MS ORTAGUS: So everybody knows Keith Krach, Under Secretary for E here. He just came back from Asia. I think you were our highest-ranking State Department official, but – at the – so he’ll go through all this. He does have an opening statement that can be on the record. In fact, this whole interview – I just talked to him – he’s fine with being on the record for the whole interview. So we’ll do it that way. We’re slowly getting everybody warming up to the podium and doing these on the record, so it’s good.
So we don’t have an e-version of this, so this will just have to be transcribed, but we’ll do some Q&A, and I think he has a really interesting perspective from what he was doing in Asia that I know a lot of you who cover Asia will be interested in.
So go ahead, Keith, and I’ll just – when he’s done with the opening statement, we’ll do Q&A.
UNDER SECRETARY KRACH: All right. Great. Good morning. And by the way, thanks for coming. It’s been about a month since I sat around this table in an informal setting, and it’s been about 100 days since I got unanimously confirmed and then packed the bags, off to Bahrain to meet the leaders, and then —
MS ORTAGUS: You were unanimously confirmed?
UNDER SECRETARY KRACH: Yeah.
MS ORTAGUS: That’s impressive. I don’t know anyone who was unanimously – (laughter) – oh, Shaun. (Laughter.)
UNDER SECRETARY KRACH: And then from there off to Osaka with Morgan and then on to Korea. We got —
(Cell phone rings.)
UNDER SECRETARY KRACH: We got back that Sunday night.
QUESTION: So sorry.
MS ORTAGUS: (Laughter.) That’s a good ringer.
UNDER SECRETARY KRACH: Yeah, that’s – this is Hiro, one of the guys we brought from the private sector. (Laughter.)
UNDER SECRETARY KRACH: By the way, you’re supposed to turn off your phones during these things.
QUESTION: I —
MS ORTAGUS: It’s okay, it’s okay.
UNDER SECRETARY KRACH: So anyway, we get back that Sunday night and I go, well, that was a great first week. I sat down with the Secretary then on the following Monday, and that’s when he gave me the charge to develop a proactive, integrated, strategic plan to combat economic aggression and maximize national security. That now has morphed into the Global Economic Security Strategy, which is an extension of the National Security Strategy and akin to the National Defense Strategy, because it was really clear – and it was actually very clear in my Senate confirmation meeting that the reality we face as a nation is ever-increasing levels of cyber warfare and seamless, intense variations of perhaps even weaponized economic competition, and our rivals are playing the long game and they’re playing for keeps, a game of four-dimensional diplomatic, economic, military, and cultural chess, and they – they believe they’re above the rules.
So if you look at the Global Economic Security Strategy, it has four main pillars. The first one is to operationalize and integrate all the different efforts, initiatives, policies, strategies in the federal – in the federal government, because there is tremendous synergy and data integration, and that’s clearly one of the things that is crystal-clear to me.
The second one is further strengthen our relationship with our allies, our partners, and our friends.
The third one is to leverage the innovation and resources of the private sector, and there in particular I see tremendous opportunity.
And the fourth one is to amplify our great American values, because it’s really the strategic moral high ground, and it’s really a – when I’m overseas, I talk about them as trust principles, and those are things like integrity, accountability, transparency, reciprocity, respect for rule of law, respect for property of all kinds, respect for sovereignty of nations. And those are the same core principles in the Global Economic Security Strategy.
And the way we’ve operationalized it is basically set up a playbook, so that’s vision, mission, those core principles, long-term goals, strategy, strategic imperatives – and we have seven – down to – all the way down to objectives and execution. And the execution side is just such a big part of it.
If you look at the long-term goals, there’s – it’s really four big ones, and that is to ensure sustainable economic growth for nations around the world. The second one is to expand the free, fair, and reciprocal trade principles to all areas of economic partnering. And the third one, it’s all about getting a level playing field in terms of those things I was talking about – respect for rule of law, property, et cetera. And then the fourth one is to build out a Global Trust Network – a Global Trust Network that is comprised of countries, companies, institutions, universities, associations that operate along those trust principles, and it’s not just physical infrastructure or digital; it includes commerce, trade, supply chain, investment, and, of course, those values.
So I’ve had a chance to really test those concepts, and really the first thing is we spend a lot of time in the interagency in terms of Treasury, Commerce, a ton of time with the NSC, the DOD, all the interagency, because we’re just developing a strawman, it’s everybody’s plan. And there’s been great input and also great buy-in, so we’re still in that testing phase.
And then the second thing is going out and testing those concepts with different countries. So I took advantage of UNGA, and I also took advantage of the World Bank meetings and IMF, and I had about 40 bilaterals. And it’s crystal-clear with me that these concepts – the concept of the Global Trust Network, global trust standards, resonates with countries. And in particular, I probably spent the most time with African nations, South American nations, Asia countries, and they really understand there’s no sustainable prosperity without liberty. And what’s also been just amazing to me is to see how much they want the United States to lead. So that’s – those have been great.
And then I also took a trip over to Norway for Our Oceans Conference that the E started six years ago, and we announced that we’ve committed $1.2 billion to the blue economy, to the oceans, for sustainable fisheries, fighting marine debris, and then also exploration, observation, and science. And I also had a chance to meet – actually have some great meetings with their ministries as well as their prime minister, as well as some – a great series of meetings with their sovereign wealth fund. They have a $1.3 trillion sovereign wealth fund, and I learned a lot in that.
Then the other overseas – and by the way, I went to Germany before that, but I’ll come back to that. And it was over in the Indo-Pacific, so it was the business forum. We brought a thousand people together, and it was really to bring in the private sector for investment in the Indo-Pacific region. It was extremely successful. And we really focused in three areas: infrastructure, energy, and digital. In the infrastructure area, we announced – and together with David Bohigian, also Japan and Australia – the Blue Dot Network, which is a set of operating principles for infrastructure, which we are going to include in the digital – or excuse me, in the infrastructure global trust standards, which is really an umbrella standard we’re putting in these different principles from different countries.
And then in the energy sector, with JUSEP, which is the Japan-U.S. Strategic Energy Partnership, Terazawa-san and I signed a $10 billion commitment and it – to raise public-private sector funds to invest in the energy sector. And that’s really Japanese private and public sector funds.
And then in the digital side, I hosted a panel and had some remarks with regard to the digital economy, the importance of trust in that. And we had Japan up there, we also had the CEO of United Laboratories. And that was really a successful conference.
I also had a chance to meet with one-on-one groups with different embassies that were there, so anyone from – I had a great one with Vietnam, a great one with Laos, Cambodia, and then also met our folks from Taiwan, even though that’s not an embassy.
And then from there went to Korea, and that was our senior economic dialogue; that’s the highest-ranking nonmilitary dialogue. I did that in conjunction with my counterpart over there. And we talked about the synergies between our Indo-Pacific strategy and what they call their new southern strategy. So we covered infrastructure, energy, digital. We covered economic empowerment of women. I had another meeting with their foreign minister, and she’s just great. And we spent a lot of time talking about the economic empowerment of women, because that’s also one of the key pillars in terms of making these trust values come alive, in addition to the power of entrepreneurship, as well as education.
And then I had a chance to speak at a government and CEO meeting. And I really applauded the Koreans for their leadership in terms of what they did in the WTO, and no longer declaring themselves a developing nation. And I think that really sets a role model for China, for example. And that probably wasn’t the easiest thing to do domestically.
The other thing I was prepared to talk to them about was – and this was a big subject in the Norwegian, the oceans conference, was unregulated, unreported, illegal fishing. Because it’s all about sustainable fisheries, and China by far is the biggest perpetrator in that area. And Korea was doing some. And by the time – and we told them ahead of time. By the time I got there they’d already passed a bill on it. So these guys have been great partners.
And then it was off to Japan, where I had a chance to meet with their new national security council, their advisor, the equivalent of Ambassador O’Brien, as well as their ministers in METI, as well as senior advisors to Abe-san, as well as their digital communications minister. And they’ve been great partners all along. And here again, in all these cases, we’re sharing with them the straw man, which is the initial draft of the Global Economic Security Strategy, and it really resonated with these guys. And I really thanked them for their partnership. They’re just – they’ve been great.
And then maybe the last thing, just to share with you, is I’ve also spent a lot of time in the private sector. So when I went over to Norway before that, I met with – I had about a five-hour dinner with 25 German CEOs, and because I really wanted to get it in a private setting and understand the things that are happening over there in terms of economic aggression. And there – and so I – they’ve had a lot of experience like we’ve had, for example, with the NBA, in terms of China’s retaliation and things that have gone on in terms of buying their companies, getting a seat on the board of Daimler-Benz without anybody realizing, those kind of things. And I also had a chance to do that in Korea with 10 executives as well, and it was pretty much along those same lines.
And by the way, I talked about the NBA thing: a seven-word tweet, within 24 hours tens of millions, hundreds of millions of dollars, sponsorship dropped by Chinese state-owned apparel companies with players, sponsors, and even Adam Silver getting the call about fire the general manager of the Houston Rockets and here’s how we want you to apologize and here’s the exact words. And they’ve all had similar instances of that, and my message to them really is there is strength in unity and solidarity.
And also, when that incident happened, I called up three big business associations that under that umbrella would be about 300,000 companies, and I said you’ve got to shine the light on this kind of behavior. And that kind of coincides with – I was in Silicon Valley two Fridays in a row and I had a chance to do a fireside chat with the Silicon Valley Executive Council, and there’s about 1,500 execs. I got interviewed by Liz Claman who’s, as you guys know, at Fox Business. And my message to them is – because I know these guys really well – I said, look, I always would say corporate responsibility is social responsibility. I said, you know what? Here’s what I learned in Washington: it’s also global economic security, because – and I told them, I said, you guys have had your intellectual property ripped off. I have. And maybe some of you don’t know, but it has. But that resonates with those guys.
And I had an opportunity to do it again a week later. Harvard Business School had a big gala with about 800 people, and I did a fireside chat with General Stanley McChrystal. And so I talked about that and the importance of global economic security, but I also talked to him about – because he asked me what it was like going from the private sector after spending 30 years in Silicon Valley and 10 years VP at General Motors. And I told him, I said, I’ll tell you one thing, General, that these people at the State Department, these are the smartest people I’ve ever met. They speak three to seven languages, they go off and get their master’s at Georgetown, they work their tail off. I said, they make you Silicon Valley guys look like you’re lazy. They’re mission-driven, and they’ve got to rotate to a different country every three years, they’ve got to take a different assignment. It’s a team sport. They treat their families great; they train the heck out of them. And I told him, I said, just like when you meet a military person you say, “Thank you for your service,” if you meet a career Foreign Service officer or civil servant or whatever nature it is, these guys are professionals, they’re leaders, they’re experts, and they’re heroes, so you thank them for their service.
So I’ll conclude with that, and I’m happy to take any questions you all have.
MS ORTAGUS: Okay, who has one? Go ahead, David.
QUESTION: Hi. David Brunnstrom from Reuters. I just wonder if you can shed any light on the planning for APEC and where that – when and where that might take place?
UNDER SECRETARY KRACH: Yeah, I don’t think that has been set yet, and we’ve certainly been in discussions with Chile, however we can support them. And I’ll just leave it at that.
QUESTION: May I?
MS ORTAGUS: Go ahead.
QUESTION: Yeah, my name is Nike Ching. Nike is a very sensitive word. (Laughter.)
UNDER SECRETARY KRACH: (Laughter.) It is.
QUESTION: Anyway, I’m from Voice of America. Thank you for the briefing. I would like to get your take on RC – RCEP, R-C-E-P. It’s a China initiative, economic trade bloc. Because Japan, Korea are going to be members; India is not. What are you hearing from the private sectors and governmental leaders about this economic bloc?
UNDER SECRETARY KRACH: Yeah. I didn’t have a lot of discussions about it, but the ones that I did, it’s kind of like it’s a low-quality agreement, particularly when it comes to standards, things like labor, things like environment. So it doesn’t make – even things like digital. So it doesn’t even come close to, for example, the modernized USMCA agreement. Yeah.
QUESTION: But I’m sorry, may I follow up?
UNDER SECRETARY KRACH: Yeah.
QUESTION: So the fact that U.S. is not part of it and the fact that U.S. withdraw from the TPP, does that give those Asian countries to give China more opportunity to exert its influence in this regional economic bloc?
UNDER SECRETARY KRACH: Yeah. And by the way, I think we’re going to have to wait and see, but I can tell you one thing: That to a country, and particularly the Asian countries, they’re looking for an alternative to the one-belt, one-way toll road to Beijing, and the Global Trust Network, they just love that concept.
And in the last two companies I’ve built, it was about building a network and there’s three core strategies in that. And the first one is maximize the number of members, because the power of the network is – it’s the number of members squared. And then it’s also reduce the friction in the network. That’s where the global trust standards are. So we’re doing it in infrastructure – we already have one, rare earth minerals – energy, digital global trust standards that incorporates, for example, the Prague principles and some of the laws that some of the countries have passed, also in the area of procurement, finance, a number of different areas. And then the third objective is to add value to each one of those nodes, and that would be the countries, the companies, and that’s – we’re actually putting together a series of packages for countries.
We’re bringing in not just all the tools in our diplomatic tool kit and all the things we have from the interagency, but new (inaudible), Import-Export Bank, but also the private sector. And when I mean private sector, I don’t just mean business sector. I also mean like the social sector. Like, I was on a board of governors for Opportunity International. They issue $60 billion worth of microloans a day, and that’s for people who are living at below one dollar a day. They have a dramatic impact in so many different nations. So we’re bringing – it’s – and things like that, or a new story that builds homes by 3D printing for people who lived in shanty towns. They started after the big earthquake in Haiti. We’re bringing in the educational sector, like K through 12 with Khan Academy, and also online college education.
So we’re really putting that together in one package and we’re looking for showcases out there, and people are really enthusiastic about it.
MS ORTAGUS: Go ahead, Ben.
QUESTION: Can I about the upcoming COP25? You mentioned that when you’re talking to countries, they’re looking for the U.S. to play a leadership role. What do you wish to accomplish at COP25? Are you going to play a leadership role considering the U.S. just pulled out of the Paris climate agreement?
UNDER SECRETARY KRACH: Well, by the way, I think the best form of leadership is leadership by example. So it’s all about results, and you heard what Secretary Pompeo talked about in terms of innovation. That’s the key. You’ve heard the stats that since 2005, our GDP has gone up 19 percent and our carbon emissions has gone down 13 percent.
If you look at the Paris agreement and you look at what China is doing, they are going to increase their carbon emissions all the way till 2030. So we’re focused on results. We lead the world in terms of clean technology. We lead the world in terms of developing technology for efficiency and implementing it. And a big thing is we’re helping other nations, with our technology, reduce their carbon emissions.
QUESTION: Could I pursue that a little bit? Shaun Tandon with AFP. In addition to what you say is leading by example, what do you actually see for the role of the COP and the role for the Paris accord itself now that the U.S. has formally given notice? I mean, do you still see some utility in having international meetings like this? How will the U.S. contribute to the actual discussions that are there in Madrid?
UNDER SECRETARY KRACH: Yeah, I mean, I think there’s a lot of science that benefit from it and stuff like that, and I know when you attack problems like this, it’s – I mean, science is really important, but it’s also time to start implementing and times to start really developing. I mean, we have a seat at the table for the UN climate framework and all of that, so we’re aware of everything. And as you guys know, our OES team is absolutely spectacular. And I think in this area, we probably have the best brainpower of anybody. Yeah.
MS ORTAGUS: Okay. One more? Anybody? No? Okay.
QUESTION: Just a real quick thing.
MS ORTAGUS: All right.
QUESTION: Any truth to the fact that – to reports that the U.S. is offering to host APEC in Las Vegas in January?
MS ORTAGUS: I didn’t hear that one.
UNDER SECRETARY KRACH: Yeah.
MS ORTAGUS: I hope that’s true. I love Vegas.
UNDER SECRETARY KRACH: Ditto. (Laughter.)
QUESTION: So not that you’re aware of?
MS ORTAGUS: I haven’t even heard that one.
UNDER SECRETARY KRACH: Yeah. No.
MS ORTAGUS: Let’s go with “yes.” Just maybe if we all say it, it’ll happen.
UNDER SECRETARY KRACH: Yeah, let’s hope so.
MS ORTAGUS: And we’ll get to stay somewhere fun.
UNDER SECRETARY KRACH: Well, thank you so much. I appreciate your guys’ time.
QUESTION: Thanks a lot.
UNDER SECRETARY KRACH: And I’m enjoying getting to know you, so thank you.