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U.S. Department of State

Diplomacy in Action

Remarks at Nixon Center


Remarks
James B. Steinberg
Deputy Secretary of State
Washington, DC
July 27, 2010

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DEPUTY SECRETARY STEINBERG: Thank you, it’s good to be here. We were coming up and Drew was describing the conversations taking place here beforehand. I offered to say nothing and just to listen to you all. If you want to do that, that’d be okay too. (Laughter.)

It is good to be here and you could not imagine a better gathering of people who are both experts and practitioners here, and so I don’t want to talk too much. I think it would be useful to have a dialogue, but it’s always useful to have a bit of a context setting, so I’ll just make a few brief points.

And I will begin, even though this was billed as a conversation about China, to put this in a slightly broader context, not least of which because we just had two weeks of a very extensive engagement in East Asia in every country but China, if you look at it. I just came back from Mongolia and Japan. As you know, the Secretary was in Korea and Vietnam. Secretary Gates was also out in the region. Bill Burns was in Southeast Asia.

And it really is a reflection of both the deep engagement we have in the region and the context in which it’s important to talk about our approach to China policy. And I think from the beginning, we’ve tried to stress that you have to think about the challenges of East Asia in a regional context. I’m now looking at Ambassador Beazley. I should just stress that while I was in Japan, it was for the trilateral U.S.-Japan-Australia dialogues. I don’t want you to feel like Australia was being neglected as part of the base touching that went on out there – (laughter) – with our good friend, Dennis Richardson, who represented Australia - it was excellent to see him.

But I think it is important, not least of which because a number of the significant events that took place during this visit really did deal with the regional context, whether it was the Secretary’s engagement in ASEAN and the indication of our intention to move forward with our engagement with the EAS, whether it was the 2+2 in Korea and thinking about the regional context of the situation on the Korean Peninsula, or even my discussions in Japan about issues like basing and host nation support. They really do provide the broader context in which we think about our engagement.

And we’ve always said that really there are three pillars to the way we engage in the region. We begin with the traditional alliances as the core, which remain quite central even though the context has changed from the Cold War, and the fact that our traditional alliances with Japan, South Korea, Australia, Thailand, and the Philippines remain very vibrant. Second, the need to engage with the new powers of the region, particularly China and India, but also the growing strength of Indonesia and others. And finally, providing a regional multilateral context for engagement, whether it’s through ASEAN, through the EAS, or APEC, which will be coming up first in Japan this year and then in the United States the following year. And I think that it’s in this context that we are looking at both the opportunities and the challenges in our relationship with China.

Having said that this last round of visits involved all the countries but China, I think it’s also important to look at the nature of our engagement with China over the last few months, the most significant of which I would say is the engagement and the attendance by President Hu at the Nuclear Security Summit. As many of you know, there was a lot of speculation about whether President Hu would participate in that.

But I think it’s a reflection of both the evolution of our relationship and the fact that China now recognizes that it really has a central and important role to play in meeting these global challenges; that despite the issues that are and remain in our bilateral relationship, that it was important that the Chinese participate at the highest level in the Nuclear Security Summit, and also not only to participate in that multilateral meeting but also to have a chance for another in a very extended series of bilateral engagements between President Obama and President Hu.

In addition, of course, we’ve been working very closely with China in conjunction with the situation in Iran, both through the P-5+1 mechanism but also in the Security Council in the negotiations that led up to Resolution 1929. And I do think that when all is said and done, that the outcome of that discussion in New York was really quite a strong one; that what we saw in response to Iran’s continued unwillingness to come to the table and deal seriously with its nuclear program, a recognition not only by the United States and EU, which had clearly shown strong views about this, but China and Russia, that the time had come to take another and stronger step.

And the importance of 1929 is not only in the specific measures that are mandatory measures under Chapter 7, but also as you’ve seen even as recently as yesterday by the EU action, that it has, in effect, enabled countries to go even further and take a number of stronger measures beyond those required by 1929, which has sort of a multiplier effect. And so I think it’s important to see that for a lot of countries, the permissive environment created by 1929 to take further steps in some ways will be as important as the formal provisions of 1929. We’ve seen that with the EU. I did discuss with Dennis [Richardson] in Japan steps that Australia is thinking about – Japan and others, South Korea, all sort of looking to see what additional measures would be appropriate in dealing with the Iranian problem. But clearly, having the engagement of China and Russia on that was critical to our success there.

We also see – we’ve had clearly an extensive series of discussions also in New York in connection with the response to the Cheonan. I think on the whole, we think it was an important outcome, it was very important to have a Security Council outcome to deal with the Cheonan. Clearly, it was not as explicit as the G-8 statement, which was a very important statement, but nonetheless, I don’t think anybody could come away from reading the presidential statement there with any conclusion other than the fact that – under the relentless pressure of the facts, that the clear concerns of the international community were expressed.

In addition, we just had the S&ED in May in Beijing with Secretary Geithner and Secretary Clinton – an extraordinary cast of close to 200 U.S. officials participating in broad-ranging discussions there, and in addition to the – sort of the government-to-government elements - an important outcome was moving forward on the people-to-people dimension with the announcement of our 100,000 students initiative, which I think in the long run could have as much impact as any of the specific things that we’re engaging with China.

So the intensity, the pace of the engagement, remains very strong. We continue to find a broad range of areas where we cooperate with China not only bilaterally, but regionally and globally. China’s involvement in the G-20 was and clearly continues to be an important part of our relationship there as we also try to sort out some of the bilateral economic issues with China. But at the same time, we also recognize that there are challenges in the relationship and we, I think, recognize that there remains work in progress on a number of issues that are important to us.

I think the most important – and I’m sure that this audience won’t disagree – is the continued unwillingness of China to deepen the mil-to-mil engagement between the United States and China. We continue to stress that this is not a favor to one country or the other, but it is absolutely critical to manage this very complex process of China’s own economic growth and military modernization, that a number of the issues that we have can only be satisfactorily addressed if we have direct dialogue, and that it’s, frankly, counterproductive for China to see this as a benefit to be offered or withheld in relationship to other issues when, in fact, both countries benefit from the dialogue and the risks to the relationship are significant in the absence of that kind of dialogue.

I think we’ve seen that in connection with our continued disagreements over the activities that we believe we’re entitled to undertake in China’s EEZ, which China disagrees with, but we don’t have a really good forum to discuss this. And also on the continuing discussion about exercises in and around the Yellow Sea, which would also be an appropriate item for a mil-to-mil dialogue.

Similarly, although we had a political discussion in Hanoi about our concerns and our desire to find a constructive way forward on the South China Sea, we clearly believe that if there were a bilateral mil-to-mil channel, that would also be an appropriate venue to discuss some of those issues. So I think that’s clearly one area where we do feel it’s important to make progress in the long term. The ability to manage this complex relationship does require that kind of dialogue.

We also continue to have concerns on the human rights front. We’ve seen a number of actions particularly in the last six months to a year that have raised concerns on our part about the overall direction of China’s policy on human rights. The good news, at least on that front, is that we have resumed the human rights dialogue. I myself participated in the meeting here in May. That doesn’t mean we’ve solved the problems, but at least we are beginning to have more direct engagement on those issues. And I think it will be important to continue that going forward.

So there is a lot of work to be done as well as things to be built on. I think another area where we need to continue to work to try to make progress is on the energy and climate-related issues. As we lead up to the Cancun meeting, it’s very important that we take the Copenhagen Accord as a glass half full in our approach to developing a global strategy on climate, and China made a contribution in Copenhagen. It agreed to sign up to the protocol, which is an important step. It is a step forward for China to accept that there is an international framework within which the climate issues have to be addressed.

But we need to go further, particularly on the transparency and the accountability side. If we’re going to work in a framework where each country pledges its own actions which begins kind of a ground-up basis for dealing with the global climate challenge, then there has to be some way, if not through formal enforcement mechanisms, that at least through international oversight, to have some sense about whether countries are living up to their own commitments. And so that will be an important thing to take forward just as we deal with issues like financing and support for adaptation going into the Cancun discussions.

So let me stop with that and open up the floor for your comments, thoughts, and your questions.

MODERATOR: I am not going to take the chair’s prerogative. I see a hand from Doug, I see one from Chris, and I see Ken, and then I’ll go to statement.

QUESTION: I’m Doug Paal from Carnegie Endowment. A quick aside on the mil-mil side on it – I had a chance to talk to somebody from the Chinese mission last night who is normally an extremely well-informed military officer, and he was parroting back to me truly half-informed statements about what’s going on in the Yellow Sea and the South China Sea. And I don’t think he’s talking to people in the Administration. I don’t think he has those meetings that he should be having. If he’s not getting the information at home, at least he’ll get (inaudible) information here and needs to get the dialogue going.

My specific question is: In light of the proposal made by Secretary Clinton in Hanoi for a discussion or a facilitation of discussion on the code of conduct, what’s the next step?

DEPUTY SECRETARY STEINBERG: You’ve heard the formal response from the Chinese side. They continue to insist that these are best handled through bilateral measures. But I think that it really will depend on how others in the region continue to articulate that. And I think that if it becomes clear to China that there is a desire on the part of the claimants in other countries with an interest in the freedom of navigation and the security of the region, that they really would like to have a forum and that they are concerned that the bilateral strategy puts the other claimants at a disadvantage, that China will have to think about the costs in its relationships with countries which are important to it, as to whether it’s willing to continue to resist that kind of thing.

What we’ve seen, I think, over the last decade is a desire on the part of China to build a more constructive relationship, particularly with its Southeast Asian neighbors. That’s what led to the code of conduct in the first place. And I think that this sort of sense that these issues should be resolved diplomatically has improved China’s standing vis-à-vis ASEAN countries, and conversely, an unwillingness to continue in that vein, and to act in a more assertive fashion within the South China Sea, both with respect to military operations and resource exploration, will cause concern. And I think that ultimately, the Chinese leadership is going to have to look at that and say: Are we better off showing more flexibility and a willingness to engage on a more multilateral basis, or just insist on our position at risk of raising questions in the minds of other countries in the region as to why it’s not willing to engage multilaterally?

MODERATOR: Thank you. Ken.

QUESTION: Thanks very much, Mr. Chairman. I want to be the only one here probably who will raise a question about the climate change agenda that you mentioned – (laughter) – and ask, effectively, what leverage do we have going (inaudible) with the Senate to adopt the climate change legislation domestically? And how much does that leave us without a serious leg to stand on (inaudible)?

DEPUTY SECRETARY STEINBERG: Well, I try to stay out of issues involving domestic issues, but I would simply say the President has always made clear that we have a variety of tools available to us to try to meet our own commitments with respect to reducing CO2 emissions. And clearly, his preference was to have a comprehensive bill, but we will have to look at other steps that we can take both through legislation and otherwise that can allow us to put us on our path. Some of that will be through regulatory measures, some of that will be through our continued significant contributions to R&D that can make a difference in terms of our own glide path.

I mean, there are lots of ways to get to meeting our own nationally set objectives there. And if we can’t do it through the framework that we had initially pursued, we’re just going to have to look at those other tools.

QUESTION: Those are longer term –

DEPUTY SECRETARY STEINBERG: Again, I mean, I think –

QUESTION: (Inaudible.)

DEPUTY SECRETARY STEINBERG: No, I understand. But I think that, again, the structure of Copenhagen is such that countries make pledges in terms of what their own national action plans are. And then we have urged transparency and accountability which people can be held to it. So what we would say is that we will have the same kind of openness to explaining to partners what we’re doing and transparency about our accountability. And so it’s not – I mean, it isn’t a question of leverage at this point. It’s a question of countries simply now saying, okay, you’ve made your own decisions, China has an action plan of its own, what is it prepared to do to give some confidence that it’s going to live up to that? And part of it is just the transparency measures.

MODERATOR: Thank you. Chris Nelson (ph) and then Ambassador Roy.

QUESTION: Thanks, Jim. You gave that whole brief in one breath. It was really impressive. (Laughter.) Let me try a narrative out on you and feel free to tell me I’m getting it wrong. It looks as though – and certainly in recent weeks, perhaps starting before some of the UN debate – that the U.S. and China have been sort of pushing each other to see how we’re going to be reacting to each other. And in some cases, you guys have been criticized as taking too much of China’s views into account. There were some people who felt that you should have just sent the George Washington into the Yellow Sea anyway and to hell with them. As you know, I didn’t defend that in my report.

And some people are seeing Hillary in Vietnam last week as perhaps pushing back on this notion that we are letting the Chinese set the agenda. How do you react to this notion that we’re starting to push back now on things that they’re defining as interests or even core interests? And I have a specific example because –

MODERATOR: Chris, is there a question coming?

QUESTION: There is. And here it comes. (Laughter.) Sometimes you’ve got to explain about the question, otherwise what the hell is he talking about. (Laughter.) With me, that’s always a question.

MODERATOR: It’s the summary that I’m looking for here.

QUESTION: At the S&ED, if memory serves, didn’t the Chinese offer some kind of consultation on the notion of – on Taiwan arms and things? And I forget exactly how they phrased it, but they wanted some kind of consultative committee. And on the one hand, we want to have mil-mil, we want to have talks. On the other hand, obviously, we can’t have a direct consult on that. Has the Administration reacted to that Chinese proposal? And how might the notion of Taiwan arms, if it comes up this year, fit into this pushing back that --

DEPUTY SECRETARY STEINBERG: Well, I don’t think I would necessarily subscribe to that narrative, and I think in part because I think you have to take each of these issues on their own. And with respect to the exercises, I think it should be clear: These exercises are about North Korea. They are designed to demonstrate, in response particularly to the Cheonan but more generally in terms of our relationship, that the United States and Korea are both working together and are capable of responding to any kind of provocation that North Korea might engage in. And if they were to, in any sense, draw the conclusion that there was doubts about our capabilities or ability to work together, that would be a serious miscalculation on their part. And sometimes you have to do this pretty explicitly. And so the exercise – we exercise all the time. As many of you know, and Chris certainly knows, we exercised in the Yellow Sea with the George Washington less than 12 months ago. But clearly, the timing of this was to demonstrate a clear need to bolster deterrence and dissuasion from further provocations by North Korea.

And it wasn’t about China. And I think trying to turn this narrative to be one about China misunderstands the purposes of the exercises. At the same time, so that there is no mistake about our intentions, we made clear that we will exercise when and where we want to when we need to consistent with international law. And that, as I’ve said, we’ve clearly indicated in the past. We’ve exercised in the Yellow Sea. We will exercise in the Yellow Sea again. But I think there were some people who wanted to turn this into an issue about China, and we wanted to keep the focus on what we think the proper focus ought to be –on North Korea both to dissuade them from further provocations and also to remind them that there is a more constructive path that they could move forward on, and that is to recommit to the 2005 joint statement and move seriously on the path of denuclearization.

With respect to the South China Sea, I think this is an issue that’s been bubbling around for a long time. I was in Vietnam last year. This was clearly a preoccupation there. We’ve seen this in other ASEAN countries. And I think what we’ve seen is a sense that there is a risk that without some more explicit discussion about these issues, that we could both have run the risk of an incident, which could be damaging to security in the region, but also to foster some long-term competition, which is in nobody’s interest; and frankly, that the time had come to just make this more explicit and to bring it out in the open, as it were, because it’s clearly on everybody’s mind.

And I think what the Secretary wanted to do was essentially to say, we know we’re all thinking about this and we know we’re all anxious about this; rather than let this fester and become a problem, let’s have an open discussion about how to take this forward and find a more constructive way to deal with it. And I think that was largely welcomed by the other ASEAN countries, because it is more comfortable to have others around when these are being discussed. And since it is obviously on everybody’s mind, rather than to have it sort of off in the background, to bring it out into the foreground. And so I think that’s the context there.

With respect to Taiwan arms, you all know the mantra. I’m looking at Doug Paal.We do not consult with China on Taiwan arms sales. We make a judgment based on what we believe are the legitimate defensive needs of Taiwan for arms sales. That doesn’t mean we don’t tell the Chinese after we’ve made our decisions what we’re doing and why we did it. And one of the things that we tell them why we did it is because of them. I mean, defensive needs are determined in response to the perceived security environment.

So there was, to my knowledge – I wasn’t at the S&ED – there was no formal proposal by the Chinese for a consultative mechanism, so there was nothing for us to say no to. But we have always been prepared to say we are prepared to discuss security in the region and we will articulate our concerns about China’s military modernization, and particularly its missile deployments there. And if they want to raise concerns, we listen to their concerns. They have raised their concerns about arms sales for as many years as we’ve been selling arms, and we’ve responded to them.

And that’s what dialogue is about. It doesn’t mean we’re there to conspire with them on what to do or give them a voice in what to do. But we can certainly hear their perspective on what their concerns are and that’s something that we can take into account as we formulate our own decisions about that, just as they need to hear what our concerns are about their activities, both their political orientation towards Taiwan and how they’re interacting with the Taiwanese authorities and in terms of their military modernization. So there is another place where dialogue is appropriate even if it isn’t about consulting about what to do.

MODERATOR: Dennis, you had (inaudible)?

QUESTION: Sure, Dennis Wilder, former fellow at Brookings – (laughter) – and other things.
You mentioned the offering of a path to the North Koreans and yet we seem to have offered them a path for a long time and they have rejected the path. When you think about this new leader, Kim Jong-un, and the fact that sooner rather than later, it looks like, he will be the new leader, what can we do? How can we approach this new leader of North Korea? What ideas have you developed (inaudible)?

DEPUTY SECRETARY STEINBERG: I think, as you know, trying to kind of suss out the dynamic and the thinking and reasoning of North Korean leadership is really a pretty perilous proposition. I mean, there are many theories, there are many arguments, and the analysts have exchanges and stuff about what’s going on. And I think that any of the theories are useful to sort of stimulate your own thinking about possible approaches, but it’s very dangerous to sort of think, well, this is what is really going on, so I’m going to build my strategy around it.

So I think – I always sort of think about this as my general philosophy about policy planning – is you try to minimax against the range of possibilities. And we can think of a range of scenarios that might take place as we contemplate what is obviously some element of transition. I think that part is indisputable. But whether – who this guy is, whether he’s really going to be the leader, whether the military would be stronger or the party would be stronger, you can trace out the scenarios, but you try to develop a strategy that will work – be most effective against the broadest range of scenarios.

And that, I think, is in some ways very straightforward, which is to make clear that even in their own terms they will be less well off if they continue down the path they’re going. They will be less secure. They will be less secure in both senses. They will be less secure in the military sense, but the regime will be less secure and they will less be able to pursue whatever this range of interests they may be interested in pursuing if they continue to move down. And conversely, they will be better off if they take the other path. And I think that’s true.

And I think that basic strategy holds irrespective of whether it’s Kim Jong-un or whether it’s the regent or whether it’s the party that’s going to rule. And I think it’s a more reliable strategy than trying to kind of guess what’s in his mind, especially because, one, I think it’s almost impossible for us to know, and second, it’s not clear whether he would be the one who’s making the decisions in any event.

But I do think what we’ve tried to do very clearly – and it’s a drawn out process and people have talked about strategic patience, I don’t know what the right word is – but I think we’ve had a long period of trying to condition the North Koreans into persuading them that the old tactics aren’t going to work, the tactics of provocation and payoff, the tactics of hoping to be salami-sliced and paid for talking rather than doing.

And that has, as a result, given a long period of time in which they’ve tested various avenues to try to get what they want without having to give up what they don’t want to give up. And one hopes that eventually they will come to the conclusion and really face that binary choice, which is if they really want to get these things, they really are going to have to do something serious.

There’s no guarantee that strategy is going to work, but I have yet to see a better one. And at least we’re not persuaded that strategy has played out unsuccessfully yet. I think there is a potential opportunity with the transition, but also risks in transition, and we have to be sensitive to that as well.

But I do think that the strong bond and collaboration that’s been built between us and the South Koreans is critical. I hope the ambassador shares that view. I think the fact that after some period of perhaps not having as good trilateral engagement over these issues, we now have a better trilateral engagement, which means we have a good alignment between South Korea and Japan and the United States on these issues, and that China and Russia understand that we’re not going to make concessions in the absence of significant indications by North Korea that they’re willing to move forward. And that’s – it is a little bit insensitive to the specifics of the individual who is going to be potentially the successor, but I think in some ways we’re on a safer course not trying to tailor it to a guess about what that might mean.

MODERATOR: Thank you. Ambassador Roy.

QUESTION: My question relates to things you’ve just been discussing and maybe you’ve said about all you can say on the subject, Jim. But the issue in my mind is this question of a roadmap and where we’re going on North Korea. Everything we’ve been doing around the Korean Peninsula is for a purpose. But there have been – and it’s a rational purpose. But there have been Shakespearean alarms and diversions that have muddied the water, and in particular the solidarity among the five, at the moment, seems less strong. The solidarity of the three, as you’ve just noted, is a very positive outcome of this. But among the five, it’s not so clear that we have.

There are two issues involved here. One is the nuclear issue and one is the question of the strategic interests with regard to the Korean Peninsula. It seems to me that on the nuclear issue, perhaps things haven’t changed. The five still have common view of what they would like to see, but now it looks as though the strategic alignment in terms of what comes out of all of this may be opening up fissures that are potentially quite severe.

And the question is: Does the Administration have a roadmap in terms of how we work our way through this, particularly given the timing factors? We have an election here in 2012, we have the 100th anniversary of Kim il-Sung in North Korea, and we have the succession issue. We have the party congress in China in 2012. And the last year of administrations is always you never see any progress in anything involving North Korea. So the timing factors are becoming important now. And at the moment, the climate is not very good for trying to move a process along.

DEPUTY SECRETARY STEINBERG: I’m not sure that I agree on the timing issues, because I think it’s uncertain how the Korean 2012 timetable plays into this. You can argue it either way. You can either argue that this may be a period of caution because it’s a period of succession in the North, or it may be a period of opportunity when legacies can be created and choices can be made. And I don’t know the answer to that. And I think we have to test the proposition that this is a time in which progress can be made. And, I think there’s frankly no harm in doing that.

With respect to the sort of strategic alignment, we’ve – unlike the mil-to-mil, where we don’t talk as much as we should, we do talk a lot with the Chinese and the Russians about these issues. And I think that part of what we have tried to stress is to try to reframe the way we see the choices and to try to get our Chinese counterparts to reframe for themselves the way they see these choices.

I think there are two indisputable facts about how China sees the issue of North Korea, which is, one, I genuinely believe, that they think that everybody would be better off with a nonnuclear North Korea. I don’t think there’s any doubt about that. I don’t think that even among hardliners in China that there’s any desire to see that. It’s not in China’s interest. Frankly, it’s not in China’s interest for anybody else to have nuclear weapons. If you’re going to be one of the five or whatever, you’re just better off not having others have it.

But second, they obviously worry about instability in the North. And so they tend to sort of have those two parameters and they’re kind of working between these two parameters. The way we have tried to encourage them to rethink this is that they seem to believe that if you just don’t rock the boat, that will help preserve stability on the peninsula – don’t push, don’t ask the North Koreans to do too much, more than they can do, nudge and encourage them, but not push them as much.

And what we’ve tried to convince them in extensive dialogues, and you know this well, is that, actually, that not pushing this and not pushing the issue more creates more instability rather than less, and that there are greater dangers from not pushing the issue and not trying to move forward, not only because it creates greater risks of conflict on the peninsula, but it also changes the broader strategic environment in Northeast Asia in ways that China presumably would not welcome.

The more we face a provocative and dangerous North Korea, the more we have to do exercises like the ones that China doesn’t particularly like to have us do, not because they’re directed against China, but clearly, China doesn’t like to have do. The more North Korea develops Taepodong-2s, the more we have to accelerate the deployment of missile defense in Northeast Asia, something also China is not that welcome to, the more we have to sustain various kinds of deployments in the region.

So we encourage China to think about this issue from a different landscape and hope that that will lead to a different set of outcomes. We need to have that dialogue, because we need to make clear that this is not done in any way to prejudice China’s interests. We’re perfectly prepared to have a conversation with China about the long-term future of the peninsula. I think our South Korean counterparts are eager to have that conversation with China too. We may agree, we may disagree, but we need to have those conversations.

So I don’t think there’s – it’s not that the gap is getting wider. It’s more that we need to deepen that conversation with China particularly and with Russia to some extent as well. But I don’t think it’s because there’s a fundamental divergence about these things so much as that because of their – the tactics that China is pursuing, there is a risk over time that could lead in a direction which would increase the problem.

MODERATOR: I’m going to jump in – I’m going to go a bit out of order and recognize Ambassador Han. But don’t we face a dilemma if we’re telling the Chinese that resolution of North Korean issues then will change U.S. deployments or missile defense or exercises of the right to operate in the EEZ?

DEPUTY SECRETARY STEINBERG: No, I think we face some choices. We will defend our interests and we will protect our alliances, and we will do that in the context of the threat that we face. If China can be helpful in reducing that threat and changing the situation in North Korea, obviously, we will make our adjustments accordingly.

But I think that it just – the point is for China to understand that there are consequences for the way in which it engages on the North Korea question – not directed against China. They are clearly not directed at China. We’ve made clear we don’t do this in any way to diminish China’s security, but we also can’t decline to protect our security and our allies’ security because China is concerned about the collateral consequences of what we feel is necessary to do.

MODERATOR: Thank you. I’ll do Ambassador Han and then Jack Logan (ph).

QUESTION: First a short remark. I fully agree with Secretary Steinberg that we should have some strategic patience concerning North Korea. If we are in a rush (inaudible) then that will be everybody will be embroiled in the tactics of North Korea and other (inaudible) actually spoil the (inaudible) rather than going in the right direction.

The second point is the question to Secretary Steinberg. We know that sometimes China’s view of the world is sometimes different from us and from others, some more democratized countries. Then we are sometimes worried whether the world outside China have the ample leverage in pushing China to go in the right way. Climate change is rather clear; if China is lagging on that, certainly, the world would be worse and China will also suffer, and so on.

But on other issues, it’s not very clear whether we have a strong leverage on that. Sometimes, China is saying to Prime Minister Merkel that, okay, we will support Europe. And that seems like Europe should depend on China for supporting the values of Europe. Well, China does not say explicitly, but sometimes we are worrying that they will pull much of the treasury bills of Chinese (inaudible).

So when they’re at some need to push China in a right way, I am anxious to know whether we have ample leverage for that. For example, on the nuclearization of North Korea, they’re saying that if North Korea is going nuclear, then Taiwan may think otherwise, Japan think otherwise, maybe South Korea may think otherwise. Then maybe enough leverage. I am curious to know whether, Secretary Steinberg, you are optimistic about finding ample leverage whenever there is a need against China.

DEPUTY SECRETARY STEINBERG: Well –

QUESTION: China is so an important country and we should engage China in major decisions on the global issues. But can we be confident that we can always have enough leverage to move China forward in the right way?

DEPUTY SECRETARY STEINBERG: Well, I think your example sort of points in the direction that I would go in terms of answering this. I’m not a neo-realist, but at the end of the day, I believe that countries pursue their own interests. And that leverage can be useful in some circumstances, but it tends to be a tactically limited thing because you use it and then there are consequences from using it. And so what you really want to do is try to find ways to convince other countries that what you want them to do is in their interest. And that goes back to the conversation that I was having with Ambassador Roy, but also your point about the risk of onward proliferation in the region.

That scenario that you outlined, which is if the North Korean program becomes more advanced, others might reconsider their nonnuclear status, it’s not leverage over China. It’s a reason why it’s not in China’s interest to let North Korea continue the program. And so the most effective technique in diplomacy is clearly to convince countries that the course that you want them to pursue is in their interests, and therefore, they’re not doing you a favor, you don’t owe them, or you’re not coercing them into doing something they don’t want to do.

Because occasionally, you can coerce countries, but they tend to not receive it well and they tend to spend all the rest of their time trying to get back to it in some ways, and there are a lot more experienced China hands than I am here who could say that the whole history of China for the last 150 years is their reaction to the coercion that took place in the 19th century. They’ve spent 150 years trying to get themselves to a place where they can’t be coerced.

So again, I don’t object to coercion or leverage under appropriate circumstances, but it’s clearly not the preferable course. And clearly, if you’re trying to build a partnership with a country like China, you would prefer not to “exercise leverage.” I also think that in many of these cases where people worry about the T-bill holdings and the like, the leverage tends to be a bit illusory. It’s very hard to exercise and use effectively.

And so on most issues, you really are most likely to be successful if you talk about common interests. And so we’ve had a lot of conversations with China on internet freedom, for example. I mean, there are ways that you can threaten them and impose cost. But at the end of the day, I think we’re convinced that the most effective strategy is to make clear that the costs that they impose on themselves for restricting freedom of expression, access to the internet, is sufficiently high that it’s counterproductive even in their own terms. It doesn’t always work, but it is at least a core of trying to make these things work.

And I certainly feel with respect to North Korea that we’re most likely to be successful if we don’t do this on a transactional basis. Because I worry if we try to do these things and say, well, if you help us on North Korea, then we have to help you on this, that you end up in a lot of Faustian bargains that you don’t want to be part of. And it’s better to build these things over time, to identify strategies that are win-win common interest type approaches.

MODERATOR: Thank you. Ambassador Chow and then Jim Hoagland (ph).

QUESTION: Thanks, Jim. Jack Chow with Rand’s Global Health Initiative. Much of the framing of China’s citizenship in the world is based on (inaudible) financial power. And you take that financial power and there’s a certain expected trajectory that China ought to be taking in contributing to some of the world’s collective problems in health and development. So as you manage the U.S.-China portfolio issues, do you see an opportunity to encourage China to do more in humanitarian work? And I’m thinking specifically about adding more funds to the Global Fund for AIDS, TB, and malaria? America contributes a billion dollars, China contributes $2 million a year.

DEPUTY SECRETARY STEINBERG: I think there is. I think there’s a tremendous opportunity. I think that one of the things that China is finding as a result of its going out strategy is that there are some costs associated with that as well in terms of their global image, the receptivity to their presence around the world. A lot of the places which they’re going in search of resources are countries that have huge development needs.

And they’re finding that it no longer checks the box just to build a sports stadium or parliamentary palace, and that in fact, if they’re going to go work in these countries and want to have a long-term relationship, that they have to be responsive to the broader sets of needs. I mean, I don’t want to overstate it, but even if you look at the trajectory of their policy towards Sudan, there’s a greater awareness that they cannot simply go there and pump oil and take the oil and sustain the relationship in a situation where they’ve become embroiled in a conflict, and that they need to take a more responsible attitude.

We have a long way to go, but there are signs at least, in some cases, that they recognize that they’re going to have to produce some public goods to go along with this engagement and that it can’t be a kind of rapacious or self-interested engagement. They have a long way to go in that thinking. I think there are different parts of the government that are more enlightened than others. And certainly, when it comes to supporting traditional development stuff, there is a tendency to hide behind, “Well, we’re just a developing country, a poor country too, we can’t do these things.” And you can tell the Chinese worry about a slippery slope, which is if they do it in one area, then they’ll be expected to do it in other areas, and they’ll kind of lose their cover as a developing country that doesn’t have to contribute as much.

But whether it’s in peacekeeping, which we see now a much greater willingness of China to engage in peacekeeping activities or collective activities like dealing with the piracy problem, you’re just beginning to see at least some recognition that in order to sustain this global role and their soft power, that they’re going to have to do some things that burnish their image. And these are the kinds of things that I think we need to push them on more. And your example – HIV, TB, malaria – are all things where they have a stake in being seen as being part of that solution. So I do think it ought to be something that we push.

MODERATOR: Paul Eckert next and someone in the back who --

DEPUTY SECRETARY STEINBERG: We lost Hoagland there.

MODERATOR: Oh, I’m sorry.

QUESTION: I did miss you, I apologize.

QUESTION: No problem. Jim, given your experience as a Sherpa, I’d be particularly interested in hearing your thoughts about the transfer of authority, and to some extent, legitimacy from the G-8 to the G-20, and China’s role in that, China’s view of that, whether or not we see China as a country that has a particular role to fulfill in the G-20 process that we can build with, or has China in fact become more of a problem?

DEPUTY SECRETARY STEINBERG: Well, I think it’s important to be clear about where the G-20 is now as opposed to where it might go at some point in the future. I think everybody involved in the process right now is very cautious about extending the role of the G-20 beyond global economic management issues. And so in that sense, the G-20 is really the successor of the G-7 and not the G-20.

In this context, I think on the whole – I mean, nobody’s perfect – but the Chinese have played quite a constructive role in terms of the global response to the financial and economic crisis of 2008-2009. They have participated constructively in the discussions about how to sustain global demand, about how to deal with the broader regulatory environment in which the global financial investment takes place. All these things have been positive, and hopefully, what they’re doing with their own currency, if they move in the right direction, would also be positive.

So in that context, I think it’s unimaginable that you would do this kind of global economic management without having the country which is the third, depending on how you measure, sized economy in the world not part of it. There are obviously differences of opinion at the G-20, but China wasn’t structurally different or in somehow a more difficult position than any of the others. So in that sense, I think it’s fine.

The question which is unresolved is what is going to happen with the G-8 agenda as opposed to the G-7 agenda, which is on the more political and security questions. The G-20 is not doing that right now, and at the moment, there’s little appetite to have the G-20 to do it. So there, the question becomes: What have we got going for us? Well, we have two mechanisms. We have the Security Council and we have the G-8, which were sort of the two kind of big power type frameworks within which to deal with some of the broader global challenges, as well as some of the ad hoc things like the Nuclear Security Summit and the like.

We do work with China in the P-5 context and are doing a lot of constructive things together. I mean, I don’t want to pretend these negotiations aren’t arduous and difficult and challenging, but we have gotten good results on all of the big questions before the Security Council. This is a glass which is 80 percent full, in my judgment. We’re not going to get a hundred percent of our way all the time.

But on the big things that have mattered to us in the Security Council, we have gotten results, starting with the PRST on the North Korean missile test, to Resolution 1874 on the nuclear test, to Resolution 1929 on Iran, and the PRST on the Cheonan. In each one of those cases, we may not have gotten a hundred percent of what we wanted, but we got a result by the Security Council with China’s support that was important.

So in that sense, in terms of some of the global management issues, China is playing a reasonably constructive role. Now, whether that leads to the G-20 taking on political and security issues or a different forum, I think that’s a work in progress. And we, at least as an Administration, have not yet taken a position on that. The G-8 still is there for the moment,but we have other ways of engaging with China on these big questions.

MODERATOR: Thank you. We’ve got about five or ten minutes left, so let’s go with Paul. Please keep your questions short if you can.

QUESTION: Paul Eckert of Reuters News Agency. The recently announced batch of sanctions on North Korea – some details have leaked out in the South Korean press almost daily. It would seem that you have a timeline for when you’re formally going to roll them out with some details. And to what extent do you expect China to help or perhaps introduce sanctions (inaudible)?

DEPUTY SECRETARY STEINBERG: The answer is we may have a timetable. I don’t know what it is. I’ve been away for the last week and they’ve been working on it. So I don’t know whether we actually have a date to do this.

What we are doing is largely a more robust implementation of some authorities that we currently have, which are authorities that we have and are not – they go beyond Resolution 1874 in some cases. We’re going to encourage others to do it, just as with Iran. We would like people to go beyond what they have to do under the UN measures. But we are largely focused on what more we can do and then we’ll use that to encourage others to do more as well.

But again, we think the stronger the signal we send to North Korea about the choices it has and the more others join us in that, the clearer and more likely it is we’re going to get the result that we were talking about before.

MODERATOR: Two final questions. The gentleman in the back and then Mark (inaudible). Maybe we’ll take both questions together and then give you a chance to wrap up.

Please.

QUESTION: Paul Richter with LA Times. I wanted to know what kind of cooperation you’ve been seeing with China so far on Iran sanctions at the UN, especially the more aggressive ones, such as on the issue of boarding ships. That’s one. And second, a European official told me that he thought China was picking up a lot of business recently as European countries have been disengaging Iran. Is that right?

DEPUTY SECRETARY STEINBERG: Well, that’s easier (inaudible). On the first, it’s too soon to say. Not enough time has passed to make a judgment about their implementation. I would say I don’t think we have seen yet China stepping into the breach, but it’s obviously a concern and we’ve made clear to the Chinese that we expect them not to do that. So that’s something we’re obviously going to be watching very carefully.

MODERATOR: Thank you. Mark, last question.

QUESTION: My question really builds on that one. The EU has promulgated new sanctions on Iran. China has joined us at the Security Council. Two big steps on (inaudible) towards isolating Iran, but China remains a major investor in Iran. And the Chinese premier has said that (inaudible) that they see an overlay between the commercial context, on the one hand, and their strategic context with Iran on the other. How do you see China’s (inaudible) interest in Iran and the steps we’re taking to try to align our efforts on Iran?

DEPUTY SECRETARY STEINBERG: I have no doubt, as I said in connection with North Korea, that China would prefer that Iran not develop a nuclear weapons capability. So that’s clear. And we have seen China take steps in a variety of contexts over the years to do something about that, going back to the time I was last in government when they ended their nuclear cooperation with Iran.

They clearly have economic interest there. The challenge that we all face is to make clear that a shortsighted pursuit of near-term economic interest could be counterproductive in terms of their long-term interest. And that’s the engagement that we have had and will continue to have with China, and we’ll see how they do the sums.

MODERATOR: On that note, please join me in thanking Secretary Steinberg. (Applause.)



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