America's Pacific Future Is Happening Now

Daniel R. Russel
Assistant Secretary, Bureau of East Asian and Pacific Affairs
Stanford University
Stanford, CA
April 21, 2016

KARL EIKENBERRY: Welcome, welcome, everyone. I am truly very proud to be standing up here today to have the honor of introducing the current United States Assistant Secretary of State for East Asian and Pacific Affairs, Danny Russel. I've known Danny for almost 20 years now. We first met when Assistant Secretary Russel was the Chief of Staff for the Undersecretary of State for Political Affairs, Thomas Pickering.

Now, there's all kinds of definitions of what makes a skilled diplomat, so let me try this one with you. For those that live here in the bay area you'll, I think, appreciate this. The definition of a skilled diplomat is somebody who's sitting at a baseball game being played between the San Francisco Giants and the Oakland Athletics, and on one side is a San Francisco Giant's fan, on the other side is an Oakland Athletics fan, and the skilled diplomat can get them to talk about ice hockey.

Truly by all measures, Danny is an extraordinary diplomat and more, he's a superb strategist as well. He has given almost all of his adult life in the service of our nation as a career member of the Senior Foreign Service of the Department of State. Prior to his current post, Assistant Secretary Russel served in the White House as a Special Assistant to the president, and as the National Security Council senior director for Asian affairs. And in that capacity, he played a very key role in formulating and then implementing President Obama's strategic rebalance to the Asia-Pacific region – something that I think the Assistant Secretary will talk to us about today.

His deep expertise in the Asia-Pacific region is evident from a very quick review of his previous assignments as a career diplomat. These included Director of the Office of Japanese Affairs in the Department of State, assignments in critical positions in U.S. Embassy - Seoul, and in U.S. Embassy - Tokyo, where he served at one point as an Assistant for Senator, then Ambassador, Mike Mansfield, our Ambassador to Japan – one of many distinguished Ambassadors to Japan, with another one sitting in our front row here, Mike Armacost.

Danny also served in the U.S. Consulate in Osaka, Japan, where he was the Consul General and interestingly served also in a previous assignment as the Branch Office Manager in Nagoya, also in the Consulate General in the Consulate in Osaka. And no one could charge Danny of overspecializing in the Asia-Pacific region because he managed to find time throughout this long and distinguished career to also serve as our Deputy Chief of Mission at the U.S. Embassy in The Hague in the Netherlands.

It also is the Deputy Chief of Mission in our Embassy in Nicosia, Cypress. He also went global well before the world went global when he was a Political Adviser to the Permanent Representative of the U.S. Mission to the United Nations, which I believe was also Thomas Pickering at that time.

So I could go on and on, but everyone's eager to use the limited time that we have this afternoon to hear directly from Assistant Secretary Russel. So I'd like to give a warm Encina Hall welcome to a great diplomat and a very good friend of so many of us in this audience, Danny Russel.

ASSISTANT SECRETARY RUSSEL: Well hello, everybody, and thank you very much, Karl. That was a very generous introduction. Actually, the honor really is mine to be here with so many great diplomats and friends and seniors, certainly you and Ambassador Armacost and Ambassador Kathy Stephens, my diplomatic colleagues from around Asia. And I think I see my brother is here, who works here at Stanford. My mother wanted us to go here so, he got here a lot sooner than I did.

My working definition of a diplomat doesn't involve sports. It's the old Will Rogers line that a diplomat's a guy who could tell you to go to hell in a way that makes you look forward to taking the trip. But this is – this is fun for me and diplomacy is fun for me. I know most people would rather be hanging out in Stern field but at least some of you share my sense that this is what makes for a good time.

I am a career diplomat, Foreign Service guy who was seconded to the White House, to the National Security Council, at the very beginning of the Obama Administration. And that meant that I had a ring-side seat and in some cases, a chance to influence a bit the development of our strategy and our policy towards Asia. And the fact is that over the course of the last seven and a half years, America's relationship with the Asia-Pacific region has changed.

Changed in a number of important ways. And, you know, when you think about a decade in which the U.S. was so heavily focused on other parts of the world for understandable reasons, and when you think about the environment when President Obama took office where the world was grappling with a devastating economic setback, the world economy was in distress, what it meant was we had a president and a team that came into office determined to use our foreign policy in a way that advanced America's interest in the first instance, our economic interest.

The Obama team that arrived in the White House in January of 2009 wanted to make sure that we were investing in a dynamic region that offered tremendous opportunities for economic and for other interests, opportunities to create jobs and to enhance our security to invest in the future. And the region is Asia, or to be more precise, the Asia-Pacific rim. And I want to spend a minute explaining the rationale behind this rebalance.

First, it was the simple economics of shared prosperity. We recognized that the world's economic center of gravity had been shifting to the Asia-Pacific, that Asia's not just a workshop, it's not just a growing consumer of American products; it's increasingly a co-innovator, a partner in developing new solutions to the big problems that we all face.

We, the United States, are overwhelmingly the source of most of Asia's external foreign investment. And U.S. companies benefit immensely from the youthful demographics and the rapid rise of the expanding middle class there.

The second feature, really, was the pressing necessity of shared security. So North Korea's recent tests are reminders, dangerous reminders, of a threat posed by their pursuit of nuclear weapons and ballistic missile capabilities. The tensions in the South China Sea reflect a risk – a different kind of risk -- where a coercive and a unilateral approach to long-standing maritime disputes is raising a great deal of tension.

A third factor was President Obama's recognition of a long-term importance of institution building. Strong institutions promote a rules-based order. And that in turn serves as a break on the strong, and creates space for the small. The more rule-setting there is by consensus, the less rule-breaking there is by unilateral actors. And what follows from that is that there's less risk that the U.S. will be forced, as we've been in other regions and as we did in Asia seven decades ago, to intervene at great cost to ourselves and our nation.

The fourth driver was our stake in supporting and defending universal values, rights, freedoms. America's support for those who promote justice, promote good governance, promote fairness, is something that gives us a tremendous amount of influence. And the fact is that where democracy and human rights prevail, we find ourselves with reliable friends and stable partners.

Now let me just run through what we've done about each of these four areas over the course of the past seven and a half years of the rebalance. First of all, we've taken our role as an economic power and as a model of openness very seriously. We've worked to promote innovation and entrepreneurship along with the rule of law. In 2009 we responded to the global economic downturn not by protectionism, not by jingoism, but by upgrading and completing the KORUS agreement, the U.S. - Korea Free Trade Agreement, and we used that to open more trade, to increase investment.

We've pursued initiatives to expand economic relations with China. That includes the ongoing negotiations on a bilateral investment treaty. And working with China, we championed the WTO's information technology agreement which has really profound long term benefits. We supported the new ASEAN Economic Community, which is that region's mechanism for integrating and for connecting the ten countries of Southeast Asia. And we are promoting economic growth and liberalization through the trade liberalization work that we do at APEC and through important agreements like TPP – which I'll come back to. Well in fact, let me just tackle that straight on.

You know, I know that people's concerns about trade agreements – and this is increasingly a feature of the current electoral scene here in the United States – and even trade advocates themselves recognize that more help is needed for communities that have been adversely effected by globalization. But I think it's worth taking a minute to explain what's so good about TPP and why this agreement is different from previous trade agreements in some key ways.

I work closely with Mike Froman, the U.S. Trade Representative who's a former colleague of mine – and I see Ambassador Mike McFaul in the back, we also worked closely – in the early stages of TPP, both the construct and the negotiation, and one of the things that is lost in the debate is the fact that even if there were no trade provisions whatsoever in TPP, it would be by far the single best environmental agreement ever reached by the United States or other partners. It would be the single best labor rights agreement ever reached. It would be the single best Internet freedom agreement ever reached. But it is a trade agreement, and it gives protections not only for workers and the environment, but it creates protections that supersede a lot of corporate interests. It has labor standards that will bring wages and working conditions in other countries closer to our own level instead of provoking a race to the bottom that we'd be certain to lose. In TPP's environmental provisions that I said are not only good in their own right, but they will prevent companies from going around our regulations, from going abroad, to escape the kinds of provisions that we in the United States have put in place.

It has provisions that will help small business export to replace jobs that have previously been lost, and it has protections for intellectual property so that you smart Stanford grads can hold on to the rewards of your hard work. But beyond the environmental or the labor or the trade rationale, there's a compelling strategic case for TPP. There's a good reason why Secretary of Defense Ash Carter says – and he means it – that TPP is more valuable than another aircraft carrier strike group. It's because high standards and economic integration produce a stabilizing and a positive dynamic.

Creating employment and creating opportunity through trade with safeguards for rights and for the environment is a recipe for peace and stability. And not only will economic benefits flow to both sides of the pacific, but the role of the United States at the center of this trading network is something that reinforces the credibility of America's commitment to the region; it reinforces our leadership. And within the region, the agreement raises standards – standards for good governance, standards as I said for labor rights and environmental safeguards, standards for data protection, and all of that leads to rising living standards; it creates more consumers for our products and it has a lot other benefits. But all of this progress, whether in democratic terms or in economic terms, depends on the maintenance of an adequate security arrangement in the Asia-Pacific region.

Peace doesn't come naturally to a region that has that level of division, of diversity – ethnic divides, cultural divides, historical divides, geographic divides, religious divides. And the United States, and particularly the Obama Administration, has taken our traditional role as security guarantor in the Asia-Pacific region very, very seriously.

So early in 2009 we started not with China, but with our friends. We started with our allies and our long-standing security partners. We modernized our alliances with Japan and Korea, and with Australia. We developed enhanced cooperation and agreements that increased rotational presence of U.S. forces in the Philippines, in Australia.

We stepped up joint exercises and training and capacity building to help our partners respond to natural disasters, to crises, to threats – and let's face it, there are real threats in the region – threats to peace and security. North Korea's nuclear missile programs are the most pressing ones. Tensions in the South China Sea over maritime and territorial disputes are very much in the news and very much on our minds – a big part of my life. The risk from violent extremism in Southeast Asia is real and it's something that we work closely with our partners to try to get ahead of. And I'll be happy in the discussion period to engage on any of those challenges.

But in terms of our overall strategy for dealing with these kinds of problems, the point I would make is that the old 20th century kind of hub-and-spoke alliance system where we work bilaterally with partners and allies but they didn't do much with each other, is pretty much over. What that has evolved into is, increasingly, an integrated network system that allows us to work trilaterally; it allows us to work in sort of plural-lateral, multilateral, and ad hoc mechanisms. We do a great deal of it with allies like Japan and Korea and Australia, but we also work plural-laterally with other partners, including and increasingly with Chi – with India.

Despite what many Chinese officials believe or at least say, this kind of cooperation isn't directed at China. We do not have a containment strategy. In the Cold War, we did have a containment strategy, and it looked very, very different than the way that we deal with China today. We're not recreating the Cold War through our policies vis-a-vis China. We are not pursuing a zero sum strategic rivalry.

The U.S. and our allies, our partners, work with China – not just on North Korea but on combating piracy off the coast of East Africa, in providing humanitarian assistance when Ebola broke out in West Africa; we would collaborate on a whole host of transnational threats, proliferation, other challenges. Moreover, I can attest that the military-to-military relationship between the U.S. and China has grown to the point where the PLA's Navy is now included in our major Pacific Ocean exercise RIMPAC; developed to the point where our top officials, including the Chairman of the Joint Chiefs of Staff, PACOM Commander, the Secretary of Defense, and Chinese counterparts routinely exchange visits and communicate. And let me also point out that the network of security partnerships that we've built and that we've refreshed are demonstrating their importance in the region's prosperity.

We are the security partner of choice for nearly every nation in Northeast Asia and Southeast Asia, and in the Pacific. Our presence, our military activities, are welcomed by virtually all of the nations in the region. Even the Chinese, who raise questions about specific operations, are in great pains to say that they don't seek to supplant or exclude the United States and that they recognize the stabilizing role that the U.S. Navy and the U.S. military play.

Why is that? It's because as strong as we are – and we are very strong – we accept the limits placed on us by international law. And that brings me to the third priority in our rebalance, which is building up institutions. We've done this through the President's participation in the East Asia Summit, the grouping of 18 nations in the Asia-Pacific region, who meet at the leader level.

We've done it through extensive other forms of engagement with the ten ASEAN countries, including the summit hosted by President Obama in February at Sunnylands with those ten leaders; by working through and revitalizing through APEC, through the G20, through the G7 – which will be held in China and Japan this year – and by a host of other multilateral initiatives that foster compromise and foster coordination.

And nowhere has this been more important than in Southeast Asia, where the U.S. works so closely with the ASEAN and the member states on things like climate change, on public health, food security, tolerance, trafficking in persons and wildlife, education, employment, counter-terrorism, disaster preparedness. These are issues that really matter. They matter today, and they matter to all of us – to the people on both sides of the Pacific.

And it's not only the U.S. government that is so engaged. American businesses, American NGOs, and institutions are very, very active partners. Stanford in fact works with USAID to strengthen rule of law in ASEAN through projects like the Council of ASEAN Chief Justices.

Now, I mentioned the values agenda as a fourth area of focus and I'd like to just talk through briefly some of what we've done here. First of all, we have supported the extraordinary, dramatic advance of democracy in Burma--Myanmar. And we've done that through a mix of diplomatic engagement, of public and private programs, economic tools, support and funding for civil society, and the formation of a cleanly elected civilian government that took office on April 1st this year, marks a huge milestone in Asia.

I'm very proud to have been part of a group that played a role in supporting that. We've used all of these diplomatic and development tools also to give practical support to pluralistic societies like Indonesia, Mongolia, like the Philippines – and we're seeing incremental but still significant progress in other Southeast Asian and other Pacific Island states.

We have worked just as hard and in many cases even harder where governments have gone backwards on freedom and on human rights, including with dear, dear friends like Thailand and Malaysia, with one party states like Vietnam, and Laos, and their next door neighbor, Cambodia. We've continued to push forward in a respectful but in a determined way. I visit these countries frequently and I'm not being Pollyannish in saying that there is progress to report. And even when it comes to North Korea, which has probably the world's worst record on human rights, we have at least focused international attention on the plight of the North Korean people. And the increased pressure on the DPRK regime from strong resolutions at the UN General Assembly and the UN Human Rights Council have at least caused North Korea to close some of its political gulags.

Now, that's not much, but it's not nothing either. And neither are we giving up on this. So before we open up the discussion, I'd just like to offer one closing thought.

Tomorrow is Earth Day. Representatives of something on the order of 130 countries are going to gather in New York at the UN to sign the Paris Climate Agreement. No question that it's a global agreement, but the Asian-Pacific countries really have stood up in support of this in important ways. When the – you know, think back when the Kyoto Protocol was being negotiated. The Asia-Pacific region was badly divided between developed and developing, the haves and the have-nots, North and South. But this time, the Asia-Pacific region which not only has many if not most of the truly vulnerable front line states, but also has the biggest offenders – the biggest emitters like the U.S., like China – exercised leadership.

Japan stepped up with a huge 1.5 billion dollar commitment to the Green Climate Fund. South Korea stepped up in a very important way to host that fund. Pacific states that are at such risk used, in effective ways, their moral authority to really drive the process forward. And China turned around in an extraordinarily important way. You know, in the past, China categorically refused to commit to specific emission reduction targets under the Kyoto Protocol. But in 2014, more than a year before the conference – and I think based on some intensive diplomacy by Secretary Kerry and others – President Xi Jinping decided to join President Obama in jointly announcing very significant and very ambitious reduction targets. What was so important about this is the signal that it sent through the developing world that we can work together. And that signal was, I think, hugely important to the ultimate success in Paris.

So this is emblematic of what the United States can do with partners throughout the Pacific, big and small; how we can undertake to build a Pacific region, a Pacific century, that's based on rules and respect for the law. It's based on opportunity and support for an adherence to universal rights. These are not Western values, these are universal values. A century in a region that's based on the principle that the voice of every country should be heard and the voice of the people in every country should be heard, based on a spirit of cooperation and ambition.

That's what we have been working and will continue to work to build. So to the students in the audience, and this is black humor but if the reports in the newspaper are accurate, anybody who works in intel, I hope you will join us. I hope you will join – think seriously about a career in the foreign service. As many of the distinguished diplomats here can attest, there really is no more satisfying vocation or endeavor than public service. So I'll end there. Thank you very much.

KARL EIKENBERRY: Danny, thank you very much. You gave us a lot to think about. Now we'll open – we'll start a conversation here. And we have back there Debby – if you'd raise your hand. Debby has got a microphone so when we open it up to questions, if you raise your hand with the microphone, if you'd please stand up and identify yourself and where you're from. And what I would like to do, then, Danny, if I could, is to ask both the last question and the first question. We will end sharply at 1:15. The last question, I'm going to come back to just how you ended at the podium – you have Stanford students here, I'm going to do the last question I'm going to ask you at about 1:13 – is if you can expand on that a little bit more. If you were a Stanford student and talking to a Danny Russel and would like some advice, why should I consider joining the foreign service?

So let me come to the first question. You've laid out in your very brief remarks a framework for a policy in the Asia-Pacific region. Now I know that many here will want to get more specific about particular issues, so let me start – there's only so much you could talk about in 25 minutes. Could we turn to the Korean Peninsula, and it just seems, Danny, that nothing works there. We try – we tried olive branch, it doesn't work. We try more of a coercive approach, it does not work – it doesn't seem like things are moving in the right direction. We're taking measures. Could you talk a little bit more about our policy?

And we have from the Consulate General of the Republic of Korea, diplomats here – could you talk about our diplomacy in conjunction with the Republic of Korea and especially with China, who we have representatives of here in this audience.

ASSISTANT SECRETARY RUSSEL: Well thanks, Karl. As you say, the bad news is that the North Korean nuclear missile program continues, and it's moving briskly in exactly the wrong direction. It constitutes a very significant threat to the national security of the United States, the ROK, Japan, and other neighbors. The good news is that that threat is – been a galvanizing factor that's drawn the U.S., and the ROK, as Ambassador Stephens and Dave Straub can attest, as well as Japan – very, very close together.

And that unity among, in the first instance, the three allies is a major strategic bulwark against North Korea because it eliminates the seams that they have typically exploited in the past. At the same time, the cooperation with China has significantly improved. There are probably a lot of reasons behind it, but I think the bulk – the lion's share of the credit -- goes squarely to Kim Jong-un whose impetuous, risky, threatening, worrying, destabilizing behavior is hard for China to pardon.

Now, there are a lot of different ways of unpacking the North Korea problem. I – having negotiated, successfully, with the North Koreans as part of Bob Gallucci's Agreed Framework team, and seeing other administrations and other colleagues make progress with North Korea – I do know what it looks like when the North Koreans have decided that they better make some kind of a deal. Maybe both hands are crossed behind their back. Maybe they undertook various commitments without a genuine intention to implement it.

But we have in the past gotten them to negotiate real deals and undertaken to implement them. We haven't lost hope and we keep the door open to real negotiations, meaningful negotiations, on the problem issue, on the nuclear issue, based on the important agreements that we have reached in the past with them that they've solemnly committed to, particularly the 2005 Joint Statement.

But I think the way to look at the issue is this: from North Korea's perspective, when you look at its two stated objectives – to be recognized and accepted by the world as a nuclear state, and to build a prosperous society with a thriving economy and the proverbial chicken in every pot – the question is, how are they doing?

They're oh[zero]-for-two. The entire world is absolutely solid in rejecting North Korea's desire to be accepted as a nuclear state. And is equally determined, as you see through the implementation of sanctions under the UN Security Council Resolutions, to ensure that North Korea can't gain access to the international economic infrastructure. Certainly because it's going to use them, that infrastructure, to fund its threatening programs, but also because it has prioritized these threats over the welfare of its own people.

So to paraphrase, you know, Ronald Reagan: is North Korea better off than it was four nuclear tests ago? The answer is, "no." And I would argue that a full blown integrated regimen of sanctions and pressure is not the same old. It's unprecedented. And I've made this analogy before but, you know, like the administration of medication, you just keep upping the dose to try to achieve the necessary effect. Now, we're not trying to kill the patient. We are not out to bring North Korea's leaders to their knees. We are trying to bring them to their senses.

War is a really messy thing and avoiding war on the Korean Peninsula remains an absolute priority for us, for the Republic of Korea, for Japan – for the region. But the way to avoid war is not to appease the North Koreans, and we believe that the firm application of real pressure, which we're seeing increasingly the Chinese willing to do, combined with a neon blinking arrow that points to a negotiated exit... is the way to go.

KARL EIKENBERRY: Thanks, Danny. Let's open it up. Please in the – no, right behind you, there you go.

QUESTION: Good afternoon, sir. Holly Barton in Stanford Hoover Institution. You mentioned earlier the concept behind the national security strategy and the interests that lie in the region. My question is, how would you characterize the overarching concept? Would you – I know you mentioned in a cooperative arrangement; would you characterize it as cooperative security, engagement, security cooperation; what overarching concept? Thanks.

SECRETARY RUSSEL: Well, I'm more of a practitioner than a theorist. But the – the driver for our national security strategy is outlined in the unclassified version that was released in 2015 in the run up to President Obama's trip to Asia is U.S. national interests – our economic and security interests.

And so rather than approach the region from the perspective of applying a doctrine of engagement or security cooperation, what we are attempting to do is to build on and to modernize both the alliances and the institutions that exist or are taking shape in the region; to tether together like-minded countries, and their ranks are growing; to use economic agreements as well as economic diplomacy promoting innovation and entrepreneurship – something that is a hallmark of not only Stanford but of this region; creating a tradition of adherence to international law; and looking for opportunities to collaborate with willing partners in addressing the emerging 21st century challenges.

So high on that list is global health. We learned from the Ebola crisis that we need to have strong health infrastructure because the pace of global travel means that a communicable disease can flash across the world, really in the space of a few days. It means addressing the challenge and problem of ISIL and radical ideologies, violent extremism, which prey on disaffected youth and others, but that also don't know geographic borders and could potentially easily spread to Southeast Asia and elsewhere. I hope that – I hope that helps.

QUESTION: Hi, I'm Marcus Kunilakis, also with the Hoover Institution, visiting. Could you, a year later, reflect on any lessons that we've learned and any critique you might have regarding the Asian Investment Infrastructure Bank and how we look at it, and both our role in not participating?

ASSISTANT SECRETARY RUSSEL: Sure. Well, I think that I would describe the U.S. approach as sound policy, flawed public diplomacy. Our messaging was terrible. And we generated, or at least tolerated, the impression that the U.S. was out to block China, that we were out to kill the AIIB, that we were chasing down friends and partners and warning them off – and that simply was not true.

And I have done a scrub and there is not a single statement by the President, the Vice President, Jack Lew the Treasury Secretary, John Kerry, anyone, opposing AIIB or warning other countries to stay away. But there's a reason why that image came into being and is so durable and that is this: that in the early stages of the presentation of the idea of an Asian infrastructure development bank from the Chinese side, there was a dearth of specifics and a great deal of smoke and mirrors.

This began as a very vague concept with no reassurance whatsoever that this bank would choose as its starting point the hard-won, high-water mark of good standards, and responsible practices, and safeguards that are now the norm for international development banks. And it appeared to us and to many in the early stages that in the absence of specifics and given the degree to which the AIIB appeared to be tethered to very specific One-Belt, One-Road, construction-oriented initiatives, that this looked a lot more like an instrument of Chinese national interest than it did a bonafide development.

And we raised those concerns repeatedly at a variety of levels, both directly with the Chinese and in consultation with a range of partners who wanted to discuss the idea of the bank with us. And we discussed it in the context of the World Bank, IMF and ADB as well.

I think, now, there is abundant reason to hope that AIIB will become a success story, that the net effect not only of what the U.S. message, but what many if not all of the other members of the bank pushed for and insisted on, has led to a structure in the AIIB that's much, much closer to what the norm of responsible MDBs are throughout the world. And that the fact that the AIB is beginning by partnering with the ADB in its initial projects, I think also augers well for the bank. Everybody always knew that there's a crying need for more infrastructure lending in Asia. What they didn't know was whether this bank would be controlled by China primarily, or whether it would be a bonafide multilateral bank; whether it would adhere to important rules and safeguards in terms of transparency, integrity, environmental responsibility, or not. And it has moved dramatically in the right direction and I've got my fingers crossed.

QUESTION: Hi, my name is Hannah Wong. My question is, why China is not included in TPP?

ASSISTANT SECRETARY RUSSEL: TPP is made up only of 12 countries that each of whom came together and announced that they wanted to be in and negotiated with one another to get an agreement and to meet the standards and the conditions. So nobody went out and sent letters of invitation to individual countries and decided to exclude China. Now, there are quite a few countries that have stated publicly that they want to negotiate entry into the TPP agreement once the agreement comes in to force and we move to a second tranche. The Republic of Korea, the Philippines, Indonesia, Taiwan – a number of others have expressed strong interest. And generally speaking, the U.S. and the other 11 TPP partners have welcomed them.

I remember being in a meeting with President Obama and Chinese a leader several years ago when the Chinese side was very, very hostile toward and critical of TPP. But a year later, I remember being at the East Asia Summit with Premier Li Keqiang in which he expressed interest and, at least in principle, support for TPP. That's a very positive and encouraging turnabout.

I think that the world would be a much better place if China eventually got to a point where it could meet the very, very high standards of openness, of – just a variety of high standards that would be necessary for China to enter into negotiations on TPP.

KARL EIKENBERRY: Danny, on the topic of trade and investment, if I could ask a quick question here. That is that China and TPP, that no one would think that that would occur within the next several years. Important bilaterally though, we do have a negotiation for a bilateral investment treaty. Is it important that we get a good treaty, and what's the prospects?

ASSISTANT SECRETARY RUSSEL:Yeah. Well, the bilateral investment treaty, or the BIT, is something that had been on the table for a few years. You know, in many respects the BIT is similar to the first chapter – the investment chapter – in TPP itself. And we've concluded investment treaties with other countries that are prospective members of TPP, precisely as a stepping stone. In the course of the last year, year and a half, I think that the negotiations between the U.S. and China on a bilateral investment treaty have really accelerated. And both sides, as recently as March 31st when President Obama and President Xi Jinping met in Washington on the margins of the Nuclear Security Summit, have committed to making best efforts to accelerate those negotiations even further.

It's not easy. My own personal view is that the – the forces of reform in China see the BIT negotiations as an important vehicle for getting reforms done and getting past some of the special interests that are resisting change. I believe that the Chinese leadership knows that it has to reform and rebalance its economy away from a heavily export dependent model to a more consumer driven model, and that a bilateral investment treaty is key. The United States welcomes foreign investment, but we want a level playing field and the BIT is the important path for getting there.

QUESTION: Collin – so this is –

KARL EIKENBERRY: Can you speak into the microphone, please? Thanks, Collin. And if you could identify yourself.

QUESTION: Sure. My name is Collin Scott, I'm a second year law student. My question is also about foreign investment and about CFIUS, The Committee on Foreign Investment in the United States, and kind of dovetailing with professor Eikenberry's question about the BIT – how does that Committee and the fact that it's done more investigations on China than any other country impact diplomatic relations and, I guess, economic relations?

KARL EIKENBERRY: Collin, can you explain CFIUS for those that don't –

QUESTION: Sure. So, the Committee of Foreign Investment of the United States reviews covered transactions when foreign purchasers are acquiring assets in the United States. I'm sure you know a lot more about it than me. But for the rest of the audience, so it's an interesting kind of intersection of diplomatic and economic relations, and just – your opinion, I guess.

ASSISTANT SECRETARY RUSSEL: Okay. Well I mean, I think CFIUS is used as sort of a boogeyman by China and others. The fact of the matter is that very, very, very few transactions – and these are only physical acquisitions – very, very few ever come before the CFIUS review board. And when they do come, what the United States does is to propose a remedy.

So if a Chinese company decides that it wants to buy a stretch of land that just happens to overlook the NSA facility in Fort Meade, well we're going to review that purchase. But we don't say how long, we say, here's a mitigation strategy: what if you invested this property – what if you spun off that company? And I think less than one percent of transactions that are reviewed by the CFIUS board, which is in itself a tiny, tiny number, are rejected. So when you contrast that with the sweeping blanket prohibitions that prevent U.S. investors and U.S. companies from acquiring properties or companies, doing business in their own right in China, it is just wildly, wildly disproportionate and different structure. If China had the equivalent of CFIUS, U.S. companies would be a lot richer.

QUESTION: Hi, I'm Emmett Berg from Reuters. Can we talk again about the South China Sea? I'm wondering how additional aggressive tactics by China in those waters might change U.S. diplomacy. And on a related question: the Philippines is pursuing an arbitration case in The Hague, and a ruling on that matter could come within about a month or so – about a month; I'm wondering how that might change U.S. stance on diplomacy as well. Thank you.

ASSISTANT SECRETARY RUSSEL: Well, there's a tremendous amount of concern in the region about much of the Chinese behavior in the South China Sea. That includes the unprecedented, large scale destruction of coral reefs, the vacuum cleaner fishing, the reclamation, the construction, of outposts; and then the militarization of those outposts with either dual use or obviously military capable runways, and ports, and other facilities. And what's particularly troubling there is that this is all occurring in very sensitive and deeply contested areas that have been the subject of ongoing diplomatic efforts, both among the claimants and between China and ASEAN for years. And this behavior is occurring, notwithstanding, agreements reached between China and ASEAN in 2002 in the Declaration of Conduct to forswear these kinds of activities that make it harder to reach a settlement or that raise tensions.

So there are tremendous concerns. These concerns vary among the – well, the countries concerned. So for example, the other claimants – the Philippines, Vietnam, Malaysia, Brunei, Taiwan – have understandable concerns because China says, "Our claims are indisputable," in the face of the fact that they're being disputed by the other claimants, and uses its military might and its economic leverage and other coercive means to try to create facts on the ground and unilaterally change the status quo. What are they to do? And that is one of the factors that drove the Philippines, having failed to get a – where bilateral design efforts through the multilateral ASEAN process, to bring a case against China in the tribunal under the law of the sea.

Beyond the claimants, the ASEAN ten countries are understandably concerned in some cases about practical matters such as the large scale fishing, often illegal and unregulated fishing, by these massive Chinese fishing fleets, but also by a general climate of intimidation or of threats. Our concern is not over who owns what. We don't take positions on whether Country A or Country B's sovereignty claims are right or wrong anywhere in the world, and certainly not in the South China Sea.

So we're not arguing for the Philippines claim or the Vietnamese claim or arguing against the Chinese claim, but here's what we are arguing – number one: claims need to be made in a way that is consistent with international law and all claimants, not only China, should clarify what their claim is and what the basis of it is. But that said, territorial claims are notoriously hard to solve. So number two: countries should pursue their claims peacefully without recourse to the threat or use of force, without bullying, without coercion. Third: regardless of the claim, the conduct and the operation on the high seas is subject to international law, conventional maritime law, and is particularly reflected by the law of the sea.

Now, the joke is that the U.S. abides by UNCLOS, signed it, but never ratified it. China signed and ratified UNCLOS, but doesn't abide by it. Now, that's a joke. We will see, because under the Law of the Sea Treaty, the decision of the tribunal that's meeting now in The Hague is binding without appeal on both parties – in this case, the Philippines and China. And it would be a devastating blow to China's image, its reputation, and the prospect of China adhering to the rule of law, if as many Chinese officials have previewed, China were to simply reject a treaty obligation; reject a determination by the tribunal. The good news for China – and we make this point in our ongoing discussions – is that the tribunal decision, whatever it is, won't have any impact on China's ability to make its sovereignty claims because you can only claim sovereignty to a land feature, not to water. The rules over the water are going to be impacted by the decision, but most people think in a way that can be helpful, because it will narrow the scope of the disagreement and open the door to some diplomatic progress.

Our commitment, in addition to maintaining peace and security, is to the universal principles and rights of freedom of navigation and of unlawful – excuse me – and of unimpeded, lawful commerce. And these are not rights that a coastal country bestows on those who sail the seas nearby. These are universal rights that belong to all countries and cannot and must not be abridged or impeded. That's why Secretary Carter has said again and again that we will sail, fly, and operate wherever international law allows. And international law allows all countries, all navies, to operate consistent with the Law of the Sea Treaty on the high seas and even to transit territorial waters.

Now we, the United States, don't claim or exercise any right that we don't also respect for China or for the other states. So yes, we will sail through territorial waters that either belong to China or are claimed by China and others, but we do so legally.

And when the Chinese Navy – without any notice during, coincidentally, a visit by President Obama to Alaska – sailed through U.S. territorial water in the Aleutians with five warships, what did we do? The U.S. Navy put out a public statement asserting that we respect China's right to transit our territorial water legally, as they did. That's the way that we would like China to behave.

QUESTION: Thank you, I'm Chris Lawrence and I'm a security fellow at CSAC. With North Korea, you talked about a blinking arrow towards an exit. So can you talk about what that path – how you envision that path? So when North Korea said you envisioned kind of a phase approach, or is it that you – can you put it as a front and then talk about the relationship? And then on the U.S. side, what are the things the U.S. and the international community need to do in order to add credibility to that path?

ASSISTANT SECRETARY RUSSEL: Well, the good news is that the answers are laid out in black and white in the 2005 September Joint Statement issued by the Six Party negotiators. And subsequently, through the incredible work of my predecessor Chris Hill and through the work of Ambassador Stephens and Dave Straub, and others, Tom – we, with the other partners and with the North Koreans, sort of fleshed out what it would look like.

Now, what's important about the existing record is this: that the U.S., the ROK, Japan, the others, have already made a commitment to North Korea that as progress is made on denuclearizing the entire Korean Peninsula – and by the way, there are no nuclear weapons in South Korea – that we are committed to non-aggression – in other words, negative security assurances – that we are committed to working towards normalizing diplomatic relations, providing economic assistance, and in a separate path – separate channel, pursuing a successor agreement to the armistice. In other words, a peace arrangement. And there are more working groups within the Six Party process.

So we removed any mystery or doubt about whether the U.S. and the ROK and Japan were prepared to have diplomatic relations, to provide economic assistance, to give North Korea assurances that it was not – their security was not at risk. These have been on the books now for 11 years, and we have reaffirmed them in public, in private, directly, indirectly, everything short of a full page in the Rodong Sinmun. So the issue that's – that's the carrot side of the equation, what's on the table. Those proffers all remain.

And we've demonstrated our bonafides and our commitment repeatedly. On the other side of the equation, the issue I think is less on a elaborate mechanism for in what sequence what happens, and the favors and so on, and more of a simple matter of whether or not the DPRK leadership has come to the decision that they will begin a negotiating process to halt, account for, roll back, and ultimately eliminate their nuclear program and their nuclear stockpile. Getting there is going to be incredibly difficult and Chris Hill has shown how starting down that road would proceed.

That's not the hard part. The hard part, and the simple part, is this: that North Korea walked out of the process. North Korea rejected denuclearization. North Korea, today, won't even use the word "denuclearization." They'll talk about an amorphous concept of disarmament and suggest that if the U.S. would withdraw its troops from South Korea, end joint exercises, and basically cede South Korea to them, then maybe, but maybe, we could start talking about denuclearization.

That's not serious and that's not a sustainable position. And so the – the intent and effect of this blinking arrow, reminding the DPRK that there is not only a negotiating record but a willingness on the part of the other Six Party partners to negotiate if North Korea will get serious is, as I said before, part of an effort to complement the pressure and the sanctions with an undertaking to bring them to their senses.

KARL EIKENBERRY: Again, the time has flown by fast. We're to that last question. So the question from the Stanford American student that ask you, why should they consider a career in the foreign service?

ASSISTANT SECRETARY RUSSEL: You mean, besides the wealth and the glory?



ASSISTANT SECRETARY RUSSEL: Well, we in the diplomatic service are in the people business. And we engage hand-to-hand with people throughout the world on problems that really matter, and that they care about. And many of us are graced with that rare opportunity to actually do something for other people and do something about the problems that we all face. We're in the information business.

And the ability to learn, not only learn languages, but to learn about the world, to learn about societies and about issues, is a lifelong joy and an incredible driver of personal and professional growth. We're in the communications business. Much of what we do in diplomacy is to figure out how to listen and how to explain; how to persuade, not to bully, not to demand, not to cajole, not to coerce, but to persuade.

There's another definition of a diplomat by, I think also, Will Rogers says, a diplomat's the guy who says, "nice doggy, nice doggy," as he's reaching for a big stick. It's a joke but the "nice doggy" is what we're all about, not the stick. The challenge of diplomacy is to get someone willingly to do something that you want them to do but they don't, and that's not easy, but it's possible and we're in the possible business.

It's also, we're in the communications business in the sense that we have to, and have the honor of, interpreting what we're seeing and hearing and presenting it to America's leaders as practical policy options. And you know, trust me, if a no-goodnick like me can make it all the way to advise the President of the United States, you Stanford people can do a whole lot better.

And then lastly, we're in the ideas business. And it is rare in life to be able to confront a problem, explore ways forward, come up with a creative idea, often as part of an inter-agency team that will engage on the security side, the commercial side, and present that idea and see it implemented; help make it work. Those are extraordinary opportunities, so you can pick which business of diplomacy suits you best, but it's an incredibly satisfying career.

KARL EIKENBERRY: Thank you. Well this event was hosted by the Asian Pacific Research Center and the U.S. Asia Security Initiative. And I don't think it's a surprise to anybody here that these chairs did not just magically appear, and the sandwiches magically appear out in the hallway. A lot of people make those things happen.

We have a wonderful team here at APARC. Debbi Warren and Lisa Lee did a lot of work, and many others whose names are too many to mention. I think that Lisa Griswald is back there, who helped out very much on the communications front, and then the assistant director for the U.S. Asian Security Initiative, Linda Yomis, really pulled all of this together. So before we thank Danny, I'd like a round of applause for all of those people. And Danny, last for you, you talked at the end about foreign service officer and you talked about a diplomat being persuasive; I think I speak for everybody here that you've persuaded this audience that we're all well served, not just in the United States but throughout the Asia Pacific Region with you as the Assistant Secretary of State for East Asian Pacific affairs. Thank you very much.

Danny has said that he might be able to stay here for just a few minutes. I'd ask, though, if you talk to Danny, respect that there's others that want to talk to him so, not to monopolize his few minutes available.