Male Speaker 1: Daniel Russel

Date: [5/19/2014] Male Speaker 1: Daniel Russel Female Speaker 1: Sheila Smith, Male Speaker 2: Mark Lippert, Male Speaker 3: John Zan [O/V] : Overlapping Voices [U/A] : Unintelligible audio

[START RECORDING [Full Event PC 2] DATE: [5-5-14]]

00:00:00

Sheila Smith: Good Morning everyone and I am delighted. My name is Sheila Smith and I’m the

Council of the Foreign Relations here in Washington, DC. I want to thank the Sasakawa

Peace Foundation for putting on such a tremendous event today. If you had to imagine

the Who’s Who of the US-Japan security relationship you couldn’t have imagined a

richer panel of speakers and discussants. I also want to congratulate Admiral Blaire, we

are looking forward to your leadership of the conversation on the strategic ambitions and

purpose of the US-Japan alliance. So let me get to our panel. We are fortunate to have

with us today, two of the Obama Administration’s key thinkers and implementers of our

policy towards Asia. You know, the strategic focus of the United States in Asia has

undergone a transition, we refer to it as the rebalance, some people like to still use the

word “pivot”, but in fact this is a longer term effort to refocus American attention; not

just government attention, but broad American attention on our long term interests in the

Asia Pacific. I think the idea that American strategy, however, can be implemented

without thinking about the backdrop of events and changes in the region, of course, is not

possible. We’ve had an awful lot of events in the Asia Pacific; it is not a static place these

days. Just in North East Asia from 2009 we had a change in government in Japan, right.

In 2010 we had provocations and the loss of life on the Korean Peninsula. We had, of

course, the terrible triple disasters in Japan and operation Tomodachi as a response. In

1 2012 we had the eruption of the most intense Japan-China tensions in the post-war

period. So Asia is not a static place, and the two gentlemen that we have here to discuss

our policy towards the region have had to manage and cope through a very difficult time

not only for the region but also for US policy. I have, on my immediate left, is our

Assistant Secretary of State for East Asian and Pacific Affairs, the Honorable Daniel

Russel, he is a career foreign service officer. Before going to the State Department he

was the President’s Senior Director for Asian Affairs. He has served in the Asia Pacific,

as well as other posts, and is one of our most experienced diplomats. To his left is Mark

Lippert. Mark is the Chief of Staff for the Secretary of Defense; he is the former

Secretary of Defense for Asian and Pacific Security Affairs in the Department of

Defense. Mark Lippert was a former Navy Seal, he served on the Capital Hill on the

Senate Foreign Relations Committee and he was very early on one of the President’s

foreign policy advisors. So without further ado, I’d like to turn the podium over first to

Assistant Secretary Russel, to help us understand what happened on the President’s trip,

but also the broader role of our Asia policy. Danny, welcome. Thank you, my pleasure,

thank you.

Daniel Russel: Thanks Sheila. Congratulations to Admiral Blaire, and thanks to the Sasakawa

Group. I’m happy to be here, particularly with my friend and colleague, Mark Lippert.

You’ve got some great speakers in the line-up today. I see a lot of friendly and familiar

faces here. So I know there’s a lot of experience and expertise in the room. I think what

would be most useful for me, would be to offer some context on our overall Asia Pacific

strategy as it relates to the US-Japan security partnership, but go a little bit beyond the

partnership per se. Without belaboring the point, our strategy towards the Asia Pacific

region, or the rebalance strategy is predicated on the simple proposition that the region is

hugely consequential to US national security and economic interests. In that context,

2 we’ve known all along that Japan plays a very important role. Economically, in the next five years, nearly half of the global economic growth outside the United States is expected to come out of the Asia Pacific region and it’s really a given that this region is tremendously important for US jobs as well as for US economic growth, as well as for

US security. So I know, from experience, as does Mark, it was very much with our national security interests and our economic future in mind that in the beginning of 2009 the President and policy makers in the government looked at how our resources as a nation were distributed and concluded that we needed to balance them, to rebalance them.

And so, over the course of the five and a half years, we’ve worked to do that, to achieve a better allocation of time and attention of our top officials, better allocation of our diplomatic resources, our trade policies, development efforts, and our military posture as well. But throughout the emphasis has been on, beginning with our alliances and working with our allies in close security partnerships and we’ve put a tremendous amount of energy into strengthening the relationships, with allies Australia, Republic of Korea, the

Philippines, Thailand, and importantly Japan, which is the subject of the discussions today. But we’ve also upgraded our economic engagement in our trade relationship with these partners, everything from the Chorus FTA with Seoul, the ongoing negotiations on

TPP with Japan, Australia and others. We’ve invested in diplomatic and people-to-people ties. We’ve strengthened, of course, a range of security cooperation, which both Mark and I will talk a little bit more about, partly to deal with the threat from North Korea. We also deployed Marines to Darwin. We’ve just signed an Access Agreement with the

Philippines. We cooperate with Australia and Japan in a trilateral context, there’s a lot of good work going on. And beyond the government-to-government cooperation, we’ve also invested heavily in people-to-people ties and connections, and the net result, I think, of all of these efforts is an astonishingly high level of public support for the relationships

3 and for the alliances in each of the five allied countries. Polling shows, in Australia, something on the order of 89% support for the alliance. Recently 95% of South Koreans agree that maintaining close relations with the US is important for security. The numbers in the Philippines are in the 90s, in Thailand in the 90s, in Japan 85% favor maintaining the security alliance with the US. And that last number is important, not as a number, but as a symbol, because, speaking as someone who’s served in Japan, from 2005 to 2008 and in 2008 returned to the State Department as the Director of the Office of Japanese

Affairs, I remember well significant strains in the bilateral relationship, some of which were driven by differences of approach over North Korea, the questions of the state- sponsored terrorism list, Banqua (sp) Delta Asia, and so on. It is not preordained that relations between the US and Japan will be good or will be smooth. Moreover, early in the first term of President Obama, there was a transformational election in Japan; the emergence of a new DPJ led government that also contained some early problematic approaches to issues of common concern. And yet, the US and Japan maintained equilibrium in their relationship, quickly righted the boat through the successive Prime

Ministerships of the Mr. Hatoyama, Mr. Kan, and Mr. Noda. And put things back on track, and now the relationship, I can attest, is very, very strong. That was evident, of course, in the US response to the tsunami and Fukushima disaster back in 2011 under the

Kan government. It’s certainly evident in the significant progress that we’ve made on

Okinawa and on the defense alliance and cooperation. We’ve resolved any number of bilateral irritants like the ratification of the Hague convention, which was a sore point.

And we’ve developed a great record of global and regional cooperation, particularly in

South East Asia and in the Pacific. We’ve made good progress on trade and economic and financial issues leading up to a breakthrough, of sorts, in Tokyo, last week, that I’m happy to talk about. The point, though, is that Japan matters hugely to us and to our

4 strategic efforts in the region and I want to build out a little bit about why Japan is so important. All of you know, without my telling you, that the starting point is the deep historic and cultural and people-to-people ties, the extent to which we share values, democratic values, human rights, market economy, and as a result, it is in our common interests to build out a region that is shaped by a culture of adherence to rules and norms.

This is something that President Obama, during his visit to Asia over the last week, has consistently emphasized. We benefit, and as a major power, and Japan, similarly, as a large and influential power, we benefit from a system of rules, even though those rules conscribe our freedom of action—that’s a tradeoff that we are prepared to make, because it serves the broader purpose of a stable region that allows for growth, that allows for continued peace, security and non-confrontational resolution of issues that arise. In that context, and beyond the region, the US and Japan have flourished as diplomatic partners, in part because of these common interests. We work extremely closely in multilateral institutions across the board. We work closely on global development and we work, obviously, to promote global and regional stability and prosperity. Outside of Asia, on the

Middle East, Japan strongly supports the Middle East peace efforts and contributes generously to the Palestinian economic growth and institution building. Syria’s another example, where Japan has provided a tremendous amount of aid to assist IDPs, to assist refugees, the countries that host them and been very active in assisting in the destruction of Syria’s chemical weapons stockpiles. Japan, of course, has been a leading donor of civilian assistance in Afghanistan, and that’s going to continue. And on issues that emerge, like the Ukraine, Japan has stepped forward to support the people of Ukraine’s sovereignty and, working with others in the G7, has taken the difficult step to impose sanctions and to commit to impose further sanctions against Russia if the Russians continue to escalate there. Moving away from security, we have a very robust economic

5 partnership and Japan is a driver of regional economic growth, of global economic growth, we’re the two largest free market economies in the world with huge trade flows, huge two-way investments that generate hundreds and hundreds of thousands of jobs in the United States. We also, beyond the bilateral financial and trade relationship, cooperate, as I mentioned on development, aid, on disaster relief, on work in AIPAC, on the G20, G7, G8, to liberalize trade and investment rules, to promote growth, and one piece of that is our collaboration on science and technology which was a high point of the recent visit by President Obama to Japan, and is particularly significant in the 21st century, because the two of us are actively sharing, actively collaborating and developing high-tech solutions to global problems. And lastly, as is all over the news, we continue to work on, and in fact last week made significant progress, on the issues—the bilateral issues relating to TPP, the Trans Pacific Partnership. We identified, as the President and

Mike Froman said, we identified a path forward. Mike Froman described it as a breakthrough, I think one way of looking at it is that the US and Japan now, in the bilateral negotiations that are the critical next step regarding TPP, really crossed and important threshold, that’s not to say that all the issues are resolved, they’re not. But to say that the negotiations now are focused on what we can get done and how we can get them done, not focused on the obstacles and the things that we can’t do. And lastly, and most relevant to the conference, we’re security partners, and I’ll leave it to Mark Lippert to speak on the alliance itself and on global security cooperation, but, what I’d like to emphasize is, first, we mean it when we each describe our alliance as the cornerstone of regional security, it really is. Not only insuring our mutual security, but also insuring the prosperity and the stability of the region, as we have in the last half of the previous century and have every intention of continuing in the 21st century, which is why we are modernizing our alliance. I would point to the creation of the National Security Council

6 in Japan as a signification step in the direction of greater internal and bilateral coordination. And I mentioned two issues that came up during the President’s visit and that I know are of interest to all of you. The first relates to the Senkakus and the famous

Article 5 of the Defense Treaty, a lot has been made, and will be made, no doubt, of the

President’s statement while he was in Tokyo, but he went to some pains to explain, “This isn’t a new Article, this isn’t a new Treaty, this isn’t a new policy.” And, you know, the facts are unchanged, the policy is unchanged, this is something that the Secretary of

Defense, the Secretary of State have clearly affirmed. So, number one, it’s true. I mean,

Article 5 of the Mutual Defense Treaty does, in fact, stipulate that areas under Japan’s

Administrative control, i.e. the Senkakus, are germane to the treaty and, secondly, we’re well on record saying that so for the President to articulate it, simply serves to reassure. It also serves to remove any lingering doubt that there might be of our position, as well as our resolve. So, it made sense for the President, on the occasion of his state visit to make clear our position. At the same time, as he signaled, it’s incumbent on all of us to remember that the purpose of an alliance, the purpose of the treaty, is to maintain the peace and nothing in what the President said or did is meant as, or should be construed as, a provocative posture towards China. Second, is the issue regarding collective self- defense, and again, I’ll leave it to my colleague, Mark, to speak to that in defense and military terms, but this, of course, is a very sophisticated audience, but outside this room there are, in some quarters, a tendency to offer a bit of a caricature of collective self- defense as somehow a step on the path of remilitarization in Japan, or abolishing Article

9 of the Constitution and so on. I think that it’s very important to recognize collective self-defense, this issue as being about Japan’s effort and ability to play a more proactive role in contributing to regional peace and stability, and its own defense. The starting point is that the principal of collective self-defense is enshrined in the UN charter and, certainly

7 our view, is its right and proper for the Japanese government and the Japanese people to consider whether they choose to exercise that right. It’s also important to remember that in any event whether it’s collective self-defense or other aspects of Japan’s defense modernization, it’s all occurring within a framework of the US-Japan alliance and that’s a critically important point. I’m running long I know, let me just touch on four sets of issues that we are dealing with in the context of the US-Japan alliance. One is, how to manage differences with China, how to influence China’s rise, a rise that we welcome, but that we seek to ensure occurs in a manner that contributes to the stability, and the prosperity, and the security of the region. How do we encourage the kind of constructive behavior from China that we all want to see in the international system? The US-Japan solidarity and our alliance, as President Obama reinforced in his visit to Tokyo and elsewhere in Asia last week, is not anti-China. At the same time, the United States is determined not to exceed to any kind of push to marginalize Japan or to vilify Japan. We benefit from a region in which Japan is a strong, influential and economically thriving partner and we think that is an important ingredient for the Asia Pacific region in the 21 st century along with the rise of China. A second issue of concern and focus is the Japan-

Korea relationship and the need to manage tensions, manage history in a way that looks forward as well as backwards, both are democracies, both are free markets, both are very close allies and we have worked and continue to work to encourage both Japan and Korea to take the steps, to reciprocate to those steps, to be responsive, to be restrained, to demonstrate the prudence and the patience needed to address these sensitive historical issues and to improve ties. Thirdly is South East Asia, where we’re working on multilateral architecture and capacity building? And the last, as I’ve mentioned is the economic agenda, not only the so-called third arrow, but TPP, energy development and

8 the support for structurally reforms in Japan that can expand and help revitalize Japan.

So, I’ve been long. Let me stop there and turn it over to my colleague.

[Applause]

Sheila Smith: Thank you very much, we will come back to some of those issue in our

conversation, but first Mark Lippert is going to share with us his thoughts on Secretary

Hagel’s trip to Asia and the US-Japan cooperation agenda. Mark, thank you.

Mark Lippert: Thanks Sheila, thanks Danny. Thanks to Admiral Blaire. In the intro it was

mentioned that I was one of Senator Obama’s earliest advisors, I would—or President

Obama’s earliest advisors working with him in the Senate. I would say that just let me

add an amendment to that, probably his earliest advisor on East Asia was Admiral Blaire

and I know he remembers this conversation he had well in the Senate dining room, I’m

probably embarrassing him a bit, but the Admiral was very kind in sharing his expertise,

his deep knowledge. It ultimately led to this thing called the DNI position and we’re

lucky to have him here today in his current role. So Admiral thanks for all you’ve done

for our country, thanks for inviting me here today, we really appreciate all of your

expertise.

[Applause]

Mark Lippert: Danny laid it out well, laid out the context. I’ve just done some sort of off-the-cuff

notes to try to key off of what he said and it’s much more narrow on the security side and

what I thought I would do is try to use Secretary Hagel’s trip to sort of juxtapose or have

as a lens into some of these issues that Danny raised and drill down a little bit more on

the security side. Let me just say at the outset too, look this is a very exciting time to be

working on security issues in the alliance, it’s very exciting, there’s a lot of dynamic,

energetic work from the Action Officer level all the way up to the Leader level. And, you

know, it’s been a great two or three years, a lot of this was started under the leadership of

9 Chip Gregson who I see in the audience, over at DOD and it continues forth today. Just to sort of tick of some of the highlights over the last couple of years, you know we’ve had our “2+2” in Tokyo, unprecedented. The announcement of the new Tippy Two radar site, the Environmental Impact Statement down in Okinawa, the Okinawa consolidation plan, all leading up to the landfill permit on the FRF to allow that to move forward. Then, of course, we’ve got the guidelines review, collective self-defense and a lot of capabilities that the US is bringing to the alliance, as are the Japanese. On the Japanese side, of course, Danny touched on the National Security Council, there’s the Secrets Law, there’s the new arms export control policy, and then there’s new, innovative things the Japanese self-defense force is doing in and around the region in South East Asia and beyond. So, again, very dynamic, very exciting, very, very opportunistic time to be working on security issues in the alliance. You know, I’ve also been fortunate to work for two

Secretary Defenses who have really embraced and been part of the catalyst for this momentum, Secretary Panetta and now Secretary Hagel and Secretary Hagel, you know, has been lucky enough to work with a great counterpart in Defense Minister Onodera.

Secretary Panetta was very fortunate to work with Defense Minister Morimoto who’s here, he’s responsible for a lot of the good progress we’re benefitting from today. So, with that I thought I’d just turn to the Secretary’s trip and kind of walk through a couple of the issues that he discussed in Japan and a little bit about their impact in the region.

You know, this was his fourth trip to Asia in just about a year. He also stopped in China and Mongolia and then hosted the first ever US-OSEAN Defense Minister’s forum in

Hawaii before he got to Japan. This was his fourth meeting with Defense Minister

Onodera, the visit also included meetings with Foreign Minister Kishida and, of course, the Prime Minister was gracious enough to spend a little time with the Secretary. You know, I think the other thing that I would highlight, just in terms of pure meetings, the

10 Secretary has spent a lot of time on the alliance and he has not, I would say, he’s worked to make sure that he reaches across the Japanese government and he’s also met with the new National Security Advisor here in Washington, he’s going to meet this week with the

LDP party chair, Mr. Ishiba, and, of course, he’s been on the phone a couple of times with the Chief Cabinet Secretary as well. So, you know, he’s looking at this as a broad comprehensive relationship, that’s not just about security but is about a whole of government approach, dealing with the security aspects. On the trip itself, really we covered five key issues, there were other issues that we covered, happy to get into that more, but just the five highlights in Japan, and, look, this audience, as Danny said, is an experienced one, so there’ll be familiar issues. But just to give folks a status update on where we stand after the Secretary’s trip would be appropriate here today. First North

Korea, I think the bottom-line here is that we share the assessment, it’s an extremely dangerous situation, and both the Minister and the Secretary, in their capacities, took steps in this recent visit to try to move forward a better defense architecture. We recommitted to trying to get the Tippy Two radar up and running—the second site up and running by the end of the year. That’s been an aggressive timeline. Both sides have truncated, I think, sore of the usual bureaucratic processes to try to get this done, because it’s so important. And then, of course, the Secretary also announced two new additional ballistic missile defense surface combatants that will arrive in Japan by 2017. That will bring the total number of surface combatants with that capability to seven by 2017. You know, there was a discussion, you know, this is not done on a vacuum in North Korea, obviously the sanctions track, the UN track was very important, we touched on that issue.

But, you know, we focused on the security side. And then obviously, on a little bit beyond just the bilateral peace, we had an in-depth discussion on the trilateral peace with the Republic of Korea, and I’ll get into that a little bit more. But, you know, the most

11 operative form, obviously, is trilateral cooperation on missile defense, dealing with the

North Korea threat and we had a good discussion there. You know, the take-away is that we are very much on a united front here with the Japanese in terms of that we want complete, verifiable, irreversible denuclearization of the Korea Peninsula and there was really no daylight between the Minister and the Secretary. The second issue that dovetails off the first was a good discussion on trilateral security cooperation with the Republic of

Korea. You know, we’ve seen some pretty good momentum, with the leaders in The

Hague. We had the Defense Trilateral talks, sort of approaching in the front window, and we wanted to kind of to do a touch with the Defense Minister to make sure that things were on track, that we kind of continued the momentum that we had, especially on the security cooperation front with respect to the Trilateral forum. The DTTs that we held here in Washington were very productive, they were very substantive, there was a lot of good cross talk between all three parties. We had a very good statement come out of it in the end and I think we’re looking forward for even more progress heading in to Shangri- la where we usually try to do a trilateral meeting at the minister level. So we felt like the bilateral stop in Japan helped us move forward a little bit on this issue and I think everybody underscores the importance there. You know, and I’d also say, just, you know, out of the DTTs and some of the conversations with both the Koreans and the Japanese, look we’re now moving the trilateral, sort of, cooperation out of the area. In fact, you know, we did a counter-piracy trilateral exercise in the Sen kamaya war (sp) at the end of the year, so there’s a lot of good, sort of, operational and policy work to be done there.

The third issue was, we touched upon maritime disputes, and Danny really covered the landscape there, I don’t have a lot to add to that. Other than I would just underscore that the Secretary of Defense’s messages both in public and in private were consistent, if not exactly the same, in Tokyo and in Beijing. He delivered the same message he did to

12 Defense Minister Onodera then he did to the Defense Minister in China as well as other counterparts that he visited along the way. So, you know, Danny articulated the policy, the Secretary made the point about Article 5, but he also, as Danny mentioned, did, you know, take a moment to emphasize that, you know, look at the end of the day we are very much supportive of a peaceful resolution to this situation. The treaty is there as a deterrent measure and it’s there to promote peace and security and that’s the business that the Defense Department is in, in the security side especially. But, ultimately, you know, these are two great countries with two strong frontline foreign ministries that are capable of working out a diplomatic solution, and that was something that the secretary emphasized as well. The fourth issue, quickly, was continued progress on posture. I touched on it a little bit at the outset. But, look, the big muscle movement that everybody tracks is Futenma and Guam. On Futenma, you know, the Secretary expressed a deep appreciation of the Prime Minister and members of the Cabinet for the landfill permit and the efforts of the governor there. That was—you know, we view that as an important step, a lot of work left to be done. I think that, you know, the next phase is sort of a planning— engineering, planning phase that a guy with a political science background cannot understand, but that’s moving forward. And we are looking, we are looking at ways of trying to expedite. And we have a very good, you know, Okinawa consolidation plan in place, but at the same time, if there are ways we can go faster and work creatively together to go faster, we are very much open to that on the US side, and I know the government of Japan is as well. On the peace of Guam, you know, we continue to make some pretty good progress as well. You know, the Congress was gracious enough to give us a couple of exemptions for certain projects, two big projects, there are other projects, but two big ones going forward, on the Upper Harbor and the North Ramp at Anderson and those continue. The Japanese side has shown more flexibility on how to spend their

13 money on Guam and we continue at DOD to make progress on the certifications that the

Congress has outlined to us in law that we have to have to make. You know, the Paycom

Commander has made a certification over the last couple of years, the Commandant of the Marine Corps. We’ve done the independent the independent study that was required by Congress. So we continue to both make progress on the certifications and then try to get these individual projects moving on the island so this can all come together all in one piece. I would just say that, you know, both sides, you know, you can feel the energy and commitment to this, you know, as I said things that used to take a lot of time, you know are moving faster. You know, At the Action Officer level, there’s just better cooperation and coordination, you know, from the technical all the way up to the political level. You know, you kind of would think, some of the real milestone I would put on that our example was the Okinawa consolidation plan that was just a great product, a very good cooperation level, both uniform, civilian all the way from political to technical folks. So, that, to me, really encapsulated a really good energy of folks working in and around that issue. Look, I said that big muscle movement on posture, but obviously the US is bringing a lot of capabilities to the alliance, really some of our best assets are being put forward in Japan. And, you know, just to tick through a quick list, you know, the P8s, new BMD platforms, the global Hawk rotations, the F35s by 2017, I believe, and then, of course, Ospreys, are all there. Those are high-end, high capability, high performing platforms, and, you know, we are proud to work with Japanese friends to bring those to the alliance. The Japanese are reciprocating, putting forward, bringing some of their best capabilities as well. And also working with us on basing and access and all of that, you know, all the things that go with that, that are very important, so, you know, I think there’s good progress there. Fifth, and last, is collective self-defense and the guidelines review, obviously that was a topic of discussion and, look, I mean, people here know that

14 the guidelines revision, you know, the last time we did this was 1997, and, you know, I think bottom-line here is three things have really changed, you know, the security environment has changed, Japan has changed, and the alliance has changed and you really have seen that from some of the cooperation we’re doing in—that we did in Iraq and Afghanistan, some of the things that the Japanese did in the Philippines to respond to the recent natural disaster there, new areas, space, cyber, peace-keeping, and then, you know, the 97 guidelines where we also talked a lot about, sort of, a forward area and a rear area, and the US was going to be in the front and the Japanese would, sort of, do the support. I mean, look, that’s not the environment that we’re in these days, right. It’s kind of a 360-degree environment in most of the situations we find ourselves in. So, I think for all those reasons, we agreed with the proposal brought forward to us first and formerly but former Defense Minister Morimoto, and he was a key driver of this. And I think we whole-heartedly agreed with his thinking, his rational, and wanted to energize this process. We’ve had a very strong, very good dialogue, both on the policy and the operational side. And, you know, our goal—stated goal is to wrap this up by the end of the calendar year. I think we are, you know, on pace to do that, having said that I think our, from the US side especially, we really want to get this right, you know. I think that the deadline has been helpful in moving things along, but, you know, I think deliberate speed is sort of the watchword of the day. And I think, you know, look, I think you do this so infrequently that it is important to get this right. On collective self-defense, you know, obviously this is a unilateral decision that the Japanese government has to make in consultation with its people, as, you know, Danny said, within the framework of the alliance, obviously. But, you know, Secretary Hagel voiced his support for this. This goes sort of hand-in-glove with the guidelines review. Obviously, if there is a change on collective self-defense, we could fold that in to the guidelines review, and I think that

15 would be sort of the, you know, a good solution. But, you know, again, and this is a decision for the Japanese government to make. I think our—what we have said in the US side, is just we’ve underscored the importance of transparency, it’s transparency and consultation, that doesn’t just apply to this issue, it applies to a whole host of issues on security in North East Asia and beyond. And, you know, our belief is you can do both, you can have good consultations, good transparency, work—listen to neighbors, to friends, to partners, but also bring more flexibility and military capabilities to the alliance, it doesn’t have to be a zero-sum game, and that’s something we’re working hard to do. You know, in closing I would just say, all of this, you know, as Danny mentioned, sort of, you know, foreshadows, or actually not foreshadows, but, you know it helps move Japan and the US into a more regional role and out-of-area role, you know, we’ve seen this in the discussions of our defense trilateral talks. We’re now talking about areas that I never thought we would, you know, just a few short years ago. You know, you’ve seen trilaterals between, you know, us and the Australians, us and the Indians, you know, it’s just been a very—you can sort of feel, you know, the bilateral peace sort of turning into a more almost extra-regional and multi-lateral peace, as we go along. So, I just, you know, think we’re strongly in support of that here at DOD, we think it’s, you know, a huge, a huge help and a great partnership and, you know, folds nicely into the core functions of the alliance. Finally, or just to say, you know, all of this is, you know, really part and parcel of the rebalance strategy. You know, as Japan, you know, I said it is a lynchpin of the rebalance strategy, and really what we’re trying to do, working with the

Japanese in the context of the alliance, is, you know, continue that security baseline, that security umbrella, that we’ve worked with allies, friends, partners in the region to maintain an environment over the last several decades that has helped lead to impressive economic and political and cultural growth and we want to keep that momentum going.

16 It’s in our partners’ and allies interest, but more and more it’s in our interests, so we want

to—we view this as a both-hand equation and we want to keep this going. So, with that I

will stop there and turn it over to Sheila for any questions. Thanks.

Sheila Smith: Thank you Mark [U/A]

[Applause]

Sheila Smith: Thank you. You, both of you have outlined the very rich and full agendas that we

have across the board with Japan, and I think you’ve done it very well. If we take a step

back, clearly the Asia Pacific is confronting a pretty tremendous moment of geostrategic

change, and it’s not all about China, right? It is about a broader accommodation of this

new rising power as well and you both have pointed that out in your remarks. You know

that there’s anxiety, right, there’s anxiety in the region about this geostrategic shift,

there’s anxiety here in Washington, right, about our ability to keep pace with the events

in the region and this larger challenge. So, to what extent are you confident that we can

keep pace, and to what extent—what do you see that we need to do now to look out five,

ten years, so that we’re ready down the line when China is a bigger power, perhaps a

more integrated power, but perhaps we don’t know yet? So if you could give us a short

term, how do we keep pace with all this change, effectively, and what do we do for our

longer-term staying power in Asia? Danny, can we start with you?

Daniel Russel: Sure. Look, anxiety is part of human nature, and anxiety is always going to be an

element of the way that the US is viewed, it’s either too much or too little, in the eyes of

many people, and you have to accept that, without dismissing it. I think, ultimately, the

most persuasive evidence of US sustainability, credibility, is our economic recovery and

the ability of the United States to create a framework through TPP, which we are doing,

that is comprehensive and high standards that creates continuity and predictability in

terms of economic growth, is a critical component to the other contribution that we’re

17 making on the security side which is to maintain and sustain regional stability, that’s very

important. Now these, as I said at the outset, the longer term strategy isn’t driven by

crises but it is tested by crises, and it’s a strategy that starts with friends and allies that

seeks to develop regional institutions and regional architecture, not because it’s in an

international relations boutique project, but because we believe that there is a kind of

culture of rules and a role for peer pressure that is important. It’s also an opportunity to

create a forum in which all the countries in the region, including the emerging powers,

including India, including Indonesia, but, of course, particularly China, have an

opportunity to interact, have an opportunity to test and develop and amend these rules,

both formal and informal rules. There’s clearly a demand for US engagement, that’s part

of what keeps us there and, I think, keeps us credible, and we’ve met that demand, and in

terms of the long term, I’m pretty confident we’ll continue to meet that demand in the

form of, say, annual meetings between the President of the United States and the ten

leaders of OSEAN, active participation in the East Asia summit, in AIPAC and so on and

the whole range of security and economic and political, cultural engagements, simply

because they are driven, not by a theory, but by a conviction that the US interests, short

term and long term, economic and security, rest in an active engagement and leadership

role for the United States in the Asia Pacific region.

Sheila Smith: Thank you Danny. Mark, if we look out, and I think over at DOD you’ve got the

task of making sure our alliances are effective, that our defense commitments are—that

we have the readiness for our defense commitments, should that occur, but there’s also

this longer term process of a military-to-military engagement with China, to try also to

build the institutional engagement on the security side in the Asia Pacific. Do you feel

we’re keeping pace? What do you think we need to do to make sure that five to ten years

from now we’re in good shape?

18 Mark Lippert: Thanks for the question. Look, I do think we are keeping pace. You know, I think

our track record, I’ll just speak on the DOD side is pretty strong so far. I mean, you look

at Australia, Singapore, the recent agreement in the Philippines, what I just talked about

with Japan, the new SMA agreement in Korea, sorry I’m using an acronym here, but it’s

DOD speak, you know, updating our policy on New Zealand, you know, a New Zealand

ship now can visit military ports on a waiverable basis. And then, you know, the

unprecedented meeting in Hawaii with the ten OSEAN Defense Ministers. So, you know,

look, I think we have kept pace and are keeping pace and are probably, you know, a step

ahead at this point. Obviously, you know, the other side what looms large is, you know,

for us is a return to sequestration, and that does loom large. I think that we’ve managed

our way through it, a couple of tough years, a lot of downward pressure on the top-line, a

little bit of a reprieve, you know in ’14 and ’15. But, you know, if we return to

sequestration, I think it will cause a lot of instability and problems within the Department.

On the longer term picture, you know, it’s, you know, DOD is by nature a planning

organization, and, you know, I think part and parcel of that in terms of an example is the

guidelines review, right? We could probably keep doing what we’re doing, you know, for

a little while longer, but I think, thanks to the vision of Defense Minister Morimoto,

Secretary Panetta, Secretary Hagel, and now Defense Minister Onodera, is we’re getting

ahead of it, right? We’re updating the alliance for the next couple of decades to deal with

these—and there are other examples of this within the department and with our allies.

Final point, just on the China, mil-to-mil piece that you alluded to, look, I think we are

working to deepen and broaden that everyday, we have new, unprecedented areas of

cooperation. The Chinese in Rim-Pac is, you know, I think a watershed, the dialogue with

Secretary Panetta was, you know, it was frank, you know, but it was real, a real back and

forth, we had it sort of moving towards a real dialogue with the Chinese and we are

19 deeply appreciative of them allowing us to see the carrier, which, again, was, for I think

we interpreted it as a symbol of us, you know, raising the issue of transparency and

consultation with them. So, again I think it is both and equation and we are trying to do

both at the Department of Defense.

Sheila Smith: I have three more questions, but I’d really like to give the audience an opportunity,

because they rarely get that opportunity. Let me see, there’s only—the gentleman in the

back, I can’t see you from here, so. Please identify yourself and be very, very brief

please.

John Zan (sp): John Zan with CTI TV of Taiwan. Security Russel, you were saying that what the

President said in Japan on the Dioyutai Senkaku issue, were not anti-China, would you

think that your Chinese colleagues in Beijing agree with you? Are you concerned in any

way that this may further alienate or even antagonize the Chinese, pushing them on a

strategic scale to, for instance, Russia? Thank you.

Sheila Smith: Thank you so much, I don’t mean to cut you off. There are sensitivities in the

region, clearly, and we have these challenges now, between allies as well as between the

others in the region. What do you see your role, Danny, in trying to smooth away, if we

can, smooth away between Japan and China, or Japan and South Korea, and in the

context, not only of the island disputes, but in the other intentions as well.

Daniel Russel: Well I think our role is to provide a credible and dependable framework that

helps maintain security and that marks off bounds of coercive or threatening behavior. As

Mark pointed out, there’s no good reason why the political and security related

differences among the countries in the Asia Pacific region can’t be managed, or,

overtime, can’t be resolved through diplomatic means. Now, we’ve made clear that,

ultimately recourse to international legal mechanisms is a legitimate form of addressing

some of the problems, as witness the case of the Philippines and their Itlos filing. But to

20 the gentleman’s question, and without presuming to speak for the government of China,

we have very open, direct, robust, and multilayered set of communication links with the

Chinese that allow us in a structured, as well as in an informal way, to explain what we’re

doing and why, what we’re concerned about, what we’re asking for towards China. I

think that the Chinese have all the tools that they need to understand that what the United

States is signaling is not inimical to China’s interests, this is not an effort in any means to

contain China, but that we are adamant in the view that the territorial disputes and other

differences between China and its neighbors need to be resolved in a peaceful way and a

diplomatic way. We are also pretty forthcoming with our advise, from one big country to

another, as the President has made clear, that it’s essential that big countries, like the

United States, like China, tread carefully, resist the temptation to throw our weights

around, manifest respect for, not only internationally law, but the conventions and the

norms in the region. We see this as a recipe for China’s growth, for China’s good

relations with its neighbors and for a region that thrives.

Sheila Smith: Thank you Danny, Mark you’ve had some challenges along the way, in terms of

the conversation with Beijing, for example, on how to manage relations with its

neighbors. Risk reduction has become a pretty broad theme for our thinking about how to

talk with China. And you’ve also had to manage ADIZ announcement, can you share

with us your sense of how much progress you sense in terms of persuading China, that its

interests are really better served through a more collaborative conversation on military

and strategic issues with its neighbors and with us.

Mark Lippert: Yeah, I think, I mean, Sheila, that, you know, it’s—we’re a very clear-eyed view

on our relationship with Beijing. I think, you know, I think we know that there are going

to be—it’s going to kind of move forward, you know, I would say in fits and starts for

lack of a better word. There’s going to be progress, there’s going to be difficulties, but I

21 think that comes with the territory, with two big countries often. So, I, you know, look, I

think on the positive side of the ledger, you know, I think we are seeing deeper, broader,

more mil-to-mil cooperation, you know, than we have previous and I think, you know,

the dialogue, as I mentioned is getting better, it’s getting more real, less scripted and we

are sort of seeing tangible outcomes of these conversations. So I think that’s on the

positive side of the ledger. You know, on the other side, look, we’ve got a long ways to

go, and it’s a very small channel, it’s not as big, broad and robust as we’d like it to be,

you know, I think both sides, you know, still need to sort of work in terms of trying to

find more informal opportunities as well as the formal dialogue. So, I think that’s kind of

where we are on that piece of the mil-to-mil equation.

Sheila Smith: Great, we I want to thank you both for spending some time with us this morning, I

know how pressing your schedule is and I promised I’d get you out. So would you join

me in thanking Daniel Russel and Mark Lippert. Thank you very much.

Daniel Russel: Thank you Sheila.

[Applause]

00:55:30

[END RECORDING [Full Event PC 2]] DATE: [5-5-14]