UPDATED Video, Transcript, and Q&A: Hillary Clinton Speech at Council on Foreign Relations (15 July)

The Clinton Speech: An Immediate Reaction

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CLINTON: Shortly before I started at the State Department, a former Secretary of State called me with this advice: Don’t try to do too much. And it seemed like a wise admonition, if only it were possible. But the international agenda today is unforgiving: two wars, conflict in the Middle East, ongoing threats of violent extremism and nuclear proliferation, global recession, climate change, hunger and disease, and a widening gap between the rich and the poor. All of these challenges affect America’s security and prosperity, and they all threaten global stability and progress.

But they are not reason to despair about the future. The same forces that compound our problems – economic interdependence, open borders, and the speedy movement of information, capital, goods, services and people – are also part of the solution. And with more states facing common challenges, we have the chance, and a profound responsibility, to exercise American leadership to solve problems in concert with others. That is the heart of America’s mission in the world today.

Now, some see the rise of other nations and our economic troubles here at home as signs that American power has waned. Others simply don’t trust us to lead; they view America as an unaccountable power, too quick to impose its will at the expense of their interests and our principles. But they are wrong.

The question is not whether our nation can or should lead, but how it will lead in the 21st century. Rigid ideologies and old formulas don’t apply. We need a new mindset about how America will use its power to safeguard our nation, expand shared prosperity, and help more people in more places live up to their God-given potential.

President Obama has led us to think outside the usual boundaries. He has launched a new era of engagement based on common interests, shared values, and mutual respect. Going forward, capitalizing on America’s unique strengths, we must advance those interests through partnership, and promote universal values through the power of our example and the empowerment of people. In this way, we can forge the global consensus required to defeat the threats, manage the dangers, and seize the opportunities of the 21st century. America will always be a world leader as long as we remain true to our ideals and embrace strategies that match the times. So we will exercise American leadership to build partnerships and solve problems that no nation can solve on its own, and we will pursue policies to mobilize more partners and deliver results.

First, though, let me say that while the ideas that shape our foreign policy are critically important, this, for me, is not simply an intellectual exercise. For over 16 years, I’ve had the chance, the privilege, really, to represent our country overseas as First Lady, as a senator, and now as Secretary of State. I’ve seen the bellies of starving children, girls sold into human trafficking, men dying of treatable diseases, women denied the right to own property or vote, and young people without schooling or jobs gripped by a sense of futility about their futures.

I’ve also seen how hope, hard work, and ingenuity can overcome the longest of odds. And for almost 36 years, I have worked as an advocate for children, women and families here at home. I’ve traveled across our country listening to everyday concerns of our citizens. I’ve met parents struggling to keep their jobs, pay their mortgages, cover their children’s college tuitions, and afford healthcare.

And all that I have done and seen has convinced me that our foreign policy must produce results for people – the laid-off auto worker in Detroit whose future will depend on global economic recovery; the farmer or small business owner in the developing world whose lack of opportunity can drive political instability and economic stagnation; the families whose loved ones are risking their lives for our country in Iraq and Afghanistan and elsewhere; children in every land who deserve a brighter future. These are the people – hundreds of millions of them here in America and billions around the world – whose lives and experiences, hopes and dreams, must inform the decisions we take and the actions that follow. And these are the people who inspire me and my colleagues and the work that we try to do every day.

In approaching our foreign policy priorities, we have to deal with the urgent, the important, and the long-term all at once. But even as we are forced to multi-task – a very gender-related term (laughter) – we must have priorities, which President Obama has outlined in speeches from Prague to Cairo, from Moscow to Accra. We want to reverse the spread of nuclear weapons, prevent their use, and build a world free of their threat. We want to isolate and defeat terrorists and counter violent extremists while reaching out to Muslims around the world. We want to encourage and facilitate the efforts of all parties to pursue and achieve a comprehensive peace in the Middle East. We want to seek global economic recovery and growth by strengthening our own economy, advancing a robust development agenda, expanding trade that is free and fair, and boosting investment that creates decent jobs. We want to combat climate change, increase energy security, and lay the foundation for a prosperous clean-energy future. We want to support and encourage democratic governments that protect the rights and deliver results for their people. And we intend to stand up for human rights everywhere.

Liberty, democracy, justice and opportunity underlie our priorities. Some accuse us of using these ideals to justify actions that contradict their very meaning. Others say we are too often condescending and imperialistic, seeking only to expand our power at the expense of others. And yes, these perceptions have fed anti-Americanism, but they do not reflect who we are. No doubt we lost some ground in recent years, but the damage is temporary. It’s kind of like my elbow – it’s getting better every day. (Laughter.)

Whether in Latin America or Lebanon, Iran or Liberia, those who are inspired by democracy, who understand that democracy is about more than just elections – that it must also protect minority rights and press freedom, develop strong, competent and independent judiciaries, legislatures and executive agencies, and commit for democracy to deliver results – these are the people who will find that Americans are their friends, not adversaries. As President Obama made clear last week in Ghana, this Administration will stand for accountable and transparent governance, and support those who work to build democratic institutions wherever they live.

Our approach to foreign policy must reflect the world as it is, not as it used to be. It does not make sense to adapt a 19th century concert of powers, or a 20th century balance of power strategy. We cannot go back to Cold War containment or to unilateralism.

Today, we must acknowledge two inescapable facts that define our world: First, no nation can meet the world’s challenges alone. The issues are too complex. Too many players are competing for influence, from rising powers to corporations to criminal cartels; from NGOs to al-Qaida; from state-controlled media to individuals using Twitter.

Second, most nations worry about the same global threats, from non-proliferation to fighting disease to counter-terrorism, but also face very real obstacles – for reasons of history, geography, ideology, and inertia. They face these obstacles and they stand in the way of turning commonality of interest into common action.

So these two facts demand a different global architecture – one in which states have clear incentives to cooperate and live up to their responsibilities, as well as strong disincentives to sit on the sidelines or sow discord and division.

So we will exercise American leadership to overcome what foreign policy experts at places like the Council call “collective action problems” and what I call obstacles to cooperation. For just as no nation can meet these challenges alone, no challenge can be met without America.

And here’s how we’ll do it: We’ll work through existing institutions and reform them. But we’ll go further. We’ll use our power to convene, our ability to connect countries around the world, and sound foreign policy strategies to create partnerships aimed at solving problems. We’ll go beyond states to create opportunities for non-state actors and individuals to contribute to solutions.

We believe this approach will advance our interests by uniting diverse partners around common concerns. It will make it more difficult for others to abdicate their responsibilities or abuse their power, but will offer a place at the table to any nation, group, or citizen willing to shoulder a fair share of the burden. In short, we will lead by inducing greater cooperation among a greater number of actors and reducing competition, tilting the balance away from a multi-polar world and toward a multi-partner world.

Now, we know this approach is not a panacea. We will remain clear-eyed about our purpose. Not everybody in the world wishes us well or shares our values and interests. And some will actively seek to undermine our efforts. In those cases, our partnerships can become power coalitions to constrain or deter those negative actions.

And to these foes and would-be foes, let me say our focus on diplomacy and development is not an alternative to our national security arsenal. Our willingness to talk is not a sign of weakness to be exploited. We will not hesitate to defend our friends, our interests, and above all, our people vigorously and when necessary with the world’s strongest military. This is not an option we seek nor is it a threat; it is a promise to all Americans.

Building the architecture of global cooperation requires us to devise the right policies and use the right tools. I speak often of smart power because it is so central to our thinking and our decision-making. It means the intelligent use of all means at our disposal, including our ability to convene and connect. It means our economic and military strength; our capacity for entrepreneurship and innovation; and the ability and credibility of our new President and his team. It also means the application of old-fashioned common sense in policymaking. It’s a blend of principle and pragmatism.

Smart power translates into specific policy approaches in five areas. First, we intend to update and create vehicles for cooperation with our partners; second, we will pursue principled engagement with those who disagree with us; third, we will elevate development as a core pillar of American power; fourth, we will integrate civilian and military action in conflict areas; and fifth, we will leverage key sources of American power, including our economic strength and the power of our example.

Our first approach is to build these stronger mechanisms of cooperation with our historic allies, with emerging powers, and with multilateral institutions, and to pursue that cooperation in, as I said, a pragmatic and principled way. We don’t see those as in opposition, but as complementary.

We have started by reinvigorating our bedrock alliances, which did fray in recent years. In Europe, that means improved bilateral relationships, a more productive partnership with the European Union, and a revitalized NATO. I believe NATO is the greatest alliance in history. But it was built for the Cold War. The new NATO is a democratic community of nearly a billion people stretching from the Baltics in the East to Alaska in the West. We’re working to update its strategic concept so that it is as effective in this century as it was in the last.

At the same time, we are working with our key treaty allies Japan and Korea, Australia, Thailand, and the Philippines and other partners to strengthen our bilateral relationships as well as trans-Pacific institutions. We are both a trans-Atlantic and a trans-Pacific nation.

We will also put special emphasis on encouraging major and emerging global powers – China, India, Russia and Brazil, as well as Turkey, Indonesia, and South Africa – to be full partners in tackling the global agenda. I want to underscore the importance of this task, and my personal commitment to it. These states are vital to achieving solutions to the shared problems and advancing our priorities – nonproliferation, counterterrorism, economic growth, climate change, among others. With these states, we will stand firm on our principles even as we seek common ground.

This week, I will travel to India, where External Affairs Minister Krishna and I will lay out a broad-based agenda that calls for a whole-of-government approach to our bilateral relationship. Later this month, Secretary Geithner and I will jointly lead our new strategic and economic dialogue with China. It will cover not just economic issues, but the range of strategic challenges we face together. In the fall, I will travel to Russia to advance the bi-national presidential commission that Foreign Minister Lavrov and I will co-chair.

The fact of these and other meetings does not guarantee results, but they set in motion processes and relationships that will widen our avenues of cooperation and narrow the areas of disagreement without illusion. We know that progress will not likely come quickly, or without bumps in the road, but we are determined to begin and stay on this path.

Now our global and regional institutions were built for a world that has been transformed, so they too must be transformed and reformed. As the President said following the recent G-8 meeting in Italy, we are seeking institutions that “combine the efficiency and capacity for action with inclusiveness.” From the UN to the World Bank, from the IMF to the G-8 and the G-20, from the OAS and the Summit of the Americas to ASEAN and APEC – all of these and other institutions have a role to play, but their continued vitality and relevance depend on their legitimacy and representativeness, and the ability of their members to act swiftly and responsibly when problems arise.

We also will reach out beyond governments, because we believe partnerships with people play a critical role in our 21st century statecraft. President Obama’s Cairo speech is a powerful example of communicating directly with people from the bottom up. And we are following up with a comprehensive agenda of educational exchanges, outreach, and entrepreneurial ventures. In every country I visit, I look for opportunities to bolster civil society and engage with citizens, whether at a town hall in Baghdad – a first in that country; or appearing on local popular television shows that reach a wide and young audience; or meeting with democracy activists, war widows, or students.

I have appointed special envoys to focus on a number of specific challenges, including the first Ambassador for Global Women’s Issues and an ambassador to build new public-private partnerships and to engage Diaspora communities in the United States to increase opportunities in their native lands. And we are working at the State Department to ensure that our government is using the most innovative technologies not only to speak and listen across borders, not only to keep technologies up and going, but to widen opportunities especially for those who are too often left on the margins. We’re taking these steps because reaching out directly to people will encourage them to embrace cooperation with us, making our partnerships with their governments and with them stronger and more durable.

We’ve also begun to adopt a more flexible and pragmatic posture with our partners. We won’t agree on every issue. Standing firm on our principles shouldn’t prevent us from working together where we can. So we will not tell our partners to take it or leave it, nor will we insist that they’re either with us or against us. In today’s world, that’s global malpractice.

Our diplomacy regarding North Korea is a case in point. We have invested a significant amount of diplomatic resources to achieve Security Council consensus in response to North Korea’s provocative actions. I spoke numerous times to my counterparts in Japan, South Korea, Russia and China, drawing out their concerns, making our principles and redlines clear, and seeking a path forward. The short-term results were two unanimous Security Council resolutions with real teeth and consequences for North Korea, and then the follow-on active involvement of China, Russia, and India with us in persuading others to comply with the resolutions. The long-term result, we believe, will be a tougher joint effort toward the complete and verifiable denuclearization of the Korean Peninsula.

Cultivating these partnerships and their full range takes time and patience. It also takes persistence. That doesn’t mean procrastinating on urgent issues. Nor is it a justification for delaying efforts that may take years to bear fruit. In one of my favorite observations, Max Weber said, “Politics is the long and slow boring of hard boards. It takes both passion and perspective.” Perspective dictates passion and patience. And of course, passion keeps us from not finding excuses to do nothing.

Now I’m well aware that time alone does not heal all wounds; consider the Palestinian-Israeli conflict. That’s why we wasted no time in starting an intensive effort on day one to realize the rights of Palestinians and Israelis to live in peace and security in two states, which is in America’s interests and the world’s. We’ve been working with the Israelis to deal with the issue of settlements, to ease the living conditions of Palestinians, and create circumstances that can lead to the establishment of a viable Palestinian state. For the last few decades, American administrations have held consistent positions on the settlement issue. And while we expect action from Israel, we recognize that these decisions are politically challenging.

And we know that progress toward peace cannot be the responsibility of the United States – or Israel – alone. Ending the conflict requires action on all sides. The Palestinians have the responsibility to improve and extend the positive actions already taken on security; to act forcefully against incitement; and to refrain from any action that would make meaningful negotiations less likely.

And Arab states have a responsibility to support the Palestinian Authority with words and deeds, to take steps to improve relations with Israel, and to prepare their publics to embrace peace and accept Israel’s place in the region. The Saudi peace proposal, supported by more than twenty nations, was a positive step. But we believe that more is needed. So we are asking those who embrace the proposal to take meaningful steps now. Anwar Sadat and King Hussein crossed important thresholds, and their boldness and vision mobilized peace constituencies in Israel and paved the way for lasting agreements. By providing support to the Palestinians and offering an opening, however modest, to the Israelis, the Arab states could have the same impact. So I say to all sides: Sending messages of peace is not enough. You must also act against the cultures of hate, intolerance and disrespect that perpetuate conflict.

Our second policy approach is to lead with diplomacy, even in the cases of adversaries or nations with whom we disagree. We believe that doing so advances our interests and puts us in a better position to lead with our other partners. We cannot be afraid or unwilling to engage. Yet some suggest that this is a sign of naiveté or acquiescence to these countries’ repression of their own people. I believe that is wrong. As long as engagement might advance our interests and our values, it is unwise to take it off the table. Negotiations can provide insight into regimes’ calculations and the possibility – even if it seems remote – that a regime will eventually alter its behavior in exchange for the benefits of acceptance into the international community. Libya is one such example. Exhausting the option for dialogue is also more likely to make our partners more willing to exert pressure should persuasion fail.

With this in mind, I want to say a few words about Iran. We watched the energy of Iran’s election with great admiration, only to be appalled by the manner in which the government used violence to quell the voices of the Iranian people, and then tried to hide its actions by arresting foreign journalists and nationals, and expelling them, and cutting off access to technology. As we and our G-8 partners have made clear, these actions are deplorable and unacceptable.

We know very well what we inherited with Iran, because we deal with that inheritance every day. We know that refusing to deal with the Islamic Republic has not succeeded in altering the Iranian march toward a nuclear weapon, reducing Iranian support for terror, or improving Iran’s treatment of its citizens.

Neither the President nor I have any illusions that dialogue with the Islamic Republic will guarantee success of any kind, and the prospects have certainly shifted in the weeks following the election. But we also understand the importance of offering to engage Iran and giving its leaders a clear choice: whether to join the international community as a responsible member or to continue down a path to further isolation.

Direct talks provide the best vehicle for presenting and explaining that choice. That is why we offered Iran’s leaders an unmistakable opportunity: Iran does not have a right to nuclear military capacity, and we’re determined to prevent that. But it does have a right to civil nuclear power if it reestablishes the confidence of the international community that it will use its programs exclusively for peaceful purposes.

Iran can become a constructive actor in the region if it stops threatening its neighbors and supporting terrorism. It can assume a responsible position in the international community if it fulfills its obligations on human rights. The choice is clear. We remain ready to engage with Iran, but the time for action is now. The opportunity will not remain open indefinitely.

Our third policy approach, and a personal priority for me as Secretary, is to elevate and integrate development as a core pillar of American power. We advance our security, our prosperity, and our values by improving the material conditions of people’s lives around the world. These efforts also lay the groundwork for greater global cooperation, by building the capacity of new partners and tackling shared problems from the ground up.

A central purpose of the Quadrennial Diplomacy and Development Review that I announced last week is to explore how to effectively design, fund, and implement development and foreign assistance as part of a broader foreign policy. Let’s face it. We have devoted a smaller percentage of our government budget to development than almost any other advanced country. And too little of what we have spent has contributed to genuine and lasting progress. Too much of the money has never reached its intended target, but stayed here in America to pay salaries or fund overhead in contracts. I am committed to more partnerships with NGOs, but I want more of our tax dollars to be used effectively and to deliver tangible results.

As we seek more agile, effective, and creative partnerships for development, we will focus on country-driven solutions, such as those we are launching with Haiti on recovery and sustainable development, and with African states on global hunger. These initiatives must not be designed to help countries scrape by – they are a tool to help countries stand on their own.

Our development agenda will also focus on women as drivers of economic growth and social stability. Women have long comprised the majority of the world’s unhealthy, unschooled, and underfed. They are also the bulk of the world’s poor. The global recession has had a disproportionate effect on women and girls, which in turn has repercussions for families, communities, and even regions. Until women around the world are accorded their rights – and afforded the opportunities of education, health care, and gainful employment – global progress and prosperity will have its own glass ceiling.

Our fourth approach is to ensure that our civilian and military efforts operate in a coordinated and complementary fashion where we are engaged in conflict. This is the core of our strategy in Afghanistan and Iraq, where we are integrating our efforts with international partners.

In Afghanistan and Pakistan, our goal is to disrupt, dismantle, and ultimately defeat al-Qaida and its extremist allies, and to prevent their return to either country. Yet Americans often ask, why do we ask our young men and women to risk their lives in Afghanistan when al-Qaida’s leadership is in neighboring Pakistan? And that question deserves a good answer: We and our allies fight in Afghanistan because the Taliban protects al-Qaida and depends on it for support, sometimes coordinating activities. In other words, to eliminate al-Qaida, we must also fight the Taliban.

Now, we understand that not all those who fight with the Taliban support al-Qaida, or believe in the extremist policies the Taliban pursued when in power. And today we and our Afghan allies stand ready to welcome anyone supporting the Taliban who renounces al-Qaida, lays down their arms, and is willing to participate in the free and open society that is enshrined in the Afghan Constitution.

To achieve our goals, President Obama is sending an additional 17,000 troops and 4,000 military trainers to Afghanistan. Equally important, we are sending hundreds of direct hire American civilians to lead a new effort to strengthen the Afghan Government, help rebuild the once-vibrant agricultural sector, create jobs, encourage the rule of law, expand opportunities for women, and train the Afghan police. No one should doubt our commitment to Afghanistan and its people. But it is the Afghan people themselves who will determine their own future.

As we proceed, we must not forget that success in Afghanistan also requires close cooperation from neighboring Pakistan, which I will visit this fall. Pakistan is itself under intense pressure from extremist groups. Trilateral cooperation among Afghanistan, Pakistan, and the United States has built confidence and yielded progress on a number of policy fronts. Our national security, as well as the future of Afghanistan, depends on a stable, democratic, and economically viable Pakistan. And we applaud the new Pakistani determination to deal with the militants who threaten their democracy and our shared security.

In Iraq, we are bolstering our diplomacy and development programs while we implement a responsible withdrawal of our troops. Last month our combat troops successfully redeployed from towns and cities. Our principal focus is now shifting from security issues to civilian efforts that promote Iraqi capacity – supporting the work of the Iraqi ministries and aiding in their efforts to achieve national unity. And we are developing a long-term economic and political relationship with Iraq as outlined by the US-Iraq Strategic Framework Agreement. This Agreement forms the basis of our future cooperation with Iraq and the Iraqi people, and I look forward to discussing it and its implementation with Prime Minister Maliki when he comes to Washington next week.

Our fifth approach is to shore up traditional sources of our influence, including economic strength and the power of our example. We renewed our own values by prohibiting torture and beginning to close the Guantanamo Bay detention facility. And we have been straightforward about our own measure of responsibility for problems like drug trafficking in Mexico and global climate change. When I acknowledged the obvious about our role in Mexico’s current conflict with narco-traffickers, some were critical. But they’re missing the point. Our capacity to take responsibility, and our willingness to change, to do the right thing, are themselves hallmarks of our greatness as a nation and strategic assets that can help us forge coalitions in the service of our interests.

That is certainly true when it comes to key priorities like nonproliferation and climate change. President Obama is committed to the vision of a world without nuclear weapons and a series of concrete steps to reduce the threat and spread of these weapons, including working with the Senate to ratify the follow-on START agreement and the Comprehensive Test Ban Treaty, taking on greater responsibility within the Non Proliferation Treaty Framework and convening the world’s leaders here in Washington next year for a nuclear summit. Now we must urge others to take practical steps to advance our shared nonproliferation agenda.

Our Administration is also committed to deep reductions in greenhouse gas emissions, with a plan that will dramatically change the way we produce, consume and conserve energy, and in the process spark an explosion of new investment, and millions of jobs. Now we must urge every other nation to meet its obligations and seize the opportunities of a clean energy future.

We are restoring our economy at home to enhance our strength and capacity abroad, especially at this time of economic turmoil. Now, this is not a traditional priority for a Secretary of State, but I vigorously support American recovery and growth as a pillar of our global leadership. And I am committed to restoring a significant role for the State Department within a whole-of-government approach to international economic policy-making. We will work to ensure that our economic statecraft – trade and investment, debt forgiveness, loan guarantees, technical assistance, decent work practices – support our foreign policy objectives. When coupled with a sound development effort, our economic outreach can give us a better form of globalization, reducing the bitter opposition of recent years and lifting millions more out of poverty.

And finally, I am determined to ensure that the men and women of our Foreign and Civil Service have the resources they need to implement our priorities effectively and safely. That’s why I appointed for the first time a Deputy Secretary for Management and Resources. It’s why we worked so hard to secure additional funding for State and USAID. It’s why we have put ourselves on a path to double foreign assistance over the next few years. And it’s why we are implementing a plan to dramatically increase the number of diplomats and development experts.

Just as we would never deny ammunition to American troops headed into battle, we cannot send our civilian personnel into the field underequipped. If we don’t invest in diplomacy and development, we will end up paying a lot more for conflicts and their consequences. As Secretary Gates has said, diplomacy is an indispensable instrument of national security, as it has been since Franklin, Jefferson and Adams won foreign support for Washington’s army.

Now all of this adds up to a very ambitious agenda. But the world does not afford us the luxury of choosing or waiting. As I said at the outset, we must tackle the urgent, the important and the long-term all at once.

We are both witness to and makers of significant change. We cannot and should not be passive observers. We are determined to channel the currents of change toward a world free of violent extremism, nuclear weapons, global warming, poverty, and abuses of human rights, and above all, a world in which more people in more places can live up to their God-given potential.

The architecture of cooperation we seek to build will advance all these goals, using our power not to dominate or divide but to solve problems. It is the architecture of progress for America and all nations.

More than 230 years ago, Thomas Paine said, “We have it within our power to start the world over again.” Today, in a new and very different era, we are called upon to use that power. I believe we have the right strategy, the right priorities, the right policies, we have the right President, and we have the American people, diverse, committed, and open to the future.

Now all we have to do is deliver. Thank you all very much. (Applause.)

MR. HAASS: Well, thank you for delivering a truly comprehensive talk that was broad and deep. So really, thank you for that, and for doing it here.

I’m going to go straight to our membership and let them ask some questions. I ask them only to wait for a microphone, and to keep their questions as brief as they can be, so we can get as many in as possible. And just let us know your name and your affiliation when we do call on you.

I see zillions of – this is the part of the meeting where I alienate 70 percent of our membership. I may let you call on people before –

SECRETARY CLINTON: Oh, no, no. That’s your job, Richard. (Laughter.)

MR. HAASS: Odeh Aberdene.

QUESTION: Madame Secretary, in 1999, I saw you in Gaza with President Clinton altering the PLO charter. There was a great deal of hope. Do you think by 2010 – by the end of 2010, we will have a peace agreement between the Israelis and the Palestinians? And can you say something about Syria?

SECRETARY CLINTON: I well remember that occasion in Gaza and the hope that was generated. And I still carry that hope very much with me, both personally and on behalf of the position I now hold. And it’s one of the reasons why I urged the President to appoint a skilled negotiator as a special envoy, and George Mitchell gratefully accepted. And we have been working literally non-stop to set up the conditions for such negotiations.

But as I said in my speech, we don’t think it is just the responsibility of the Israelis, nor even just of the Palestinians. We expect the entire region, particularly the Arab states, to assist us by stepping up and making clear that they are truly going to support the two-state solution.

We intend to pursue our efforts as vigorously as we possibly can. I’m not going to make any predictions, but I can only tell you that our commitment is deep and durable. And I don’t get easily discouraged, and I don’t want anybody else to, because this is a very difficult undertaking, especially because of the ten years between where we were in Gaza in ’99 and where we are today in 2009. But I have actually been heartened by what I’ve seen in the last six months.

With respect to Syria, we have made it very clear to the Syrians, including with the offer to return an ambassador, that we do want an engagement, but we expect it to be reciprocal, and there are certain actions that we would like to see the Syrians take as we begin to explore this with them. I think Syria is a critical player in whatever we do in the Middle East. I’m hoping that the Syrian calculation of where they should be positionally with respect to their relationship with Iran and their support for extremist and terrorist activities will be changing so that we can pursue a two-way engagement that will benefit both us and the larger region.

MR. HAASS: You mentioned in your speech the potential role of the Palestinian Authority in that context. You did not mention specifically Hamas. Do you see any conceivable situation in which Hamas could play a role in the peace process?

SECRETARY CLINTON: Well, right now, we are firmly committed to the Quartet principles. And we have made it clear, both publicly and privately, through all kinds of pronouncements, that we would expect Hamas to recognize Israel and renounce violence and agree to abide by prior agreements. And we’ve been very pleased that the Quartet members – the EU, Russia, the UN – have stood very firm with us on that.

And in the efforts to try to work out a unity government between the Palestinian Authority and Hamas, the Palestinian Authority has also stood firmly because, of course, they are committed to a two-state solution, something that Hamas has not yet committed to. So at this stage, what we want to do is to get the negotiations going between the Israelis and the Palestinian Authority.

And as I said with respect to the Taliban, those who are willing to lay down arms, renounce al-Qaida, be willing to participate in a society that is free and open, they are welcome. And I think that’s true for people in other organizations who may realize that rejectionism and resistance hasn’t really given them or their children the kind of future that they would hope for. And so I’m very committed to working to encourage as many people as possible to be part of the two-state solution, but there are certain entry requirements that have to be paid.

MR. HAASS: Trudy.

QUESTION: Trudy Rubin, the Philadelphia Inquirer.

SECRETARY CLINTON: How are you, Trudy?

QUESTION: Madame Secretary, I wonder if you could elaborate a little on the Administration’s willingness to engage with Iran at this point?

First, could you tell us has there been any response from Ayatollah Khamenei or the Iranian Government to the letter that was sent in May? And if the Iranians should show interest in engagement, what if they stonewall? How long could this go on if there was absolutely no give? And finally, could you clarify, after Vice President’s Biden’s remarks, has there been any green, yellow, or red light given to Israel about an attack on Iran?

SECRETARY CLINTON: Well, those are three easy questions, Trudy. (Laughter.)

With respect to Iran, I’m going to stay within the boundaries of what I said in my speech. We are well aware that the situation after the election puts a different complexion on both the Iranian Government – we really don’t know what their intentions might be at this point in time. We’re very troubled by the repressive actions that they took in the aftermath of their elections, as well as what are most likely a certain amount of electoral irregularities.

But as I said, we have no path that has opened up right now. But we have made it clear that there is a choice for the Iranian Government to make. And we will wait to see how they decide, whether that choice is worth pursuing. If they were to choose to pursue it, we’ve made it very clear that this is not an open-ended engagement. This is not a door that stays open no matter what happens. And I think that until there is some decision on their part, we really won’t know what to expect.

With respect to the Vice President’s remarks, I think that the President and the White House clarified those the next day.

MR. HAASS: We’ve now had a two-part question and a three-part question. Can we please limit future questions to one part? (Laughter.)

Ambassador Schaffer?

QUESTION: Thank you, and it’s nice to see you, Madame Secretary.

SECRETARY CLINTON: Thank you.

QUESTION: I last saw you in Colombo when you were First Lady.

SECRETARY CLINTON: I remember that.

QUESTION: You’re about to go to India, and I wanted to ask you about what you expect to get out of the trip. Presumably, a lot of it will be on the bilateral side. But I wanted to ask if you could focus a little bit on the foreign policy and global part of your agenda. Are there issues where you see a real prospect of working together with India? Are there others that are tougher? And what do you see as the entry point there?

SECRETARY CLINTON: Well, Ambassador, we are delighted that our two countries will be engaging in a very broad, comprehensive dialogue. It’s the most wide-ranging that I think has ever been put on the table between India and the United States. It has six pillars to it, one of which, of course, is foreign policy, strategic challenges, along with other matters, like health and education and agriculture and the economy.

So I don’t want to prejudge, but it is clear that everything is on the table to discuss. We believe India has a tremendous opportunity and a growing responsibility, which they acknowledge, to play not just a regional role, but a global one as well. How they choose to define that, we will explore in depth during the course of our discussions. But obviously, there are a number of areas where we would welcome Indian leadership and involvement that are difficult.

There’s nothing easy about nonproliferation. Anybody who ever read Strobe Talbott’s book, Engaging India, knows that it’s a very difficult issue. But we want to look at new ways for global and regional regimes on weapons of mass destruction, particularly nuclear. We’re very interested in the role that India sees for itself in the immediate area. You mentioned Sri Lanka. What are the military and particularly naval implications of decisions that India is making going forward? The economic actions that India is taking – they weathered the beginning of the recession better than many places – what are they going to do keep generating growth, lifting people out of poverty? The Congress party made a number of important campaign promises to their poor, particularly the rural poor.

When I’m there, I will visit the first LEED certified building in India to talk about climate change and clean energy. We know that India and China have understandable questions about what role they should be expected to play in any kind of new global climate change regime. Our Special Envoy for Climate Change Todd Stern will be with me. And it is our hope that we can, through dialogue, come up with some win-win approaches. And this LEED-certified building is a perfect example of what India would be capable of doing.

I will also be visiting an agricultural facility because India is really hoping to continue to expand agricultural productivity, but then they have to create an infrastructure so that the crops get to a market. We have to have farm-to-market roads. You have to have storage and refrigeration facilities. So I think that this is an extremely rich area. I’ve just touched the surface of it. So I’m excited. I’m very much looking forward to my meetings with the prime minister and certainly with Minister Krishna and others in India, and we’re going to do everything we can to broaden and deepen our engagement.

MR. HAASS: You mentioned Ambassador – Senator Mitchell and Todd Stern. I want to make sure that – are there any members of your staff who want to ask a question here?

SECRETARY CLINTON: They’d better not.

(Laughter.)

MR. HAASS: I don’t want to deny them – in case the morning staff meeting wasn’t sufficiently long. I wanted to – let’s – in the back, all the way – I see in the third to last row or so, but I can’t see that far who it is. I see one or two hands up there.

QUESTION: Jonathan Broder from Congressional Quarterly. Madame Secretary, there have been reports that in the discussions between George Mitchell and Israeli Defense Minister Ehud Barak, that a certain number of settlements – or houses in the settlements that have already begun, the construction has begun on them already, that there has – was some agreement to allow the construction on these houses to go forward. Can you confirm that?

SECRETARY CLINTON: Well, I’m certainly not going to step on the negotiations in any way. I think that any decisions that are made will be announced officially. And it’s only fair to the Israeli Government, as well as to our own, that we wait until decisions have been made.

MR. HAASS: Hattie Babbitt.

SECRETARY CLINTON: Hi, Hattie.

QUESTION: Hi. I wanted to ask you to talk a little bit more about the Quadrennial Diplomacy and Development Review. It’s – I understand from your speech on Saturday – modeled in – a little bit after the Defense QDR, but in many ways more complicated because of the numbers of departments and agencies that have a stake or are stakeholders in the process. And could you talk more about how you envision that happening?

SECRETARY CLINTON: Thanks, Hattie. I served on the Armed Services Committee for six years. And the Quadrennial Defense Review, it seemed to me, was a very important discipline and tool for the Defense Department. It forced the Defense Department to take a hard look at itself, put forward priorities and the means to achieve them. And I thought it was one of the many reasons why Defense had increasingly taken a paramount position in our foreign policy. So among the many steps we’re taking, I decided we would do the first-ever Quadrennial Diplomacy and Development Review, because I think it requires us to think hard about what it is we’re trying to achieve, to be as specific as possible, to match our mission with the resources we need, to justify what we believe we are doing and to demonstrate results.

Especially in a global economic downturn, I feel a real responsibility to be able to explain to people who are not currently employed or hanging on by their fingernails, why am I asking for more money for something called diplomacy and development? I’m not asking for the money to build tanks or airplanes. I’m asking to send people to represent the United States, to engage in important negotiations, to be early warning signals. I’m asking to send experts into the field who can work with other nations, achieve sustainable results for the investment we make, lift the standard of living, which we believe then helps to sow the seeds of stability and, hopefully, democracy. And we have to make that case.

So we have embarked upon this. I think it is extremely complicated. I have no illusions about that. It is also, as Hattie said, something where we have to coordinate with a number of other agencies. Defense does work that you could call diplomacy and development. Treasury and the multilateral financial institutions are certainly engaged, at least in development. You’ve got USDA. You’ve got the U.S. Trade Rep. You can go down the list. And we want to try to explain the whole-of-government approach. And so in addition to what we will be doing internally, we will be working with the White House to bring together all the other stakeholders in diplomacy and development.

Now, it won’t surprise you to learn that I am also deep into discussions both with the Pentagon and with the Congress about bringing back some of the authorities and some of the money that went with them that has been used by the military for diplomacy and development. And the migration of those authorities and those resources is one of the many reasons why the State Department and USAID have had a challenging – a more challenging time than usual in the last years.

So this is both a policy tool as well as an attempt to explain and justify what it is we believe we can accomplish. And I want it institutionalized. I think Howard Berman may put it into legislation, so it’s not just a one-shot deal, it’s not just because I’m Secretary of State, but it will require the same level of rigor and analysis every four years by State and USAID.

MR. HAASS: I’m going to do serious – all the way in the back there. I can’t see who it is. The gentleman – yes, sir.

QUESTION: This is Stephen Flanagan from CSIS.

MR. HAASS: Oh, Stephen.

QUESTION: Madame Secretary, I had a question about your – the question of the dividends that are being – receiving – the Administration is receiving from its recommitment to alliances and alliance relationships. Many of our NATO allies definitely welcomed the shift in strategy and the recommitment to alliance relationships generally that the Administration put forward, but frankly, the response at Strasbourg-Kehl was little bit tepid, both on the military and the civil side. Now, President Obama characterized that as a down payment and that there would be more forthcoming, but yet we also still hear some allies hiding behind the complaint that, well, we haven’t yet seen the full development of the civil side of the Administration’s strategy.

So I wanted to ask you: Where do you see – do you see the second and third payments coming from our allies? And also, if you could give us a brief sense of where you are. You mentioned the recommitment of additional personnel to Afghanistan, civil personnel on the U.S. side. What about some of our allies and other partners in the world?

SECRETARY CLINTON: Well, I agree that it was a down payment. And I guess I was more impressed by what we got than perhaps some were, because I know how difficult it was to make the convincing case to allies who felt like they had been either shut out of the process or had a feeling that their contributions were not adequately appreciated. So we had a lot of catch-up work to do, and it was part of our overall strategic review. Richard Holbrooke is here, and he has put together an interagency team as well as an international team. We have intense ongoing discussions with our ISAF allies and with others who want to play a part in promoting the strategy that the President put forth.

Now, it’s challenging because of the global economic crisis that everybody faces. It’s also difficult, as it is in our own country, to understand – well, wait a minute, you’ve been there for nearly eight years and now you’re adding more troops and you’re asking for more funding and you’re going to send more civilians? So, I mean, we have to answer these questions in our own country. And you saw where Prime Minister Brown in Great Britain – they lost eight soldiers. And the government went out and began talking about why it was important to stand with the United States and others in Afghanistan, and got, from what I could glean, a more positive response than people anticipated. Because you have to be willing to try to assuage the fears and anxieties and paint a picture of where you’re going.

Now, on the civilian side, this has been one of the areas that Jack Lew, my Deputy for Resources and Management, working with Ambassador Holbrooke and his team and USAID and everybody involved – we’ve actually been heartened by the numbers of people who have volunteered to go. But we’ve limited the areas that the United States is going to focus on. For example, you heard me say agriculture. Seventy percent of the people of Afghanistan live in rural areas. Afghanistan used to be, in some descriptions, a garden of Central Asia and South Asia. And because of the Soviet invasion and the resistance to that and then the warlords, I mean, now it is so eroded and dry and – the whole agricultural base has to be reinvigorated. So we’re really focused on that. We’re not promising to be all things to all people. And in fact, we’re working with our allies so that they will focus on areas that we are not able to any longer.

So look, this is very complicated. And the whole idea is to be able to clear and hold, which is what our Marines are doing in the south right now, and to provide security for people and to begin to see life return to markets and other means of common activity, and then to go in and work with local people: on their police force, which we will be focusing on; on agriculture; and obviously, since I’m Secretary of State, on women and women’s roles and opportunities.

And I’m not here to say, we know exactly everything to do and every one of our allies is going to come through, but I am encouraged by those who feel the political pressure or the economic pressure to shift from military resources to civilian and development resources. And I think we’ve put together something which has a direct relationship to the strategy that we’re now following.

MR. HAASS: Professor Lieber.

QUESTION: Bob Lieber, Georgetown. After the easy questions, let me ask you one a tad more challenging. The previous presidents, from Jimmy Carter through Ronald Reagan through Bill Clinton, have sought to reach out to Iran and been rebuffed. Frankly, every president has had that experience. Iran, for 20 years, has been cheating on its obligations under various treaties. If Iran fails to respond positively to these initiatives, and if our friends and allies and others, including Russia and China, are unprepared to countenance really significant sanctions, what happens then? President Obama, either during the campaign or shortly after, said that the U.S. would not be willing to see Iran with a nuclear weapon. And therefore, I have to ask the question: If these other efforts don’t work, is the Administration prepared to live with a nuclear Iran or not?

SECRETARY CLINTON: Well, as I said in my speech, as you rightly quoted the president, we have consistently stated that we do not accept a nuclear-armed Iran. We think it is a great threat to the region and beyond.

But as you might guess, I’m not going to negotiate with Iran sitting here. And in most negotiations I’ve ever been a part of, either as a lawyer or as a senator or in any other capacity, I think if you have a clear set of objectives and you begin the process, you have a better idea of what might or might not be possible. We have no illusions about this. I believe, though, that the absence of the United States for much of the last eight years in these negotiations was a mistake. I think we outsourced our policy to Iran and, frankly, it didn’t work very well. That’s how I see it. I want to be in the middle of it, to be able to make our own judgments, to figure out what we know and don’t know, and then to be in a stronger position with respect to other nations.

I think part of the attractiveness of engagement, direct engagement, is not only to make our own judgments, but also to demonstrate to others that we’ve done so, and to make clear what kind of reaction we’ve gotten, which I think lays the groundwork for concerted action. And certainly, in just the last six months in our efforts in talking with other partners, I’ve noticed a turn in attitude by some, a recognition that it’s not just the United States that should be concerned about what Iran is doing, but that there are implications for others who are much closer than we are to Iran.

So I think that, as I said in the speech, our policy is one that we believe makes the most sense for our interests, and we intend to pursue it but we obviously have exits along the way depending upon the consequences of the discussions.

MR. HAASS: We probably have time for about one last question. Stan Roth.

SECRETARY CLINTON: Hi, Stan.

QUESTION: Hi, good to see you.

SECRETARY CLINTON: Good to see you.

QUESTION: I just wanted to ask you to expand on –

SECRETARY CLINTON: Oh, here comes the microphone.

QUESTION: Stanley Roth with The Boeing Company. I wanted to ask you to expand on one of the points you made towards the end of your speech, the State Department’s whole-of-government approach to economic issues. Particularly as you work on the economic recovery of the U.S., the role for trade, beyond just the reference you made to free trade agreements, where would you like to see us end up on the trade side? But also, exports obviously are going to be part of the recovery plan. What role do you see for yourself and the State Department in terms of commercial advocacy? It’s sometimes tough, the environment faced by American business overseas.

SECRETARY CLINTON: Well, commercial advocacy is part of our list of responsibilities, as you know, and it’s one that I take very seriously. But I’d like to just take a step back and look at the broader picture of the State Department’s role in economic aspects of foreign policy.

From my perspective, trade is a foreign policy tool as well as an economic one. And we’re in the midst of looking hard at our trade policy, trying to determine how we can be more effective in making the case to the Congress and the American people about trade, but also making it clear to the rest of the world that we’re a trading nation and we want to be.

But we’re at a point where the economic implications of foreign policy are now very heavily seen as part of the intersection of nations. I mean, the G-20 is assuming greater and greater importance. I mean, you remember it started in 1998 as a result of the Asian financial crisis, and it has stayed as a player because it serves a very useful purpose. You have people at the table who, before, were not welcome or were not even thought of in the same breath as the United States or Great Britain or someone else.

So I think that the role of the economic agenda of the State Department needs to be strengthened. We work closely with Treasury. We work closely with the National Economic Council. But I’ll give you a quick example: David Lipton, who works with Larry Summers in the White House, just went to Pakistan for us to do an assessment of Pakistan’s capacity to meet the IMF requirements and what it needed and how it was doing. Well, was that an economic analysis? Was that a strategic, security, political – ? I would argue it’s all of that. So why would we say, oh, well, no, we’re not going to be part of the economic mix, when it’s critical as to how we’re dealing with other countries? Part of the reason that I worked to have our dialogue with China be inclusive and comprehensive is because strategic and economic concerns cannot be divorced.

So on all of these issues, the State Department has to play a role on the economic front. And we’re working very collegially with everybody. I mean, obviously, you have different perspectives, different jurisdiction. We know all of that. But there is a recognition inside this Administration that it’s an all-hands-on-deck, whole-of-government time. Everybody’s being required to get up and do your part and redefine what it is and expand it so that you can be the most effective player possible. So I think this is just part of our responsibility now.

QUESTION: So after six months, what has most struck you about this? Here you are; what’s surprised you the most?

SECRETARY CLINTON: Well, I’m really impressed by the quality of the people I work with at both the State Department and USAID, just the level of passion and intense commitment, the willingness to work long and all hours; you know that from your own experience. The excitement of being part of the new Administration, which has meant so much to so many people around the world and has certainly caused people to rethink who we are as Americans and maybe give us a break, cut us some slack as we get organized and get going.

I still think it’s hard to justify not having our full government in place six months after we started. That’s something that we’ve got to do something about, I think. (Applause.) I mean, we are trying to get our political leaders in place to work with our very dedicated Foreign Service and Civil Service employees, but we’re still not there yet. And I had no idea when I was in the Senate asking a million questions of every nominee – (laughter) – how really shortsighted that was. (Laughter.)

It’s amazing; the other thing I didn’t realize is that when all else failed, if there was a problem that had a foreign policy implication, write a letter when you’re in the Congress – Ellen Tauscher, who is our new Under Secretary for Arms Control and Nonproliferation – so I probably, in my eight years, wrote hundreds of letters, and now I have to read them. (Laughter.) And it just depends upon which side of the table you’re sitting.

But it’s been a real privilege and an honor, and I think we’re making a difference, and obviously, we’re going to work as hard as we can to translate that into the results that the American people deserve.

MR. HAASS: Everybody here wishes you a successful and safe trip, as you know, to India and Thailand, and it’s been a privilege and an honor, to quote your words back at you, for us to have you here today. Thank you.

SECRETARY CLINTON: Thank you, Richard. Thank you. Thank you so much. (Applause.)

Transcript: Vice President Biden on Iraq, Iran, Economy on "This Week" (5 July)

Iran: Did Joe Biden Just “Green Light” an Israeli Air Strike?

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The video of the interview is available via the "This Week" website:

HOST GEORGE STEPHANOPOULOS: Major milestone this week here in Iraq with the American troops pulling out of the cities. And I wonder if you can put the broader American mission in context. Are we in the process of securing victory or cutting our losses to come home?

BIDEN: Securing victory. Look, the president and I laid out a plan in the campaign which was twofold. One, withdraw our troops from Iraq in a rational timetable consistent with what the Iraqis want. And the same time, leave behind a stable and secure country.

And one of the reasons I'm here, George, is to push the last end of that, which is the need for political settlement on some important issues between Arabs and Kurds and among the confessional groups. And I think we're well on our way.

STEPHANOPOULOS: You know, your predecessor doesn't seem convinced.

(LAUGHTER)

STEPHANOPOULOS: John Hannah, Vice President Cheney's national security adviser, wrote this week that under Obama, Bush's commitment to winning in Iraq has all been vanished. The vice president warned against a premature withdrawal.

He said: "I would not want to see the U.S. waste all of the tremendous sacrifice that has gotten us to this point."

BIDEN: You know, it's kind of ironic. It's their timetable we are implementing. Cheney and Bush agreed with the Iraqis before we were elected that we'd have combat troops out of the cities by June 30th.

STEPHANOPOULOS: So he's wrong to be worried?

BIDEN: Well, I mean, it's -- I mean, for this he can't have it both ways. He negotiated that timetable. We have met the commitment the timetable the last administration negotiated with Iraqis. And we're totally confident that is the right thing to do.

So I find it kind of ironic that he's criticizing his own agreement that he negotiated.

STEPHANOPOULOS: You're also facing a little bit of criticism from the Iraqis. You know yesterday you stood up there with Prime Minister Maliki and talked about your commitment to solve these political problems, yet his spokesman came out after the meeting and said: "This is purely an Iraqi issue, we don't want the Americans to get involved."

What do you say to that?

BIDEN: Well, that's that not what -- that's not what the prime minister said. The prime minister said that we may need you to get involved.

What we offered the prime minister, as well as the speaker, as well as the two vice presidents, was that to the extent -- let me give you an example. The United Nations has started a process to deal with what they called the "disputed internal borders." And that is the debate between the Kurds and the Arabs as to where the line is.

Kirkuk is probably the biggest flashpoint. And we were asked that we would -- would we be helpful to the United Nations in doing this? I was further asked that would I communicate to the Kurdish leadership, who I have a close relationship with, that their passing a constitution through their parliament in Kurdistan was not helpful to the process that was under way.

STEPHANOPOULOS: So what's going on here? Maliki says one thing and his spokesman says another.

BIDEN: Well, look, I think that it's very important that Prime Minister Maliki and all of the Iraqi leaders are able to in fact communicate, which is true, to the people of Iraq, that they're now a sovereign nation.

They take directions from no one. That they are able to handle their own internal affairs. And the fact -- my guess is, if the spokesman said that -- which surprises me, if the spokesman said that, I'd imagine they're worried about an upcoming election, making it look like the United States is going to continue to try to direct things here.

We are not. That is not why I'm here.

STEPHANOPOULOS: We're not going to direct things, but what if the Iraqi people -- they've been dealing with these political disputes for an awful long time, what if they can't solve them, the violence flares up again?

BIDEN: Well, that's going to be a tragic outcome for the Iraqi people. We made a commitment.

STEPHANOPOULOS: But are we going to put our lives on the line again?

BIDEN: No. We made a commitment to withdraw our troops from the cities by the 30th, to withdraw our combat brigades from Iraq by next summer -- the end of next summer, and withdraw all troops according to the SOFA, that agreement we negotiated with them, by the end of 2011. That is our intention.

STEPHANOPOULOS: But no matter what, 2011, American troops all gone?

BIDEN: That is the intention. We believe the Iraqis will be fully capable of maintaining their own security. And we believe that with the time frame, with their upcoming election -- you know they're having an election in January, I know you know that, they'll form a new government early -- in late winter as a consequence of that election.

And it is our expectation that that election will come off peacefully and that their democracy is gradually maturing, so.

STEPHANOPOULOS: Let me turn to Iran. We're three weeks out from their election.

BIDEN: Yes.

STEPHANOPOULOS: Do you have any doubt it was stolen?

BIDEN: Well, look, what I don't want to do is play into the hands of the supreme leader and Ahmadinejad like they're blaming the British now. You know, there -- that the reason why there was unrest is outside influence.

STEPHANOPOULOS: They're saying they have confessions from reformers saying that.

BIDEN: Well, you know, they say a lot of things. That's simply not true. The -- I think the dust hasn't settled yet in terms of?

STEPHANOPOULOS: Still, three weeks ago.

BIDEN: Well, no, now here's what I think. I mean, I think it's clear that the consequences of the way the election was conducted and the way that the election was declared -- who was declared the winner and how, is going to have a rippling effect.

What that effect will be, I don't know. I think we have to wait to see how this settles out and -- before we can make a judgment.

STEPHANOPOULOS: But there's no doubt now that they responded violently to the election.

BIDEN: Oh, there is no doubt about that. There is none. The whole world saw it. And it is -- we have to acknowledge as a free and sovereign nation that we abhor the violence that took place. We think it was inappropriate, the way in which they treated those protesters.

And so there is no question, we and the rest of the world looked at them and said, my lord, this is not the way to conduct?

STEPHANOPOULOS: But how do you respond to critics who say the United States should have come out forcefully right away, right away and said, this is wrong, stop it, and they say that would have made a difference?

BIDEN: Well, I don't -- I think the president was absolutely pitch-perfect. I think what the president did is exactly the right way. I think the president did not allow us to be used to as the scapegoat, us to be used as?

STEPHANOPOULOS: There were some reports that you were arguing for a more forceful response earlier.

BIDEN: Well, I think the president did it exactly right. I think he was correct.

STEPHANOPOULOS: And going forward, what next? What should the strategy be right now?

BIDEN: Well, look, the Iranian government has a choice. They either choose greater isolation, and from the whole world, or they decide to take a rightful place in the -- in civilized, big, great nations. They can -- that's the path they have to choose.

STEPHANOPOULOS: Haven't they already shown evidence in the last week of what their choice is?

BIDEN: Well, they have in terms of the way they conducted their election, but they haven't in terms of whether -- the real key issues to now, are they going to continue the nuclear program? Are they going to be braced by what happened? Is this going to alter their behavior internally or externally?

Look, responses that they saw on the street in any country have consequences. It's hard to predict what those consequences will be.

STEPHANOPOULOS: But what are the consequences for the U.S. relationship? I mean, the president had said he wants to meet with the Iranians over the nuclear program through the P-5. But how does he engage with the Iranians now without breaking faith with those reformers?

BIDEN: Well, the way you do it is if they choose to meet with the P5, under the conditions the P5 was laid out, it means they begin to change course. And it means that the protesters probably had some impact on the behavior of an administration that they don't like at all. And it believes and I believe that means there's consequences to that.

Now, if they in fact decide to shut out the rest of the world, clamp down, further isolation, I think that takes them down a very different path.

STEPHANOPOULOS: How do you respond to those who say that it's the United States now that should hit the pause button, there should be a cause correction, and we shouldn't rush to sit down...

BIDEN: Well, we're not. We're not rushing to sit down.

As I said to you, we have to wait to see how this sort of settles out. And there's already an offer laid out there by the permanent five plus one to say we're prepared to sit down and negotiate with you relative to your nuclear program. And so the ball's in their court.

STEPHANOPOULOS: When I saw President Ahmadinejad back in April, his response to that was that we need to see more from the United States first.

Is it fair to say now that there will be absolutely no more concessions to the Iranians in advance of those discussions?

BIDEN: It's fair to say the position the president has laid out will not change.

STEPHANOPOULOS: But there will be engagement -- if the Iranians want to...

(CROSSTALK)

BIDEN: If the Iranians seek to engage, we will engage.

STEPHANOPOULOS: And meanwhile, the clock is ticking...

BIDEN: If the Iranians respond to the offer of engagement, we will engage.

STEPHANOPOULOS: But the offer is on the table?

BIDEN: The offer's on the table.

STEPHANOPOULOS: And meanwhile, Prime Minister Netanyahu has made it pretty clear that he agreed with President Obama to give until the end of the year for this whole process of engagement to work. After that, he's prepared to make matters into his own hands.

Is that the right approach?

BIDEN: Look, Israel can determine for itself -- it's a sovereign nation -- what's in their interest and what they decide to do relative to Iran and anyone else.

STEPHANOPOULOS: Whether we agree or not?

BIDEN: Whether we agree or not. They're entitled to do that. Any sovereign nation is entitled to do that. But there is no pressure from any nation that's going to alter our behavior as to how to proceed.

What we believe is in the national interest of the United States, which we, coincidentally, believe is also in the interest of Israel and the whole world. And so there are separate issues.

If the Netanyahu government decides to take a course of action different than the one being pursued now, that is their sovereign right to do that. That is not our choice.

STEPHANOPOULOS: But just to be clear here, if the Israelis decide Iran is an existential threat, they have to take out the nuclear program, militarily the United States will not stand in the way?

BIDEN: Look, we cannot dictate to another sovereign nation what they can and cannot do when they make a determination, if they make a determination that they're existentially threatened and their survival is threatened by another country.

STEPHANOPOULOS: You say we can't dictate, but we can, if we choose to, deny over-flight rights here in Iraq. We can stand in the way of a military strike.

BIDEN: I'm not going to speculate, George, on those issues, other than to say Israel has a right to determine what's in its interests, and we have a right and we will determine what's in our interests.

STEPHANOPOULOS: Meanwhile, North Korea...

BIDEN: Yes.

STEPHANOPOULOS: ... seven missile launches in the last 24 hours, 11 this week. Anything the United States can do about it?

BIDEN: The question is, is there anything that we should do about it?

Look, this has almost become predictable behavior. Some of it seems like almost attention-seeking behavior.

STEPHANOPOULOS: And you don't want to give the attention?

BIDEN: And -- no, I don't want to give the attention, because, look, I think our policy has been absolutely correct so far. We have succeeded in uniting the most important and critical countries to North Korea on a common path of further isolating North Korea. They're going to be faced with a pretty difficult choice, it seems to me.

STEPHANOPOULOS: But not a task that includes very forceful enforcement of the sanctions. The Russians and the Chinese blocked any boarding of the ships, didn't they?

BIDEN: No, no. Well, what they did was, if you noticed, the ship had to turn around and come back. Why? Because no port would allow them into their port.

There was no place they could go with certitude that they would not be, in fact, at that point, boarded and searched. And so I would argue that it, in fact, worked.

STEPHANOPOULOS: Is our policy now though basically waiting for the Kim Jong-il regime to collapse?

BIDEN: Our policy is to continue to put united pressure from the very countries that North Korea was able to look to before with impunity. They could take almost any action and got no reaction, no negative reaction.

That's changed. And it is -- there is a significant turning of the pressure. And there are going to be some very difficult decisions that that regime's going to have make.

There's a real debate going on right now, George, about succession in North Korea.

STEPHANOPOULOS: Reports that he's tapped his youngest son.

BIDEN: That is the report.

STEPHANOPOULOS: Do you believe it?

BIDEN: Well, if I had to bet, that would be my guess. But I don't think anyone knows for certain.

STEPHANOPOULOS: The clock is also ticking on Afghanistan. Key members of Congress made it pretty clear during the war supplemental debate that they're going to give until early next year to see progress in Afghanistan or they're going to cut off the funding, move to cut off the funding.

Is that the right approach?

BIDEN: Look, I think the right approach is one we have chosen, the Obama/Biden administration.

We did a thorough review of what our objectives and policies were and should be in Afghanistan.

BIDEN: We set in motion a policy which is now only beginning to unfold. All the troops we agreed to increase are not even all in place at this point. And we also believe, as General Jones accurately said, that, ultimately, the success or failure in Iraq will not rest not on a military outcome, but on a both economic and political outcome internally, getting better governance in place and economic development in that country.

STEPHANOPOULOS: But do Americans have a right to expect that if we don't see continued progress in the next six to nine months, six to 12 months, then we should think about cutting back and pulling out?

BIDEN: Look, I think the Americans have a right to expect success. And I think the success is measured by how we defined it.

STEPHANOPOULOS: At any cost?

BIDEN: No. Success. And if they conclude that, whatever the policy that's being undertaken by any administration as not succeeding, they have a right to say, look, cease and desist. But I don't think that's where we're going, George.

STEPHANOPOULOS: There were some reports this week that the president has already made the judgment sending General Jones over to Afghanistan with a clear message -- no more troops. This is it, this is all you can get.

And Bob Woodward wrote about it. He talked about the general meeting with various military figures in Afghanistan, and this is what he said -- this is what he reports that General Jones said: "If there were new requests for force now, the president would quite likely have a Whiskey Tango Foxtrot moment. Everyone in the room caught phonetic reference to WTF -- which in the military now sort of means, what the (blank)."

Are you concerned that this is sending some kind of a chilling message?

BIDEN: No, not at all. Look, here's...

STEPHANOPOULOS: You don't want to hear the advice?

BIDEN: Look, no, no. We got the advice.

We spent five months with the entire national security team, the chairman of the Joint Chiefs of Staff, the secretary of state, the secretary of defense, the national security adviser down in that tank, down in that Situation Room, laboriously banging out the plans. The military came in with explicit requests. The president gave them what they asked for. It hasn't even been implemented yet.

STEPHANOPOULOS: You were on the other side, it was reported, that you didn't want an expansion of troops.

BIDEN: No, no. I did want an expansion of troops. There was a slight difference about how to layer them, how to proceed.

The president -- we all ended up in -- you know, this was an open discussion. And the thing I like about the president, he seeks everyone's opinion.

Well, we reached a consensus opinion, and the consensus opinion of the national security team, of which I'm a part, was to do exactly what's under way.

The point is -- I suspect the point that Jim Jones is making is, hey, it hasn't even been implemented yet. Troops are still on the way. Slow up, guys.

STEPHANOPOULOS: But to be clear, you're saying if the military believes there should be more troops, they shouldn't be afraid to give that advice. They should give that advice?

BIDEN: They should not be afraid to give whatever advice from the field or from the Pentagon to the president and the secretary of defense that they think they need.

STEPHANOPOULOS: While we've been here, some pretty grim job numbers back at home -- 9.5 percent unemployment in June, the worst numbers in 26 years.

How do you explain that? Because when the president and you all were selling the stimulus package, you predicted at the beginning that, to get this package in place, unemployment will peak at about 8 percent. So, either you misread the economy, or the stimulus package is too slow and to small.

BIDEN: The truth is, we and everyone else misread the economy. The figures we worked off of in January were the consensus figures and most of the blue chip indexes out there.

Everyone thought at that stage -- everyone -- the bulk of...

STEPHANOPOULOS: CBO [Congressional Budget Office] would say a little bit higher.

BIDEN: A little bit, but they're all in the same range. No one was talking about that we would be moving towards -- we're worried about 10.5 percent, it will be 9.5 percent at this point.

STEPHANOPOULOS: But we're looking at 10 now, aren't we?

BIDEN: No. Well, look, we're much too high. We're at 9 -- what, 9.5 right now?

STEPHANOPOULOS: 9.5.

BIDEN: And so the truth is, there was a misreading of just how bad an economy we inherited. Now, that doesn't -- I'm not -- it's now our responsibility. So the second question becomes, did the economic package we put in place, including the Recovery Act, is it the right package given the circumstances we're in? And we believe it is the right package given the circumstances we're in.

We misread how bad the economy was, but we are now only about 120 days into the recovery package. The truth of the matter was, no one anticipated, no one expected that that recovery package would in fact be in a position at this point of having to distribute the bulk of money.

STEPHANOPOULOS: No, but a lot of people were saying that you needed to do something bigger and bolder then, including the economist Paul Krugman. He's saying -- right now he's saying the same thing again -- don't wait. You need a second stimulus, you need it now.

BIDEN: Look, what we have to do now is we have to properly, adequately, transparently and effectively spend out the $787 billion.

STEPHANOPOULOS: That's your job. You're in charge of that now.

BIDEN: That is my job, and I think we're doing it well. If you noticed, George, I mean, there were other predictions. This was going to be wasteful and all these terrible projects were going to be out there, and we're wasting money. Well, that dog hasn't barked yet.

STEPHANOPOULOS: Well, Senator Coburn has identified some.

BIDEN: Yes -- no, he hasn't, but he did, he identified one hundred ? forty-eight of which we had already killed. And so -- and the rest I dispute. So the bottom line though is, I think anybody would say this has been pretty well managed so far.

The question is, how do you now -- do we -- what we have to do, George, is we have to, as this rolls out, put more pace on the ball. The second hundred days you're going to see a lot more jobs created.

And the reason you are is now all of these contracts for the over several thousand highway projects that have approved.

STEPHANOPOULOS: But you're also seeing states across the country cutting back on their programs. Many of the people on unemployment?

BIDEN: Sure.

STEPHANOPOULOS: ? today are going to run out of unemployment in September. That means for a lot of those people, if there is not a second stimulus, they're going to be out in the cold.

BIDEN: Well, look, we have increased the amount of money unemployed -- those on unemployment rolls have gotten, 12 million are getting more money because of the stimulus package.

We've increased the number of people eligible by 2 million people. We've given a tax cut to 95 percent of the people who get a pay stub. They have somewhere -- $60 bucks a month out there that's going into the economy.

There is a lot going on, George. And I think it's premature to make the judgment?

STEPHANOPOULOS: So no second stimulus?

BIDEN: No, I didn't say that. I think it's premature to make that judgment. This was set up to spend out over 18 months. There are going to be major programs that are going to take effect in September, $7.5 billion for broadband, new money for high-speed rail, the implementation of the grid -- the new electric grid.

And so this is just starting, the pace of the ball is now going to increase.

STEPHANOPOULOS: So you're in charge of the stimulus. You're the president's envoy here in Iraq. You're supposed to settle this dispute between the director of national intelligence and the CIA over who is going to appoint the station chiefs. By the way, have you solved that one yet?

BIDEN: I think we've solved that one.

STEPHANOPOULOS: You have?

BIDEN: Well, let me put it this way. I think we're well on the way to that being solved.

STEPHANOPOULOS: Who won?

BIDEN: They both won.

STEPHANOPOULOS: So they're going to share the responsibility to appoint to station chiefs?

BIDEN: Not done yet. Let me comment on that next week to you.

STEPHANOPOULOS: OK. Well, let me get to the broader point then. You've fixed -- you say you've fixed a problem that will?

BIDEN: Well they fixed the problem.

STEPHANOPOULOS: ? to find out that they fixed the problem -- look to find out the details on all of that. But you've got all of these discrete projects now. And when you came in you talked a lot about how you didn't want to get bogged down in individual projects because you wanted to be, you know, the president's primary adviser.

Are you're worried you're going to far in the other direction?

BIDEN: No. Because all of these projects have end dates on them. You know, they all have sell-by dates, because -- and that's I think that -- I hope I've brought some real expertise to this job, available to the president.

The things he has asked me to do. I hope I'm relatively good at. And -- but all of them have specific objectives.

STEPHANOPOULOS: Finally, Sarah Palin.

BIDEN: Yes.

STEPHANOPOULOS: You were the last person to run against her.

(LAUGHTER)

STEPHANOPOULOS: Were you surprised by her decision to step down?

BIDEN: Well, look, you and I know -- and I shouldn't say that because that implicates you in my answer, so. But those who have been deeply involved in politics know at the end of the day it is really and truly a personal deal.

And personal family decisions have real impact on people's decisions. I love reading these history books and biographies of people, the reason they made the choice to run or not run was because the state of the economy.

It maybe had a lot to do with what the state of their life was, and the state of their family, et cetera. So I'm not going to second guess her.

STEPHANOPOULOS: She cast herself as the victim of political blood sport in that press conference. Is that how you see it?

BIDEN: No. I respect her decision. I don't -- I don't know what prompted her decision to not only not run again and also to step down as a consequence of the decision not to run in 2010. And I take her at her word that had a personal ingredient in it. And you have to respect that.

STEPHANOPOULOS: Mr. Vice President, thank you very much.

BIDEN: Thank you.