CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES (CSIS)

CSIS-BOB SCHIEFFER SCHOOL OF JOURNALISM DIALOGUE: SOUTH CHINA SEA: A KEY INDICATOR FOR ASIAN SECURITY COOPERATION FOR THE 21ST CENTURY

MODERATOR: BOB SCHIEFFER, ANCHOR, “FACE THE NATION”, CHIEF WASHINGTON CORRESPONDENT, CBS NEWS

SPEAKERS: KURT CAMPBELL, ASST. SECY. OF STATE, EAST ASIAN AND PACIFIC AFFAIRS, U.S. DEPARTMENT OF STATE

AMBASSADOR STAPELTON ROY, DIRECTOR, KISSINGER INSTITUTE ON CHINA AND THE UNITED STATES

DAVID SANGER CHIEF WASHINGTON CORRESPONDENT, THE NEW YORK TIMES

ERNEST BOWER, DIRECTOR, SOUTHEAST ASIA PROGRAM, CSIS

TUESDAY, SEPTEMBER 28, 2010 5:30 PM WASHINGTON, D.C.

Transcript by Federal News Service Washington, D.C.

H. ANDREW SCHWARTZ: Good evening and welcome to the Center for Strategic and International Studies. My name’s Andrew Schwartz and I’m our vice president for external relations. We are proud to be able to host this series in partnership with Texas Christian University and the Schieffer School of Journalism.

We’d also like to thank our sponsors: The United Technologies Corporation, who have been generous allowed us to make this possible. I’d be remiss if I didn’t recognize one of our distinguished guests here: Adm. Keating, who is in charge of PAYCOM and a very good friend of the center. Admiral, welcome. (Applause.) Thank you for being here.

We have a terrific panel tonight. And I’ll let you get right to it. But I’d also like to thank Assistant Secretary Kurt Campbell. Who, of course, was here at CSIS for many years – a great colleague and a great friend – and with that: Bob Schieffer.

BOB SCHIEFFER: Thank you very much, Andrew, and welcome to this first fall session of the Schieffer School of Journalism forums here held with our Washington partner CSIS. Today’s topic, I have to say, is exactly the kind of thing that I think is just perfect for these forums.

We’re going to talk about policy in the South China Sea. This is something that has gotten only scattered notice from experts in the field. And yet it could be of enormous importance of what’s going on out there. And we have a – you know, for example: Washington is leaping into the middle of a territorial dispute in the South China Sea.

This is an area that’s rich in oil and gas, fish – a dispute between China and the Southeast Asia nations. Seldom have we gotten in the middle of something like that. We are planning naval exercises with South Korea and waters that China is claiming to be its territorial waters. We’ve all been reading in the paper about China and Japan in this incident involving the Chinese fishing boat captain who the Japanese released back to the Chinese.

So what does all this mean? Is there a new American attitude toward the South China Sea? Has China taken a new attitude towards these waters? And we really have a great group here to talk about this. Right here is Kurt Campbell, who is the assistant secretary of state for East Asian and Pacific Affairs. You’ll find biographies of all of our panelists in your booklet, so I’m not going to read those, but safe to say, these are all experts in this field.

Stape Roy of the Woodrow Wilson Center, he is a career ambassador, spent more than four decades in the Foreign Service. Ernest Bower, senior advisor, director here at the CSIS Southeast Asia Program, an internationally recognized on economics, politics and business in Asia, and of course, my old friend David Sanger, the chief Washington correspondent for the New York Times, also author of a New York Times bestseller, “The Inheritance”.

Well, I’m going to get right to it, and I think before we get out to sea – (laughter) – we need to talk about what’s going on in North Korea, Kurt, because Kim Jong-il has promoted his youngest son a four-star general. There’s been some sort of a promotion for his aunt. What does this all mean and what do we know about it?

KURT CAMPBELL: Well, first of all, Bob, it’s a pleasure to be here, congratulations to you for this wonderful dialogue and to TCU, and it’s great to be back at CSIS among so many friends and colleagues. I know we’re going to talk about the South China Sea today, but obviously there’s an enormous amount of attention about what’s transpiring in North Korea. We’ve been watching the preparations for this party conference for some time. There appear to be reports out of Pyongyang about the promotions that you have referred to.

The truth is that we know remarkably little about Kim Jong-il’s youngest son. We think he is around 27 or 28 years old. Pictures that we have of him are uncertain, from an earlier period. We think he studied abroad for some period of his high school or education. We know almost nothing about him, and we believe that the aunt you’re referring to is married to one of the very senior officials of the North Korean party and is the sister of Kim Jong-il. Beyond that, to be perfectly honest, we are watching and looking for details just about like everyone else.

Recently, we’ve done a careful look at what we think we’ve known and compared that with predictions associated with North Korean developments, and it is interesting and cautionary to see how wrong we’ve been in the past. And so I think our key here is to be careful, to make sure that we’re in very deep consultations with our friends in the region. I’ll be in Japan and South Korea next week. We obviously want to hear their views.

Our positions about what’s necessary in terms of reengagement and six-party talks and other kinds of engagement remain consistent, and frankly, we’ll be waiting and watching carefully.

MR. SCHIEFFER: I’m going to go to David, because David, I know you have been doing some reporting on this. What do you pick up about this from intelligence people?

DAVID SANGER: Well, as Secretary Campbell said, we know very little about Kim Jong Un, and the fact that we’re not even certain what year he was born gives you the depth of the black hole that’s out here. I have had some U.S. government officials who spent a lot of time looking into his background, colleagues of Kurt’s in the U.S. government, say that it was not until they actually began to look into Kim Jong Un’s background that they began praying for Kim Jong-il’s good health – (laughter) – which I had never really heard before from U.S. government officials. Not usually a common sentiment that you hear.

During the last trip to China that Kim Jong-il took, which was about four weeks ago, the Chinese quite conspicuously took him down to a number of areas where economic development had flourished, places where they had begun early with market reforms. And this would have been someplace between the fifth and 50th effort to try to convince him to do some market openings. It would, of course, open up the society along the way, and I think the big question is, does this transition indicate that they are ready to go do that?

So far, there is absolutely no evidence of that, at least that I’ve seen, and there is considerable evidence that the leadership is concerned about what it’s like to turn a country in this kind of straits over to a 27 year old. Remember, when Kim Jong-il took over, he had had years of being trained by his father, and everything that we have seen happen in the past few weeks and months is a compressed version of what they did over 20 years with Kim Jong-il, and so they just don’t know what they’re getting. And the big question is, why are they stacking so many members of the family around him?

MR. SCHIEFFER: Do you – when you say, people were praying for his father’s good health when they realized what was happening here, is that just because of inexperience or because they’re rushing this, or is there something different about this son?

MR. SANGER: I think what they’re worried about is – and you saw this with the sinking of the South Korean ship – that they’re quite concerned that in order to establish his military credentials, especially now that he is newly – I don’t know how many stars he got the other day, but four stars? That’s a pretty good promotion from not being in the military the day before. (Laughter.)

I think their big concern is that in order to establish his stripes, he would provoke a series of incidents that would be a way of establishing his credentials as anti-American, anti-South Korean, you know – do exactly what his father did over a time period to establish his credentials. There are interpretations of the sinking of the South Korean ship, that it was part of this, and it’s got to be of concern to many in the U.S. government with the president going to Seoul just after the election.

MR. SCHIEFFER: Stape and Ernie, before we kind of go to sea here, do either of you have anything you’d like to add to what you’ve heard?

STAPLETON ROY: No.

ERNEST BOWER: No.

MR. SCHIEFFER: Okay, well, let’s talk about this, and I want to go back to Kurt, then because why did the United States decide to stake out this new position in the South China Sea when for years, we have simply said that it’s not our business to take a position on territorial disputes in the region, and just hope that they would be resolved peacefully?

We seem to be taking a different stance. Just tell us exactly what happened here and then why we took the position we did.

MR. CAMPBELL: Actually, Bob, if you look very carefully at what Secretary Clinton said, and every word was carefully delivered and issued as opposed to the reporting of that – (laughter).

MR. SCHIEFFER: I hope you’re listening to this.

MR. CAMPBELL: Yeah. You will see –

MR. : Didn’t take Kurt long to go into government here – (chuckles).

MR. CAMPBELL: You will see that the U.S. position that Secretary Clinton enunciated was very consistent –

MR. SCHIEFFER: Well, tell us exactly what this dispute is, and then take it from there.

MR. CAMPBELL: Right. So what we have seen in recent years is the South China Sea is really a vast area of ocean in which there have been for decades, generations, conflicting, overlapping planes of sovereignty. The traditional U.S. position has been one that we do not take a position on sovereignty, and indeed, we are not a claimant in these waters. But we have a very strong national interest in maintaining freedom of navigation and freedom of the seas. We exercise those in circumstances, both there and elsewhere in Asia.

What we have seen in recent years is a dramatic increase in incidents in the South China Sea, among a variety of different players – incidents against fishing, potential energy exploration, other kinds of activities on lonely island atolls. And what we were concerned by was an environment of escalating tensions that had the potential of undermining peace and stability in the region as a whole. And so what Secretary Clinton very carefully underscored was a longstanding American position about peaceful resolution around diplomacy, around freedom of navigation, around the opportunities associated with peaceful economic pursuits.

And in many respects, it was very consistent with the position that was laid out in 1995 by then-Secretary of Defense Perry and in the first part of the last decade during the Bush administration. So it’s very consistent with longstanding American positions overall, in terms of this particular region.

MR. SCHIEFFER: But the Chinese don’t see it that way, apparently.

MR. CAMPBELL: Well, again, I would just simply state, if you look carefully at all of our back-grounding, all of our public statements, every single statement and comment made by a U.S. or other official, you will never hear one country mentioned.

We have not aimed this at any country. This is a determination that we believe that the best way forward is through a process of dialogue, which, in fact, began with the culmination of the statement of conducts in 2002, in which the ASEAN, the countries that surround the South China Sea – some (claimants ?), some not – and China agreed to work together on procedures for how to deal with potential problems.

We thought that was an important first step. We want to see some of those elements codified more clearly and be used as a basis for dialogue going forward.

MR. SCHIEFFER: But let me understand – did she not offer to help mediate disputes?

MR. CAMPBELL: No, no, no. In fact, very clearly –

MR. SCHIEFFER: She did not –

MR. CAMPBELL: No, she offered to assist –

MR. SCHIEFFER: But aren’t the Chinese taking that view?

MR. CAMPBELL: Again, I think it’s very careful to look at what we’ve said. And we are prepared to assist, either through workshops or – which we do a lot through. The Adm. did many of these in Hawaii to assist with search and rescue, with issues associated with piracy and the like.

These are the problems, in many respects, of the South China Sea. And so our goal here, frankly, is to create a more stable, predictable environment. And we have no intention of taking sides or stoking up tensions in the South China Sea. This is a desire to create dialogue, a degree of predictability.

And frankly, I will also say, the ASEAN Regional Forum in which Secretary Clinton enunciated the American position quite clearly, she spoke after a number of states – over a dozen spoke out about the need to maintain peace and stability in the South China Sea, about a clear determination for a closer dialogue on maritime security. So in many respects, we are not intruding into a circumstance. We are responding, in many respects, to a set of circumstances which we think basically are in the interests of all the players, including many of the claimant states.

MR. SCHIEFFER: Well, let me ask Ernie. It’s been reported that Chinese officials privately are referring to the South China Sea now as a core interest of China. Number one, is that true? And if so, what does that mean? And does that change things?

MR. BOWER: Well, I think it’s – we know the Chinese – some Chinese have claimed that the South China Sea is a core interest. To whom and when they said it are now being disputed.

MR. SCHIEFFER: But what does that mean?

MR. BOWER: Well, I think that’s a very good question, Bob, because I think that’s really interesting. It’s interesting because the Chinese are clearly sort of clawing back from that public position. They definitely saw a real reputational blow after their – the way they reacted to Secretary Clinton’s remarks in Hanoi. A lot of the Southeast Asians felt like this was the unmasking of a China that had been on a two-decade charm offensive in Southeast Asia, and they had done a great job with it, believe me. Really good job. You know, the script for the Americans was more that we’ve been diverted and not as focused.

So I think the Southeast Asians felt, well, wait a minute. We’ve got some atavistic, sort of, concerns about what this big neighbor to the north is thinking about, and after, sort of, this economic diplomacy, it’s got us feeling pretty good. If the punch-line is that we need to heel to Chinese sovereignty, well then, wait a minute, we’re not sure we want that deal. And I think that’s what the reaction is in Southeast Asia, and the Chinese have read that reaction, and they – I believe they – that’s why they’re, sort of, pulling back on when – to whom and when did we say core interest. But they said it, it’s pretty clear they did.

MR. SCHIEFFER: What does that mean to you, Stape?

MR. ROY: Everything said so far is accurate. Kurt has laid out the U.S. position very well. To understand the Chinese position, I think you have to look at it this way: They’ve had this honeymoon period with Southeast Asians, and their diplomacy has been very effective.

And in recent years, that’s begun to unravel a bit over disputes in the South China Sea. It hasn’t just been driven by China because back when I was serving in Beijing, Vietnam was issuing oil-drilling contracts in areas that China considered Chinese territory, and there were disputes going back to that period.

So internally in China, there has been pushback against a too-soft policy that was not adequately defending China’s interests in the South China Sea. Now, it’s very difficult to understand the Chinese position on the South China Sea. The only thing that is crystal clear about it is that they believe they have indisputable sovereignty over the South China Sea area.

But every other aspect they have not defined clearly. That famous nine-dotted line that goes down like a bag, sort of pulling in all of the South China Sea – the Chinese themselves have never defined exactly what that means. Maj. Gen. Luo Yuen, who has been an outspoken advocate of Chinese sovereignty down in the area has recently called for China to define, does that line mean that it’s the limits of the territorial sea? Does it mean the limits of their administrative jurisdiction? It’s not clear.

The Chinese do not speak with precision about the South China Sea. Some Chinese make claims that are not documentable in terms of official actions by China. The use of the term “core interest” – I can show you Chinese language material that refers to the South China Sea as a core interest. There is no official Chinese public statement making it a core interest.

Chinese specialists on the South China Sea debate the question of whether it should be considered a core interest or not, with substantial voices saying it shouldn’t be considered a core interest. If there has been an official Chinese statement making it a core interest, they would not be debating the issue that way, so that we have to be very careful in understanding where China is on this question.

To understand why China reacted the way it did to Secretary Clinton’s statement, which, as Kurt pointed out, is not a new position for the United States, think about when Canada was having problem with Quebec, and Gen. DeGaulle – President DeGaulle – offered to be helpful.

The Canadians were outraged because they thought his offer to be helpful was interfering in an ultrasensitive issue which they did not want the French becoming involved in.

So the Chinese have reacted to the Secretary Clinton’s statement that way. It’s not that they parsed her language carefully, the way Kurt did, and understood exactly what she was saying. They saw the United States coming into an issue which China wants to deal bilaterally with the four claimants in Southeast – it’s not with all of the Southeast Asians. There are only four countries down there, and it doesn’t want others involved in that dispute. And the United States, by taking a position on it which is compatible with international law and the U.N. Convention on the Law of the Sea, the Chinese feel that we’re interfering in a sensitive issue. So that’s where they’re coming from on the question.

MR. SCHIEFFER: The other question, the other instance that’s been in the news, of course, has been the Chinese trawler captain who, according to the Japanese, rammed a couple of their boats. The Japanese arrested him, as it were, but they’ve now sent him back to China. Let’s just go – Kurt, why don’t I start with you. What do you make of that incident and what was that all about?

MR. CAMPBELL: These islands are sensitive and disputed areas between China and Japan. The United States does not take a position on sovereignty. However, when Okinawa reverted to Japanese control from the United States in 1972, the Ryukyus and these islands were part of that, and so one of the things that Secretary Clinton and others in the U.S. government very clearly articulated last week is the American position, which is, of course, that we do not take a position on ultimate sovereignty, but we are very clear about what our security responsibilities are in connection with these particular islands.

I must say that this issue escalated rapidly, and what we have seen over the course of the last several years are substantial efforts to improve Sino-Japanese relations. And I think it is, frankly, in the deep interest of the United States to see an Asia in which Japan and China are getting along well, are working well together, and frankly, in a very short period of time, much of that was held at risk. And we saw substantial tensions rise in China almost overnight.

And I must say that although he’s received some criticism in Japan, I think Prime Minister Kan and Foreign Minister Maehara handled a very difficult situation with statesmanship, and he needs to be recognized in that respect. He understood that there was a larger issue at play here, a need, a desire for these two countries to work together, and I’m confident that over time, that some of the damage that has been done can be repaired expeditiously.

MR. SCHIEFFER: Do you think, Ernie, that the Chinese in the beginning made more out of this than they should have?

MR. BOWER: Well, I think the issue on China – and I look at it through a Southeast Asian lens – is that – but I think the Japanese would share this view – is that we sort of see two Chinas right now. There’s the China that – the group of Chinese that are saying, wow, we’re powerful, we’re on the world stage, you know, what can China do? What can we do? And

unfortunately, that seems like there’s a lot of guys in the Chinese military, the PLA, who might be in that group.

The other group is the ones who say, you know, what should China do? And there tend to be some of the guys who I think are going to come in – are likely to come into power in 2012, and the Deng Xiaoping sort of school who would rather sit back and let China build its strength and not challenge the U.S. or others until they’re ready, which is sometime long in the future. And I think that’s what we’re looking at, sort of a split China, and that’s how I look at the Japanese – the situation with the Chinese captain. It’s really interesting to see the netizens in China and the nationalists sort of push the polity in China up to the edge of saying and doing things that are a little bit scary.

MR. SCHIEFFER: Stape, let me ask you, another place where there has been some tension is the United States conducting – planning to conduct naval operations with the South Korean navy, and the Chinese are objecting to that. Is that objection something new here? IS this a new assertiveness here, that they would be talking about this in the way they seem to be?

MR. ROY: It is new, because the circumstances are different. I mean, we have operated in the Yellow Sea previously, including aircraft carriers, and the Chinese haven’t made a peep. The problem at the moment is, China has an extraordinarily difficult position with North Korea. You have this very sensitive succession process underway there, they took an outrageous action by blowing up a South Korean Corvette back in March. China was in a position where it didn’t care what an objective investigation showed. Its position had to be determined by the sensitivity of its relations with North Korea at the moment.

And therefore its position doesn’t have an underpinning because everybody else believes that North Korea blew up the South Korean Corvette and that it was an act of very dangerous provocation at a sensitive time. So here is China in a situation where North Korea has taken an outrageous action, which provokes a legitimate response from South Korea and its ally the United States.

And that has the potential to stir up more trouble in North Korea. And more trouble in North Korea is more trouble for China. So China is caught in a situation where it’s damned if it does and it’s damned if it doesn’t. And if you look at China’s actions they have not been very coherent.

They essentially want everybody to react calmly and peacefully to an act of war by North Korea. It’s a difficult position for China to maintain. But in terms of their national interests you could understand why they’re taking that position.

MR. SCHIEFFER: Kurt, I take it the United States has no plans to not go ahead with these operations?

MR. CAMPBELL: Look, we don’t talk about sensitive military operations. But I would simply say that Chairman Mullen and Secretary Gates have been very clear that we will conduct

military operations. We do on a regular basis. This is nothing unusual. I would just say, Bob, just two things on that if I could.

These exercises are not aimed at China. And I think it’s very important to underscore that quite clearly. And if you look over the course the last several months since March – and I really like the way Stape laid this out. This act against South Korea was a dramatic attack against an unaware ship – and an enormous loss of life. And it was a terribly difficult issue, politically, for South Korea.

And President Lee Myung-bak managed this issue with a calm and a statesmanship that, frankly, was remarkable. Incredible. And the United States has done everything possible to stand with him through every step of this very difficult, arduous, journey.

One of the things that’s absolutely critical is to demonstrate the strength of the U.S. South Korean alliance. And our preparations both through exercises and other kinds of operational matters are a very clear signal to North Korea about how further provocations will be treated.

And so I would simply say that the issue here – and, again, I like Stape’s analysis – is such, however, that, in fact, what’s really interesting is how careful and restrained the response from South Korea has been to what is really an outrage.

MR. SCHIEFFER: David, you’re the expert here. Would you like to – we’re going to go to the audience for – there’s a lot of experts out there.

MR. SANGER: A lot of experts in the audience and many on this stage. All right, when I think about what I’ve heard all of our panelists say here, I think we’ve learned something about Chinese behavior in the past few weeks and how they are beginning to act more broadly on the world stage. So what have we seen? In the neighborhood, whether it’s the South China Seas or the (Shangchuan Islands?).

We’re seeing old claims that have been around for a long time that they are suddenly willing to go out and make an issue of it. When I lived in Japan, which was from 1988 to ’94 when I was there as a foreign correspondent for the Times there would occasionally be incidents in the (Shangchuan Islands?), which are largely uninhabited and so forth.

And they would be dealt with as consular issue. You know, somebody would wander into the area – they’d get a couple of embassy people together to get them back. The Chinese went out of their way to escalate what didn’t necessarily need to be an escalated issue. And that gets right to what Ernie said: this battle within China between many different factions. I think there are more than two views on this about how they express themselves.

North Korea, as Kurt has pointed out – as Ambassador Roy said, is a special case for the Chinese because they feel that this is their client state. They’re going through a very difficult period of transition. And they don’t want to see a collapse that results in having South Korean and American troop’s right up on their border.

And then there’s how they’re dealing with us, which is still a pattern of deflection. I think back to the president’s meeting in New York last week with Wen Jiabao, the Chinese prime minister, mostly about currency. Not Kurt’s territory but his wife’s territory – (laughter) – at the Treasury. And in that case, they spent two hours on the issue. And it was a very courteous exchange in which the Chinese were deflecting but not being very confrontational.

This is a range of Chinese reaction to different problems that I don’t think we used to 10 or 15 years ago.

MR. SCHIEFFER: I have a question here. If tomorrow morning the Chinese navy entered the South China Sea and it became clear that the Chinese were beginning to drill for oil or natural gas out there. What would the United States response be?

MR. CAMPBELL: They’re two things that teach you, Bob, when you go into government. (Laughter.)

Can I just say just quickly on that? Last week, when we were in these meetings up in New York – my wife is an official at the Treasury Department. And so they were rushing around from these summoned meetings.

And I sit down in a meeting ready to meet an Asian leader. And I look to my right to the person sitting next to me and it’s my wife. And she’s supposed to be in Washington. And I said, what are you doing here? And she said, what are you doing here? (Laughter.) And we couldn’t figure out who was picking up our daughters. (Laughter.)

MR. SCHIEFFER: I have some inside information. I know who’s picking up the daughters. (Laughter.)

MR. CAMPBELL: So that was a real diplomatic challenge there at that particular meeting. (Laughter.) But the two things they teach you about at the State Department – one is that you do not answer hypothetical questions – (laughter) – at least, in front of a good collection of your closest friends and media from and throughout Asia. And secondly: You don’t comment on currency matters. (Laughter.) And so I try to follow those two issues.

But let me – the first part of your question. The truth is that many states operate actively in the South China Sea. There are militaries – the Chinese have many exercises, as do we, as do the Indonesians, the Malaysians, the Vietnamese and other.

Our general proposition is freedom of navigation, freedom of entry, a (confident?) environment for commerce. These are the primary interests of a great seafaring nation like United States. And we believe these are the interests that animate all of the countries of Southeast Asia and China as well.

MR. SCHIEFFER: So Ernie, you’re not – as the CSIS director, you’re not bound by these constraints? (Laughter.)

MR. BOWER: I really hoped you wouldn’t creep that over my way. I thought we’d give it to the diplomat who had four decades of service. I don’t know. I mean, I think it’s a real hard question. I think the Vietnamese – I was in Hanoi when the Chinese really started battling the Vietnamese around over some of these offshore oil drilling by multinational corporations.

And the Chinese were saying you can’t do this. Literally calling oil companies up and saying you’re in the wrong place. Don’t do this with the Vietnamese. And I think the Vietnamese were really looking for some sort of a signal from the United States. And I think the answer – I mean I think the answer – I mean and I’m not in government.

But the answer that I think that they heard – and I didn’t hear this directly from anyone in the U.S. government – was, you know, the 7th Fleet is not going to roll into, you know, Cam Ranh Bay to protect the interests of an oil company.

MR. SCHIEFFER: Stape, you’ve been dealing with that part of the world for a long, long time. How are the ASEAN nations reacting to this, kind of, new attitude were seeing in the South China Sea? And if you’d like to add on to what Ernie said there.

MR. ROY: Well, let me just provide a brief add on to it. The Vietnamese have been active on oil and gas projects in the South China Sea. The Philippines has been active on oil and gas projects. If China begins to be active oil and gas projects there’s nothing inherently wrong with that.

If they do it 13 miles off the Vietnamese coast then there’s a question of a provocation that raises issues of tension, potential conflict and that would be of concern to us. But the mere fact that China would engage in oil and gas projects in areas that they consider to be within their legitimate rights is not in itself a provocative action.

The other part of your question was –

MR. SCHIEFFER: How are the nations out there reacting to this, kind of, what we’re seeing. This new attitude by China and by the United States – as the Chinese would say there is, anyway.

MR. ROY: Everybody in Asia has noticed that China has been more assertive in pushing forward its interest’s vis-à-vis countries around it over the last few years. And it’s a matter of concern to them. But we need to remember that what they say to us and what they say to the Chinese are two different things.

And so we need to be careful not interpreting how they’re reacting strictly in terms of how we are seeing the situation. But recognize that we need some outside perspectives on it also. But I’ve talked to a whole range of Asians. And I’ve gotten a consistent view that they are noticing what we are noticing.

I do not sense deep alarm because they don’t think it’s going to get out of control. But if anything it has increased a desire on their part for greater solidarity with the United States. That’s not something that we have to push. That’s something that they are pulling on.

MR. CAMPBELL: And the important thing – that we are focused on a statement that Secretary Clinton made at the ASEAN Regional Forum. But what I would urge – I mean there are many (Asianists?) in the room here – is to put this in a larger context. This is not an isolated initiative.

We are trying to do a variety of things. You will have seen, on Friday, President Obama held the first ever U.S.-ASEAN summit in the United States to underscore our commitment on a range of issues – on the Mekong Delta and the health of the river, climate change issues; whole set of trade and other economic initiatives.

We have committed to join the East Asia Summit, which is the fledgling architecture of the Asian Pacific region. President Obama is committed to going to Jakarta next year for the meeting. Secretary Clinton will be going this year, next month, in Vietnam.

We’ve signed the treaty of amity and cooperation. We’ve tried our best with some real difficulty to engage Burma, Myanmar. We have done a number of things in Northeast Asia and we have been involved in a deep process of engagement with China. So what we are trying to do, frankly, is to deeply step up our game in the Asian Pacific region.

And, frankly, we’re trying to build on very strong bipartisan roots. One of the great things about Asian policy is, generally, it is a policy that has had very strong support on both sides of the political aisle. I think our general view is that, of course, we’re involved in very consequential activities in Afghanistan and Iraq.

But the real fulcrum of history is playing out in the Asian Pacific region. And the United States has to step up its game. And that’s what we’re trying to do.

MR. SCHIEFFER: All right. We’re going to open it up to questions out there. Come right to the microphone.

Q: John Zang with CTI TV of Taiwan. I have a question on the sign of Japanese tension. Several of the panelists mentioned the tougher the Chinese attitude. The tougher way China handled the issue. But on the other hand do you see anything different in terms of the Japanese handling of this issue?

Because skirmishes in that waters between Chinese fishing boats and Japanese coast guards are nothing new. I mean, it’s happened before. But, usually, the Japanese boats would drove the Chinese or the Taiwanese boats away from the territories. This was, if I understand it correctly, the very first time that took the captain to Japan and put him through the domestic- legal system. And that enraged a lot of the Chinese.

Was there any miscalculation on the part of Japan that actually contributed to the escalation of tension? Thank you.

MR. SCHIEFFER: Kurt, would you like me to answer that?

MR. CAMPBELL: I think that’d be a good one for you right there. (Laughter.) Thank you, Stape. It’s great to have you on a panel.

MR. ROY: I think you raised an important point. I think the way to look at this issue – you have to recognize it from Japan’s standpoint it was acting totally within its rights because the Chinese fishing boat was in areas that Japan considers to be Japanese territorial waters.

But there has been a pattern of previous incidents that did not results in arrests. They resulted in forcing the people out of the area. And there was a change this time in the way that Japan handled it. I don’t know there was a miscalculation. But I think it gets caught up – we’re seeing signs of rising nationalism in the area. And, certainly, you see it in China. And I think you can see it in Japan as well.

I thought that Secretary Campbell put it exactly right. Once the incident had started blowing up, the Japanese government, against domestic criticism, handled it with great statesmanship because letting the issue blow up further by keeping the person in the Japanese judicial system would simply have made the problem worse and longer lasting.

So I think it was an act of statesmanship. It was not a cave. You don’t use those sorts of terms when you’re trying to deal with diplomatic incidents. You try to get them out of the way. And, therefore, I think a potentially serious incident is on the way to dying down.

MR. SCHIEFFER: David, you wanted to say something?

MR. ZANGER: Let me give you a nondiplomatic interpretation to this. You know, the question that is least asked in foreign policy frequently is, and then what? And I think when the Japanese went and arrested the trawler captain, they didn’t ask that question at a high enough level. And so the reaction happened. As we’ve all pointed out it was much more severe than I think the Japanese anticipated.

And so the only part of this analysis I would slightly disagree with Ambassador Roy is, in the end, it looked like the Japanese did fold. That it was about 36 hours between the time that the Chinese announced that they were cutting off rare-earth exports. Whether they really cut them off or not, who knows?

But all they had to do was make the announcement. Materials that the Japanese need for high-tech batteries, electronics and the time that the Japanese prime minister – or the prosecutor announced that the captain was going home without charges. That sounded like a fold to me.

MR. SCHIEFFER: All right, next question.

Q: Thanks very much. Chris Nelson, Nelson Report. Great discussion. Not a hypothetical: The Chinese foreign ministry today said, either they have or they will send patrol craft – it wasn’t clear if they meant armed or not – to the disputed islands. Does that strike you as a risky, potential escalation? Do we have a position on that? Has that happened before? Where they’ve actually sent escorts?

MR. CAMPBELL: Chris, I don’t know about this particular report. And I appreciate you bringing it to our attention. Let me say that in recent days, I think one of the things that we have heard from our ASEAN friends is that there is a renewed dialogue among China and some of the other countries in Southeast Asia. And we welcome that. We think that makes an enormous amount of sense in this environment.

And so I think what we’re looking for are steps among all parties. And again, I tried to underscore that the kinds of incidents we are seeing are involving a variety of states. Some of them are directed at Chinese fishermen and the like.

We are looking for a cooling-off of some of these tensions and a very clear return to cool- headed diplomacy. And we think that is in the interest of all the countries involved in the South China Sea.

MR. SCHIEFFER: Ernie, do you?

MR. BOWER: Yeah. I’d like to follow up on that. I thought it was just along those lines of what Kurt was mentioning. The fact that the South China Sea is not mentioned directly in the joint statement of President Obama in his meeting with the ASEAN leaders, I thought, was pretty consistent with what Kurt just said.

I thought it was actually – it’s smart. It’s good policy. And it’s somewhat – a reporter called me immediately after the joint statement was issued and said, boy, this is it, this is. The Japanese returned the captain and the Americans are being – you know, and the ASEANs are being controlled by the Chinese when they’re not even in the room.

You know, they don’t have courage to put South China Sea in the joint statement. And I thought that was – well, excuse me, Bob, I thought it was not good analysis. I was going to use another word. (Laughter.)

MR. CAMPBELL: That’s the third rule. Don’t use those other words. (Laughter,)

MR. BOWER: Yeah, I mean I think – no, I think – I like the restraint that Kurt’s talking about. I think it works in Southeast Asia, it avoids forcing the Southeast Asians into a position that they’re not comfortable with, and let’s remember here, if you’re in Southeast Asia, you can’t go anywhere. So you’re dealing with this situation for not the next two years or even 10 years, you’re dealing with an emergent China for 100 years, and I think they appreciate the Americans being firm but not pushing too hard, and that’s going to require some nuance out of your shop, Kurt, good luck. (Laughter.)

MR. SCHIEFFER: Yes, right here, and we’re going to wind this up in about five minutes because Kurt’s got to get out.

Q: May I ask Assistant Secretary Campbell, did the Chinese officials officially tell U.S. officials that the South China Sea was its core interest? If they did, it seems China will undermine U.S. influence in Southeast Asia, so what is the U.S. strategic roadmap against China, besides all those naval strengths in that region? Thank you.

MR. CAMPBELL: Look, first of all, I’m not going to get into diplomatic discussions with Chinese friends around a variety of issues. I like very much the way that Ernie laid out sort of the give and take and the back and forth on a range of issues.

Look, the United States is a resident power in the Asian Pacific region. China is a rising power, it’s rising rapidly. We have been a crucial, indispensable ingredient in that rise. We’ve supported it for decades. The security environment that we have created, the peace and stability is the most important element associated with Chinese rise.

The second most important is the openness of the American market, and third has been the determination of a succession of American leaders to have a strong, constructive relationship with China. So I just reject out of hand this idea that somehow – the nefarious interpretation that I think that you’re suggesting in this respect.

Ultimately, as China expands its activities, military and otherwise, they will come in contact with the United States more and more. It is in U.S. interest, and indeed in Chinese interests and the interests of the other countries in the Asian Pacific region, that our countries work more closely together to establish rules of the road, create greater confidence about what our expectations are – that is what we’re seeking to do with sustained dialogue.

This – history reflects very clearly that the rise on the scene of a great power, another great power, is a very delicate thing, and I think we are at least trying to demonstrate that we understand the nature of the challenge before us in this respect.

MR. SCHIEFFER: I’m going to have one more question, and then I’m going to ask that you allow Secretary Campbell to leave, because he really does have another appointment he has to get to. So we’ll have one more question, and then we’ll give the secretary a chance to leave. Go ahead.

Q: Peter Sharfman. I’d like to invite the panel to step back a little and take a longer perspective on this. The conversation we’ve heard for the last 45 minutes reminds me forcibly of the courses I took in college about diplomacy from 1815 to 1914. Is this a sign that the world is moving into a different kind of international interaction than we all grew up with in the late 20th century?

MR. SCHIEFFER: Why don’t you just go down the line here.

MR. BOWER: Do I have to start on that one? (Laughter.) I think it is. I think there is a brand new architecture that we’re all going to live with, and it started to – and we’re living through the beginning of it. The – and I think – I would go further than Kurt did on giving credit to – frankly, this administration has started nicely to – and I think there is a bipartisan thread here – to open up the Bretton Woods Institutions, to more participation from China and India.

I mean, we haven’t talked about India at all. We haven’t said the word India yet, which is stunning, actually, that we hadn’t mentioned it. We should have, but I didn’t – (laughter). And I think India is a very important part of this new architecture too, and so yeah, I think the East Asia Summit, the ADMM-Plus 8 – these are new structures where we are going to have to share power with some emergent countries that, frankly, the Americans don’t know well. Kurt and the policy team are cold, hard experts on this.

Where I find the gap right now in America is between the guys who know what policies to use to create enough opening and do the nuance and the political animals that we are as Americans, and that gap is a dangerous gap, and I really laud Bob Schieffer for pulling these issues out for Americans to think about.

MR. SCHIEFFER: Thank you. Stape, why don’t you go, and then Ambassador – I mean, Secretary, if you’ll finish it up for us.

MR. ROY: I completely agree with Ernie. We’re dealing with a different world. It’s not happening overnight, but I think the process has accelerated in the last few years, and certainly the global financial crisis has been a factor that has helped to enable people to see that the world is a different place now. It’s far broader than China. It involves Brazil, Mexico, in this hemisphere. We’re not going to be able to be the dominant country in the Western Hemisphere the way that we were in the 19th century in the 21st century. It does involve India. We have a diminished Russia, but still a second-most powerful nuclear country in the world. We have a China that is rising rapidly. The United States is still the strongest and with the largest economy in the world. So we have to deal in a different environment, and I think that that’s going to require adjustments in the way we think and in the way we act.

MR. SCHIEFFER: Secretary, why don’t you wind it up for us.

MR. CAMPBELL: Let’s give David a chance. I always like hearing what he has to say, so –

MR. SANGER: You know, I would agree with what – with what both Ambassador Roy said and what Ernie said. I think that the political risk here for president Obama is this: that many of his critics are looking for a moment which they can say that he is acquiescing in decline in American power. I think he looks at it differently, and by allowing the G-20, for example, to replace the G-7 – in other words, sharing this decision-making with China, India, Brazil, others – he is making the point that we have to get adjusted to this new world. And those are two very different visions of where the United States is headed in the next 20 years, and that’s really the meta-debate that’s taking place here.

MR. SCHIEFFER: It’s a very interesting point.

MR. CAMPBELL: Thank you, Bob, and again – can I say one of the things that’s most exciting, frankly, and encouraging is to see such a strong group of people interested in this topic, and I know there are hundreds of panels going on right now about “Obama’s Wars” and Bob Woodward’s insight on what’s going on in Afghanistan. It’s extremely important that we focus on these issues, and we’re grateful to see all friends here today.

So just three points, if I could, quickly. The first is, you know, the story and the storyline of American decline. We have seen this story several times just in the last couple of decades. In 1975, it was a real concern about American withdrawal, and poor United States, we’re just out of it, and you know, only to see the United States return again.

In 1989, at the end of the Cold War, you’ll all recall the idea that the United States would – had wasted all its national resource on this very taxing competition with the Soviet Union, only to find American charging back.

I think there is now an emerging recognition in Asia that the United States is going to play an important and, indeed, dominant role in the Asian Pacific region for the next 40, 30, 50 years – for the next big chunk in global history.

And I think the truth is that the American ingenuity, American inventiveness, the openness of the American labor market – you could go through all of our weaknesses, but I would stack it against our strengths anytime. And I think there is a general recognition that you underestimate American power at your peril. And I think it is the duty of this generation of Americans to fulfill that optimism that Asians have in us – frankly, sometimes more than we have in ourselves. If you really want to hear good news and a sense of what America can accomplish, talk to young people in Asia.

Second is, there is also a tendency – I like very much the question about, is this sort of 1914 again? And there are elements – very clear elements of competition that play out in the Asian Pacific region, and some of that competition is very tough. Our goal is to contain that competition in ways that are productive and generally healthy in economic and other affairs, and to recognize that some of the biggest challenges that we confront in Asia are challenges that we all face.

So for instance, in my view, the biggest challenge that we’ll face over the course of the next generation is the challenge of climate change, and what that will mean as a security paradigm in Southeast Asia, in China and the United States, and to recognize that these issues are not issues that there is advantage, but in fact, where we must work together or we will fail.

And the third point, just simply, I would put, is to be effective in Asia. One must recognize that good China policy does not mean simply going to Beijing, although that is an essential component of good China policy. Good China policy is embedded in good Asia policy –

MR. : Hear, hear.

MR. CAMPBELL: – strong relationship with our allies, a commitment to architecture. I’m so glad that Ernie raised India. India’s role in Asia is the most important new element in Asian politics over the course of the last decade, and the Bush administration deserves enormous credit in bringing that about, and we need to support that going forth.

This needs to be a consequential, long-term investment and commitment on the part of the United States. And hopefully, these and other folks will be committed to do so.

MR. SCHIEFFER: Well, I want to thank all of you for a great discussion today. (Applause.)

And let me just also say this: At TCU, at TCU –

MR. CAMPBELL: Let’s thank Bob – (inaudible, applause).

MR. SCHIEFFER: At TCU, we take these things very seriously. And our football team is ranked number five in both national polls. (Laughter). Thank you very much. (Applause.)

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