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GOLDMAN SACHS
ASSET MANAGEMENT
AIMS ALTERNATIVE INVESTMENTS
SYMPOSIUM 2013
FORMER UNITED STATES
SECRETARY OF STATE
HILLARY RODHAM CLINTON
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200 West Street
New York, New York
October 24, 2013
12:50 p.m.
Before Rita Persichetty, a Notary Public
of the State of New York.
ELLEN GRAUER COURT REPORTING CO. LLC
126 East 56th Street, Fifth Floor
New York, New York 10022
212-750-6434
REF: 105177

P R O C E E D I N G S
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MR. O'NEILL: Welcome. This has been a
great day and a half here at the AIMS Symposium, and
it is my distinct honor to introduce today's lunch
conversation. Please join me in welcoming Secretary
Clinton, who will be hosted in a discussion with our
own Tim O'Neill, who is the cohead of investment
management.
Well, thanks again, Madam Secretary.
Everyone is very interested in what you have to say,
so why don't we get right to it and start talking
about the political process in Washington, D.C.
I think it's fair to say that the
government shutdown and debates that surrounded it
were not the finest hours in political history, but
democracy is an evolving process, and nobody has a
more refined perspective of that than you, having
served in the executive branch as well as Congress.
So my first question is: How do we get
past this partisan gridlock?
SECRETARY CLINTON: Well, Tim, thank you.
Thanks for having me here to have this conversation
with you. And I know we have many people who are not
Americans who are here from other parts of the world.
So let me start by saying that we have
evolved our system, it is a durable, resilient
system, and from the outside, it can look quite
dysfunctional from time to time, but it has a
capacity for regeneration and focus that has really
stood up in good stead for so many years.
What happened in the last two years,
really, three years was a growing sense on the part
of some who are very ideologically disposed, to try
to move out of the usual order in the Congress where
you win some, you lose some, you keep working. You
can't win on legislative issues, you win elections,
you have a rhythm to it, and it requires a certain

amount of compromise and acceptance because of the

broad cross-section of views and experiences that our
country embodies.
Back in July of 2011, I was in Hong Kong
during the last debate over our debt limit. And it
was very striking to me how the business leaders I
was speaking with in a big conference there were
quite concerned. At that time, I could be very
reassuring, I said, don't worry, we'll get through
it, we're going to work it out, we would never
default.
So we fast-forward to this last episode,
and it is troubling that there is a hard core of
extremist politicians who have views about decisions
as monumental as shutting down our government and
defaulting on our debt that have a small but a
disproportionate influence on the debate in
Washington.
So what you saw was a relatively small
group in the House of Representatives and very few in
the Senate who were trying to achieve one objective,
namely make a political point about the health care
law by holding hostage the entire rest of the
government and putting the full faith in credit of
the United States at risk.
Although it went up to the last hour, the
fact that they were a minority and that there were
much more level heads, even in the same political
party, that the business view started speaking out
after having been relatively silent, thinking this is
going to work out, but then people of experience and
expertise began speaking out, it was possible to get
through that crisis.
But it does raise the larger issue about
what to do. And I think there are three answers to
that. Voters have to quit rewarding people who take
uncompromising stands in the face of reality and

evidence, and that is something that each one of us

can contribute to.
Obviously I'm a Democrat, but there are a
lot of level-headed, smart Republicans who were
biting their nails over this. They should be
rewarded, not threatened by the far right and people
who either don't know or don't care about the
importance of our being in reserve currency, about
the importance of our paying the bills that we've
already run up, about the importance of confidence in
the global economy should pay a price, and you pay
that price at the ballot box.
Secondly, running for office in our country
takes a lot of money, and candidates have to go out
and raise it. New York is probably the leading site
for contributions for fundraising for candidates on
both sides of the aisle, and it's also our economic
center.
And there are a lot of people here who
should ask some tough questions before handing over
campaign contributions to people who were really
playing chicken with our whole economy.
And thirdly, I think that there has to be
greater education and understanding about what's at
stake. I think too many people for too long thought
raising the debt limit was so you could borrow more
and spend more instead of pay bills you've already
incurred. That's a pretty big. The guy goes out,
has a really nice meal, puts it on his credit card,
the restaurant turns the credit card in, and the
company gets paid, the company bills the guy, and the
guy says, you know, I didn't like that meal very much
after all, I'm not paying, and that in a very small,
microcosmic way is what people who were willing to
default were basically saying.
So it's a worrisome situation, but I always
come back to my first point, I mean, that we always
have a way of righting ourselves and getting back

into that great big messy middle that you've operated

in for more than 200 plus years, and I think that's
where this will move towards, everybody, citizens as
well as leaders do their part.
MR. O'NEILL: Part of that process is
called compromise, so let me just test that
hypothesis to an issue that you know a lot about,
health care reform.
So obviously the Affordable Care Act has
been upheld by the supreme court. It's clearly
having limitation problems. It's unsettling, people
still -- the Republicans want to repeal it or defund
it. So how do you get to the middle on that clash of
absolutes?
SECRETARY CLINTON: Well, this is not the
first time that we rolled out a big program with the
limitation problems.
I was in the Senate when President Bush
asked and signed legislation expanding Medicare
benefits, the Medicare Part D drug benefits. And
people forget now that it was a very difficult
implementation.
As a senator, my staff spent weeks working
with people who were trying to sign up, because it
was in some sense even harder to manage because the
population over 65, not the most computer-literate
group, and it was difficult. But, you know, people
stuck with it, worked through it.
Now, this is on -- it's on a different
scale and it is more complex because it's trying to
create a market. In Medicare, you have a single
market, you have, you know, the government is
increasing funding through government programs to
provide people over 65 the drugs they needed.
And there were a few variations that you
could play out on it, but it was a much simpler
market than what the Affordable Care Act is aiming to
set up.

Now, the way I look at this, Tim, is it's

either going to work or it's not going to work. We
have an election next November, make it an issue. If
it doesn't work, it's been, as you said, voted on,
you know, signed by the President, passed by -- on
constitutionality by the supreme court, so it's the
law of the land.
Everybody knows there are problems getting
the software right and getting the information in.
They'll either work it out or they won't. You know,
by February, March, you'll either see that the system
is working, because if you compare the federal
system, which for all kinds of reasons has to be more
complex, the state systems that ran their own
exchanges, states like New York, California,
Maryland, et cetera, are actually rolling it out
quite sufficiently because they had a smaller
universe, they had a better collection of the data,
and they had willing participants on all sides of the
transaction.
But when you have huge states like Texas,
which is dead set against it, and you have a large
state like Florida, which is ambivalent, you know,
it's difficult to run a federal exchange, you know,
being able to get the information, get it up and get
it out.
So I think the way our system is supposed
to work is if, by next November, people running for
office are either defending or not the Affordable
Care Act, it will be an electoral issue. And if it
is still unacceptable to people or not running right,
then the Congress that will come in after, will have
every right in the world to go after it and figure
out what they can do.
Now, if they still have a Democratic
President in the White House, who may not want to go
as far as some would, in fact, I'm sure of that, but

then there can be a discussion about, okay, what

worked and what didn't work.
But, you know, elections are about winning
and losing and who gets to make decisions. The
President is a two-term President. We have a
Democratic senate and a Republican house, so people
had to compromise.
And on the Affordable Care Act, I think
there's going to be a few months to see whether or
not it can be operating the way it should, and then
people can have a rational discussion about what, if
anything, can be done, and then they can be arguing
it out in the election.
MR. O'NEILL: So can I follow up on that
perspective of President Obama's role in all of this
process.
Do you think that if he were more
personally engaged with Congress on these issues,
that we would have a different result?
SECRETARY CLINTON: I don't know, Tim. I
mean, I've obviously been asked this and I've seen
the critique. You know, different presidents have
different strengths, they bring different life
experiences.
I had the opportunity of working with the
President closely for four years on some very tough
national security issues. He's an incredibly
intelligent, thoughtful, decisive person in pursuing
the agenda he sets.
But he may not, you know, be someone who we
think of as spending a lot of time in a give and take
of politics; however, I know that he spent a lot of
time early on in the first term with the Republicans
in trying, as you recall, to put together the brand
barbie (phonetic) and it turned out that the
Republicans' side, particularly in the house,
couldn't deliver on even a small market.

So you can get to the point of saying,

okay, we can live with this, you say you can live
with that, I can sell it to the Democrats, you sell
it to the Republicans, and the answer would come
back, I can't sell it to Republicans, so we have to
jigger it around somehow. Whether that was a
negotiating tactic or the hard reality that it was
hard to sell it to the caucus, I don't know.
But I do remember quite well the President
working diligently to reach out to people and trying
very hard on the health care bill, for example,
spending more time than a lot of Democrats wanted him
to, trying to figure out how he can get some
Republicans on board.
So let me switch gears for a minute and go
back to the '90's with my husband, and there isn't
anybody that I can think who would doubt that my
husband is an incredibly active engager of people,
whatever side of the aisle, (audible over laughing)
and ask their opinion on something, he's going to
have you over, he's going to play golf with you, et
cetera, et cetera. That didn't stop them from trying
to destroy him. And his agenda and his economic
program was passed without a single Republican vote
after an enormous amount of personal effort to get
some Republican, you say you care about the deficit,
at that time we had $250 billion deficit, help me
bring it down. The arithmetic I learned in Little
Rock, Arkansas is you add and subtract with both
revenues and cuts, let's work together, nowhere.
So it's not always that being, you know,
personally engaged and working with people is going
to get you the results you want if the people on the
other side are doing their political calculations
that is in their interests not to compromise, not to
give in.
So, you know, there's always -- you can
always try more things, you can work harder at it.

I'm a big believer in that, but it's not always the

case you will get it done.
Now, back in the '90's when, you know,
Republicans shut the government down twice with Bill
in the White House, and he did just what President
Obama did, I will not negotiate with you until you
open the government, I'm not going to be put into
that position. They opened it once and then demanded
that he agree with them on some issues he wouldn't
agree with them on. They shut it again. And he took
the same position, I'm not going to compromise in
this posture, I'll be glad to talk to you later.
So got the government back opened, began to
try to work together. And there's a lot of theater
in politics just as there is in any other human
enterprise.
So Newt Gingrich was the speaker, and he
would rail against Bill and occasionally me all
daylong beyond -- I think we had at least one cable
station back then, but we seemed to be on there when
it was being broadcast, and then 9:00 o'clock at
night, he'd sneak into the White House, I mean, you
really can't sneak into the White House, it wouldn't
be advertised, let me put it that way. So he would
go into the White House, go up to the second floor,
and he and Bill would pound things out for a couple
of hours trying to work towards welfare reform, and
eventually, a couple years later, a balanced budget,
et cetera.
And he -- and Gingrich was a very forceful
leader of the Republicans, but he had people to his
right that didn't want any negotiation or any
compromise.
At one point the then, I think he was -- I
don't know if it was Tom DeLay or Dick Armey told
Gingrich, we don't want you going to the White House
any longer talking to Bill alone. You make too many
deals. We're going to stop that.

So it's a constant effort. And I think the

presidents that I've known and even my working with
President Bush, you know, different styles, but every
president I've ever known well has really tried to
put the pieces together.
MR. O'NEILL: There's no doubt that the
President has a tough job, but as you said, politics
is not for the fainthearted, but probably the most
impossible job is the speaker's job.
SECRETARY CLINTON: Yes.
MR. O'NEILL: Would John Boehner even try
to sneak into the White House?
SECRETARY CLINTON: Well, I personally like
Speaker Boehner. I've sympathized with him because
he's in a tough spot, and I don't pretend to
understand all of the dynamics in the Republican
caucus, but I do think that, you know, the speaker
needs to try to figure out how to exercise more
direction for his caucus.
I think his theory this time was, you know,
these guys are going to exhaust themselves, we'll get
to the 11th hour, the senate will save us, we'll pass
something, we'll get beyond it. And that's pretty
much the way it played out.
And that wasn't a, you know, that wasn't a
wrongheaded view on how it would unfold, because even
though the people leading the charge of the shutdown
and default got a lot of air time, they did not get a
lot of support beyond what they had to start with.
So the speaker wasn't wrong about that.
The problem is, we can't keep doing this. This is
really, you know, this is really dangerous to our
entire system.
So I think the speaker has to see if he can
figure out a way to isolate as much as possible the
really hard core, absolute evidence deniers and get
them over here and then try to bring the rest of the
caucus with him.

It may mean that it will threaten his

speakership, but my view on that, and it's easy for
me to say, he will be historically a more important
figure if he stands up to his own extreme wing and
makes clear that he is putting his country first.
He's obviously a rock solid Republican, conservative,
but he's not going to (inaudible) go so don't even
think about all of you guys ever doing this again
while I'm the speaker. And I personally think he
would stay in office, but, you know, that's not for
me to say.
MR. O'NEILL: Well, we can all hope for a
profile (inaudible) encourage speaker for, Madam
Secretary, but let me take a different prospective as
foreign governments were watching all of this, what
do you think they were saying and thinking about the
United States?
SECRETARY CLINTON: Well, I think we know,
because some of them went public with what they were
thinking about. And it was painful because it's
difficult to see a self-inflicted wound like the one
we just went through having such consequences.
And it's not just what they were saying at
the moment, it's what they were planning for the
future. When, you know, you see countries saying
that we don't know how reliable the United States is,
they don't know how much we can count on us and our
leadership, that has real consequences. It has
economic consequences but also has consequences when
you read that, you know, one of the high-ranking
Chinese officials who publicly commented on it, said,
look, it's time to de-Americanize the world. These
people can't run their own country, why should they
be permitted to exercise a disproportionate influence
on the rest of the world.
So it was something that I regret, and
probably the best symbol of it was because the
government shutdown, President Obama could not go to

the East Asian Summit or the Asia-Pacific Economic

Committee, two of the linchpins of what we call the
Asia pivot, which was our desire to both reassure and
reassert American presence and power in the Pacific
as a balance and as a duty to those with whom we have
treaties, Japan and South Korea, Philippines and
Thailand and Australia.
And so because of the shutdown, it wasn't
just the fact of the shutdown, literally a lot of the
people furloughed who would do a President's trip
couldn't work, just imagine, that is no way to run a
great country, right?
And so the President didn't go, but, you
know, President Putin was there, President Xi Jinping
was there and, you know, it's a very symbolic moment
when it's -- not because of any external problem, but
it's because of the internal political dysfunction
that keeps the President of the United States, I
don't care what party, I don't care what your
political preferences are, keeps the President of the
United States from being on the world stage at a
really important time, to look over the horizon
about, you know, trading opportunities and the TransPacific partnership, other kinds of work that needs
to be done in the region to keep, you know, commerce
flowing across the South China Sea to work with our
friends in Japan and China to prevent further
escalation over the contested islands. I mean,
there's a lot going on in the region.
And it was a very sad commentary on what
this kind of political standoff done for totally
partisan and personal advantage does to our overall
foreign policy.
MR. O'NEILL: We agreed there's a lot of
going on in Egypt and in China, (inaudible) new
leadership there. Your views?
SECRETARY CLINTON: Well, I've met the new
president, and certainly I'm impressed by his, you

know, mental and physical energy and vigor. He seems

to have created a stable transition from Hu Jintao
power and the former leadership to the new team.
I think China has some big challenges that
they're going to have to confront. You guys know
more about economic challenges than most people, but
there are other demographic challenges that feed into
that. There's a lot of discontent in a growing
middle class about, you know, what is the future
holding for them, what kind of opportunities are they
going to have, there's no real social safety net
whatsoever, pensions and the like.
So I think that he has his job cut out for
him. He's very much committed to coming up with some
plans. I know there will be a meeting shortly to try
to look at the plans for the next five to ten years,
so I think he's shown steady leadership, which is
very welcome, both inside China and outside China,
but I also believe that there's growing nationalism
in China and in Japan and in other places in the
region that we have to be watchful about.
This dispute over what are called by the
Japanese as Senkaku Island has really unleashed some
very old grievances and a lot of heated rhetoric
going back and forth between China and Japan that
needs to calm down. It is not in anyone's interest
that this spiral out of control.
Similarly, Korea and Japan have disputes
over Takeshima (phonetic/audible) and some territory,
again, without the United States playing a leading
role in making sure there's an opportunity to resolve
this. North Korea, which under its new leader, seems
unpredictable at best, and I think even the Chinese
leadership today recognizes that.
And you go down the roll call, and there
are so many tremendous opportunities, but in order
for those opportunities to be realized, it requires a
rules-based order. I mean, everybody from the

biggest China, to the smallest Singapore, to the most

developed, to the least developed, which is why I
spent so much time in the region trying to knit
together the sort of regional rules-based order that
I think is important for the people in the region
first and foremost, but for all the rest of us.
And it will all come down to whether China
wants to exercise that (inaudible) that responsible
stakeholder position.
And I think eventually that will be the
decision of the Chinese government, because it's in
their interest because while they focus on internal
challenges, they don't need a lot of agitation and
problems on their borders and outside, so it's
something that we watch carefully, and we obviously
want China to be successful and to be responsible.
MR. O'NEILL: Within the administration, do
you think there's any risk that the Asia pivot focus
that you started, Madam Secretary, loses momentum
because of the Middle East and the shift there?
SECRETARY CLINTON: Well, Tim, I hope not.
I mean obviously there's a lot going on in North
Africa and the Middle East that requires our
attention, but I've said repeatedly that the real
future lies in the Asia-Pacific, and no country is
better situated to take advantage of what happens in
the Asia-Pacific than we are because we are a Pacific
nation, just like we are an Atlantic region, thanks
to the gift of our geography.
But it was troubling that the President
couldn't go to that event. That signaled to a lot of
academics and scholars, well, that so-called pivot I
went around talking about is certainly slowing down,
that it's not realizing the continuity that is
required to establish policy.
You know, if you look at what we did in
Europe with NATO, our promotion of the European
Union, our close alliances with many countries there,

our constant support for freedom behind the old Iron

Curtain and our willingness to help fund and help the
countries that came out from behind it get on their
feet, we had a long-term strategy.
If you look at Korea, after the Korean War,
we could have said, man, we have a world war, now we
have a Korean War, we're done, we're going home, but
we had very, you know, very smart leadership that
said, okay, we've protected the lower half of the
peninsula, they need a chance to develop.
And think about what they went through. I
mean, South Korea has coups, have assassinations,
have, you know, really terrible politics for a very
long time. They didn't become what we would consider
a functional democracy overnight, but we never gave
up. We had troops there, we had aid there, we had a
presence of American business there. We were there
for the long run.
And what I worry about is that in a time of
shrinking resources and well-deserved demands that we
pay attention here at home to what's happening to the
American people, that we're not going to maintain
that continuity of attention and support that is
needed in Asia and elsewhere.
So I'm hoping that it, you know, certainly
is maintained despite the hiccups, but it takes time
and resources to do that.
MR. O'NEILL: So let's go to the Middle
East, complicated, could spend hours talking about
it. I think all the problems -- the big problems for
this group are sort of hiding in sight from our view,
Iran, Iraq, Syria, Egypt.
What would be most helpful to us, given
your intimacy with the issues and the personalities
in the region, if you give us a six to 12-month look
in the region and say, if this happens, that's
important, or what is your biggest worry because
opportunity wasn't (inaudible) influence?

SECRETARY CLINTON: Well, one thing I've

learned is that there's no one that knows what's
going to happen in the Middle East, and that even
became clear after the Arab Spring, but I'll take a
stab at it.
It's really important that Egypt
stabilizes, and whatever one thinks about the
military intervention that happened, it's a fact, but
it's not at all clear to me that that military
intervention has resulted in stability or in quashing
a lot of the continuing uprisings from Islamists and
even Jihadists.
So how Egypt navigates through this next
six to 12 months is crucial for the entire region.
There are a lot of proxy battles going on, you know,
there's proxy battles between the Saudis and the
Iranis and the Jordanians and the Iranians and the
Turks and, you know, it goes on and on, and you can
look at individual countries and try to sort out who
is on what side.
So in Egypt, the election of Morsi was not
by any means an overwhelming mandate, in fact, it was
a rather small turnout in the second election. And
instead of recognizing that, Morsi and the Freedom
and Justice Party, which was the political arm of the
Muslim Brotherhood, really began to try to
consolidate their own games.
And again, I -- kind of the manual for
foreign policy is, you know, human nature. People had
been on the outs, they've been in prison, they've
been abused under Mubarak. They won an election in
part because the other side was so poorly organized
and would not get their act together, despite our
best efforts to encourage them to.
So they think, okay, we want to now get all
our people, you know, give them the position in the
government, make the decisions that will please our
supporters. They ignored the economy. They wouldn't

make the tough decisions that the IMF was demanding

for many months, still to this day, and they began to
do things which really raised concerns among the vast
majority of nonactive Islamists in Egypt. And you all
know that the military then basically came in, but
they had a 22 million signature petition asking them
to, so it was all very unusual.
So the military's in, what are they going
to do? Are they going to be any better at developing
the country than Mubarak was? Mubarak and his wife
were people I knew quite well, had many conversations
starting in the '90's literally up until weeks before
he left, but there was no plan. You know, the
literacy rate did not go up, the education rate for
the average Egyptian did not improve. Women's
positions did not change. Agricultural got worse.
They started importing wheat instead of exporting.
You go down the list and the military controls a
significant percentage of the economy. Some say 40
percent, some say 50 percent.
So some of what you're seeing is not just
political and patriotic, it's just purely selfinterest, you know, we don't want anybody going after
our industries and our resources.
So my hope is, and I really can't tell you
how realistic a hope it is, is that whoever runs, and
it's likely to be a general, and it's more than
likely to be el-Sisi taking off his uniform running
for president, probably given the way that they're
managing the system, get elected, but then what?
What is he going to do? What role is he going to
play? So Egypt is (inaudible).
If you look at what's happening in Syria,
it's clearly a multiply leveled proxy battle. We've
got Iran with their agents in Hezbollah, and they're
being taken on by indigenous rebels but increasingly
a collection of Jihadists who are funded by the
Saudis, funded by the Emiratis, funded by Gotter

(phonetic), and you have the Turks that were very

active in the beginning, but then began to be
concerned by some of the development inside Syria,
particularly among the northern and northeastern
Kurdish population in Syria.
So there is a lot of maneuvering still
going on. I'm hopeful that there will be success
with the chemical weapons peace, and I'm hopeful
there will be a peace conference, but I'm doubtful
that Asad will move out of the way, so I think you're
in for six to 12 months at least of further stalemate
where it is still a very active, you know, civil
conflict.
I think that the other places that you have
to watch is what's, you know, what's happening in the
gulf, both the Saudis and the (inaudible) becoming
much more active participants in Egypt, in Lybia, in
Syria. There's a lot of moving parts here. Gutter
(phonetic) with the new premiere is, you know,
finding his way, he's been very active under his
father, we'll see what he does.
And then we have the peace process which,
you know, Secretary Kerry and his team are plugging
away on, but moving over all of it is Iran, and the,
you know, the fact that the Israelis and the Saudis
are both in the same boat without being suspicious of
anything that could be agreed to by the Iranians,
give you some sense of how the calculation here is in
a state of constant motion.
The Iranians are on their charm offensive.
If it's real, which is hard to tell, then you could
see a breakthrough of some sort by the international
community. Whether that would meet the demands of
Israel and Saudis, who knows, but at least they're
talking and trying to explore it.
And, you know, I think it's very tough to
reach a credible deal with Iran, but I think you have
to try. And I just don't think you can walk away

from that possibility. And so I hope that something

can come of it.
MR. O'NEILL: Speaking of that term, as
President Reagan once said about the Russians, trust
but verify. Recently in response to the Iranians
turn if he was smiled but enriched.
SECRETARY CLINTON: Well, I think you got
it, I think if -- the Iranian's position for as long
as I've been closely following it and involved in it
is we have a right to enrich. Now, technically they
don't. They're signatory to the nonproliferation,
they do not have a right to enrich, but that is their
bottom line demand, and that's what they're trying to
obtain international recognition for.
And it will be very difficult for the right
safeguards and conditions to actually be constructed
that would hold water enabling them to do that, but
there are really three things you should look at.
We should look at the uranium production
through centrifuges, (inaudible) are the two major
centers, but you should also look at their continuing
work to build a heavy water reactor in a place called
Arak, A R A K, which is a half form of plutonium
which is the fastest path for weapons-grade material
for nuclear bomb.
And you have to look at their missile
program, because why do they continue to develop
intercontinental ballistic missiles that work on
miniaturizing warheads if they don't have some
intention of being prepared at least to hold out the
threat over their neighbors and beyond.
So this is, I mean, you know, if you had an
arms expert here, he or she would go into great
detail about how difficult it is to find all of the
production, to control all of the production that
Iranians keeping saying they have a Fatwa against
nuclear weapons.

And the problem with that is even if you

were to believe it, and there are some very
skeptical, smart people who do believe it, who
believe that the Fatwa is legitimate, it doesn't go
on to say, and we will not construct the pieces to
give us the nuclear capacity whenever we choose to
assemble them. It just says, no, we will not build
nuclear weapons.
So it's a wicked problem, as we like to
say, because Iran is not only troubling because of
its nuclear program, although that's the foremost
threat, it's the primary conductor and exporter of
terrorism.
I mean, if you had a big map here behind
us, literally from North America to Southeast Asia,
there are so many thoughts, so many bombs, so many
arrests that are all traced back to the Iranian
revolutionary guard, and their constant efforts to
sell (inaudible).
And we have a lot of friends around the
world, even people who say, look, I need their oil, I
need their gas, I don't particularly trust them or
like them, but I'm going to do business with them,
besides that's an American problem, that's Israeli's
problem, it's a Middle Eastern problem. It's not.
They want (inaudible), they want as broad a
span of control as they can have, so even if a
miracle were to happen and we came up with a
verifiable nuclear deal, there would still be
problems that Iran is projecting and causing around
the world that had real consequences for our friends
and ourselves.
I mean, they did hire, you know, they did
hire that gunman to kill the Saudi ambassador, and
people thought that was so outrageous. It was made
up. We're sitting around the situation room saying,
let's think of something really bad about the
Iranians, like you had to think of something, and,

okay, let's make up a story that they sent agents to

Mexico to hire a drug cartel enforcer and fortunately
they were led to somebody who was a double agent
working for the drug administration -- the Drug
Enforcement Administration in the United States, so
we were able to capture the guy when he came to Texas
to transfer the money, but they were going to kill
the ambassador from Saudi Arabia in Washington, and
the plan was to get him when he was at a public
place, a big restaurant some of you may know, Cafe
Milano. I mean, absurd.
And we had -- the guy, once he was caught,
gave names and dates and money transfers and all the
rest, but people kind of shrugged it off like, oh,
that's so ridiculous. Who would do that? The
Iranians, they do it all the time.
So yeah, trust but verify and then verify
again, again and again. We have to figure out some
modus vivendi with them but not at the risk of
putting ourselves and others under their thumb.
MR. O'NEILL: Let's come back to the US.
Since 2008, there's been an awful lot of seismic
activity around Wall Street and the big banks and
regulators and politicians.
Now, without going over how we got to where
we are right now, what would be your advice to the
Wall Street community and the big banks as to the way
forward with those two important decisions?
SECRETARY CLINTON: Well, I represented all
of you for eight years. I had great relations and
worked so close together after 9/11 to rebuild
downtown, and a lot of respect for the work you do
and the people who do it, but I do -- I think that
when we talk about the regulators and the
politicians, the economic consequences of bad
decisions back in '08, you know, were devastating,
and they had repercussions throughout the world.

That was one of the reasons that I started

traveling in February of '09, so people could, you
know, literally yell at me for the United States and
our banking system causing this everywhere. Now,
that's an oversimplification we know, but it was the
conventional wisdom.
And I think that there's a lot that could
have been avoided in terms of both misunderstanding
and really politicizing what happened with greater
transparency, with greater openness on all sides, you
know, what happened, how did it happen, how do we
prevent it from happening? You guys help us figure
it out and let's make sure that we do it right this
time.
And I think that everybody was desperately
trying to fend off the worst effects institutionally,
governmentally, and there just wasn't that
opportunity to try to sort this out, and that came
later.
I mean, it's still happening, as you know.
People are looking back and trying to, you know, get
compensation for bad mortgages and all the rest of it
in some of the agreements that are being reached.
There's nothing magic about regulations,
too much is bad, too little is bad. How do you get
to the golden key, how do we figure out what works?
And the people that know the industry better than
anybody are the people who work in the industry.
And I think there has to be a recognition
that, you know, there's so much at stake now, I mean,
the business has changed so much and decisions are
made so quickly, in nano seconds basically. We spend
trillions of dollars to travel around the world, but
it's in everybody's interest that we have a better
framework, and not just for the United States but for
the entire world, in which to operate and trade.
You know, I remember having a long
conversation with Warren Buffett, who is obviously a

friend of mine, but I think he's the greatest

investor of our modern era, and he said, you know, I
would go and I'd talk to my friends and I'd ask them
to explain to me what a default credit swap was, and
by the time they got into their fifth minute, I had
no idea what they were talking about. And when they
got into their tenth minute, I realized they didn't
have any idea what they were talking about.
I mean, Alan Greenspan said, I didn't
understand at all what they were trading. So I think
it's in everybody's interest to get back to a better
transparent model.
And we need banking. I mean, right now,
there are so many places in our country where the
banks are not doing what they need to do because
they're scared of regulations, they're scared of the
other shoe dropping, they're just plain scared, so
credit is not flowing the way it needs to to restart
economic growth.
So people are, you know, a little -they're still uncertain, and they're uncertain both
because they don't know what might come next in terms
of regulations, but they're also uncertain because of
changes in a global economy that we're only beginning
to take hold of.
So first and foremost, more transparency,
more openness, you know, trying to figure out, we're
all in this together, how we keep this incredible
economic engine in this country going. And this is,
you know, the nerves, the spinal column.
And with political people, again, I would
say the same thing, you know, there was a lot of
complaining about Dodd-Frank, but there was also a
need to do something because for political reasons,
if you were an elected member of Congress and people
in your constituency were losing jobs and shutting
businesses and everybody in the press is saying it's

all the fault of Wall Street, you can't sit idly by

and do nothing, but what you do is really important.
And I think the jury is still out on that
because it was very difficult to sort of sort through
it all.
And, of course, I don't, you know, I know
that banks and others were worried about continued
liability and other problems down the road, so it
would be better if we could have had a more open
exchange about what we needed to do to fix what had
broken and then try to make sure it didn't happen
again, but we will keep working on it.
MR. O'NEILL: By the way, we really did
appreciate when you were the senator from New York
and your continued involvement in the issues
(inaudible) to be courageous in some respects to
associated with Wall Street and this environment.
Thank you very much.
SECRETARY CLINTON: Well, I don't feel
particularly courageous. I mean, if we're going to
be an effective, efficient economy, we need to have
all part of that engine running well, and that
includes Wall Street and Main Street.
And there's a big disconnect and a lot of
confusion right now. So I'm not interested in, you
know, turning the clock back or pointing fingers, but
I am interested in trying to figure out how we come
together to chart a better way forward and one that
will restore confidence in, you know, small and
medium-size businesses and consumers and begin to
chip away at the unemployment rate.
So it's something that I, you know, if
you're a realist, you know that people have different
roles to play in politics, economics, and this is an
important role, but I do think that there has to be
an understanding of how what happens here on Wall
Street has such broad consequences not just for the
domestic but the global economy, so more thought has

to be given to the process and transactions and

regulations so that we don't kill or maim what works,
but we concentrate on the most effective way of
moving forward with the brainpower and the financial
power that exists here.
MR. O'NEILL: So let me talk a little bit
about an issue that you've been very articulate and
inspirational on, and that is women's rights. From
1994 in Beijing -SECRETARY CLINTON: '95.
MR. O'NEILL: Beijing not only humans
rights you've been a very forceful advocate of the
economic empowerment of women. Can you give us a
mark to market progress report?
SECRETARY CLINTON: Well, Japan is doing
well, because Prime Minister Abe, as part of his
economic plan, became convinced that encouraging more
women to get into the workforce would be a big boost
to the Japanese GEP.
So there are leaders around the world who
are coming to this recognition because of the
evidence that is being presented, the IMF has done
some really good work on this, obviously the World
Bank and other organizations as well, but the bottom
line, when you talk about economic empowerment, is
that there are three big objectives, one, tearing
down the still existing barriers, legal, regulatory,
cultural barriers to women's participation in the
economy.
The IMF has just done a study about the
legal obstacles to women working in professions all
over the world, and some countries have very few,
other countries are surprising, like I think Russia
has 150 jobs that women can't be employed.
So instead of saying, you know, here are
the -- if you are going to be a miner in Siberia,
here's the pack you have to carry and the work you're

going to have to do. If you can do it, fine. If you

can't, no. Man or woman, doesn't matter.
So there are existing legal obstacles.
There are regulatory obstacles. You know, a lot of
countries back in '95 did not allow women to inherit
property. They couldn't inherit from their fathers.
They couldn't inherit from their husbands. And this
was particularly onerous on small holder women
farmers who do all the work. Sixty to 80 percent of
the women farmers in the world, depending upon the
region you're in, are women, and they're farming, you
know, 2, 3 acres maybe at the most, but they're the
ones in the field, the baby strapped to their back,
they are the ones taking the food to market after
they feed their family. If their husband dies, it
goes to his father or his brother, and in many
instances, the woman and her children have to leave.
So there were legal obstacles we were able
to break down, but then in practice, nobody enforced
them. There weren't the regulations or the
expectations that it would be carried through on.
And then there are the, you know, lingering
cultural barriers. And, you know, Angela Merkel last
spring, who is a very conservative, cautious
politician whom I deeply admire, I think she is an
incredible leader, she said she favored a requirement
that German companies have 30 percent women on their
boards.
Now, when somebody as cautious and
conservative as Angela, who I have known for 20 years
says that there's a problem. The problem is that
(inaudible) is there's not a pipeline, it doesn't
have enough people in it, but the fact is that there
are a lot of women now who have achieved in their
careers, who have a lot of great attributes to
contribute to boards, but they're not being sought
out, they're not being invited, they're not assuming
that role. And the same, you know, in the CEO ranks.

So whether it's legal obstacles, sort of

regulatory, judicial obstacles or cultural attitudes,
we have to continue to try to remove those.
And I don't say this just because, you
know, I think it would be wonderful if every girl in
the world got the education she needed and the health
care she needed and access to credit and politics, I
think that would be great, and it's a moral
imperative, but it is an economic imperative.
And the work that Goldman has done that the
OACD had done, the IMF has done shows unequivocally
that we're leaving money on the table at the time of
slower-than-hoped-for growth globally. And one of
the reasons is that women are not encouraged and
permitted in many instances to be full participants
in the economy.
So I go around making this case to a
greater or lesser agreement, but I keep making it
because I think it's very much in our interest and
it's in the interest of our economic system globally
to do more to make sure those doors are opened.
MR. O'NEILL: Thirty years, now you're
officially a private citizen, again, outside the
bubble, flying commercial, I assume. So does the
world look differently?
SECRETARY CLINTON: The world looks
different, yeah, Tim, I'm glad to be back in the
world, I have to confess, and I'm glad to be on the
shuttle instead of on a 16-hour flight somewhere, you
know.
I've traveled mostly in our own country
since leaving the state department, and there's, you
know, there are a lot of questions out there. People
are struggling to figure out what we're going to do
next and how we're going to get there.
And a lot of young people who are not
employed where they thought they would be employed
now, college graduates not really working in the area

they need to, sort of mismatched between the skills

businesses need and what people are producing, so
there are some structural issues that we have to
address as a society.
And it's not all about what the federal
government does with the budget, but mostly I'm
impressed that we just keep moving forward. And we
have to honor and celebrate that spirit of resilience
we saw here in the city after 9/11 when it was so
devastated and people were shocked for all that was
happening before their eyes. And there were a lot of
questions, would downtown ever come back, would they
work here. If you look at it now, it's just
extraordinary, and it's a tribute to everybody who
helped to make that happen.
So when I look at the future of our
country, you know, I'm an optimist by nature and I'm
confident that we'll work our way through it, but it
won't happen by accident. It will happen because both
the public and the private sector decided it is in
our interest to make some tough decisions. And the
list of tough decisions are known to everybody from
entitlement reform to revenues to future growth
investments in R&D and, you know, education and
skills and all the rest.
But I think that we will once again fulfill
the comments that Winston Churchill allegedly made,
that the Americans finally get around to doing the
right thing after trying nearly everything else,
we're in the trying everything else stage right now.
MR. O'NEILL: So last question, if -- what
would you advise someone if he or she came to you and
said, I'm thinking about running for the Democratic
presidential nomination?
SECRETARY CLINTON: Another one of those
hypotheticals. Well, I would probably say, are you
crazy?
MR. O'NEILL: Wait, wait.

SECRETARY CLINTON: Look, I think whoever

runs next time has to have a very clear idea of where
he or she wants to take the country and has to run on
those ideas, because the election cannot be about
personalities, participants sniping, all of the
irrelevant stuff the day after the election sort of
dissipates, and you wake up and say, okay, now what
am I going to do? It needs to be an election about
the future.
So win or lose, people know what you want
to do. You took it to the country, you tried to
build a consensus for it, which can hopefully avoid
some of the end runs that we've been seeing in the
last few weeks, and then you have to have enough of
an understanding of how government works to be able
to execute the operational side of it, the slow, hard
boring of hard boards as (inaudible) said about
politics, there's nothing glamorous about it.
And a lot of what I did as secretary of
state, you know, people say, oh, well, what were you
doing, well, I was trying to protect internet freedom
which is under attack from some of the countries
around the world that don't want their people to have
access to the internet. I was trying to figure out
what we could do about climate change that we could
get around the Congress because they weren't going to
give anything dramatic, but also was going to fit
with our economic impairments, you know, things that
aren't -- they're not in the headlines, they're in
trend lines. So you can't govern from the headlines,
you have to be responsive to them, but you have to
have a plan about what it is you think that the
country can do and then how you can harness people's
energies.
Now, I'll end with this. I mean, you know,
my father was a veteran of World War II, he was in
the Navy for five years. He gets out of the Navy,
all he wants to do is restart his very small

business, he was a printer of drapery fabrics in

Chicago, and start a family with my mother, that was
it, you know, that was the GI dream, and get a nice
house and raise the family.
So when Truman and Marshall said, you know
what, we have to rebuild Europe and we have to
support Japan, yes, you know, Germany and Japan were
our enemies, and we just lost 400,000 plus people in
the war and countless billions of dollars, but we
have to do that.
So we're going to have to keep taxing you,
Hugh Rodham, my father's name, to rebuild your
enemies. My father, who was a lifelong Republican,
is like, what is that about, you know, what do you
mean? I mean, come on, give me a break.
But we had visionary leaders who said,
trust us, and there was enough trust in the system so
that people could. We are going to help create a
world that will be a more peaceful, more prosperous
world and good for the United States.
So when Truman and Marshall came up with
what's known as the Marshall Plan, people were not
immediately enamored, so they went to businesses,
they went to the big banks and the industrial firms,
and they sat down and they said, look, you guys are
going to need markets, you're going to need consumers
to be able to buy your stuff, if we don't rebuild,
who knows whether that will happen.
And then a lot of our leaders in businesses
and presidents of colleges fanned out across America
and made the case. And everybody was speaking with
one voice. And we spent about $13 billion, which in,
you know, current dollars is 120, 125 billion,
rebuilding our enemies, and it was one of the best
investments America ever made.
So somehow and I -- you know, look, I know
we're more cynical. We have a television station for
every prejudice, bias and bigotry anyone would want

to invest themselves in, so it's harder, it's harder

to bring people together, but I think that's what is
needed, and somebody would have to be willing to do
politics differently than it's been done, win or
lose, and say, look, here's what you get, no games,
no hidden tricks, this is what we have to do, you
know, if you agree with me, vote for me, if you don't
agree with me, vote for somebody else, but I want to
have a conversation with the country that is in
keeping with who we are as a people.
MR. O'NEILL: Thank you, Madam Secretary,
for today and everything that you've done for the
country. Ladies and gentlemen, Hillary Rodham
Clinton.
(Time noted: 1:50 p.m.)