The U.S.-European Relationship

We are at the end of a long year and looking ahead to another one.

Question: Inevitably.

Question: Is it going to be shorter next year?

Principal Deputy Assistant Secretary Volker: No, next year will be pretty much the same. The year after that will be a little bit longer. [Laughter]. At least by a day.

But the starting point, it's easy to get wrapped up in all the day-to-day stuff, and there's so much of it that you can drill into any given thing of all the day-to-day stuff. But when you do take a step back and you say -- "Where are we? What's going on? What have we been doing? What's next?" -- we have now the sort of richest, most diverse and most productive U.S.-EU relationship that I think we've ever had. We have a transatlantic community that at the Riga Summit pulled together a lot, I think, and said we face a lot of common challenges, we're going to work on these together, we're going to act on some of them through NATO, we're going to invest in NATO for the future so we have a strong and effective alliance.

We have good working relationships bilaterally with lots of countries in Europe, all the countries, Germany included. Then we have Germany taking over the G8 and the EU presidencies in the coming year. There's a lot of opportunity that we see in that, but we're not starting from a zero base. We're starting from two years after President Bush's February 2005 trip where he said I want to work with Europe on the challenges that we face, and we've been doing an awful lot of that since then. So we're not starting from zero.

I think if you take a look again from a very high altitude here and say what's been going on, one of the things that has happened is that we have, I think together the U.S. and Europe have, established that we really need to work together on a global agenda, so our transatlantic relationship or our U.S.-EU relationship is not just about Europe, it's about what we do together in the world. In some ways it sounds self-evident, but it wasn't a few years ago. During the Cold War all the big strategic challenges that we faced were anchored in one way in Europe and Eurasia. It was the Soviet Union, it was the collapse of Yugoslavia, it was the ethnic cleansing in the Balkans, it was integration of Central and Eastern Europe, so it was very natural that we and the Europeans worked very closely together on all these things.

But after September 11^th, it was demonstrated that the principal strategic challenges we've got are not anchored in Europe, per se, and our attention certainly said how do we deal with these challenges that are outside of Europe? It wasn't evident that we said, you know, central to our ability to deal with these challenges in the world is to be working together with Europe to deal with them. That is very much the way we see things now and what we have been doing for the past few years.

So I think that is one major shift, that the transatlantic relationship is much broader and richer and that we work with Europe on global strategic challenges rather than simply European-centric ones.

We also have a -- Europe would call it the neighborhood policy or the neighborhood agenda of the Balkans, the Caucasus, Ukraine, Moldova, and also Russia. A lot of people in town here talk about that in terms of frontiers of freedom. We've had a successful development of democratic market economies, security, stability in a very large part of Europe since the end of the Cold War, but not all of Europe since the end of the Cold War. Belarus, the Balkans. And we've been seeing some progress. This is something we have to continue to work on together. That's a very important agenda item for the Germans in their EU presidency. They've talked a lot about this.

We do face a lot of challenges with Russia, and I think we need to be working on those together.

Another one, when we talk about these global strategic challenges that we're dealing with -- terrorism and the war of ideas and Iraq and Afghanistan and Iran and the Middle East, Lebanon, all of these are part of those. It's a huge agenda. We very much see in the coming years we're going to be continuing to work with the German G8 presidency, the German EU presidency, within NATO, various configurations, whether it's the Quartet or the Contact Group or Kosovo or a quintet, and trying to put together the right mechanisms to deal with each one of these -- EU-3, the UN Security Council, 3+3, whatever works. We'll continue to do that and Germany is going to be sort of at the heart of a lot of these over the next year or so.

So that's sort of where we've seen the agenda go and what we're dealing with.

One of the things I think is important that we also hope to see develop over time, there's a very negative image of the U.S. in Europe.

Question: [Inaudible]?

Principal Deputy Assistant Secretary Volker: Well, you tell me. You can relate it to Iraq, you can relate it to Guantanamo, you can relate it to Kyoto, whatever. But there's an image out there. I think the image was set several years ago and the reality has moved on. I hope that also one of the things that we can do in working together well with the EU, within NATO, on these various challenges as we have been for the past few years and as we'll continue to do, and even reinforced in a German presidency, is to address some of the issues about the image people have of the U.S. as well.

We can talk a little bit about each one of those as well too, but an area that comes to mind is, and that I think will be a big part of working with the German presidencies, is on environment and global warming and climate and energy issues. These are all very much related and all things that we care very much about and are doing a lot about and want to work together with Germany and Europe to address. I think that is something that we'll certainly be talking a lot about. It's a big part of the German agenda. I hope it penetrates public thinking as well, that they see this as really what we're doing.

Those are sort of some general themes; then I'm sure you're going to want to ask about a lot of specifics, so I'm happy to do that as well. But I wanted to get some of the broader lines out there. That I think our working together with Europe over the past few years has gone very very well. I think it's continuing to go well. We've got a lot of things we're doing together. It's a global agenda, not a Euro-centric agenda, but there are things within Europe as well that we're doing. And it's a diverse agenda. It's not all crises. There are a lot of things that we do.

Question: How high are the expectations of the State Department for the dual German presidency, and what exactly are the expectations?

Principal Deputy Assistant Secretary Volker: I don't want to give the impression that all of a sudden miracles will happen, some things will change that have never been imaginable before, and the German presidency is some magic wand that just changes the world. That's not the case.

As I said, we started from a pretty good base already. We've been doing a lot to develop what we're doing together with Europe to address all these challenges and we will continue that in a German presidency.

There are a couple of things I think that having a German presidency adds to this mix. They're not a magic wand, but they are nonetheless additional elements to bring to bear. One of them is a very strong position of Germany within Europe; it's a leader within Europe. You have a strong Chancellor who has shown herself to be effective within the European Union. That's a good thing. You're combining the G8 and EU presidencies at the same time; that's also a good thing.

You have a good relationship between the Chancellor and President Bush and the administration and the German government, the grand coalition. We've been working well together already for the past several years. That's a good thing.

I think the timing is also one; we are a couple of years beyond President Bush's February 2005 trip. The presidency is two years on. It will be a couple more years since then of the decision to invade Iraq, which I think was an issue that divided Europe and left a lot of divisions between Europe and the U.S., as well. We're a long way past that now. We're looking at these challenges differently.

So I think there's a lot of hope that we can work together on things. Germany is a leader in technology development, so we talk about developing clean technology and bringing it to markets and tackling emissions; Germany's a natural partner to want to work with in doing that.

So it's not that there's going to be some magic breakthrough that we expect the German government to deliver; it's just that it's a good opportunity to take advantage of a transatlantic relationship that's already moving along.

Question: Can you talk a little bit more specifically about what you'd like to see on the agenda?

Principal Deputy Assistant Secretary Volker: The German government has done a lot of work already to develop its agenda. What does it want to focus on in the EU presidency, the G8 presidency?

Among the things they've said that are priorities for the EU presidency are Russia, and they're on the hook to produce a new framework agreement with Russia, for EU cooperation with Russia. That inevitably brings in some of the energy issues which have been a focus during the Finnish presidency and will carry over so they'll want to continue to develop those.

Central Asia. Germany wants to strengthen the EU's relationship with Central Asia. We think that's a very good thing. We'd like to see more EU engagement and involvement in Central Asia. There are energy issues, there are democracy issues, there are development issues, there are Afghanistan issues, there are strengthening regional integration in Central Asia, Afghanistan, South Asia, all of which are great things that we welcome EU engagement on, as well.

There are the neighborhood issues: how to deal with Ukraine and Georgia and Caucasus and the Balkans to continue to support democratic, economic reform, defense reform.

One of the things that every EU presidency has to deal with is the enlargement issue. What is the vision for EU enlargement? Where does this go? I think having a strong neighborhood policy while the EU grapples with the existential question of where does the EU go? In the meantime you have a strong neighborhood policy that helps countries do what they need to do on reforms to make them closer to the EU in practice, is a very good approach and I think that's another element of the German presidency that we very much want to support.

On the G8 side, again, Russia, energy; those issues have already been brought up in the G8 in the last St. Petersburg Summit that we had. I think Germany will want to pick those up again.

We have a continuing commitment in the G8 to the partnership on African development. We also have a continuing commitment to democratic reform in the broader Middle East region from the Sea Island Summit. Germany, one of its functions in its G8 presidency will be to work with a regional partner as that regional partner chairs the Forum for the Future meeting next year. There's a lot of work going on to support development and strengthening the civil society in the broader Middle East region. I'm sure there are others that I've left off of this list now, but that's quite a long list already of things out there.

I would also say that obviously those are sort of the long-term thematic issues. Then there's always the crisis issues. Germany will be in the EU chair, which puts them in the Quartet meetings. We'll do a lot on the Middle East, I'm sure. Germany is already contributing in UNIFIL and sort of continuing to try to support a stable and democratic Lebanon, is an important thing. I'm sure we'll be working together a lot on that.

Germany is part of the Contact Group we've been working with on the Balkans. This coming year will be a big year for the Balkans. We expect the UN envoy to come up with a proposal for a final status for Kosovo. That will be working through Serbia, Kosovo, some time for discussions about that. It will come to the UN Security Council. We would like to see that resolved early in the coming year.

At the same time, take a step back and think about the Balkans. This is 2006. The first time NATO ever conducted a military operation was 11 years ago. Before that it had never done that. The military operation was to support principally Bosnian Muslims against attacks from Serbs and to put an end to the war, and then to deploy a peacekeeping force in Bosnia.

From there you had Kosovo, the ethnic cleansing in Kosovo. Then NATO's second military operation was to protect Muslims in the Kosovar province of Serbia from ethnic cleansing, allow refugees to return. The first two military operations were to protect Muslims, and did so.

Now we're at a point where the wars in the Balkans are over. There are still tensions and there are political conflicts and unresolved sorting out of the power struggles inside Bosnia, but we see a region that is moving ahead. Bulgaria and Romania already joined NATO and they're going to join the EU on January 1^st.

Croatia, Albania and Macedonia are in NATO's Membership Action Plan. Croatia is looking very strong for that and we said we intend to support them at NATO's 2008 Summit. At the NATO Summit we just had in Riga, NATO said we're going to issue new invitations in 2008 for those countries who meet NATO's standards. First in line are those who are already in the Membership Action Plan, which are those three.

We have an independent Montenegro which is very quickly moving to establish itself as a country that wants to move toward closer integration with Western institutions and get itself literally and figuratively on the map as doing the right things on issues that we need to deal with.

So you see a whole region that is moving ahead. We want Serbia to be part of that movement. We want to see a successful Serbia, a Serbia that's democratic, that's more economic, and as you have final status for Kosovo we're also trying to reach out to Serbia. This is why at the NATO Summit again we offered PfP [Partnership for Peace] membership for Montenegro, Bosnia and Serbia, and said that we continue to expect them to cooperate with the International Criminal Tribunal and the war crimes issue is important, but we do want to see them be part of this advancement of the region. This is something that, the next year is going to be a very big year for the Balkans and as an EU presidency country, Germany is going to have a lot to work on in this area.

Question: A two-part question. First, you outlined the German side of things. What do the Americans expect one will get out of the G8 next year? Obviously not of the EU presidency, but of the G8 next year. What will your own focus be?

Second, you've mentioned that there are challenges with Russia. How would you frame --

Principal Deputy Assistant Secretary Volker: Those are related questions.

First off, with Russia, we want to work together with Russia as best we can. There are a lot of challenges that we share in common and that we need to work together on to address. Iran, North Korea, proliferation, terrorism. There's plenty out there.

There are issues where we would like to see progress and movement, and Russia is a key part of progress and movement -- South Ossetia, Abkhazia, Transnistria, the frozen conflicts, Nagorno-Karabakh, all important, Russia's a player, and we want to work together with Russia to deal with those.

The problem is that we have some trends that are of concern to us in Russia, and of concern to Europe, as well. We see steps that are moving away in our view from an open democratic society: making it harder for NGOs to register and to carry out the functions, a little pressure on the NGO community; more centralization in the political system; more centralization in the economy. In the economy, in particular, the monopoly position of the gas problem and others in the energy field, that is then used in ways that seem overtly political to put pressure on countries in one way or another. We had the gas cutoff in Ukraine and Georgia early last year. We see price differentiation, so you pay a certain price if you're a certain country; you pay a different price if you're a different country. We see efforts to increase the monopoly position by buying up distribution networks further and further west into Europe. These are all issues that I think we're concerned about and that need to be addressed.

So you have a democracy, you have an economy, you have regional security issues, and you have energy in particular issues, all of which are issues that we've got to deal with Russia on. Then I think the U.S. and Europe, the U.S. and Germany have a common interest in figuring out how to do this.

How to do that? I think on the one hand we have to be understanding that Russia [inaudible] is a bit chaotic, and to see a greater rule of law would be something that we would support. Then what did we see recently with the Politkovskaya murder and the Litvinenko murder that took place in the UK, or that we presume is a murder. I don't think that's quite confirmed yet. Or have the British confirmed it as a murder? I'll let them characterize it.

Question: They've called it murder.

Principal Deputy Assistant Secretary Volker: They've called it a murder investigation. That's the way to say it.

We're not taking a position on it, but we're letting the people who are more closely involved do the investigation.

But all those things raise a concern. We've got to talk about them, we've got to be open about them, we have to talk with the Russians directly about them. We don't have an anti-Russian agenda. We want to work together with Russia, but we also have interests in seeing development that's more democratic, that's based on market principles, that contributes to stability and security and the sovereignty and territorial integrity of its neighbors. Those are all things that we care about; we've all got to talk about.

On the energy side, I think the diversification sources and types of energy is important.

I'd like to make one point here which is in my view is an interesting thing. We often talk about these things in different compartments of our mind. We talk about Georgia is a country that's had a democratic revolution and we need to support that. Or we talk about Chavez being a real problem in Latin America. Or we talk about the need to reduce greenhouse gas emissions and slow global warming. Or we talk about the monopoly supply of gas to Central Europe from Russia and how they diversify.

What we don't talk about is how all these issues are really related in a lot of ways. This is sort of getting into the things Tom Friedman was talking about and even expanding on that. The money that we spend on energy and the fact that we are dependent upon fossil fuels means that we are producing fossil fuel emissions and greenhouse gas emissions. It also means that the money we give to Chavez for oil is money that he uses for other purposes which aren't necessarily democratic. So if we care about democracy, again, that's another aspect of the issue. The same thing, if we need to be supporting the establishment of real democratic institutions, economic reform and stability in a place like Ukraine or Georgia, we also need to be supporting them in energy independence and increasing their efficiency in energy use, and in doing so we also, if that means reducing fossil fuel dependence, it also means that's part of what we do for a cleaner environment as well.

Or if we, the U.S. and Germany, can develop clean coal technology or reduce the cost of bio-fuel so that it becomes market attractive to use bio-fuels, or wind power or solar power, to get the cost per kilowatt down so that it's actually market attractive to use them -- we're not only cleaning up the environment, but then we are taking some of the fuel out of the system that fuels some of these other concerns that we have as well. So they're all a little bit related.

That's one big issue that we care about and that we would want to work with the German G8 presidency, EU presidency on -- this nexus of energy and environment and security and democracy.

Another one which is important is the long term on the Middle East, what we think of as the broader Middle East initiative. We have all the crises and we'll deal with all the crises the best we can -- the Quartet for Israel/Palestine, what we can do on Lebanon, Iran, following through on Iraq, Afghanistan and so on.

But, in addition to doing all of the issue by issue things we have to do, we need to be supporting civil society and the foundations of democratic development in the broader Middle East region. Germany can be a terrific partner in that because of the role of the Stiftungs that are there, its relationships in the Middle East region. We've been doing this for three years already in the Forum for the Future, and frankly, that's gone very well. It's one of the unsung stories of a platform for civil society in the Middle East region to bring its issues to the table with G8 and other European and Arab governments all in attendance, and to discuss these over a couple-day conference. Then the preparatory work that goes into this: It has seen a real flowering of civil society and political and democratic development dialogue in the region that really wasn't happening three or four years ago. So that's another area that we would put some priority on.

I think what Germany identified as a priority is one we would share. You talk about the neighborhood and Ukraine and Georgia and the Balkans and all of it. This is something that we want to work on together.

Question: Coming maybe more to the issue, I'd like to ask you about the approach to Iran. It's obvious there is a different approach in Europe towards Iran than is here in Washington. So far the efforts are common, there are no open discussions about that, but I'm sure you're aware that in Berlin and in Europe they're very reluctant to increase the pressure on Tehran. There are quotes from European politicians saying that they never want to give the impression that the world or the West wants to punish Tehran.

I assume this is different to the approach here. Is there any reason to be optimistic that without changing politics in Tehran, that next year you will achieve some results?

Principal Deputy Assistant Secretary Volker: First off, I don't see the premise of your question quite the same way. I don't see a lot of difference between the U.S. and our European partners on Iran. We are working together with the EU-3 and in the UN Security Council. We are trying to create the conditions where Iran makes a decision to stop its nuclear enrichment program and to work with the international community. It can have a civilian nuclear capacity; that's nothing that we are contesting, but it needs to work together with the international community in a verifiable way to do that and to give up its own enrichment plants.

To achieve that we've put some incentives on the table -- Europe and the U.S. have done -- including our putting on the table the idea we would sit down with the Iranians and join those negotiations if they cease their enrichment program. And we need to have some increasing pressure on Iran, so there are costs to them not giving up their enrichment program and working together with the rest of the international community. That's something that Europe also agrees on, and it's part of the approach we've had with the Security Council resolutions we've had so far and the work we've had with the EU-3 so far, and what we are now working on as we start the effort for a further UN Security Council Resolution. In fact Secretary Rice has been in close touch with her counterparts on this, Nick Burns has been with his counterparts, so we're very much in the same place.

The issues revolve around how much and how fast, and how do you do this together with Russia and China to keep the Security Council united, which is important. I think the unity of the international community is an important factor. If the issue is how do you influence Iranian decision making, that's a big factor to see that we're all together on this and doing one thing. At the same time it has to be real so that it can't just be talk and hoping. None of us -- not Germany, not France, not the UK, not the U.S. -- none of us are satisfied looking ahead to a future and saying, oh well, if our wishing for Iran not to have a nuclear weapon doesn't work, then that's okay. None of us are satisfied with that so we are working together to try to put in place the conditions to change the circumstances, get around to make a different decision. That's very much where I see us.

Will Iran take a different decision and say okay, we give up our enrichment and we'll reach some accommodation? The answer is that's a decision only they can make and we, the U.S. and Europe, the EU-3, Security Council, need to do everything we can to urge and press and push the Iranians toward that decision. We can't make it for them. Only they can do it. But that's what we have to put in place and that's what we'll do over the next year.

Question: You don't see differences between those --

Principal Deputy Assistant Secretary Volker: You can go around town here, you don't have to go to Europe. You can walk around Washington and get a dozen views of what else to do with Iran. Everything from kinetic to non-kinetic. [Laughter]. But that doesn't mean that's US policy.

Similarly, I'm sure you can go around Europe and get a lot of people talking about a lot of things, but that doesn't mean it's European policy. What we've worked out with Europe is the approach that I've outlined.

Question: Two small questions. One is in regards to Russia, you were talking about the [recent] development over there. Do you expect Germany as the biggest neighbor and as one of the biggest players, do you expect Germany to be tough on Russia in regards to the democracy agenda, first?

Second, you were also talking about the image problem the U.S. has, which is undeniable. What do you want to do really to improve it? If it's not cosmetics then it has to be a substantial change of foreign policy, hasn't it? In this regard, Condoleezza Rice has been talking about some deep thinking on Iraq she did. Can you elaborate on this a little bit? On the deep thinking?

Principal Deputy Assistant Secretary Volker: The first one was tough. First off, I don't think it's right to characterize the issue as tough or not tough. Germany, for example, has always had, going back to the middle of the Cold War and beyond, a relationship with Russia that's different than the American relationship. The Soviet Union at the time, but different than the U.S. relationship with the Soviet Union. It's still true. There are different connections, different more specific interests that Germany and Russia will have, and that's part of a fabric. So Germany has I think a lot to bring to the table as having a relationship with Russia that is important. I think Germany shares a lot of the same assessments that we talked about, sort of one of the concerns out there. We all need to be clear about them in discussing them with each other and talking about them with Russia, and we need to take constructive actions to deal with them, such as diversifying our sources of energy so that we are both getting away from a Russian gas monopoly on the one hand, but getting away from a fossil fuel dependence on the other hand.

Question: [Inaudible], the gas [inaudible]?

Principal Deputy Assistant Secretary Volker: Sure. And it's not a question of not -- Russia should be supplying energy to Europe. Russia has a lot of energy, Europe needs to buy energy, and that's fine. The question is, can you diversify in order to make sure things are on a market basis and a market footing where no one holds a monopoly power, but rather we play in a fair market.

Take for example, we're talking about Germany, but I was in Sweden earlier this month. Sweden declined having a Russian gas pipeline to Sweden and it has 50 percent of its electricity from nuclear; 40 percent from hydropower; 10 percent from other sources, most of those are renewable. They're in great shape on energy as far as that goes. They still have to make decisions, though, about what to do. Do they close down nuclear plants? They decided not to do that. Do they build new ones? They haven't decided that yet. So these are all choices that we have to make and it's not only Germany, but Europe as a whole. Germany's in one situation, if you have a gas pipeline with Germany, but you also have nuclear power and you also have other sources of energy. People have to be making decisions about investments, about the application of new technology, about connections.

One of the things that's been going along over the last couple of years is development of Azeri and Kazakh oil and gas fields; bringing those to Europe is important. We have the Baku-Tbilsi-Ceyhan pipeline come on-line. Now there's talk about adding more gas to that. We've been talking with Azerbaijan, Georgia and Turkey about gas supplies in that part of the world. Algeria I think has decided to increase its gas supplies to Europe. So there's a lot to talk about and it's not necessarily being tough against Russia. It's being responsible and creative and determined in advancing a European policy. That's the first one you raised.

The second one you raise is image. Here I've heard many people say that the only way to change the U.S. image is for a major change in U.S. foreign policy. What I would say to that is, the first thing people ought to do if they're looking at the image of the U.S. is look at what U.S. policy actually is because I think that is very poorly understood in Europe.

Let's start with climate, because that's one that I've been doing a little bit of work on lately. The U.S. has a terrible image on climate in Europe. People say we're a belching, smoking, environmental ogre of some kind and that we don't care about this issue at all, we're not doing anything about it. That's just wrong. We do care an awful lot about the climate and about the environment and about greenhouse gas emissions and we're doing a lot about it.

We are not a signatory to the Kyoto treaty so we don't participate in that effort. That's true of a lot of the countries. The U.S. has, however, been working at reducing greenhouse gas emission and working at reducing the greenhouse gas intensity of our economy.

If you just look at a period, for example, the latest period for which we have data is 2001 to 2004. The U.S. had a growth of greenhouse gas emissions in our economy of about 1.3 percent. That's pretty slow growth. The EU had growth in greenhouse gas emissions of its economy during that same time of about 2.5 percent. Also pretty slow. More growth than the U.S. had, but both modest growth in terms of where we are. Kyoto had a target for EU reductions, an 8 percent cut from 1990 levels. Most of that cut had been achieved by the time that Kyoto was signed because it was looking backward in time, but still an effort to get down. But in the most recent period over which we have data, both the U.S. and Europe have had a modest increase. The U.S. increase being even a little bit more modest than Europe's increase.

In addition, we had much faster economic growth during that period of time. We also had population growth during that period of time. The measure that we think is important to look at is the greenhouse gas intensity of the economy. Our view is that you've got to have robust economic health. You've got to have jobs, you've got to have growth, at the same time that you're reducing greenhouse gas emissions from your economy.

So if you take your greenhouse gas emissions and divide it by your economy, that's the greenhouse gas intensity of your economy. During this time period U.S. greenhouse gas intensity dropped by about 7.5 percent. European greenhouse gas intensity also dropped. I don't have the figure here, I'd have to go home and look it up, but it's about 4.3 percent or something like that. So it is slower reduction in the greenhouse gas intensity of the European economy than what the U.S. has done during this time period.

We started with a dirtier base because we have different countries and different economies. More nuclear power in Europe, less nuclear power in the U.S. We have big wide open spaces. We've developed our economy differently. But the fact is we are doing a lot of the same things to achieve reductions in greenhouse gases.

The way that we're doing this is different than the Kyoto way. Kyoto is basically setting a cap and then trading emissions within a cap and trying to achieve a reduction. So far it hasn't done that, but it could still do that. I'm not saying there's something wrong with this. We didn't want to sign up to it because of the impact we felt it would have on our economy. We also felt that people set targets, reduction targets or the levels, in a way that was not necessarily fair or that was going to bring about real effect, real reductions. What we're seeing right now is that countries that set ambitious targets for reductions under Kyoto are trading away the emissions to countries that didn't set ambitious targets for Kyoto, who have not cut their emissions and are getting the benefit of other countries trading the emissions to them, so it hasn't really pushed anything down yet.

It doesn't mean it won't ever sort of bite at some point and make a difference, but we didn't think this was the right way to go about it.

What we have done is invest a lot of money in technology and development. I think the figure is about $29 billion since 2001 in public funding for development of cleaner technologies.

This has had the effect of speeding the development and reducing the cost of some alternative sources of energy. So that if you compare the cost of kilowatt hour of solar or bio-mass or other sorts of alternative energy 20 years ago and what it costs today, it's far cheaper. It also happens to be the case that fossil fuel prices are way up right now. So the relative cost of some of this alternative energy is pretty good and it's being brought to market more easily.

The U.S. is now the largest producer of bio-fuels in the world. We passed Brazil this year. Brazil's second. Europe's third. We are looking at how we can expand the use of this within the U.S. market for automobiles. Clean coal technology. Half of our electricity comes from coal. We can get cleaner coal technology into coal plants. There are zero emission coal plants. It's going to make a huge difference in the emissions. That's what we've been investigating, is to actually try to get the technology in to do that.

Another thing we've been doing is we've been working with India and China and Australia, South Korea, Japan, through the Asia Pacific partnership which is a group of countries that includes half the world's population, half the world's output in terms of GDP, well more than half the world's greenhouse gas emissions, and trying to develop or implement the approach that I've just been talking about, which is one that combines the idea of human development -- which is what economic growth is all about -- with reducing greenhouse gas emissions by bringing cleaner technologies into markets.

They have achieved some reductions in their emissions and they are very enthusiastic about working together on a technology basis because they don't want to be in the position of having the developed world say we've got nice, lovely developed economies now and now we're making them cleaner. You can't grow any more, or you can't increase your greenhouse gas emissions, which is tantamount at this stage saying to saying no growth. Therefore, all the money that we give them in terms of development assistance for reducing poverty, for improving global health, for cleaner environment, for economic policy, for fostering growth and all that is money down the drain if we're actually sending a signal that they can't grow their economies.

They've got to have economic growth, and the idea is we've got to have clean technology to support cleaner economic growth in the developing world. So we've been working with those countries to do that. They're not part of Kyoto, they're not going to be part of Kyoto. They're very skeptical of that, but they are interested in reducing greenhouse gas emissions.

So after working through the Asia Pacific partnership we've gone back to the EU and we've said let's work in high-level dialogue between the U.S. and European Union on how can we work together to stimulate development of cleaner technology, whether it's fusion, solar, bio-fuels. How can we improve energy efficiency, you know, zero-energy buildings, and how can we bring these things into the market.

So we did this, we had a meeting in Finland in October. We've got a lot of working groups set up on different pieces of this now. We're going to meet again in the coming year. So we're very enthusiastic about this and we're doing an awful lot.

I don't think that is very well understood in Europe.

Question: Can I jump in there? Apart from all this clean technology stuff and definitely let's say the perception problem of the U.S. environmental policy in Europe, isn't the fact that California and the Northeastern states are just joining or trying to join Kyoto, the very best proof that first of all a lot of Americans want to go that way; and can go that way while the current administration is refusing it. And secondly could you explain briefly to me how is it possible that states of the U.S. may join an emission-trading system on an international treaty basis without having to have a foreign ministry? Is that legally possible?

Principal Deputy Assistant Secretary Volker: You have to research that. I don't know the facts on that. We have instances I can think of where states of the U.S. have made deals with Canada and I don't know if it's on a provincial level or a national level in Canada, on things like boundaries and fisheries and things like that, electricity. So I don't know what the rules are on that exactly.

What I would say is that when it comes back to Kyoto or to emissions, the first thing is the fact that you have a number of, if you have states or if you have movements in the U.S. talking about this, it illustrates what I'm saying. If the image in Europe is that the U.S. doesn't care about emissions and greenhouse gases and climate and all, it's just wrong. What these states are doing --

Question: About Bush than about America.

Principal Deputy Assistant Secretary Volker: Right.

Question: More about the government than about the Americans.

Principal Deputy Assistant Secretary Volker: Right. And the second point then, take it to the level of the government then. The Kyoto Treaty is just that, it is a treaty. It is a method for addressing an issue. It is one way to go. There is not an outcome. An outcome is a reduction in actual greenhouse gases, which is what we've been achieving. Kyoto is one way to try to get there. It's a way that the EU has signed onto and some others have as well. It has the potential to produce that result. That is not the only way to do that, and in fact whether you are a signatory to Kyoto or not, Kyoto again, it's about caps. How do you reach the cap? You still have to do something to produce the technology that will either reduce your use of fossil fuel so that there's less burning; or change the level of emissions from that into the atmosphere. That is what the administration is working on.

Question: You ducked the question again. Schwarzenegger and some other Republican or Democratically run states in the Northeast want to join Kyoto. Does that prove that more needs to be done and that more can be done and that Kyoto is working?

Principal Deputy Assistant Secretary Volker: No. First off, people can have different views about what's the best method for trying to reduce greenhouse gas emissions. We're not criticizing Kyoto and saying Europe should un-sign it or something. No. Use it. Try to do that. That's fine. What we're saying is that we agree with the objectives of trying to reduce greenhouse gas emissions and slow that contribution to global warming and we're doing something about it. We're doing a lot about it. So we should pursue that.

Question: Can I change the subject? I'm just coming from --

Principal Deputy Assistant Secretary Volker: Do we have more on this subject before --

Question: I wanted to bring you to Iraq.

Question: You say your efforts are not --

Principal Deputy Assistant Secretary Volker: We'll go Iraq --

Question: Not well understood in Europe, and there is a reason why, because Iraq is over-shadowing everything. So are we bound to expect real changes in the U.S. Iraq policy?

Principal Deputy Assistant Secretary Volker: And what was your question?

Question: Afghanistan.

Principal Deputy Assistant Secretary Volker: Let's come to Iraq then. First off, let me put it this way. I haven't found anyone among my European interlocutors who has a different set of objectives for Iraq than what the U.S. has. We want to see Iraq succeed as a democratic, secure, stable unified country within its territorial integrity; ethnic groups working together in a single government. We want to see it get along with its neighbors, not be an exporter of problems, we want to see an end to terrorism. I haven't found anyone who thinks that that's wrong.

The next question is how do you do that? That is, the first thing I should say is that is a subject, as you know, of a lot of serious thinking in the U.S. right now. We have this Baker-Hamilton report. There are other reports being done in various agencies of the government. The President's going to be reflecting on this. He's thinking seriously about this question. How do we bring a fresh approach? What do we do? How is the best way to work at these effectively?

The question then of what is going on in Iraq today and the image of the U.S. related to that, one of the things that I think is conflated in some of the European analysis is that you have a lot of people in Iraq who are extremists from the Sunni community or extremists from the Shia community or outside influence getting arms or support from others in the region or from al-Qaida, and they're killing a lot of people. There's a lot of violence. The assumption underlying a lot of the media coverage and public discussion in Europe is that the U.S. is to blame for this. That the U.S. policy is somehow to blame for all this killing that's going on in Iraq.

Well, when you have a situation where you have a lot of armed groups who are perpetrating a lot of violence, what are the things that you think you need to do? First is you want to try to protect the civilian population, which is part of what we're trying to do. Another is to try to attack and go after those groups, which is what we're trying to do. Most important is to be supporting the government in the country, which is the democratically elected government, probably the most legitimate elected government in the Middle East, Arab government in the Middle East, based on a constitution that the Iraqis themselves developed. Support the government in trying to establish law and order, in trying to establish functioning an institution's governance, which we're also trying to do. To train them and help them so they can do a better role in security themselves. Diminish the role that we play.

Our objective is to see them succeed and to not be there.

There are still a lot of how-to's that need to be addressed, and I can't speculate on any new initiatives or new ideas the administration would support. The President's going to have to do that. But again, when you come back to the image of the U.S., it's very easy to just throw out Iraq and violence and say oh, America's terrible. You get a lot of that in the European commentary about the U.S.

But if you ask the question, well what should be done that would actually work in Iraq? What is the U.S. doing? There's a lot more that I think people could agree with if they were willing to look at it and say well, you have to do this, you have to do that. You don't want the U.S. to leave Iraq tomorrow and have a civil war. You don't want terrorism to spread beyond Iraq, wider in the Middle East. You don't want to see an elected government fail and an extremist government imposed.

It's funny what people comment about U.S. policy. You can't impose democracy. It's funny to me that people say that, because of course you can't impose democracy. How could you?

Question: Germany is a good example.

Principal Deputy Assistant Secretary Volker: Democracy is not imposed. What you do is you prevent others from imposing a non-democratic system and a non-democratic will on the country as a whole. You create the conditions where people can then exercise democratic rights. That's important, actually. It's not something we should sneer at. That's actually important. People are facing military or autocratic or extremist pressure. To try to resist that pressure a little bit so the majority of people can exercise some democratic choice.

Question: [Inaudible] European answer to what can we do, and that's the same answer as part of the Baker report which is engage with Syria and Iran. That's clear, definitely in the population but I think also in most of the Foreign Ministry. But you know better than I.

Question: Can I try and broaden the question? After the thumping that the administration experienced on November 7^th, there's really a spirit of bipartisanship now in the U.S., it seems to me. So everybody realizes we have big problems in Iraq and we have to resolve it in common, as a whole. The U.S. as a whole. Do you sense something like that? This spirit of bipartisanship coming up in the transatlantic relationship, too? Because after 2003 and even maybe up to date, there are quite a lot of, a few people in Europe, the government also, the public in general, that want to see the U.S. defeated in Iraq. Do you think that's over now in Europe? Do you try to explain that, that everybody wants the same in Iraq, but do you have more proof of that than people just paying lip service in Europe?

Principal Deputy Assistant Secretary Volker: First off, I don't think that there are Europeans who really want to see the U.S. defeated in Iraq. Not anyone serious. If there are people who think that then they're not playing out the consequences of what it means for themselves.

Question: If you look at the polls, people in Germany think that the U.S. is actually more dangerous than Iran, for instance.

Principal Deputy Assistant Secretary Volker: That's a throw-away thing for people to say.

Question: Let's say Europe is still full of we-told-you-so.

Question: Yes, vindication.

Question: But it doesn't mean that Europeans really wish to see America defeated in Iraq. The problem is that the Europeans still are not facing that problems in the broader Middle East are as big a problem for Europe as they are for the United States.

Principal Deputy Assistant Secretary Volker: It's interesting. These things all depend upon how you ask the question and whether people are being asked to address the consequences themselves.

The German Marshall Fund survey that came out earlier in the year, what's striking is that 94 percent of Americans and 97 percent of Europeans both said that terrorism is the principal security challenge that we've got to deal with. I think that's right.

When you talk about means, how do you address challenges in the world? The U.S. and the European numbers line up pretty well. First diplomatically, then politically, then economic sanctions, and military force as a last result. It all tracks pretty well in the numbers. The U.S. is more willing to use military force than Europe, according to the polling data, but the numbers are still low and it's still the last resort compared to all the other tools in the tool box.

I wouldn't go too far with the idea that Europe wants the U.S. to fail, or even that it doesn't really see the same challenges. I think it does see a lot of the same challenges. And I do think there's a lot of evidence. One of the things that we always have to remind ourselves once in a while is, the use of the word Europe is a pretty broad term. What do we have with Iraq? We have many many countries that have military forces in Iraq that are trying to contribute to security there. We have many many countries that are trying to contribute to reconstruction and development. The European Union is present in Iraq. Germany has done training for civilian administrators and police. The French have done police training in Iraq. A lot of countries are trying to contribute to this. A lot more can be done and we'd like to see more done everywhere. But it's hard in a security environment as tough as it is, but there's a lot to do. I think the common objectives are all there. The common concerns are all there. I think there is a lot of evidence of people wanting to work together on that.

There is this perennial question of blame or image problem for the U.S., that whatever violence we see on the TV gets associated with the U.S., and that's sort of what -- you ask people to think about it, scratch the surface.

Question: But even when it's not related to reaction, maybe that relates to Christof's question. If you look at Afghanistan, maybe there is now a sense prevailing that actually we are in this together. You have suicide bombers in Afghanistan, Taliban resurgence. But still, if you look at the summit in Riga, the Europeans are, most Europeans are still very reluctant to really acknowledge that we're in this together and act like we're in this together.

So do you still stick to your more optimistic note that in Afghanistan and in Iraq there is a sense of real relationship going to prevail in 2007?

Voice: Maybe we can ask Christof to pile on with his question.

Principal Deputy Assistant Secretary Volker: Yes, I see the time.

Question: I'm coming from a briefing by Anthony Cordesman who just came back from Afghanistan. A very very dark picture, fighting and attacks on Western troops are up three to six fold compared to last year, and [inaudible] worse. The West is going to lose that war too if there is not a dramatic change in approach and there should be a sense of urgency.

This country is very much concentrating on Iraq, but can you see that the administration is willing to send more troops, fighting troops, combat troops to Afghanistan? And to pay very quickly at least $6 billion. And is the U.S. administration willing to change this policy? And what do you expect Germany to do? Also sending more combat troops or --

Principal Deputy Assistant Secretary Volker: Right. I read Tony's piece today. It was actually a pretty good piece. He didn't end it by saying we're going to lose. The way he ended his piece in the paper today was to say that it's a tough challenge and we need to increase our efforts in the military operation and substantially increase our efforts on reconstruction.

Let me talk a little bit about Afghanistan. The first thing I'd say about Afghanistan is remember where we were and what we're trying to do. It's very easy to get lost in where we are today and not see the bigger picture.

We had a medieval regime that was imposing an extreme form of Islam on the population, that was stoning women to death, that did not allow girls to go to school, that had banned music, that was blowing up world heritage sites. This is what we had. In addition to that was trying to export this regime and this way of thinking through the tools of modern terrorism.

Where are we today? We have an elected government in Afghanistan that has pulled together the vast majority of the ethnic communities, that is based on a democratic constitution, which has six million kids in school -- two million of those are girls; had 4.3 million refugees return from Pakistan and Iran; building a road that's going to connect the country for the first time, a ring road. It's 80 percent done, 50 percent paved. The economy has tripled since 2001.

Question: Including the drug economy?

Principal Deputy Assistant Secretary Volker: No. The economy that we're measuring has tripled. The drug economy is a different and large problem but that's not what I'm referring to there. There's been a lot of progress in Afghanistan.

What are we trying to do? You have Taliban, principally Taliban right now is what Tony's talking about, trying to fight back and to reimpose a non-democratic system on a population that is otherwise trying to build a democratic society and a more prosperous society. And you have NATO troops, including the U.S. and others, 37 countries total, that are trying to help support security in Afghanistan so that that development can take place, and the challenges are big.

The U.S. is the largest contributor to the NATO operation. This didn't use to be true. The U.S. had stayed out of ISAF for the first couple of years and it was largely European allies who were running ISAF. And as ISAF has expanded from the north to the west to the south to the east, it has grown.

If you remember a couple of years ago we were trying to expand into the west and Secretary General de Hoop Scheffer was looking for four helicopters, can I get four helicopters to make this happen? Well, a year and a half later not only do we get the four helicopters, we've got the other two sections of Afghanistan, the south and the east, now in the ISAF mission and we're up to 32,000 troops. Yes, we're still looking for more. We're always on the margin looking for what more we need and what more we should do, but we've done a lot to see the NATO operation grow and be effective in the west and elsewhere.

Question: Things are moving in the wrong direction?

Principal Deputy Assistant Secretary Volker: What I would say is things are moving in the right direction, but that the military challenge presented by the Taliban has grown, and NATO is doing a good job dealing with that. It is requiring combat troops. The U.S. has a large number, I think the number is about 12,000 in ISAF, plus those that are still in Enduring Freedom. We have a large number of other NATO forces there, more than Enduring Freedom ever had in the south before. I think one of the principal reasons that we see the increase in the level of activity, the level of violence is that we have a more ambitious mission as ISAF than Enduring Freedom. Where we were targeting insurgents before, we're not working to try to connect to the country and say that we want to see all of Afghanistan participate in development under a central government and have peace and stability and not Taliban rule. That's what they're fighting back against. It's important that NATO have the forces there, that is to protect the population against that.

One of the things I would say, and you know there's been a lot of discussion in the German media and others about caveats and solidarity within NATO, and that's an important principal. We should start from the principal of NATO as we did at Riga, affirming that we have a mission in Afghanistan, we agree on the mission and what we're trying to do, and as a result we ought to be acting as allies in solidarity, contributing to that effort as best we all can on a basis of sharing the burdens.

Everyone has domestic politics. Everyone has to sort through what they can do, what they can't do and how. But the principle that we start from ought to be trying to act in solidarity among allies within NATO. I know that's what all the allies are trying to do.

We didn't move that issue as far forward at Riga as we could have but we did a lot. What I was impressed by at the Riga Summit was, first off, there were some specific moves. There were some additional contributions here and there. There was lifting of caveats by some countries. The thing that was impressive in Riga, though, was the political commitment because you had the leaders actually looking us in the eye and saying we're doing the right thing. We are going to continue our efforts in Afghanistan and support the Afghan government. I think that's very important.

I'll leave it there on Afghanistan. There's a lot more we did at Riga too, which is all very exciting, but I'll save that for another time.

Question: Thank you very much.

Principal Deputy Assistant Secretary Volker: Thanks.