SECRETARY CLINTON: (Applause.) Thank you very much. This is a first, with both Secretary Panetta and I here together. But I think that it speaks volumes about the importance that we place on this conference, Wolfgang, and on the significance of the alliance that has grown so strong over the last 50 years. It is also a great personal pleasure for me to be back in Munich with so many colleagues and friends. I wish to thank one of them, my friend, the Foreign Minister, Westerwelle, for his important comments. And I also wish to thank the presentation by Sam Nunn and Igor Ivanov on the Euro-Atlantic Security Initiative that I think holds great promise for us all if we heed the words that it contains.
This gathering, as Leon just said, founded at the height of the Cold War, has become an important symbol of our commitment to stand together as a transatlantic community. And we come to Munich each year, not only to advance our shared values, our shared security, and our shared prosperity, but to take stock of where we stand in the efforts to forge that union between us, and also to lift up our heads and look around the world at the global security situation. That calling is no less powerful today than it was 50 years ago.
Now, I have heard all the talk about where Europe fits in to America's global outlook. And I have heard some of the doubts expressed. But the reality couldn't be clearer. Europe is and remains America's partner of first resort. I have now traveled to Europe 27 times as Secretary of State. President Obama has visited 10 times. And wherever America is working to prevent the spread of nuclear weapons, to fight disease, to help nations on the difficult journey from dictatorship to democracy, we are side by side with our friends in Europe.
In fact, I would argue the transatlantic community has never been more closely aligned in confronting the challenges of a complex, dangerous, and fast-changing world. The breadth and depth of our cooperation is remarkable. You know the litany. In Libya, NATO allies came together with Arab and other partners to prevent a catastrophe and to support the Libyan people. In Afghanistan, with nearly 40,000 European troops on the ground alongside our own, we have built and sustained NATO's largest-ever overseas deployment. And we will continue to support the Afghans as they assume full responsibility for their own security by the end of 2014.
As Iran continues to defy its obligations, America, Europe, and other partners have put in place the toughest sanctions yet. And we are also pursuing diplomacy through the E3+3 track, because Europe is vital to both halves of that dual-track strategy. And as a tyrant in Damascus brutalizes his own people, America and Europe stand shoulder to shoulder. We are united, alongside the Arab League, in demanding an end to the bloodshed and a democratic future for Syria. And we are hopeful that at 10:00 a.m. Eastern Standard Time in New York, the Security Council will express the will of the international community. (Applause.)
As Secretary Panetta just made clear, our commitment to European defense is just as deep and durable as our diplomacy. At this year's NATO summit in Chicago, we will update our alliance to keep it strong for the 21st century. So when President Obama says that "Europe remains the cornerstone of our engagement with the world," those aren't just reassuring words. That is the reality.
Today's transatlantic community is not just a defining achievement of the century behind us. It is indispensable to the world we hope to build together in the century ahead. Here in Munich, it is not enough to reaffirm old commitments. The world around us is fast transforming, and America and Europe need a forward-leaning agenda to deal with the challenges we face. Let me just briefly discuss five areas in particular that will require a greater collective effort.
First, we have to finish the business our predecessors started, and build a Europe that is secure, united, and democratic. And we heard the ICI Report that sets forward some very specific steps we could take together. From day one of this Administration, we have worked closely together to transform strategic relations with Russia, while standing firmly behind both our principles and our friends. This approach has yielded results, but we need work to sustain it. And this is not the only place in our community where we need to overcome mistrust. As long as important conflicts remain unresolved in Eastern Europe, the Balkans, the Caucasus, and the Mediterranean, Europe remains incomplete and insecure. Even as we grapple with a wider global agenda, we cannot lose sight of the challenges closer to home.
And let me underscore the word "trust". We heard it from Igor Ivanov, we heard it from Guido Westerwelle, and I think it deserves repeating. We have to do more together to build a sense of trust and to overcome mistrust among us. That will have to be one of our strategic imperatives, if we expect to address successfully the issues ahead.
Second, because the strength of our alliance depends on the health of our economies, security and prosperity are ultimately inseparable. That means we need a common agenda for economic recovery and growth that is every bit as compelling as our global security cooperation. We recognize that Europe's most urgent economic priority is the ongoing financial crisis. As you probably know, we have been dealing with one of our own. And although we get good news from time to time, as we did yesterday with jobs figures and drops in unemployment, we know we have a ways to go, as well. We remain confident that Europe has the will and the means not only to cut your debt and build the necessary firewalls, but also to create growth, to restore liquidity and market confidence.
As Europe emerges from economic crisis, we have to work harder to reinforce each other's recoveries. As deep as our economic relationship is, it has not yet lived up to its potential. I speak often about economic statecraft, because I think we cannot talk about what must be done in the 21st century without recognizing that our economic strength lies at the core of everything we are able to do to advance our values, to protect our interest, to create the security architecture that will sustain stability, going forward. The new U.S.-EU High-Level Working Group on Jobs and Growth created by President Obama and his European counterparts should be at the forefront of our efforts to put our people back to work.
And also, America and Europe can and should be trading more with each other and with the rest of the world. That means we also need to be focused on promoting our economic values. Too often, American and European companies face unfair practices that tilt the playing field against us: favoritism for state-owned enterprises, barriers to trade emerging behind borders, restrictions on investment, rampant theft of intellectual property. Together, America and Europe need to instill that all nations must respect the rules of the road that guarantee fair competition and market access. And above all, we need to remember that our investment in global leadership is not the cause of our fiscal problems. And pulling back from the world will not be the solution.
Third, in a time of tight budgets we need to ensure that our security alliance is agile and efficient, as well as strong. That is what Secretary General Rasmussen calls "smart defense": Joint deployment of missile defenses, the commonly-funded Alliance Ground Surveillance program, Baltic air policing, and a reinvigorated NATO response force. These are practical ways to provide security while minimizing cost to any one nation.
We also need to build our capacity to work with partners such as Sweden, Japan, Australia, members of the Arab League, and many others. And this will be a focus of our efforts in Chicago to ensure that NATO remains the hub of a global security network with a group of willing and able nations working side-by-side with us.
Fourth, our shared values are the bedrock of our community. We need to vigorously promote these together around the world, especially in this time of transformational political change. In the Middle East we have a profound shared stake in promoting successful transitions to stable democracies. We are making the Deauville Partnership a priority during America's G8 presidency this year. And to make good on its promise, we will be putting forward an ambitious agenda to promote political and economic reform, trade, investment, regional integration, and entrepreneurship to help people realize the better future they have risked so much to have.
Just as the impetus behind the Arab Spring has extended beyond the Middle East, so much our work. We have to help consolidate democratic gains in places like Cote d'Ivoire and Kyrgyzstan, and support democratic openings in Burma, and wherever people lack their rights and freedom. At the OSCE, the Community of Democracies, and elsewhere, we need to align all of the tools we have to further our values and goals.
America and Europe have more sophisticated tools than ever to support and reward those who take reforms, and to pressure those who do not. And wherever tyrants deny the legitimate demands of their own people, we need to work together to send a clear message: You cannot hold back the future at the point of a gun.
Of course, it is not credible to preach democracy elsewhere unless we protect and promote it ourselves within our community. The trappings of democracy are not enough. We need a vibrant free press, clean and transparent elections, an independent judiciary, a healthy political opposition, and protection for women, religious, and ethnic minorities. We must protect democratic rights and freedoms wherever they are endangered, including here in Europe.
Fifth and finally, we have to reach out to emerging powers and regions. The world we have worked together to build is changing. There are new centers of wealth and power, and fewer problems can be addressed decisively by America and Europe alone. So we have a challenge to make the most of this critical window of opportunity, to enlist emerging powers as partners, and strengthening a global architecture of cooperation that benefits us all.
I am glad that Europe's engagement in the Asia Pacific is on the agenda here in Munich, because we need to reach out together to regions already playing a growing role in world affairs. Now, a great deal has been said about the importance of a rising Asia Pacific for the United States. But not nearly enough has been said about its importance for Europe. America and Europe need a robust dialogue about the opportunities that lie ahead in the Pacific-Asia region. And we are building one here today. Taken together, all of these elements point to a larger enduring truth: When Americans envision the future, we see Europeans as our essential partners. There is no greater sign of our confidence and commitment than just how much we hope and need to accomplish with you.
We have not sustained the most powerful alliance in history by resting on our laurels. Our predecessors planned for the future together. They acted on the belief that America, Europe, and like-minded nations everywhere are engaged in a single common endeavor to build a more peaceful, prosperous, secure world. That is as true today as it ever was. And in this time of momentous change, let us have that same spirit guide us as we chart our path forward together. Thank you. (Applause.)
AMBASSADOR ISCHINGER: Thank you, Secretary Clinton. Thank you, Secretary Panetta. We are running just a little bit behind schedule, but I think we should have time for a few questions. A couple of questions have already reached me here.
And I will start this question and answer session by reading a question from someone you know well, Karl Kaiser, sitting somewhere here, from Harvard. His question is -- I think it is addressed to the Secretary of Defense, I imagine -- "Is the U.S. posture during the Libya crisis of 'leading from behind' and relying on allies to assume the main share a pattern likely to remain?" I think that goes to you, Leon.
SECRETARY PANETTA: Look, in the world that we are dealing with, with the myriad of threats that I outlined, whether it is terrorism, whether it is the war in Afghanistan, whether it is the threats from Iran, North Korea, turmoil in the Middle East, I think we need to have a broad and flexible approach to dealing with each of those crises. We can't just rely on one mode to be able to confront the conflicts in today's world. Libya, it worked to have NATO come together. It was effective, it was successful. But it doesn't necessarily mean that that particular model might apply if we had to go to war in North Korea, or if we had to confront a threat elsewhere.
I think the most important thing the United States has done in developing our defense strategy is to maintain our capability to be able to engage in a broad way, depending on what the crisis is, what the threat is. So if we need land forces to confront land forces, and we have to take the lead on that, we have the capability to do that. If we have to deal with someone trying to close the Straits of Hormuz, we have the naval and air force capability to be able to do that. We can do that in conjunction with NATO, or we can do it on our own. We need to maintain a full, flexible, agile, and strong defense in every way. And that means working with NATO, but at the same time understanding that all of us have to have the capability to deal with threats as they emerge.
AMBASSADOR ISCHINGER: Thank you very much. The next question goes to Secretary Clinton, but I can't read this properly. It comes from Stefan Kornelius. Could somebody give a microphone to Stefan over there, and we will invite him to present his question himself?
MR. KORNELIUS: Wolfgang, I am glad to give you a lot of (inaudible) both questions I want to ask myself.
Secretary Clinton, the question of Afghanistan and their sort of emerging probable negotiating process with the Taliban, the first steps have been made. Is the Administration prepared to do a confidence-building measure in thinking of releasing detainees in Guantanamo, as the other side demands?
SECRETARY CLINTON: Well, I am not going to go into any details about what we are or are not prepared to do, because we are just at the beginning of this process of exploration whether or not there is an opportunity to bring about an end to the conflict through a political solution. But this is, first and foremost, an Afghan-led and Afghan-owned process. We support the Afghan Government in its efforts to work with the representatives of the Taliban and other insurgent groups, to see whether there is common ground on which to build enough trust -- to go back to that word again -- to have a resolution.
There are certain conditions that certainly the United States would look to. We would expect anyone who was engaged in such talks to: renounce violence, to be prepared to lay down arms and enter the political process, if that is what they were to seek, to have their views known within the Afghanistan political system; to renounce all ties with al Qaeda because of the history with the Taliban -- that is a very important issue to the Afghans, to us, to NATO-ISAF; and to agree to abide by the constitution of Afghanistan.
So, there will continue to be all kinds of speculation about what is or is not happening. But I think it is important to say of course we are exploring whether there is a way forward in partnership, and with the lead of the Afghans themselves.
AMBASSADOR ISCHINGER: Thank you. Because we are running out of time I will call on two more. If you could be brief, first one is member of the German Bundestag, (Inaudible) Stinner, and the second one is Francois Heisbourg, over there. So we go to (Inaudible) Stinner first.
QUESTION: Yes. Thank you very much. Due to the shortage of time, I would like to do it in English, then. The question goes to Mr. Panetta, Secretary Panetta, with regard to missile defense. This morning we heard a very interesting presentation by Senator Nunn. And my understanding of these two presentations from him and from you, I see a difference in tonality. Senator Nunn, to a very large extent, elaborated on the political issue with regard to coming to terms with Russia. You more or less concentrated on a technical aspect of defending ourselves, which is most valued, of course.
But would you subscribe to the ideas of Senator Nunn, that it is of utmost political importance to come to terms with Russia, and that we are to take into consideration the political and psychological concerns of Russia?
And the last question is with regard -- is Russia fears that the missile defense will undermine their capability of defense themselves. I think it is unjustified, as far as it goes, from phase one to three. With regard to phase 4, inaugurated probably by 2020, I see that this phase 4 will indeed -- or will eventually indeed undermine Russia's capability. To what extent are you willing to subscribe to what Senator Nunn has done with regard to political implications? And what do you think about Russia's concerns here? Thank you very much.
SECRETARY PANETTA: No, I greatly respect the work that Senator Nunn has done. And frankly, I don't see a contradiction here. I think to engage in what Senator Nunn wants to do, to be able to reach out to develop the kind of communication and relationships that are important to trying to prevent war in the future, I think that is absolutely essential. But I also think you need to do that from a position of strength, not a position of weakness. And, therefore, I think we have to continue to build our defense. We have to continue to be able to deploy that which we think is important to the defense of Europe. And we intend to do that.
Now, we do not view, very frankly, the ballistic defense system that we are trying to develop here as in any way a threat to Russia. We have made that clear, time and time again. We will continue to make it clear to Russia. And we hope that, ultimately, we can resolve those issues, so that we can proceed in a way that represents the defense of Europe, not a threat to Russia, but the defense of Europe.
AMBASSADOR ISCHINGER: Thank you. And the last question goes to Francois Heisbourg, from Paris.
QUESTION: Yes, Secretary Panetta, in the very substantial changes in the American defense posture which you announced recently, the -- your starting points are defense budget reductions which do not take into account sequestration.
Am I right in assuming that sequestration would be countermanded, would not need to be taken into account if, for example, President Obama were reelected and the balance in the Congress would change? But if one assumes that, does that mean that there would be no further defense cuts beyond those upon which you have based the announcements in the change of defense posture? Because the difference between a world with sequestration and a world without sequestration is about half-a-trillion dollars of defense spending.
SECRETARY PANETTA: Sequestration, for those of you that are not familiar with that term, is a crazy formula that was developed by some of our colleagues in the Congress that essentially said if they didn't reach a number of savings to be achieved -- it was done with this committee, the super committee that had been appointed. The committee was to achieve at least, I think, about 1.4 trillion in savings. And if they did not achieve at least that amount, that then an automatic cut across the board would take place of that amount. And for defense, that represents a virtual doubling of the cuts that we would confront.
As the President has pointed out, and I have emphasized, we are not paying attention to sequester. Sequester is crazy. And therefore, I am going to urge -- and we strongly urge -- the Congress to be able to come forward and try to detrigger that amount. Because, frankly, it is not only the amount, but it is the way it would be done. The formula is built in to sequester. It would cut across the board. And, as I have said, it would virtually devastate our national defense. And for that reason, we are saying no, we are not planning on sequester taking place. If sequester happened, I would have to throw the strategy that I just developed -- I would have to throw that out the window. And I think that would be dangerous for America, and it would be dangerous for the world.
With regards to the future, obviously we will continue to work. I think we have developed a very strong strategy for the future. I think the strategy that was developed with the service chiefs -- I developed it with the service chiefs, with the under secretaries of defense. It was a unified effort to establish a strategy that would give us a defense not only now, but in the future, and make it one that would be agile and flexible for the future. We think we want to stick to that, because it is important for the United States to set a strategy, and a consistent strategy, so that the world understands where we are going with defense, not just now but in the future.
AMBASSADOR ISCHINGER: Let us all thank our two Secretaries for a great presentation. (Applause.)