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Interactive Videoconference With the World Economic Forum in Davos, Switzerland

Secretary Condoleezza Rice
Via Digital Videoconference
January 26, 2006


Remarks with Klaus Schwab, Founder and Executive Chairman, World Economic Forum, Kishore Mahbubani, Dean, Lee Kuan Yew School of Public Policy, Singapore, Ngozi Okonjo-Iweala, Minister of Finance in Nigeria, Daniel Vasella, Chairman and Chief Executive Officer, Novartis, Switzerland, And Elie Wiessel, Professor of the Humanities, Boston University, USA

(9:00 a.m. EST)

MR. SCHWAB: Good afternoon, ladies and gentlemen. We have the great pleasure to welcome among us via video link Secretary -- Madame Secretary Rice to discuss with a distinguished panel the guiding principles and values for U.S. policies.

Madame Secretary, we are very honored to have you with us this afternoon and we are looking forward for a very lively discussion with you. We know that we have an opportunity here to raise issues with a panel which actually represents four different areas in the world, and I would like to welcome at my left, first, Elie Wiessel, who doesn't need any introduction, Nobel Prize winner, Professor of the Humanities, also connected with Boston University. I welcome Ngozi Okonjo-Iweala, the Minister of Finance of Nigeria; Daniel Vasella, who is the Chairman and Chief Executive Officer of Novartis in Switzerland; and Kishore Mahbubani, the Dean of the Lee Kuan Yew School of Public Policy in Singapore.

We will divide the 45 minutes which we have at our disposal into four parts, each of about ten minutes. The first part is related and devoted to the issue of democracy and morality, and I would like to give the floor to Dr. Vasella.

DR. VASELLA: Madame Secretary, first I would like to thank you for your willingness also to take challenging and open questions in the spirit of this place here in Davos. I have tried to formulate as clearly as I could what is preoccupying for many of us.

On one side, we all know that the U.S. is a superpower, economically and also militarily, and is standing up for democracy, defends democracy and also wants the enforcement of laws, and in this is expansive beyond the borders of the old country. In the means used to promote democracy, security, the means seems to contradict with the fundamental values the U.S. is standing for. And I'm asking myself how is this on one side compatible; and secondly, isn't the U.S. Government, with that, playing into the hands of enemies and weakening the supporters?

Secretary Rice speaks on screen by video link, during a plenary session entitled: The Guiding Principles and Values for U.S. Politicies at the World Economic Forum in Davos, Switzerland, Jan. 26, 2006 [ AP/WWP] SECRETARY RICE: Well, thank you very much. Thank you for the very probing question and I want to thank the members of this distinguished panel. There are old friends on this panel, people for whom I -- I've known for years. I want to thank Klaus Schwab for making this opportunity available.

And I would like very much to turn to the question just asked, but if you will permit me, I would like to start with a statement on something that I think is very much on all of our minds this morning because I'm certain that the people will have seen the preliminary results of the Palestinian elections. We're going to be talking about democracy in this session and I'd like to begin by making a statement on those elections before turning to the question asked of me.

While we await the confirmation of those final results from the Palestinian elections, we've seen the predictions regarding the Palestinian Legislative Council elections. We offer our congratulations to President Abbas and the Palestinian people on an election process that was peaceful and free of violence and, by all accounts, fair and where there was very heavy turnout of the Palestinian population.

The Palestinian people have apparently voted for change, but we believe that their aspirations for peace and a peaceful life remain unchanged. Those aspirations can only be met through a two-state solution, which requires a renunciation of violence and turning away from terrorism and accepting the right of Israel to exist and the disarmament of militias. As we have said, you cannot have one foot in politics and the other in terror. Our position on Hamas has therefore not changed.

I have spoken to President Abbas today, who was elected by the Palestinian people on a platform of peace. The Palestinians have a constitutional process that they will now follow and we ask all parties to respect this process so that it can unfold in an atmosphere of calm and security.

I've also spoken to Secretary General Annan, to Foreign Minister Livni of Israel and to others to share views on the way forward. There will soon be a meeting of the Quartet that is devoted to the roadmap and to Middle East peace.

Thank you for allowing me to make that statement.

Now turning to the question of democracy and morality, I believe it is a very central question because the United States, I believe, must be a country that is true to its principles, true to its word and that conducts itself in accordance with those principles, because I think that people around the world look to the United States for the carrying out of those principles and those ideals.

I know that in the war on terror we have had to do some very difficult things, but I want to assure people that what the President has done and what the United States has done since the terrible attacks on this country of September 11th has been fully within our international obligations, within our laws and within the principles and values that the United States holds dear.

All democracies are facing a very difficult challenge these days. That challenge is that we have people -- groups, terrorist networks, shadowy terrorist networks, stateless terrorist networks -- that have but one intention, and that is to kill innocent people. In this war on terror, innocents are not killed as collateral damage; they are killed by intent. Whether you look at the bombing of a wedding party, a Palestinian wedding party in Jordan, or the bombing of a subway at rush hour in Madrid or in London, or flying an airplane into a building on a fine September day, it's quite clear that these terrorists do not make a distinction between the innocent and any others; they simply go after in order to terrorize and to make free peoples turn away from their values.

And so they have to be dealt with and they have to be dealt with in a very tough way because this is a very different war. But we also recognize that in fighting the war on terrorism we have to do it within our laws, within our principles and within our values. And the President has been very clear throughout this process that we were going to live up to our international obligations, that we were going to stand for the rights of human beings worldwide.

And let me just say one word about some of the stories of abuse that have come out from time to time -- inexcusable events like those that took place at Abu Ghraib. When that has happened, the democratic process is one that punishes the guilty. It gives due process to those who are accused of crimes. But when they are convicted of those crimes, they pay a price; and we have had people imprisoned, we have had people lose rank. Because the difference between a democracy and a dictatorship is that -- not that democracies are perfect, democracies are human institutions too, they're not perfect -- but that when abuses happen they are openly discovered, in our case by our free press, they are openly dealt with, they are dealt with in accordance with law, but they are not hidden, as would be the case in a dictatorship.

And so yes, we've had to do some difficult things. These are hard struggles and hard dilemmas. But I'm quite confident that when the history of this period is written, the United States will have managed to fight the war on terror and stay true to its principles and values.

MR. SCHWAB: Thank you, Madame Secretary. I know, Elie Wiesel, you have been so much engaged in those issues of human rights and values. How do you react to the statement of Madame Secretary and how do you see -- particularly referring to her first statement -- how do you, what is your worry in the Middle East in the present situation now with the outcome of the election?

MR. WIESEL: Madame Secretary, there was a writer in France called, Christian Bernard, Jewish humorist. He was in hiding for some time and afterwards he was caught by the Gestapo. And he was brought to others who were about to go to (inaudible) and they saw him smiling. They asked him, "You are smiling now?" And he said, "Until now, I lived in fear. From now on, I shall live in hope."

My question to you is, Madame Secretary, last time we met, we spoke about fear and hope. Where are we now? Are we oscillating between one and the other? Yes, democracy is, of course, is an ideal. We all believe in it. Hamas won. Hamas is surely not a democratic movement. Its ideals are surely not humanistic ideals. Does Hamas still believe in the destruction of Israel? What do we do now?

SECRETARY RICE: Well, first of all, I believe that we still have every reason for hope and for optimism. Whenever you have 80 percent of the Palestinian people turn out in a free and fair election, one that is free of violence, it has to be a cause for hope.

We have to remember that the Palestinian people in the Middle East are in the midst of a historic transition. We have to remember that the Palestinian people have endured governance that was, by all accounts, not meeting their needs -- and that was the Arafat period which was terribly corrupt -- and I suspect that the Palestinian people are expressing their desire for change.

But it is now up to not just the Palestinian people, but also the international community, to speak clearly that democracy brings not just rights, but it brings obligations and responsibilities, too. And one of those responsibilities is to care for and to be a fighter for peace, and not for war and not for violence. Democracy and wanton violence, democracy and terrorism, are incompatible, just as it is incompatible to ultimately have armed people within a legislature. And so the time is coming when the international community is going to have to speak clearly and truly to its principles.

We understand that this is a transitional period, but anyone who wants to govern the Palestinian people, and do so with the support of the international community, has got to be committed to a two-state solution; must be committed to the right of Israel to exist -- you can't have a peace process if you're not committed to the right of your partner to exist; must be committed to a renunciation of violence. And I think you will hear the international community speak clearly in exactly those principles over the next day. There will be some difficult choices before those in whom the Palestinian people are placing their trust. But if there is to be a future that can answer the aspirations for peace with the Palestinian people, I am quite sure, hold, then it is going to have to be a future that renounces violence and terrorism.

MR. SCHWAB: Madame Secretary, if you take this issue, this Hamas victory, and you put it into the broader context of the Middle East -- and I refer to the situation in Iran, Syria and Lebanon, Iraq and coming back to the statement of our friend Elie Wiesel -- we are oscillating between fear and hope. But if we take the total picture, how would you connect the different pieces of this Middle East situation? And particularly, if you connect the different pieces, aren't we in a situation where we have to have much more fear than hope?

SECRETARY RICE: Oh, I don't think we have to have more fear than hope. I think we have to realize that the Middle East was not a stable place and a place of hope before the freedom agenda became core to Middle Eastern politics. How could it have been a better Middle East in which Syria occupied Lebanon? How could it have been a better Middle East in which Saddam Hussein's brutal dictatorship filled up his mass graves with innocent civilians? How could it have been a better Middle East when you had an Afghanistan that was a place that harbored terrorists, a failed state that produced the terrorists who produced the attacks on the United States on September 11th?

So there's sometimes the sense when we look at what is obviously a difficult transition to democracy in the Middle East, obviously one in which people are trying to replace conflict with politics, trying to replace repression with compromise. This is hard; democracy is not easy. But we have to ask: As compared to what? As compared to the Middle East that is a place that produced the ideologies of hatred that led people to fly airplanes into buildings?

So I think we have to have a sense that the positive developments in the Middle East -- and I could mention not just elections in Lebanon and free elections in Iraq and completion of elections in Afghanistan and of course Palestinian elections, but also the emancipation of Kuwaiti women with the vote -- very good things are happening in the Middle East.

Perhaps we have to step back and remember that our own journeys to democracy were also rocky and difficult. I come from a part of the United States in which my parents were not even guaranteed the right to vote until 1965 when I was ten years old. So we have to remember that democracy is hard, but it is always worth it. And when we asked the question, "Should we fear the difficult changes, the difficult path to democracy that we now face," we have to ask ourselves, "Shouldn't we have feared more the tyranny and the hopelessness and the absence of legitimate channels for politics that characterized the Middle East before?"

MR. SCHWAB: Madame Secretary, we have the honor to have here President Karzai and he would -- underlines his message of hope which you just have given in the case of Afghanistan. I know Elie Wiesel would like to take up one other issue in this respect before we turn to other regions in the world.

MR. WIESEL: Madame Secretary, again, we spoke about Iran. Iran wants to become nuclear; I hope it won't. The Iranian President is pathologically sick, sick with hatred. What can we do to stop Iran from becoming nuclear?

SECRETARY RICE: Well, Iran is a significant danger and challenge, I think, to the international community. And I will turn to the nuclear issue, but it's not just Iran's nuclear policies that are a problem. Iran is the most important sponsor, state sponsor, of terrorism, sponsoring those who would undermine the hopes of people in Lebanon or the Palestinian territories for peace. And so we also have to recognize that there is a terrorism problem with Iran. We have to recognize that the Iranian people, a great people, a people that deserve to be integrated into the international system, are having their hopes hijacked by an unelected few who determine the future of Iran, and that is also out of step with the direction that the rest of the region is taking.

And yes, of course, we are deeply concerned, gravely concerned, about Iran's obvious desire to be outside of the international consensus, which says that Iran cannot have either a nuclear weapon or the technologies that might lead them to be able to gain a nuclear weapon.

And so we are working very closely with our partners in the international system, most especially with the European 3, who, by the way, gave the Iranians an opportunity for an opening to the world, for greater trade, for greater engagement, if Iran would only allow its civil nuclear needs to be met in a way that was consistent with proliferation concerns.

Given that the Iranians walked out on that opportunity, given that they have broken their moratorium and have begun to remove the seals on equipment that would allow them to perfect the technologies for a nuclear weapon, it's our very strong view that it is time to refer Iran to the Security Council. That is not only the view of the United States but also the view of the European 3, who tried to bring the Iranians into the community of states, and we're going to pursue that course.

Now, when we're in the Security Council, there will be many options available to the Security Council, but we believe that that is only the start of a new phase of diplomacy. A certain set of negotiations will have failed, but diplomacy will still have -- we will still have diplomatic means to try and get Iran to return to more sensible policies.

So the international community has got to react and it has got to react strongly. You have seen the condemnations of the terrible statements by the President of Iran and you've also seen the condemnations of Iran's behavior in removing seals and threatening to restart its nuclear processes. We must now turn that condemnation into action by referring Iran to the Security Council so that the weight of the Security Council can be behind the International Atomic Energy Agency as it tries to deal with the Iranian issue.

MR. SCHWAB: Madame Secretary, during this meeting there's a lot of discussion on the rise of China and India and what consequences it may have on the geopolitical and geoeconomic situation. And I would like to turn to our friend Kishore Mahbubani to comment on this issue and to raise possibly questions.

MR. MAHBUBANI: Thank you very much, Madame Secretary. I was going to begin by saying you can now relax; we're leaving the Middle East and going to an area where hopefully that is a bit less tense but, at the same time, frankly, the region where the stakes are the greatest are still in East Asia. And if you had to point to the one big question of the 21st century, the one big question, of course, is the rise of China and how it will emerge. In that too, I guess possible extreme scenarios, one the emergence of China as an angry, resentful dragon upset with a world that thwarted its rise, or that China can emerge as a responsible stakeholder and one that, in a sense, adds to the global system.

The country that can influence the rise of China the most today is America, as the sole superpower of the day. What America does, what America says, makes a huge difference to the emergence of China. And this is a particularly sort of plastic moment in terms of the direction that China is going to go into. And the sense I have is that China watches America intently; it watches America intently not just on the bilateral policies towards China, but also watches America intently on its global policies, what it does in Kyoto, Iraq, UN, et cetera, et cetera.

So my two questions, specific questions to you, Madame Secretary: One, is Washington, D.C., aware of how closely it is being watched in Beijing in terms of its actions? And by the way, for example, we just discussed the election of Hamas. I can tell you that this will be watched very carefully in Beijing, too. How is America going to react to this?

And my second question is: How does America sort of factor in the long-term dimension? You have short-term challenges of bilateral issues and the long-term challenge of handling the emergence of a new China. How do you factor in the long-term dimension in your policies?

SECRETARY RICE: Well, thank you, and you're right. Probably the most dynamic region in the world certainly is indeed East Asia. And one only has to look at the tremendous economic activity, the growth that has characterized this region. And I think that for the most part it's a quite positive story. There are certainly challenges, but if you look at the East Asia of 20 or 30 years ago, you would not have expected to see a China that is opening to the world in the way that it is, a South Korea that has become a full-fledged and stable democracy, Japan continuing its democratic processes in a consolidated democracy -- and by the way, the United States with good relations with all of them as we also have, I might add, increasingly good relations with India, the world's largest democracy in that region. So, on balance, I think the trends have been overwhelmingly positive for this region.

Now, the rise of China is something that we don't only take note of, but we believe that there is an obligation by all of the powers, but perhaps particularly the United States, to engage in policies that will encourage the rise of the second China about which you spoke, the responsible stakeholder China, the China that sees that it has an obligation in the international system to promote and, in fact, to defend peace and security. That is why the work that the United States is doing with China in the six-party talks concerning the North Korean nuclear program is so important. It is why the discussions that we are having with China about how to manage the Iranian proliferation problem is so important. China is, after all, one of the permanent five members of the Security Council. And China needs to behave in ways, as I believe it really has in the six-party talks, that suggest that it understands that it has a crucial role to play in not just commenting on security but actually promoting a more secure environment.

China also has an obligation as a rapidly growing economy, an economy that is having a huge impact around the world and not just in East Asia. You talk to people as far away as Mexico and they will talk about the importance of the Chinese economy to their own economic prospects. And so when it was envisioned that China would become a member of the World Trade Organization, it was because it was believed that it was important to embed China a rules-based system for an economy, an open and free trading economy. And China has an obligation, as one of the largest economies now, to live up to those rules. It is why we have been concerned about questions of the Chinese currency. It is why we have been concerned about China's obligation and China's commitment to enforce intellectual property rights. It is why China should not be a country that closes its markets to financial services or to software products from around the world.

In other words, when you have a country as big and dynamic and important as China, you need to encourage that country which is emerging and growing and rising to do so in a peaceful way, in a responsible way and in a way that contributes to a more peaceful and prosperous, not just continent, but a more peaceful and prosperous world.

I do think that China is beginning to understand those obligations. We've seen signs of that. But it is still a country that's very much in transition. And in that regard, China's own domestic transition is also an issue. And we have had extensive conversations with the Chinese about the relationship of their growing economy, the increasing prosperity of their people and the desire for a more open political system which will undoubtedly come because it's really very hard to tell people to think at work but not at home. And so when you want creative people, they have to have a sense that they are going to be able to defend their interests in a political system. So there is a lot at stake with China.

But I think that if you take the region as a whole and you look at Japan, you look at South Korea, you look at Southeast Asia, which is emerging also as an incredibly dynamic region, who would have thought that Vietnam would be where it is some 30 years ago. Would that have been thought possible? Of course, consolidating democracies in Singapore and Thailand, Philippines, places that are -- that have democratic processes. And so this is a region that is going through a lot of change. There are still challenges. There are still outliers in the region. But on balance, I have to say that I think it is a region that not just has great promise, but that is really, really fulfilling that promise.

MR. SCHWAB: Madame Secretary, we had yesterday with us Vice Premier Zeng Peiyan who underlined the positive role which China intends to play in the world community. I would like now to turn to issues which are very high on the agenda of the Davos discussions. And those are the issues of fighting poverty and fighting diseases, not forgetting Africa. And last year, here in Davos, Africa was somewhere in the center of our deliberations. And I would like to turn to the Minister of Finance from Nigeria, Okonjo-Iweala to -- and ask her whether she is satisfied with the efforts which are made by the international community and particularly by the United States and what could be done more and what would be your question to Madame Secretary?

MS. OKONJO-IWEALA: Thank you very much. Madame Secretary, it's good to see you again. Last week, we were both in Liberia to witness a historic occasion of the election of the first female president in Africa, Ellen Johnson-Sirleaf. At that occasion you saw a lot of hope from a country which has seen 15 years of war, people were excited, this was a new beginning.

Last year, as Klaus Schwab said, Africa got a lot of attention and saw a lot of hope. There was acknowledgement that despite the huge challenges that remain, African countries are beginning to take their problems and their solutions into their own hands and are beginning to do what it takes to be able to develop: acknowledgement that many countries in Africa are now growing at better than 5 percent a year for a couple of years now; acknowledgement that there's beginning to be tackling of governance issues, corruption, even though much more needs to be done.

And last year, as a result of all this, the developed countries promised to double aid to Africa to help fight poverty from 25 to 50 billion. They promised to focus on fighting key diseases, HIV/AIDS, malaria and so on. And the United States was very much a part of this. And African countries acknowledge this assistance, but aid is not going to be enough. I don't think that any country has ever developed purely from aid. Aid will be a catalyst and African countries are looking to see some of the things that are happening in East Asia happen in Africa. We can't do it unless we get more foreign direct investment in some of our countries. But you see that the numbers are very little. We get less than 5 percent of the FDI that is going -- flowing in the world.

And furthermore, there's a dirty little secret that is not talked about very much, the fact that East Asian countries, the tigers, would not have developed as fast if Japan had not made a commitment to directing private sector investment, sort of shepherding private sector investment to these countries. And in the European Union the same thing happens -- investment in countries that are poor.

My question to you is: How are we going to encourage more such private sector investment in African countries? What is the role that the United States can play to do that? Because my fear is if we do not, we will not get the kind of development that we are all looking for. Thank you.

SECRETARY RICE: Well, thank you very much and hello to you, too. We were indeed together in Liberia. And I want to just say first that the Minister has a fine reputation for having fought corruption, for having made real changes in Nigeria and for having increased the confidence of the international community, the international financial institutions, in Nigeria and in its future.

And you are to be congratulated for that, Minister, and it speaks very much -- what you and President Obasanjo have done -- it speaks very much to one of the underlying premises of the work that the United States has been doing with Africa. In fact, this President has increased African aid by almost three times since he came to office. He made a $15 billion commitment to HIV/AIDS and to malaria and tuberculosis. He's made enormous commitments to women's education in Africa. And, of course, the Millennium Challenge Account -- the Millennium Challenge Corporation now as we call it -- singles out countries that are engaged in good governance, that have democratic processes, that invest in their people, that fight corruption. Because we believe that that is where the dollar of American assistance is likely to make the biggest difference in the way that the Minister just mentioned. Because foreign assistance should not be a permanent condition (inaudible) it should make countries (inaudible) of seeking foreign investment, of growing their own economies and (inaudible.) And so foreign assistance should be a temporary hand up. But it's not going to be a temporary hand up, unless you have good governance. And I think that good governance, you have rule of law, you fight corruption, you have contracts that are stable and that the commitments can be relied upon.

If you are educating your work force, if there are investments in infrastructure, then foreign direct investment will flow to countries that are on that program. Now, I do think there is more that we can do to highlight countries that are making those important policy changes, countries that are fighting corruption, countries that are making rule of law the center of their economic policies because you have throughout the African continent the capability to be a very prosperous country. It is a region that has been beset by governance problems and it is one reason that Africa taking responsibility for its own problems, putting in place governments that are committed to governing wisely, governing democratically, I think is going to have a very big effect on the future of a continent.

I noticed that President Johnson-Sirleaf in her inaugural address said something that really struck me. She said that the government has to be as clean as the people so that people can see that it is transparent and she said there was going to be a declaration by all the members of her government of their assets. It was to me a sign that she understands that much of the responsibility rests with those who are elected to govern, to govern wisely and cleanly.

As I have said and as the Minister said, aid is flowing in to Africa and it's flowing in in record numbers and in large numbers from the United States. But it is only going to have an effect of lifting people out of poverty, lifting economies out of poverty and into growth, if that aid is married up with good governance and with wise economic policies. And that's why we are working with countries in the way that we do. We've tried, by the way, too, of course, to relieve some of the heaviest debts from some of the most heavily indebted countries. We've helped Nigeria also with debt. But the real answer here is that it has to be a partnership between donor countries that provide assistance and recipient countries that receive that assistance to make certain that the assistance is going to build the infrastructure of good governance, the infrastructure of people who can respond to the challenges of a new economy and to be responsive to the needs of the people.

MR. SCHWAB: Madame Secretary, we are coming to an end of our dialogue, but I would like to ask my co-panelists to use this occasion in speaking to you and I would like to ask each of you to give a short advice. What would you advise; what is your biggest wish towards Dr. Rice in terms of what you have heard and in terms of your own position and your own view of the world? And I may start with you, Daniel Vasella.

MR. VASELLA: Madame Secretary, I think you have been very eloquent and very clear in your answers and unambiguous. And I would say that what I would wish personally is as we are holding the United States and the U.S. Government to the highest standards because you are the most powerful, we would like that the credibility is here and fully, if I may be so blunt to say, restored, because there are questions about -- in various parts of the world -- how consistent it is and I'm coming back to morality and action. And I think here, I would wish that it's well explained, as well explained as you did now, and that this message is propagated on one side to clearly condemn what you do not stand for and clearly explain why you take decisive actions on the other side in order to maintain, protect, promote democracy, human rights and law.

MR. SCHWAB: Kishore Mahbubani.

MR. MAHBUBANI: This is very easy for me. In March 2005, I published a book called "Beyond the Age of Innocence: Rebuilding Trust within America and the World," so I've expressed my wishes in a whole book. But very briefly in two, three sentences, I want to echo the point that Daniel made that in some ways the world has enjoyed unprecedented peace and prosperities since 1945 because the United States created a global system that enhanced American interest and also enhanced global interests and provided a stable platform for much of the world, especially East Asia, to grow and thrive.

The question that is hanging overhead is: Will the United States do this for another 60 years? Will it sustain a global platform that will benefit both America and the rest of the world? And I hope it will.

MR. SCHWAB: Minister.

MS. OKONJO-IWEALA: Madame Secretary, I want to -- I wish (inaudible) the question I asked you. And I want to express a very strong personal wish that you become an ambassador for Africa; that you ask all the investors in this room and in this forum to take a look that there are some countries doing the right thing and they should go there and invest; that you tell people that Africans are willing and able to take their own future into their hands and that you speak up for us. We don't want to be seen always as a continent that is looking for help and asking for things. We want to be seen that we are doing things to help ourselves. And I want you to become a personal ambassador for us. (Applause.)


MR. WIESEL: Madame Secretary, you know very well that a great power is great not because it has a great army, a great economy, extraordinary means of achieving success. A great power is great because of its great moral principles and I am sure you believe in them. And therefore what I would give you an advice which (inaudible), to organize under your auspices a conference in the State Department, a kind of summit meeting of intellectuals, moralists, a conference on hatred, what (inaudible) 21st century is hatred. You must analyze its sources, its origins, its motivation and we must eradicate it. Good luck. Thank you. (Applause.)

MR. SCHWAB: Secretary General -- Madame Secretary, before you -- before -- maybe my (inaudible) lapses would have been to put her at the top of the world government. (Laughter.)

But Madame Secretary, my wish is a very simple one: Next year we hope to have you personally with us. Madame Secretary, I would be very appreciative if you would have the last word and I just want to thank you before you take the final floor, how much we appreciate it that you joined us at least visually, digitally, and we are looking forward to welcoming you one day here in Davos. But it's your final word, Madame Secretary.

SECRETARY RICE: Well, thank you very much. And I want to thank my fellow panelists and I want to thank you, Klaus, and I do look forward to joining you in person next year. I would just like to close by recalling that when we are true to our values and true to our principles, we really have nothing to fear; we have every reason for optimism. Because there've been great challenges to democracy before in our lifetimes and democracy has usually triumphed, but it's triumphed not just because it is an important principle and because it burns deep in the heart of every human being, but because we've been willing to fight for it and to defend it and we've been willing to make those principles true in practice.

When I was here in 1989 in Washington in my first stint in government for President George H.W. Bush, I was lucky enough to be the White House specialist at the end of the Cold War, and you don't get much luckier than that. I was the Soviet specialist at the end of the Cold War. And in 1989 and 1990 and 1991, I watched and participated in the liberation of Eastern Europe and the unification of Germany and ultimately the peaceful collapse of the Soviet Union. But as I looked back over that time, I realized that we were really just harvesting good decisions that had been taken in 1946 and 1947 and 1948 in times when it must have seemed that there were nothing but setbacks for democracy.

If you look back to Europe in that period, you know that in 1946 and 1947, the reconstruction in Europe was still failing. You know that in 1947, there was civil war in Greece and civil strife in Turkey; that in 1948, the Czechoslovak coupe happened and Germany was permanent divided by the Berlin crisis. And in 1949, the Soviet Union exploded a nuclear weapon five years ahead of schedule and the Chinese Communists one. These weren't just minor setbacks to democracy. These were huge strategic losses. And I wonder how our predecessors, people like Marshall and Truman and their European counterparts, how they and people in Asia who would build a democratic Japan, how did they focus enough on the values and the principles to be optimistic that in 1989 and 1990 and 1991, we would be seeing the end of Communism and the emergence of a Europe whole and free.

My point is that we've done hard work before together and those of us who are fortunate enough to be on the right side of history's divide in terms of liberty and freedom owe it those who have not yet been able to experience liberty and freedom, to stand with them and to stand by them, just as we have -- as people stood by us in our time of need. That means to me that as we look at a Middle East that clearly is going through a difficult transition, as we look at an Iraq where there are challenges every day of violent men who would try and arrest the progress toward a democratic future for Iraq, as we look at uneven progress of the democracy agenda in the Middle East, as we look at all of that, and we see that the road is difficult, that we need to keep the big perspective and recognize that history will judge us not by whether we were optimistic about today, but about whether we were optimistic about tomorrow and whether we kept in mind that the desire for human dignity, the desire for human liberty, is a universal desire and that if we're responding to that desire, we're doing history's good work.

Thank you very much. (Applause.)

MR. SCHWAB: Secretary Rice, you cannot look here into the audience, Secretary Rice, but on behalf of everybody I would like to thank you very much and also my fellow panelists for having participated at this session which certainly helped to clarify the U.S. position and the guiding principles and values for U.S. politics. So thank you very much for having joined us this afternoon. (Applause.)

Released on January 26, 2006

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