Remarks by Senator Richard Lugar, Chairman, Senate Foreign Relations Committee to the Saban Center for Middle East Policy, The Brookings Institution

March 29, 2004

SECTION: PRESS CONFERENCE OR SPEECH

HEADLINE: REMARKS BY SENATOR RICHARD LUGAR (R-IN), CHAIRMAN, SENATE FOREIGN RELATIONS COMMITTEE TO THE SABAN CENTER FOR MIDDLE EAST POLICY, THE BROOKINGS INSTITUTION

RE: "A NEW PARTNERSHIP FOR THE GREATER MIDDLE EAST: COMBATING TERRORISM, BUILDING PEACE"

LOCATION: THE BROOKINGS INSTITUTION, WASHINGTON, D.C.

MODERATOR: STROBE TALBOTT

BODY:

SEN. LUGAR: (Applause.) I'm honored to be introduced by my good friend and in this hall of the Brookings Institution, an institution that has meant so much to the understanding, I believe, of all legislators with regard to foreign and domestic policy and humane values. And I appreciate very much your coming today to be part of this dialogue.

Since the end of World War II, we have recognized that our national security rests on four strong pillars: our own democratic values and the example of freedom we hold out to the world; our military strength; our alliances with other countries and our ability to work cooperatively with the rest of the world in this endeavor; and an enlightened use of both hard and soft power, including diplomacy, aid and trade, that promotes friendship while protecting us from enemies.

To meet the threat from the Soviet Union, we maintained a strong military and created NATO. But we did more. We also launched the Marshall Plan to rebuild Europe, and helped create the United Nations and the Bretton Woods institutions-the World Bank, the International Monetary Fund and the World Trade Organization. The aim was to promote international cooperation, to spread the values of democracy and respect for human rights, and to fight poverty. Over time, we developed more institutions and mechanisms-bilateral defense treaties, regional development banks, the Helsinki Process, the Nunn-Lugar Cooperative Threat Reduction program, just to name a few.

But today we in the West and we face a major challenge. It is the threat of weapons of mass destruction, terrorism, failed states and instability that arises in major part from extremist organizations in the Greater Middle East. The terrorist ideology generated there has global reach. The region is the prime source of what I believe is the greatest single threat to modern civilization in the 21st century-that is the nexus between terrorism and weapons of mass destruction. We must promote security and stability in this vast but troubled region, where demographics, religious extremism, autocratic governments, isolation, stagnant economic systems, and war have often overwhelmed the talents of its peoples and the wealth of its natural resources.

This is a challenge for all of us in the developed world. Instability, poverty and joblessness increase the flow of migrants to Europe. The Palestinian-Israeli conflict causes unrest and discord among Europe's Muslim populations. For some, this longstanding struggle is both a reason and an excuse for anti-Americanism and anti- Western sentiments in the Arab world. Last week's response to the killing by Israel of Hamas leader Sheik Yassin is yet another illustration of how events there can reverberate around the region, and a foretaste of the conflagration that could ensue if we can't end the spiral of violence.

It underscores my strong belief that we cannot take an election-year time-out in the quest for peace.

Now while we cannot ignore the repercussions of the U.S.-led military action in Iraq, it is now time to look forward. European and Asian countries have the same interest as the United States in seeing that Iraq becomes a stable democratic country. By so doing, it can become a catalyst for positive change throughout the region, where millions of people suffer from grinding poverty and hopelessness. This has led some young people to terrorism and to express their despair by lashing out at others more fortunate. At the extreme, some have chosen suicidal missions.

But if we strongly support in Afghanistan and in Iraq citizens who are striving to build successful states that embrace freedom and enjoy broadly shared economic development, their success could generate extraordinary encouragement to millions of people now mired in hopelessness.

Likewise, if we help to produce a resolution of the Israeli- Palestinian conflict, fresh political winds could sweep through the region, and new possibilities for political reform could flourish. We should make solving the Israeli-Palestinian conflict an integral part of our larger strategy, not an adjunct to it, and consider new structures that bring moderate Arab countries into the process.

As President Bush has said, our long-term strategy is to replace the region's pervasive repression, intolerance and stagnation with freedom, democracy and prosperity. The war on terrorism is only a part, although a crucial one, of this broad and ambitious agenda. The best way to achieve this goal is to cooperate with our traditional partners and with countries in the Greater Middle East on a new paradigm of reform and development.

At its June summit in Sea Island, Georgia, the G-8 -- which includes the United States, Canada, Japan, Russia, the United Kingdom, France, Germany, and Italy-should outline a plan for the G-8 to engage with the Greater Middle East in a way that allows the nations of the region to set their own priorities-their own priorities-for the new millennium.

Many of the nations of the Greater Middle East have entered this new era isolated from the industrialized world.

As the U.N. Arab Human Development Report noted, the whole Arab world translates only 300 books annually; 65 million Arab adults, including half of the women, are illiterate; and only 1.6 percent of the Arab population has Internet access. This isolation contributes to the misunderstanding and prejudice that leads to violence. Other advancements in communication, transportation, health and educational opportunities have yet to reach large percentages of the people of the Greater Middle East. As the 2002 development report noted, while poverty is a serious problem, quote, "The region is richer than it is developed." End of quote.

The 2003 U.N. Arab Human Development Report identified knowledge, freedom and women's empowerment as the most serious challenges to development. Fourteen million Arab adults do not make enough money to buy even the most basic necessities. Steep population increases in many Arab countries mean that as many as 50 million more Arab workers will enter the job market in the next eight years. In addition, the development report found that Arab countries had the lowest freedom score out of the seven world regions. A number of these findings are applicable to non-Arab nations of the Greater Middle East as well.

The G-8 can be a key instrument to effect long-term political and economic change in the Greater Middle East by leveraging financial contributions from Europe, Asia and the rich countries of the region, and by providing the imprimatur of the broad international community. The United States has already begun on its own. The Bush administration launched the Middle East Partnership Initiative-MEPI-in 2002 to support economic, political, and educational reform as well as women's empowerment in the region. MEPI currently consists of 87 programs in 16 countries, and the other G-8 countries have similar programs.

Many of these existing efforts should continue. But the G-8, speaking with one voice, must make a bolder statement. I propose a grant-making Greater Middle East 21st Century Trust, sponsored by the G-8. It would be modeled on the principles of the Global Fund to Fight AIDS, Tuberculosis, and Malaria, the G-8 Africa Action Plan, and the United States' Millennium Challenge Account. The 21st Century Trust would unite the G-8 countries with donor countries in the Middle East in a quest for political, economic, and educational modernization. The donors would pool resources to deliver grants and would work together to define the funding criteria based, in part, on the high priority needs identified in the United Nations' Arab Human Development Reports, which were written by Arab scholars. Vigorous two-way interaction between donors and recipients is vital; change cannot be imposed from the outside.

The trust would not only increase development funding to the region but would also provide an opportunity for the G-8 countries to work alongside countries in the Greater Middle East toward common goals instead of arguing over old disputes. It is particularly important to demonstrate to countries like Afghanistan and Pakistan that G-8 interests stretch beyond capturing terrorists and destroying their networks.

It will be important for the Trust's contributors to include rich countries of the region, such as Saudi Arabia, willing to invest in their own futures and take a stake in the Trust's success. Equally important, Saudi Arabia has completely banned its citizens from donating to charities in foreign countries because it feared funds were being diverted to terrorist causes. A 21st Century Trust would give donors in Saudi Arabia, and other countries, a secure vehicle for charitable donations.

To be sensitive to cultural concerns in the Greater Middle East, the Trust could be structured to respect Islamic financial principles. These principles, in part, forbid the payment or receipt of interest, or any transaction that involves speculation, but allow grants, profit-sharing, transaction fees and other financial structures. This would provide a vehicle that both the religious and the non-religious could use.

This Trust proposal reflects advances in our understanding of international development. The programs it is based upon-the G-8 Africa plan, the global AIDS fund, and the Millennium Challenge-represent a new form of social compact between governments and donors that does not superimpose a plan from donors but, instead, works with the recipient countries to plan and to set priorities. The MCA and the Global Fund institutionalize the inclusion of civil society in project design and incorporate benchmarks so we can know if a project is effective.

Under MCA, countries must demonstrate that they are, quote, "ruling justly, investing in their peoples and establishing economic freedom." The MCA will use independent indicators to judge a candidate country's fitness in such realms as corruption, rule of law, political rights and trade policy. The MCA includes at least three break-through concepts that could be applied to the Trust proposal:

First, donors and recipients negotiate compacts based on goals put forth by the recipient countries. This gives recipients the lead in coming up with their own priorities.

Second, the compacts contain benchmarks that can be measured over time to assess progress. This lays the groundwork for performance- based evaluations.

Third, both the compacts and the projects are to be published on the organization's website. This provides transparency and openness.

What I am proposing today is in some ways parallel to the Bush administration's own initiative, which it developed separately. But mine has some key differences. For one, the trust is not-is not-a development bank, but a grant- and investment-making body that could conform to Islamic financial principles. More importantly, rather than a set of programs to be created and funded, I am proposing instead building a vehicle for action that would set broad goals and criteria. Specific programs would be developed and offered by the recipient countries themselves, and accepted or rejected by the trust based on the standards it sets. This way, we can confer ownership of the reform process on the countries themselves.

Similarly, the trust would go beyond the primary development paradigm of growth, infrastructure and health. It would help realize what the Arab Human Development Report called, quote, "a restructuring of the region from within." End of quote. Ultimately, the trust would seek to promote changes to many of the structures that have been identified by the Arab scholars in the development reports as roadblocks to modernization in the Greater Middle East. This involves reform of economic systems; lessened state control of economies; diversification away from over-reliance on oil and toward more value- added industries; reform of labor markets to promote productivity and greater opportunities for advancement; revamping of weak education systems; a sea-change in the role of women in education, the economy and society; and much greater emphasis on research, science, technology and engineering; and political reform to give citizens more space to think and to have a voice. As the latest development report notes, political instability and struggles for power-"in the absence of democracy-impede the growth of knowledge on Arab soil."

The trust would recognize that many of the policies and practices that have been-that have hobbled the Greater Middle East have been endorsed by the governments of the countries in question. It will be a challenge to convince them to join the trust as partners in a process that will require them to make such fundamental changes. That's why the trust will seek to engage all elements of societies. The Arab Human Development Report calls on, quote, "the state, civil society, cultural and mass media institutions, enlightened intellectuals and the public at large to plant those values that encourage action and innovation in the political, social and economic sphere." End of quote.

This challenge to business as usual helps explain why the administration's own ideas for a Greater Middle East Initiative have so far met with resistance from many Arab governments. Some Europeans have also criticized the initiative for, in effect, choosing reform over stability. I urge the president and his team to stay the course and not be cowed by this initial reaction.

Many comments about the administration's plan have a familiar ring. Arab autocrats have denounced it as an imposition of Western values by outsiders. They've also criticized it as being a "Mission: Impossible" until Western outsiders impose a settlement on the Israeli-Palestine conflict. Such obstructionism simply makes the case more clearly for real reform.

I understand the desire of regional governments for ownership of the process, which is why I've emphasized the two-way nature of the trust function. But granting ownership does not mean the G-8, through the trust, should simply write blank checks to the Greater Middle East governments to pursue their own self-interested visions of reform. That would deny the need for fundamental change, and we must be prepared to use our considerable leverage with allies inside and outside the region to promote truly democratic reforms and political freedom, and not simply maintain the status quo, or our initiatives will lack credibility. At the same time, by remaining engaged in the Israeli-Palestinian conflict, we will strengthen the rationale for our broader initiative in that region.

The social and political changes we are seeking will be even more difficult in an atmosphere of violence. The industrialized democracies, working with the countries of the Greater Middle East, must try to maintain a stable environment for long-term progress. I have proposed that NATO, with its integrated military command, interoperability of equipment and forces, and a proven ability to make decisions, take action, assume a larger role in the Greater Middle East and make the region a new priority.

I have made a number of specific proposals. In particular, NATO should beef up its presence in Afghanistan, where it is leading the International Security Assistance Force, and assume a formal role in Iraq. No reasonable country of the Greater Middle East, just as no Western or Asian country, can wish for failure in the rehabilitation of Iraq. NATO's involvement, by further internationalizing the reconstruction effort, will make success more likely.

More broadly, NATO should launch a major effort to promote strong military-to-military relations with Greater Middle East countries, a program I have called Cooperation for Peace. As in NATO's hugely successful Partnership for Peace program in Central and Eastern Europe, NATO could help with training for peacekeeping, for counterterrorism, border security, as well as with defense reform and civilian control of the military. This Cooperation for Peace program would complement efforts by the 21st Century Trust to modernize Greater Middle Eastern societies and integrate them into the international community.

Achieving the kind of regional transformation we seek will require many steps over a long period of time. The first step, before deciding what change is necessary, must be for the leaders and the people of the Greater Middle East to agree, through vigorous and open debate among themselves and across the region, that change is necessary. This reform in attitude cannot be imposed from outside; it must be generated from within the region, across national boundaries, and it must be seen in the context of people taking charge of their own futures.

We already see examples under way. For instance, the Alexandria Library in Egypt hosted a conference on "Critical Reforms in the Arab World: From Rhetoric to Reality" during this past month, to bring together members of the civil society in the Arab region, including intellectuals, businessmen and academics. They declared that they "are fully convinced that reform is a necessary and urgent matter." And contrary to the popular notion that democracy is somehow an alien concept, they say they embraced, quote, "without ambiguity, genuine democracy," end of quote. We need more of this.

Many in the region say that they cannot support an agenda for change unless the United States addresses the Israeli-Palestinian conflict. The Arab Human Development Report calls the conflict "a contributing factor to the region's democratic deficit, providing both a cause and an excuse for distorting the development agenda."

The search for stability in the Greater Middle East must proceed hand in hand with the resolution of the Israeli-Palestinian conflict, but the nations of the Greater Middle East must be brought into the process of resolving the conflict. They cannot continue to expect the United States to address these issues on their behalf and then complain the United States is not doing it right.

Therefore, I propose that as a part of the drive to bring the Greater Middle East countries into the modern world, we bring them fully into the process of resolving the Israeli-Palestinian conflict. This would close what has in the past been a gap in strategies for the larger region.

As a first step, we should expand the Quartet, which is currently directing the peace process-the Quartet made up of the United States, Russia, the European Union and the United Nations-into the Sextet by adding Egypt and Saudi Arabia. This would give the Palestinians more confidence in any proposal that comes forth, and give all countries in the region a greater stake in both the specifics of a new peace proposal and in the efforts to follow through on implementation. Closer Arab support would also give the Palestinians the option to make compromises that they might not otherwise make on their own.

Secondly, we must recognize that Prime Minister Sharon's unilateral disengagement has created an opportunity that we should seize to generate new attitudes and approaches to ending the violence. His decision to evacuate unilaterally almost all settlements in Gaza and a number in the West Bank, once unthinkable by any Israeli leader, is being accepted by most within Israel. Many in Israel are recognizing the demographic reality that if Israel maintains control of the West Bank to the beginning of the next decade, Jews could be in the minority in the state of Israel.

Such recognition now reinforces Israel's acceptance of the principle of a separate Palestinian state.

The Israeli withdrawal, as a practical matter, along with Israel's construction of a security fence, will reduce the opportunities for Palestinians to attack Israelis and the need for Israeli military checkpoints and other intrusions into Palestinian daily life, which do so much to inflame anger. The withdrawal, because it is new and because it was put forward unilaterally, could energize the peace effort and provide a useful detour in the road map without abandoning it.

However, it is important that we, along with the quartet-or the sextet-work actively with the Israeli government to ensure that disengagement is done in a way that enhances Israeli security, returns a significant number of Arab neighborhoods to Palestinian Authority jurisdiction and does not fragment Palestinian territory. It should also be coordinated with the Palestinians and others.

There is concern that the Palestinian Authority is so weak and fragmented that, upon an Israeli departure, a radical group such as Hamas could emerge as de facto rulers. That's why the administration is promoting the active involvement of Egypt and Jordan in any security arrangement in Gaza. But we can, and I believe we must, go further. With the effective collapse of the Palestinian Authority, Israel has no reliable negotiating partner, as events of the past week have underscored. We should consider asking moderate Arab countries to assume significant responsibility for rehabilitating or restructuring the Palestinian Authority so that discussions can be restarted.

Some experts have proposed turning over control of the Palestinian territories to an international trusteeship. This trusteeship would provide enhanced security for both Palestinian and Israelis. It could restructure the Palestinian security services and lead a reform of the Palestinians' failed institutions. It would turn back sovereignty at the appropriate time. Why shouldn't this trusteeship be managed by Arab nations? This would give them a role in what they themselves claim is at the core of many of their own problems.

Arab nations' establishment of a trusteeship. Israeli unilateral disengagement. These might sound like drastic measures, but taken together they could revive momentum toward a solution of the Israeli- Palestinian conflict.

The G-8 has already taken on one new role in 21st Century security. The Global Partnership Against the Spread of Materials and Weapons of Mass Destruction and has pledged an additional $10 billion over 10 years for Nunn-Lugar-type programs in the former Soviet Union.

The Greater Middle East 21st Century Trust should be a new form of social compact between donors and recipients. By working together with a wide range of other nations, Americans can demonstrate that we are strong and creative advocates of a peaceful world for all, and that the future lies in being a partner with the United States, not a counterweight to it.

In my view, the G-8 Summit in Sea Island at the beginning of June represents an opportunity to focus the world on modernization needs in the Greater Middle East. This challenge should be addressed by the G- 8, and it should include the participation, contribution and vision of those in the Greater Middle East. By the same token, the NATO summit in Istanbul at the end of June would be the right venue for framing a transatlantic security structure that extends throughout the Middle East.

As His Royal Highness Prince El Hassan bin Talal noted last October in Amman, quote, "Peace is real and durable only when the root causes of conflict have been eliminated," end of quote. He went on to highlight the importance of eradicating poverty to limit violence. We can achieve greater security through careful mitigation of well- defined threats. We can extend our idealism to create broad opportunities for millions of people to enjoy more promising lives for themselves and their children. Let us answer the call of those in the Middle East and work with them.

I thank you very much. (Applause.)

Q (Off mike) -- this is very welcome. Yes, I'm Howard Pack and I'm professor at the Wharton School of the University of Pennsylvania and a fellow at the Institute for International Economics. There are several things that come up simultaneously.

The first is, if you look across countries, the Middle Eastern countries have actually done quite well in terms of economics, except for Saudi Arabia and Kuwait, over the last two decades. Jordan, Saudi Arabia and Kuwait have done poorly, but Morocco, Tunisia, Egypt have really done very well in the international context. They also have relatively limited poverty. The Middle East, if you look at a cross- country sample, has remarkably little inequality of income.

Secondly, if we look at who are the terrorists. They typically are relatively well-educated and from the upper income parts of society. Bin Laden, after all, is very rich, and if terrorism were really associated with poverty, we'd expect terrorists from Chad and Tanzania, not from Saudi Arabia, or indeed Egypt. And so if you think about economic reform as a way of reducing terrorism, the links are very tenuous. In Sri Lanka, some of Tamil Tigers are actually pretty rich and pretty well-educated. They have an ideological reason or a nationalist reason to proceed.

We then go to economic reform. The economic reforms are deeply threatening. State-owned enterprises are, as you mentioned, are a very large part of the economies. The employees there do not want to lose their jobs any more than South Carolina textile workers do. And you know how that works in the U.S.-they're vigorous in their own self-defense.

And so if one looks at this, in some ways you have this very-you know, it's a very well crafted plan, you know. I'm not objecting to the plan. But I think there may be an excessively optimistic view that as economics, which I'd like to believe, being an economist, hold the key to all issues. Because there are a lot of issues that are non-economic will not be addressed. Even when you go to questions of legitimacy of the governments. Korea and Taiwan face slightly larger external threats than the Arab countries do from Israel, if you just look at population and military threat. And in those countries they use the external threat to --

MR. TALBOTT: (Off mike.)

Q-okay-to legitimize, to legitimize economic reform.

Sir, the question I'm asking is, are you really that hopeful about economic reform as the end of terrorism, or is it one part of a larger agenda?

SEN. LUGAR: Well clearly, it's one part. I take your point that there are uneven successes with regard to economies throughout the area. But it seems to me that the overwhelming number of people who are living in almost hopeless poverty is reasonably self-evident. Now, that does not mean that, as you suggested, these are necessarily the terrorists. You know, clearly-and I'm intrigued by work that Jessica Stern has done recently, in which she has interviewed in Pakistan people who have gone into terrorism and are thinking about suicidal terrorism and why they do it. And some of these are students, and some are fairly affluent and make your point.

But the facts are that we, it seems, keep getting back to the point that as we talk about this subject, Arab countries and/or Arab peoples say we are tired of being lectured about our failings. This is an attempt really to say: Come up with your suggestions. A critique may very well be that nobody will play. In other words, if in fact everyone was in a status quo mood-as you say, the factory workers like the nationalized industries, even if tens of millions are unemployed. Maybe the tens of millions are voiceless and nobody makes a proposal. So I admit-but this is why we try to get a broader group; it's the governments, but also universities and business people and anybody in the cultural society. And we don't have the criteria we have for Millennium Challenge, in which already you have to be at certain levels of performance. We sort of play things as they are from a situation of desperation, noting that, and noting at least proposals that might come.

Yes, sir?

Q Yes, Senator. I noticed --

MR. TALBOTT: Mike.

Q Oh, my name's -- (name off mike) --

MR. TALBOTT: Can you go to the mike?

Q I noticed that you made no-oh, sorry. That you made no mention, Senator, of the American presence in Iraq. And I would be interested in your comments as to how you think your proposal, and similar proposals, what the Bush administration may be raising at the G-8 summit, how any American proposals in the region will be received, given, rightly or wrongly, that there is a broad sense in the region that America lacks legitimacy, particularly in light of the comment that you made that reform can't be forced, but needs to happen voluntarily.

There is a sense in the region that America does think that reform not only can be, but must be forced. And also, given the results or the non-results of the Arab summit yesterday on the recipients end, in terms of the states in the Middle East, what kind of partners do you think we would have to kind of work through this plan of yours, given the fact that they can't even sit down and have a meeting much less iron out any kind of road map for going forward?

SEN. LUGAR: Well, certainly the decision by the Tunisians to inform people not to come was disappointing to everybody, certainly those who were planning to come -- (laughter) -- as well as the rest of us who were looking forward for the agenda to come forward that we're talking about. So I understand today that President Mubarak and the Egyptians have indicated that they hope to help revive this situation by having a meeting in Egypt or somewhere else maybe in three weeks or in a short period of time and I hope that will be the case, but it illustrates what a daunting situation this is as you begin to wade into it and ask for ideas and suggestions. And as you say that the meeting has been called off temporarily, but I think only that.

Now, on the American presence in Iraq, let me say that clearly I thought that Afghanistan and Iraq and the success that they may enjoy could be models for hope for others. Maybe so, maybe not. The jury's still out in both cases. But I've suggested we're more likely to be successful if we are joined by NATO allies in Iraq. We are clearly on a path now in which Jerry Bremer is leaving the country the 30th of June and you can see on the front page of The Washington Post this morning suggestions that some Iraqis following the Ayatollah Sistani are dissatisfied with the constitutional law.

So I'm not bold enough to predict what will happen in the next six months, quite apart from beyond that time, except with the hope that there are Iraqis who in fact will want to have a democratic framework, will want to have a stronger economy. But the United States is not going to be able to impose that, and I suspect that bit by bit our relationship with Iraq will be defined by Iraqis on the military side as well as the economic side.

This may not be an answer instantly to people who say, well, why are you there at all? Well, we are there and we are working our way with the Iraqis into a constructive resolution so that they gain sovereignty quickly and hopefully develop really a better life. Yes, on the aisle.

Q Thank you. Gary Mitchell from the Mitchell Report. Mr. Chairman, your proposal is certainly bold and suggests that it would take a level of cooperation among the nations of the Greater Middle East and clearly the nations of the G-8 and others. I wonder if you could talk a little bit about what you think needs-what conditions would need to be present in American domestic politics to have something like this take hold and be successful?

SEN. LUGAR: In American domestic politics we at least have had some debate over the Millennium Challenge Account idea. Some scholars would argue this is so complex that the debate has been limited to people who have been interested in foreign aid and foreign assistance questions.

But still this is a different idea: that somehow the proposals come for grants from the countries themselves, and that as opposed to grants to all countries at all times, we ought least to have some criteria, some incentives, namely, countries that stop corruption and move toward democracy, freedom of religion, rights for women. They're more likely to get grants.

On the case of the Middle East thing, I'd suggest that we don't start with criteria of that sort; we really start with no criteria. We have asked, really, participation in my proposal from the recipient countries as to what the criteria ought to be. This might come from a conference such as the one that was going to happen in Tunisia and may happen somewhere else, in which, pragmatically, there is some evidence that Middle Eastern countries generically have accepted some reform if in fact there was substantial money or there was substantial possibility of economic gain coming from that. Maybe so, maybe not. But that would be my hope.

Now for the American people, it seems to me there has to still be a very broad sense in our electorate that the rest of the world counts, that we are deeply interested in other countries.

I've tinged this a bit with the urgency that we ought to be interested in the war against terrorism. And one can define that in many ways, but I'm one who comes more and more to sort of the subnational cell group situation, which makes this much more complex, because, after all, the people asking for the grants will be countries, or they'll be institutions, probably, or fairly well- defined groups, scholars or business people, within a country, not an al Qaeda cell or some floating arrangement of this sort of thing.

But I suppose this is the debate that has to occur. Is there some faith that changing the circumstances-not unilaterally, by the United States alone, but I've suggested the G-8 as the beginning point, maybe not the ending one, for the donor group-really tackles the situation that prior to 9/11 we had not thought of in the body politic as a whole or very much, really, in official Washington, and a sense that we thought about it a great deal after 9/11. And we changed abruptly our foreign policy toward large states-India, Pakistan-and small states we discovered-Uzbekistan and Tajikistan. And we are still discovering what occurred maybe over three centuries of a fissure of economic development and political developments.

My confidence level in the American people is such that people, as they understand these issues, will be in favor of programs that have some sophisticated resolution.

Yes, sir?

Q Mr. Chairman, my name is Said Arikat, from Al-Quds newspaper. Your idea is quite intriguing-establishing a trust. You're also suggesting that it ought to be independent and should not be contingent on the resolution of the Arab-Israeli conflict.

Now, Martin Indyk, the director of the Saban Center, has suggested long ago to have some sort of a trusteeship.

Now, could you incorporate the two and have actually the G-8 merge the trust with a trusteeship? And, you know, under this chaos that is taking place, perhaps the G-8 will assume responsibility for separating Israelis and Palestinians instead of the wall that's taking place.

SEN. LUGAR: Well, I've chosen, really, a different idea for the two trusteeships, and deliberately. The trusteeship, if that idea were to be adopted in the Israeli-Palestinian situation, would be a temporary one, preferably of other Arab countries in whom Palestinians would have more trust than they would in the G-8, perhaps. Now, maybe they would have trust in the G-8, but my gut feeling is that politics would dictate having Arab friends that were closer at hand looking out for their interests.

I think the trust idea with the G-8 is really going to lead to some debate in Europe as to how much involvement Europeans want to have in the Middle East. Now, I'm not the only person thinking about this. Each of you would cite an excellent address by Joschka Fischer at the Munich Security Conference in which he tried to explore in a very bold way how Europeans who are interested in this same problem of terrorism, these intrusions that might come into German life the same as they've come into Spain and the United States and elsewhere, might be more forward-looking. And he pointed out the Barcelona agreement has brought together some dialogue between Europeans and Middle Eastern people, although often the conferences were postponed because of crises in the Israeli-Palestinian thing that's sort of stopped the music for a while before they got going again.

So, as an extension of the thought that Europeans might be more involved, and an extension I've tried to propose today that they might be involved in military-to-military ideas, where that seemed useful, to democratize the forces, to try to think through civilian rule and defense department. This requires some volition on the part of other states to want to have that kind of partnership, but I am suggesting we ought to be prepared as G-8, and maybe broader than that, to respond constructively, as opposed to pretending that it's all hopeless out there, or that somehow some-the Lord will provide, and it's unlikely that will be the case.

So I accept your point as an interesting one of making this trusteeship a broader one. For the moment, I think I would separate those two ideas for the reasons I have mentioned.

Yes, sir?

Q Thank you, Mr. Chairman.

Jeffrey Winograd (sp), I'm the editor of an independent newsletter called focusisrael.com. And basically, I have a follow-up to the question you were just asked about the trusteeships. Israel is a democracy and Egypt is not. Israel follows the rule of law, Egypt does not. Egypt is allowing weapons smuggling into the Gaza Strip, and some people would say Mubarak is not Sadat. So my question is, why should the Israelis trust the Egyptians in any trusteeship?

SEN. LUGAR: Well, I wouldn't advise trust in this case. It appears to me that pragmatically the Israelis might like the idea of a trusteeship so that there was, in fact, some entity with which to negotiate, or some degree of organization as opposed to chaos. So it would be less a question of trust than something pragmatically looking at circumstances that might be more favorable in the interim, as then Israel proceeds, hopefully, finally, to find a negotiating partner. And over the course of time, sovereignty could come to a Palestinian state, perhaps through that trusteeship. And I have suggested Egypt as a logical member of the trustee group if such was to be formed.

Yes?

Q I'm Al Millikan, affiliated with Washington Independent Writers. Does what the United States is doing domestically-defining or redefining marriage, protecting or not protecting the unborn, pledging allegiance under God or not-does the rest of the world care about what we're doing in these areas that others have to make decisions about themselves? Does this affect how others respond to our leadership or partnering? Or do they ignore our internal actions and even deny how this could influence their own cultures and peoples-and God?

SEN. LUGAR: Well, I doubt whether they are-they totally ignore us. But on the other hand, my general perception would be that they are not involved in our day-to-day political activities. They really have overwhelming dilemmas of existence and survival, and although perhaps our stewardship might be-or their reflections on that influenced by the nature of our debates, and certainly always has in a way by the civility with which we approach affairs-the general fairness or pragmatically how well we do-seems to me that is not going to at least change the picture that I'm presenting today. In other words, I doubt whether it will influence any members of the G-8 or the proposals that might come from countries that would want reform.

Yes?

Q William Jones, currently with Amnesty International.

I'm curious, Senator-we have met once, and that was in Turkey, and I'm curious on how Turkey has not come up. It seems to me they're the elephant in the Middle East and not in the bedroom, and what role they might be able to play in this whole process.

SEN. LUGAR: Well, Turkey is a member of NATO, and as a member of NATO it might play a significant role. I have suggested such a role for NATO. I grant your point, that Turkey is a very important country and developments there make a huge difference for a whole lot of reasons. But I would say of course we ought to try to define roles for Turkey, and the Turks perhaps will want to assert roles in this situation that we ought to be sympathetic with.

MR. TALBOTT: Maybe one more.

SEN. LUGAR: Yes, on the aisle.

Q Carol Giacomo with Reuters. Senator, have you discussed this proposal with the Bush administration, and if so, what's the been the response? And how much money do you think you would need at the outset to get it going?

SEN. LUGAR: I have not had a formal discussion with the Bush administration. Since my text was prepared several days ago I've shared it with some members of the administration so that they were not surprised by the presentation today, but they are-they're going to walk around this problem. They have offered some suggestions and I've indicated that some of these have been rebuffed apparently initially by Arab countries. So they're interested in success here. I think there's not a pride of authorship problem, and in the event that my ideas found some greater acceptance my guess is that many of them would be adopted.

MR. TALBOTT: Senator, before thanking you I'd like to put one question to you myself. It's a little closer to home than the proposal that you brought to us today. Zbigniew Brezinski has made a proposal in a number of speeches that he's given recently in connection with his new book on an idea that he feels would ensure bipartisan support for American foreign policy in the next presidential term, and that would be that whoever is inaugurated next January appoint a secretary of State from the other party, and he names names. He is suggesting that President Bush, if reelected, make as his secretary of State Senator Lieberman. We look forward for a chance to ask Senator Lieberman what he thinks about that. (Laughter.) And if Senator Kerry were to be elected, his nominee is either you or Senator Hagel. Would you like to comment -- (laughter) -- either on this idea in general or in specific?

SEN. LUGAR: Strobe, you know I won't go there at all. (Laughter.)

MR. TALBOTT: (Laughs.)

SEN. LUGAR: We have enough ahead of us in the Middle East without being in our own campaign in that way, but I'm always flattered by mentions by my friend, Zbigniew. But I'm interested in doing what I'm doing.

I would just say, candidly, that being chairman of the Foreign Relations Committee in the Senate is about the best job anybody could have in this country, and I like it and I hope I can stay. (Laughter, applause.)

MR. TALBOTT: I would call that answer not Shermanesque, but Lugaresque -- (laughter) -- which is to say judicious, gracious. And whether you go there or not, I'm glad you came here today.

SEN. LUGAR: Thank you very much.

MR. TALBOTT: So thank you very much, Senator. (Applause.)