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The last fifteen years have seen dramatic changes in the world. And with technological advances we can assume that the pace of change is going to continue rapidly. We are now the sole super power in the world and in a way we got there by accident because instead of defeating our opponent, we became the sole super power because our principle advisory collapsed. And in looking back through history and thinking about it I have not been able to identify a comparable circumstance where the strongest power in the world got that way because of a collapse of an opponent rather than by defeating the opponent. This matters because if your engaged in conflict with an opponent you have a sense of what your goals are, but if you become a sole super power by virtue of the collapse of your opponent you haven't thought through with what you should do with that extraordinary power that you suddenly have available to you. As the sole super power we are positioned to exercise enlightened leadership or we can become the target for everyone else. And we should always remember that you can't be a leader if others aren't prepared to follow. So leaders have to pay attention to whether or not people are inclined to go where we would like to go. And if they don't then we need to consider whether those are the right directions in which to move. We also have to consider whether we will still be the sole super power at the end of the next fifteen years. We can be challenged in a variety of ways, we can be challenged by coalitions of other powers and we shouldn't fool ourselves into thinking that we are all so powerful that if other countries unite against us we will not find our selves facing severe challenges. But we can also be challenged by rising powers such as China, but rising powers won't necessarily challenge us. They may choose to cooperate with us and how we behave will partly determine whether they choose to cooperate or to confront us. With a globalized economy the balance of power is changing also. Some observers have seen the global balance of powers shifting from Europe to Asia and the Pacific and certainly the most dangerous problems of the world are located in East Asia and at the same time some of the most dramatic success stories of the world are located there and we have had a historic role there for hundreds of years. So this is an important area and we need to think about it carefully. The conference has been organized into five major plenaries and five breakout sessions designed to enable us to look in depth and in separate groups at some of the particular issues that are touched upon in the plenaries. Let me take a moment just to give you a brief preview of what lies ahead. In tonights plenary, "Shaping the Geopolitical Landscape" we will examine the factors that will affect the United States' role in the world over the next fifteen years in terms of global competitiveness, military power and foreign In tomorrow morning's plenary, "Rising Star: China", speakers will address what China's relations are likely to be with the surrounding areas of Asia as well as the United States as well as the obstacles the China may well encounter in sustaining its current growth. Plenary number three, later tomorrow morning is on the topic, "India: Looking East or West." That session will look at another emerging Asian powerhouse and will explore the role that India will have in shaping future political and economic relationships. These are very significant topics because China with 1.3 billion people has been growing at a rate of 10% on the average for over ten years and India, now, is beginning to grow very rapidly with a population of a billion people. Never before in human history have we encountered such rapid growth effecting so many people and its putting enormous pressure on global resources. We may look back with nostalgia on the days we only paid three dollars and thirty cents a gallon for gasoline. Because if the Chinese reached our level of economic development and had the same number of automobiles per capita that we have, they would consume more than total global consumption of energy everyday. So you can see what the implications are of these giant countries. But our fourth plenary session, "Other Rising Powers", will also look at Brazil because we don't want to become so focused on China and India that we forget that right here in the Western hemisphere we have one of the significant emerging countries in the world. Through all these discussions we hope to find what it is that will affect what makes countries into global super powers and what impact they will have on the global landscape and on what is frequently referred to as North-South relations or East-West relations. North-South usually refers to the differences between the developed countries and the less developed countries. East-West differences have East-West differences have historically had to do with different ideological systems of the sort that we can see in the Middle East. After the forth plenary, we will break into the breakout groups which will address topics such as the global economy and globalization, natural resources in the environment, national and international governance, future conflicts and the impact of the private sector in emerging economies. You will then have time to relax and enjoy everything that Asilomar has to offer. Following dinner you will have a choice of two films, so we will be voting with our eyes, in a sense, because one film is on China and one film is on India and it will be interesting to see how we divide ourselves up. The films will be followed by a festive musical program on Brazilian music. On Sunday morning we will conclude our conference with the final plenary, "Looking at the Wild Cards: Uncertainties that Could Affect the Balance of Power" and this will focus on two issues, the uncertainties that are being generated by the Middle East and the uncertainties emerging from the intense competition for global energy. Some technicalities are worth noting. You have question cards on your seats. They are available and will be available at all of the sessions, please feel free to write down any questions as they occur to you and they will be collected by council staff and read during the question and answer period as a general courtesy also please remember to turn off your cell phones and to avoid beepers and other types of disruptive electronics which is part of that technology that is driving that process of change. Before i conclude, i would like to recognize once again the impressive array of speakers that have assembled here this weekend. I want to thank everyone of them because they have enormously busy schedules and they have agreed to come here and their contribution, i think, will make this a much richer experience for all of us. And now i have an additional pleasure of introducing to you Ms. Jane Wales, who is the President and CEO of The World Affairs Council of Northern California. Ms. Wales will be chair of tonight's session. Please join me in welcoming Ms. Wales. (applause) Thanks Stapleton. Let me just take a moment to say a word about Stapleton Roy, because i had the pleasure of serving with him in government. He is our chairman for this, for this weekend. He knows of which he speaks, he served in Moscow, he was in the State Department for forty-five years. He served in Moscow during the height of the Cold War. He was in three times U.S. ambassador. He was ambassador to China, and arguably the best we've ever had, ambassador to Singapore and ambassador to Indonesia. He is an old China hand having been raised in China, speaking fluent Chinese. He rose to the rank of career ambassador, a position very few people have held, and then became assistant Secretary of State for Intelligence and Research, so you are, will have the benefit of the wisdom of and experience of, of a man with an extraordinary career. He is now manager at Kissinger and Associates. Now as Stape said how we are going to start the process of trying to envision the world of 2020, where we will stand, what the whole geopolitical landscape will look like and what our role will be, what will be the U.S. role in such a world? How will we relate to rising powers, such as China and India? How will we respond to turmoil in the Middle East what will we do in the face of a competition over resources including a competition of energy resources, how will we fair? The National Intelligence Council has just finished on doing a report that takes a look at the world going forward, which is the NIC's role, and it argues the continued economic military and technical dominance by the United States will characterize the years ahead. Yet, it notes that several questions arise. It notes a number of certainties, some things it predicts for the future but it also notes some uncertainties, things that we might influence by our own behavior or maybe influenced by the behavior of others. So we will have an opportunity to think things through how we will fair and also in our relations with our allies, both in the context on the war on terror but also in the context of a variety of transnational governance challenges that we will inevitably face together. We have got three extraordinary speakers to address the question of what the future may look like. The first is Doctor Thomas Fingar who is the author of that report, of that NIC report, he is Deputy Director for National Intelligence for Analysis and he Chairman of the National Intelligence Council. Prior to joining the NIC he served in the State Department in a variety of capacities over a twenty year career. He's somehow managed to bring that process to publish a number of books and articles, mostly on aspects of Chinese politics, so you'll have a chance to quiz him on that as well, and on Chinese policy making. His topic will be challenges of a flat, unipolar world. He'll be followed by Jeff Garten, with whom i was also fortunate enough to serve, Jeff is now Professor of International Trade, Finance and Business at Yale University, having served as Dean for ten years of the Yale School of Management. Prior to that he served as under Commerce for international trade in the first Clinton Administration he had been managing Director of the Blackstone Group and of Lehman Brothers. He is the author of numerous book and articles. I'm sure you have read his work. He's going to focus tonight on the topic of America and the global economy: the challenges and opportunities posed by emerging markets. Our third speaker is David Sanger, who you probably watch on Friday nights on KQED when you watch Washington's Week in Review if you haven't been reading him all week in The New York Times. David is the White House correspondent for the New York Times, He's had a twenty-four year career at the paper. He's reported from New York, from Tokyo and from Washington covering foreign policy, globalization, international economic upheavals, nuclear proliferation, Asian affairs, high technology, and for the past few years the arc of the Bush presidency. He will talk about how the war in Iraq may have affected the president's options. Following their presentation we're going to move to your questions. And so what we will ask you to do is when Stape is done, is to write your questions down on your question cards and send them up my way by way of our staff and i will try to order them in a logical way. I'll be paraphrasing so if you don't precisely recognize your words, know they're your thoughts, but not precisely your words. So please join me in welcoming our first speaker Dr. Thomas Fingar. (applause) Thank you Jane. Let me add my warm word of both welcome and congratulations for being part of the self selected group of people demonstrating an extraordinary interest in international affairs. The work of the World Affairs Council is, in my view, absolutely critical to our ability to deal with the kind of challenge that Stape began to outline and then all three of us will mention this evening. Let me begin with a disclaimer or two. The first is though i would be proud to be the author of the NIC report on global 2020, that was actually produced while i was the Assistant Secretary of State for Intelligence and Research so i can take no credit other than as one of the hundred of people who participated in the session. The other is to make clear that i am here tonight in my private citizen capacity. Cut me some slack, though i am an official in the administration i am not attempting this evening to either defend or criticize the actions of the administration. I'm a forty year analyst and that's the basis for my presentations, so you'll get personal views. I've defined my task as navigating around subjects that Jeff and David will address and help frame the discussion because this is a terribly important set of questions and you're gonna get one man's view of some of the key features and dynamics and drivers that are shaping events now and will for years and perhaps decades ahead. In sketching out the nature of the geopolitical landscape, my starting point is a bumper sticker phrase, "we're living in a flat, unipolar world". That captures it, it probably means different things to different people and it probably should cause many of you to scratch your head and say, "what exactly does he mean by that", and I'll attempt to explain and attempt to explore some of the dimensions and the consequences, again deliberately avoiding some of the areas that will be covered by others. For those of you who recognize the title as that of Tom Freedman's book, or at least the flat world part of it. Yes i stole it, yes i agree with much of what he said, most of what he said in that book, but i wanna focus on sort of what i think is meant by the world being flat, he's focusing on the outsourcing dimension, for me its the lowering of barriers. The lowering of barriers to movement of people, of goods, of ideas, of disease, of anything else that we could name this evening. Distance has been dramatically changed but more so than the shrinking of the globe image, which we have used for many years, impediments to movement, political, economic, cultural, technological have been eliminated but have been fundamentally transformed. Transformed in ways that make anyone, anywhere at anytime, a potential neighbor, a potential partner, or a potential problem. We as Americans need to be much more aware than i believe we are as a nation of what is happening beyond our borders, because beyond our borders isn't all that far away. A few hours by airplane. A few days by ship. Our jobs, our health, our (unidentified) capabilities are very much enmeshed with the rest of the world. Even though American must be more concerned, more involved, more engaged in international affairs than we have intended to be. Part of American exceptionalism has been the ocean buffer that has separated us from the problems, the troubles of the other parts of the world. But if we are not at converse of developments around the world as we might be, part of the unipolar dimension is that the informed publics, the movers and the shakers, and increasing numbers of ordinary people in countries around the globe pay attention to us. Sometimes pay more attention to what we say, what we do than we Americans do in our own country. We will dismiss a statement of "well that's just political grandstanding". Its probably not going to be heard that way by millions of people, arguably billions of people, around the globe, the spotlight is on us. People pay attention to us, people have expectations of us and that is very much apart of the political landscape. One of the dimensions of being the sole super power here is that whether we want to or not were the five hundred pound gorilla. We're the elephant turning around in the grass, whether we intend to do well or intend to do evil a lot of grass gets trampled. Others cannot ignore us. We at our peril ignore the broader implications of what we do and what we say about what we do and what we say about what others are doing and what we say and do with respect to developments elsewhere in the world. Its a fact, and likely to remain so for some time, that United States pre- immanence is unparalleled in history. Our power is unrivaled, but it is not universally welcomed. When i used to teach political science it was almost axiomatic, poli sci 101 that when any nation or group of nations acquires the kind of pre-immanence that we have, the natural dynamic in international affairs is for others to form coalitions to balance, or check or limit, or at least remind us of the need to take the interest of others into account. In my view we are just beginning to enter a period which others are becoming uncomfortable with our pre-immanence. They worry more than they used to about what we do. For decades we got the benefit of the doubt as the leader of the free world, not just self proclaimed but universally recognized as the spark plug behind the institutions of the international systems as they exist today from the Dumbarton Oakes agreements in the financial area to the existence of the United Nations to a series of arms control regimes to international regimes of all kind, we built the international system. Now there is concern that we may be unilaterally seeking to change a status quo that had actually worked to the benefit of billions of people and most countries around the globe. To state it again in bumper sticker kinds of terms, recognizing that its an oversimplification, people worry about our pre-immanence, wonder whether we will remain the bright shining city on a hill. A beacon on human rights, a model for open markets, a paragon of democracy, a respecter of the interest of people outside as well as inside of our own borders to think in terms of global good rather than narrow self interest. Or will we become and behave like the king of the hill? I'm on top and you're not knocking me off the pedestal. Much of this is in the realm of perceptions. We can argue till doomsday that our intentions are good, or at best are benign, or at worst are benign, if others perceive us as having a fortress American mentality- pull up the drawbridge, more alligators in the mote. What's good for me is good for me, you're on your own, we've got a serious problem. Its again not what we think we are doing, it may not even be what we are doing, its what we are perceived to be doing and how we are perceived that we interact with others. Let me give a short list of some of the characteristics of this flat unipolar world. The first is that the world, including Americans, are still adjusting to the post-Cold War era. Its actually quite astonishing that sixteen years into it we still don't have a way of describing this new era. All we know is that its really quite different and that ways in which we organized our thinking and our behavior and our institutions and our expectations for decades no longer seems entirely appropriate but we don't quite know what should replace them. We live in a world in which an image of the Cold War is a kind of tug of war where nations are lined up on our side or their side. It was pretty simple. A single game. We worried about how to move people from their side to our side, keep people on our side with us on our end of the rope, the rules were clear, everybody understood them and developments in all arenas sort of played out in a predictable and understandable way. Now we live in a world in which the playground has got myriad of games going on simultaneously. Some have rules, some don't. Some have referees, some don't. Some have folks looking to the United States to act as the referee, others want nothing more than that we refrain from acting as the referee of the global sheriff or the policeman. The pre- immanence that makes us the source of great expectations that we will help pull another nation out of an economic recession with the power of our market, that we will provide the military where with all to bring to an end a, an ethnic clash in a part of Africa, Darfur. It also makes us a target, a target of envy in some case a target of terrorists where kill the umpire takes on more than totally symbolic meaning. We've still got problems left over from history. Short list: the Korean peninsula, China-Taiwan, Israeli-Palestinian, Cuba. But just as we have these problems that haven't yet played out an institution that were developed in an earlier era from purposes that are still around and the normal instinct is to lets reach for what's in the tool box. Let's see if we can use NATO in Afghanistan without pretty much thinking, is that what NATO is for? But its available and the old think, the way in which we tend to maybe look for a substitute for the Soviet Union. Some of the interest, the concern about rising powers, though i believe misguided but at least in the minds of some are looking for a substitute for a return to the familiar patterns of the past, but one of the themes that i am sure will be underscored this weekend is how different the world is. But it is a world that has not just rising powers and Stape listed the most important, which are on the world stage and by virtue of the size, size of the territory, size of the population, size of the economies are not just one more addition to the existing arrangements that they not simply going to accommodate themselves to the existing order of necessity the order will be changed by incorporating though not because necessarily they are malevolent in any respect, but because of their size and because of the interest of many in finding a way to balance the United States. Again not to defeat us, not to antagonize us, just to balance us. The changing in the world has blurred a lot of distinctions. Domestic and foreign was a convenient way to distinguish between again domestic politics and international affairs. Economic policies for our country and global economic system. All of this has been blurred, now for a decade the term "intermestic" has been used, its a lousy word, but internal domestic or international and domestic. Its also blurred and changed and narrowed the gap between individuals, individual security, individual safety and national security. The war on terror, concerns about terrorism perhaps illustrates this most strikingly. Where once upon a time law enforcement worried about protecting individuals or catching wrong doers after a crime had been committed and nation states developed control mechanisms and regimes and used diplomacy and military force to deter defeat aggressive actions directed against national interest now more and more of what we are actually concerned about expend treasure and blood to protect is in the middle ground. Its not entirely and international affair, its not not entirely a national security protecting individual Americans from the threat of terrorism is a national security objective. Boy does that change the world in terms of national policy when the unit of analysis around the globe changes from the hundred and two nation states to billions of individuals, millions of corporations. Indeed it can be argued, and i am quite sympathetic to the argument, that nation states are becoming decreasingly important and indeed may already have been surpassed an importance by networks, networks have all kinds of manifestations. The networks that bring us fresh flowers from South America that bring us strawberries for breakfast all year long, that enable U.S. design sneakers with fabric manufactured here, shipped to a Taiwan or South Korean company using machinery made in Japan to a factory in South China to be assembled for shipment to American ports to be advertised by American public relations firms and a where house and moved around by truckers that those kinds of networks also facilitate the movement of people, alien smuggling, movement of people for prostitution, movement of gray and black market arms, movement of narcotics, movement of raw materials for weapons of mass destruction, movement of imitation pharmaceuticals and actually cause rather than cure ailments. We're not very well structured to think about how you deal, how one deals with networks. But unless we do we are missing a major component of the action. And when we expect nation states to deal with problems that are inherently transnational, beyond over which they have limited control, over which we as a national government have only partial control. Expectations will be frustrated. Where does this lead us, lead me in this? Where i began. With acknowledging the importance of gatherings like this and underscoring the need of all Americans to pay much more attention to international affairs, to be much more thoughtful about our role in the world. To be much more attuned to the concerns, the interests, the issued that other put on the table and to try to be objective rather than thin skinned when criticism is leveled at what we do and say. Thanks you. Thank you Thomas Fingar. I am actually going to pose a question to you now to ponder for when the, the questions sessions begins. You remind us that right after World War II there was a burst of social innovation that we led creating a set of institutions and a set of processes for international governance and your remark suggests that the time came right at the end of the Cold War for a similar burst of social innovation to create new structures, new processes, new regimes, new norms for managing a world of networks instead of a world of nation states. So the question I'm leaving with you to ponder till we move to the questions session is why didn't that happen and how can we provoke it to happen now? I'll turn it now to Jeff Garten. Thanks Jane. I have a very difficult task in talking about the global economy and the shifting balance of power in the year 2020 because virtually no one, with any accuracy, talk about the U.S. economy one quarter from now. They wouldn't know what the inflation rate would be, they certainly couldn't predict oil prices and we're still revising the GDP figures from the last quarter. So, um looking ahead i thought that the best way i could do this is to actually create a story and this is a story of a secretary of treasury who in the year 2021 who assumes office and surveys the landscape and reports to the President about what is seen and what we should do about it. Now i have to, i have to just start with two issues that we have to keep in mind as i tell you this story. The first is that since i am looking so far ahead I'm not going to say very much about all the issues that are probably on your mind if you read the, read the newspapers regularly. I'm not gonna talk about the big economic imbalances that exist in the world and the huge U.S. trade deficits and the big surpluses in Asia. I'm not gonna talk about the budget deficits and all the problems that we know will come with them. I'm not gonna talk about today's oil prices or the debate over immigration or even the debate about whether the United States can be competitive, because of we look ahead fifteen years, it is really impossible to know how those issues are going to be dealt with. And I'm gonna try to go, really arch over all of that and the other thing I'd like to say just by way of introduction is that no matter how far i try to look out, probably I'm talking about the next ten years. In other words, i don't have the imagination to be able to really look at the year 2020, I'm gonna try, but you might think about the things that i say as being accelerated, that is they could happen, the future is going to come much quicker. SO lets assume that its inauguration day in the year 2021. A new Secretary of Treasury has been appointed and her name is Ellen Schumann, and Ellen had been appointed by President Alessandro and she is preparing on that day to give him an extensive report about the global economy, America's role in it and what it all means for the balance of power. Now Ellen is a