Video and Transcript: President Obama on Pakistan-Afghanistan (29 March 2009)

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HOST BOB SCHIEFFER: Today on “Face the Nation” from the White House, it’s Obama’s war now, and he talks about that in our exclusive interview.

Mr. President, thank you for joining us. This economic crisis has been so severe that it has literally pushed all the other issues off the television, out of the newspapers. But as -- when you outlined your program for Afghanistan and the new strategy, it really underlined in the starkest terms that we may not be talking about these serious issues, but there’s some very serious things going on out there. So I’d like to start there.

OBAMA: Please.

SCHIEFFER: If I could. This is a hugely ambitious plan -- 22,000 more troops. You’re going to increase spending by 60 percent. You said in your announcement, we must defeat Al Qaida.

OBAMA: Right.

SCHIEFFER: This has really now become your war, hasn’t it?

OBAMA: I think it’s America’s war. And it’s the same war that we initiated after 9/11 as a consequence of those attacks on 3,000 Americans, who were just going about their daily round, and the focus over the last seven years I think has been lost.

What we want to do is to refocus attention on Al Qaida. We are going to root out their networks, their bases. We are going to make sure that they cannot attack U.S. citizens, U.S. soil, U.S. interests and our allies’ interests around the world.

In order for us to do that, we have to ensure that neither Afghanistan nor Pakistan can serve as a safe haven for Al Qaida. And unfortunately, over the last several years, what we’ve seen is essentially Al Qaida moving several miles from Afghanistan to Pakistan, but effectively still able to project their violence and hateful ideologies out into the world.

SCHIEFFER: You talked many times during your -- as you outlined this strategy about Al Qaida in Pakistan. You talk about safe havens in Pakistan.

OBAMA: Right.

SCHIEFFER: Are you giving our commanders now in Afghanistan the green light to go after these people even if they’re in what used to be safe havens in Pakistan?

OBAMA: Well, I haven’t changed my approach. If we have a high- value target within our sights -- after consulting with Pakistan, we’re going after them. But our main thrust has to be to help Pakistan defeat these extremists.

Now, one of the concerns that we’ve had building up over the last several years is a notion, I think, among the average Pakistani that this is somehow America’s war and that they are not invested. And that attitude, I think, has led to a steady creep of extremism in Pakistan that is the greatest threat to the stability of the Pakistan government, and ultimately the greatest threat to the Pakistani people. What we want to do is say to the Pakistani people, you are our friends, you are our allies. We are going to give you the tools to defeat al Qaeda and to root out these safe havens, but we also expect some accountability, and we expect that you understand the severity and the nature of the threat.

In addition, what we want to do is to help Pakistan grow its economy, to be able to provide basic services to its people, and that I think will help strengthen those efforts.

If the Pakistan government doesn’t have credibility, if they are weakened, then it’s going to be much more difficult for them to deal with the extremism within their borders.

SCHIEFFER: But you’re talking about going after them. Are you talking about with American boots on the ground, pursuing these people into these so-called safe havens?

OBAMA: No. Our plan does not change the recognition of Pakistan as a sovereign government. We need to work with them and through them to deal with Al Qaida, but we have to hold them much more accountable and we have to recognize that part of our task in working with Pakistan is not just military. It’s also our capacity to build their capacity through civilian interventions, through development, through aid assistance.

OBAMA: And that’s part of what you’re seeing both in Afghanistan and Pakistan, I think, is fully resourcing a comprehensive strategy that doesn’t just rely on bullets or bombs, but also relies on agricultural specialists, on doctors, on engineers, to help create an environment in which people recognize that they have much more at stake, in partnering with us and the international community, than giving in to some of these extremist ideologies.

SCHIEFFER: Help me out here. How do you -- what if they can’t do it? What if they won’t do it?
I mean, we have reports now about members of Pakistan’s intelligence service actually actively helping the Taliban and Al Qaida.

OBAMA: Well, some of those...

SCHIEFFER: What if they don’t do it?

OBAMA: Some of those reports aren’t new. There are a whole host of contingencies that we’ve got to deal with. I mean, this is going to be hard, Bob. I’m under no illusions. If it was easy, it would have already been completed.

So we’re going to have to go with a strategy that is focused, that is narrowly targeted on defeating Al Qaida. We think that, if you combine military, civilian, diplomatic, development approaches; if we are doing a much better job of coordinating with our allies, we can be successful.

But we recognize there are going to be a lot of hurdles between now and us finally having weakened Al Qaida or destroyed Al Qaida to the point it cannot -- it doesn’t pose a danger to us.

And we will continue to monitor and adjust our strategies to make sure that we’re not just going down blind alleys.

SCHIEFFER: Are you concerned at all -- because some people say the more troops you put in, it’s just going to inflame the situation; it’s going to make it worse. What do you say to them?

OBAMA: I’m very mindful of that. Look, I -- I’m enough of a student of history to know that the United States, in Vietnam and other countries, other epochs of history have overextended to the point where they were severely weakened. And the history in Afghanistan obviously shows that that country has not been very favorably disposed towards foreign intervention. And that’s why a central part of our strategy is to train the Afghan National Army so that they are taking the lead, increasingly, to deal with extremists in their area.

That’s been one of the few success stories we’ve seen over the last several years, is the Afghan National Army actually has great credibility. They’re effective fighters. We need to grow that. And that’s part of the reason why we want to make sure that there are trainers there.

But the last point I would make, you know, a request was made for increased troop levels in Afghanistan. I have already authorized 17,000. We’re now adding 4,000 trainers, specifically designed to train Afghan security forces.

But what I’ve also said to the Department of Defense and what I will say to the American public is that, you know, we now have resourced properly this strategy. It’s not going to be an open-ended commitment of infinite resources. We’ve just got to make sure that we are focused on achieving what we need to achieve with the resources we have.

SCHIEFFER: What you seem to be saying is we have to win; there’s no choice here. So does that mean, if more is needed; if the commanders come back to you and say, we may need more troops, Mr. President, to do this, you’re going to be ready to do that?

OBAMA: What I will not do is to simply assume that more troops always results in an improved situation.
I think there was a good argument, after us scrubbing this very hard and talking to a lot of our allies in the region, including the Pakistan and Afghanistan governments, the Europeans and our other NATO allies, that this was the best strategy.

But just because we needed to ramp up from the greatly underresourced levels that we had doesn’t automatically mean that, if this strategy doesn’t work, that what’s needed is even more troops.
There may be a point of diminishing returns in terms of troop levels. We’ve got to also make sure that our civilian efforts, our diplomatic efforts and our development efforts are just as robustly encouraged.
And, so for example, in the budget that I’ve presented to Congress, I’ve said we’ve got to increase foreign aid in Afghanistan and we’ve got to increase foreign aid in Pakistan. And I’m going to be really pushing Congress, because sometimes foreign aid is a, you know, juicy target, particularly during tough times.
I’m going to tell them, this is central to our strategy. And it can save lives and troops if we properly execute it.

SCHIEFFER: But you described this in very dark terms. I mean, and there’s no question that things are worse than ever in Afghanistan. You would agree with that?

OBAMA: I do.

SCHIEFFER: But you’re saying...

OBAMA: Let me make sure I’m clear. They’re not worse than they were when the Taliban was in charge...

SCHIEFFER: Yes.

OBAMA: ... and Al Qaida was operating with impunity. We have seen a deterioration over the last several years. And unless we get a handle on it now, we’re going to be in trouble.

SCHIEFFER: You said the other day in the “60 Minutes” interview that you would not have thought at this point in your presidency that Iraq would be the least of your worries, something to that effect.

OBAMA: Right.

SCHIEFFER: Are things going well enough there now that you may consider speeding up the withdrawal of troops from Iraq?

OBAMA: No, I think the plan that we put forward in Iraq is the right one, which is let’s have a very gradual withdrawal schedule through the national elections in Iraq. There’s still work to be done on the political side to resolve differences between the various sectarian groups around issues like oil, around issues like provincial elections. And so we’re going to continue to make progress on that front.

I’m confident that we’re moving in the right direction, but Iraq is not yet completed. We still have a lot of work to do. We still have a lot of training of Iraqi forces to improve their capacity. I’m confident, though, that we’re moving in the right direction.

SCHIEFFER: Let me ask you about something closer to home, and that is Mexico. You talked about sending more aid to the Mexican government, but things down there are really serious, as you well know. It’s my understanding that 90 percent of the guns that they’re getting down in Mexico are coming from the United States. We don’t seem to be doing a very good job of cutting off the gun flow. Do you need any kind of legislative help on that front? Have you, for example, thought about asking Congress to reinstate the ban on assault weapons?

OBAMA: I think the main thing we need is better enforcement. And so this week, we put forward a comprehensive initiative to assist those border regions that are being threatened by these drug cartels to provide assistance to the Mexican government, to make sure that on our side of the border we’ve got more personnel, more surveillance equipment.

SCHIEFFER: Why are we having so much trouble with that? I mean...

OBAMA: Well, what’s happened is that President Calderon, I think, has been very bold, and rightly has decided that it’s gotten carried away. That the drug cartels have too much power, are undermining and corrupting huge segments of Mexican society, and so he is taking them on, in the same way that when Eliot Ness took on Al Capone back during Prohibition, oftentimes that causes even more violence. And we’re seeing that flare up.

SCHIEFFER: Do you think it’s a threat to the United States security?

OBAMA: I don’t think that it is a -- what would be called an existential threat, but it is a serious threat to those border communities, and it’s gotten out of hand. And so what we have to do is to recognize that, look, this is a two-way street. As Secretary Clinton indicated, we’ve got to reduce demand for drugs. We’ve got to do our part in reducing the flow of cash and guns south.

SCHIEFFER: Are we anywhere close to putting U.S. troops on the border?

OBAMA: You know, obviously, there have been calls to increase National Guard troops on the borders. That’s something that we are considering. But we want to first see whether some of the steps that we’ve taken can help quell some of the violence. And we want to make sure that we are consulting as effectively as we can with the Mexican government in moving this strategy forward.

SCHIEFFER: All right. Let’s take a break here and we’ll come back and talk about some domestic issues.

(COMMERCIAL BREAK)

SCHIEFFER: Mr. President, you’re scheduled to announce on Monday what you plan to do with the auto industry, as they’re asking for more federal money.

OBAMA: Right.

SCHIEFFER: You’ve told them they’re going to have to cut back, present a different business plan. Our sources tell us that, as far as the White House is concerned, they’re not there yet.

Do they have to do more in order to get this money?

OBAMA: Yes. They’re not quite there yet. There’s been some serious efforts to deal with a combination of long-standing problems in the auto industry and the current crisis, which has seen the market for new cars drop from 14 million to 9 million.

Everybody is having problems, even Toyota and other very profitable companies.

And so what we’re trying to let them know is that we want to have a successful auto industry -- U.S. auto industry. We think we can have a successful U.S. auto industry. But it’s got to be one that’s realistically designed to weather this storm and to emerge at the other end much more lean, mean and competitive than it currently is.

And that’s going to mean a set of sacrifices from all parties involved, management, labor, shareholders, creditors, suppliers, dealers. Everybody is going to have to come to the table and say it’s important for us to take serious restructuring steps now in order to preserve a brighter future down the road.

SCHIEFFER: But they’re not there yet?

OBAMA: They’re not there yet.

SCHIEFFER: You campaigned on cutting taxes for the middle class. And yet, lately, I don’t see any middle-class tax cut in the version of the budget that’s going through the Senate right now.

You have suggested that maybe you’d let the tax cuts you put for the middle class in the stimulus bill run out next year.

Can you tell us, are you still pushing a middle-class tax cut? I know you said you want the Congress to follow the principles you set out, your priorities: education...

OBAMA: Health care.

SCHIEFFER: ... reducing the deficit, health care and so on -- and education. But have you abandoned the middle-class tax cut?

OBAMA: Absolutely not. Now, first of all, let’s understand, Bob, I’ve delivered that middle-class tax cut for two years, in the stimulus package. So people will be getting...

SCHIEFFER: This year and next year?

OBAMA: That’s right.

SCHIEFFER: But are you going to let that run out?

OBAMA: Hold on a second. They’ll be seeing their tax cuts in their -- their paychecks starting on April 1, for 95 percent of working families, just as we promised.

I strongly believe that we should continue those tax cuts. We should make them permanent because the average worker out there, the average family, saw their wages and incomes flatlined, even during boom times, over the last decade.

And there’s been a huge growth in income at the very top echelons but not for average American workers. They’ve been losing ground. So I think it’s the right thing to do. What I’ve also said, though, is we’ve got to pay for it.

Now, in my original budget, we had a way of paying for it. And some of the proposals that we have made, members of Congress have said, well, we’re not quite comfortable with that.

So what I’ve said is, if you don’t want to pay for it in those ways, let’s find another way to pay for it. I think it’s still the right thing to do. And I’m going to be pushing as hard as I can to get it done in this budget.

If it’s not done in this budget, then I’m going to keep on pushing for it next year and the year afterwards, so that we don’t see a drop-off after the two-year tax cuts...

(CROSSTALK)

SCHIEFFER: So what you’re saying is that the Congress may want to find a different way to pay for it but you’re going to insist on...

OBAMA: Absolutely. That’s still...

(CROSSTALK)

SCHIEFFER: ... a middle-class tax cut? I want to ask you, also, about these bonuses and all that on Wall Street. Congress expressed outrage. You seemed outraged. And then after the Congress -- the House passed the bill to get that money back with some kind of taxes on those people, you seemed to throw a little cold water on that. You said we shouldn’t legislate out of anger.

Have you now, on reflection, decided that maybe you let that go a little too far?

OBAMA: Oh, no. I think that the anger was justified. And had we not seen some healthy expressions of anger, we wouldn’t have gotten $50 million of those bonuses back that had been sent to AIG.
But what I consistently said -- and I said this even on the first day, when I announced that, in fact, we were going to do everything we could to get some of those bonuses back.

OBAMA: I said at the time that it is important to keep our eye on the ball. My most important job is to get this economy moving again, to get credit flowing again, so that businesses, large and small, can start rehiring, open their doors, and we can start seeing economic growth again. That’s my most important job.
What I don’t want is that larger project to be threatened by short-term gratifications of our legitimate frustrations with some of the behavior that we’ve seen on Wall Street. And I met with bankers, some of the...

SCHIEFFER: Did you talk about that in your big meeting with the bankers at the White House?

OBAMA: I did. I talked to them. And what I said was, look, first of all, there are a lot of bankers that are doing good work in the community, that are acting responsibly, that haven’t taken huge risks. I understand that. But understand that for the average single mom who is just barely struggling to pay her mortgage or medical bills for her kid, who is paying her taxes, who is playing by the rules, and then finds out that a taxpayer-assisted firm is paying out multimillion-dollar bonuses, that’s not just not acceptable.

Show some restraint. Show some -- show that you get that this is a crisis and everybody has to make sacrifices.

SCHIEFFER: So what did they say?

OBAMA: They agreed. And they recognized it.

Now, the proof of the pudding is in the eating, so I expect to see that restraint operate. Another way of putting it is I said to those folks, let me help you -- help me help you. It’s very difficult for me as president to call on the American people to make sacrifices to help shore up the financial system if there’s no sense of mutual obligation and mutual help.

Now, the flip side is I have got to explain to the American people we’re not going to get this recovery if we don’t see a recovery of the financial sector. And there’s no separation between Main Street and Wall Street. We’re all in this together. And it’s my job to help keep that focus as we move forward.

SCHIEFFER: One more question, Mr. President. This week, I went down to Monticello, Thomas Jefferson’s home, where they have this wonderful new visitors’ center. And one of the historians down there reminded me that Thomas Jefferson once said the presidency is a splendid misery. But at the end of his term, he also said, quote, that the presidency had brought him nothing but increasing drudgery and a daily loss of friends.
I just wonder, have you lost any friends yet?

OBAMA: I don’t think I’ve lost any friends. But I’m sure I’ve strained some friendships.

And look, this is an invigorating job. In some ways, I feel incredibly fortunate to be in this job at a time where the presidency really matters. This is not a caretaker presidency right now. Every decision we’re making counts, and my team understands that.

You know, if I had my preferences, would I love to deal with one of these at a time? Deal with Afghanistan now and maybe put off banking until later, or deal with health care three years from now? That would be great.

I don’t have that luxury because the American people don’t have that luxury. They need to be kept safe now. They need health care assistance now. They need this economy back on track now. They need to educate their kids now. And given that they’re having to make a lot of difficult choices, it’s important for us to work as hard as we can to help them live out their American dream.

SCHIEFFER: Thank you, Mr. President.

OBAMA: Great to talk to you, Bob. Thank you.

Transcript: David Petraeus and Richard Holbrooke on CNN (29 March)

HOST JOHN KING: General Petraeus, let me start with the threshold question for you, how many troops will it take? How long will it be.

PETRAEUS: Well, as you know, John, the president and President Bush before him have set in motion orders for troops that will more than double the number that were on the ground at the beginning of the year. We'll get those on the ground. We'll take a lot of effort with infrastructure, logistics and so forth, start employing those in the months that lie ahead. They'll all be on the ground by the end of the summer and the early fall.

And along the way we'll be doing the assessments. And among those assessments, of course, will be the kinds of questions about force levels, about additional civilians and other resources as well.

KING: General McKiernan, your commander on the ground, had been up-front that he needed even more troops. Why did the president say no?

PETRAEUS: Well, he certainly hasn't said no.

What everyone has said is let's get these forces on the ground. Every request for forces and every recommendation that General McKiernan and I made through this year, this entire year, has been approved. And, as I said, we'll take that forward, do the assessments. And I think it'd be premature to get beyond that right now.

KING: Ambassador Holbrooke, before we get to your challenges in the diplomacy, I want you to take us inside the deliberations about this strategy, because as you know, many Democrats have warned this could be President Obama's Vietnam, that you're sending more troops into an area where you still have huge problems on the Pakistani side of the border -- and we'll talk about that -- with corruption and other issues on the Afghan side of the border. And we'll talk in more detail about that. But take us inside the room when it comes to the risk assessment for this president at this moment.

HOLBROOKE: First of all, John, I served in Vietnam for three and half years, and I'm aware of certain structural similarities. But there's a fundamental difference. The Viet Cong and the North Vietnamese never posed any direct threat to the United States and its homeland. The people we are fighting in Afghanistan, and the people they are sheltering in Western Pakistan pose a direct threat. Those are the men of 9/11, the people who killed Benazir Bhutto. And you can be sure that, as we sit here today, they are planning further attacks on the United States and our allies.

In terms of the deliberation itself, the president shared at least four meetings, by my count, of the full National Security Council -- very unusual, very impressive. He ran the meetings himself. I've been in meetings with presidents since Lyndon Johnson in whose White House I served. And I have never seen a president take charge of a meeting the way President Obama did continually.

In other meetings without the president present, General Jones, his national security adviser, his deputy Tom Donilon, and the senior members of the administration, including Hillary Clinton, Bob Gates and the military command, including my colleague and friend David Petraeus, all had a vigorous debate. The vice president participated heavily. And in these discussions, John, I can assure you, and through you everyone who's watching, that every single option was considered, its pros and cons. A convergence and a consensus was immediate, that we couldn't walk away from the situation, no matter how bad it was and how bad the situation we had inherited was.

Then the issue became what do we do about it? All the options were considered. On the civilian side, we focused on the agricultural sector, which has been neglected. And yet it's an agricultural sector -- country. We focused on creating jobs. On the informational side, Dave Petraeus and I agree that we don't have a strong enough counter- informational program to combat the Taliban and Al Qaida, and so on and so forth down a wide range of issues.

From this review, Dave Petraeus and I are now going to sit down and plot the most serious integration of civilian and military activities that we can -- we have had in our time. We're going to integrate the policy like it's never been done before. And, in fact, Dave and I are now planning a retreat to do just that.

KING: Well, let me -- let me talk about the challenge ahead, because no matter how right or how smart the United States is this time -- and you, obviously, in saying what you just said, Mr. Ambassador, you're criticizing what happened in the previous administration. But I don't to look backwards. For you to succeed, you need partners. And I want to play something that then-Candidate Obama told our Fareed Zakaria back in 2008 about the president of Afghanistan, Hamid Karzai -- the president of the United States, now, saying, back then, he didn't have much trust. Let's listen

I'm sorry, we don't have that sound for you. But here is what he said back in 2008. He said: I think the Karzai government has not gotten out of the bunker and helped to organize Afghanistan and government, the judiciary, police forces, in ways that would give people confidence. So there are a lot of problems there.

General, if there are a lot of problems there, have those problems been fixed? Or are you sending more U.S. troops into a country that can't organize and run itself?

PETRAEUS: Well, first of all, it's a comprehensive effort. And among the various lines of operation, if you will, are diplomatic lines that will be spearheaded by the ambassadors in both countries and with Ambassador Holbrooke, of course overseeing that. Among that effort has to be, without question, the strengthening -- the building in some cases -- of the kind of trust, cooperation, coordination that is necessary to deal with the problems that have emerged over the years.

It is no secret that the legitimacy of the Afghan government has been challenged by the corruption and some of the other issues there. President Karzai has appointed corruption committees, has made important starts, appointed some good officials, among them Minister of Interior Atmar. That now needs to be moved forward, as we run up to the elections. And then beyond, of course, it would be very important that we all work together to combat the kinds of issues that we discussed.

KING: You say it needs to be more forward. But Ambassador, I want you in on this point, because you have called corruption a cancer in Afghanistan. President Karzai's been in charge of seven years, first of an interim government, a transitional government. He's been president for four and a half years. If there is a cancer of corruption in Afghanistan, and he has been in charge for seven years, is he not part of the problem?

HOLBROOKE: There isn't any question that the government has corruption at high levels. I've said it as a private citizen, and I'm not going to repudiate anything I said as a private citizen. President Karzai called me right after the president's speech, which he which he watched live on CNN. He said it was a great speech, and he agreed with every word of it. And you will note that the president, for the first time at the presidential level, addressed corruption directly and frontally.

I will be meeting with President Karzai tomorrow in the Hague, in advance of the secretary of state's arrival there for this big international conference. Hillary Clinton will meet with Karzai the following day, the day after tomorrow. We will talk about corruption to him as we have before.

We do think it's a cancer. President Karzai says publicly that he agrees with that. And now it's up to his government to take action. But I would stress to you, John, that there is an election coming up on August 20th, the second election in Afghanistan's history. It's a hugely important election. President -- Secretary Clinton will address that in her remarks on Tuesday. And that election will be a chance for the people to vote on these issues.

KING: General Petraeus, I want you to come with me so we can take a closer look at the source of the issue here. And Ambassador Holbrooke, I believe you can see this on a monitor you have up in New York. This is your range of territory, General. You cover all this. But the problem at the moment is right here. And I want to pull out this border region just a little bit more and bring it over to the center, and pull this out a bit, so people can see what we're looking at.

Now, you believe the problem is as much on this side as on this side. So the U.S. troops are going here into Afghanistan. But many would say you're sending the fire department here, when the fire is here, that Al Qaida and the Taliban are on this side of the border. How confident are you that sending troops here will deal with the problem here in the context of trust? We just talked about trust with President Karzai. Do you trust -- let me ask you a simple question first. Do you tell the Pakistani military the most sensitive U.S. secrets? Or can you not trust that that information will be passed on to their security services and them onto the terrorists?

PETRAEUS: Well, first, let me just say that it's very important that the fire department address the fires that have sprung up in the eastern and southern parts of Afghanistan without question.

PETRAEUS: And then it's critically important that the fire department, if you will, in Pakistan, do the same thing in the Federally Administered Tribal Areas.

And if you move this down here, in fact, I just talked to General Kayani and had an update from him on operations that are ongoing in Bajaur and Mohmand, which are part of the Federally Administered Tribal agencies, some of which you have here.

And also in Khyber. They have just launched another operation in Mohmand. Clearly there has to be the establishment of true trust there as well. We discussed that actually this morning.

There is a substantial and significant and sustained commitment that is part of this Af-Pak strategy that was announced on Friday. We've had ups and downs between our countries over the years. We've now got to get on an up and stay on an up with them. And again, working our way forward in that regard has to be critical.

KING: And when you say we need to establish true trust, again, at a time of economic recession at home, when American families are struggling, we have given Pakistan more than $12 billion in recent years in aid and we don't have true trust?

PETRAEUS: Well, we have had ups and downs. Now, it is important to point out that there has been progress in these areas. It's significant to note that for a variety -- through a variety of ways, nine of the top 20 extremist leaders in this area -- let's remember, this is where the al Qaeda and transnational extremists are that have -- that were the ones that launched the 9/11 attacks, of course, and have launched attacks more recently in the U.K., Afghanistan, Pakistan, India, and other areas.

So very important to get into this. We have established, as an example, a joint coordination center just here just across the Khyber Pass. That is the kind of building trust that is very important where we're providing the products of intelligence activities and so forth and we see the building with the frontier core, with the other elements of the Pakistani military that are active there, the kind of cooperation and coordination necessary.

I should add that it's also important that this be trilateral. And in fact, as Richard explains frequently, the intelligence services of these two countries, which have had quite a bit enmity between them, they also have to cooperate and we're going to work together, all of us, to try to foster that cooperation as well. KING: And, Ambassador, to that point, how difficult is -- already difficult and incredibly complicated and sensitive diplomacy, how much more difficult is it if you can't be sure that you share a secret, you share some sensitive information with somebody in Pakistan and there is a history of this information being passed on to the security services and then in some cases passed on to the al Qaeda and Taliban?

HOLBROOKE: Well, of course, you're absolutely right, John. It's a huge concern for General Petraeus and me. Leon Panetta made his first trip as director of central intelligence to this region. This is going to be his focus.

We have started a new trilateral process of the leaders of the two countries, Afghanistan and Pakistan, coming to the United States. They came in late February to advise us on the strategic review. Both -- Karzai also praised the president's speech, by the way.

And now we are planning a new session for early May which Leon Panetta, Secretary of Agriculture Tom Vilsack, Vice President Biden, and others will join Secretary Clinton, General Petraeus, and me, and Bob Gates to participate in.

In all of these issues, we have to break down what you just referred to and what the Pakistani foreign minister himself called the trust deficit. You're absolutely right. There is a -- the relationship between Pakistan and the United States is immensely complicated and it isn't quite where it should be.

And the new focus on Pakistan and what General Petraeus just referred to as Af-Pak, Afghanistan-Pakistan, is designed to emphasize the fact that as we move forward, we need to focus as much on Pakistan, but with one key caveat, John. As the foreign minister of Pakistan has said publicly and repeatedly, there cannot be American combat boots, combat troops on the ground in western Pakistan.

So when you talk about fighting the fire on the other side of the border, we are constrained in going after people on that side of the border, even though they are the ones, to a large extent, planning further attacks.

This is the challenge of a uniquely difficult problem. Now we're recommitted to it and General Petraeus and I are shoulder-to-shoulder in this effort.

KING: I want to go to a quick break, but before I do, on this point -- and we'll have much more discussion, but on that key point that you're not allowed -- the Pakistani government says you're not allowed to put people in here.

From time to time we know there have been Special Forces operations in this area. How much of that is for public consumption? And how much of -- do you have the freedom, if you see something right here and you can get to it before the Pakistanis can, would you do it?

PETRAEUS: Well, I think the president made that clear the other day where he talked about consulting with the Pakistanis. But if it ultimately comes to it that we will, if necessary, take action.

Let me caveat that very, very carefully though. And that is that there is no intention for us to be conducting operations in there certainly on the ground, and there is every intention by the Pakistani military and their other forces to conduct those operations.

This is a very proud country. It has existing institutions. Our job is to enable those institutions, to help them develop the kinds of counterinsurgency capabilities that are needed and to help their entire government at large to conduct the kind of comprehensive effort that is necessary well beyond just the military effort, but one that then looks after displaced citizens, that tries to foster local economic development, and there was some of that in the president's speech as well.

KING: Much more to discuss with our two distinguished guests, General Petraeus and Ambassador Holbrooke. We'll be back in a minute. Among the topics, U.S. tensions with Iran. How close is that country to a nuclear weapon?

And of course, we're keeping our eye on the North Dakota where the Red River remains a flooding threat. We'll talk to Senator Kent Conrad, who is assessing the situation in his home state. STATE OF THE UNION will be right back.

(COMMERCIAL BREAK)

KING: We're discussing the many challenges here with General David Petraeus and Ambassador Richard Holbrooke discussing the many challenges here.

We were just talking, gentlemen, about the problems, the many issues you have to deal with, the tough jobs you have with the Afghanistan-Pakistan border. I want to move, a little bit this way in the neighborhood is Iran.

Admiral Mullen, the chairman of the joint chiefs, was on this program a couple of weeks ago. And I put to him the question, does he agree with international assessments that Iran now has enough fissile material to build a nuclear weapon?

Let's listen to Admiral Mullen.

(BEGIN VIDEO CLIP)

KING: Does Iran have enough to make a bomb?

ADMIRAL MIKE MULLEN (USN), CHAIRMAN, JOINT CHIEFS OF STAFF: We think they do, quite frankly. And Iran having a nuclear weapon, I've believed, for a long time, is a very, very bad outcome to for the region and the world.

(END VIDEO CLIP)

KING: Now, General, Secretary Gates, the same weekend, said, yes, they may have enough material but he doesn't think they're close to a weapon yet.

What is your assessment of the -- where they are in development of the weapon and what kind of a threat and a complication that makes your efforts in the rest of the very troubled neighborhood?

PETRAEUS: Well, Admiral Mullen clarified what it was that he was saying and he pointed out that there are additional steps required between having enough low-enriched uranium and actually having something that can be weaponized.

You have to highly enrich it. You have to actually do the physical package. You have to have delivery and so forth. The bottom line is that we think it's at least a couple of years away in that regard. It could be more. It could be a little bit less. There are certainly a lot of facts that we don't know about what goes on inside Iran.

KING: And is this -- is this regime being helpful when you deal with Afghanistan and Pakistan or are they trying to undermine what you doing over here, just as the administration -- the previous administration said repeatedly they tried to do what you were trying to solve in Iraq?

PETRAEUS: I think it's probably a mix. We have common objectives with Iran with respect to Afghanistan. They don't want to see the Taliban and the extremists elements that sought sanctuary there before return to running that country, certainly, a Sunni extremist organization, they, of course, being a Shia country.

They want to see a reduction in the flow of the illegal narcotics that has trapped many of their own citizens in addiction and so forth.

So there are common interests here, but there's also a sense, at times, we think, where they would certainly like us to bleed a bit more perhaps. They don't want to make it too easy for us. And certainly, they want to have a degree of influence, some of that legitimate, some perhaps a little less legitimate.

KING: Well, Ambassador Holbrooke, you will be in a meeting in the week ahead, I believe. I know Secretary Clinton will be there, in which Iranian diplomats will be in the room.

It is the highest-level contact in quite some time. What are your guidelines?

Where has the president said, Richard, if this comes up, you're allowed to talk about this. Let's say the Iranians come in and they're in a talkative mood and they want to talk about a lot of things. Where's your red line?

HOLBROOKE: Well, let's just see what happens in the Hague, John. I don't want to -- I don't want to forecast what's going to happen. Red lines? Well, we're not going to eradicate 30 years of bitter disagreements in one meeting.

But I want to be clear here that the United States has been asked repeatedly since January 20th how we feel about Iran participating in meetings on Afghanistan and Pakistan.

And we've given the same answer to everyone. We have no objections. Iran is a neighbor. And as David Petraeus has just said, they have -- we and they have common concerns.

In 2002 they helped stand up the Karzai government. They hate the Taliban and they need stability on their eastern frontier.

On the other hand, we have enormous differences with them on their nuclear program, on Hezbollah, Hamas and many other issues. So this is a work in progress. We also have to be mindful of the interests of our very important friends and allies in the rest of the region.

And so it's a very complicated issue. But the door is open for Iran to participate in international efforts to stabilize Afghanistan. Those must involve all the neighbors, including India, China, Russia, Turkey, Saudi Arabia, United Arab Emirates, plus our NATO allies.

So this -- we'll see how it goes.

KING: The vice president (sic) of the United States was a guest on this program two weeks ago. And he said something that caused a bit of a stir over at the White House and around town. I want you to listen.

(BEGIN VIDEO CLIP)

KING: Do you believe the president of the United States has made Americans less safe?

FORMER VICE PRESIDENT DICK CHENEY: I do. He is making some choices that, in my mind, will, in fact, raise the risk to the American people of another attack.

(END VIDEO CLIP)

KING: General Petraeus, you served in the Bush administration under Vice President Cheney and President Bush. You're now serving in the Obama administration.

Are the American people less safe because of this new president, as Vice President Cheney says?

PETRAEUS: Well, I wouldn't necessarily agree with that, John. I think that, in fact, there is a good debate going on about the importance of values in all that we do. I think that, if one violates the values that we hold so dear, that we...

KING: You mean torture?

PETRAEUS: ... we jeopardize -- well, in fact, I put out a memorandum to the soldiers in the Multinational Force-Iraq, when I was the commander, because of concern that we may not be taking some of these seriously enough.

As you know, the field manual came out, from the Army, that is used by all of the different services that completely, clearly outlaws torture. So we think for the military, in particular, that can't -- that's a line that can't be crossed.

(CROSSTALK)

KING: So was the line crossed in the Bush administration?

Was the line crossed? Did you do things which you fundamentally thought were wrong and immoral?

PETRAEUS: We certainly did not. Now, there were some incidents that did, and we learned some very hard lessons from Abu Ghraib and other cases. And we believe that we took corrective measures in the wake of that. And that is very, very important.

But it is hugely significant to us to live the values that we hold so dear and that we have fought so hard to protect over the years.

KING: I want to talk through a timeline of Iraq. The American people came to know General David Petraeus as the general who turned around -- and many would accept that statement -- a flawed strategy in Iraq.

I want to go through a timeline. Then-state senator Barack Obama, way back in 2002, said he thought the Iraq war was a fundamental mistake and he opposed it.

And then, as a senator of the United States and a candidate for president, he spoke out quite passionately against the surge strategy. Let's listen.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: The responsible course of action for the United States, for Iraq and for our troops is to oppose this reckless escalation and to pursue a new policy.

(END VIDEO CLIP)

KING: As president of the United States, shortly after taking office, he was unveiling new Iraq strategy. He called you "brilliant," General Petraeus, and he said this. It sounds a little different.

(BEGIN VIDEO CLIP)

OBAMA: Under tough circumstances, the men and women of the United States military had served with honor and succeeded beyond any expectation.

(END VIDEO CLIP)

KING: And then recently, in a 60 minutes interview, he, almost under his breath, said something to the effect of who knew Iraq would be the least of his problems as president of the United States.

He has never publicly -- President Obama has never publicly said, you know what, I was wrong; the surge was the right strategy. Has he told you that?

PETRAEUS: Well, we haven't actually talked about the surge. What we talked about is looking forward. And I think it's very important, actually, at points like this, to take the rearview mirrors off the bus, as we say, and look -- look ahead. That has been the focus.

I think you know that, on the day after the inauguration, the first full day in office, the president sat down with the commander from Iraq by video teleconference, myself in the situation room, the chairman, the secretary of defense, the other members of the national security team and discussed Iraq.

And that's what launched the review of the Iraq policy that eventually culminated in the address at Camp Lejeune, something that General Odierno, Ambassador Crocker and I support, something to which we had substantial input, and we think quite a pragmatic and proper, prudent way forward.

KING: Ambassador Holbrooke, you were a fierce critic of the Bush approach in Iraq. In the political debate about it here in Washington, though, many Democrats will tell you privately, you know what, I was wrong; the surge worked because of David Petraeus and that, you know, President Bush, in the end, and John McCain and Joe Lieberman were right.

Why is that such a hard thing for Democrats to say?

HOLBROOKE: I -- I'm not going to partisanize the discussion here. But I do want to say something about Dave Petraeus, whom I did not know until about three months ago and then fate and destiny put us together as counterparts.

I think the nation owes General Petraeus a debt of gratitude for what he's achieved in Iraq. And I am confident, absolutely confident, having known the entire United States military chain of command from General Westmoreland in Vietnam on, that we now have the best team we possibly could have on the ground, from Admiral Mullen to General Petraeus to the command in Afghanistan.

And I'm proud to work with them. And we all ought to acknowledge what has been achieved.

Now, in regard to the previous comment that you played, by the former vice president of the United States, I need to say -- and I hope I can do this in a spirit of bipartisanship and nonbipartisanship, that I don't have a clue what he's talking about.

We are treating Afghanistan and Pakistan as a single theater. We are going to address it in an integrated way. We are going to give it more resources. And that is where the people planning the next attack on the United States or on our European allies are certainly doing it. So I just do not understand what his comments were referenced to.

KING: All right. We will leave it there. Ambassador Holbrooke being very diplomatic. We'll catch you next campaign season. We'll see if that stays the same.

(LAUGHTER) Ambassador Holbrooke, General Petraeus, on a serious note, you both have very difficult work in the days and weeks ahead and we certainly, as Americans, we wish you very well in that work.

Good luck to both of you. And thanks for coming in this morning.

Transcript: Secretary of Defense Gates on Fox News Sunday (29 March)

HOST CHRIS WALLACE: This week, President Obama took ownership of the war in Afghanistan. Here for an exclusive interview on the new strategy as well as other tough challenges around the world is the Secretary of Defense Robert Gates.

And, Mr. Secretary, welcome back to “FOX News Sunday.”

GATES: Thank you, Chris.

WALLACE: Let’s start with President Obama’s mission statement Friday on the new strategy in Afghanistan. Here it is.



OBAMA: ... that we have a clear and focused goal to disrupt, dismantle and defeat Al Qaida in Pakistan and Afghanistan.

(END VIDEO CLIP)

WALLACE: President Bush used to talk about building a flourishing democracy. Has President Obama narrowed our mission and, if so, why? GATES: I think the -- the near-term objectives have been narrowed. I think our long-term objective still would be to see a flourishing democracy in Afghanistan.

But I think what we need to focus on and focus our efforts is making headway in reversing the Taliban’s momentum and strengthening the Afghan army and police, and -- and really going after Al Qaida, as the president said.

WALLACE: Yeah, I’m going to pick up on that. The president said that Al Qaida is actively planning attacks against the U.S. homeland. Does Al Qaida still have that kind of operational capability to plan and pull off those kinds of attacks?

GATES: They certainly have the capability to plan, and in many ways they have metastasized, with elements in North Africa, in the Levant, in the Horn of Africa and elsewhere, and they aren’t necessarily directly controlled from Al Qaida in western Pakistan, but they are trained there. They often get guidance from there and inspiration from there.

So I think they do have those capabilities. They clearly have been inhibited by all the things that have been done over the last six or seven years.

WALLACE: When you say they still have those capabilities to pull off an attack on the U.S. homeland, do you still regard them as a very serious threat?

GATES: I still regard them as a very serious threat, yes.

WALLACE: U.S. commanders in the field wanted more combat troops than the 17,000 that President Obama committed.

Why did he decide against committing all of those additional combat troops? And will there be enough for the kind of counterinsurgency, living among the population, protecting the population, that was so key to the success of the surge in Iraq?

GATES: Well, let me be very clear about this. The president has approved every single soldier that I have requested of him. I have not sent any requests for units or troops to the president so far that he has not approved.

Now, the reality is I’ve been at this a long time, and I don’t think I’ve ever in several decades run into a ground commander who thought he had enough troops. That’s probably true in all of history.

But we have fulfilled all of the requirements that General McKiernan has put down for 2009, and my view is there’s no need to ask for more troops, ask the president to approve more troops, until we see how the troops we -- he already has approved are in there, how they are doing, what the Europeans have done. And we will be reviewing that come the end of the year.

WALLACE: And are there enough for the kind of counterinsurgency tactics -- living in the population, protecting the population -- that we saw so successful in Iraq?

GATES: Well, based on the requirements that have been levied by General McKiernan for 2009, that would be his view, I think.

And the reality is there already are a lot of troops there. This will bring us, when all is said and done, to about 68,000 troops, plus another 35,000 or so Europeans and other partners.

WALLACE: What kind of long-term commitment has the president given you? Has he promised you that he will stay in Afghanistan until the Taliban, in fact, are -- and Al Qaida are defeated?

GATES: He has clearly -- he clearly understands that this is a very tough fight and that we’re in it until we’re successful, that Al Qaida is no longer a threat to the United States, and that -- and that we are in no danger of either Afghanistan or the western part of Pakistan being a base for Al Qaida.

By the same token, I think he’s been clear -- and frankly, it was my view in our discussions -- that we don’t want to just pursue -- settle on this strategy and then pursue it blindly and open-endedly.

And that’s why I felt very strongly that toward the end of the year or about a year from now we need to reevaluate this strategy and see if we’re making progress.

WALLACE: But the strategy is subject to review. The commitment to defeat the Taliban and Al Qaida -- is that subject to review?

GATES: I don’t think so.

WALLACE: That is the commitment.

GATES: Certainly, to defeat Al Qaida and -- and make sure that Afghanistan and western Pakistan are not safe havens for them.

WALLACE: There were reports this week that elements of Pakistani intelligence, the ISI, are providing the Taliban and other extremists with money, supplies, even tips on allied missions against them. One, is it true? And two, if so, can we stop it?

GATES: Well, the way I would answer is to say that we certainly have concerns about the contacts of -- between the Pakistani intelligence service and the -- and some of these groups in the past.

But the reality is the Pakistanis have had contacts with these groups since they were fighting the Soviets 20 or 25 years ago when I first was dealing with the Pakistanis on this, and I must say also helping make sure that some of those same groups got weapons from our safe haven in Pakistan.

But with people like Gulbuddin Hekmatyar and the Haghani [Haqqani] network, the Pakistanis have had contacts with these people for a long time, I think partly as a hedge against what might happen in Afghanistan if we were to walk away or whatever. What we need to do is try and help the Pakistanis understand these groups are now an existential threat to them and that we will be there as a steadfast ally for Pakistan, that they can count on us and that they don’t need that hedge.

WALLACE: There’s a NATO summit coming up next week in Europe. Have we given up on the idea of getting our allies to send more combat troops to fight alongside the U.S. in Afghanistan?

GATES: No, we haven’t. And in fact, I think some of our allies will send additional forces there to provide security before the August elections in Afghanistan.

But I think what we’re really interested in for the longer term from our partners and the allies is helping us with this civilian surge in terms of experts in agriculture, and finance, and governance and so on, to help us improve the situation inside Afghanistan, give a sense of forward progress on the part of the Afghan people.

Also, police trainers -- you know, the Caribinieri, the Guardia Seville, these various groups in Europe are really very good paramilitary-type police, and I think they could do a good job in the police training, so those will be probably the principal focus of our requests.

WALLACE: New subject. North Korea says that it will launch a communications satellite sometime in the next few days. They have, in fact, even moved a missile out to the launch pad. Several questions. Why are we so troubled by an activity that the North Koreans say is civilian?

GATES: Well, I think that they’re -- I don’t know anyone at a senior level in the American government who does not believe this technology is intended as a mask for the development of an intercontinental ballistic missile.

WALLACE: Do we believe that they now have the ability to put a nuclear warhead on top of a missile, as the head of the Defense Intelligence Agency, General Maples, suggested?

GATES: I think that we believe that that’s their long-term intent. I personally would be skeptical that they have the ability right now to do that.

WALLACE: The commander of U.S. forces in the Pacific, Admiral Keating, says that we are, quote, “fully prepared” to shoot down this missile. Are there any circumstances under which we will do that?

GATES: Well, I think if we had an aberrant missile, one that was headed for Hawaii, that looked like it was headed for Hawaii or something like that, we might consider it. But I don’t think we have any plans to do anything like that at this point.

WALLACE: What if it were headed for the West Coast, for Alaska?

GATES: Well, we -- I don’t think we believe this missile can do that.

WALLACE: And what about the Japanese? Obviously -- would -- they have some of our technology. Do we believe they’re going to -- prepared to shoot this down?

GATES: Well, again, based on what I read in the newspapers, what the Japanese are saying is that the -- if that missile fails, and it looks like it’s going to drop debris on Japan, that they might take some action.

WALLACE: You’re basically discussing this, Mr. Secretary, as if it’s going to happen.

GATES: The launch?

WALLACE: Yeah.

GATES: I think it probably will.

WALLACE: And there’s nothing we can do about it?

GATES: Nope.

WALLACE: And what does that say to you?

GATES: Well, I would say we’re not prepared to do anything about it.

WALLACE: There are reports -- well, let me -- I want to stay with that. What does that say to you about the North Korean regime, that -- that we and the rest of the world can all say that this is -- you know, a provocative act, an unlawful act, and they thumb our noses and we’re not going to do anything about it?

GATES: Well, I think it’s very troubling. The reality is that the six-party talks really have not made any headway any time recently.

There has certainly been no -- if this is Kim Jong-il’s welcoming present to a new president, launching a missile like this and threatening to have a nuclear test, I think it says a lot about the imperviousness of this -- of this regime in North Korea to any kind of diplomatic overtures.

WALLACE: There are reports that the Obama White House has asked you to cut $2 billion from the next budget for missile defense, roughly 20 percent. Is this president less committed? Is he less convinced that this program will work than President Bush was?

GATES: Well, I don’t know about the comparison. I would say -- I would tell you that I have not received any specific requests from the White House in terms of our budget. We’ll be talking about that. We have the top line number.

We receive what we call a pass-back from the Office of Management and Budget, but I considered the suggestions that they made simply those, suggestions. I’ve taken some of them and some of them I haven’t.

WALLACE: But do you regard there is a new skepticism in the part of the White House towards missile defense?

GATES: I think that -- I think one of the things that we need to do is sit down and go through the capabilities that we have, the tests that we’ve been through, and -- and focus on where -- where we need to sustain development, where we need to sustain a commitment to have a capability.

WALLACE: So it sounds like that’s under review.

GATES: I think so.

WALLACE: There are so many trouble spots around the world, but I want to do a lightning round tour of the horizon. I know this is not your thing, Mr. Secretary, but let’s try to do quick questions, quick answers.

Iraq -- do you see any developments so far that might cause you to have to slow down President Obama’s time line to pull out of the major cities by this summer and to get our combat troops out by August of 2010?

GATES: I haven’t seen anything at this point that would lead me to think that there will be a need to change the time lines.

WALLACE: Iran -- you said recently -- you said recently that they are not close to a nuclear weapon. Admiral Mullen, Chairman of the Joint Chiefs, says that they have enough material to make a bomb. Is there a contradiction there?

GATES: No. What they have is -- is probably enough low-enriched uranium from their centrifuges at Natanz to give them the capacity should they then enrich it more highly to proceed to make a weapon. They don’t have the capability at this point to enrich. We were suspicious they may be building one clandestinely.

We do not believe they are doing enriching beyond a low level at Natanz, and the IAEA [International Atomic Energy Agency] is in there, so we will know if they tried to do that. So I guess the point -- the bridge between what Admiral Mullen said and what I’ve said is they do have enough low-enriched uranium that if they should then proceed to enrich it more highly, they could build a weapon.

WALLACE: You expressed, I think it would be fair to say, extreme skepticism about the ability of diplomacy to alter the behavior of the North Koreans. Do you feel the same way about the Iranians?

GATES: Well, I think -- I think, frankly, from my perspective the opportunity for success is probably more in economic sanctions in both places than it is in diplomacy.

Diplomacy -- perhaps if there is enough economic pressure placed on Iran, diplomacy can provide them an open door through which they can walk if they choose to change their policies, and so I think the two go hand in hand, but I think what gets them to the table is economic sanctions.

WALLACE: A couple of more questions for the lightning round. Mexico -- the Pentagon issued a report in November on the growing drug violence there that said this, “An unstable Mexico could represent a homeland security problem of immense proportions to the United States.”

Mr. Secretary, how likely is that scenario, that the Mexican government loses control of part of the country?

GATES: I don’t think that’s a likely scenario at this point. I think that a lot of the violence is -- is among or between the cartels as they strive for control of certain areas in Mexico.

I think President Calderon has acted with enormous courage and forcefully in sending troops in to try and get control of that situation.

And I think that -- as I think Admiral Blair testified just in the last couple of days, I think that the chances of the Mexican government losing control of some part of their country or becoming a failed state is -- are very low.

WALLACE: In January, White House Press Secretary Robert Gibbs gave a one-word answer, “yes,” when asked if this president is going to end the policy of “don’t ask, don’t tell” for gays in the military.

Where does that stand? And why is there currently money in the 2010 budget to keep enforcing that policy?

GATES: Well, it continues to be the law. And any change in the policy would require a change in the law. We will follow the law, whatever it is.

That dialogue, though, has really not progressed very far at this point in the administration. I think the president and I feel like we’ve got a lot on our plates right now, and let’s push that one down the road a little bit.

WALLACE: And finally, and we have just a minute left, President Bush used to talk about the global war on terror. This administration, this White House, seems to steer away from that.

In fact, in his speech on Friday, President Obama talked about a campaign against extremism. Beyond the words, is there a strategic difference between the way these two presidents see the fight?

GATES: I think that they -- they both see Al Qaida as a threat to the United States, Al Qaida and its extremist allies. And I think they both have made clear their determination to go after it.

We have the opportunity now that perhaps we did not have before to apply the kind of resources, both military and civilian, against it and a broader kind of strategy that we did not have before.

WALLACE: But a difference between saying war on terror or campaign against extremism...

GATES: I think that’s people looking for differences where there are none.

WALLACE: Mr. Secretary, I want to thank you so much for coming in. We got through everything. Thank you. Please come back, sir.

GATES: My pleasure. Thank you.

Transcript: Obama Interview on Global Economy with Financial Times

From the Financial Times website, which also has audio of the interview:

FT: Thank you for doing the interview Mr President.

Obama: My pleasure, I read the Financial Times before other people read the Financial Times. Now it’s trendy and everybody carries around a Financial Times.

FT: Let’s talk about the G-20. What will be your benchmarks for success?

Obama: The most important task for all of us is to deliver a strong message of unity in the face of crisis.

There’s some constituent parts to that. Number one, all the participating countries recognise that in the face a severe global contraction we have to each take steps to promote economic growth and trade; that means a robust approach to stimulus, fighting off protectionism.

Next, we have to make sure that we are all taking serious steps to deal with the problems in the banking sector and the financial markets and that means having a series of steps to deal with toxic assets and to ensure adequate capital in the banking sector.

Third, a regulatory reform agenda that prevents these kinds of systemic risks from occurring again and that requires each country to take initiative but it also requires coordination across borders because we have a global, we have global capital markets, and that will include a wide range of steps, additional monitoring authority coordination of supervisors and various countries dealing with offshore tax havens. Making sure that…

FT: Is that a problem? Offshore tax havens.

Obama: Well, its something that is going to be discussed. I know that in my discussion I think there is a concern that we don’t want people to be able to game the system or circumvent regulated capital markets and making sure our regulations are targeting not just banks but any institution that could pose a potential systemic risk to the system.

A final area of concerted action involves international financial institutions and their capacity to assist emerging markets in developing countries at a time when those markets could be under even more severe strain then some of the more wealthy nations and I think making sure that institutions like the IMF have the resources to provide such assistance that world food supplies are not imperilled as a consequence of the break down in global trade, those are all issues that I think have to be addressed.

Now, I’m confident based on conversations that I have this week with Angela Merkel, Sarkozy, as well as with Kevin Rudd as well as conversations that I have had previously with Gordon Brown and others, that there is already a rough consensus there that by the time we arrive in London we will have taken, we will have made significant progress in moving in the right direction.

FT: Let’s just talk about the stimulus for a moment. At the moment there has been a 1.8 per cent GDP boost in 2009 by the G20 nations. There are concerns among economists that you need a sustainable stimulus and therefore 2010 is key. Will you get secure commitments from say, the Europeans, for action if necessary in 2010?

Obama: Two points I want to make on this, Number one: The press has tended to frame this as an “either or approach”. There are some G20 participants that are arguing fiercely for stimulus, others for regulation. What I have consistently argued is that what is needed is a “both and approach”. We need stimulus and we need regulation. We need to deal with the problems right in front of us and we also need to make sure we’re taking steps to prevent these types of breakdowns from happening again.

With respect to the stimulus, there is going to be an accord that G20 countries will do what is necessary to promote growth and trade. I think there is a legitimate concern that, would most countries already having initiated significant stimulus packages that we need to see how they work. Obviously I admire economists. I have a bunch of them on my staff. But to start making a whole host of plans about next year, without having better information on how the current stimulus efforts are working, is something that I think is of concern.

So what we are going to see is what the United States has led on this. We have been very aggressive in terms of our recovery package. The way our recovery package is structured, money is going out both in 2009 and 2010. But each country has its own constraints, its own political rhythms and what we want to just make sure is that everybody is doing something, everybody recognises the need to make progress on this front and that we are prepared to step into the breech should current efforts prove to be inadequate.

FT: I mean that is really the great challenge, in managing this crisis - bridging the gap between what is economically absolutely necessary and what is politically possible. How do you bridge that?

Obama: That’s one gap. Then there’s a gap in ideas about how to approach a crisis like this, especially among economists - although on the issue of the stimulus there seems to be much broader consensus among both conservative and liberal economists that stimulus is appropriate.

You know, the financial crisis hit the United States first; it is now being experienced around the world. Not surprisingly we took some very aggressive action earlier than some other countries because its impact had been felt most immediately on Wall Street. As other countries start experiencing these drastic declines in GDP and in their exports I think that the sense of urgency has grown and you are going to start seeing a convergence. In all countries there is an understandable tension between the steps that are needed to kick start the economy and the fact that many of these steps are very expensive and tax payers have a healthy scepticism about spending too much of their money, particularly when it is perceived that some of the money is being spent not on them but on others who they perceive may have helped precipitate the crisis. So that is always going to be a challenge and what’s also difficult is the fact that the policies we initiate all take time to take effect and by its very nature politics looks for more instantaneous gratification.

But I am confident that the American people, and I think people around the world, are looking to its leaders to lead and that some of the steps we have already taken are starting to bear fruit. We’re seeing glimmers of stabilisation in the economies and we haven’t yet seen…

FT: Glimmers of stabilisation?

Obama: Here in the United States for example, you’re starting to see pockets of stabilisation in the housing market. Our housing plan has led to the lowest interest rates, mortgage rates in a very long time and you are starting to see a huge number of refinancing in the banking sector. In certain select markets, like the market for auto loans or the market for student loans, Secretary Tim Geithner’s efforts to provide a market for asset-backed securities has helped and so we still have a long way to go, but I am confident that if we are persistent and we don’t approach this with a thought that there is a silver bullet out there but instead are willing to try a range of methods to deliver on the economic growth in jobs that we will get out of this current crisis.

FT: You mentioned the risks and dangers of protectionism. 73 separate measures have been identified by the World Bank since the last G20 summit so what again in practical terms can your administration do at the G20 to stop this - and I’m thinking to whether there are real risks that people worry in Europe a lot about what is going on, on Capitol Hill, with “Buy American” provisions.

Obama: Well first of all I think it’s important to note that here in the United States, despite some protectionist rhetoric and very real economic frustration growing out of the collapse of the financial markets and the huge rise in unemployment that the “Buy American” provision that was in the stimulus package was specifically written that had to be consistent with WTO [World Trade Organization]. That the Mexican trucking provision is now subject to negotiations to ensure that we don’t see an escalating trade war.

I have sent a very clear signal that now is not that time to offer hints of protectionism and I will continue to discourage efforts to close off the US market. I think that in a democracy, there are always going to be some loose ends out there. That’s true here, that’s true around the world but overall I don’t think that we’ve seen a huge rush to protectionism that that isn’t the rhetoric that is emanating from the leaders that will be gathering in London.

And to the extent that the American people or Europeans or Asians, Africans, Latin Americans all feel confident that their leaders are doing everything that they can to encourage and promote economic [..] and that they have their populations interests at heart, I think we are going to be able to hold the line on any significant slippage.

FT: I wondered Mr President whether you’re concerned that, particularly following the AIG bonus controversy, there’s some danger that confidence that business has in the rule of law in the United States has been shaken and that could hinder some of these recovery measures?

Obama: I think it is a source of concern in some quarters. To the extent that the captains of industry recognise very legitimate frustrations that the American people feel when they read about huge bonuses going to members of firms that are receiving large tax payer bailouts. I think they can take steps to lessen that danger and I met with some bankers today and it was a constructive conversation but one of the points that I made is that a time when everybody is needing to sacrifice there has to be a similar sense of sacrifice on the part of those various sectors of the economy that helped to precipitate this crisis and to the extent that they’re showing restraint that compensation packages are structured so that there is some deferral until money is returned to tax payers and the economy recovers that will be good for everybody. That will put [...] in a stronger position to help them.

But you know, keep in mind that although there are going to be, I think, emotional reactions to and legitimate grievances around some of these issues, the United States has been the world’s most successful economy precisely because of a long standing respect for legal contracts and orderly transparent and open market operations and that’s not going to change.

FT: Mr President, given the rising tendency to populism on Capitol Hill and elsewhere, do you feel confident that at a time like this you can go to Congress and ask for the kind of backing of capitalisation that most economists say will be required in the near future?

Obama: I think it is very important for us to show that the money that has already been authorised is being well spent. That it is helping to result in loans going to small business and large business that are in turn investing and creating jobs. If voters perceive that it’s a one way street that we are just pouring more and more money into institutions and seeing no return other than avoiding catastrophe then it’s harder to make an argument for further intervention.

If on the other hand people start saying that they can refinance their house, and their child can get a student loan and that small business is able to retain its credit line, so that there is a tangible and meaningful result from our measures, then I think we can win back the confidence of the American public.

The Reckoning? Spanish Judge Orders War Crimes Investigation of Bush Officials

The Obama Administration has been trying to hold the line against any punishment of the Bushmen for their actions, and the "Truth Commission" proposal of Senator Patrick Leahy is unlikely to become reality. Overseas, however, the battle is not yet done:

"A Spanish court has taken the first steps toward opening a criminal investigation into allegations that six former high-level Bush administration officials violated international law by providing the legal framework to justify the torture of prisoners at Guantánamo Bay, Cuba, an official close to the case said."

The magistrate who ordered the enquiry is Baltasar Garzon, best known for his crusading arrest of Chilean dictator Augusto Pinochet. Those named in the complaint include former Attorney General Alberto Gonzales, Vice President Dick Cheney's chief of staff strategist, David Addington, ; Jay S. Bybee, Mr. Yoo’s former boss at the Justice Department’s Office of Legal Counsel; and David S. Addington, who was the chief of staff and legal adviser to Vice President Dick Cheney. the Bush Administration's favourite twisters of the law, John Yoo and Jay Bybee, and former Undersecretary of Defense for Policy Douglas Feith, and Department of Defense counsel William J. Haynes.

The New York Times, which has a copy of the 98-page complaint, says it is based on the Geneva Conventions and the 1984 Convention Against Torture. The case was prepared by Spanish lawyers, with help from experts in the United States and Europe, and filed by a Spanish human rights group, the Association for the Dignity of Prisoners.

Any arrest warrants are still months away and, as American legal experts quickly noted, they will be largely symbolic: it is unlikely that the Obama Administration would grant an extradition request from Spain. Still, the warrants would raise the prospect that any of the six men could be arrested and detained if they travelled abroad.