10

soon as we pursue it on the basis of mutual interests. We may not agree
on every technical point, but it has a good chance of being solved.

Beyond such issues as non-proliferation, what else do we want?

Certainly, we have a mutual interest in good relations between China
and the United States - a mutual selfish interest. China cannot continue
to grow economically if political warfare develops between us, or at
any rate it would grow only with great difficulty. Secondly, some of
China's neighbors may, over a period of time, feel encouraged to apply
pressures they might not otherwise engage in. The United States has an
interest in this because, if we get into an open confrontation with China
- or into any kind of confrontation with China - you in this room know
exactly what the other Asian nations are going to do. They're going to
seek a middle between us and China but they will not support us or
support China. In the process of maneuvering between us, they will all
turn more nationalistic and that will demoralize everybody. For this
reason alone, containment is not possible in the anti-Soviet sense of the
Cold War days. It shouldn't even be discussed because it's not an
option. If we do try it, it will be one of those policies in which both
sides lose. So good relations are in our mutual interest.

On the other hand, this cannot be a purely American enterprise because
the relationship between us and China is very, very tricky. As China's
power grows economically and militarily, its weight upon the
surrounding countries will likewise grow. You all know this from its

11

markets and style of policy. China's armies need not go on the march
for it to exercise greater influence and insist that it be treated with the
respect its power, economic and in every other way, entitles it.

We Americans and our Asian friends will have to get used to all this.
And, of course, there is a point beyond which, if it should shade over
into hegemonical aspirations, some resistance must be assembled. At
that point things will start getting more difficult. What should be the
United States' attitude towards all of this? I don't think we should
organize alliances against China. That would be self-defeating. Because
the United States has no direct interest in any of the inter-Asian
quarrels, it can afford to promote good relations with all of them
simultaneously - including China. We should always be present but
unobtrusively so. We should be available, but not insistent.

I've been talking only about China, but we need to take into account the
other countries of Asia. First, there is Japan. We Americans have a
tendency to think of every nation as being incipiently American and as
a potential candidate for our specific style of government. Then there is
Japan with two thousand years of history. Until 1945, it considered us
its mortal enemy. Then we won the war. The Japanese adopted
institutions modified from the previous period. Keep in mind that they
were modified, which is to say not all that different. But in America we
assume that Japan has become a Western-style democracy, that it will
never again be politically active, remain an economic powerhouse and,

12

in terms of its politics, will always follow the American lead and be an
integral part of the American alliance system.

That cannot be. It is impossible. Japan made - and kept to - a very
heroic decision for forty years to subordinate itself to the United
States. But that was precisely because it was so conscious of its
extraordinary national identity, to survive under foreign tutelage. They
used it to build up a strong economy and now that it ranks as a world-
class economy, it finds itself facing a new environment. The Russian
threat has diminished. China is growing in strength. Korea will always
be viewed differently in Japan than in the United States because, for
us, Korea is an intellectual problem whereas the Japanese view it as a
matter of life and death. They also see other nations developing and I
predict that, in the next ten to fifteen years, Japan will pursue an
increasingly national policy including an ever stronger military force.
It already has the third largest military budget in the world and
probably the second most effective military. I think that today its force
is probably more effective than that of Russia -small as it is. And it can
expand quite rapidly with a significant nuclear capability that can be
activated at any time. For all these reasons, Japan will be a major
player. The direction it goes in will depend very much on the
environment in which it finds itself. The American alliance is
definitely a stabilizing element, but I must be frank: that alliance must
be seen as a means of enhancing Japanese security, not as a weapon that

13

can be used to expand Japanese strategic influence into, say, South-East or Southern Asia. And that will be a tricky passage indeed.

## Side B

(Beginning sentence is cut off)

British foreign policy east of Suez is Indian foreign policy. It was made in Calcutta and afterwards in New Delhi by Indian civil servants under the Viceroy. And the traditional British policy east of Suez was that New Delhi - or Calcutta before New Delhi - was dominant from Singapore to Aiden. One of the ironies of the Indian-American dialogue in the next decades will be the following: for about thirty years, the Indians claimed and even believed themselves to be morally superior to the power politics of other nations. (Which is incidentally exactly what the Americans said before World War I and World War II.) It's the classic position of a country removed from immediate issues. The real problem will be that, as India becomes more active, it will turn more traditional. The Americans are more likely to come to the Indians with all kinds of sweeping ideas when what the Indians will really want to talk about is what happens east of Calcutta and west of Bombay. They don't want to be bothered with high-flown rhetoric that they can't apply to their own conditions. But the fact is that, west of Bombay, we really do have many common interests with respect to Islamic

14

fundamentalism. As India becomes more active in South and South-East Asia, it will run up against Japan, China, and local circumstances. None of this is bad. It means, however, that American foreign policy has to be less intrusive and more behind-the-scenes. We have no reason not to have good relations with China, India and Japan simultaneously. We don't have to encircle anybody. On that basis, let's see what happens. If everybody co-operates, everybody will be happy. If any of these nations become excessively aggressive, the others will begin to oppose it and then the United States can choose to what extent its interests are involved.

The only trouble with the theory is who is going to implement it in America? Where are we going to find the people to do it? This is our real challenge. We no longer have to worry about being part of a Cold War system in Asia but there are still lots of problems - like the environment, which is really getting to be a serious problem, especially among the coal burning populations. On such issues, co-operative models can be built.

You may notice that I have not talked about human rights. Yet that i'm(3Us one of the big debates that will be coming up in America. Nor can we any longer avoid that issue because it is making it impossible to define a good foreign policy. It has led to a coalition between the liberal wing of the democratic party and the neo-conservative wing of the republican party. And that leaves no anchor in foreign policy between the parties.

[w]

15

On the one hand, the United States will always have to be in favour of
democracy: it's our tradition, it's inevitable, and it can never be
eliminated from the American lexicon. On the other hand, our
perception of it is highly unique. Democracy evolved in the West over a
period of 800 years in a very particular direction. There is no inherent
reason why it should be implemented at the beginning of every political
evolution in every country, even in ones with totally different cultural
backgrounds from ours. On the face of it, it's an unrealistic expectation
yet it is the essence of the debate we've got to have in America in the
next year or two, otherwise a whole series of accidents will occur.

I have been talking only about political subjects but do want to mention
the major economic issues ahead of us in the next ten years or so. One
of these has to do with Europe. Most Americans have not focused on
the fact that there will soon be a European currency. Only lately has it
begun to penetrate Wall Street thinking that this is really going to
happen. And when it does, there will suddenly be another reserve
currency in the world and a whole other player. Adjusting the rates
between those two is not going to be all that easy, and it will also
affect third parties.

The second point has to do with what I was getting at in my question
yesterday to Anwar. It's all very well to talk about free, multi-lateral
GATT-like trade, but the reality of the next ten to fifteen years is that,
while the United States should certainly recommend multi-lateral trade,

19

[i]

16

a whole series of special arrangements are already arising: Mercosur (check spelling) in South America, some special arrangements in the ASEAN and other Asian situations, NAFTA, and the European Union. Therefore the relationship between the regional blocks and of the multi-lateral and bi-lateral groupings are going to become overwhelming issues. We shall soon have to begin to adjust our rhetoric to reality but even before that, will have to understand what it is we are trying to do. This has been a very broad sketch and I've talked much longer than I was asked to speak, but it reflects what I perceive to be the shape of the future. With respect to China, we don't yet even have a decent dialogue in place. But in the long run we must have both a political and an economic dialogue with China.

One of the economic problems is that this state of affairs will not be tolerated indefinitely. The imbalance of trade between America and the key Asian countries cannot simply continue to grow. Nobody may ask for my opinion on trade policy, but I promise you that the American political system will not stand for it indefinitely. Therefore it would be useful to see what can be done to keep it within limits where America's self-interest is somehow clearly involved. These are some of the challenges. None of them is insoluble, and we should begin by having good relations with China. Secondly, we have to adjust our relations with Japan. Finding ways to hold political dialogue with Japan is less prohibited by conflict than by culture.

⊕

[w]

17

The fact is, if you'll forgive me, the Japanese are not geared to the sort of dialogue we in the West like to engage in; while we're not geared to the consensus-type of discussions the Japanese prefer. That's a definite problem. With India, we haven't even begun serious discussions. Or with Indonesia, or with ASEAN as a political entity. On the other hand, I want to stress that everything I've described is salvageable. These are not incurable problems. Though I have cited quite a lot of problems, keep in mind that the problems are themselves a mechanism of change. And if you can say, as I am saying, that their solution is within your own control, then you are not in bad shape.
That's my basic message to you.

So let me stop at this point. I'll be happy to take a few questions if you promise we'll be out of here by 2 o'clock. What do you think, Bill, should we do a few questions?

I think that would be very good ________ (words unclear)

OK. Good. Let's take a few questions.

Bob.

Question 1) unclear.

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18

Do you have any optimism about the possibility of get a greater
reflection of between an enormous pool of talent that exists in your
country and the quality of leadership that we've been offered?

Answer:

Those of you who follow American politics know that the current
President was my second choice. So I am hardly here as a strong
defender of him. On the other hand, I have said publicly and to my
Republican friends that we ought to make every effort to produce a bi-
partisan foreign policy because we can't have four more years of
internal civil war. Now, is it possible to do this? Well, I can't tell as
yet because the President took off for the Great Barrier Reef of
Australia and I have no clear view whether Clinton views his new role
as running for history instead of for another term.

There are a number of us who would do our utmost to get him bi-
partisan support. What he should do, or somebody has to do - and
frankly I will try to organize it privately if it isn't done publicly by the
President - is to get a group of bi-partisan people together to try and
answer some of the questions I've put here before you, and who will
keep at it and keep raising the questions until some decisions have been
made. Above all, it should be a bi-partisan effort. I have no idea
whether the President is going to organize something like this. We'll
know more in about a month, but if we keep drifting along and just play

⊕

at all these things tactically on the basis of old fashioned ideas, I think
continued crisis is likely; nor will we be exercising the sort of
leadership required. There are certainly enough people of good will
who would support the effort if the President took the lead and who
would join in. I've already talked to some leading Democrats as well as
Republicans. And, as I said, if it isn't organized by the government, I
and some others will try to do it outside the government.

Henry Kissinger:

No? If there are no more questions, then let me say what a pleasure it
has been to be here with you, and let me also thank the organizers. It's
been a very stimulating morning. Thank you all very much.

New Speaker

I think when we hear someone like Henry speak, we all, and I say this
as an American, but I think those of us here who the majority are
obviously non-Americans would feel the same way. I think we see, you
know the tremendous lack that we've had in American foreign policy
direction over the last few years and can only hope, as he has indicated,
that our President elect will choose a more active role for his place in
history going forward. And I think that's particularly true with the

[w]

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relationships with Asia. I want to in the name of my colleague Paul Collins, and our other associates here from CitiBank today. We want to thank all the participants for being with us. I think we had two great panels on China and on Asia. And when I see my friend Paul Crugman next I will certainly have a lot to talk to him about. You can be sure of that. And I think the Deputy Prime Minister got us off to a tremendous start last night, not only talking about Malaysia and what is being done here, but talking about Asia in general and all the various issues that come out about Asia. I know John Reed and Paul and I have spoken to him felt very badly that he couldn't be here but he wants you all to know that he'll be with us next year. This is a special thing for him ______ who first put this together knows that well also. This is the one thing on John's calendar that's sacrosanct obviously with the exception of the personal family emergency he had. So once again, and I've been told by Tamson who has kept this conference going, organized it etc. that I had to have you all out of here by 2:15 if not a few minutes earlier because you're all very busy people. So thank you once again for joining us and we look forward to having you all next year. Thanks again.

⊕

13/12 '96 18:35

CITIBANK

☑ 001/014

**Global**
**Finance**

Asia Pacific

Citibank, N. A.
5 Shenton Way
#29-00
UIC Building
Singapore 068808

Tel
(65) 320-5408
Fax
(65) 224-4790

**Tamson Bickford Hamrock**
Public Affairs /
Communications
Director

Date : Dec 13, 1996

To : Dr Henry Kissinger

Tel No : 212-7597919
Fax No : 212-7590042

From : Tamson Hamrock

Tel No : 65-3205408
Fax No : 65-2244790

Subject : SPEECH

TOTAL = 14 (INCLUDING THIS COVER PAGE)

Dear Dr Kissinger

Greetings from Singapore ...

As promised, attached please find a transcript of your keynote address at the Citibank Asia Pacific Leadership Meeting in Kuala Lumpur.

As I plan to distribute this with your personalised copies of "Diplomacy" to all delegates, please get back to me at your convenience with any edits/revisions and I will arrange to have printed here in Singapore.

Again, such a delight to meet you.

Warm holiday wishes & very best regards

Released as is
by HAK

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## Side A

Bill, Friends, I don't know how many of you are familiar with the, well you must be, the institution of the American cocktail party. I mention it because I was at one of those things, on one occasion and a lady came up to me and she said "I understand you're a fascinating man, she said. Fascinate me". It turned into one of the most unsuccessful conversations I have ever had. And after I hear a friendly introduction as Bill just made, I find myself in the same position of living up to the kind words that he expressed. It is true we met at the time of the Latin American Debt Crisis and I was saying that it was not an economic issue it was a political issue and that the challenge was not just to collect the debt but to do so in a way that wouldn't overthrow all the political institutions. Now this is not something that Bankers love to hear, and it was to the enormous credit of Bill that he, in those days it was an unusual position, that Bill gave me a hearing and in fact came up with solutions that were politically tolerable for the countries concerned and which laid the basis for some of the economic recovery in Latin America that we are speaking about today. Now let me talk to you about America and Asia. And let me begin with America so that you understand the context in which these decisions are made. Whenever I travel in Asia or almost anywhere else, the assumption is that the United States has a carefully thought out strategy and that every American move is part of some master design and I'm then asked what is the policy here? And, the same of course is also true of the CIA which is, to which I describe qualities which I never discovered when I was in office. I wish, I must say I wish they had had some, I wish they had had some of those abilities that I'd see in movies and elsewhere. But the fact of the matter is that the United States does not at this moment have an over-arching (argint?) strategy. That may be depressing, it is certainly depressing for an American. And the reason is really quite simple. First of all America did not have a Foreign policy to speak of until 1945. We are the only nation that went through the greatest part of its history without having a powerful neighbour, without ever having a real security problem, and which could therefore act on the illusion that our domestic institutions were so uniquely blessed that we were immune from the considerations by which other nations had to conduct their affairs. In 1917 when America entered World War I, we suddenly came up with the theory that wars are caused because people are not democratic. And that the spread of democracy was the way to bring about peace. Nobody had ever come up with such a theory before. There wasn't a shred of evidence that this was true. Yet it was never contested at the time, and in many ways it is still an operating principle of American foreign policy. You talk to many American, most American intellectuals or many American businessmen or politic leaders, they will tell you it is a fact... that democracies do not make wars. I don't know where that fact is proved, and first of all you have to define what a democracy is.

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Most wars have been popular at the beginning, and it isn't true that governments drag a reluctant population into war. If you look at most wars that have been conducted, they have a popular base. So this is a peculiarity of American politics, strategy. At the end of World War II we had a nuclear monopoly and 50% of the world's gross national product. Under those conditions you don't conduct foreign policy you allocate resources, because you could overwhelm, we could overwhelm any problem we faced by allocating resources to it. The real dilemmas of policy which arise when you have to balance risks and opportunities on the basis of assessments you cannot prove when you make them. When you have limited resources in relation to all the things you might possibly do. And you therefore have to establish priorities. Those are reasoned experiences for America within the last few decades. And so there is not established as there is in Britain, or France, or China, a tradition of foreign policy thinking. We have to learn it as we go along. And you have to understand that in assessing any American foreign policy that special problem is compounded by the current situation. Until 1989, we had a pretty clear operating policy, which was to contain the Soviet Union. And that coincided with two great experience of America in the twentieth century - one was World War II and the other one was overcoming the Depression. We overcame the Depression by massive governmental programs, in effect war spending, and we won World War II by defeating the aggressor by a massive mobilization of resources. And while this was not exactly accurate in every place of the world and while this thinking got us into trouble to some extent in Vietnam, it was more or less accurate and it wound up with victory in the Cold War in the sense that Soviet Communism collapsed, the Soviet Empire collapsed, and we emerged as the strongest military power in the world. But now we live in a new environment. Militarily we are a super power but the issues that can be solved by military means are shrinking. So most of the issues one discusses today, are not within reach of American military power, conceptually.

Secondly, in the economic and other fields, Japan, Europe or Germany, Russia, China, India are emerging as, not as super powers necessarily, but as nations that can significantly effect world events. And the United States has to find a relationship to all of them. We have to do so moreover, in a way that we have never done before. In the past, American Presidents would say here's the danger and to overcome it we have to mobilize resources, and at some period of time, the effort will no longer be necessary, we will have won, and the problem will have gone away. Now, this is not the case. Now we are part of a system, and we have to look at international politics in a systemic way. There is no outcome. There is no end to the process. Every solution is an admissions ticket to another problem, and we have to learn to balance rewards and penalties. And we have to know what we're trying to do. I've told one or two of an experience I had in one of my earlier visits in China.

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I had a meeting with Deng Xiao Peng and I made a conventional American statement to him. I'd said, the good thing about our relationship is that we want nothing from each other. Deng let it pass. Next day I saw Mao. Mao said I have read what you have said to Deng. He said it is not my consideration. He said "If I wanted nothing from you, I would not have invited you. He said, and if you want nothing from me, why did you come?" Now that is the reality of international politics. What are we trying to do? What is our objective in the world, and let me talk primarily about Asia. Now to answer that question, the answer to that question is complicated further, by the fact that in America we have a generational problem and an intellectual problem going on simultaneously. The generational problem is this; I come from the generation that defeated the Depression, won World War II, went through the Korean War, constructed the Cold War strategy, developed the military plan. I'm not saying I was involved in all of these things, but it was a generation that saw in big projects done by American leadership. The generation that is now more and more dominant is the generation that grew up during the Vietnam War. They don't like big American projects, and don't like the exercise of power. And I must tell you, any of you who want the American power withdrawn from Asia, that's an easy thing to accomplish, keeping it here is the tough part. They want to work on the environment, on human rights, on drugs, on all kinds of good issues, that however do not exhaust what used to be considered foreign policy. And after the Vietnam generation comes another generation that is not so defensive, but extremely ignorant. Partly because they are brought up in a different way from their predecessors. My generation and even the Vietnam generation was brought up on books. When you're brought up on books, you cannot put all the knowledge that exists in a book, so you have to learn by concepts, and concepts enable you to understand comparable situations. And therefore to project into the future. The new generation is brought up on computers. They cannot write, they can only print. I'm serious. I'm not exaggerating. You talk to... they do not write. They learn from pictures, they don't learn from reading anymore. And as a result, when you learn from pictures a totally different mentality develops. More sentimental, more emotional, but above all very short term, very much geared to immediate impressions. It affects our whole style of politics, and there is a very limited attention span now. And this at the moment when what is needed, is really long range thinking. And this is the real problem and I'm speaking very frankly with you. I don't want to panic you, but I want to tell you the truths of what the reality is as I see it. So they, to design an American foreign policy in such an environment, is an extraordinarily difficult task. And now let me apply this as a problem to Asia. In Asia we meet old societies, and established cultures. Whether they are China or Japan or India, they have a long history.

Marshall

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American history is relatively short. I'm always struck when I go to China, when you ask an American or a Westerner when something happened, he gives you a date. When you ask a Chinese when something happened he gives you a dynasty. Now there have been fourteen Chinese dynasties that I know about. Ten of which have lasted longer or as long as the whole history of the United States. Each of them. So when you get to dynasty you're within 300 years of the problem. It's a different, it's a different perspective. And, whenever I visit Chinese provinces I rarely come to a Chinese province whose population is not larger than that of the largest European country. All of this creates a different scale of thinking. And that's not easy to absorb. You can make the same observations about India, and you can make the same observations about Japan. So here come the Americans, and we have solutions to every problem. In fact we have more answers than their questions. And we're asking those nations to react, to react to this. Now as I've said, we are in a system, in an international system. Now we like to talk about, and you like to talk about, Asia as a unit and as a community. It's not my observation. I think the political relations of Asian nations to each other, not the economic one. The political relations of Asian nations to each other are more similar to nineteen century Europe, than they are say to the European union. I believe that China, Japan, India, Korea, look at each other as strategic potential opponents. I'm not saying they're going to go to war with each other. But I am saying they are looking at each other from the point of view of conceivable, potential threat. And I could go, I could apply that to Thailand and to Indonesia. There's one South East Asian leader, I won't mention which country, with whom, whom I've known for many years and I play a game with him, not game, every time I see him, I ask him to name the three greatest threats to his country. He's never yet mentioned any other country than another Asian country. And this has been going on for twenty years. Now this I take to be the political reality. Now here comes China. When I encountered China, they felt threatened by Russia, potentially threatened by Japan, potentially threatened by India, and they had had bad experiences with each of them. And the genius of Nixon was not the opening, that was bound to happen, we did it perhaps more skillfully than others might have, but somebody would have, it would have happened because the Chinese would have insisted on it. What I think we did well was to focus the advice we got from our political advisors from the State Department was to discuss claims and assets, arms control and all kinds of current problems. We said no, lets talk about the international equilibrium with the Chinese and see whether we have common interests here. And that's what I meant this morning when I said that we spent... I mean Mike, you probably have seen these conversations when you were in government. So you know that they were on as high a level of strategic analysis as you can find in the best academic seminars except that the academicians wouldn't have to feel for reality. So, that was then.

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Now China is growing stronger, and I do agree with the people who say that China has to be related to the International System. But I would go further. I would say the whole International System has to be redesigned because until 1945 it was a Europeans based system. Between 1945 and 1989 it was an American led Cold War system and everything could be more or less integrated into a pattern of East-West relations. But what do we do now? What is the present system? What are we trying to do? I am very heartened by the fact that our government and the Chinese government are now beginning high level talks. It took an awfully long time. Four years. And I'm sort of unhappy that everything we tried failed and that we are basing it on one ship wreck after another. But still, I am glad the dialogue is starting. But the next question is, what are we going to talk about? What is going to be the subject of conversation? What are we trying to achieve? We have, because of the missionary tendencies developed by President Wilson and adopted by all of his successors, we have a tendency to present our solutions, as an ultimate moral dispensation and asking other nations to sign on to them. That is very difficult. You take the issue of non-proliferation. On the face of it, China has as great an interest in non-proliferation as we do. In fact I would argue China has more neighbours than we do, and therefore has a greater risk, if nuclear weapons spread to all their neighbours. So, I think a dialogue based on mutual interest is quite possible but what we have done up to now is we went to China and said, we have passed a law which says, you may not distribute missiles of a range of more than 300 miles. I don't know where we arrived at 300 miles but, for all I know that's a reasonable definition. The fact is it was never discussed with the Chinese. On that basis, no agreement is possible. I think the non-proliferation issue will in fact be solved as soon as we make it on the basis of mutual interest. We may not agree on every technical point, but I think it will be solved. But beyond issues like non-proliferation, what do we want? Well I think we have an interest, a mutual interest in good relations between China and the United States, a mutual selfish interest. China cannot continue to grow economically, if political warfare develops between us or at any rate it will develop only with great difficulty. And secondly, some of China's neighbours over a period of time may be encouraged into pressures they might not do otherwise. The United States has an interest because if we get into an open confrontation with China, or into any kind of confrontation with China, you in this room know exactly what the other Asian nations are going to do. They're going to get into the middle between us and China. They will not support us, they will not support China. And therefore they will become all of them more nationalistic trying to manoeuvre between us. So it will demoralize everybody. And for this reason alone, containment is impossible in the Russian, Anti-Soviet sense. And it shouldn't be discussed. It's not an option. And if we try it, it is one of those policies in which both sides lose. So good relations are in our mutual interest.

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On the other hand, it cannot be a purely American enterprise, for this reason - the ultimate relation between us and China is gonna be very tricky because China will grow in power, unavoidably. And as it grows in economic and military power, its weight on the surrounding countries is going to increase. You all know this. Its markets and its style of policy, not because it will march armies in there, but because it will simply exercise greater influence and because it will insist that it will be treated with the respect its power, economic and every other way, entitles it to. Now, we Americans and our Asian friends have to get used to much of this. But there is a point beyond which if it shades into hatchatorial aspirations some resistance will develop. Not necessarily from us. And at that point things will get difficult. Now, what should be the United States attitude towards all of this? I don't think we should organize alliances against China. That would be self-defeating. But the United States has no direct interest in any of the Inter-Asian quarrels, so we can afford to have good relations with all the Asian Nations, including China. We should be present, but unobtrusive. We should be available, but not insistent. And from that platform, we should see what happens historically. Now, I've talked only about China, but we have to take into account other countries. First, there is Japan. Now, we Americans have a tendency to think that every Nation is an Incipient American. And a potentially candidates for our style of government. So, here is Japan with two thousand years of history. Until 1945 considered a mortal enemy. Then we win the war. They adopt modified institutions from the previous period. Modified. They're not all that different. And now we suddenly say now they're a Western style democracy. They will never again be politically active they're an economic power house but in politics they will always follow the American lead and they're an integral part of the American alliance system. It cannot be. It is impossible. Japan made a very heroic decision for forty years to subordinate itself to the United States precisely because it was conscious of its extraordinary National identity, which enabled it to survive under foreign tutelage and they use it to build up a strong economy. Now that it is a world class economy, it faces a new environment. The Russian threat has diminished. China is growing in strength. Korea will always be viewed differently in Japan than by us, because for us Korea is an intellectual problem. For Japan it's a matter in their perception of life and death. They see other nations developing and therefore I predict that in the next ten to fifteen years Japan will pursue an increasingly National policy. An increasingly strong military force. And it already has the third largest military budget in the world and probably the second most effective military force. I think today its force is probably more effective than that of Russia. Small as it is. But it can expand very rapidly. And it has potentially a significant nuclear capability which it can activate any time it chooses to. So Japan will be a major player. And in which direction it goes depends very much on the environment in which it finds itself.

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## Side B

We don't understand it necessarily. British foreign policy east of Suez is Indian Foreign policy. It was made in Calcutta and afterwards in New Delhi by Indian civil servants under the Viceroy. And the traditional British policy east of Suez was that New Delhi or Calcutta before New Delhi, was dominant from Singapore to Aiden. And one of the ironies in the Indian-American dialogue in the next decades will be the following: for about thirty years the Indians pretended to be, or claimed to be and believed themselves to be, morally superior to the power politics of other nations. Which is incidentally exactly what the Americans did before World War I and World War II. It's the classic position of a country removed from immediate issues. Now the real problem will be, as India becomes more active, it will be more traditional, and the Americans are more likely to come to the Indians with high-sounding sweeping ideas when what the Indians want to talk about is what happens East of Calcutta and West of Bombay. And don't bother us with high-flown rhetoric that we can't apply to our conditions. But the fact is I think West of Bombay we really have many common interests with respect to Islamic Fundamentalism. As India is active in South and South-East Asia it will run up against Japan, China, and local circumstances. All of this is not bad. It means however that American foreign policy has to be less intrusive and has to be more behind-the-scenes. We have no reason, not to have good relations with China, with India, and Japan simultaneously. We don't have to encircle anybody. And on that basis, and then let's see what happens. If everybody co-operates, everybody will be happy. If any of these nations become excessively aggressive, the others will begin to oppose it and then the United States can choose to what extent our interest is involved. This is a great theory. The only trouble is, who is going to implement it in America? Where are we going to find the people to do it? This is our real challenge. We don't have to be part of any Cold War system in Asia right now. Then there are a lot of problems, that now are serious problems, like environment, which is really getting to be a serious problem especially with the coal burning, population and similar things on which co-operative models, on which co-operative models can be built. Now you notice, I have not talked about human rights. And one of the big debates that will come that will have to come in America is... we can no longer avoid that issue. Because it makes it impossible to define a good foreign policy. It leads to a coalition between the liberal wing of the democratic party and the neo-conservative wing of the republican party. So that you can get no anchor in foreign policy between the parties. On the one hand, the United States will always have to be in favour of democracy, it's our tradition, it's inevitable, and it can never be eliminated from the American lexicon.

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But the amount of pressure we will exercise for it, the insistence on it, and above all our perception of it, after all, democracy developed in the West over 800 years of a very particular evolution. Why should it be implemented at the beginning of a political evolution in countries with totally different cultural backgrounds? In the form in which it now exists in America. It's on the face of it, absurd. But this is a debate we've got to have in America over the next year or two or a whole series of accidents will happen. I mean I'm appalled, that an American assistant secretary of State can visit an Indonesian prison to see how prisoners are treated. It's not that I welcome Indonesian treatment of prisoners, it is the attitude that it reflects about American intercession in what are normally considered domestic affairs. So this is something that has to happen in America. Now, I've talked only about political things. But I want to mention that I think major economic issues will be ahead of us in the next ten years or so. One has to do between us and Europe. Most Americans have not focused on the fact that there will be a European currency. It's only lately that its begun to penetrate Wall Street thinking that this is really going to happen. And when this happens, there will be another reserve currency in the world. Which means that there will be another player. And adjusting the rates between those two, it's not going to be all that easy, and it'll also affect third parties. Secondly, the point I was getting at in my question yesterday to Anwar. It's all very well to talk about free, multi-lateral GAT like trade. In my view the reality as that what will emerge to the next ten to fifteen years is while certainly the United States should recommend multi-lateral trade, a whole series of special arrangements are already arising. Maricatour in South America, some special arrangements in ASEAN, some other Asian arrangements, NAFTA, European Union. So that the relationship between regional blocks and the relationship between multi-lateral and bi-lateral arrangements is going to be an overwhelming issue. And we will have to begin to adjust our rhetoric to reality, and we have to understand what it is we are trying to do. So, this is sort of in broad sketch and I've talked much longer than I was asked to speak, but what I see to be, the future. We must, when I stress China, it's only because we don't yet have a decent dialogue with China. We must develop a political and long run economic dialogue. Now of course another economic problem is it will not be tolerated indefinitely. That the imbalance of trade between America and key Asian countries continues to grow. It's not what I think. Nobody will ask my opinion on trade policy. I promise you the American political system will not stand for it, indefinitely. And so it would be useful to see what could be done to keep it within limits in which the American self-interest is clearly remains involved. So these are some of the challenges. None of them are insoluble. We begin with good relations with China. Secondly, we have to adapt our relations with Japan. We have to find a way of a political dialogue with Japan. Which is inhibited not so much by conflict as by culture.

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That the Japanese, if you'll forgive me, are not geared to the sort of
dialogue that we like to engage in and we're not geared to the consensus
type of discussion that the Japanese prefer. That's a problem. India, we
haven't even begun serious discussions with. Nor with Indonesia, nor
with ASEAN as a political entity. So these are the challenges. On the
other hand, I want to stress this... everything I've described is salvable.
These are not insucrable problems. and if I cited a lot of problems, keep
in mind that it is the problems are the mechanism of change. And if you
can say as I'm saying, that their solution is within your own control,
you're not in bad shape. That's my basic message to you. So let me stop
here now. I'll be happy to take a few questions but if you will promise
to be out of here by 2 o'clock. If you want to do 15 minutes of
questions, I'll be glad to do it. So let me stop here and take a few. What
do you think Bill, should we do a few questions?

Bob.

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Question 1) unclear.

Answer:

Look, those of you who follow American politics, know that the current
President was my second choice. So... in two elections. So I am not here
as a strong defender of him. On the other hand, I have said publicly, and
I have said to my republican friends, we ought to make every effort to
produce a bi-partisan foreign policy because we can't have four more
years of internal civil war. Now, is it possible to do this? Well, I can't tell
yet because he went off to the reefs of Australia right after the election.
To the Great Barrier Reef, so I have no clear view of if Clinton views his
role now as running for history instead of for another term. There are a
number of us who would do our utmost to get him bi-partisan support.
What he should do, what somebody has to do and frankly what I will
try to organize privately if it isn't done public by him, is to try to get a
group of bi-partisan people who will try to answer some of the
questions I've put here and who will keep at it and will keep raising
questions and I will, and it should be bi-partisan. Now, I don't know
whether he is going to do this. We'll know more in about a month but if
we keep drifting along and just play all these things tactically on the
basis of old fashioned ideas, I think continued crisis are likely and
certainly we will not be exercising the leadership that is needed. But I
cannot tell you whether it's going to happen. But there will be enough
people of good will who would support it if the President gives the lead
and who will join. I've already talked to some democrats, leading
democrats and to some leading Republicans. And if it isn't done by the
government, I and others will try to organize it outside the government.

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Henry Kissinger:
Yes Sir?

Question 2

Who do you think will be the next Secretary of State?

Answer:

You know, you should never make predictions on things that are going to happen in the next few days. I've seen on CNN, that there are three leading candidates: Madeline Albright, Tom Pickering and Senator Nun. If those are in fact the finalists, if this is not a smoke screen to come up with somebody that nobody has thought of, I would guess that it will be Pickering. Because my guess would be that Sam Nun would be considered to threatening by the vice-president as a potential opponent, and that Albright will be considered not to have enough of a base in the foreign policy establishment. And if those are the three choices, my guess would be Pickering.

Is he not regarded as somebody who is very task oriented rather than visionary?

He was the executive secretary of the State Department when I was Secretary of State. I would have considered him more an executor than a designer of policy, but then in fairness to him, he was used as executor. He wasn't asked to be a designer of policy. I would of thought that he's better as executor and manager than as designer, but I could be wrong. Because he's never had any occasion to show his capacity in that respect.

Henry Kissinger:

No? If there are no more questions, it's been a pleasure to be with you and I want to thank the organizers. It's been a very stimulating morning. Thank you very much.

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New Speaker

I think when we hear someone like Henry speak, we all, and I say this
as an American, but I think those of us here who the majority are
obviously non-Americans would feel the same way. I think we see, you
know the tremendous lack that we've had in American foreign policy
direction over the last few years and can only hope, as he has indicated,
that our President elect will choose a more active role for his place in
history going forward. And I think that's particularly true with the
relationships with Asia. I want to in the name of my colleague Paul
Collins, and our other associates here from Citibank today. We want to
thank all the participants for being with us. I think we had two great
panels on China and on Asia. And when I see my friend Paul Crugman
next I will certainly have a lot to talk to him about. You can be sure of
that. And I think the Deputy Prime Minister got us off to a tremendous
start last night, not only talking about Malaysia and what is being done
here, but talking about Asia in general and all the various issues that
come out about Asia. I know John Reed and Paul and I have spoken to
him felt very badly that he couldn't be here but he wants you all to
know that he'll be with us next year. This is a special thing for him
who first put this together knows that well also. This is the one
thing on John's calendar that's sacrosanct obviously with the exception
of the personal family emergency he had. So once again, and I've been
told by Tamson who has kept this conference going, organized it etc.
that I had to have you all out of here by 2:15 if not a few minutes
earlier because you're all very busy people. So thank you once again for
joining us and we look forward to having you all next year. Thanks
again.