 We've already had our introduction to integrating economic and security issues, and we're now going to hear from, I think it's safe to say, historic Secretary Treasury, first head of the National Economic Council. His unparalleled knowledge of capital markets certainly paid off while he was in that position, and his role in moving towards a balanced budget and a surplus. And then from a position of economic strength dealing with the global economic crises that came first in Mexico and Asia and then in Russia. His career at Goldman Sachs led him to the eventual co-chair. He's now chairman of the executive committee of a merged organization, Citigroup. And so we turned to you, Bob, how do we better integrate our strategic approach into the financial considerations on down to, let me just say, the walling off that Treasury frequently feels it needs not to be polluted. It has great resonance on Capitol Hill, and that makes it more difficult in this coordination. But what are your views on these issues that we've been discussing and moving for better that integration and contingency planning? Thank you, David. Tony referred to the possibility of some of our staff members with Schitzoid. I think Tony, their view was more the director's with Schitzoid than any event. When President Clinton first asked me to be the head of the new NEC, I came to Washington. I spent about a week here with the yellow pad, and I walked around Washington talking to different, I'd never been in a White House. I was there once actually, I was invited to contribute money to something. Any event, under Republican administration oddly, but any event, but I didn't get to sleep there. No, but that's not the point. That's not the point. I wandered around Washington for a week with the yellow pad because I forgot I'd better talk to people who've actually been in this place or I'm not going to know what the hell to do. And maybe I didn't know what to do, but at least I tried to learn. And clearly the most valuable person I spoke to was Brent Scowcroft. Brent was nice, and I'd never met Brent before. He was nice enough to see me, and then I think he spent almost an hour and a half with me. He scared the hell out of me because he told me he worked 90 hours a week, and I called my wife and I said, how do I get out of this job? But that aside, that aside, when you heard his description of what a national security advisor should do, it seemed to me it's a pretty good description of what a national economic council director should do. And working with Tony was a pleasure. A lot of things depend on structure, but a lot of things depend on personalities and how people work together, and our thing did work well, Tony. I think it worked very well, except when we disagreed and when you prevailed, and then it didn't work well. Any event, I was asked to respond to four questions, and I think I'd like to do is just read them to you, and you'll see the three of them deal with process, and then one of them deal with what are the economic issues we should look to going forward. And with respect to the process questions, I think the best answer I can give you is to describe we did the Clinton administration, because I actually think that we did have a good set, I agree with Tony, I think we did have a good set of processes and one that worked pretty well. The four questions were, oh, and I might add that the process that we put in place, as I'll say in a moment, were very much influenced and very consciously by the president, by the respect he had for the foreign policy processes of the predecessor of Bush administration. The four questions were, how can the president ensure that economic issues receive the priority they deserve relative additional security issues? Two, how are economic and security objectives and policies most effectively integrated? Three, what is the role of the national security advisor and council staff in coordinating economic and non-economic issues of security? And four, what are the principal economic challenges facing the administration? Let me also say that I think this question of how you integrate economic and non-economic issues that relate to international matters is indeed one enormously worthy of focus and it was interesting to see yesterday's New York Times and today's financial times, the discussions that the new administration is beginning to have about this subject. As David said, I was in the White House for two and a half years at Treasury for four and a half and it was a time of enormous activity and a lot of that activity was of, well, men is important, you had NAFTA, GATT, China WTO, we had a Mexican financial crisis and Asian financial crisis, all the issues around Russia, the countries transitioning, the communism, we had one set of events with respect to the dollar that came at the time at least was described as a quasi-dollar crisis, we had the launching of the Euro, we had the enormous increases in the trade deficits with Japan and with China and enormous, I might add, economically troubled Japan and China and a great deal else and during that entire time, the integration of economic and non-economic considerations, traditional foreign policy, national security and political considerations were done in accordance with a very conscious and very deliberate management strategy that President Clinton had developed before he came to office and I said a moment ago, it was one that was very much influenced by his respect for the processes, the Bush administration with respect to foreign policy and the way they worked. I remember my first interview, actually my only interview, with President Clinton during the transition and it was about a two-hour discussion, and we talked actually very little about economic issues. We talked a lot about how people worked together and what he said was that the Bush foreign policy team managed to work together, at least it was his impression in such a way that you had real teamwork, that when an issue came up, you had all the relevant parties at the table, that you had somebody at the head of that table who viewed himself as an honest burger and as a consequence, all the pros and cons of each possibility came to the fore and then you could make a balanced judgment that was best informed by all relevant considerations and that's what he wanted to do was to take that same model and apply it to the economic issues and it was out of that that the organization subsequently called National Economic Council came. Secondly, he said he thought that in this world that we are now in that with respect to international issues that have an economic component, it was very important the economic issues or the economic considerations rather be given a weight that was appropriate and not be subordinated as he felt sometimes in the case to national security, geopolitical, other non-economic foreign policy considerations. And that was partly because of the enormous increase in the importance of international economic issues to our own economic well-being and partly because the resolution, by then, 1992 order again, any of it. And that was partly because in many cases, for example, financial crisis in order to get the geopolitics and your political objectives and national security objectives accomplished, you've also got to accomplish economic objectives. And I think this thing basically, I think the concept was right and I think it fundamentally worked very well. Obviously, each specific matter that developed would raise specific questions of process and which agencies are going to play what role and those who had to work out, but you did it within the structure that I just described. Very importantly, during the transition, I was sitting with my internet with the deputy for international activities, Beau Cutter at the NEC. We got a call from Tony Lake and Sandy Berger. And they suggested, as Tony said, that instead of having separate economic staffs in the NEC and the NSC, which would then work with each other, hopefully, we have a single staff of international economic people and that they would report jointly to the NSC and the NEC. And that, it seemed to me, was the final piece in the structure and a very, very good idea, which we adopted. And that was the structure that was in place then through the whole eight years. I think for this whole thing to work is also very important, as Brent emphasized, that the White House councils play their appropriate role, which is a role of integration of honest brokering, but that it, the council has not tried to reinvent the agencies inside of the White House. And that doesn't mean that a national economic director to take the job I had or a national security advisor can't have strong opinions and express strong opinions. I believe they can. But I think it's got to be in the context of a process, as Brent emphasized, that is recognized by all of the agencies concerned as a fair process. And it's got to be in the context of a process in which it's clear to everybody that the director's views, even if expressed strongly, will be presented no more strongly, or let me put it differently. We presented fairly in addition to everybody else's views being presented fairly to the president. If people feel that way, then respect the processes and the processes of work. If they won't, then they'll end run it. Secondly, you've got to have a president who understands the importance of good process. I believe good process is critically important respect to the policy and who supports the process. And I can tell you that from the very beginning, President Clinton worked through his National Economic Council, and then on the international economic issues, the NSE and the NSC together, on economic issues. And in the instances when people tried to go around the processes, the president diplomatically but nevertheless firmly referred them back to the processes. Well, it didn't take very long before people realized this was how business going to get done in our administration. As to the decisions themselves, in some cases seems to me, the national security, the geopolitical, the other traditional foreign policy considerations will have the predominant weight. And in other cases, the economic considerations will have predominant weight. And then in some, they kind of balance out in an equal kind of a way. I'll state an example. This may be somewhat controversial, but at least it's my view. I think that when you have financial crises, as for example, we had in Mexico and then in Asia, in all likelihood, the economic considerations, at least with respect to the structure and content of the response program, would appropriately have the predominant weight. Because if you can't reestablish credibility in the financial markets, then you won't solve the economic problem, or at least you won't have a reasonable chance, which is the best you'd ever have, of solving the economic problem. And if you don't solve the economic problem, then you're not going to be able to deal with the national security, geopolitical, and other problems. In trade issues, I think it's a very much more complicated question because very often in trying to accomplish, and for example, with respect to trade enforcement, in trying to accomplish a trade objective, you can have significant adverse political or diplomatic effects. And there it's a very careful balancing and weighing in a set of tradeoffs. I think the key is to have processes that will enable whoever's going to make the ultimate decision, at least in our administration, they very often were made at the presidential level, see all the competing considerations on these very difficult trade issues, with very often more competing considerations, particularly when you were talking about sanctions and enforcement. We had meetings that were very actively co-chaired by the National Security Advisor and the Director of the National Economic Council. The trade representative was the lead agency in terms of doing analysis and presenting the material, but everybody had an opportunity to have an equally strong say. And of course with respect to implementation, once the decision was made, USTR was the lead agency. Finally, I think all of this works, it doesn't work depending on the atmosphere that a president creates in his administration. In the case of the administration now leaving, President Clinton really did have a very strong sense of trying to create the kind of environment in which people would, to the extent practical given human nature and its peculiarities, in which people would work together in a reasonably collegial and reasonably mutual supportive way. I don't think there's any question that when he interviewed people for cabin jobs and senior White House jobs, he was focused not only on their substantive expertise and their political savvy, but very much focused on whether he thought they would fit with other people. I know of one instance in particular where somebody who was being very seriously considered for a cabinet position, this was not the beginning, but a little further along the process, didn't get the job because the president felt that that person had very sharp elbows and would not fit into an environment in which people were trying to work in the matter that I have just described. Let me conclude by listing what I think or at least some of the principal international economic challenges facing the new administration. And I list them in no particular order and undoubtedly I'm missing some that is important as many as that I've listed. When I think about markets and such matters, by the way, it always strikes me that what you try to do is you try to think of everything you can that would affect markets. You always have to recognize the thing that's most important is probably something you never thought of, which is why life is curious and dangerous. It's not the only reason, but it's one reason. Any let me jot it down, struck me as some of the issues, let me list them for you. One of them is continuing to promote trade liberalization. I agree with Tony, open markets. I think our own open markets, our own open markets, contribute enormously to economic conditions of the past eight years. And I think trade liberalization abroad and keeping your own open markets open here should be a prime priority of a new administration. And I think that includes getting, to get very specific, getting either fast track legislation or some effective alternative to it. Secondly is countering the, in my view, exceedingly dangerous backlash against globalization, not only in this country, but around the world. Increasing foreign aid to developing nations, which now by something like 30 to 40% of our exports, that includes support for the World Bank, the other national development banks, the IMF, helping Russia and the other nations transitioning from communism. In some instances, I think in some of these cases, I think in Russia most specifically, we were faced with situations where all the choices were probably, in some sense, all the choices were very difficult. And so the point was to make the least difficult choice. But nevertheless, I think it was extremely important to be supportive with respect to these countries. Effective response to future international crises, in my view, at least, given the way markets work, the inherent tendency that I at least believe exists in markets and economies, to go to excess, I think it is virtually inevitable that we will have future international financial crises. And I think it is very important that we have effective response as well as, as, as well as prevention to the extent that that's possible. Promoting a strong dollar, which is one of the maximums of our administration, we even said we, in the very same press release that we announced we were buying the end in intervention, we also announced our favorite strong dollar, which I thought was quite a rhetorical accomplishment in any event. And then when the press asked me, well, how can you say both? I say, well, that's because we believe in both. And then finally, continuing to reform the financial architecture. For me, the six and a half years I spent in government, and many of you are far more experienced in government than I have been, but it was really a remarkable experience. There was opportunity to cope with the complex and I think in many ways, unprecedented problems of a new and complex global economy. I believe that the processes the president put in place contributed greatly to the successes we had, although we certainly had our failures as well. And I wish the new team the best as they now carry forward in dealing with this complex world. Thank you. Thank you very much. Thank you very much indeed, Bob. That's an excellent presentation. And now our final panelist is General Charles Boyd. He is a highly decorated Air Force Officer of Prisoner of War from 1966 to 1973. That makes you a hero in my book. He has been Executive Director of the National Security Study Group, the Hart-Rudman Commission, two and a half years of Blue Ribbon Commission that is looking at the strategic future. He himself is a strategic thinker in something of a future. General Boyd. Thank you, sir. Thank you. I think of myself as an old used fighter pilot and I'm up here at a table about to say something about national security with the likes of Tony Lake and Brent Scowcroft Candy. And I have a comment or two about economics and with a highly respected and hugely successful Secretary of Treasury. It's showing arrogance on my part. I guess it's almost breathtaking. But nonetheless, this is my task. I would tell you at the outset that when Dick asked me to participate, the work that I'm going to talk to you about was due to roll out for the public on the 10th, which was going to be well ahead of this conference. And then when that date got slipped to the 17th, Dick and I talked about it and he said, well, you know, you're going to be on the panel about an hour before you'll leave the panel an hour before the press conference in which the Heart Redmond Commission Report rolls out. So you won't be upstaging your commissioners and everything will be all right. And then the United States Senate decided to hold confirmation hearings for going to Powell. At the same time, we were going to roll our report out in the Mansfield room in the Senate. So we decided he might get more attention than we would. So we slipped that. And now I'm in the position of upstaging my commissioners if I tell you if I show you a little ankle of what's in my report. But I'll deal with my commissioners later. I would ask you to take what I say in a private way and please. Sure. Just in case you don't know, this Heart Redmond Commission established really by a discussion between the congressional leadership and this president and designed to be a product that would be given as a gift from this administration to the new. So its timing was the work of the commission would be compete in time to hand over to a new national security team and a new president. By partisans scrupulously saw 14 commissioners coached by Gary Hart and Warren Redmond and consisting as most of you know, I'm sure of a wonderful set of Americans ranging from Andrew Young and Newt Kinkridge and Armstrong, Jim Schlesinger, a couple of military guys. Jack Galvin, Harry Train, industry guy, Norm Augustine, Don Rice, Les Gelb, just a truly remarkable set of public servants and people who have been successful. In some aspect of the national security apparatus backed up by a group of scholars and practitioners of the national security disciplines on the study group, military officers, foreign service officers, intelligence officers, scholars and the like. Three main things we were asked to do. One, define what kind of a world we think we're going to live in over the next quarter of a century. Recognizing as someone said earlier, nobody can predict the future, but you can take a look at some trends and maybe get some information or some draw some conclusions about what direction we're generally heading. We did that and it's published New World Coming. I think a remarkable piece of work personally. Second of all, we were asked what we think we know about the world that we see emerging, what we do about it as a nation with respect to the national security. What kind of national security interests do we now have? How are they defined in this world that we now live in? What should our objectives be and what would be a strategy for the achievement of those national security objectives? We've done that, it's out published. And the third phase, which is really the bulk of this document, which is about to go to the printer, take a look at the structures and the processes by which this nation formulates and executes its national security policies. And is that structure, the architecture still adequate to the need or might there be some readjustments that you could recommend? And so it is that we have done that. Quickly, by way of review, the world we saw coming was one in which, in terms of science and technology, the rate of change was accelerating at a breathtaking pace. The world is changing in ways that are hard for us to even grasp. 90 some odd percent of the number of scientists that have lived in the course of human history are alive today, all reinforcing each other and producing a synergism that is just breathtaking. The process of integrating economics on a global basis is occurring also at a breathtaking pace. And yet at the same time, a very large fraction of the world's people are not involved in that integrating mechanism. And as a result, a division between those who are and those who aren't is widening and thus maybe the source of much of national security concern over the next quarter of a century. We were asked to look at our own nation or the changing nature of our own society and the implications for national security there. I think most of us all look alike, the ones that sit on the panel, unlike a very, very diverse nation that now we are becoming 83 languages spoken in the Los Angeles County school system, 120 languages spoken right here in the public school system of Montgomery County. This is a very diverse nation and getting more so very fast. And what are the implications for the unity of the country and its identification with common security objectives? Very interesting. The hardest part of our work I will tell you is the second part, putting together a strategy, defining the interests, defining our national security objectives and developing a strategy. Tony says it's tough to put together, and maybe not even useful, a large overarching strategy, very, very tough. And especially when you are dealing with a group that is diverse as our own commission with such a broad range of ideological inclinations. They did so. They debated themselves. This was a heavy lifting organization. We set up a debate between two of our most skillful and debating skills commissioners. And they argued the merits of trying to develop a strategy that was weighted toward opportunity and prevention or one weighted toward response. Mostly we have experience with a large strategy that deals with response or reaction. And indeed, as I think David mentioned, the resource allocation process leans very heavily today toward the response tool, the military, and very likely toward the opportunity or the prevention tool. They came down clearly on the side of conflict prevention, of seizing opportunities, dealing with problem areas before they become crisis, before they require the response tool. And if there was, in the end, they were solidly in support of that notion. But that affects everything that you do after it. It reflects how you establish your priorities, how you allocate your resources to them, and the whole mechanism by which this nation now formulates an excuse is not geared in that direction. So it takes this naturally to the third and the structure and process part of the work, of the commission's work. And I'll tell you about a couple of aspects of that, I think, that will fit in the heart of what this conference is about. And then I'll stand ready to answer any specifics anybody has. One is that you can probably proceed without a strategic framework. And you can probably get along in most circumstances by devising individual strategies as the need arises or managing crises as they emerge. But if you want to do, in the largest sense, a conflict prevention kind of a strategy, you have to have a strategic framework for that. You have to do some strategic planning. There's now an emphasis on that kind of a process that we have not really been accustomed to dealing with in recent decades. I will tell you, I will jump ahead. After some time of developing this aspect of our study, I went back and read the Waging Peace. I think Andy Good Pastors allegedly hear some place in this audience. He wrote forward to the book. And I was interested to note that Eisenhower seemed to have a systematic strategy formulation mechanism that, as far as I can tell, unmatched in the last half century by any administration that truly systematic approach to involving all the grownups. We have in place now a national security strategy development process that's required by law, the Goldwater Nicholas Law. We turn out a national security strategy every year. And it's done by action officers in Pentagon and some folks in the National Security Council staff. But as far as I can tell, nobody at least in the military above the grade of colonel ever reads it, or even in some cases know its existence. An informal survey that I did with some of my senior diplomatic friends would indicate approximately the same is true in the State Department. So a process that involved that is to have any real meaning and utility would have to be one like I think Eisenhower used in which the principles actually do the formulating of the strategy. Andy and his forward mentions that every Thursday was NSC day, just like the JCS and the time prior to Goldwater Nicholas when the more important JCS process went away. If it was a Tuesday or Wednesday or Friday, there was a JCS meeting and it happened at two o'clock and everybody came. Such a thing existed at that time. So we call for the establishment of and in some detail a strategic strategy formulation process, a prioritization, a strategic prioritization process which produces a vehicle then that can go through OMB to the department store the allocation of resources within those strategic priorities. The second big and I'm getting a note to get off the stage pretty quickly here so I will but I think it's important out of the phase one report and reinforced in the strategy of phase two this commission came down very firmly on the side that economics has become in case there's any doubt in anybody's mind a component of national security at least equivalent to the military or the diplomatic component. And we are not structured in such a way to give recognition to that fact nor to integrate in the processes all that kind of a decision applies. So this commission is calling for the president in the congress to establish the secretary of the treasury as a statutory member of the national security council and a mechanism that would no longer require a national economic council the international staff would become an integrated part of the national security council staff that domestic peace would become a part of the domestic policy council. And they did so in recognition that the president can have anybody come to the principles meeting he wishes but that there was a certain symbolic value to changing the law the national security act itself. And that's the only thing that I would one of my questions that Dick Solomon asked me to answer was do we need a new national security act and the answer is no but we need to tweak the one we have. I will stop right now or unless they get my thank you very much congratulations in your superb job in piloting this commission through to its final destination today and hopefully implementation our speakers have been so outstanding that we've put more into their presentations but let's have some questions here and we've got very little time please take your name your question please don't give your answer. Yes ma'am the microphone back here it's it's he's moving it up to meet you. My name is Barbara snilling and I'm from Vermont and a new member of the peace institute board and my question is given the very intense political nature of our forthcoming Congress is it possible to have strategic thinking. Let's go for off you want to give a succinct answer to that yes or no. We're very carefully avoided any discussion of the Congress which is a very important part of the process and it is my humble view that the Congress is broke and needs to be fixed as more than the executive branch. That was very succinct. Who's next. Well we've got a satisfying I will turn this back to our president. I want to thank you gentlemen for a really wonderful presentation. Again thank you an outstanding panel will take about a five seven minute break and reconvene thank you.