 Okay. Thanks everybody. Thank you for coming. If I could ask that you find a seat because I will tell you the ambassadors on the way. He was on the Excella. Of course, you know the Excella. And it'll get you there when it gets you there. But he has arrived. He should be here in just a few minutes. But because Ambassador Armitage has to leave, I thought you'll just please indulge us and let us have Ambassador Westmikot just join us in progress. And I wanted to get started. Besides, I'm going to blather on for a few minutes and at least tell you why I think we're here. And probably by the time I get done, the ambassador will be here and we can turn to the two experts that we brought here. Thank you all for coming. This has been something I've personally been quite interested in for quite a while. And I first had a conversation with Secretary Panetta about this idea almost three years ago. And let me just give a bit of a frame to explain what's behind this. The reason why Ambassador Peter, by the way, was because it was stimulated by something our friends in the UK had done. You'll remember our buddies from the United Kingdom had a program called Nimrod. You remember Nimrod got in a little bit of trouble and it got too expensive and it just wasn't going to make it. And so they made a hard choice. It was a brave choice. And that was to cancel Nimrod and then to, in its place, buy three rivet joint aircraft. Exactly in the same configuration as the 18 rivet joint aircraft that we have. We couldn't find three crappy old airplanes like the ones we used but we lined them up, you know. And of course that's one of the first complaints they had as we made them identical and they're really old. But it was an important insight into something and that is when two allies can operate the same hardware, we can avoid the back office costs of having infrastructure so that our friends in the UK can put their dollars behind the fighting end of a rivet joint and not have to worry about the schoolhouse and the depot support system, etc. Now of course there was a bargain we had to strike with this which is that obviously if the United Kingdom is going to buy our aircraft, we have to guarantee them a production right for the modernization of the entire fleet, which is fair. I mean that's part of the partnership. Now that idea caused me to start thinking about this whole issue of industrial collaboration and alliance partnerships in a very different way. We need to start thinking that the world's getting is no smaller. There certainly aren't any fewer bad guys in the world, aren't you glad you're not from the Kim family, huh? We got some real wackos out there and threatening to the United States and to our allies. Our budgets are under a lot of pressure. Our budgets here, budgets in the UK, everywhere. Our closest friends are struggling just as we are. We cannot afford to do business the way we used to do business. And there's an opportunity if we decide that we're going to become federated forces. Now I use the term federated because I think it's meant to signal we both come as equal partners here. This isn't a big brother, little brother arrangement. We are equal partners. We need the United Kingdom to be our partner on rivet joint. And we've made them essential for the future for that program. And we need to start thinking about this as a new way to think about how we work with allies around the world and friends around the world. We tend to have a pretty deep paternalism about our relations with partner countries. Yeah, we're willing to let you buy our stuff, but not really our good stuff. I mean, we're going to keep that for ourselves. Well, I mean there was once a time, maybe, when we had to worry about industrial loss of, you know, key technology. But these are our finest allies. These allies care just as much about this mission as we do, certainly as much. And they have strong control systems. We are not at risk by sharing frontline technology with these allies. And we need to mature, honestly, on our side. If we're going to ask them to fight with us side by side, then we need to start letting them have the kinds of things that it takes to be our partner on that battlefield. So there's a lot that we have to start working through here. I'd also say that there's a related dimension to this idea. And that is this, and we're facing it really in Asia. You know, for 60 years, our approach to forward presence has been through creating big American installations overseas. You know, there are two ways that we send Americans overseas. You know, PCS, Permanent Change of Station, and TDY, Temporary Duty. And, of course, Permanent Change of Station means that we send people to big complexes, you know, American outposts. And over time they become unwelcome neighbors around the world. We've been struggling for 15 years in Okinawa. But what we've learned, for example, with very good friends like the United Arab Emirates, is that if we're willing to be there on a TDY basis, we can be very strong presence in the region. So we need to rethink this whole thing in a very different way. These are countries that can be full partners with us in a shared mission. We see the world the same. We will have some differences, obviously, some diplomatic differences. But the content of our goal, as well as with our allies, is so profoundly parallel that we're cheating ourselves if we don't find a way to work together. And that's what the purpose of this effort is going to be. This is what my colleagues and I are going to be working on in the months ahead. Tonight, you know, Peter will be here. Ambassador Westmikow will be here. But I'm very grateful that Rich Armitage has joined us. We've had many conversations with Rich on this. Of course, you all know Ambassador Armitage as certainly the premier national security leader in Asia for America. This is a man who spent more time thinking about, worrying about, nurturing relationships, building capability in Asia for a greater good, our shared good, than anybody I know. And Rich, we're honored to have you here tonight. We're grateful for what you've done for the country. I'm going to really make this an interview, and then somehow I'm going to bring Ambassador Westmikow up to speed when it gets in here in the door. But let's start with you, Rich. And that is to say, I know that you travel extensively throughout Asia. All of the countries in Asia are trying to think about how they're going to develop a security posture for the next 20 years. Would you just share your thinking about this and what they're expecting from us as American partners? Well, what I've heard recently is for the most part, the so-called rebalancing toward Asia has been welcomed by the great majority of nations, with the exception, of course, of North Korea and China. It has some real and frankly well understood questions about it. But the first question that you get from our foreign friends is, what does the U.S. expect of us and the rebalancing? My answer, frankly, is, well, wrong question. You need to figure out yourself what you're willing to do to help the United States, because the U.S. has not figured this out, hasn't thought it through. As a suggestion that our equities and the strategic weight that the U.S. gives Asia greater, the rebalancing is fine, but it is a practical change. We haven't thought that far ahead. So first of all, nations of Asia will be thinking for themselves what they are willing to do if they want our presence around it, if we want us to be involved in the life of the neighborhood. Number two, it's unfortunate, I think, that in the main part weight has been given to the security equation and it left out a lot of the other arrows in our quiver, such as in exchanges, such as now we're trying to conclude a TPP and that's great, such as a foreign direct investment in these foreign countries. So we went to the rebalancing of what we could move quickly and that is security forces and left the other arrows back home. And so it leads us to be rather unbalanced. As we move forward and particularly talk about federated defense, John, it occurs to me that we need to, in the first instance, be talking about things that are completely non-threatening. Nobody in Asia wants to get involved in a problem that we may bring about and the last 15 years or so of U.S. involvement has been a bunch of problems that we brought about, not everybody bought fully into. So I would suggest that a very safe thing to talk about or a battle that we all have and that is against nature, the ability to transport others, maybe understand how much transportation capability exists in the various forces, take an inventory, but do something initially that's very non-threatening and then move forward. And I think that would be both helpful for our friends in the area, but it would also be helpful to us if we realize that we don't have to take the full load of every typhoon in the Philippines or anything else. Richard, let me ask you, I know that you've counseled governments in Asia rather extensively about, you know, working with the United States, buying U.S. equipment, you know, how are we going to be treated if we do that? Are we going to get jerked around? How reliable are you guys really? You know, because we saw what you did to Pakistan, you sold them F-16s and pulled the rug out from under them. You were at the State Department. You saw this from both the DOD perspective and the State Department. Tell me about America's reliability as a partner. Well, again, it gets a frantic on this. Relationships like the Republic of Korea, like Japan that are pretty mature. We've had a good relationship for a long time. They have a lot more faith in the ability, and a lot more experience in the ability of the United States to deliver once we say something. For other countries, we, from time to time, have different problems in Indonesia or Malaysia. And their experience is a little different. And their experience looking at our export controls and technology transfer regimes would lead them to be a little reluctant to go very far with us because they realize that we can turn around and Congress can turn around on a dime. And for human rights or religious freedoms or reasons, stop the provision of technology. So I find that our Asian friends, on the one hand, are appreciative of the fact that we do value human rights and human freedoms, religious freedoms, but they're frightened about being caught in the middle. What can we do on this? Because it's, you know, frequently we impose restrictions on countries because it doesn't matter, we don't care, and it's the least painful thing to do. But then once we do it, we never know how to get out of it. Well, there's the rub, isn't it? John, it occurs to me, I've spent some time talking about this and thinking about it. I talked to David Vertog before the meeting. I will admit to you, I came to the Department of State as a deputy and bathed in the religion of freeing up the export control regimes and making technology transfer decisions that were cogent and correct. And I learned something. And Secretary Powell had the same feeling. But we weren't into the priesthood. We weren't members of the cult. And this was the export control regime, folks. And then Pentagon, you'd call them iron majors. Well, in the State Department, we have iron majors except they're civilians. They're iron GS-15s or something. And you can have as much zeal and as much energy to try to change the export control regimes. But if you don't speak that language and that jargon, they'll wrap you up in your underwear every single time. So it leads me to the conclusion that the only place that we had success really in moving export control regimes was by a country-by-country basis. Egypt came to mind. And we were successful in opening up Egypt. It took a lot of energy. It took personal energy from the secretary, from the deputy secretary. It's the only way I was able to get any movement in export control and technology to get a blanket approach change. You know, there's not enough days left in my life for that. But a country-by-country approach, I think you can make, you can become more credible and you can make some significant progress. There were days in the past when we were more clever about how to deal with this. I remember when our Dutch allies wanted to buy the P-3, the state-of-the-art P-3, anti-submarine warfare aircraft. And security people were a little concerned about that. But we made an arrangement that an American officer was assigned to the Dutch P-3 squadron. And his duty was the last thing before the airplane took off was to go on board, put in the tapes, get it running up and running, and then let it go on the mission. And then he recovered the tapes at the end of the mission and we secured those separately. Of course, that was the more sophisticated algorithms that were behind the acoustic processing. It seems, you know, if we do this carefully and not in an offensive way, it seems to me there are operational solutions to the paranoia that we tend to have about this problem. Did you ever experience some of this when you were at sea? It happens all the time, but we're breaking it slowly. You suggest it may be joint patrols or joint manning of ships and things of this nature. We've got an agreement with the UK on the use of carriers. It's slowly breaking. Submarines may be the next one, though. The submarine community in the United States, in my view, is quite hard headed and quite closed. And I think that could be a real tough nut. But if we could get Australians, maybe the Japanese, to be involved in some of these submarine programs, the Japanese, for obvious reasons, to have more neuralgia for the nuclear issue. But this might be something where we could really make a big difference. But, John, this whole question of federated defense, one of the questions is whether we have to be in the middle of it. We're joined by the ambassador. You're with Xcela. No, not even. The slow train. We know. I explained to everyone here about that. Thank you so much for persevering. Rich, why don't you finish your sentence and I'm going to bring the ambassador up to speed. Well, I was thinking often when I think of federated defense, I start with the United States. And I don't know that that's always the right place to start with. First of all, depending on different administrations, they have different approaches to allies and some more credible than others. It's not a political statement, it's a practical one. And federated defense is going to very much be a factor of how much faith our allies have in us. But at a different level, it's one of the regional and sub-regional level, things are happening. There's a press release out a couple of days ago from the Nordic states who are rolling out a defense roadmap. And they've entered a new phase that unlocks the potential and cross-border collaboration of the five Nordic countries. It has implications for NATO. It has implications for us. It's a very safe place to begin with the air defense and things of that nature, for the five of them. It seems to me that we need to give some consideration to how much we try to foster this kind of sub-regional federated defense. It's good for them, it might ultimately be good for us. This is a very good point. Let me get to that question to ask the first question of the ambassador. But let me just frame the conversation because this idea of federated defense really sprung off of the insights I got from what I saw in the UK when they decided to abandon the Nimrod program and to buy the River Joint into River Joint. And it's a hard thing for a country to do, to jettison a program with all of the industrial connections and politics that goes with that and join another country's program. But you did, it was very courageous. Of course, there's a bargain here. We promised to place work with you with the modernization for this fleet. But now instead of having 18 and you having three, we've got 21 aircraft we can operate together. And there's a capacity. And in some ways this is growing into the defense business what we've done for many years in intelligence cooperation through the Five Eyes system. We really have a federated system that we've developed there. Now I'd like to just, by way of background, to say this is really a question. Can America start looking at its partnership with allies in a new way, in a bigger way, in a way that's more cross-worthy and more intimate so that we can see you as a genuine partner and we are a reliable partner on our side. So that's kind of frames the conversation to this point. And before I get to the question, Rich just put on the table, which I think really gets to the nub of something quite interesting. Ambassador, let me just ask. I mean, the UK has probably been more forward-leaning than any country I know in finding practical ways to collaborate on needed things for the UK. I mean, you bought C-17 airlifters. You bought the aircraft carrier thing with Brits. I mean, you've been remarkably pragmatic. Can you help us understand how you manage this within the United Kingdom because you're able to manage the complexities of sovereignty and politics and industrial politics and national security in a much more sophisticated way. And I'd just be curious if you could give us insight into that. Well, thank you very much. Is this working? It is. I think it's working. You all here? Yeah. And apologies again for arriving late. I'm not sure that we're that much more sophisticated, but I do think that we've developed a very useful model for working together in what you might call a federated way, but I'll come back to that word in a moment, but which we would probably regard as a collaborative partnership, primarily with the United States, but not only with the United States. We are doing worthy things, important things in terms of collaborative defence projects and indeed strategy and indeed combined operation capabilities with other partners, particularly with the French, because we concluded some time ago, and I used to be Ambassador in France, that it wasn't really a reasonable to leave the United States shouldering the bulk of the burden or as much of the burden as it was within NATO, and that if the Europeans were going to pull their weight, the main Europeans who have a defence capability and ambition and global reach and tradition and relationships and like to think they could do this stuff are the Brits and the French. And we concluded that we could probably be more effective if we started working together to try to drive down costs, improve interoperability and develop a habit of doing more stuff together. But to come back to your basic point, I think you're right, it goes back even to Trident missiles and so on. You mentioned RivetJoy where we've got a rather remarkable partnership, where we've got a kind of jointly available piece of kit. We've bought only three, you've got 18, but they are largely interoperable. There is work that is done between us on UAVs where sometimes UK tasking in Afghanistan actually goes to US equipment, vice versa. We work very closely. The carrier strike program is another one where we work very closely together. And so is Joint Strike Fighter, the F-35, where there is, in exchange, if you like, for a very early commitment to be a kind of co-prime contractor as a high level of workshop commitment, a joint involvement right from the very beginning, which we think works extremely well. It continues with submarines and even to the extent of design and manufacture of some of the elements of your next generation submarines and ours. So it's something that we think works which helps to improve our ability to work together and to swap stocks and equipment and mutually deploy equipment when we need to. But also we hope to keep down the costs. And it facilitates the development of a partnership when we need to go in and do something together. So it's a pattern which has derived from, I think, a very high level of trust of working together which goes back many, many decades and which has evolved through a series of very real projects and which is going from strength to strength. Let me say something that will shock everybody here but on this very point about trident replacement. You need to replace tridents. We need to replace tridents. You want, your people want a submarine with only 12 tubes. We want a submarine with 16 tubes. Why don't you build 16 and we'll rent four of them from you? I mean, I don't see any reason not to. We'll put a U.S. launch control officer on them. I can't imagine where we're going to be in a war that gets to that level working. But there's no reason we couldn't be thinking about that. We've got such intimate trust with each other. Let me... I better not try long-term. Don't answer that question. Don't answer that question. John, if I can say something about, I certainly agree with the comments of trust and confidence in the U.S. and Great Britain but you know there's an element to our relationship and the element of relationship with Australia and frankly to Japan where when you talk about federal defense you tend to think about equipment and things of that nature. I think it starts with people both in the run-up to the Iraq war. We had a serviceman from Great Britain, from Australia and laterally from Japan who were at SETCOM involved in this at least understanding what was going on in the Department of State. We've had officers from Great Britain, from Australia, from Japan sitting right alongside with us and you talk about something that really raises trust and confidence, that does. So all of these in federal defense starts in my view with the people. I hope we've solved the problem where we invite a foreign officer into our command center. He or she will write a memo that goes into our classified system and then it's listed as no foreign and they can't read it ever again the rest of their life. I mean we've had that goofy thing happen to us. I hope we can fix that at some point. Let's get to this issue you brought up Rich which I think is really quite interesting and that is to what degree is this opportunity one to encourage collaboration among regional countries and partners that doesn't involve us but we can play a role in helping to encourage that. You mentioned what the Nordic states were looking at. Why don't you just expand on this and then I'll turn to Ambassador. Well, the Nordics have a need for air defense. We're involved with some of those countries in terms of defense commitments and NATO to the extent they're better able to provide for themselves, it's better for us. If we have the type of relationship that we hope and sometimes we say we have different countries we can get a shared picture which plays very well for us. We here in this hemisphere with NORAD have a bit of this. We have some experience with developing a regional approach. I think in Southeast Asia you could have this and I'm not saying that we're in the middle of it although two of the Southeast Asian nations are allies but we can certainly be fostering this type of commitment to each other and I think that in itself is a good thing it lowers the defense temperature it lowers the security temperature much in our interest. Well, let me just build on that to say that I once had a rather scratchy conversation with a Brit in your government who... Impossible. And he was really going on and on about how impossible the Europeans were to work with and were your closest friend and I said, sir, with all due respect what we most value in you as a partner is your ability to bring Europe along, not to be on our side of the agenda. Can you... This is a difficult place that you have to walk because I know that the UK has treasured its partnership with us and yet it also has been an active leader in the European community. Can you help us think through how we could manage this in a better way? I'll try. A couple of points. One is this of course goes way beyond the defense relationship. Yes, it does. I think it's a great opportunity which is out there as the people of the United Kingdom perhaps determine once and for all after the next general election which will take place in May 2015 whether they will remain members of the European Union or not. There are people in the UK who believe that Britain should leave the European Union and go off into some wonderful sublime mid-Atlantic status as a 51st State of the Union and that you would welcome us and adapt your operations, defense, political institutions on to this wonderful new State of Nirvana. There are others amongst us who don't think this is necessarily realistic and indeed remind those who think that the UK can disappear off into the middle of the ocean by reminding them that the United States government position which has been pretty constant for quite a while is that the United States interest remains in having a strong United Kingdom at the heart of the strong looking European Union that is kind of my point of departure. So I think we are very conscious of those of us who work on these subjects very conscious that that is the UK that is the US if you like strategic requirement I think that's the best place for the United Kingdom to be but as you know the Prime Minister has set out a program for improving the terms of membership and then seeking fresh consent to be given a majority in the next general election in the UK to consult the British people to get fresh consent if you like for the concept of membership. So this whole issue of where the United Kingdom fits its membership of Europe its future as part of Europe and its relationship with the United States is quite complex and is quite political in this sense. Back to the defense, second point really just to say that I think we are very conscious of the connection with our European partners in order to make the alliance the relationship across the Atlantic much more effective, more interoperable, more cost effective because we are very conscious I hear it regularly from very senior members of the administration that there is a growing level of concern in the administration along Capitol Hill that the United States is today shouldering something in the region of 73-75% of the cost of NATO and that some Europeans are not doing their share of sharing the burden. We are currently at 2.4% of GDP on defence expenditure so we're comfortably in excess of the 2% commitment some are not even at 2% we know that we've got to work therefore with our European partners and one way we've got to do this is to try to improve the way in which we do get smart with the capabilities that we have got so that what we do is more effective. We're doing it already as I was just trying to say with the United States more and more with the French but we need to do it as Europeans and more effectively as well and I think that's where we can perhaps play a role in bringing along the European members of the alliance in order to make it work better and more cost effectively. The last thing I would add is that it needs to go beyond the European members of the alliance and we think of the NATO partnerships which have been developed and there's a whole bunch of them there's the Istanbul Security Initiative there's another one with the Gulfies there are a series of different things which have been going most of us don't even know this for 10, 15 years and are one reason why for example in Libya when some European members of NATO declined to take part it was not that difficult to bring in some of our Middle East partners who actually took part with pilots and aircraft and so on in taking military operations within the framework of an existing and tried and tested NATO command structure. So I think it isn't just about the existing members of NATO some of whom will show up on the day and some of whom may not it's also about using that to develop broader partnerships of a basis which is sometimes ad hoc fresh coalitions and which will be different in accordance with what the task is and where the theatre is in which we've got to act. That's really interesting. Retu. Thinking as the ambassador spoke that I had started out ambassador before you arrived and talking a little bit about the rebalancing one of the things that we forgot to do when we announced the rebalance was to say what it was and what it wasn't and it wasn't of course turning our back on Europe it wasn't meant to be and I think the administration is correct the record but it also wasn't meant to be a free ride. And I acknowledge Great Britain is doing the job at 2.4 France is above the 2% but most as you suggest are well below, well below even Australia is at 1.7% so the rebalance to Asia was not a lot of things but it was certainly not a free ride and your comments would remind me if you can bring along our European friends you've done the Lord's work. You mentioned the Libya operation very interesting we haven't studied this yet enough but this was one instance where Europe chose to lead a military operation within NATO with America playing more of a supporting role and the question first to you ambassadors how you feel that's now being viewed inside Europe and then Rich do you think this is a model that Americans could accept as being more of a standard model inside kind of a new dimension for NATO? I would say that at the European level I don't think anybody had any problem with that in fact many Europeans were probably comfortable with the fact that the United States chose to be less visibly up front those Europeans who tell themselves or tell others that it was just us with our Arab friends who did the business in Libya are deluding themselves there was actually a very important US military commitment even if it was not a US led campaign and I totally understand sympathize with the reasons why after Iraq, after Afghanistan after a whole bunch of things going on in the region the United States wasn't necessarily that keen to be up there waving the stars and strikes leading the vanguard and inviting everybody else to follow but it was also as so often happens on these occasions one of those campaigns which developed extremely rapidly almost with a kind of momentum of its own I recall on the Monday evening the G8 foreign ministers couldn't even agree amongst the European members of it that anything should be done about Libya went on Wednesday the United States circulated a new draft security council resolution some people looked and thought well this has got no chance of passing might even be a provocation by Saturday lunchtime we were in the Elise Palace and there was President Sarkozy telling the rest of the alliance my planes are in the air and you guys went with me it happened as rapidly as that and there wasn't a huge amount of time to work out who was up front behind the rest of it but I think that the way it came out there was a very strong very visible French and British political commitment to get on with this campaign but very very strongly and I would say indispensable US military participation with a number of others who came along and joined in I think it worked extremely effectively I would add one other little comment straying slightly from that theme but based on the Libya experience there were some very important lessons learned in the course of that campaign and I think the one of the corollaries of this degree of partnership of this increased collaboration between members of the alliance has to be a greater readiness to regard the procurement and the acquisition and the equipment program as a two way street for example we found that there was a piece of equipment which was originally developed as a tank buster called Brimstone which is a missile manufactured in Britain but with a very high level of US content which was unbelievably accurate and very very effective there and which we are at the moment demonstrating I've just been to the test firing just the other day at China Lake in California is something which probably does also meet the requirements of the US military and maybe with other allies and I think to the extent that we are very happy to buy Rebit joint in C17 and Chinook helicopters and a bunch of other equipment the sustainability of defence spending does require a visible two way street in the defence procurement programs of all of the allies we've all got to be ready to buy what's the right kit at the right price from our partners and to be a little bit less sometimes kind of well that's mine and nationalistic in terms of the acquisition programs and I think that needs to be a repetitive time part of the deal because I happen to agree with that there's going to be a hard part of the deal if I might to that there's one other element that we learned that's something very important that we learned in the Libyan experience and that is we can have the aircraft or whatever if you don't have the pilots and we had a shortage of pilots during the Libyan situation so there's a lot of lessons out of it the question you asked me John is this a model as we go forward I don't think so I think what Libyan was was showing and demonstrating I think was American people and their loathing of military involvement right now is just out of their experience of these two unpopular wars and they've had enough and so they were very content to let our president quote lead from behind I've never understood the phrase by the way when you're a company commander or a platoon commander you lead from the front but when you're a general officer your place is probably not at the front leading a platoon or a company it's probably back where you can gain the greatest idea of the picture of the battlefield so leading from behind is what we teach all of our general officers and commanders so they've got to be at the point of decision isn't a model for going forward not sure Americans if you think about it in a way are awfully bloody minded we don't think of ourselves this way but we're in Afghanistan so many years after we initially invaded we were in Iraq for so long Vietnam another thing so we can put up with a level of pain we're awfully bloody minded when we put our mind to it so immediately going forward is probably closer to a model Syria comes to mind but in the longer run I think that in the United States because we have equities and we have interest in almost every part of the globe is going to have to be more forward leading and more in the driver's seat well I agree with that but I'd also say right now our French allies are carrying overwhelmingly the load in trying to bring security in the Sahara I mean frankly this is this is in our interest for them to succeed and we need to be doing more it seems to me countries that have more expertise in background and experience if they want to work inside a NATO framework that merits some of our support no indeed it does but there's another side to that coin if you look at some of the African countries we have a surprising amount of US forces there prosecuting al-Qaeda in the Maghreb and I don't think it's very publicized Afrikaan doesn't talk about it very much but so you're completely right the French are carrying a home load in CAR in other places we're transporting them on occasion probably asking them to pay for it as well if I know our Comptroller's I was one of the ones as you say the Jews are scary it's the patrons saying of all Comptroller's but I think what the French are doing where they're taking the lead first of all in Mali and then subsequently in the CAR it does bear out your point because what the French discovered very quickly was that to do that sort of operation on their own was becoming if not difficult then pretty much impossible and so therefore they came to you they came to us you know we're providing C-17 have you left to take their troops to the CAR you're providing transport you're providing I started providing a bunch of different operational capabilities which increasingly we're going to find members of the Alliance don't have on their own hence the concept of smart alliance where we all focus on what we're good at and providing capability which others can draw on because very very few with the exception of the United States occasionally ourselves can do all this stuff entirely on our own the last operation where the Brits were entirely autonomous and carried out a military campaign I'm very sure notice was probably here in the end it actually worked very well very effectively it didn't last more than about eight weeks go back to the Falklands war which was 12,000 miles from home how easy would it be for us to repeat that operation if we had to today I'm not going to ask the question it wouldn't be easy so we you know more and more I think we do need to help each other out even when one particular country is taking the lead as the French have admirably in my view in Mali and the CAR well it strikes me that it ought to become more than just kind of helping out but actually become part of our strategy because it because it going forward we just don't have the depth or necessarily the expertise John that's that's right but if I may I want to inject a slightly different note in this discussion we're talking in the main about allies but when we talk about federated defense I don't think we necessarily have to talk about allies only look at Singapore for instance which the stationing of the LCS the F-16 deployments have been quite helpful to us and in our defense strategy are not allies so when we think about federated defense I think we need to think of I think that's exactly right Ambassador do you feel that the defense budget now for UK is stabilized or do you feel it's what's your sense of where it's heading over the next years I would say that on the back of the 2010 strategic defense review that we conducted we are, and the result of which was a plan to produce what we call future forth 2020 what do we need in 2020 and how do we get there and what are the decisions we need to take some of them painful about cutting programs which were either very expensive or becoming obsolete, some of which were not actually obsolete but were very effective in order to free up the resource to give us what we're going to need in the future I think we've taken some very brave decisions we've also done something which is probably a first in the last 40-50 years we balance the books so our defense budget has not got a great big black hole in all sorts of unfunded future programs the thing actually now makes sense financially which is it's been painful but it does at least mean that there is a solid base on which to make future decisions as and when resources are there or the needs arise but we're going to be spending $250 billion over the next 10 years in re-equipping updating and replacing equipment that's not small beer for us we're going to have these two aircraft carriers we're buying aircraft we're maintaining and going to update when the need arises the continuous at sea nuclear deterrent because there is the decision is pretty much taken in the UK that is the only that is the most cost effective way of continuing to play our part there we're going to have carrier strikers I was talking about we're going to have long range capabilities with aircraft in order to deliver troops we will be able to mount at very short notice and sustain indefinitely at least a brigade size operation and with a bit more early warning and a bit more time we can do something bigger than that for a long period of time as well so we're feeling that given the constraints fiscal primarily we're in much better shape than we were we'll be no doubt looking again at what we need and what the prices are and in which direction to go on in the years to come because the requirements and the technology and the interoperability and what to do with our partners are evolving all the time as other threats and our calculation of where we need to be and what kit we're going to need in the years to come but we're feeling that we're in much better shape than we were just a few years ago we're coming to the hour and I promise Richard let it get out of here by six but let me pose kind of the last question and let me start by saying at the outset it's very much in America's interests for the United Kingdom to remain a leading country in Europe I mean I think that's overwhelmingly in our interest so I use that as the introduction for this question and Ambassador you raised the question of smart defense which is kind of people doing what they do well now or be prepared to commit to do something that they can do well but is there a blueprint for this I keep asking my European friends what's the blueprint for a smart defense when we're done with this we don't have 26 semi-controlled crash landing where everybody's cut their budget and instead what comes out of it is a coherent whole but I don't see the blueprint can the United Kingdom play a role in getting us a blueprint for Europe not us US but Europe a blueprint for its smart defense two comments first of all for the first time in five years later this week heads of government of the European Union are going to get together to look at precisely these questions of security and that is I think going to focus minds and we may have some better answers to your question after that second thing I would say is that we're certainly ready to try doing that but I would just flag a word of caution something which you have dealt with for many years which is in the UK there is a sensitivity on the issue of sovereignty and sovereign control over our defense capability it's one thing to have a very high degree of interoperability cooperation, joint task forces, joint projects with very close allies particularly United States but with one or two other partners as well it is quite another for us to somehow see national security being subsumed into the concept of European Union integration which some member states hold dearer than we do so while we're very happy to see we want to see the European partners of the alliance carry more of the water and we want to see more European smart defense and we want to see within NATO the Europeans playing their part and working more closely together what we're concerned about on our side would be anything which amounted to a pooling of sovereignty in the concept of defense within the European Union that's kind of no-go territory for the Brits but it is quite separate from wanting Europe to play its part within the alliance within the existing command and other structures of NATO and to working with our European partners to try to divvy up if I can put it like that the individual responsibilities of each of the European partners of the alliance should be assuming that all major functions as part of making the alliance work better and as part of the whole operation being smarter and more fit for purpose Rich, your views on this and then we'll let you each wrap up here I was thinking about Asia when you were asking this John Ambassador touches on the key element of federated defense that no one wants to although we're all states of the 21st century we all understand that we have to cede some sovereignty for the general public good, the global good the sovereign commitment of our forces into combat is one that no nation is going to give up and that's the real difficult part seems to me of talking about federated defense I look at the US-Japan relationship in this context and see that you've got part of the elements of everything I think you'd want in federated defense except one you mentioned at the opening and that is getting away from larger US-style bases and turning into more Masawa-type joint bases where the Japanese flag is primary the US flag is secondary and we're clearly guessed, the wanted guessed so I think if at least you're talking about federated defense look to Asia, you ought to look closely at the relations, it's got element of procurement which help both of us because of the economy of scale it's got element of presence which we're allowed to use the presence which serves Japan's interest as well as our own it's got all the elements I think you'd want training together working together etc so I think that along with Australia is probably the key when you look at Asia to what we're talking about federated defense in the area with the rest of the countries there are elements of it but because I think of the historic neuralgia that exists and fresh neuralgia it's hard for me to see that they would move together very far very quickly though having said that the historic neuralgia in Europe a couple hundred years is pretty enormous and Europe has for the most part gotten past it well clearly with Europe because of the structure that NATO provided there is an international framework of interoperability that's a huge starting point we don't have that in Asia but because of such strong and intimate connections with Japan and Korea Australia and others we can build them out and having them extend their network similarly we can build a de facto interoperability well you have got John with the ASEAN defense ministers ministerial sort of a framework I'm going to talk about NATO like but it does provide the venue to have just these discussions and they're off the record venues very often sometimes not with the communique or anything therefore the best of all discussions well this was exactly the way I wanted to launch this you see there's an enormous amount of intellectual depth but uncertainty inside this idea I'm convinced it's where we have to go there's so much engineering details you know to be able to get through it was perfect way to launch it we're going to turn to my colleagues here now we're going to amplify on it would you all with your applause say thank you to Ambassador Westbrook thank you sir nice to see you good friend of Mark Roche yeah I am we're going to do a little bit of a set change I think as we get the seating set up for our panelists I'm just going to give you a quick overview of the study effort first of all I'm Kathleen Hicks I'm the director of the international security program here at CSIS and I will be leading the cross CSIS effort on federated defense there is a website now up on CSIS you'll see the address is over here which is csis.org slash fdp thank you and on there you will see obviously after today the webcast of this event you will have a concept paper that overviews the project and some links to our expert some of whom will be here today and you all are welcome to start moving up to speak to the federated defense topics so first of all what do we mean by federated defense I think you had a very good overview today from the opening panel and particularly from Dr. Henry's concluding remarks which are that we have the genesis of an idea here the seeds of an idea but a lot of engineering detail to work out our conception is again that it's a major effort that brings together thoughts on defense industry on international trade regional expertise in this case today we're going to be talking mostly about Middle East and Asia and understanding of the US defense system and strategy it really is intended to be a geostrategic approach for many years across multiple administrations you've heard discussion of building partnership capacity very good term that served us well but it has its limits and as Dr. Henry started to indicate and Dr. Armitage as well we're really moving from describing the action building partnership capacity to describing the goal we're trying to achieve it's really a geostrategic concept of achieving federated defense it's also a little less paternalistic by the way than building partnership capacity this is really about working on an even playing field with allies and partners around the globe on particular security interests that are common to us all there are for 2014 three major study areas that we will be focusing on and again this is laid out in our concept paper the first is understanding the global defense supply chain which is foundational to everything that we are doing and Scott and I will talk about that today we will be also focusing on defense industrial cooperation building off of our understanding of that global supply chain what are the barriers to further defense cooperation around the world especially coming from the United States and our system and then third we will focus on federated defense approach for Asia that includes defining the goals of what such an architecture would bring differences we might have with our partners and allies in terms of goals and then trying to define those areas of common interest where we can begin to knit together patterns of cooperation that can build into a stronger defense approach and it will end with those requirements and capabilities we think we need we will also be starting later in 2014 our work on a federated defense approach for the Middle East and so we're going to talk about that today so with that I'm going to move up here and introduce our panelists thanks very much so let me start all the way to my right and we have here Scott Miller who is our sole chair in international business from 1997 to 2012 Mr. Miller was director of strategic excuse me global trade policy at Procter & Gamble to his immediate left we have John Alterman who holds the Brzezinski chair in global security and geo-strategy and he's the director of the Middle East program here at CSIS prior to joining CSIS in 2002 John served on the policy planning staff at state and as a special assistant to the assistant secretary of state for near eastern affairs excuse me over here we have Mike Green he's the senior vice president for Asia and Japan chair he's also an associate professor at the Walsh School of Foreign Service at Georgetown and he served on the NSC when we called it the NSC from 2001 through 2005 all the way to my left is David Burto who's the CSIS senior vice president and director of national security program and industry and resources which focuses on defense industry, government procurement and national security programs and contracts as well as current and future constraints on budgets and resources so with that wide perspective that we're bringing to you today we're going to walk through some of the major concepts behind federated defense and then open it up for questions and answers from the audience questions from the audience hopefully answers from us so let me start over to my right with Scott really foundational to understanding how we do a federated defense is understanding how that global defense supply chain works and functions what are the key considerations we should be taking into account as we look at the supply chain thank you let me start with two observations the first is that at a time with significant defense spending cuts both here at home and among our major allies that we stand to gain a lot from integrating defense markets as part of any federated defense so I'll address specifically the issue of defense markets the second observation is that defense procurement and the defense industrial base looks a lot different than most procurement bases and most industrial bases in the United States and I think that's because of a number of factors first the defense industrial procurement and purchasing is still very national in 2009 the Pentagon spent 98% of its dollars with U.S. firms that number is replicated on other markets interestingly I found that Germany, Italy and France all spent about 98% of their budgets on domestic suppliers after the European Union issued a directive to try to get inter-European purchases so there's something going on here that's important and very different than the way operations go outside the defense industry more importantly U.S. firms in the defense industry are still largely vertically integrated and comprehensive you know firms and what's been happening for the past 25 years really based on changes in technology information communication technology transport technology and the push toward greater specialization is that most firms outside the defense industry it's over a long period of time very gradually but have become massively more specialized in the tasks that they do vertically disintegrated versus their past history and operating with supply networks in a way and this is not just having suppliers it is deep coordination and deep information sharing and production sharing with suppliers it's often called trading tasks it's often characterized the rise of global value chains but what's really going on is there's been a revolution in the way production happens and production is highly dispersed in most products some of the more obvious ones are for instance Apple Corporation Apple Corporation actually owns no manufacturing plants it designs products it markets them brilliantly but it makes nothing in terms of Apple Corporation itself that's not unusual and it's becoming it's actually if you look at the market capitalization and the success of Apple Corporation it's a model to be admired and aspired to at the same time as while production is being dispersed more importantly knowledge is dispersed and as I look at the defense industry versus non-defense it is the ability to contain knowledge is almost impossible in a world of information communication technology knowledge becomes dispersed experts people with know-how people with operational and basic research and development know-how are outside your networks and that that adds complication and over time adds problems so in the near term the defense industrial base has an opportunity for improvement in cost in the long term the problem is really a knowledge problem as I've talked with some of my colleagues the basic issue is a regulatory structure that reflects a different era perhaps the Cold War but also reflects a different kind of industrial organization than what is more common today and what is what provides the opportunity for efficiencies but also solutions to the problem of knowledge that's a great background in David going from there into the world of industrial cooperation and defense what are your major takeaways in terms of how you're going to connect this understanding of the global supply chain to some of the barriers that countries often complain to U.S. officials about in terms of dealing with our system thanks Catherine and thanks Scott for that overview struck by a comment that Ambassador Armitage made earlier on in the conversation before that it would be useful for us to start with something non-threatening I wish I could say that in fact supply chain is non-threatening but having spent a lifetime working with the defense industrial base and the dedication of that industrial base to sustaining itself it may not be perceived as non-threatening across the board nonetheless I think it does offer a tremendous opportunity in terms of looking at federated capability in Asia but in Europe as well you can go from 98% to 97% and you will have increased the non-controlled part by 50% and so you can have a fairly modest change here and a pretty dramatic initial effect I think there's three areas that we want to look at here one is in fact the ability to bring into the defense universe the benefits of what's happened in the revolution in global supply chain is pretty thoroughly over the last couple of years and they've discovered something that won't surprise many people in this room one is that government to government joint successes are fairly rare far more common is in fact an industry to industry partnership and I think if we look at building industry to industry partnerships as a gateway to government to government collaboration cooperation will find some opportunities for near term success at fairly small scale but again given from the base that we're starting from they'll be quite significant if you will and they would create some of that start at the non-threatening level the second is the U.S. barriers if you will and we're all very familiar with those everything from the processes by which we issue licenses for exports to processes by which we sell U.S. goods and services through foreign military assistance and security assistance programs but we don't want this to be about process change in effect because we've wrestled with that time and time again what we really want to do is to identify some areas where in fact near term collaboration and cooperation can occur and to use those as a basis for building on and the third is to look at it from the outcomes point of view because ultimately it's not about whether or not we can increase a dollar level but whether or not we end up with greater capability at the back end of it if you will so I think that's the three areas that we're going to look at over the next few months you really echoed I think what Ambassador was saying in terms of the export control he used that example of the export control world and understanding how to break through that so I just want to press that point a little bit to ask you know is it worth the effort to look at some of the processes that we have whether it's export control or others even though we don't want to process reform study per se there are clearly areas of frustration for partners with the United States how do you plan to look at those I think what we do need to look in fact at integration across the processes if you will there have been a number of studies in recent months and years both in DoD and across the federal government of opportunities to do this I think it's implementing the existing work that's been done will be our initial focus DoD alone last year had three separate studies and in fact they're in various stages of implementation I think tying those together would be the most useful first step great let me turn to you Ambassador Armin had just spoke quite a bit already about Asia and at the application of federated defense there I'm wondering if you can help us think through how our partners and allies would look at an approach like federated defense would it be seen as a welcome new breakthrough would it be seen as yet another indication that the U.S. doesn't have the wherewithal to underwrite its commitments and is shifting burden how do you think it would be perceived to include by China and others in the region who may not welcome a strong U.S. presence well we have to be I think the short answer is in general our allies will look on it favorably and the Chinese won't like it very much that's a fairly safe prediction we should be sensitive to historical precedent and the one that as an academic always a Christian is the so-called Guam doctrine or Nixon doctrine so in 1969 Richard Nixon in the summer said we're going to get our Asian allies to carry more of the burden and the doctrine or the concept had two elements one was you Asian allies do more and the second part was we have a balance of payments problems so you buy more from us so it was overwhelmingly about shifting the burden and the result was that our alliances sort of drifted through the 70s what was missing was thinking about how not you Asian allies do more but how do we operate more effectively together how do we become more joint or virtually joint more interoperable that was not there in the Guam doctrine and the second part was instead of buy more from us to correct our balance of payment problems how do we with pressure on our defense budgets do things more effectively for our taxpayers together so I think if we have that in mind and we approach this as a comprehensive win-win approach it will go well David and I co-led for you I guess when you were in the Pentagon this independent review of our rebalance strategy to Asia and one of the things that struck us was we couldn't find really anywhere in the US government somebody who was authorized to think about shape our joint requirements with our friends allies and partners wasn't really paycom really OSD US Korea Alliance because it's joint and combined was an exception to this rule but even with Australia there just wasn't a a cohesive campaign plan across government to think about what requirements we should develop capabilities we should develop between ourselves and our allies we have this in NATO though imperfect we don't have it in Asia outside really of the US Korea Alliance because we have more time off transition and so forth I want to look at how the Asia group and all of us will work on this in Asia I think we need to think through how would you first and foremost organize the US government so that we could begin thinking further down the road not service to service or command to command but in a strategic way the capabilities requirements we have the capabilities we need and it will be concentric circles there will be high end deterrence things we need for North Korea basic capacity building maritime domain awareness that our Philippine or Vietnamese or other friends may want some of this we may do, some of this the Japanese or the Koreans or the Australians may do and the concentric circle grows because Rich mentioned the ADMM plus the new defense ministerial process well that includes China, includes India so there will be some things that are not deterrence and dissuasion that are basically response to humanitarian and other crises which is a matter of importance to us because we don't want failed failing vulnerable states so it's kind of concentric circles it will require a strategic concept and leadership and agility which we generally don't demonstrate but that's why we're doing this to try to think of how would we try to get closer to that very good well John in the Middle East and United States has extensive experience in working with partners on transferring weapons selling weapons Egypt, Israel the Gulf are there for looking forward on federated defense for the Middle East are there lessons we should be thinking about based on those experiences and more generally how might the Middle East be a place where the concept of federated defense can work thank you very much I think there are three sort of baskets of issues to consider when we're thinking about applying this concept to the Middle East which as far as I can tell is going to be a continued source of instability or fear of instability for many years to come and one of the questions that we have to start with is what is the source of that instability is it likely to come from states is it likely to come from non-state actors and what kinds of capabilities do you have to build a defense to that's the overarching question within that I think you have three sets of questions one is what do you do about the fact that the nature of some of your relationships and some of your partners may change over the period of implementation we are dealing with the fact that our relationship with the military in Egypt is in a state of flux right now so if you're starting to invest in capabilities you're starting to invest in allies taking over capabilities one of the things you have to hedge against is the nature of those relationships may change during your process of implementation that's problem one problem two is you're talking about tweaking a relationship with a gulf that from the perspective of most of the states of the gulf has worked pretty well and that relationship has been we put the gulf put tens of billions of dollars into buying your weapon systems and you provide strategic depth for the gulf if you're going to change that does that mean they have to buy less does that mean that these countries many of which only have a million citizens have to put up more what if they think we are strategically misguided in our policy which is what you're hearing from a lot of them about Iran are they committed to following us down the wrong path on Iran can they have more voice in the policy if there's going to be more responsibility so I think there are number of questions in the gulf that if maybe the gulf already represents what we're looking for and if it doesn't there is going to be a transition period to get them to the point where we want them to be where they want us to be the third is in many ways the most complex which is what do we do with our Israel relationship in this concept because on the one hand we have been unwilling to rely on Israeli capabilities to do the security things we want to do in the Middle East when we have a war with Iraq Israel doesn't play a role in fact we send deputy secretary there during the gulf war to babysit the Israelis and they don't have a role and on the other hand you have our relationship with Israel and the assurance that Israel has a qualitative military edge over all of its neighbors therefore putting a wet blanket over what you're willing to sell to the rest of the region and this Israeli role where they are not being leveraged but they are providing a ceiling over the kinds of relationships you have with others and I think being a problem that we're going to have to unknot if we're going to really be serious about this in the Middle East so the most interesting part of your project is going to be in late 2014 we delve into the Middle East issues sorry Mike well actually I think the following point I was going to have for both of you and maybe this will show some of the regional differences as I said in my opening remarks one of the issues with building partnership capacity it's often a bit paternalistic and it's sort of the United States looking for areas we want others to grow in and trying to get their investment in there I think with a federated approach at its base level you're looking for areas where the partner or the ally agrees they want to grow their capability and that's not actually an easy subset to come to so the Gulf I reflect on the fact that many of the Gulf states are very interested in high-end tactical aircraft as an example or precision guided munitions and we may want them to increase investment for instance in minesweepers and they're probably equally important examples in Asia so my question is how do we as we develop this concept and think about the strategy for implementing it how do we come to agreement how do we find areas beyond humanitarian where we and our partners and allies can agree that we have a common goal and there's an obvious capability set to grow there that we all can convince our domestic publics to invest in how's that for an easy question I think we have some real stumbling blocks in the region one is that for many of these countries they perceive a domestic threat which we don't we don't perceive or we perceive differently than they do and coming to some understanding about what do they have to prepare for is a problem and the second is this strategic issue that there's not unanimity that our approach to Iran is the right approach and for many of them they want to build up a greater deterrent to Iran and we are having a rough personality around by the way they're having their own interesting relationship with Iran I heard that a senior Gulf oil who I won't name may be headed to Iran next month for his own discussion so it's a more complex relationship and I think what it highlights is that we have to be more engaged in the strategic level of discussions and come to some greater understanding about what it is that we're trying to do and what the nature of security is then we have been willing to do in the last few years the problem with that is there are a lot of areas where we just don't agree and they just look at us and say you guys are naive and we understand the region and we've been here for thousands of years and you guys come in and aren't serious and there has to be a way that that they feel that not only are their voices being heard but they're taken into consideration and for a lot of Americans with their own notion of how politics work and how the world should be that may be either a hard pill to swallow or a pill people say were just once well the Middle East is hard but Asia is no picnic we in the United States very much want interoperability among our Korean, Japanese allies and ourselves but right now opinion polls that just came out in Japan show that over 70% of Japanese don't trust Koreans. We knew the Koreans were mad at the Japanese now it's going the other way so we have an interest in professionalizing the militaries in places like Burma, Myanmar, Indonesia we have our own restrictions especially now with the military in Myanmar so we have our own difficulties engaging in places where we think there needs to be better capacity building some countries like Japan may not be so nervous about in fact want China to see us doing more whereas a country like Korea which is a solid ally doesn't want the China problem they want us to help them to turn North Korea so it's the threat assessment is multi-directional the historical baggage is complicated we have our own historical baggage and then we have this larger problem that China is not a country we're trying to contain we're trying to shape Chinese decision making and it's hard to get the balance right I think there are some I think the richest point earlier about don't try to reform the whole export control system but pick countries I'd even say pick projects for example Asia is a very large maritime theater we in our pay-come report said the Marine Corps should have another amphibious radio group well actually we're getting rid of an amphibious radio group probably so the Marines can't maneuver without amphibious radio groups but they can move things with high-speed vessels especially Australia you know the concept at one point and we're straining from this and need to get back to it is Australia can have that high-speed vessel capability so we can move Marines around do amphibious exercises with all the allies and partners that want that capability themselves Japan, Australia, Canada, New Zealand, Korea and and think about moving high-speed vessels more into a collaborative federated capability including for other countries that want amphibious capabilities like Japan that want it to go on to do exercises and so forth missile defense the Koreans, the Japanese, the Australians the Japanese are our most significant missile defense partner in the world probably today, certainly in Asia the Koreans are they have a missile defense capability they just don't like to call it that we learned with the North Korean missile launch recently that we are not so good at talking to each other so that's an area submarines, we don't make diesel subs the Japanese make some of the best in the world the Australians need Collins class submarines we have an interest a national security strategic interest in Australia having a fast long leg submarine, the best propulsion in the world for diesel submarines is Japan the Japanese are revising their defense export rules to actually allow collaboration but they've not really done it the Australians haven't done it with Japan there's a role for us to help shape that even though we, our nuclear navy will never let us build a diesel sub we can certainly help because we do the weapons systems for both countries so I think there are probably a dozen projects like that Global Hawk and UAVs for maritime domain awareness with the Philippines, a patrol craft where we can lead from behind we can be the integrator, we can assist others and that if we have a plan for this, the secretary of defense the pay com commander will know where to spend their chips because reforming our export control system overall will assist in task but there may be specific projects where we can get work done and overcome some of these barriers could I add a little bit to that or do you want to ask a question first you can finish and then I'll ask a question if you don't answer it with your comment that's fair I think that what Mike and John have laid out is a very good view from sort of the geostrategic level down and looking at it both from a force posture and a force shaping point of view but there's a bottom up piece as well for companies, exports if you will it might be easier to tackle that at the supply chain in where you're looking at actually services and sparing for instance spare parts rather than at the major end item or even at the diesel submarine propulsion system in it may be easier to crack the code if you will across the Asian Pacific region I think that's less valid as a Middle East approach simply because you don't have the indigenous in house capability they would love to have that but I don't think they're there the same way for instance the Japanese companies would be able to move into the supply chain business from a national security perspective in a federated capability across the Asia Pacific in the trilateral and multilateral relations that you talked about so what I was going to ask next links to that for both you and for Scott and for you it's to say well those roles the various roles that Mike was pointing out the US could play integrator etc can you just expand on that kind of from the bottom up perspective and then maybe Scott if you have some examples from other sectors that we ought to be thinking about we in the defense world ought to be thinking about as it relates to how we do that well one of the lessons that we learned from the last draw down in the 1990s is the way that defense companies managed to survive a dramatic reduction in DOD expenditure in both procurement and research development was in fact expanding their international business they all are looking at that as well in fact if you listen to the analyst calls for each of the companies as they talk to Wall Street they're all expanding their business in internationally if you add them all up the total is actually greater than will be reality so clearly some are going to do better than others in that regard but I think it's actually in our national interest to find ways to encourage and support that but to do so in a way that doesn't undermine the relations and the burgeoning relations with the governments and the bilateral multilateral relations that we're developing that's going to be pretty tricky we don't actually have a cookbook with the recipe of how to do that I think that's a lot of what we're going to have to look at over the next few months Scott anything we can learn from sure and it really comes down to what you measure David talked about moving from 98 to 97% domestic purchasing as a one way to measure and that is actually a typical way organizations measure themselves it's versus year ago it's a plan it's versus some internal measure and the most important thing to take into account the knowledge problem associated with supply changes to measure the outside world my previous company was known as a leader in its research and development we spent about twice as much per dollar net sales on R&D as any of our competitors and yet we started and so we thought we were fine except we were being out-innovated and we started measuring outside to ask a simple question how many people in the world are doing our kind of research at our level we knew how many people we had but it took us a while to figure out how many people in the rest of the world were thinking about the same kinds of things working on the same problems and doing it at the same level whether a basic or applied research and we found out that given our industry leading capability was 2% of all the researchers and at that point we stopped everything and set a hairy audacious goal of having half our commercial innovation coming from outside the company within five years and totally we thought our approach to R&D so it really comes down to it's an aphorism to get what you measure but what gets measured in the supply base probably needs to change or needs to we need to measure different things well you as an audience have been extremely patient as we've talked to you for a while so I think I'd like to do is open it up for questions and I'm going to apologize in advance because both my height and the way the chairs are arranged if you are in the corners I will not be able to see you so if you'd like to ask a question move more toward the center and we do have mics that'll come around so just once you're called upon if you can give your name an affiliation so questions right here thank you my name is Jinning Wen with Voice of Vietnamese Americans I would like to ask all the panelists to talk also about India and Russia and Central Asia what is your vision for that part of the world and in particular the Southeast Asia with everything happening recently the recent almost collisions between the US and Chinese vessels in that area and also the AEDIC with all of that is there anything that would have impact on your plan for the federated defense thank you I can start on just taking the three India, Russia and then the Central Asia so we start backwards on Central Asia we're not starting there our Asia look will be from the Indian Ocean over but not as high up if you will as Central Asia for Russia we have some separate work where we're looking at the global arms trade which is not part of this project but is what CSIS is doing but if there are areas for potential collaboration with the Russians as it relates to the regions we are looking at we would certainly look at this as an opportunity and again that could occur in either of these regions and of course could occur in Europe and then finally India it is our sense that India will be a part of our look at Asia and let me just turn it over to Mike if you have any additional thoughts on how that might play in we CSIS did a report actually last year on US India defense industrial technology relations in part because of the frustration I think industry and probably duty has felt about the US India defense relationship it has not lived up to the potential it seemed to have it's going to be a long-term process with India now US companies are selling a lot of things C-130s and so forth that frigates to the Indians and it's an important defense market but this is why we have to have kind of a case by case I would argue the most important thing from the US interest standpoint with India is that India has the capacity to in effect sanitize the Indian Ocean for us if the Indians can gain more control over the Indian Ocean that's in US interest and I think there are capacity building opportunities there and then we want to do as much as we can to build interoperability we do a lot with Indian Air Force Red Flag up in Alaska we do a lot with the Indian Navy used to be a talking point I don't know if it's still true that the US and India exercise more than India and the rest of the world so that's something we want to keep building on and the Japanese in particular but also Singapore and other countries are doing more with India in the areas of exercising and Japan actually has a security agreement with India that's a kind of federated network capabilities that overall help to make the Asia Pacific region more stable. Central Asia is a bit different I mean you mentioned the security problems that unified Japan to India including Taiwan, Philippines, Vietnam, Malaysia, Australia and almost everybody in between are maritime problems, they're sea lane problems, piracy natural disasters it's a set of problems that builds an opportunity for common well common doctrine or thinking about common capabilities Central Asia is a bit different I think and would take more thought but we don't have any right so just to clarify on the project overall we're starting in these two regions and then as the project progresses we will take on additional regions but no commitments right now in the order of those others these are pretty significant challenges to manage yes South East Asia is part of our Asia very good next question my name is Herman and I'm a member of the National Press Club in Washington just a few days back the Japanese government has announced that it will increase 5% for its defense budget and my question is how does the US view that kind of plan because I understand that Japan is very the closest ally of US since also US has huge military bases in Japan, Okinawa and how do you see the political maneuver of Japan because just two days ago there was a summit meeting between ASEAN and Japan how do you see the connection between defense, increase and political maneuver with ASEAN by Japan and how do you see China reacts to that kind of maneuver thank you should I take that? you are the Japan the Japanese government actually Tuesday which means in a few hours right about now Japan time is putting out its new it's putting out three documents the first national security strategy out of their new NSE a new national defense program guideline document sort of like RQDR and then the midterm defense plan which is a list of squadrons and a sort of planning outline of what they're going to procure and it's already out in the press and they've been briefing it from Tokyo and Japan's budget should increase by about 1.7% a year which is good from the US perspective I propose the earlier conversation about allies getting up towards 2% Japan's still below 1% but that's a good trend especially given the budget pressures the shift will be towards air and naval and that's good but Japan's ability to maintain strategic weight prevent a vacuum contribute to stability in the region cannot be fully met by defense spending or even creating an NSE or removing restrictions on exports alone it's going to require more active Japanese security cooperation with other partners so I think from the US perspective I'm not in the administration but I know they're saying they strongly welcome the changes in Japan's defense policy and I can't imagine they would be anything other than positively disposed towards stronger Japan ties with Australia and others the tricky part is the inside of the donut what is the Japanese strategy to reassure Korea which is important to us and we have some role in that and then how do you get the right mix where you're saying that aggressive things like aid is if they keep happening are going to create more of these networks without either saying we're going to contain you or worse saying we're going to contain you and then not being able to do it because all of these other partners in ASEAN have strong economic and in some cases political ties with Beijing that's why this this Federated Capabilities concept is so important to our strategy in Asia because a one size fits all process won't work and the thing that strengthens the capacity of countries around the region and our links with them and their links with each other which is adjusted depending on whether they're allies and so forth that not only is it an opportunity I think without it the so called rebalance won't work rebalance is not going to work if we're just moving some Marines around and making speeches very good let's have time for maybe two more questions one right here and then let me just take a minute I'm sorry good evening ladies and gentlemen my name is Rosemary Saquero my question it isn't really a question looking at Africa I come from Kenya where we are on the Indian Ocean and looking at the piracy and what is happening in Somalia and other parts and with African being in Germany how do you look at federated defense central Africa in the future thank you and just to go one more time through the three major topics we're covering the first is the global defense supply chain which will be relevant wherever that supply chain takes us and I imagine it at least takes us a little bit into Africa then we get to the issues of how we improve international defense cooperation and that I think will be applicable that's what I consider our foundational work both of those applicable globally then into the deep dives of the regions and we were we're planning to start with Asia we will then while still working Asia we will move to doing Middle East and then we'll move beyond that so I imagine in 2015 we will be able to take a deeper dive look beyond the foundational work at Africa at Latin America at Europe and maybe some of the other sub regions so that's our work plan right now and we do think the concept is applicable globally but we are limited by our own resources for anyone who would like to give us more resources to look at problems we can usually expand our available time accordingly but right now that's how we've scoped the program thank you I'm curious a little bit about how the traditional security assistance authorities that you've kind of laid out will play into the federated defense obviously some of these countries are not on the FMS track they're on the foreign military financing track and so how have you thought through those issues in particular thanks that was Jen Taylor I believe right you didn't introduce yourself but I think what we're going to do is two fold one is from the broader process point if you really want to look at where the exceptions need to be made and where the boundary conditions are but I also think that from a bottom-up perspective we're going to look for a couple early successes particularly as the previous panel outlined and I think those will primarily be in an Asia focus I think that's going to be where our initial fold comes into play both at the higher end the US Japan US Korea but also I think looking at Southeast Asia and some of the potential there key to it as well though I think Jen is the third party relationships I think there will be some cases we'll be looking at that the US is not necessarily in the lead but the US is playing a supporting role perhaps Australians in the lead perhaps Japanese are in the lead perhaps the Koreans are in the lead and I think we'll look for opportunities there in the very near term as well and just because I completely ignored this side of the room is there a question over here before we close thank you sorry I've been watching this side of the room they've been very awake and alert for the whole time thank you Greg Hicks here at CSIS on loan from State Department you talked a little about global supply chains and about the interaction of those with defense trade controls there's another way to to work this hang on that's through investment by partners from overseas but that brings in the question of CFIUS and I was just wondering if you all were taking a look at that absolutely I think that what you've laid out really is the other end of this spectrum ultimately what we want is enhanced global capability in a way that aligns with both US interests and interests of our partners and allies that does require a recognition of the value of foreign direct investment a recognition of the value not only at the front end of the CFIUS part of the process but at the back end as well of once you're actually in the game being able to actually identify bid on and win contracts in a global competitive environment I think all of that has to come into play it makes for a much more complicated analytical approach if you will I was thinking earlier as you were going through your list here you know in the end we get to global peace and then we get to put our feet up and say okay let's go do something else but I don't anticipate that we'll reach that in fiscal year 14 well with that with that encouraging end note I want to thank everyone for coming today it's always difficult to talk about a project when you've just barely started it so my hope is that we can come to you in six months nine months with some of our initial output from the three major studies we're launching right away the global supply chain look the defense international defense cooperation in the Asia work and get your appetites wedded through this event and through that for further work that we will do throughout 2014 and 2015 so thank you very much for coming today and we look forward to further engagement