over $7 billion in transactions. All Iran used in the last seven or eight month is less than a billion dollars. If sanctions were the driving force, we would have jumped on it and used all the $7 billion, we didn't. The reason our government is at the negotiating table is that we want to change the dynamics of our relations with the rest of the world, not that sanctions hurt people. It's clear. And we believe sanctions are unjust, sanctions deprive Iranian people of the possibility to buy medicine because your banks are not prepared to transfer money for them. No, no, no. I mean, legally they are, but reputation costs prevents them from doing that. I mean, this is clear. But the point is, you asked for this question, so I'm giving you an answer. Go ahead. The point is... But comes to an end sometimes. Yes, thank you. Sanctions did not bring the government to the negotiating table. If sanctions had brought this government to the negotiating table, now we would have moved away from the negotiating table. They didn't. We want to change the nature, the dynamics of our relations, and I think everybody will be better off if that happens. The one point with the sanctions are, and that was the beginning of our discussion, is what is better, to have a military intervention, the hybrid warfare we see in the Ukraine, or is it better to react with an economic answer? We think the economic answer is always the better one to a potential military aggression than a military reaction because this does not bring us anywhere. And the sanctions are all where only a vehicle to bring you at a table and us at a table to negotiate. For example, with Russia now, it's the agreement of Minsk that has to be fulfilled. That's the goal that we want to go to. And the sanctions, obviously, were at least... We never liked them. They are harmful to all of us, but they are the better instrument to bring people at a negotiation table than a war. And that's why sanctions sometimes are to be imposed. So are you not abandoning them even after we are at the negotiating table? I think it's very good if we come to an end, that's the goal. We have to have at the very end an agreement everybody sticks to. Same in Russia and Ukraine. We have the Minsk agreement. We want to see that it is fulfilled. In the Minsk agreement, we had the OSCE. We had Russia. We had the separatists. And we had the Ukrainian government at one table. They signed the agreement. So what we want to see now is that it is put in place. You know, that is the real truth behind an agreement or behind negotiation. So if we come to an end with the negotiations, this is good. We can come to an end with sanctions. But at first, the negotiations have to go to a good end. All right, I'm going to have to call it into this part of the conversation. Although if the two of you would like to stay after and continue, you're more than welcome. We're basically out of time and I just want to give each of you a brief opportunity to wrap up. We've talked about economics, obviously. We've talked about sanctions, about terrorism, some big issues we haven't talked about, like climate and jobs and environment. But I want each of you now, starting right here with Dr. Wenderlein, to tell us what you think the most serious threat is for 2015. Oh, my God. Somewhat briefly, though. Yeah. We have to understand that economic development and security are two sides of one coin. And if we keep that in mind, we will be successful in tackling the threats ahead of us. Well, as you know, Korea is a divided nation confronting North Korea within or across this DMZ. My nightmare scenario is that some day, we know we are trying to deter the possibility, but some day if North Korea turns out to be a master's, this nuclear weapons technology, and then translate this miscalculation into some kind of action, that could be a nightmare scenario. But working together with our friends, we are trying to prevent that from happening. Ben Ben Min. Yes. In our region, I see the security threat as territory disputes may happen in East Sea or South China Sea. So that could be a threat to the stability in the region. Mr. Serif. Well, I think two problems may emerge as new security challenges for 2015. One is the return to Cold War politics and to Cold War geopolitical rivalries. It's impossible to go back to the 90s or to the 80s, but we see ingredients of that, and those ingredients are detrimental to both regional and global security. And that, I think, is a very major problem. But more importantly, I believe extremism and the way to deal with extremism are our main challenges. Now, we've seen extremism in our region, in Europe, elsewhere, what it can do. But the way to deal with extremism by pushing people to further exclusion, pushing people to further periphery of international system is a very dangerous phenomenon, particularly when it comes to ostracizing an entire population in Europe and basically insulting the values and the sanctities of Islamic religion becoming a norm in certain European societies, which feed extremism, which feed this feeling of disenfranchisement. I think these are very serious challenges and threats that we're facing right now. And our final word from our business representative has progressed. As I answered in the terms of business risk, and I think a risk which is completely underestimated is the development within the EU and Europe. We've had six years of recession, which just launched probably the biggest financial package. There are very few structural reforms and the current crisis in Eastern Europe that we could have very, very severe impact on the Western European economy. And that was why I was interested when you started speaking about China. China grew 10-fold of EU last year, 10-fold. And I think that with the risk of going into the seventh year of recession, which is real because of lack of structural reforms in many countries, because of the impact of the Russian crisis, is something that would not only from a financial standpoint, but also from a social standpoint, will be difficult to bear in Europe. And I think that is somewhat estimated by many people. Well, thank you all very much, a very robust debate. We clearly could go on for another hour. And I'll say, if you'd like to, but we do have to call it end to this AP Davos debate. Thank you very much.