Excerpts from the editorial coverage of the Andersen Consulting World Forum on Change:

POLICING POLICY

Kissinger: When I look at statesmen-or at successful business executives-the ones who prevail are the ones who have some vision of where they want to go. To operate the status quo is, first, boring and, second, means that sooner or later you are going to be engulfed by circumstances. If you do too much systems analysis, you learn all the complexities and none of the direction. Of course, systems analysis is essential. And it poses a huge problem for our country in the field of foreign policy.

Traditionally, the basic approach of American foreign policy has been that we stay aloof until a great danger comes along and that we then overwhelm it with our resources. At the end of World War II, this basic approach could be applied. We had 50 percent of the world's GNP. We had an atomic monopoly, and we were lucky in the sense that we had a definable enemy. We didn't need to conduct foreign policy; we simply had to identify problems and then allocate resources to them-and we did that extremely well.

That period is now over. We now live in a new world in which we lack concepts. We have no precise view of where we are going. And therefore, we have a very fitful foreign policy. This is occurring at the very moment when all the parameters of foreign policy are changing. Russia is within borders it has never known before. Europe has had to adapt a nation-state into a European Union. China is entering a global system for the first time and will become the dominant nation of Asia. And Japan, seeing that happening, is driven into greater and greater nationalism. And then there is the U.S., essentially without any tradition of international politics.

The challenge we have in foreign policy is this: In the Cold War, our danger was defeat. In the post-Cold War period, our danger is irrelevance. More and more decisions are being taken in the world because we can't effect them, because we marginalize ourselves or become marginalized. Which means that, over a period of time, more decisions are being taken without reference to what we consider our interests. If we

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suffer, it will not be in a catastrophic way, but in the gradual decline of our relative position. A political leader will have to understand this-and to put together some kind of coherent framework. Because we have huge assets, it does not have to be that way if we can identify our assets and bring them to bear on the problems.

What I would really like to see is an American president who assumes the educational function of the presidency. The American public is one of the healthiest in the world, and if their president said, "Here are the problems," I think, on the whole, he would get support. Instead he's putting on Band-Aids. For example, anybody who knows anything about Yugoslavia realizes that it is not possible for Croats, Serbs, and Muslims to live in the same grouping. That's why Yugoslavia broke up. So to announce that we are in favor of a united Bosnia and are keeping our army there to keep them from fighting is ridiculous. They must be separated or we will be over there forever. And yet the idea that the U.S. has a moral mission in a world defined by our intervention in every country in that world is still a dominant view in American foreign policy. But we do not have a duty to bring peace everywhere. With limited resources we should bring it where it affects American interests and values, or the interests of close allies.

Q&A George Shaheen (Andersen Consulting): In positioning the U.S. to move forward on a worldwide basis, how would you advise the administration to go about formulating a cohesive foreign policy?

Kissinger: My advice to the President would be, "Get together some of the brightest people you can find and put them to work." When I took over the State Department, I took eight or ten of the best people I could find and set them to work on middle-term problems. I did not permit any discussion of incoming cables. I wanted to know, "Where are we going in the Middle East? What are we trying to do there? What outcome are we trying to bring about? What about other areas?" Then, when the Middle East war hit, we

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were like a football team that had been rehearsing plays. We knew where we were going and didn't argue about "What are we trying to do?"

Today, it seems to me that, while we would like to see a free market, we have to recognize that the world may break down into potentially semi-protected or protected areas. Therefore, I would get myself in a position to analyze it. I would try to group the Western hemisphere into a free-trading system and to pull in as well the North Atlantic region, the Polish border, and all the NATO countries. Then, if the whole world is free trade, fine; if the whole world is not free-trade, we will have that block with which we can bargain.

**Arnold B. Pollard (CE):** In the post-Communism world in which we live today, what is your assessment of our position in the global marketplace?

**Kissinger:** In Latin America right now, they are creating something called the Mercosur under Brazilian leadership. It includes Brazil, Paraguay, Uruguay, and Argentina, with Chile just joining and Venezuela applying to join as well. So we may wind up with the countries of South America being part of an economic grouping that excludes us. At first it will be very nice and very friendly, but the fact remains that we are not part of that decision-making.

With respect to China, we go after that country on such issues as drugs, human rights, women's rights, and nuclear proliferation. Well, the Chinese have been self-governing for 5,000 years and we have not existed for the better part of that history. They consider it insulting when we apply sanctions because they don't meet our criteria of a pluralistic democracy - especially since we don't understand how Chinese society operates. The Chinese problem is not totalitarianism but rather that the country is flying apart. You have a billion and a half wild individualists. The problem, too, is not one of a return to communism but of a wild and reckless capitalism. I met with a commander in southern China who gave me his visiting

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card. On one side it read, "Major General Commanding" and on the other "vice president of such-and-such electric power company" for that region. So that is China.

When Japan's Prime Minister Hashimoto spoke before the Council on Foreign Relations recently, the attendees began badgering him about domestic reform. But what business is that of ours? They should ask about trade relations, policy relations and things that affect us-not what they are doing in their own political process. In Asia, we have to understand that our role is very similar to that of Britain toward Europe in the 19th century. The relations of Japan, China, Russia, India, and Indonesia to each other are like the relations among European countries in the 19th century. They think of one another as strategic opponents and are going to jockey against one another. They do not think they are part of a cooperative system. With its immense population, China will become hugely dominant because it will be the biggest market for all of its neighbors. As a result, China can set conditions by regulating what it buys from where. We must realize this and come to some understanding with the Chinese. They have to understand that we will not tolerate all of Asia being dominated by a single country because that would make it too powerful. On the other hand, we have to understand that they will want to gain some additional influence in order to develop. So the problem is how do we define that margin in which the Chinese can gain influence without our getting into confrontations with them. And that requires constant dialogue.

Looking forward, I expect the growth of considerable nationalism and rearmament in Japan. I predict India is going to become a major player. And I think Russia is going to emerge with an authoritarian, very nationalistic, government that will probably do well economically but prove to be no joy to deal with politically. We like to think that we can apply certain principles uniformly around the world. But that doesn't happen to be true. We like to think we can push democracy and that's also not uniformly true because most of the world is not democratic. So the trick for us in developing our foreign policy will be to find a balance while conducting a very subtle and complex policy.

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Edwin Lupberger (Energy Corporation, Inc.): As the current chairman of the U.S. Chamber, I am often quizzed about our stand on NAFTA and its impact on our national economy. Can you outline your position as a proponent of NAFTA-on the necessity for incorporating that level of lower priced worker into our overall economy-and discuss how the global changes occurring will affect our overall trade policy?

Dr. Kissinger: We are condemned to co-exist with Mexico and are in a position not unlike that of the Israelis vis-a-vis the Arabs - although not quite as bad. Mexico is going to link up with somebody, and it will be better if they link up with us than if they do it with Europe, Korea, or Japan. With 20-plus million Mexicans in the U.S. already, our politics could get too complicated unless we try to do with Mexico the same sort of thing the West Germans decided to do with the East Germans. We have to try to bring them to our level before they swamp us. In terms of the disparity in wages, we can pay the price for a brief period because those wages will rise quickly. Otherwise Mexico will hook up with Asia and the really low wages there. Eventually, I would like to see Western Europe linked to this trade bloc as well because that would defuse the problem.

J.P. Donlon (CE): A number of critics have suggested that NAFTA was a mistake. In a similar vein, there are anti-European Union factions within Europe. What future do you foresee for that market and how will it influence trade and political relations with other markets?

Dr. Kissinger: NAFTA is our problem. The EU is the Europeans' problem. Europe is struggling to adapt the nation-state to a European Union and practically all its energy is being expended on that problem. And contained within it is the highly technical financial issue of a common currency. I would like to see Europe united for the same reason I would like to see North America united-because I think a united

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Europe could operate on a bigger scale. If the Europeans had it to do over again, they probably would not have chosen monetary union as a vehicle for achieving that. For when you embark on a common currency, you always have to give up something that is, for the members of each nation, the quintessence of their nationality. You are asking them to give up their own money for some new and vague entity with no political loyalties. I wonder whether this common currency is worth the political dislocations it may cause.

A second challenge is that, of the various countries, none except Germany and possibly Luxembourg and Ireland, can really meet the criteria that have been set out - though they are maneuvering to meet them.

For example, France is selling state assets to reduce its deficit. In Italy, they have passed a tax, the European tax, in order to achieve these criteria. I asked Prime Minister Aznar(CHK??) recently when Spain was going to go in. "We will do whatever is necessary and we will get in," he said. "We can meet the criteria for one year to get in, but I don't know how we are going to meet it after that." And then what?

Competitive devaluation, joint devaluation, inflation, and austerity imposed by a central bank? It's tough enough when a government does it, but I can't imagine the French or the Italians giving up social security by order of a central bank-one probably run by Germans. Finally, America should keep quiet about the EU issues. It's not our problem.

Phillip Rooney (WMX Technologies): What thoughts or recommendations do you have on how we can formulate a well-thought out foreign policy and move forward globally?

Kissinger: Whatever established foreign policy we had as a nation was destroyed by the Vietnam War.

Vietnam was a disaster from that point of view because the old establishment, which was honorable and could have learned over a period of time, was thoroughly shattered. Moreover, a whole generation-the leadership group of today-was affected by that war. My generation was the one that fought in WWII, that built the post-war architecture, created the structures that defeated communism, and developed the Marshall Plan. I say this not to brag but to indicate that ours was a generation that believed in America

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and that it had a constructive role to play. The generation that grew up during the Vietnam War has a different view. It was reared on slogans arguing that ours is a rotten county and that it must be improved; that America cannot be trusted with the exercise of power. Nor do I know whether the attention span of our leadership group is adequate.

Representatives from a Canadian consulting company told me a few years ago that, whenever they briefed CEOs, it was the case that, if the CEO was older than 45, briefing him or her on paper proved most effective; if the CEO was under 45, a visual presentation became essential. Now I personally cannot learn from visual presentations. When I started my career and politicians would ask for my opinion, what they were after was how to define a program. Today they want to know what they can present on the evening news-and they want it in two- or three-minute sound bites. When you begin thinking that way, how can you think constructively about the future? Somehow we have to overcome this challenge.

LESSONS IN LEADERSHIP Pollard: The bridge to the 21st century that we are all on passes over an awful lot of crushing cross currents. Factors like information technology and global competition have imposed pressure on business leadership-rapid pressure like never before-for a new skill set that deals with change in an organization on a regular and recurring basis, not just as an occasional or once-in-a-lifetime kind of thing. Change is every day and it's rapid. How can today's industry leaders navigate these turbulent waters?

Kissinger: The problems of any leader in the political world-and I believe this is true for the business world as well-is how to take whatever you are in charge of from where it is to where it has never been. And that is not simply a question of intelligence; it is a question of judgment and courage. You can always hire intelligent people to multiply your complexities. Yet all the important decisions are tight ones, the 51 to 49 decisions; the 60 to 40 decisions almost anyone can make. And you have to be able to define where it is you are trying to go and then find the means to get there and the people who can help you to

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implement this. In my view the top responsibility of the chief executive towards his subordinates-or any executive towards his subordinates-is to make them do things that they did not know they could do. You do them a favor by insisting on standards which, otherwise, they would brush aside. I have seen executives in business who don't like strong people around them because they don't want potential successors. I have seen a number of CEOs of big corporations fail who would not have failed had they kept some of the people they let go. I don't think any CEO who is threatened by his subordinates should be a CEO.

Shaheen: The ability to master change is critical to continued success in leading an organization. What are the qualities essential to successfully negotiating an ever-changing environment and how do you view the skills of today's leaders?

Kissinger: One problem that concerns me about our political leaders today-and it concerns business executives as well-has to do with the concept of knowledge. For we are living through the transition of learning by print to learning by visual images. It represents a shift in consciousness as important as the invention of books was in its time. Before there were books, you could only learn liturgically through memory. That is how I was brought up - on books. Books permitted the collection of much more knowledge, but because you could not store all the information on the written page, or read it all even if it could be stored, anyone trained on books had to learn through concepts. For instance, one had to learn to recognize comparable phenomena and to project into the future. Today, the people who are being brought up on computers and television don't need to do that. They have an unparalleled range of knowledge available to them and consider it a waste of time to learn a lot of the things that we had to learn. In this age of television and computers, we have the paradoxical situation that there is more knowledge available than anyone could dream of but that there is less incentive than ever to learn it.

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I have a friend who was dismayed when he asked his 14-year-old son what the capital of Spain was and found that his son didn't know. The fact was that the kid was practically walking around with a computer.

"If I want to know the capital of Spain," he surmised, "I can know it" - meaning that he would know it in whatever amount of time it might take him to find it on his computer. But when you aren't really learning things, it sort of imprisons you. Nor does it train you to look into the future. What was the strength of a Churchill, a Franklin Delano Roosevelt, a DeGaulle - or any of the great statesmen? Their strength was that they possessed an instinct for history. Bismarck once said, "All a statesmen can do is listen to the footsteps of God as he walks through history and get a hold of the hem of his cloak and walk with him a few steps of the way." Contemporary politicians do not think this way, and I believe that is one of the problems with our current foreign policy. It was different with Nixon. Nixon's great ability was not that he knew a heck of a lot more, but that he could apply it to the future. And that he had tremendous guts. He had the courage to bet himself. And he always used to say to me, "You pay the same price for doing something halfway as for doing it completely." That was an important lesson I learned from him. He had the paradoxical advantage of being convinced that, if he was to fail no matter what he did, he might as well do it right.

Donlon: Looking at the leaders of today, which stand out as transformation leaders?

Kissinger: Among the politicians, I am impressed with Senator McCann of Arizona because he seems to have an understanding of the future. In terms of intellect, Newt Gingrich is probably the most creative man in American politics. I had enormous admiration for Yitzhak Rabin, who unfortunately was assassinated. And in Europe, I think Germany's Helmut Kohl is a great man.

Terry Neill (Andersen Consulting, LLP): You have been close to some of the great leaders of this century.
Can you comment on what lessons we can learn from looking at world leaders?

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Kissinger: Leaders must develop an understanding of their society and of what can and cannot work. And they must learn to move step by step. Academicians and journalists can talk in absolute terms, but the practitioner can only move in stages-each of which will be imperfect and therefore vulnerable to attack. The trick is this: If you go too far beyond the capacity of your society or of the group that you are leading, you will fail. If you don't attend enough, you will stagnate. Ideally, you must operate at the outer limits of what you think your group can tolerate and keep it there, which is tough. And then, of course, you must surround yourself with strong people. I once read that the number two person in any organization has a big choice to make. He can either try to be very popular with his subordinates and reflect their consensus, or he can take positions that may be too tough for the CEO to take but force his subordinates to do things that don't come easily to them. And it's only in the second instance that he's actually achieving something.

# Vision for Achievement

## Judgment and Courage Shape Effective Leadership

by Dr. Henry A. Kissinger

The top responsibility of a chief executive, or any executive, is to provide clear direction and then to motivate his or her subordinates to do things they did not know they could do.

Business and political leaders face many of the same problems, but the most critical one has been the same since the earliest Homo erectus set about organizing his fellow clan members one million years ago. The challenge is simple but profound: How do you take whatever you are in charge of from where it is now to where it has never been?

This is not simply a question of intelligence. It is a question of judgment and courage. It also is a question of being able to define where it is that you are trying to go and finding the means to get there. It means having a sense of the past so that you can provide a vision for the future. Then, with a clear understanding of the future you are trying to create, it means finding the people who can help you implement your vision.

Not having these components of effective leadership does not guarantee catastrophe, but I think it does point to a fate that, ultimately, is far worse: becoming marginalized and watching from the sidelines while your endeavors slide into a gradual decline because your leadership is considered more and more irrelevant.

The top responsibility of a chief executive, or any executive, is to provide clear direction and then to motivate his or her subordinates to do things they did not know they could do. As obvious as this sounds, many people in

leadership positions fail to provide direction. How can that be? I think it has a lot to do with how they learn. My generation was brought up on books. However, we now are living through a period of change that is as important as the invention of books — namely, the shift in learning from words to learning from pictures.

In the medieval period, before there were books, you could learn only by liturgy. Therefore, there was less information available to learn because everything had to be learned by memory. Books were revolutionary because they permitted the collection of much more knowledge than anyone previously had conceived possible. They provided a happy combination of knowledge and concepts, precisely because it was impossible to store all the information in books — even if it were possible, it was impossible to read all the books. That meant that anyone trained by reading books had to learn conceptual knowledge. They had to be able to recognize comparable phenomena and project them into the future.

Today's generation, however, was brought up on television and computers. It does not have to learn conceptually because it has an unparalleled range of knowledge available. This raises the question of whether the attention span of our current

Outlook 7

Ideally, you must operate at the outer limit of what
you think your group can tolerate — and keep it there.

leadership group is adequate. A Canadian consulting company told me a few years ago that when it briefed chief executives older than 45, it was most effective when using paper. For chief executives under 45, they had to use visual presentations.

Another consequence of failing to learn conceptually is that many people today think it is a waste of time to learn many of the things my generation had to learn. A perfect example of this situation occurred recently with a friend of mine, whose 14-year-old son was about to travel to Europe. When his father asked him to name the capital of Spain, the boy did not know — and did not care that he did not know because he could find the answer through his computer. That's the paradox: There is more knowledge available than anyone ever could dream of, but there is no incentive to learn it. When you rely too heavily on the tactics used to obtain information, you miss out on the learning process and, consequently, the ability to benefit from conceptual thinking.

What was the strength of a Winston Churchill or a Franklin Roosevelt or a Charles de Gaulle or any of the other great statesmen? They had an instinct for history, which meant they could envision the future and provide direction on how to get there. Otto von Bismarck, the first chancellor of the German Empire, once said, “All a statesman can do is to listen to the footsteps of

God as he walks through history, and get ahold of the hem of His cloak and walk with Him a few steps of the way.” But most contemporary politicians — or business executives — do not consider that they are walking through history. Is it any wonder, then, that few of them make history?

Thirty years ago, when politicians wanted my opinion, they would ask, “What do you think?” They thought they needed a program. Today they ask, “What do you say?” They want to know what to say for the evening news, and they want it in two- or three-minute sound bites. When you begin thinking that way, how can you think critically about the future?

JOSE ORTEGA

8 Outlook

Somehow, we must overcome this syndrome. I cannot offer any brilliant solutions, but I do have three proposals.

First, it is important for executives to make decisions within a sense of context, of history. This approach allows leaders to compare their actions with those of others, to rise above tactical firefighting and to obtain a precise view of where they are going.

What worked for me when I ran the U.S. State Department was to hire eight or 10 of the brightest people I could find and put them to work on middle-term problems. Then, for an hour-and-a-half every day, we addressed where we were going, what we were trying to do and the outcome we were trying to achieve. We did not discuss incoming messages. Rather, we asked, where are we going in the Middle East and other areas? What are we trying to accomplish? This method prepared us well, and when the Middle East War hit, we were like a football team that had been rehearsing plays. We knew where we were going. Certainly we had to adjust to existing conditions, but we were not arguing over what we were trying to do.

Second, it is critically important to hire strong people. I have seen executives who do not like strong people around them because they fear potential successors. In large corporations especially, when a chief executive fails, it is often because he or she let go of some of the very people who should have been kept. Frankly, any chief executive who is threatened by his or her subordinates should not have the job. Strong people

can impart the leader's mission and motivate the troops to attain it.

Finally, I would advise executives to develop an understanding of their societies, of what can and cannot work. Then, learn to move step by step. Academics and journalists talk in absolute terms, but the practitioner only can move in stages, each of which will be imperfect, and, therefore, vulnerable to attack. If you go too far beyond the capacity of your society or of the group you are leading, you will fail. If you do not pay enough attention, you will stagnate. Ideally, you must operate at the outer limit of what you think your group can tolerate — and keep it there. No doubt this is tough, and you cannot misjudge the limit.

It requires a considerable amount of moral strength and good judgment to make these kinds of critical decisions. But these are the decisions that chief executives are paid to make. All important decisions are, in reality, 51:49 decisions. Anyone can make the 60:40 and greater decisions. Real leaders, on the other hand, have the critical faculties and courage to bet on themselves and their vision, and then articulate it with such command that their people accomplish more than anyone ever thought possible. ■

Dr. Henry A. Kissinger recently shared his thoughts on transformational leadership and other topics with chief executives at the Andersen Consulting World Forum on Change.

Dr. Henry A. Kissinger
is chairman of Kissinger
Associates in New York.
As Secretary of State
for Presidents Richard
Nixon and Gerald Ford,
Kissinger played a major
role in the formulation
of U.S. foreign policy.
He shared the Nobel
Peace Prize in 1973 for
negotiating the North
Vietnamese cease-fire,
and, in 1977, was
awarded the United
States' highest civilian
award, the Presidential
Medal of Freedom. ■

henry kissinger

Outlook 9

# United Tractors' Transformation
## Positioning for World-class Competition

by Joe Leahy

> "We needed to transform our company to ensure cohesion in the face of an increasingly complex business climate."
> 
> Martin Aryana Imanto, United Tractors

When Indonesia's largest supplier of heavy construction and earth-moving equipment, PT United Tractors, embarked on a fully integrated transformation program two years ago, industry observers asked, "Why all the fuss?" After all, the company already was doing well. Sales had soared 46 percent in 1994, continuing the solid growth of the previous year.

"We were facing several burning issues," said Budiardjo Sosrosukarto, United Tractors Deputy CEO. In the short-term, the company was grappling with high growth rates and an increasing number of more sophisticated international customers. Under recent trade agreements, the future would bring free trade to Indonesia — a fearsome prospect for a company operating in a tariff-protected environment.

"We needed to transform our company to ensure cohesion in the face of an increasingly complex business climate. We also needed to become more competitive before the advent of international competition," said Martin Aryana Imanto, United Tractors CEO.

The third issue was internal. United Tractors is a subsidiary of Indonesia's largest automaker, Astra International. Recently, the parent company included in its strategy, the goal of operating internationally and increasing efficiency, thus becoming world class.

"For years the dominant player in a protected market, we at United Tractors realized such fortunate circumstances may not last forever," said Imanto. Indonesia's commitment to free trade agreements under the Association of Southeast Asian Nations and the World Trade Organization is significantly changing the way United Tractors conducts business. These agreements are expected to slash tariffs on heavy equipment imports to 5 percent or less by 1999. As part of this plan, in 1994 the government stripped United Tractors of its exclusive rights as registered sole distributor of heavy equipment such as Komatsu.

Finally, the company's exponential growth also was a cause for concern. With sales turnover increasing at an annual average of 35 percent, United Tractors needed

to rapidly implement internal systems, particularly in human resources, just to keep pace.

Realizing the need for change, United Tractors began its transformation with an attempt to reform one area of business, its information infrastructure, before realizing that an integrated approach would be more effective. "A good analogy is: How can the company become a butterfly if only a part of the caterpillar is transformed," said United Tractors Deputy CEO Frans J. Santoso.

To begin addressing this complex need for change and synergy among its increasingly disparate business units, United Tractors teamed with Andersen Consulting. Together they established a unified program to transform the company. Through this transformation, United Tractors aims to become a dynamic world-class competitor in the heavy equipment industry.

United Tractors seeks to meet the expectations of international customers and compete against other world-class organizations in the domestic market, in addition to serving these customers in foreign

ROB PORAZINSKI

10 Outlook

> "Ideally, leaders must operate at the outer limits of what their groups can tolerate—and keep them there, which is tough."
> 
> Dr. Henry Kissinger

POLICING POLICY

**Kissinger:** When I look at statesmen—or at successful business executives—the ones that prevail are the ones that have some vision of where they want to go. To operate the status quo is, first, boring, and second, means that sooner or later you are going to be engulfed by circumstances. If you do too much systems analysis, you learn all the complexities and none of the direction. Of course, systems analysis is essential. And that is a huge problem for our country in the field of foreign policy.

Traditionally, the basic approach of American foreign policy was that we would stay aloof until a great danger arose, and then overwhelm it with resources. At the end of World War II, we had 50 percent of the world's GNP. We had an atomic monopoly, and we were lucky in the sense that we had an enemy. To this basic approach could be applied. We didn't need to conduct foreign policy; we simply had to identify problems and then allocate resources to them—and we had that extremely well. That period is now over. We now live in a new world.

never known before. Europe has had to adapt a nation-state into a European Union. China is entering a global system again for the first time and will become the dominant nation of Asia. And Japan, seeing that happening, is driven into greater and greater nationalism. And here is the U.S., without a tradition of international politics.

The challenge we have in foreign policy is this: In the Cold War, our danger was defeat. In the post-Cold War period, our danger is irrelevance. More and more decisions are being taken in the world because we can't effect them, because we marginalize ourselves or become marginalized. Which means that, over a period of time, more decisions are being taken without reference to what we consider our interests. If we suffer, it will not be in a catastrophic way, but in a gradual decline of our relative position. A political leader will have to understand this—and to put together some kind of coherent framework. Because we have huge assets, it absolutely does not have to be that way if we can identify our assets and bring them to bear on the problems.

whole, he would get support. Instead he's putting on Band-Aids. For example, anybody who knows anything about Yugoslavia knows that it is not possible for Croats, Serbs, and Muslims to live in the same grouping. That's why Yugoslavia broke up. So to announce that we are for a united Bosnia, but we are keeping our army there to keep them from fighting is ridiculous! They have to be separated or we will be there forever.

The idea that the U.S. has a moral mission in the world that is defined by our intervention in every country in the world is still a dominant view in American foreign policy. But we do not have a duty to bring peace everywhere. With limited resources we should bring it where it affects American interests and values, or the interests of close allies.

**George Shaheen (Andersen Consulting):** In positioning the U.S. to move forward on a worldwide basis, how would you advise the administration to go about formulating a cohesive foreign policy?

**Kissinger:** My advice to the president would be, "Get together some of the brightest people you can find and put

from left to right: CE's Arnold Pollard, Duke Power's William Grigg, USLIFE's Gordon Crosby, HIP Health Plan's Victoria Wicks, John Foster of NovaCare.

the lack concepts. We have no precise view of where we are going. And therefore, we have a very fitful foreign policy. And this occurs at a moment when all the parameters of foreign policy are changing. Russia is within borders it has

What I would like to see is a United States president who assumes the educational function of the presidency. The American public is one of the healthiest in the world, and if their president said, "Here are the problems," I think, on the

them to work." When I took over the State Department, I took eight or 10 of the best people I could find and set them to work on middle-term problems. I did not permit any discussion of incoming cables. I wanted to know, "Where are we

CHIEF EXECUTIVE 35 JANUARY/FEBRUARY 1997

FORUM

# KISSINGERISMS

(cc)

**On post-communism chaos...**

"The Chinese problem is not totalitarianism, but rather that the country is flying apart."

**On foreign policy...**

"We do not have a duty to bring peace everywhere."

**On Mercosur myopia...**

"We may well wind up with the countries of South America being part of an economic grouping that excludes us."

**On the EU endeavor...**

"If the Europeans had it to do over again, they probably would not have chosen monetary union as a vehicle to achieve this."

**On NAFTA...**

"I think that what we have to try to do with Mexico is similar to what the West Germans decided to do with the East Germans... bring them to our economic level before they swamp us."

**On the home front...**

"The generation that grew up in the Vietnam War... [was] brought up to learn that this is a rotten country that has to be improved and that America is not to be trusted with the exercise of power."

**On the chief seat...**

"I don't think any CEO who is threatened by his subordinates should be CEO."

**On chairing change...**

"You must surround yourself with strong people."

going in the Middle East? What are we trying to do there? What outcome are we trying to bring about? What about in other areas?" Then, when the Middle East war hit, we were like a football team that has been rehearsing plays. We knew where we were going; we weren't arguing, "What are we trying to do?"

Today, it seems to me that while we would like to see a free market, we have to recognize that the world may break down into potentially semi-protected or protected areas. Therefore, I would get myself in a position to analyze it. I would try to group the Western hemisphere into a free-trading system—and to pull in the North Atlantic region, the Polish border, and all the NATO countries. Then, if the whole world is free trade, fine. If the whole world is not free-trade, we will have that bloc with which we can bargain.

**Kissinger:** In Latin America right now, they are in the process of creating something called Mercosur under Brazilian leadership. It includes Brazil, Paraguay, Uruguay, and Argentina, with Chile just joining and Venezuela applying to join as well. So we may well wind up with the countries of South America being part of an economic grouping that excludes us. At first it will be very nice and very friendly, but the fact remains that we are not part of that decision making.

With China, we go after the country about issues like drugs, human rights, women's rights, and nuclear proliferation. Well, the Chinese have been self-governing for 5,000 years; we have not existed

for the better part of their history. They consider it insulting that we apply sanctions because they don't meet our criteria of pluralistic democracy. Especially since we don't understand how Chinese society operates.

apart. You have a billion and a half wild individualists. The problem is not one of a return to communism, but wild, reckless capitalism! I met with a commander in southern China, and when he gave me his visiting card. On one side it said, "Major General Commanding;" on the other it said, "vice president of such-and-such electric power company" for that region. So that is China.

When Japan's Prime Minister Hashimoto spoke before the Council of Foreign Relations recently, the attendees began badgering him about domestic reform. What business is that of ours? They should ask about trade relations, policy relations—things that affect us—not what they are doing in their own political process.

In Asia, we have to understand that our role is very similar to that of Britain toward Europe in the 19th century. The relations of Japan, China, Russia, India, and Indonesia to each other are like the relations between European countries in the 19th century. They think of one another as strategic opponents and are going to jockey against one another. They do not think they are part of a cooperative system. With its immense population, China will become hugely dominant, because it will be the biggest market for all of its neighbors. As a result, China can make conditions by regulating what it buys from where. We must realize this and come to some understanding with the Chinese. They have to understand that we will not tolerate all of Asia dominated by one country, because that would be too powerful. On the other hand, we

From left to right: Audiovox's John Shalam and Beth Pritchard of Bath and Body Works and Victoria's Secret

CHIEF EXECUTIVE

36

JANUARY/FEBRUARY 1997

Clockwise, from top
left: William Grigg
of Duke Power,
John Foster of
NovaCare, Beth
Pritchard of Bath
and Body Works and
Victoria's Secret,
George Shaheen of
Andersen Consult-
ing, HIP Health
Plan's Victoria
Wicks, and Robert
Lauer of Andersen
Consulting.

have to understand that they
will want to gain some addi-
tional influence in order to
develop. So the problem is
how do we define that margin
in which they can gain influ-
ence without getting into con-
frontations with them? That
requires constant dialogue.

Going forward, I expect a
growth of considerable
nationalism in Japan and a
rearment of Japan. I predict
India is going to become a
major player. And I think Rus-
sia is going to emerge with an
authoritarian, very nationalis-
tic government that will prob-
ably do well economically
but be no joy to deal with politically.

We like to think that we can apply cer-
tain principles uniformly around the
world. But that doesn't happen to be true.
We like to think we can push democracy,
and that's also not uniformly true, because
most of the world is not democratic. So
the trick for us in developing our foreign
policy will be to find a balance. We must
conduct a very subtle and complex policy.
This is the problem we face in the field of
foreign policy.

**Edwin Lupberger (Entergy Corporation, Inc.):** As the current chairman of the U.S. Chamber, I am often quizzed about our stand on NAFTA and its impact on our national economy. Can you outline your position as a proponent of NAFTA—on the necessity for incorporating that level of lower-priced worker into our overall economy—and discuss how the global changes occurring will affect our overall trade policy?

**Kissinger:** We are condemned to co-
exist with Mexico. We're in a position not
unlike that of the Israelis with the Arabs,
although not quite as bad. Mexico is
going to tie up with somebody, and it's
better that they tie up with us than that
they tie up with Europe, Korea, or Japan
and still seep into our country. With the
20-plus million Mexicans we have in the
U.S. already, I think our politics would get
too complicated. Therefore, I think that
what we have to try to do with Mexico is
similar to what the West Germans decided

to do with the East Germans. We have to
try to bring them to our level before they
swamp us. In terms of the disparity in
wages, we can pay the price for a brief
period, because those wages will rise
quickly. Otherwise they will hook up with
Asia and the real low wages there. Even-
tually, I would want to link Western
Europe to this trade bloc as well, because
that would really defuse the problem.

**J.P. Donlon (CE):** A number of critics have suggested that NAFTA was a mis-take. In a similar vein, there are anti-Euro-pean Union factions within Europe. What future do you foresee for that market and how will it influence trade and political relations with other markets?

**Kissinger:** NAFTA is our problem. The EU is the Europeans' problem. Europe is struggling to adapt a nation-state into a European Union, and all their energy, or practically all their energy, is being spent on that problem. Within that problem is a highly technical financial issue of common currency. I would like to see Europe united for the same reason I would like to see North America united—because I think a united Europe could operate on a bigger scale. If the Europeans had it to do over again, they probably would not have chosen monetary union as a vehicle to achieve this. When you do a common currency, you have to give up something that for every person is almost the quin-tessence of the nation. You give up your own money for some new vague thing

with no political loyalties. I
wonder whether this common
currency is worth the political
dislocations that it may cause.

As a second challenge, of
the various countries, really
none of them—except for Ger-
many, and possibly Luxem-
bourg and Ireland—can meet
the criteria that have been set
out. They are maneuvering to
meet them. For example,
France is selling state assets to
reduce their deficit. In Italy,
they have passed a tax, the
European tax, in order to
achieve these criteria. I asked
Prime Minister Aznar recently
when Spain was going to enter
the EU. "We will do whatever is necessary
and we will get in," he said. "We can meet
the criteria for one year to get in, but I
don't know how we are going to meet it
after that."

Then what? Competitive devaluation,
joint devaluation, inflation, and austerity
imposed by a central bank? It's tough
enough when a government does it, but I
can't imagine the French or the Italians
giving up social security by order of a
central bank—one probably run by Ger-
mans. But I think America should keep
quiet about the EU issues. It's not our
problem.

**Phillip Rooney (WMX Technologies):**

**Kissinger:** Whatever established for-
eign policy we had as a nation was
destroyed in the Vietnam War. Vietnam
was a disaster from this point of view,
because the old establishment, which was
honorable and could have learned over a
period of time, was absolutely destroyed.
A whole generation—the leadership
group of today—was affected.

My generation is the one that fought in
WWII, that built the post-war structure,
that created the structures that defeated
communism, and that developed the Mar-
shall Plan. I say this not to brag but to
indicate that this was a generation that
believed in America and that we had a

CHIEF EXECUTIVE

37

JANUARY/FEBRUARY 1997

FORUM

A WHO'S WHO OF FORUM PARTICIPANTS

**Gordon E. Crosby, Jr.** is chairman of the board at USLIFE Corporation, a New York City-based life insurance firm with $7 billion in assets.

**Ronald M. Gross** is chairman and CEO of Stamford, CT-based Rayonier Inc., a $1 billion forest products company.

**Aleksander Erdeljan** is chairman, president, and CEO of Troy, MI-based R.P. Scherer Corporation, a $600 million pharmaceutical technology company.

**John H. Foster** is chairman and CEO of King of Prussia, PA-based NovaCare, Inc., an $800 million supplier of rehabilitation and healthcare services.

**William H. Grigg** is chairman and CEO of Duke Power Company, Inc., a Charlotte, NC company with $12 billion in assets.

**Henry A. Kissinger** is chairman of the New York City-based international consulting firm of Kissinger Associates.

**Leo Liebowitz** is president and CEO of Getty Petroleum Corp. in Jericho, NY.

**Edwin Lupberger** is chairman and president of New Orleans, LA-based Entergy Corporation, Inc., a $22 billion electric power generation company.

**Leslie G. McCraw** is chairman and

CEO of Fluor Corporation, a $9 billion construction and engineering company in Irvine, CA.

**Ian Morrison** is an author and a consultant and senior fellow of the Menlo Park, CA-based Institute for the Future.

**Beth M. Pritchard** is president and CEO of Columbus, OH-based Bath and Body Works and Victoria's Secret Bath retail companies.

**Phillip B. Rooney** is president and CEO of WMX Technologies, the Oak Brook, IL-based waste management and environmental services firm.

**George T. Shaheen** is managing partner of Andersen Consulting, a global management and technology consulting organization.

**John J. Shalam** is president and CEO of Audiovox Corporation, a Hauppauge, NY-based manufacturer of consumer electronics equipment and parts.

**John C. Shaw** is office of the chairman at Wellpoint, a Woodland Hills, CA-based health care company.

**Victoria A. Wicks** is president and CEO of HIP Health Plan of New Jersey, a North Brunswick, NJ-based managed care company.

**Abraham Zaleznik** is professor of leadership emeritus at the Harvard University Graduate School of Business.

constructive role to play. The generation that grew up in the Vietnam War has a different view. They were brought up to learn that this is a rotten county that has to be improved and that America is not to be trusted with the exercise of power.

I also do not know whether the attention span of our leadership group is adequate. Representatives from a Canadian consulting company told me a few years ago that when they briefed CEOs, if the CEO was older than 45, paper was most effective. If the CEO was under 45, visual presentation was essential.

Now, I personally cannot learn from visual presentation. I am beyond that age. When I started my career, politicians would ask my opinion and they thought they needed a program. Today they want to know what to present on the evening news—and they want it in two- or three-minute sound bites. When you begin thinking that way, can you think well about the future? Somehow we have to overcome this challenge.

LESSONS IN LEADERSHIP

**Pollard:** The bridge to the 21st century that we are all on passes over an awful lot of crushing cross currents. Factors like

information technology and global competition have imposed pressure on business leadership—rapid pressure like never before—for a new skill set that deals with change in an organization on a regular and recurring basis, not just as an occasional or once-in-a-lifetime kind of thing. Change is every day and it's rapid. How can today's industry leaders navigate these turbulent waters?

**Kissinger:** The problems of any leader

top responsibility of the chief executive towards his subordinates—or any executive toward his subordinates—is to make them do things that they did not know they could do. You do them a favor by insisting on standards that, otherwise, they would brush aside. I think this is the requirement of an executive.

Also, I have seen executives in business, who don't like strong people around them, because they don't like

in the political world—and I believe this is true for the business world as well—how to take whatever you are in charge of from where it is to where it has never been. And that is not simply a question of intelligence; it is a question of judgment and courage. You can always hire intelligent people to multiply your complexities. All the important decisions are the tight ones, 51 to 49 decisions. The 60 to 40 decisions anyone can make.

You have to be able to define where it is that you are trying to go and then find the means to get there—the people who can help you to implement this. In my view the

Top to bottom, from left: Ronald Gross of Rayonier Inc., Fluor Corp.'s Les McGraw, Andersen Consulting's Terry Neill, and Phillip Rooney of WMX Technologies.

Top to bottom, from left, Leo Liebowitz of Getty Petroleum, Scherer Corp.'s Aleksander Erdeljan, John Shaw of Wellpoint, Edwin Lupberger of Entergy Corp., Andersen Consulting's George Shaheen, Henry Kissinger of Kissinger Associates.

potential successors around them. I have seen a number of CEOs of big corporations fail, who would not have failed had they kept some of the people they let go. I don't think any CEO who is threatened by his subordinates should be CEO.

**Shaheen:** The ability to master change is critical to continued success in leading an organization. What are the qualities essential to successfully negotiating an ever-changing environment and how do you view the skills of today's leaders?

**Kissinger:** One problem that concerns me about our political leaders today—and among business executives as well—has to do with knowledge. We are living through a shift from learning through print to learning through pictures that is as important as

the invention of books. Before there were books you could only learn by liturgy—you had to do it all from memory. I was brought up on books. Books permitted the collection of much more knowledge, but because you could not store all the information in books, or read it all even if it was stored, anyone trained on books had to learn conceptual knowledge. He had to learn to recognize comparable phenomena, and how to project into the future. Today, the people who are being brought up on computers and television don't need this. They have an unparalleled range of knowledge available to them. They think it's a waste of time to learn a lot of the things that we had to learn.

In this age of television and computers, we are living in a paradoxical situation in that there is more knowledge available than anyone could dream of, yet there is no incentive to learn it. I have a friend who was dismayed when he asked his 14-year-old son what the capital of Spain was and his son didn't know. Now, this kid walks around, practically, with a computer. He says, "If I want to know the

capital of Spain, I can know it," meaning in whatever time it takes him to get it on his computer. And when you don't really learn it, this can imprison and not train you to look into the future.

What was the strength of a Churchill or a Franklin Delano Roosevelt or a DeGaulle, or any of the great statesmen? They all had an instinct for history. Bismarck once said, "All a statesmen can do is listen to the footsteps of God as he walks through history and get a hold of the hem of his cloak and walk with him a few steps of the way." But contemporary politicians do not think this way, and I believe that is one of the problems with our contemporary foreign policy.

It was different with Nixon. Nixon's great ability was not that he knew a heck of a lot more, but that he could apply it to the future. And that he had tremendous guts. He had the courage to bet himself. And he always used to say to me, "You pay the same price for doing something halfway, as for doing it completely." That was an important lesson I learned from him. He had the paradoxical advantage of being convinced that,

no matter what he did, he would fail anyway, so he might as well do it right.

**Donlon:** Looking at the leaders of today, which stand out as transformational leaders?

**Kissinger:** Among politicians, I am impressed with Senator McCann of Arizona, who seems to have an understanding of the future. In terms of intellect, Newt Gingrich is probably the most creative man in American politics. I had enormous admiration for Yitzhak Rabin, who unfortunately was assassinated. And in Europe, I think Germany's Helmut Kohl is a great man.

**Terry Neill (Andersen Consulting, LLP):** You have been close to some of the great leaders of this century. Can you comment on what lessons we can learn from

looking at world leaders?

**Kissinger:** Leaders must develop an understanding of their society, and of what can and cannot work. And they must learn to move step by step, because academics and journalists can talk in absolute terms, but the practitioner can only move in stages—each of which will be imperfect and therefore vulnerable to attack. The trick is this: If you go too far beyond the capacity of your society or of the group that you are leading, you will fail. If you don't attend enough, you will stagnate. Ideally, you must operate at the outer limits of what you think your group can tolerate—and keep them there, which is tough.

And then, of course, you must surround yourself with strong people. I once read that the number two in any organization has a big choice to make. He can either try to be very popular with his subordinates and reflect their consensus, or he can take the position that may be too tough for the CEO to take, and force his subordinates to do things that don't come easily to them. And it's only in the second case that he's really doing something. And this I believe to be absolutely true. ☐

CHIEF EXECUTIVE 39 JANUARY/FEBRUARY 1997

cion resulted in a corporate shutdown, that shutdown would certainly be worse for its employees than the alternative: a job with modest benefits. The free market says to employees, "We give you excellent benefits because you are valuable to our company and our shareholders." Paternalism condescends, "For all the benefits we give, you owe us loyalty."

Third, there is an inherent fallacy in the lifetime-employment mentality, and its corollary, a mindset that all layoffs are bad. Obviously, employees who are laid off suffer trauma. But ultimately, many plant closings benefit those furloughed, their former and future companies, and the economy at large. Consider the oft-discussed case in which the law prevents or impedes a company from closing a plant. Since the jobs that companies want to eliminate usually are either low-productivity jobs or those that can be performed more efficiently elsewhere, the maintenance of those jobs traps people in the lowest-efficiency segment of the economy. If we made a practice of "humanely" rescuing low-productivity jobs on a large scale, America would become an island of low productivity, with stagnant or declining gross domestic product. I stress that GDP is not a depersonalized economic indicator; it is important to each of us. America's GDP, divided by its population, approximates the average American's salary. In other words, creating a policy, however well-intended, that reduces economic efficiency, will have the effect of lowering our average wage. I do not see anything humane or kind-hearted about making Americans poorer.

Fourth, layoffs often improve not only the fortunes of the downsizing company but also those of the laid-off employees, and of the economy at large. For example, some semiconductor companies generate productivity figures of less than $100,000 in revenue per employee per year. By contrast, Cypress's revenue per employee is about $300,000 per year. When an employee leaves or is laid off from a company with low productivity, and moves to a company with higher productivity, the GDP expands by an amount equal to that of the productivity increase. Furthermore,

the new company probably will be able to consistently pay more to its new employee, because of its higher productivity. After a layoff, many employees end up with better jobs in different industries. For example, when AT&T exited the personal computer business, we immediately dispatched a recruiting group to South Carolina to find critical talent for our PC chipset business. Our competitor, Cirrus Logic, got there first and hired more than we did, but we came away with a business unit manager and a skilled motherboard development group. We really value the employees AT&T no longer needed; they're better off, and so are both companies. And AT&T can now focus on the telecommunications business it dominates.

Recently, we went back to South Carolina to try to hire the Cirrus Design Center en masse. Cirrus President Mike Hackworth reacted personally, and a battle ensued. At the same time Cypress and Cirrus were in a recruiting battle in South Carolina, Cirrus divested itself of two business units and had a small layoff, while Cypress moved some San Jose wafer production to its Texas and Minnesota plants, resulting in a layoff of 60 employees, most of whom will find jobs in the superheated Silicon Valley economy before they cash their severance checks. The point of this story is about fast-moving Silicon Valley companies. Companies must have the freedom to adjust to business conditions or they will run inefficiently, and our entire economy will suffer.

Fifth, avoiding layoffs and treating people well is exactly what CEOs must do to make their companies profitable. While layoffs are one method to improve the efficiency of the economy at large, they are intensely disruptive for individual companies. All the CEOs I know aggressively avoid layoffs, because they know the company that can attract and keep the best and brightest is the company that will win in the long haul. No CEO wants his or her company to be unable to hire the best because it is known as the company that lays off people to tune up its quarterly profit-and-loss statement.

Sixth, the choices that American compa-

nies make in our free market have consistently enhanced the living standard of American workers for 220 years, since the American revolution created the economy of corporations. (Corporations existed in Europe prior to 1800, though by that time America had only five million citizens but more corporations than all of Europe, combined.) Only in the past 25 years, when government meddling has become pervasive, have our companies not been able to produce continuous yearly raises for our workers—jeopardizing the core of the American dream.

Employees who fail to recognize that free choices, not all of them favorable, are an imperative of the free market, do so at their own peril. Just as employees make decisions in the best interests of themselves and their families, companies must do what's right for their shareholders. In so doing, companies will almost always do what is right for their employees. When markets sag or technologies change, that may sometimes mean releasing people back into the marketplace to find more productive jobs. Much more typically, during rarely-discussed upsizing, companies do what's right for their shareholders by fighting tooth-and-nail to attract, reward, and retain the best people.

Employees should understand that their company's only right to exist arises from the value it provides to its customers. Consequently, the employees' only guarantee of employment arises from bringing consistent value to their company. The advertising model, in which companies and employees argue about cost cutting versus entitlements, is a losing model. Eventually, a company with that cancer will succumb to healthy companies in which people form winning teams that are not forced to trade off among the interests of customers, employees, and shareholders. That happens precisely because healthy teams create the wealth that serves all interests in our free market. □

T.J. Rodgers is president and chief executive of San Jose, CA-based Cypress Semiconductor, a $600 million manufacturer of computer chips.

CHIEF EXECUTIVE 33 JANUARY/FEBRUARY 1997

POLICING POLICY

Traditionally, the basic approach of American foreign policy was that we would stay aloof until a great danger came, and then overwhelm it with resources. At the end of World War II, we had 50 percent of the world's GNP. We had an atomic monopoly, and we were lucky in the sense that we had an enemy. So this basic approach could be applied. We didn't need to conduct foreign policy; we simply had to identify problems and then allocate resources to them—and we did that extremely well. That period is now over. We now live in a new world.

From left to right: CE's Arnold Pollard, Duke Power's William Grigg, USLIFE's Gordon Crosby, HIP Health Plan's Victoria Wicks, John Foster of NovaCare.

We lack concepts. We have no precise view of where we are going. And therefore, we have a very fitful foreign policy.

CHIEF EXECUTIVE

35

JANUARY/FEBRUARY 1997

FORUM

# KISSINGER'SMS

## On post-communism chaos...

## On foreign policy...

## On Mercosur myopia...

## On the EU endeavor...

## On NAFTA...

## On the home front...

## On the chief seat...

## On chairing change...

CHIEF EXECUTIVE 36 JANUARY/FEBRUARY 1997

Going forward, I expect a
growth of considerable
nationalism in Japan and a
rearmament of Japan. I predict
India is going to become a
major player. And I think Rus-
sia is going to emerge with an
authoritarian, very nationalis-
tic government that will prob-
ably do well economically
but be no joy to deal with politically.

**J.P. Donlon (CE):** A number of critics have suggested that NAFTA was a mistake. In a similar vein, there are anti-European Union factions within Europe. What future do you foresee for that market and how will it influence trade and political relations with other markets?

**Kissinger:** NAFTA is our problem. The EU is the Europeans' problem. Europe is struggling to adapt a nation-state into a European Union, and all their energy, or practically all their energy, is being spent on that problem. Within that problem is a highly technical financial issue of common currency. I would like to see Europe united for the same reason I would like to see North America united—because I think a united Europe could operate on a bigger scale. If the Europeans had it to do over again, they probably would not have chosen monetary union as a vehicle to achieve this. When you do a common currency, you have to give up something that for every person is almost the quininessence of the nation. You give up your own money for some new vague thing

Then what? Competitive devaluation, joint devaluation, inflation, and austerity imposed by a central bank? It's tough enough when a government does it, but I can't imagine the French or the Italians giving up social security by order of a central bank—one probably run by Germans. But I think America should keep quiet about the EU issues. It's not our problem.

**Phillip Rooney (WMX Technologies):** What thoughts or recommendations do you have on how we can formulate a well-thought out foreign policy and move forward globally?

**Kissinger:** Whatever established foreign policy we had as a nation was destroyed in the Vietnam War. Vietnam was a disaster from this point of view, because the old establishment, which was honorable and could have learned over a period of time, was absolutely destroyed. A whole generation—the leadership group of today—was affected.

CHIEF EXECUTIVE JANUARY/FEBRUARY 1997

FORUM

LESSONS IN LEADERSHIP

in the political world—and I believe this is true for the business world as well—is how to take whatever you are in charge of from where it is to where it has never been. And that is not simply a question of intelligence; it is a question of judgment and courage. You can always hire intelligent people to multiply your complexities. All the important decisions are the tight ones, 51 to 49 decisions. The 60 to 40 decisions anyone can make.

looking at world leaders?

4. Anderson Consulting (which previously said they had no plans to transcribe your talk, but apparently did) now asks if you would allow them to post it in their internal database library.

It is a poor transcript and will require allot of editing.
I'll send it to Gina, unless you do not want it posted, or
want to let them have it as is.

Send now to Gina ✓ I'll take it to jury duty and let
you know once I've seen it
Done 7/29

Dr. Henry Kissinger

Mr. Shaheen, ladies and gentlemen, they have taken away these plaques (slides on screen) of Delivery in Excellence in front of everybody else, but it's right here on my monitor and I'm just wondering whether the "great" will come up next to deliveries, and next to excellence as I proceed through my discussion.

I appreciated this introduction and of course, when ever one has such a nice
introduction one finds oneself in the position in which I once was at a reception
where a lady walked up to me and said, "I understand you're a fascinating
man", she said. "So fascinate me." It turned into one of the less successful
conversations that I have had and since Mr. Shaheen referred to so much of my
biographical material, I think maybe it's interesting for you to understand how
arrogant Harvard professors really can be.

TEL 0114 936 3137

P. 005

When President Nixon invited me to be national security advisor, I had never met him. In fact, my only contact with him was in the entourage of Nelson Rockefeller opposing him in three primary campaigns. And I once spoke to the reunion of Rockefeller accolades and said, "A book is going to be written about us." We found more ways of losing primary elections than had ever been described before. We came up with a new one each time. At any rate, here was Nixon offering me the second or third most important job in the government and I said to him, "You know, most of my friends at Harvard are very opposed to you and I would really like a little time to check with them to see whether I can take this job without losing my friends." Why he didn't tell me to get lost at that point I will never—I will never know. He said, "Take a week."

Nelson Rockefeller had been traveling. He came back two days later and I had told him what I had done. He said, "You must be out of your mind." He said, "He's (Nixon) is taking a much bigger chance on you than you're taking on him." Which I would like to say, had occurred to me, but it hadn't. And he said you go right to that phone and tell him you'll take the job and no further discussions. At any rate, that is how this happened.

Now let me talk to you about the international situation as I see it and do it in three parts: A few words about the United States, something about China and Hong Kong, and something about Europe. The management was determined that there would be no question period, 'cause they didn't know what you guys might say if you ever got the microphone. But at any rate, let me talk about those subjects first.

First about the United States. We are in a extraordinarily complicated position for two reasons: 1) the United States faces an international environment for which it has no historical or intellectual preparation. If you compare what American leaders were saying around 1950 and what came to pass, we have achieved practically everything we've set out to do at the end of the second World War. And George Bernard Shaw once said, "There are two tragedies in life; 1) to fail to fulfill your heart's desire and 2) to fulfill your heart's desire." What do we do now?

The post World War II situation accorded very much with our historical experience. America is the only major country in the world that has never had a powerful neighbor. The only major country populated entirely by immigrants or their descendants. The only country that could pretend to itself that its choice of being involved in international affairs was entirely up to it. So when we did engage ourselves in World War I and World War II, we defined it as dealing with an absolute evil which, once eradicated, would enable us to return to our previous policies. Even during World War II, Roosevelt said to Churchill, "Don't ask me to keep any American troops in Europe because they cannot be

GCS Conference

4

Dr. Henry Kissinger

kept for more than a maximum of 18 months after the war ends." That was the perception during World War II

Then we were projected into world affairs but in a very special way. We had an atomic monopoly; we had nearly 50 percent of the world's gross national product. For us, the conduct of foreign policy appeared like domestic policy for most other countries as an allocation of resources. Every major American initiative will testify as having a terminal date. Last week, there were great celebrations of the Marshall Plan. But the fact is the Marshall Plan was a five-year program. After that there was supposed to be no further need to engage in a consistent European policy requiring a lot of resources. Starting in the Vietnam war, we came up against some limits. We came up against situations which we could not overwhelm with resources. And starting with the collapse of communism, we are now in a world that is familiar to many other nations-- but not to us. There's no clear cut ideological enemy. There's no clear cut strategic enemy. There is no clear cut terminal point for what we're doing. We're now part of the system. We have to think of accumulating rewards and penalties to move events in a desirable direction but without being able to describe an end to that process.

Now for British or French or Chinese foreign office specialists, it would be a waste of time even to talk about this because they've never a different world. But for the United States, this is unprecedented. And you see it now in the weird debate that's going on in the United States. When I was in office, and both before and after me, people were talking about bi-partisan foreign policies. The assumption was the administration had a policy and then the Opposition Party, if it was patriotic, would try to make it work. Today that isn't possible anymore. It isn't because the most determined opponent of President Clinton is the minority leader of the democratic party in the House of Representatives-- Congressman Gephardt.

The Republican party is equally split between internationalists like me and populist, semi-isolationists like those that are now trying to organize opposition to MSN/MFN??? for China. And so conducting foreign policies has become extraordinarily complex. It's become even more complex because the international environmental is changing at a pace for which there's no previous experience. And the categories of the international environment are so different.

Economics are global; communications are instantaneous, but politics are national and even ethnic and every complicated economic problem has to be translated operationally into some sort of national or regional dispensation and that puts a tremendous burden on decision-makers, both in government and in business. This is the general environment in which we find ourselves.

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Dr. Henry Kissinger

BOSCHDRUMMON, OYOTENDRERSEN CONSULTING

TELU171 438 5187

P. 007

Then there's one other aspect which is the change in generation. Now it always happens that the older generation believes that it has wider experience and the younger generation has new insights. That's inevitable. But what we are now witnessing is in my view, a change in human consciousness.

My generation is the last one that was brought up entirely on books. If you're brought up on books you know you can never encompass all the knowledge that has been accumulated in books so if you want to operate you have to develop concepts.

Concepts enable you to recognize comparable situations and project them into the future. Great statesman, from my study of them, are not more intelligent than their environment but they have a better ability to project trends for a longer period of time. The generation following mine at an accelerating pace, does not learn from books, they learn from pictures. They're brought up by computers. They can call up a range of knowledge that was unimaginable previously and to get it instantaneously. So in dealing with any one problem, they have available to them a much better information base than the book generation did.

On the other hand, they have never had to wrestle with recognizing comparable situations because the problems always presented to them are on their merits so-to-speak. I believe the ability to project into the future is far less. So there it's probably a heightened ability to deal with immediate technical problems and a lesser ability to deal with long-range problems. And that seems to me the case in every society that I know, with us Americans being a little bit ahead of the curve.

Frankly, when I read statements by our current President, I tear my hair out because it isn't that I disagree with him, it's that there is no historic base to them; they're all tactical and I like to console myself and think that this is peculiar to one person. But I think this may be the congenital defect of the societies that are emerging. So these are the challenges. Now let me deal with a few concrete situations.

Let me take the case of China and Hong Kong. The essence of foreign policy, decision-making and of any other decision-making the first is to recognize what your problem is then to get some grasp of the range of possible approaches to their problems and then to select one of them and act on them. So the first thing is -- what is China?

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China has longest uninterrupted history of any nation in the world. Five thousand years of recorded history. They manage to get through all but 200 of those without significant advice from the United States. So it is not self-evident to them that we should prescribe to them what their domestic institution should be. Moreover, they have a experience of the last 150 years of colonial humiliation and therefore, westerners telling them how to arrange themselves domestically, have a terrible time having their arguments accepted on their merits.

Take the case of Hong Kong -- in our press and certainly in the public statement of our politicians, it is described as if its flourishing democracy were being turned over to communists. The fact is, in the Chinese mind, a British colony is being turned over that was carved out of China and is therefore, has a different significance to them than it does to the outsiders. And in fact, outsiders have been very careful in reading too many lectures in public, because they might bring about exactly the opposite result of what they intend. I'll get back to this.

Another aspect of China is, for those of you who do business there you know -- if I ask anyone in this room when something happened, you'll give me a date. When you ask a Chinese when something happened, he'll give you a dynasty. Of the 14 dynasties in Chinese history, ten have lasted longer than the entire history of the United States. So once you know the dynasty, you're within about 200 or 600 years when something occurred. It's a different perspective of time.

And of course when you travel in China you rarely come to a problem that does not have a larger population than the largest European country. All of this imposes a different scale of perception.

When Nixon went met Mao, one of the first things Nixon said to Mao was the chairman's teaching have changed the civilization. Mao said, "No. I have changed Beijing, and a few of its suburbs." I thought this was ridiculous at the time. But now when we see what it takes to govern this huge country, we see that there is a lot of merit in what Mao was saying because the nightmare of every Chinese ruler has been how to get this huge mass of individualists, family-oriented, to cooperate together.

So now in America we are having an intense political debate. Somewhat cynical because there are some people who admit what they're trying to do is to create a coalition of all of right-wing, Christian, anti-abortionist, human rights people, labor. The only thing they don't know is for what precise purpose? What is the end gain?

Now there are four levels. One is -- is China a strategic threat? Second, do we have disagreements with China? Third, what about Hong Kong and Taiwan? And fourth, what about human rights?

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20 JUL. 1971 ANDERSEN CONSULTING

TEL:01/1 438 5151

P. 009

First, on strategic threat. There is no doubt that China has grown at the rate of ten percent a year since 1979. And any of you who do business in China or visit there can only be almost awed by this spectacular achievement and the unbelievable transformation that has occurred. Especially in the parts that we are most likely to see, not necessarily in the rural areas but one has to get asense of perspective.

The China GNP is a tenth of the American GNP. Therefore, a ten percent increase in the China GNP is a little less than a one percent increase in the America GNP and therefore, the gap between us at this moment is still increasing. The Chinese are devoting 1 ½ to 2 percent of their GNP to defense; we're devoting 3 to 3 ½ percent of our GNP to defense. Militarily, the gap between us is increasing.

It is absolutely absurd in my view to speak of a Chinese strategic threat against the United States. There is a book that says if the Chinese have 30 intercontinental missiles aimed at the United States, they can do horrendous damage. That's undoubtedly true. As a result, since we have about 20,000 warheads they will be totally wiped out and at the end, they would have brought about their worst nightmare.

And the worst nightmare of the Chinese in my experience, is not the United States but invasion from powerful neighbors. And nobody has explained why the Chinese should prostrate themselves in order to bring about their worst nightmare.

Certainly China will become increasingly strong, but so will their neighbors; Japan, has a much larger military budget; India, Taiwan, Korea. I do not believe that the myths of a Chinese invasion of all its neighbors is possibly realistic for 25 years and I cannot prescribe policy for today on the basis of what could conceivably be a threat in 25 years since I don't really believe that will happen or is now foreseeable.

Second issue is do we have disagreements with the Chinese? Absolutely. It cannot continue that the trade balance is as one-sided as it is. Even though most of the Chinese manufacturers do not take jobs away from American industry because they're in the lower end of the skills cycle. But still it is not going to be politically sustainable to have a deficit of this size. Secondly, the proliferation of Chinese weapons is a problem. And if they participated in trying to affect our elections, that is certainly inappropriate. But none of this requires confrontation. For all of this, there are diplomatic and other pressures available to deal with them. But these are certainly issues to be dealt with.

Third, Hong Kong and China and Taiwan. I believe that the Chinese intend to have a smooth takeover of Hong Kong. I do not believe that the Chinese insofar

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28-JUL. 9/(MUN) 09:11 ANDERSEN CONSULTING

TEL:01/1 438 5757

P.010

as they can control this have any intention to end the present situation in Hong Kong. I don't say this because I believe they are great humanists. I believe it because it is overwhelmingly in the Chinese self-interest. Why should they want to destroy their biggest hard currency earner? Why should they want to destroy the possibility of a bridge to Taiwan in which one country and two systems might conceivably work by a flagrant breaking of the Agreement with Britain? So in terms of Chinese self-interest and of my own conversations with them, I'm convinced that what they will like to do is to carry out the Agreement.

There are four obstacles. The first is that's what they'd like to do. Do they know how to do it? Can they learn to run a pluralistic system? They're trying to handle it by turning it over to a Hong Kong administration under a Hong Kong government and keeping the existing administration in place. But we'll have to see whether the bureaucrats in Beijing can keep their hands off it - not because of any evil intentions, but because that is their nature. Secondly, is it possible to keep the administration of Hong Kong as free of corruption as it has been under British rule? That too, remains to be seen. The third is: will the opponents of the agreement in Hong Kong keep their protest below a level that will produce a kind of Chinese retaliation that in turn, would spark a lot of foreign intervention? And the fourth is: what will Taiwan do? Will they want to make it work?; which I doubt. But how far will they push their opposition? Those are the four uncertainties. I believe on balance. I'm quite optimistic about the immediate future in Hong Kong. What happens after 2, 3, or 4 years? It depends a lot on the general international environment as it has developed in the meantime.

On the question of human rights, I could be talking here forever. It is really a philosophical question to the degree to which one can make the internal behavior of the foreign country the subject of sanctions and of foreign pressure. And this is a philosophical point. I do not believe that formal pressure will work and I also believe that the changes in China, as a result of industrialization, are bound to produce some political changes not to speak of the one-child families, which, for the first time in Chinese history produces a situation where there's no extended family, no cousins, no nephews, no brothers and sisters. Now I don't pretend to know what this will do but it will certainly change Chinese life.

So this is my view of China: if the United States can bring itself to deal with China, on the basis that Chinese understand which is mutual self-interest - in which we serve our purpose, which is stability in Asia, and they serve their purpose, which is uninterrupted domestic progress - none of the issues that we disagree about should be a source of confrontation.

If we don't manage this, it's going to be a tough world in Asia if the United States is in confrontation with China because all of you who know Asia, know

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Dr. Henry Kissinger

we will have no allies - not like Europe. And it will be a long, drawn out
struggle.

I remember Mao once told me that a Romanian came to compose his differences
with a Russian. And Mao said to him, "I'll struggle against him for 5,000 years"
So the Romanian said, "Well, fellow communist, can't you talk a little more
conciliarily means." He said, "O.K. 4,000 years." When the Romanian
complained again, he said, "Cut it down to 3,000". Then when the Romanian
still complained he said, "I've made my last concession." So this is what we'd be
up against. I don't think it's necessary and I hope that in the debate that emerges
in this country, common sense would prevail.

Now let me say a few words about Europe since I have gone too long on China.
Europe faces three issues: 1) its own internal arrangements, 2) its relations with
the United States, 3) its relations with Russia. Let me say a word about the
internal arrangements of Europe.

In the 19th century, the European nation state had the ideal size for the state of
technology that then existed. An ideal balance between the size of the state and
the task it had to accomplish and therefore, they made huge, rapid progress in
industrialization and dominated the world.

But with all the European achievements, they have had one characteristic that
has not been paralleled in this to this extent in any other part of the world: A
degree of competitiveness leading to an internal civil war that has built into the
consciousness of these societies, a degree of commitment to the nation's state,
that makes it very hard to overcome today.

And so the attempt to unify Europe has gone far but has not yet reached a
degree of cohesiveness that enables Europe to act as a unit. Now Maastricht was
intended to bring this about by creating a common currency. And I suppose if
everything had worked smoothly, it might have succeeded. But in order to get a
common currency, criteria have been developed that are almost impossible for
the various participating countries to meet and almost surely impossible to
maintain even if they were to meet them on some magic date for entry into the
Common Market.

Secondly, to meet these criteria involves such a degree of intervention in the
fiscal policy of most states that it became a huge issue in Britain and is now a
significant issue in France. On the other hand, for the continental countries, if
the European project is abandoned, there is no anchor to their policy at all.
There is no other foreign policy. They cannot return to the competitive policies
of the nation's state. They cannot advance without having some degree of
unification. So I believe actually that some way will be found to bring about
something approximating Maastricht. It probably will not have the same criteria

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Dr. Henry Kissinger

and it probably will be a somewhat a weaker currency than they thought. But
on the other hand, a European currency once it exists, will enter the portfolios of
so many investment trusts, and will be used for hedging in so many parts of the
world, that it should become a reserve currency of some kind which will bring
about a new relationship with the United States.

Now how this will happen now is complicated by the fact that I have difficulty visualizing how Kohl can get re-elected under present circumstances in Germany. And even if he can get re-elected, how he can move with great assurance before his election. And I have the gut feeling that something will happen like when the European army was rejected by France in '54 which then led to a new construction.

I cannot believe that the European project will be abandoned in Europe because then the European countries will be without any rudder at all. Then the problem is what is going to be the relationship with the United States? What is going to be the relationship with Europe? The temptation, of at least, the French-oriented Europeans, is to try to develop an identity by distinguishing themselves from the United States. And if that happens then the European project will get into great difficulties because the Germans will never go along with this. And I think if the Germans have to choose between France and America, they will surely choose America. I don't want this to happen because I think it is in the American interest to have a more coherent Europe. I think since we already have to manage the relationships in Asia, for us on top of it, to have to manage or become part of the European balance of power, is beyond the technical capacity of the United States government

And so I would prefer a coherent Europe tied to the United States in some kind
of North Atlantic free trade area. I think this is a project that could find support
in Europe. The difficulty is that many of the Vietnam generation in the United
States have really, who are now in power, really find it very difficult to relate
themselves to Europe in this manner. They are much more interested in close
relations with Russia. And we have now in this debate about NATO expansion
that is occurring, we the United States has advocated a structure that on the one
hand expands NATO, but on the other hand, turns it into such a rapid rate
system of UN type collective securities that the major emphasis is on relations
with Russia.

But Russia has its own problems—the most of important of which is — can it get
used to the borders in which it finds itself? Which is for the first time in 400
years about the borders in Europe of Peter the Great.

Now on the one hand, Russia extends from St. Petersburg to Vladivostok eleven
time zones. St. Petersburg is closer to New York than it is to Vladivostok.

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Dr. Henry Kissinger

Vladivostok is closer to Seattle than it is to Moscow. So therefore, they should not suffer from claustrophobia.

The problem is— can they bring themselves to accept more or less borders that in which they find themselves? If they do, then the relationship: America; Europe; Russia can evolve quite rapidly. If they go back to their historic policy of pressing in all directions, which to some extent they're still doing from a very weak base, then we will have a problem. And for all of these reasons I believe American politics should give priority to Europe and wait on the integration of Russia until Russia's own internal situation becomes a little clearer. At any rate, we actually will not be able to discuss these issues in detail here.

What I want to leave with you is this— never in recorded history, have so many elements been fluid at the same time. Never has a country had the position that the United States now has of being able to shape the events in so many different parts of the world. But at this particular moment unfortunately, we are consumed by domestic politics. At the end of World War II, we had a leadership group that had deep convictions about the world in which they then found themselves. People like Atkinson, Marshall, McLloyd, David Brewers. We don't have a similar leadership group now.

> When I was a young professor, I once did a paper on "Post-War Politics". I called on President Truman and I asked him of what he was proudest in his period in office. He said, "What I was most proud of was that we totally defeated our enemies and then we brought them back to the community of nations as equals. And I'd like to think that only Americans could have done that."

Now that is a generous and big view and it was not a composite of every pressure group that can organize five congressman for some special pleading because there was nothing self-evidently beneficial to us in doing this and in creating an economic competitor to ourselves, which in fact, we did in Europe and Japan. This is the challenge we face now.

I have a friend, a Chinese friend who claims that there exists the following Chinese proverb, I say claims because I'm not absolutely sure that there exist as many Chinese proverbs that they lay upon us. And it goes like this: "When there is turmoil under the heavens, little problems are dealt with as if they were big problems, and big problems are not dealt with at all. When there is order under the heavens, big problems are reduced to small problems and small problems should not obsess us."

That's the real challenge of this period. But lest you get too impressed by the proverbs, let me tell you one more. I was in China and the man who taught me the proverb is Li Quan Yu, former prime minister of Singapore. I told a Chinese

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Dr. Henry Kissinger

28-JUL. 97 (MON) 09:13

ANDERSEN CONSULTING

acquaintance about this proverb and I said I didn't know whether it was a real proverb and he said, "Next time Li Quan Yu tells you a proverb tell him this: there is an ancient Chinese proverb that says 'Li Quan Yu invents Chinese proverbs'". Thank you very much.

(Applause)

Shameen: Maybe I'll ask you one question. Would you take one question?

Kissinger: Sure.

Shameen: Since we are not set up for questions, and knowing Dr. Kissinger like I do, I know that he relishes that opportunity, I thought I might ask him one. He's agreed to take it — he has no idea what it is, but I don't think it's more insightful perhaps than tough. But I would ask you, that if you were advising, and close to the President of the United States today, and you had one issue to focus our President on, to concentrate on and perhaps address and resolve, what would that issue be?

Kissinger: I would probably tell him that the thing he has to define for himself is what kind of structure he wants to see emerge in the world? And not deal with each issue tactically. And my view is, that the world is really divided into at least two types of problems — probably more, but let's say two: Western Europe, Western Hemisphere and North America. We're dealing with democratic countries — market-oriented, no possibility of military conflict. Asia we're dealing with big countries that deal with each other like 19th century European countries did. It's principally strategic rivals — not democratic, market-oriented — in a different way.

So, in the democratic world we have to create community. In the Asian world we have to create equilibrium. And he has to get his people organized to do those two different things and not wait for a manifestation of individual issues to arise. Otherwise, he will spend all his time on tactics.

When if you look around the world today, Bosnia, Korea, these are all lingering time-bombs that are not being — for which there's no real framework to attend to them. This is what I would try to tell him to do. And he wouldn't know what I was talking about.

CLOSE

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TOTAL P. 12

POLICING POLICY

The challenge we have in foreign policy is this: In the Cold War, our danger was defeat. In the post-Cold War period, our danger is irrelevance. More and more decisions are being taken in the world because we can't effect them, because we marginalize ourselves or become marginalized. Which means that, over a period of time, more decisions are being taken without reference to what we consider our interests. If we suffer, it will not be in a catastrophic way, but in the gradual decline of our relative position. A political leader will have to understand this-and to put together some kind of coherent framework. Because we have huge assets, it does not have to be that way if we can identify our assets and bring them to bear on the problems.

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Kissinger: My advice to the President would be, "Get together some of the brightest people you can find and put them to work." When I took over the State Department, I took eight or ten of the best people I could find and set them to work on middle-term problems. I did not permit any discussion of incoming cables. I wanted to know, "Where are we going in the Middle East? What are we trying to do there? What outcome are we trying to bring about? What about other areas?" Then, when the Middle East war hit, we were like a football team that had been rehearsing plays. We knew where we were going and didn't argue about "What are we trying to do?"

3

Arnold B. Pollard (CE): In the post-Communism world in which we live today, what is your assessment of our position in the global marketplace?

Kissinger: In Latin America right now, they are creating something called the Mercosur under Brazilian leadership. It includes Brazil, Paraguay, Uruguay, and Argentina, with Chile just joining and Venezuela applying to join as well. So we may wind up with the countries of South America being part of an economic grouping that excludes us. At first it will be very nice and very friendly, but the fact remains that we are not part of that decision-making.

With respect to China, we go after that country on such issues as drugs, human rights, women's rights, and nuclear proliferation. Well, the Chinese have been self-governing for 5,000 years and we have not existed for the better part of that history. They consider it insulting when we apply sanctions because they don't meet our criteria of a pluralistic democracy - especially since we don't understand how Chinese society operates. The Chinese problem is not totalitarianism but rather that the country is flying apart. You have a billion and a half wild individualists. The problem, too, is not one of a return to communism but of a wild and reckless capitalism. I met with a commander in southern China who gave me his visiting card. On one side it read, "Major General Commanding"

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Dr. Kissinger: NAFTA is our problem. The EU is the Europeans' problem. Europe is struggling to adapt the nation-state to a European Union and practically all its energy is being expended on that problem. And contained within it is the highly technical financial issue of a common currency. I would like to see Europe united for the same reason I would like to see North America united-because I think a united Europe could operate on a bigger scale. If the Europeans had it to do over again, they probably would not have chosen monetary union as a vehicle for achieving that. For when you embark on a common currency, you always have to give up something that is, for the members of each nation, the quintessence of their nationality. You are asking them to give up their own money for some new and vague entity with no political loyalties. I wonder whether this common currency is worth the political dislocations it may cause. A second challenge is that, of the various countries, none except Germany and possibly Luxembourg and Ireland, can really meet the criteria that have been set out - though they are maneuvering

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Kissinger: Whatever established foreign policy we had as a nation was destroyed by the Vietnam War. Vietnam was a disaster from that point of view because the old establishment, which was honorable and could have learned over a period of time, was thoroughly shattered. Moreover, a whole generation-the leadership group of today-was affected by that war. My generation was the one that fought in WWII, that built the post-war architecture, created the structures that defeated communism, and developed the Marshall Plan. I say this not to brag but to indicate that ours was a generation that believed in America and that it had a constructive role to play. The generation that grew up during the Vietnam War has a different view. It was reared on slogans arguing that

8

Representatives from a Canadian consulting company told me a few years ago that,
whenever they briefed CEOs, it was the case that, if the CEO was older than 45, briefing
him or her on paper proved most effective; if the CEO was under 45, a visual presentation
became essential. Now I personally cannot learn from visual presentations. When I started
my career and politicians would ask for my opinion, what they were after was how to
define a program. Today they want to know what they can present on the evening news-
and they want it in two- or three-minute sound bites. When you begin thinking that way,
how can you think constructively about the future? Somehow we have to overcome this
challenge.

9

where it has never been. And that is not simply a question of intelligence; it is a question
of judgment and courage. You can always hire intelligent people to multiply your
complexities. Yet all the important decisions are tight ones, the 51 to 49 decisions; the 60
to 40 decisions almost anyone can make. And you have to be able to define where it is you
are trying to go and then find the means to get there and the people who can help you to
implement this. In my view the top responsibility of the chief executive towards his
subordinates-or any executive towards his subordinates-is to make them do things that
they did not know they could do. You do them a favor by insisting on standards which,
otherwise, they would brush aside. I have seen executives in business who don't like
strong people around them because they don't want potential successors. I have seen a
number of CEOs of big corporations fail who would not have failed had they kept some of
the people they let go. I don't think any CEO who is threatened by his subordinates should
be a CEO.

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HENRY.DOC

Page 1

Vision for Achievement

by Henry A. Kissinger

Business and political leaders face many of the same problems, but the most critical one has been the same since the earliest *Homo erectus* set about organizing his fellow clan members two-one million years ago. The challenge is simple but profound: How do you take whatever you are in charge of from where it is now to where it has never been? This is not simply a question of intelligence. It is a question of judgment and courage. It also is a question of being able to define where it is that you are trying to go and finding the means to get there. It means having a sense of the past so that you can provide a vision for the future. Then, with a clear understanding of the future you are trying to create, it means finding the people who can help you implement your vision.

Not having these components of effective leadership does not guarantee catastrophe, but I think it does point to a fate that ultimately is far worse: becoming marginalized AND watching from the sidelines while your endeavors slide into a gradual decline because your leadership is considered more and more irrelevant.

The top responsibility of a chief executive, or any executive, is to provide clear direction and then TO motivate his or her

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Page 2

subordinates to do things they did not know they could do. As
obvious as this sounds, many people in leadership positions fail
to provide direction. How can that be? I think it has a lot to
do with how they learn. My generation was brought up on books.
However, we now are living through a period of change that is as
important as the invention of books namely, the SHIFT IN
learning from words to learning from pictures.

In the medieval period, before there were books, you could learn
only by liturgy. Therefore, there was less information available
to learn because everything had to be learned by memory. Books
were revolutionary because they permitted the collection of much
more knowledge than anyone previously had conceived possible.
They provided a happy combination of knowledge and concepts,
precisely because it was impossible to store all the information
in books. And even if it were possible, it was impossible to read
all the books. That meant that anyone trained by reading books
had to learn conceptual knowledge. They had to be able to
recognize comparable phenomena and project them into the future.

Today's generation, however, was brought up on television and
computers. IT DOES not have to learn conceptually because IT HAS
an unparalleled range of knowledge available. This raises the
question of whether the attention span of our current leadership
group is adequate. A Canadian consulting company told me a few
years ago that when IT briefed chief executives older than 45, IT

HENRY.DOC

WAS most effective when USING paper. For chief executives under
45, they had to use visual presentations.

Another consequence of failing to learn conceptually is that many people today think it
is a waste of time to learn many of the things my generation had to learn. A perfect
example of this situation occurred recently with a friend of mine, whose 14-year-old son
was about to travel to Europe. When his father asked him to name the capital of Spain,
the boy did not know — and did not care that he did not know because he could find
THE ANSWER through his computer. That's the paradox: There is more knowledge
available than anyone ever could dream of, but there is no incentive to learn it. When
you rely too heavily on the tactics used to obtain information, you miss out on the
learning process and, consequently, the ability to benefit from conceptual thinking.

What was the strength of a Winston Churchill or a Franklin Roosevelt or a Charles De Gaulle or any of the other great statesmen? They had an instinct for history, which meant they could envision the future and provide direction on how to get there. Otto Von Bismarck, the first chancellor of the German Empire, once said, "All a statesman can do is to listen to the footsteps of God as he walks through history, and get a hold of the hem of His cloak and walk with Him a few steps of the way." But most contemporary politicians — or business executives — do not consider that they are walking through history. Is it any wonder, then, that few of them make history?

Thirty years ago, when politicians wanted my opinion, they would ask, "What do you think?" They thought they needed a program. Today they ask, "What do you say?" They want to know what to say for the evening news, and they want it in two- or three-minute sound bites. When you begin thinking that way, how can you think

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(4)

critically about the future?

First, it is important for executives to make decisions within a sense of context, of history. This approach allows leaders to compare their actions with those of others, TO rise above tactical firefighting and TO obtain a precise view of where they are going. What worked for me when I ran the U.S. State Department was to hire eight or 10 of the brightest people I could find and put them to work on middle-term problems. Then, for an hour-and-a-half every day, we addressed where we were going, what we were trying to do and the outcome we were trying to achieve. We did not discuss incoming messages. Rather, we asked, where are we going in the Middle East and other areas? What are we trying to accomplish? This method prepared us well, and when the Middle East war hit, we were like a football team that had been rehearsing plays. We knew where we were going. Certainly we had to adjust to existing conditions, but we were not arguing over what we were trying to do.

HENRY.DOC

what can and cannot work. Then, learn to move step by step. Academics and journalists talk in absolute terms, but the practitioner only can move in stages, each of which will be imperfect, and, therefore, vulnerable to attack. If you go too far beyond the capacity of your society or of the group you are leading, you will fail. If you do not pay enough attention, you will stagnate. Ideally, you must operate at the outer limit of what you think your group can tolerate—and keep it there. No doubt this is tough, and you cannot misjudge the limit.

Dr. Henry Kissinger recently shared his thoughts on transformational leadership and other topics with several chief executives at Andersen Consulting's World Forum of Change.

## Profile

Dr. Henry A. Kissinger is chairman of Kissinger Associates in New York. As Secretary of State for Presidents Nixon and Ford, Kissinger played a major role in the formulation of U.S. foreign policy. He shared the Nobel Peace Prize in 1973 for negotiating the North Vietnamese cease-fire, and was awarded the United States' highest civilian award, the Presidential Medal of Freedom, in 1977.

Sir:

I spoke with Mr. Donlon, editor-in-chief, who said that the reason they've sent the entire transcript is because they will not know for weeks what excerpts, if any, they will be publishing.

I asked him to let us know when they have determined which excerpts they will be using, but in the meantime, they wonder if you would peruse the transcript and make any corrections to the record you deem necessary.

tc

733 THIRD AVENUE NEW YORK, NEW YORK 10017

TEL: 212.687.8288

FAX: 212.687.8456

CHIEF
EXECUTIVE

17 October 1996

OCT 18 1996

Dr. Henry Kissinger
Chairman
Kissinger Associates
350 Park Avenue
New York, New York 10021

Dear Dr. Kissinger:

Thank you for addressing our *Chief Executive* guests, Tuesday evening, October 15, at the St. Regis Hotel, for the Andersen Consulting World Forum on Change. It was a memorable and insightful evening for all of us.

As promised, here is the transcript of your talk. If you wish to review your remarks or contents of the transcript in any detail, please do not hesitate to contact *Chief Executive* editor-in-chief, J. P. Donlon.

We would like to extend a special thank you to Ms. Novack for her assistance with the logistics and planning of your presentation and to Jimmy, your special assistant. Congratulations on a fine staff!

Continued success as chairman and chief executive of your own company, Kissinger Associates.

PS: We hope you were not **too early** to meet Mrs. Kissinger!

cc: J. P. Donlon

Transcribed by
A STENO SERVICE 60 East 42nd Street, NYC 682-4990

TRANSCRIPTION OF AUDIOTAPE FOR: CHIEF EXECUTIVE
MAGAZINE

SUBJECT: World Forum on Change:
The Transformational Leader
Evening Roundtable Introductions
Followed by Dinner with Guest Speaker
Dr. Henry Kissinger

DATE: October 15, 1996
The St. Regis Hotel

TAPE #: 1 and 2

SIDE(S): A & B

LENGTH: 45 & 30 minutes

FILE NAME: CE1017A.WPF

DISK NAME: CE #8

NOTES:

ARNOLD B. POLLARD: Hi, I'm Arnie Pollard, Chief Executive of _Chief Executive Magazine_ --

MAN: I like the sound of that.

[LAUGHTER]

ARNOLD B. POLLARD: I'll say it one more -- I'm Arnie Pollard, Chief Executive. On behalf of my colleague, our editor J.P. Donlan, and our partners, Bob Lauer and George Shaheen from Anderson Consulting, it's my very special pleasure to welcome all of you to their first annual World Forum on Change: the Transformational Leader.

Change is a cliche. We've all heard, like Chicken.
Little, that change is coming and you've got to
learn how to handle it, ever since we've been in
kindergarten. But guess what? This time around, the
cliche is for real. This bridge to the 21st Century
that we're all on -- by the way, we are all on it,
[LABROOKS?] has it as eighteen-to-one that that's
where we're going.

[LAUGHTER]

So, get used to it. This bridge to the 21st Century
that we're all-on passes over an awful lot of
crushing cross-currents. And it really -- whether
it's the information technology and global
competition confluence that some in this room have
termed "the second wave" -- whatever it is, suddenly
the pressure is on business leadership, and rapid
pressure at that, like it's never been before. It
really creates the need for a new skill set that
deals with change in an organization, in an
enterprise on a regular and recurring basis, not
just as an occasional, once-in-a-lifetime, once-in-
a-[RAIN?] kind of thing. Change is every day, and
it's rapid. And the transformational leader is the
leader who can manage that sort of change, I've been
told.

2.

So, without further ado, let me just say that it's our usual habit in gatherings like this to begin by having a quick round table introduction, where each of our guests -- on the chance that he/she didn't get to meet everyone at cocktails -- just introduces themselves and their company.

To begin that process, I'd like to pass the baton to a true transformational leader who, in a half a dozen plus years and the existence of a new company, has presided over a quintupling of growth, and has really learned the meaning of managing change as an everyday process. He must be successful at it -- he's still here. George Shaheen, the Managing Partner of Anderson Consulting, would you go first? And then proceed in a counter-clockwise fashion, for photographic convenience.

[LAUGHTER]

GEORGE SHAHEEN: Well, I'm George Shaheen, Worldwide Managing Partner of Anderson Consulting and, along with _Chief Executive Magazine_, I'd like to welcome all of you to what I think is going to be a fun evening, an informative evening, and a productive day tomorrow to talk about change. So, welcome.

EDWIN LUPBERGER: I'm Ed Lupberger, Worldwide CEO --

3.

[LAUGHTER]

-- of Entergy Corporation. We're in electric and gas
energy business.

TERRY NEILL: I'm Terry Neill, I'm the Worldwide
Managing Partner of Anderson Consulting's change
management practice.

LES G. MCCRAW: I'm Les McCraw, the Chairman and CEO of the Fluor Corporation, and we engineer things. We build things. And we own the best [COAL?] company in America.

[LAUGHTER]

ABRAHAM ZALEZNIK: I'm Abraham Zaleznik. I'm the
[METUSCHKA?] Professor of Leadership Emeritus at
Harvard Business School, and I'm very happy to join
this distinguished group.

BETH M. PRITCHARD: I'm Beth Pritchard, President and CEO of two personal care businesses, Bath and Body Works and Victoria's Secret Bath.

JOHN J. SHALAM: I'm John Shalam, President and CEO of Audiovox Corporation, we're in the consumer

4.

electronics business. We handle cellular telephones,
[UNINTEL] sound products and car security products.

RONALD M. GROSS: I'm Ron Gross, Chairman and CEO of
Rayonier, a forest products company, owner of timber
land in the United States and New Zealand, and a
specialty pulp business.

ROBERT A. LAUER: I'm Bob Lauer, and I do not have a
worldwide title.

[LAUGHTER]

My responsibilities are with Anderson Consulting, in
the Americas, in change management.

J.P. DONLON: I'm J.P. Donlon, I'm the Editor in
Chief of *Chief Executive* magazine.

PHILLIP B. ROONEY: I'm Phil Rooney, the CEO of WMX
Technologies, a waste management and environmental
services company.

KEITH BURGESS: I'm Keith Burgess. I'm the Worldwide
Managing Partner --

[LAUGHTER]

5.

-- you can tell by my accent, of the competency
practices in Anderson Consulting. And the best way I
can describe that is to say, I'm the nearest thing
that a services organization has got to a Worldwide
Production Director.

JOHN H. FOSTER: I'm John Foster, Chairman and CEO of NovaCare. We're in the rehabilitation business, a national factor there. Rehabilitation means therapy, and we're the largest employer of therapists in the country.

VICTORIA A. WICKS: I'm Victoria Wicks. I'm the President and CEO of HIP Health Plan of New Jersey: We're a managed care company.

GORDON E. CROSBY, JR.: I'm Gordon Crosby, Chairman of the Board, U.S. Life Corporation. Our core business is life insurance, but we're in related financial services.

IAN MORRISON: I'm Ian Morrison, Senior Fellow of the Institute for the Future. I guess I'm a futurist, which is a dangerous thing to be.

[LAUGHTER]

6.

CAROL EVANS: I'm Carol Evans. I'm the newly minted
Publisher of _Chief Executive_ magazine.

JOHN C. SHAW: I'm Jack Shaw, I'm the WellPoint
[CHAIRMAN?] in Woodward Hills, California. We're not
yet a brand or a household name, but we are the
third or fourth largest publicly held managed health
care company in the country.

ALEKSANDAR ERDELJAN: I'm Aleksandar Erdeljan,
Chairman and CEO of R.P. Scherer Corporation. We
specialize in pharmaceutical technology, drug
delivery. We have nineteen facilities in twelve
countries around the world.

LEO LIEBOWITZ: I'm Leo Liebowitz. I'm President and
CEO of Getty Petroleum Corp. Petroleum tells the
business that we're in. But we're also located in
the city that's going to become the world champion
baseball players.

[LAUGHTER AND APPLAUSE]

WILLIAM H. GRIGG: I'm Bill Grigg and I'm last.

[LAUGHTER]

7.

I'm Chairman of Duke Power, and the proud Partner of
Les McGraw in Duke [UNINTEL].

ARNOLD B. POLLARD: Gentlemen, ladies, please start.
We'll get to the main event of our speaking at the
end of our meal. Thank you.

[BREAK IN RECORDING - DINNER]

J.P. DONLAN: Can I have your attention? George, you
have the floor.

GEORGE SHAHEEN: Thank you, J.P. I have a great
honor to introduce this gentleman that we all know
very well, but I'm going to take a little bit of
your time to make sure that we accord him a proper
introduction.

We've gathered here tonight and, hopefully,
tomorrow, because we know that our ability to master
change is very critical to our continued success in
leading our organizations. And tomorrow we're going
to gather and listen and debate about what change
means to us, and how it's going to impact our future
and the world at large.

Tonight, I think it's only fitting that we have
invited and have amongst us a person who has

8.

mastered our ever-changing world. Someone who knows
how to negotiate the sensitive balance that enables
countries, corporations, and people to co-exist,
each in their own ways. Dr. Henry Kissinger is,
arguably, the best known American diplomat in recent
history. He brought to modern politics a keen sense
of how an action in one corner of the world can
reverberate in another.

Not surprisingly, his principles and ethics can be
traced to his youth. In 1938, Dr. Kissinger arrived
in the United States from Germany, with his family,
thus escaping the horrors of the Nazi Holocaust.
And, consequently, he is entirely familiar with the
very human desires for respect and tolerance. And,
with his innate intellectual brilliance allied to
his sense of human respect, it is little wonder that
the benevolent soldier Kissinger returned to the
United States, destined for a spot in our history.

He went to Harvard, where he distinguished himself,
first as a student and, later, as an instructor for
more than twenty years. Then he began the role of
his lifetime, when President Nixon tapped him for
national service in 1969. In his capacities, first,
as National Security Advisor and, then, as Secretary
of States for Presidents Nixon and Ford, Dr.
Kissinger always maintained a clear-eyed approach to

9.

the maintenance of global balance and foreign
diplomacy. He played a major role in the formulation
of U.S. foreign policy, during a period of
unprecedented global change and conflict. He
arranged Nixon's remarkable visit to mainland China
in 1972, and he shared the Nobel Peace Prize for
negotiating the North Vietnamese cease fire. He also
helped arrange another cease fire in the 1973 Arab-
Israeli War. And, for those and other
accomplishments, Kissinger was awarded the nation's
highest civilian award, the Presidential Medal of
Freedom, in 1977.

Part of Kissinger's success in politics, in his
life, can be found in the fact that he knew the
value of bringing people together, of negotiating
change that allowed people to maintain their basic
self-respect. He knew how to manage change so that
everyone could go home a winner. So, tonight, as we
prepare for tomorrow's World Forum on Change, and
look at how we manage change within our own corners
of the world, it gives me great pleasure to
introduce to you one of the world's greatest masters
of change. Please join me in welcoming Dr. Henry
Kissinger. Welcome.

[APPLAUSE]

10.

DR. HENRY KISSINGER: I told one of the young ladies that brought me in -- and this introduction leaves me in the same position -- I once was at a reception. A lady walked up to me and said, "I understand you're a fascinating man," she said. "Fascinate me."

[LAUGHTER]

That was a disastrous meeting, I think. And, after such a fulsome introduction, you really, basically, can only go down. I'll talk to you for a bit. It's been suggested that I talk for twenty minutes and I think that, basically, they pick twenty minutes so that it can be said that you were all present at a historic occasion.

[LAUGHTER]

Because, when your native language is German, you can go for twenty minutes without placing a verb.

[LAUGHTER]

Let me talk about the problem of this topic, from the point of view of the foreign policy practitioner. I'm now in the private sector, as

11.

Chairman of a consulting firm, which is not a
competitor to Anderson, I can tell you.

[LAUGHTER]

We are small. So, I've had to learn about the
private sector. And in the discussion, perhaps, we
can bring in similarities and differences between
the political world and the world of business.

The problem of any leader in the political world --
but this, I think, is true in the business world,
too -- is, how to take whatever you're in charge of,
from where it is to where it has never been. And
that is not simply a question of intelligence. That
is a question of judgment and courage. You can
always hire intelligent people to multiply your
complexities. All the important decisions are fifty-
one/forty-nine decisions. The sixty/forty and up
decisions, anybody can make. It's the fifty-one/
forty-nine which, in effect, require a considerable
amount of moral strength.

So, you have to be able to define where it is that
you're trying to go. And then you have to find the
means to get there. You have to find the people who
can help you implement this. In my view, the top
responsibility of a Chief Executive towards his

12.

subordinates -- or any executive towards his
subordinates -- is to make them do things that they
did not know they could do. That's the principle on
which the Marines operate, any high morale group
operates on that basis. And you do them a favor by
abusing them, as long as it isn't personal. You do
them a favor by insisting on standards which,
otherwise, they would just brush aside. One of my
associates, [WINSTON NORTH?], claims the following
story to be true. I'm sure it's exaggerated. But he
claims I asked him to draft a paper. And he brought
it to me and I said, "Is that the best you can do?"
And he said, "Well, I'll take it back and I'll try
again." This went on five or six times. Finally,
when I said, "You're sure this is the best you can
do?" He said, "Goddamn it, yes! It's the best I can
do!" And I, allegedly, then said, "Okay, now I'll
read it."

[LAUGHTER]

Now, it's probably -- I'm not sure whether it's
exactly true, but I think this is the requirement of
an executive. I read a book on public administration
by some Frenchman whose name I've now forgotten, who
said that the number two in any organization has a
big choice to make. He can either try to be very
popular with his subordinates, and sort of reflect

13.

their consensus, or he can take the position that
may be too tough for the Chief Executive to take,
and force them to do things that don't come easily
to them. And he said it's only the second course
that he's really doing something. Now, this, I
believe to be absolutely true. When I talk about --
I mean, when I look at statesmen, or when I look at
successful business executives, the ones that
prevail are the ones that have some vision of where
they want to go. To operate the status quo is, a,
boring and, secondly, it means that sooner or later
you're going to be engulfed by circumstances. If you
do too much systems analysis, you learn all the
complexities and none of the direction. Of course,
systems analysis is important. And that, in the
field of foreign policy, is a huge problem for our
country.

First of all, we have never had to conduct a serious
foreign policy in our history, until the end of
World War II. We were separated from the rest of the
world, we were exposed to no serious threat, we were
populated by people who had turned their back on
their mother countries and, therefore, felt they
were superior morally to where they came from. So,
they felt they had nothing to learn from there. So,
we never participated in the day-to-day politics.
When we showed up in Europe at the end of World War

14.

I, we suddenly announced -- Woodrow Wilson announced
-- that the way the Europeans had conducted foreign
policy through the equilibrium and the balance of
power, that that was wrong. And that we were going
to introduce a totally new way of conducting foreign
policy.

Now, the interesting thing is, I know no eminent
American who asks, "How do you know this?" to
Woodrow Wilson. What evidence do you have that your
approach can work? Not only did Woodrow Wilson
prevail intellectually, his view is still a dominant
view in American foreign policy -- the idea that the
United States has a moral mission in the world that
is defined by our intervening in every country in
the world. That you can prevail. For example, last
year, this year, the Security Advisor, Tony Lake,
who used to work for me, briefly, I can tell you.
[COUGHS] He didn't last four years with me.

[LAUGHTER]

But the security advisor, Tony Lake, said, "We have
a duty to try to bring peace everywhere, but only
for a limited period of time." In my view, that is
absolute, arrant nonsense. We do not have a duty to
bring peace everywhere. With limited resources, we

15.

should bring peace where it affects American
interests or values, or those of very close allies.

But, secondly, if we do try to bring peace, we have
to prevail. We can't say, "This is a one year
project, and then we'll quit." The obligation is not
to be seen to do it, the obligation is, if we have
one or when we have one, to do it. So, how you
perceive your challenge is, in itself, crucial.

Now, at the end of World War II, we did get involved
in international affairs, but from a very peculiar
perspective. We had fifty percent of the world's
GNP. We had an atomic monopoly. And we were lucky in
the sense that we had an enemy. So, the basic
approach of American foreign policy could be applied
fairly well. The basic approach was, we stay aloof
until a great danger occurs, and then we overwhelm
it with resources. This was exactly what we could do
at the end of World War II. We didn't have to
conduct foreign policy, we had to identify problems
and then we had to allocate resources to them, and
we did that in an extremely good way. And we could
apply the lessons of World War II -- which was to
defeat an enemy that was conceived as absolutely
evil and was absolutely evil -- and, secondly, we
could apply the experience of the Depression, where
we overcame domestic difficulties, again, in the

16.

end, by the allocation of resources. In the end,
because it was really World War II that finally
overcame the Depression.

That period is now over. We won the Cold War. We
achieved everything we set out to do in 1950. And
now we live in a new world. We lack concepts. We
have no precise view of where we are going. We don't
know, exactly, where we are heading. And, therefore,
we have a very fitful foreign policy. While I
deplore Clinton, and will vote for Dole, I cannot,
in good conscience, say that every aspect of the
Republican foreign policy pleases me greatly. In
fact, I don't even know, exactly, what it is! Nor
does Dole, or he would have been enunciating it. So,
we have a conceptual and intellectual problem in
this country.

Secondly, we have a problem of generations in our
leadership group, politically. My generation is the
one that fought in the Second World War, that built
the post-war structure, that, in the end, created
the structures that defeated Communism, and
developed the Marshall Plan and all these things. I
don't say this to brag, I say this to indicate my
generation, and the generation of many of you here,
believed in America. They believed we had a
constructive role to play. The generation that grew

17.

up during the Vietnam War has a different view. They
were brought up to learn that this is a rotten
country. Hillary Clinton -- this is not an attack on
Hillary Clinton, because she speaks for some of
these attitudes -- said, when she came in as First
Lady, "There is a malaise in the American soul."
Eleanor Roosevelt -- who was too liberal for my
taste -- but Eleanor Roosevelt, whom I knew, could
never have said this! Nor her husband. So, they
think this is, basically, a rotten country that has
to be improved, first. Secondly, that America is not
to be trusted with the exercise of power. And,
third, therefore, in foreign policy, they like what
they call the "soft issues" -- environment, women's
rights... All of these are good issues. Many of them
don't happen to be the principal issues of foreign
policy.

Last year, President Clinton quoted himself to Tom
Friedman of the *New York Times*. And he said he had
told the President of China, two months after the
Taiwan blowup, he had told the President of China
that the issue between us was not political, but the
environment! He said, "You Chinese must not, in
effect, screw up the way we did. And we can help
you." And he said, "And I could see, the President
had never looked at foreign policy from that point
of view." You bet your life.

18.

[LAUGHTER]

Five thousand years of history, and the issue
between us and Taiwan is political. It's got nothing
to do with the environment. There's an important
environmental problem, but it isn't at the core --
the environmental problem between us and China is a
cinch. It can be done by any group of professors,
once we agree to do something about it. So, that's
one problem.

The second problem that concerns me -- and that
concerns me, also, among business executives -- is.
this: my generation -- not because I claim to be
better, but simply in terms of generations, in terms
of time -- I was brought up on books. We, however,
are living through a period of change that is as
important as the invention of books was. Namely, the
change of learning from printing to pictures. In the
medieval period, before there were books, you could
only learn by liturgy. And, therefore, there were
not so many things you could learn, because you had
to do it all by memory. Then, books permitted the
collection of much more knowledge than anyone
conceived before. But they produced what I believe
to have been a happy combination of knowledge and
concepts, precisely because you couldn't store all
the information in books. It was impossible to do

19.

this, or to read them, even if they were stored.
Anyone trained on books must learn conceptual
knowledge. That is to say, he must learn to
recognize comparable phenomena, and he must learn
how to project them into the future. Now, the people
who are brought up on computers and television don't
need this. They have available to them a range of
knowledge that is unparalleled. They think it's a
waste of time to learn a lot of the things that we
had to learn!

I have a friend who has a fourteen-year-old son who
was going to Europe. He said, "What's the capital of
Spain?" The boy didn't know what the capital of
Spain was. Never heard of it. So, my friend blew his
top. Said, "How can you be such an idiot?!" "Well,
look, I've got my computer here. Right here." This
kid walked around, practically, with a computer. He
said, "If I want to know what the capital of Spain
is, I can know it" in whatever time it takes him to
get it on his computer. Now, that may be an
exaggeration. But the fact is, we have the
paradoxical situation that there is more knowledge
available than anyone ever could dream of. On the
other hand, there is no incentive to learn it. And
when you don't really learn it, this over-concern
with tactics threatens to imprison you and not train
you to look into the future.

20.

What was the strength of a Churchill or a Franklin
Roosevelt or a DeGaulle or any of the great
statesmen? They had an instinct for history.
Bismarck once said, "All a statesman can do is to
listen to the footsteps of God as he walks through
history, and get a hold of the hem of his cloak, and
walk with him a few steps of the way." But
contemporary politicians could never dream of saying
anything like this! He wouldn't think that way,
walking through history. So, one of the problems in
our contemporary foreign policy, to my mind, is
that, to the present generation -- it was a bit
different with Nixon. Nixon's great ability was not
that he knew a hell of a lot more. But he could
apply it to the future. And, secondly, he had
tremendous guts! He had the courage to bet himself.
And he always used to say to me -- it was an
important lesson I learned from him -- he always
used to say to me, "You pay the same price for doing
something halfway, as for doing it completely. So
you might as well do it completely." And, you know,
I was, as an intellectual, more given to hedging.

[LAUGHTER]

He had the great advantage -- Nixon had the
paradoxical advantage that, he figured, everything

21.

he did would fail anyway, so he might as well do it
right.

[LAUGHTER]

He was not a happy warrior! He was convinced, no
matter what he did [LAUGHING], it would blow up. So
why the hell not do it right? Might as well go down
that way as any other.

So, this is the problem we now have. And this occurs
at a moment when all the parameters of foreign
policy are changing. I've described our problem. But
then, Russia is within borders it has never known
before. Europe has to adapt a nation-state into a
European Union, and all their energy or practically
all their energy is spent on that problem. Within
that problem is a highly technical financial thing
of a common currency. China is entering a global
system, again, for the first time, and will become
the dominant nation of Asia. And Japan, seeing that
happening, is driven into greater and greater
nationalism. And there is the United States, anyway,
without a tradition of international politics, now
with a leadership group that was brought up in the
Vietnam War, which is just about the worst group
from that point of view -- that ten year period.
And, thirdly, with a leadership group -- that

22.

applies to all of them -- that is visually trained,
rather than conceptually trained. Who could imagine
Presidential candidates [UNINTEL PHRASE]. I don't
care what he does, but I don't want to see that
debate in the press. When somebody wants to be
President, he ought to know which direction he wants
to go. That's why we want him, presumably, as
President. So, this is a really basic problem. And
it makes it very tough for us in the world.

Let me just make two general points here. One is, we
like to think that we can apply certain principles
uniformly around the world. But that doesn't happen
to be true. Secondly, we like to think we can push
democracy. That's also not uniformly true, because
most of the world is not democratic. Secondly, a lot
of the people who claim they're democratic are in
opposition, and opposition people are always
democratic! That's their way to get into office!

[LAUGHTER]

We thought Komeini was democratic when he was
running around as a religious opponent. And that
way, we get into huge fights with major population
areas. But I think there are two areas in the world
which are substantially democratic: Western and
Central Europe and much of the Western hemisphere.

23.

(LC)

And there, we actually could apply our traditional
principles, and create an economic and political
structure of market economics tied together by
common principles.

But we're not doing it, because we have made up our
own minds -- and those of you who follow these
things should observe with some dismay that, in
Latin America right now, they're creating something
called [UNINTEL] under Brazilian leadership. It
includes Brazil, Paraguay, Uruguay, Argentina, and
which Chile is now joining, because we're making it
nearly impossible for them to get into NAFTA. And
Venezuela is applying to join. So, we may well wind
up with the countries of South America being part of
an economic grouping that excludes us, the first
time this has happened in history. Excludes us -- at
first, it will be very nice and very friendly. But
the fact is, we are not part of that decision-
making. That's on one side.

On the other, you have countries -- we turn to Asia.
The relations of Japan, China, Russia, India,
Indonesia to each other are the relations like
European countries in the 19th Century. They think
of each other as strategic opponents. They do not
think they are part of a cooperative system. And we
keep talking world community, Asian-Pacific

24.

community. It's all, to them, total rubbish! It is
not something that has any meaning to them, and on
which they can operate. Then, we go after China on
drugs, on human rights, on women's rights, on
nuclear proliferation. Now, the Chinese have been
self-governing for five thousand years. We have not
existed for the greater part of their history.
They've managed to get along without significant
advise from the United States --

[LAUGHTER]

-- for the greatest part of their history. They
consider it insulting that we apply sanctions for
their not meeting our criteria of pluralistic
democracy, especially since we don't understand how
Chinese society operates. The Chinese problem is not
totalitarianism, but the country flying apart.
You've got a billion and a half wild individualists,
and all you have to do is walk around any public
place in China to see these frantic activities, and
ask yourself -- the real problem of Chinese
government is to figure out what their public is
doing. When Nixon met Mao -- when everybody in China
was wearing Mao suits -- he said to Mao, "The
Chairman's teachings have changed a civilization."
Mao said, "No, I have changed Beijing, and a few of
its suburbs." I thought that was an elegant way of

25.

saying... It happens to be not totally true, but
more true than what Nixon was saying. China will not
go to petition, if it does, because of Communism. If
it goes to petition, it will be because of wild,
reckless Capitalism! Individualistic, nepotistic
Capitalism. That is the problem in China, not the
problem of a return of Communism. It's
inconceivable.

What can you do in a country...? I have been with
the Commander of [PWAN TONG?], an area of Southern
China. He gave me his visiting card. On the one
card, it said "Major General Commanding." On the
other, it said, "Vice President" of an Electric
Power Company for that region.

[LAUGHTER]

So, here's China. And I could go through all of
these countries. I expect a growth of considerable
nationalism in Japan and a rearmament of Japan. I
predict India to become a major player. And I think
Russia is going to go through a process at the end
of which it will emerge with an authoritarian, very
nationalistic government that will probably do quite
well economically, but be no joy to deal with
politically. But I don't want to keep going on.

26.

I want to make one final point, which is this. The
challenge we have in foreign policy is this: in the
Cold War, our danger was defeat. In the post-Cold
War period, our danger is irrelevance. More and more
decisions in the world are being taken, because
nobody knows what we're talking about, and because
we can't effect it, and because we marginalize
ourselves or become marginalized, which means that,
over a period of time, more and more decisions are
taken without reference to what we consider our
interests. So that, if we suffer, it will not be in
a catastrophic way, but in a gradual decline of our
relative position. And this is what a political
leader will have to understand, and to try to put
together some coherent framework. It absolutely does
not have to be that way, because we have huge assets
-- if we can identify what our assets are, and how
they can be brought to bear on the problems. But let
me stop here and open it for discussion.

ARNOLD B. POLLARD: You leave the obvious question,
so I'll have to ask it. And the obvious question is,
if you were to, at least, sketch what the posture in
terms of foreign policy overall objectives and
visions were in the post-Communistic world that we
live in today, what would be the key touchstone for
the sketch?

27.

DR. HENRY KISSINGER: I'll answer it, but you have to remember this: even if you don't like my answer, and even if you don't think it's particularly profound, this is one man's answer. When I took over the State Department, I got myself the eight or ten brightest people I could find. And they must have been pretty bright, because they're all still in key position fifteen to twenty years later. And I put them to work on middle-term problems. I did not permit any discussion of incoming cables. I wanted to know, where are we going in the Middle East? What are we trying to do? And other areas. And it stood us in good stead. I mean, on other occasions they could discuss cables. But, for an hour and a half each day, address where are we going and what are we trying to do and what is the outcome we're trying to bring about here? Then, when the Middle East war hit, for example, we were like a football team that's been rehearsing plays. We knew where we were going. I mean, we had to adjust it to the existing conditions, but we weren't arguing, what are we trying to do?

You have to keep that in mind. If somebody became President and agreed with my concept, I'd first tell him, get yourself --

[END OF TAPE 1, SIDE A]

28.

[BEGINNING OF TAPE 2, SIDE B]

DR. HENRY KISSINGER: -- I'd first tell him, get yourself five -- put people in as Secretary of State, Security Advisor, Defense, CIA -- and get to work on this. I think what we have to do, it seems to me as I [END?] it, in the Western hemi -- we have to -- I would decide that, given the fact... I'd like to see a free market, but I have to recognize the fact that the world may break down into potentially semi-protected or protected areas, and I'd like to get myself in a position to analyze it. So, I would try to group, first, the Western hemisphere into a free-trading system -- and to have the North Atlantic region from the Polish border and all the NATO countries plus the Western hemisphere - into a free-trading system. Then, if the whole world is free-trade, fine. If the world is not free-trade, we have that block with which we can bargain.

I think it is also essential that, with all this battling about democracy around the world -- we can't make the Iranians democratic or the Chinese democratic, but we can see to it that the world which is democratic is [UNINTEL]. So I would make this the [CORE?]. Secondly, in Asia, we have to understand that our role is very similar to that of Britain towards Europe in the 19th Century. Russia,

29.

Japan, China, India, Southeast Asia are going to jockey against each other. Of those, China will become hugely dominant because, with that market, they will become the biggest market for all of their neighbors. And they can make conditions as a result, by regulating what they buy from where. And we have to realize this. And we have to come to some understanding with the Chinese, about -- they have to understand that we will not tolerate all of Asia dominated by one country, if we can help it. Because that would be too powerful. On the other hand, we have to understand that they will want to gain some additional influence, if they're no longer, if they will no longer be in twenty, thirty years an underdeveloped country. So, the problem is, how do we define that margin in which they can gain influence without getting into confrontations with them? That requires that we're in constant dialogue with them. That is one requirement. A constant dialogue with the Chinese requires, also, that we have something to say.

[LAUGHTER]

The administration has now learned that they have to say "strategic dialogue." But they don't know what it is! They battle on about environment and drugs and nuclear proliferation. Take nuclear

30.

proliferation. I am totally against nuclear proliferation. It's a totally sensible position. However, if you make it a moral issue with the Chinese, you're out of your mind. If you say to the Chinese -- and, first of all, you have to understand to whom are the Chinese proliferating? Basically, to Pakistan. Why are they proliferating to Pakistan? Because India has nuclear weapons, and they don't want to be the only ones to face India, so they're tripling out something to Pakistan. From this, I conclude that we probably will not be able to come to an understanding with them about Pakistan. But we ought to be able to come to an understanding with them about Iran, Iraq, and other countries.

So, we have to learn to see how they look at the world. As between them, there is the almost certain rise of Japan, which will be accelerated by their fear of China. So, the trick for us in foreign policy will be, to learn to balance -- we also have to be on good terms with Japan! I almost sound like a Harvard professor, to be on good terms with everybody.

[LAUGHTER]

But the trick is to be on good terms with everybody for different reasons. And, to the extent that we

31.

are hostile to China, the Japanese and the Indians
are getting a free ride. Because they, then,
maneuver between us and all that they do is
[GREAT?CREATE?] respect for us. So, we have to
conduct a very subtle and complex policy. And then,
I haven't even talked about fundamentalism and
Middle East and -- I'm just trying to give you a
feel for the sort of thing that I would advocate.

TERRY NEILL: You're basically no comfort at all,
Dr. Kissinger, but you fascinated me.

[LAUGHTER]

You've been close to some of the great leaders that
we've seen in this century, and you've talked about
their ability to place themselves in the footsteps
of history. What are the other lessons that we
should take, when we look at leaders and their
ability to deal with change and understand and
influence change?

DR. HENRY KISSINGER: Place themselves in the
footsteps of history. They also have to develop an
understanding of their society. What can and cannot
work. And they have to learn to move step by step,
because -- you know, academics and journalists can
talk in absolute terms. The practitioner can only

32.

move in stages, each of which will be imperfect and,
therefore, vulnerable to attack. So the practitioner
has to know -- again, if I may use the word -- the
trick is this: if you go too far beyond the capacity
of your society or of your group that you're
leading, you will fail. If you don't attend enough,
you will stagnate. So, ideally, if you could draw a
model, you would, say, operate at the outer limit of
what you think your group can tolerate. And keep
them there. Which is tough! And you mustn't misjudge
it. Because if you go beyond that limit, it cracks
up, too.

So this would be... Then, of course, I feel, you
have to get yourself surrounded by strong people. I
cannot accept -- I've seen executives in business,
especially in business, who don't like strong people
around them, because they don't like potential
successors around them. I've seen a number of big
corporations in which, in fact, when [UNINTEL] the
CEO finally failed, he would not have failed if he
had kept some of the people he let go. I don't think
any CEO who is threatened by his subordinates should
be CEO. I would make that as an absolute rule. If
you're in charge, you can't be threatened by your
subordinates. I mean, these are some of the
principles that I would apply.

33.

EDWIN LUPBERGER: I have a question. I'm currently
Chairman of the U.S. Chamber. Because of our stand
on NAFTA, I get quizzed a lot about, one, how well
is it doing and, two, was it, in fact, a good thing?
And I often quote you, having seen you on
television, as saying that our economy needed
Mexico, because we needed that level of worker, that
lower priced worker, as a part of our overall
economy. I quote you, but I don't know that I
understand that that well --

DR. HENRY KISSINGER: No, but I don't think I said
that.

EDWIN LUPBERGER: Maybe I misquoted you. Help me,
because I need [UNINTEL -- SPEAKERS OVERLAP] --

DR. HENRY KISSINGER: [UNINTEL -- SPEAKERS
OVERLAP] -- that's not my -- my argument is this.
With Mexico. I'll go to the Western hemisphere in a
minute. I say, with Mexico, we've never had a
hundred million people at our border. We're
condemned to co-existence with Mexico. We're in the
position, like the Israelis are with the Arabs, not
quite as bad. And they're going to tie up with
somebody, and it's better that they're tied up with
us, than that they're tied up with Europe or Korea
or Japan, and do the same thing and seep into our

34.

country and, with the twenty-plus million Mexicans
we have here already, I think our politics will get
too complicated. So, I think what we have to try to
do with Mexico is of the same order as the West
Germans decided to do with the East Germans: We have
to try to bring them to our level before they swamp
us. So, in addition, there are economic benefits in
exports. But, fundamentally, I believe that, with
much of Latin America, we can pay the price for a
brief period in the disparity of wages, because I
think the wages will rise fast enough, so that they
cannot make a permanent in-road on us. And because,
otherwise, these really low wages in Asia, hooked up
with them, may get us. This is my real view. And,
therefore, I would also eventually want to link
Western Europe to it, because then this problem
would be defused. But I believe that countries like
Brazil and Argentina will, fairly rapidly, grow
anyway. And I don't think it's so much that we must
have these lower wage workers. For me, the argument
for NAFTA is primarily a political argument.

ALEKSANDAR ERDELJAN: Mr. Secretary, back to foreign
policy. To what extent do you think our problems
being, in addition to being philosophical, also due
to the absence of a foreign policy establishment
which would provide, presumably, some continuity and
consistency to our foreign policy -- absence of the

35.

foreign policy establishments, as exist in France or
Germany or the UK, for that matter.

DR. HENRY KISSINGER: I think very much so. Whatever
we had, as a foreign policy establishment, was
destroyed in the Vietnam War. And this I don't want
printed, but my heart bleeds when I go to the
Council on Foreign Relations. I mean, that is now a
yuppie assemblage of semi-wise guys and makes no
contribution to the long-term thinking of our
country. It's like thirty other talk shops. It's a
big problem. The British and French and Chinese --
among countries that I know -- Japanese, they have
an establishment that sort of keeps things in the
same framework. The Germans don't have it, either,
because they've been ripped up so often, which is
why they had a worrisome phenomenon. What I would
like to see is a President who assumes the
educational function of the Presidency. The American
public cannot possibly understand this. On the other
hand, the American public is one of the healthiest
in the world. They'd like to believe in their
president. And if he went out there and said, "Here
are the problems," I think, on the whole, he'd get
support. Not, maybe, on every detail. But he isn't
doing it. He's doing bandaids. He's getting the
problems off the table and he figures -- he's always
in New Hampshire -- he figures, you know, he'll get

36.

the problem done and, when it comes up again, I'll
worry about it. We talked about Bosnia before. It
doesn't matter what you think, but anybody who knows
anything about Yugoslavia knows that it is not
possible for Croats, Serbs, and Muslims to live in
the same grouping. That's why Yugoslavia broke up.
So, to announce that we are for a united Bosnia, but
we're keeping our army there to keep them from
fighting, is ridiculous! They either have to be
separated, or we'll be there forever. And if we try
to unite -- the political and the military programs
of the Dayton accords are absolutely incompatible
with each other! They cannot both be carried out.
That's a mathematical certainty. The danger is that,
either we give up our political program and we look
totally cynical, which is fine with me, but I'd
rather do it sooner than later, or we talk ourselves
into implementing it, in which case we'll be back in
a Balkan war, which the American people will not
sustain. This is not of historic importance, but
it's the sort of thing that wrecks your foreign
policy consensus.

Also, to tell you the truth, to take an issue on
which there's a wide consensus... Take Iraq. I don't
know what we're trying to do. I would have liked to
overthrow Saddam. I did not favor that we ended the
war as quickly as we did.

37.

ARNOLD B. POLLARD?: And take the risk on what would follow?

DR. HENRY KISSINGER: Nothing would have followed. We needed to keep it going for two more days. That was the only way we could have kept Iraq together. To let a successor take over. The only reason I say we had to overthrow Saddam is because we had so demonized him, and he is a miserable bastard.

[LAUGHTER]

EDWIN LUPBERGER: Can I quote you on that?

DR. HENRY KISSINGER: But now that he's gone -- now that he's there, how are we going to -- we want Iraq to exist as a conduit to Iran. But the more we weaken it, the more there's a danger that it will, somehow, disintegrate. How are we going to keep together this notion that the North is a free, [UNINTEL] safe area, The South is a safe area, but there's a unified Iraq anyway. For what? It's this kind of incoherence for which, sooner or later, you have to pay. I'm not saying that I have a brilliant solution to this dilemma.

J.P. DONLON: Dr. Kissinger, I'd like to follow up on a question that Ed posed -- you alluded to NAFTA.

38.

We're familiar with the dissidents or anti-NAFTA's who say NAFTA was a mistake. There are also factions within Europe that are trying to divide the European Union. And there are political factions inside various countries who say the Union, in various forms, is not a good idea. What do you see for the future of the single market for itself and, also, how it relates to historic political and trading relations with that entity?

DR. HENRY KISSINGER: NAFTA is our problem. The European Union is the Europeans' problem. I think this. I would like Europe to be united for the reason that I gave before, because I'd like the North Atlantic area to be united and because I think a united Europe could operate on a bigger scale. I think, if they had to do it over again, they probably would not choose European monetary union as the vehicle to achieve this. And they would probably try to do it the political road, first. They applied, literally, the lessons of 1950, '51, when the coal and steel community led, step by step, to greater political cooperation. But the coal and steel community dealt with specific industries that were sort of related anyway. When you do a common currency, you have to give up something which, for every person, it's almost the quintessence of his nation. And you give up your own money, what is

39.

perceived to be your own money, for some new, vague
thing to which no political loyalties, as yet,
attached to the same degree. You get into an area
that is complicated. I don't believe that economics
dominate life as much as politics does.

The second thing is, when you look at the various
countries, there's really, except for Germany,
possibly, and Luxembourg and Ireland, really none of
them can meet the criteria that have been set out.
They're using various kinds of maneuvers -- like
selling state assets, which the French are now doing
-- to reduce their deficit. I talked to the Prime
Minister of Spain two weeks ago, and I said, I asked
him when he was going to go in. He said, "We'll do
whatever is necessary to get in," he said, "We can
get it, but I don't know what we're going to do once
we're in, because we can meet the criteria for one
year, to get it, but I don't know how we're going to
continue to meet the criteria once we are in." So
then, you get, what? Competitive devaluation, joint
devaluation, inflation, and austerity imposed by a
central bank! It's tough enough when a government
does it, but when a central bank, when the French
have to give up Social Security, or the Italians,
because a central bank, probably run by a German,
says so, I can't quite imagine how that's going...
Frankly, the more I think about it, the less -- in

40.

Italy now, they have passed a tax in order to
achieve these conditions, called the "European tax,"
or something like that. I mean, if you're a
demagogue, what is easier to attack? So, I'm getting
uneasy. I would like Europe united. But I am
beginning to wonder whether this common currency is
worth the political dislocations that it may cause.
But I think America should keep quiet about it. It's
not our problem. They now have to do it and learn
it. We can't stop it, British can't stop it. Too
much prestige of Kohl and Chirac is involved in it.

PHILLIP ROONEY: Dr. Kissinger, you talked earlier about one of the issues facing us is a lack of relevancy, as we formulate foreign policy. We've moved from an era where we've had, I think, well-thought-out foreign policy. And you're, somewhat, kind of a walking book. Maybe I'll use an analogy. We've lost that knowledge, transferred with a political system. I was just wondering what thoughts you plan to offer, or recommendations, in terms of the failings of the political process to allow the transfer of foreign policy and relevancy, on a worldwide basis, to move forward?

DR. HENRY KISSINGER: Vietnam was a disaster from
this point of view, because the old establishment,
which was honorable and which could have learned,

41.

over a period of time, was absolutely destroyed.
They were either destroyed or they began to suffer
from the Stockholm syndrome -- the fact that they
fell in love with their captors, and found it
desperately trying to prove that they really were
true liberals. So, a whole generation was really...
They forget. I was at the Council of Foreign
Relations the other day, for a speech by Hashimoto
-- were any of you there? -- the Japanese Prime
Minister. They began badgering him about domestic
reform in Japan. What the hell business of ours is
it what the domestic reform is in Japan? They should
ask him about foreign policy relations, trade
relations, things that affect us. What they do in
Korea. But what they do to their own political
process -- and it was done in a semi-accusing way.
We have a problem to get a new generation. We ought
to have, you know, we're lucky we have ten years of
more or less successful policy. And then train a new
generation. But what I do not know is whether the
attention span of our leadership group is adequate.
A Canadian consulting company told me a few years
ago that they have learned that, if they brief
CEO's, if the CEO's at that time were older than
forty-five, they were most effective if they did it
with paper. They're below forty-five, they have to
have visual presentation.

42.

[LAUGHTER]

Now, I personally can't learn from visual
presentation. I am at that age, beyond that age. So,
I don't know how you -- When I started out in
politics -- I'm not really in politics. But when
politicians asked my opinion thirty years ago, they
would ask me, "What do you think?" They thought they
needed a program. Today, they ask me, "What do you
say?" They want to know what to get on the evening
news. And they want it in two or three minute sound
bytes. And when you begin thinking that way, can you
think well about that future? Somehow, we have to
overcome this. I have no brilliant idea of how to do
it.

J.P. DONLON: I have one last question for you,
Doctor. You have met a lot of people in your long
career. Is there anyone that you would call
attention to this group as a transformational leader
or potential future leader that may or may not be --

DR. HENRY KISSINGER: Present people? Or do you want me to talk about past people?

J.P. DONLON: No, I mean present people. People that this group might choose to pay more attention to, that we might hear more about in the future. Because

43.

this person is kind of transforming his or her group
and we might find this as someone to pay attention
to in the future.

DR. HENRY KISSINGER: Among politicians, I've been
impressed by Senator McCann of Arizona.

J.P. DONLON: Why him?

DR. HENRY KISSINGER: Because he is not a learned man, but he seems to have an understanding of future. In terms of intellect, if he could get his temperament under control, I think Gingrich is probably the most creative man in American politics. He gets a terrible beating now, but if you had him at this table, I promise you, you would all walk away with the feeling that you'd talked to a substantial figure. You see him on television, he has no terminal facility.

[LAUGHTER]

There's a new one that used to be an actor, from
Tennessee, that has sort of impressed me. I mean,
this is not for publication. But Senator Thompson,
from Tennessee. Some of the older Democrats -- Nunn,
Bradley -- I like very much.

44.

J.P. DONLON: Is there anybody outside the U.S. who
you would call this group's attention to?

DR. HENRY KISSINGER: Some of the younger Tories in
England, some interesting ones. In Israel, I used to
admire enormously Rabin, who unfortunately was
assassinated. If he were there, we wouldn't be in
the present crisis. In Europe, it's a big problem,
too. Kohl, I think, is a great man. If you ask me,
go back a number of -- the younger people, I'd have
to think about that. There are some younger people,
both here and abroad.

J.P. DONLON: Dr. Kissinger, thank you for your
time.

[APPLAUSE]

DR. HENRY KISSINGER: Indulge me here, by saying we
never fail to end on time.

ARNOLD B. POLLARD: Twelve minutes late is not on
time?

DR. HENRY KISSINGER: My wife will be happy, because
I told her I'd pick her up, and she was afraid I'd
come in in the middle of dinner. She wants me to
come at the end of dinner.

45.