Foreign Policy Begins at Home: The Case for Putting America's House in Order

JOANNE MYERS: Good morning. I'm Joanne Myers, and on behalf of the Carnegie Council, I would like to thank you for joining us as we welcome Richard Haass to this Public Affairs program.

Mr. Haass, as many of you know, is the president of the Council on Foreign Relations. Before he joined the Council, he had a very distinguished career in government, having served in four presidential administrations, most recently in the Bush administration as director of policy planning in the State Department. He is also the author of several books. Most of them have focused on foreign policy. It's not surprising, then, that he is recognized as one of the most prominent members of the U.S. foreign policy establishment, which may explain why we have such an unusually large crowd and many of you are having trouble finding a seat.

For some time now, I've been following Richard, meaning that not only have I read his books, but I've also been up at the crack of dawn to watch him on MSNBC's Morning Joe. His command of the issues and penetrating insights easily convince anyone who has read his books or watched him on TV that he has a profound appreciation for history and a great deal of experience working in and around government. We are delighted that he accepted our invitation to discuss his latest publication, entitled Foreign Policy Begins at Home: The Case for Putting America's House in Order, which is his lucky number 13.

In many ways, this title suggests his thesis—namely, that what is happening here at home can and will eventually determine not only what we do, but what we can do as a nation outside our borders. Or, to put it another way, it can be viewed as a foundation for a discussion on addressing our country's domestic challenges and the need to take a closer look at how homegrown obstacles can often interfere with exerting international influence.

If you are a student of history, you'll remember how at the beginning of the 21st century there was an extraordinary imbalance in world power, tilting in favor of the United States. At the time, we were the only country able to project military force globally, our economy represented more than a quarter of the world's, and we led the world in soft power resources. America's primacy appeared well established.

But as so often happens, history intervened, giving us the unimaginable attacks of 9/11, followed by two costly wars, a deteriorating economic situation, and, along the way, many new actors making their impact felt on the world stage. Some say America lost its footing.

Mr. Haass understands this all too well. He knows the history of how we got to where we are, the back stories, and the challenges. When he posits that the world still needs American leadership and offers recommendations for what we need to do to lead again, I would argue that we should listen carefully to this astute observer, who has the candor, the common sense, the knowledge, and the stature to influence our future.

Please join me in giving a warm welcome to our guest today, Richard Haass.

Thank you for joining us.

RICHARD HAASS: Thank you, Joanne, for that extraordinarily generous introduction, more than I deserve. But since I often get criticism I don't deserve, I'm glad to take it.

It's great to be at Carnegie. The Carnegie Council is a venerable institution. It's a neighbor of the institution I'm fortunate enough to be associated with. We're about five blocks away. And you're seven years older. I've learned to respect my elders. You all are on the cusp of your 100th anniversary. We have seven, eight years to go. Ours is 2021. So we're simply going to watch how you do it. We will take careful notes and we will do our best to learn from it.

But, really, intellectually and in many other ways, the Carnegie Council, I think, occupies an important space in the American public debate.

Let me thank you all for being here this morning. I now live in New York, but unlike many of those who hail from Washington, I won't filibuster. I will not speak at great length. You have so many informed, knowledgeable people here that I would really rather save the lion's share of our time for your comments and questions. So I'll do just that. But let me just tee it up.

This book is not an Agatha Christie novel. It's not a surprise. The title gives it away—the idea that foreign policy begins at home.

What are maybe not so obvious are two things, though. One is why I wrote, and second, what I think that means. When I used to teach at the Kennedy School, we used to say that 90 percent of life was implementation. That's what I want to talk about. If you agree that foreign policy begins at home, with this moment in history, how does one implement it?

Let me first explain for a second how it is I came to write this book, because it's not self-evident that the president of the Council on Foreign Relations—Joanne said I'm a member of the foreign policy establishment; I plead guilty. I worked hard to be a member of the foreign policy establishment for much of my career. How did it happen? Because this was not a book that I ever really thought I would write. It's not even a book I set out to write. It wasn't as though one day I said, "I want to write this book." It was more a book that wrote itself.

The reason is really twofold. One is the traditional foreign policy reason. Next year is not just the 100th anniversary of this institution, it's the 25th anniversary of the end of the Cold War. Of all days, a certain irony, I suppose, or poignancy for New York is that it was on 11/9 of 1989. About 18 months from now, we're going to mark the 25th anniversary of the coming-down of the Wall.

If 25 years ago you had predicted essentially the trajectory of American foreign policy and you would have said that the lion's share of American resources—more than 6,500 young American men and women would have lost their lives and more than 40,000 injured and more than a trillion-and-a-half dollars or so spent, in many ways trying to refashion or remake the countries of Iraq and Afghanistan—you would have questioned your judgment about having that person be the speaker. But that's exactly what we have chosen to do.

The Iraq War was most certainly a war of choice. The Afghanistan War began as a war of necessity after 9/11, but it morphed into a war of choice, particularly under the current president, when the United States tripled U.S. force levels and embarked on an ambitious program to remake Afghanistan.

I came to the conclusion that both of these were simply ill-advised, that these were both bridges too far. You can use whatever metaphors you will, but I thought that we had ignored in many ways, in part, the lessons of Vietnam. If you go back and read Fire in the Lake, Frances FitzGerald's book, what Frances FitzGerald does in that book is to talk about the importance of knowing local history and culture and geography and politics and economics.

What I thought we did in both Iraq and Afghanistan was that we ignored a lot of the local verities. Instead, we came at it with a prism or a filter or a lens that was made in Washington, or made in the United States, and we tried to impose that on the local realities. Essentially, we tried to do things that I think the local realities resisted.

This is no criticism of those who gave so much, but my sense is that over time we will not have results that in any way will endure or that in any way will be commensurate with the level of effort. Along the way, we got distracted. Public policy generally is about choices, it's about priorities, and essentially you could not have made the degree of investment—whether that's military or economic or political or diplomatic or simply time, and as a former policymaker, time, the bandwidth of policymakers, is an important but scarce resource. So there was the direct cost, but also what you might call the opportunity or indirect costs of what we did in both Afghanistan and Iraq.

Part of what led me to write this book was the sense, simply, that we overreached and we lost our strategic compass.

But at the same time, the other half of the coin was what we were—or really were not—doing here at home. If we were guilty, I thought, of overreaching abroad, I thought we were also guilty of underachieving here at home. I looked at all the things that were not getting done. Obviously, the tackling of the fiscal challenge—I'm happy to talk about it, but don't get reassured by the short-term improvement in our fiscal picture. Nothing has been done to set the United States on a sustainable trajectory when it comes, in particular, to meeting our entitlement obligations.

When I look at what is not being done to modernize our infrastructure, to improve the quality of our K-12 schools, to come up with a modern, 21st-century immigration policy—we could go down the line—in all these cases, what was missing was not so much the ideas. The ideas were out there, but it was the politics. We simply couldn't come up with a political process that would function in a way that would essentially broker compromises and that would do a lot of what needed doing.

So it was this combination, again, of overreach abroad and underperformance at home. What these are, really, are two sides of the national security coin. Foreign versus domestic, to me, is a pretty artificial distinction, particularly in an age of globalization, where things cross borders with great velocity and great volume. But also our capacity to act abroad is obviously directly limited and affected by the capacities we have created here at home, whether the capacities are military or economic or human.

Anyhow, what got me to write this book was just that. I came away worried. I wasn't persuaded, as Churchill said, that Americans can always be counted on to do the right thing after they have tried everything else. Okay, maybe. But that was a different era. Even if he's right, that's an awfully expensive process of trial and error, awfully expensive.

Maybe I'm naïve, but I'm in the ideas business. I don't produce tires for a living. I don't produce Big Macs for a living. I'm in the business of producing and disseminating ideas. The reason I wrote this book, the reason I'm here talking to you all today, is to essentially try to get some of these ideas out there.

Henry Kissinger once said, in a different context, that the policymaker or the observer who simply criticizes without putting forward alternatives hasn't done much for his boss's—in this case, the president's—day. I also feel it's incumbent on me to say a little bit about what I do, particularly since this last week was Henry Kissinger's 90th birthday. I think in that spirit, one should say a little bit about what we do.

My argument is that we need a new national security doctrine. My phrase for it is "restoration." I'm not trying to bring back the monarchy, just in case there's any misunderstanding, though I was educated over in England. But what I want to do is restore two basic balances. One is a balance within foreign policy and one is a balance within national security, between the foreign and the domestic.

The foreign policy balance is essentially to end what I think is the era in which the Middle East has so dominated American foreign policy abroad as to distort it. There are more than two reasons, but let me start with two reasons why I believe a Middle East-centric foreign policy doesn't make a lot of sense.

One is that the Middle East, whatever else it is—and it's a part of the world where we have Israel, where there are 300-plus million people, there's oil, there are terrorists, there's the reality and potential of nuclear weapons—it's not a part of the world where the great powers come together. So it is not, for example, like Asia or like in the 20th century in Europe, a place of great power, competition, and potential conflict. One thing.

Second, the kinds of challenges that increasingly define the Middle East—questions of political legitimacy, sectarian strife, you name it, and we can talk about it in whatever detail you want—these are not challenges that are particularly susceptible to being fixed by American efforts or by the efforts of any outsider. It's not even particularly about America. But I think one of the lessons I take from Iraq and Afghanistan is that even enormous investments with the kinds of tools we have to bring to bear don't necessarily pay off in these situations.

It's not an argument for doing nothing. Let me just cut to that chase. But it is an argument for thinking hard about what might actually be useful, where there's some relationship between effort and results.

What I think we need to do is not leave the Middle East, but I do think we need to dial it down. Choose whatever metaphor you wish. Think of rheostats rather than switches. But we need to dial it down. What we need to do is dial it down, in part, to put greater emphasis on parts of the world where our interests, I would argue, are greater and where our position to affect those interests is greater.

That, to me, is the Asia-Pacific. That is the part of the world where the great powers interact—China, Japan, Russia, India, the United States, Korea, what have you. And there are things going on in Asia that are reminiscent of Europe a century ago. One almost feels the tectonic plates of history are beginning to move there, where one has a bit of friction between the major powers of the region; where nationalism is getting stronger; where, unlike Europe, you haven't had the reconciliations like you had between France and Germany—nothing like that, say, between China and Japan—where the institutions of Asia, while they are quite developed in the economic sense, are significantly underdeveloped in the political/military sense, again unlike Europe; and where the United States is in a unique position, because of its alliance relationships and other relationships, to really be a balancer and a stabilizer.

The kinds of things we can do in Asia, whether it's the regional trade talks that have begun, the kind of meeting we're going to have with China on Friday and Saturday between President Obama and the new president of China, President Xi Jingping, whether it's honoring our alliance obligations through a military presence and our naval forces to deal with the potential for interstate conflict—these are exactly the sorts of things we're good at.

So I come away from this saying there's a case for slightly dialing up in the Asia-Pacific and dialing down, putting a ceiling on what we're doing in the Greater Middle East. There are some other tweaks. We can talk about what this means for Latin America, Africa, Europe. But those are the principal thrusts within the foreign policy. It's a rebalancing or a restoration, I would say, of the historical balance.

There has been no other period in American foreign policy history, national security history, when the Middle East has dominated American national security. There have been periods when Latin America has. There have been periods when Europe has. There have been periods when Asia has. Never before has there been a period when the Middle East was so central. There are reasons for it. I think, essentially, we have to restore the proper strategic, if you will, balance between and among the various challenges, some of which are regional, some of which are also functional, dealing with global issues and all that.

Secondly, the balance between the foreign and domestic: As I said before, our ability to function abroad in part depends upon our ability to continue to be successful here at home, so we have the focus, but we also have the capacity. What worries me is that we're not succeeding here at home.

This is not an argument that America is in decline, because we're not. But to say that does not mean that we're not underachieving or underperforming. Of course we are. We're growing at a half to two-thirds the historic rate of post-World War II economic growth. We have had tremendous stagnation of incomes for large swaths of America. Long-term unemployment is now, alas, a widespread phenomenon.

Very few people come to the United States to go to our K-12 schools. A few do. But the lion's share of those who line up at our consulates and embassies around the world do so to come to Princeton or Harvard, not to P.S. this or that in New York.

We have seen several bridges collapse in the last few weeks. That's part of a much larger problem. If you have recently been to any airport in the New York metropolitan area, if you have taken the Acela [high-speed train] to Washington, I need say no more. We do not have a First World infrastructure. That significant detracts from our competitiveness. It's a major sponge of time, a source of inefficiency. It also, by the way, leaves us much more vulnerable to either natural disruption or terrorism, because we don't have the resilience in our society that we need to have.

I could go on and on. But essentially we have become much less competitive than we ought to be. We're spending 18 percent of our GDP on health care, twice what the OECD [Organisation for Economic Co-operation and Development] average is, without outcomes in any way that are proportionate to it. We're once again in a position where it's a question of when and not if. Unless something dramatic is done, we are going to run up a massive degree of debt and vulnerability.

You can't fix that, by the way, on a dime. It's a little like a supertanker. You don't make sudden stops and starts with supertankers. The same thing is true of entitlements. In order to fix things 10 and 15 years hence, you have to make the decisions now. You can't do it when someone is in their mid-60s and suddenly say, "Oh, by the way, we're going to change the rules of the game, and the retirement age is going to change." That's Lucy and the football. You have to do it now, 10 or 15 years ahead. And, alas, we're not. If anything, the Congressional Budget Office report that came out a couple of weeks ago has taken the pressure off. Ironically, so have the results of the sequester.

One day I think what's going to happen is that many of the problems we're seeing in American society will get worse, plus we still could face a serious economic crisis down the road when American indebtedness goes up.

By the way, another reason it will certainly go up is that interest rates are not going to be this low forever. We face a situation where, as entitlement obligations grow and interest rates go up, it crowds out everything else, and there's nothing left for national security and there's nothing left for domestic investment.

Not all spending is equal. Some spending is spending; some spending is investment. What worries me is that we're on a trajectory where we will have basically very little left for investment in this country. So what I want is to have greater focus put here at home to right this.

This is not an isolationist argument. To say that, for this period of history, foreign policy ought to begin at home is not isolationist, for two reasons.

One is the foreign policy argument. When I look out in the world right now, there are any number of problems, from Syria to Iran, to North Korea, to cyber this, what have you. But none of these rises to the existential, as I see it. I don't see anything out there that is on the scale of a Nazi Germany or Imperial Japan or even a Soviet Union during the four decades of the Cold War. I actually believe the United States has a bit of time and space to devote a greater proportion of its resources here domestically.

Second of all, the reason this isn't isolationist is that I'm not talking about departing the world. I'm talking about slight readjustments in what we do. If we invest intelligently in our human and physical base here at home, that will position us to do more in the world down the road, either to discourage the emergence of a so-called great power rival/peer competitor or to deal with one if it happens all the same.

So this is not a withdrawal from the world. It's not moving away from the responsibilities of national security. But again, it's looking at the strategic picture now and for the foreseeable future and saying we have a bit of time and space, and we need to restore the foundations of our strength. And if we do that, by the way, we'll be much better positioned to play a leading role in the 21st century. I think that is essential.

I'll end with this, and Joanne hinted at it. We had better get this right. For those of you who studied Economics 101, there's no Adam Smith out there with an invisible hand organizing the geopolitical marketplace, if you will. It doesn't just work. It takes leadership. And there's nobody else out there, I believe, with the capacity, the habits, the inclination to lead the world but the United States.

I know this makes a lot of people unhappy. But this is not a statement of arrogance. This is certainly not a call for unilateralism. We can't do it ourselves. We don't have the resources, plus the nature of the problems doesn't lend itself to unilateral effort. It has to be multilateral. Leadership implies followership. It doesn't mean you dictate what others have to do. It means you partner with them; you collaborate with them.

But the defining challenges of this century are going to be things like proliferation; they are going to be things like climate change; they are going to be things like regulating the new domain of cyberspace; what to do about potentially pandemic flu or other diseases; keeping an operating, functioning world economic order, trade, investment, finance. It isn't just going to happen by itself. The Indians are not going to make it happen. The Japanese aren't and the Europeans aren't and the Chinese aren't. Unless the United States plays this role, it isn't going to happen. If it doesn't happen, it's bad for the 7 billion out there. It's bad for the 300 million-plus here.

So it seems to me that the stakes are large. The good news is that we have the opportunity, I still think, to get it right. The not-so-good news is that it's not so clear we're going to use that opportunity.

Thanks very much.

QUESTION: James Starkman.

Thank you very much for a wonderful summary of the macro situation. What weighting would you give to structural tax reform, first, and entitlement reform, second, to enable all the good things to happen that you would like to see happen?

RICHARD HAASS: I'd put a real heavy emphasis on entitlement reform. We simply don't have the capacity, for a couple of reasons. One is simple demographics. We're going to have too many people above a certain age. Even though the U.S. demographic balance, if you will, is less bad than other societies in terms of the ratio of the working to the non-working, it still ain't great. The good news is that a lot of us are going to be living longer. I'm not against that. Self-interest is a powerful motivator.

But we have to understand that the consequence of a much larger number of Americans living way beyond their mid-60s is going to be a heavy set of obligations. So we're going to have to fix that. It's simply unsustainable. There are lots and lots of detailed ideas.

Actually, Social Security is quite easy. Social Security, out of all the public policy debates, to me, is one of the easier ones, in terms of raising retirement ages—we haven't kept pace at all with demographics there—different types of cost-of-living adjustments, so-called chained CPI [consumer price index], possible means testing. Social Security is not the lion's share of the problem. It's actually a fairly modest chunk of the problem, but there the fixes are relatively straightforward. It's all about politics and the strength of the AARP [American Association of Retired Persons].

The Medicare/Medicaid issue is a much more complicated one. What to do about it is much tougher. Again, though, I think there are things that we could talk about if you want. There are lots of ideas out there, I believe, that would help. That, to me, is the biggest single one.

Tax policy—sure. Corporate tax policy—look, the United States has a nominal rate of 35 percent. It's way too high. Most companies don't pay it, in part because they avoid it—the whole thing with Apple. Tax avoidance is fine. We all pay accountants to tax-avoid. Tax evasion is something else. So when corporations tax-avoid, they are doing what their shareholders want.

What we want to do is set up a system, though, where all the incentives are not to tax-avoid and keep money parked outside the United States. We would love the Apples of the world to bring money back and to build greater capacity in the United States.

There are lots of reasons for doing that, including the cheap price of natural gas, including the fact that we have a fairly large consumer base in North America, 450 million people.

Whether we have tax holidays or simply lower rates, we have to deal with corporate taxation policy. You can't have—whatever the numbers are—$1.5 trillion, plus or minus, of money on the balance sheets of American corporations sitting there. We want them to bring it back home. We want them to invest it. That would be great. It would then be good for employment. That seems to me something that is not beyond the wit of man.

More broadly, a wise man once said to me that the tax code is, essentially, every year the government tells you what to do and what not to do to make money. That's what the tax code is. It basically favors certain types of economic activity and it discourages others. We have a tax code that does just that.

I don't particularly like a tax code that is so hard on earned income. I think it's harder on earned income than it should be. I would like to see a tax code that does two things. I would probably balance some things out between earned and investment income. I wouldn't have the distinctions we have. And I would get rid of a lot of the so-called taxation expenditures—mortgage deductions, this and that. I like Marty Feldstein's idea of putting a ceiling on deductions and letting people decide what the mix is for themselves.

I would simplify the tax code. I would bring it down. I would certainly reduce the levels on earned income. I would probably raise the levels somewhat on investment income. I'd get rid of things—the special exemptions for private equity.

I've got my ideas. Other people have their ideas. Again, what's almost always missing in the American debate, though, is not ideas; it is the politics that would allow you to broker a compromise. That's a much bigger set of questions, which is, how do you, in some ways, fix American politics, either from the bottom up or the top down? We can talk about it. But I really think it comes down to that, more than the details of tax policy.

QUESTION: Ron Berenbeim.

Your tour of foreign policy was fundamentally a realistic analysis of the situation, and it was a very good one. But when you get into the politics of foreign policy, you find a collision historically in the United States between realism and idealism. That is fundamentally, I think, the reason for the focus on the Middle East. So it becomes a question of how this rebalancing can be managed politically. I would like to hear your thoughts on that.

RICHARD HAASS: I think you're half right and half not-so-right. I wouldn't use the word "politics." You're right, the great fault line really goes back more than 100 years in American foreign policy, if you want to call it between realists and idealists or those who were adherents of Woodrow Wilson as opposed to Hans Morgenthau, however you want to describe it. A more recent version might be Bush 41 versus Bush 43. Having worked for both, I can make that statement.

Really, whether the focus is on behavior between states or within states—I don't see that as a political debate so much as an intellectual debate. The reason I say that is that presidents have enormous latitude. If President Bush 43 did not want to act against Iraq, he simply wouldn't have acted against Iraq. He wasn't forced to by the political system. He chose to. If President Obama hadn't wanted to triple U.S. force levels and expand U.S. war aims in Afghanistan, he wouldn't have.

Basically, under the Constitution and under American political tradition, in foreign policy you have incomparably more latitude as a president than you have in domestic policy. Very little of foreign policy is actually legislated. Every once in a while it is, but by and large it's not.

So I actually think that presidents have tremendous latitude. President Obama is not anxious to get involved in Syria, so he's not. The administration has showed considerable discipline in pushing back against the various voices. You may think that's smart; you may think that's dumb; right or wrong. But they have tremendous discretion there. Congress is not going to be able to force the president to get involved in Syria. It can light political fires, and he can decide the heat's too much to take and get involved. Or he may intellectually decide it's the right choice at some point. But I think he has tremendous discretion.

I think the ideological debates on domestic policy—taxation, spending, and all that—are much more locked in, and because so much of domestic policy has to be legislated, I think there the politics are more of a constraint. But in foreign policy—but I don't challenge your basic point.

Every day the United States gets up and it looks at the world—take this Friday and Saturday. The president is going to meet with Xi Jingping. Today is, appropriately enough, the 24th anniversary of Tiananmen Square. To what extent should U.S. policy in any way be shaped, influenced by considerations of the domestic trajectory of Chinese society and politics and economics, as opposed to what China does vis-à-vis Korea or Syria or Japan or climate change or Smithfield ham? These are real debates, but I actually think, up to a point, the president has tremendous discretion.

But this is the principal intellectual fault line of American foreign policy, always has been, always—I won't say always will be, but sure is now.

QUESTION: Hi, Richard. Rita Hauser.

Your prescription of the pivot—get out of the Middle East, go to Asia—

RICHARD HAASS: Let me interrupt. Not get out of the Middle East. It's reduce our involvement.

QUESTIONER: Okay, move over. I recently heard a somewhat crude description: Asia is the beautiful, new, young mistress—glamorous—and we'd love to go over there, but we can't get rid of the old hag who is on the other side. I said it's somewhat crude.

But when you think about it, how do you get out of the Middle East? How do you move yourself away from the centrality of the Middle East? Even if you assume that that is the right thing to do, how can you, since there are always forces that are pulling us back and keeping us there, and, in my view, will continue to do so for a long period of time?

RICHARD HAASS: First of all, I want the record to show that it was Ms. Hauser and not me who used this crude—you are all my witnesses. I'll get yelled at for many things when I go home tonight, but hopefully this will not be among them.

The analogy, actually, that I use is a much more elegant one, Rita, which is, for those of you who are fans of Godfather III, where Michael wants to leave the mob, he says, "Every time I try to go, they keep pulling me back in." I think it's the first time Foreign Affairs magazine ever quoted The Godfather, when I wrote about it.

I don't disagree with the way you set it out. It seems to me the part about getting more involved in Asia is pretty straightforward. That's not the hard part. The hard part is the resisting of getting pulled back in the Middle East. I would say a couple of things.

One is, by the way, the administration is kind of doing it on Syria. There is more that I think we could be doing to deal with the refugee issue, to shore up Jordan, potentially, and so forth. But I also—you might disagree—if we're not getting involved directly—and I don't think we should—I do think we should be doing more indirectly for the Syrian opposition. So I would be in favor of arming selective opposition figures or groups.

But the idea of putting a ceiling on Syria is just what the administration has decided to do, and so far they are holding the line. That shows me that it is possible.

On Egypt, again, you had fairly tumultuous events. We are saying, "Look, you want your $4.8 billion from the International Monetary Fund. Great. Here are some conditions you've got to meet. If you don't want to meet the conditions, you don't have to take the money." It seems to me that's going the way.

John Kerry is busy trying to ignite Israeli-Palestinian talks. I think that's great. That's a traditional diplomatic role of the secretary of state. That's fine. I'm not wildly optimistic about his chances. Even if he were to make some progress about what would be the positive consequences, I don't think it would affect many of the principal dynamics in the region.

I think the hardest one is going to be Iran, out of everything, depending upon what the Iranians choose to do or not to do with their nuclear program. I think that's where this argument is going to hit its most difficult point, and we are going to have to potentially make a fateful choice. If the combination of sanctions—we just expanded the sanctions in the last day or two—if the combination of sanctions and diplomacy—vinegar and honey, if you will—don't induce the Iranians to put a ceiling on their program at a level that's enough for them but not too much for us or Israel, then we are going to be faced with a fateful choice about whether to live with an Iranian nuclear weapons capability of some scale or going to war to prevent it from advancing.

Either one of those, I think, is heavily freighted with costs, risks, consequences, what have you. Particularly if we were to use force, it would certainly delay for I don't know how long what I'm arguing for here. That's why I think it's the most fateful of the foreign policy choices that Mr. Obama is probably going to have to take.

But my answer to you is almost like the answer to the previous question, which is that I think you have discretion. George W. Bush wasn't pulled into the Middle East. He took himself to the Middle East with the Iraq thing. Obama took himself—he didn't have to do what he did in Afghanistan. I think we had to do what we did after 9/11, when the Taliban government wouldn't kick out al-Qaeda. We didn't have to do much more than that.

I think we had to do what we did after Saddam Hussein invaded Kuwait. But then I thought it was very interesting—full disclosure: I was the Middle East advisor at the National Security Council at the time—the president didn't get pulled into going into Baghdad. He said, "Okay, we're going to liberate Kuwait, but we're not going to do more."

I do think presidents retain discretion about how much to try to do in the Middle East or anywhere else now if events get really bad. Let me say, if tomorrow there was major turmoil in Saudi Arabia, I'm not sure we would get pulled—I'm not smart enough to design a form of intervention that would be relevant if the House of Saud, as someone said, turns out to be built on a house of sand. We're going to have to live with the consequences.

I also think—and it's one of the really interesting pieces in our field right now—one of the great transformations—and it hasn't really gotten the attention it deserves—is the energy transformation. This year the United States is reaching a 25-year high in oil production, a 25-year low in imports. We have probably the world's largest supplies of natural gas. It must have some strategic consequences that we have essentially arrived at North American energy self-sufficiency. It doesn't make us independent of events in the Middle East, but it certainly makes us energy self-sufficient. It has to give us some cushion, a little bit more margin for maneuver, a little bit more discretion.

So I actually think we have more choices when it comes to the Middle East than ever before.

One other reason: During the Cold War, the Middle East was a principal venue of Cold War competition. You know that better than I do. Now it's not. Yes, Russia's there, but it's not the same thing.

Again, we have more choices than we have ever had before. It doesn't necessarily mean we do or don't do this or that. But I actually think the degree of national security discretion in the Middle East has probably never been greater.

QUESTION: Warren Hoge, International Peace Institute.

Richard, in the book you describe the world now as nonpolar—not bipolar and certainly not with America as dominant. I want to ask you about what kinds of alliances you imagine the United States will be making in the 21st century. Our traditional allies, European allies, are feuding among themselves. They have economic problems maybe worse than the ones we have and, in many cases, lack the capacity to be reliable partners. Who are our new partners, and where are they?

RICHARD HAASS: In the reaction to the book, I thought this would be much more controversial and I'd get beat up much more on this subject than I have. Instead, people have chosen to beat me up on other subjects.

A couple of things. One is, all things being equal, I think alliances are probably less critical in this era of history than they were in the previous one. That's because alliances largely depend upon fairly predictable situations—predictable threats, predictable venues, predictable obligations. One of the characteristics of this age is, I think, a greater fluidity and dynamism.

Second of all, the European allies—it's much less central for many reasons. A lot of it is good news. Europe was the central venue of international relations in the 20th century. It was the scene of two world wars and a cold war. The good news is that Europe is no longer the central venue in international relations. It's boring. That's great. Imagine if we could make the Middle East boring. We'd get a Nobel Peace Prize.

Europe has become boring. The biggest issues are budgets, not bombs. That's good news.

But the relevance, therefore, of Europe as a venue—and also, as you say, not just the relevance of Europe as a venue is less, but the alliances, when they try to go further afield to adapt to new historical circumstances, tend not to. NATO can do a little bit so-called out-of-area, but ultimately it's what increasingly has become an à‑la-carte arrangement. A crisis happens somewhere in the world, and it's like when you were kids and you had pickup games instead of organized teams. There's a crisis somewhere and we go to NATO and we go, "Who wants to play with us?" Maybe a couple of countries say, "We'll play shortstop." "We'll play third base on this one." "Nah, we don't want to play today." And that's kind of what happens.

In a sense, the lack of capacity—Bob Gates, when he was secretary of defense, talked not just about a lack of capacity on the part of Europeans, given defense spending trends and economic trends more broadly, but the changing political culture.

My own view is that the European, quote/unquote, allies become much less central to American foreign policy, particularly if the greatest areas of interest are out in Asia. I think Asian alliances are a more interesting phenomenon. There I would say we have the formal alliances with the Japans, the South Koreas, the Philippines, the Australias, what have you. I would say those are particularly important.

One, we need partners to manage the dynamism in the region. But also, if you do not want to see an Asia which is kind of "Katy, bar the door," where suddenly the Japanese and the South Koreans start not just putting a lot more into conventional armaments, but even start reconsidering the nuclear issue, given North Korea and China, then I think it's essential that the United States stay involved and that the alliance relations there remain robust. My sense is that the traditional European alliances will become much less significant, but the Asian alliances will become more important, given North Korea, given China, and given some of the nationalist trends.

I'll just say one more thing on that. I think one of the trickiest things for American foreign policy over the next five or ten years is going to be how to meet these alliance obligations in Asia and at the same time manage a constructive relationship with China. That will be a threading of the needle. I actually think getting that right, that balance between alliance obligations—we do not want to have an adversarial relationship with China. We don't want to have a policy, if you will, of containment.

On the other hand, there are aspects of Chinese behavior that are worrisome. Getting this right and avoiding what some of my former colleagues at Harvard called the Thucydides trap, where the great power of the day ends up in a friction-filled or worse relationship with the rising power—getting this right and dealing with the diplomatic challenge of China and the obligations to our allies—supporting them but not giving them blank checks—getting this right is going to be exquisite, if we can pull it off.

QUESTION: Good morning. Peter Russell.

In hearing your points about balance, foreign and domestic, it makes me wonder whom we can look at as political leaders who are grasping this nettle or taking up this challenge. I thought about this particularly when I looked at your bio and noticed that earlier in your career you were the Sol Linowitz Professor at Hamilton. I would cite Ambassador Linowitz as one of these people who was a real principled compromiser and had that balance.

RICHARD HAASS: I like that phrase, "a principled compromiser." I like that.

QUESTIONER: Who would you look to today as that kind of leader?

RICHARD HAASS: I have to be a little bit careful here, since I run a nonpartisan institution and this month marks the end of my 10th year, and if I want an 11th year, I will probably have to—let me say it this way. We have seen it in recent times. We have seen it under both Democrats and Republicans. We saw it under Bush 41, whether it was the Andrews Air Force Base budget deal, whether it was what he did on foreign policy. It seems to me he reached across the aisle really well. Bill Clinton did, in certain ways, as well.

I think it has gotten more partisan under this president and the previous president. That's not their fault necessarily. It's also because of the dynamics of how we fund our politics, media, what's happening within the parties, particularly the Republican Party.

I think it's tougher. I think the political environment, the political terrain is simply tougher for anybody.

Let me talk about two things that I think are interesting. One is what you might call bottom-up politics. I referred to it before. We had a situation where 90 percent of Americans had a preference for background checks, and that went down in the Senate. Why is that? Why is a bill that's supported by 90 percent of Americans defeated?

It's because the most important thing in American politics is not preferences, but intensity. Minorities that act in politics with intensity invariably overwhelm majorities that only act with preferences. So when you have groups like the National Rifle Assocation that act with great intensity, unless you come out with countervailing intensity, you're going to lose, even if 90 percent of the people favor background checks.

That's why I think what potentially Mike Bloomberg and others will do is interesting. What I would love to see on entitlements is—until there's some pushback against the AARP, I think we're going to have the entitlement policy we have. I would love to see, if you will, more competitive politics at the grassroots level.

I haven't given up that executive leadership can work. There are enough examples in the modern era. I always say—and maybe it's a bit naïve—that you want some mixture of someone who can paint the context—an FDR kind of fireside chatter, a Reagan type—who is mixed with Lyndon Johnson's ability to twist your arm out of your socket. You want a politician who can do both the wholesale and the retail. I think that's what it takes.

You can look out there yourself and say, do you see anybody out there? Quite possibly, I can see a couple of people who can do it.

I'm not into the despair game. In that sense, maybe Churchill is right and there's enough resilience in American politics. We'll see.

QUESTION: Guillermo Rishchynski, Canadian ambassador to the United Nations.

You mentioned that the lack of existential threat in the world today does give the United States some measure of latitude to get the house in order. But you also said that issues such as proliferation, climate change, and pandemics, specifically, could potentially have those kinds of impacts. The best way, obviously, to deal with those issues is multilaterally. Yet multilateralism today is probably at its worst point in quite some time.

What, in your judgment, does the multilateral system need to do to make itself relevant again? What role does the United States have to play in that context to ensure that this works?

RICHARD HAASS: You're not going to like my answer, because you are credited to an institution that is not part of the solution.

Multilateralism and UN-ism are two very different things. I actually think multilateralism is alive and well. UN-ism is not. What you might call the 190-plus-countries-signing-up-to-something approach to multilateralism I think is probably—if it's not dead, but on big issues—it hasn't done it on climate change. It hasn't done it on trade. It failed miserably when it came to cyber, the recent meeting in Doha for the International Telecommunications Union.

On lots of issues, I don't think, if you will, UN-ism, that version of multilateralism, can work. If it can, great, but on most issues it doesn't.

Then one has to get more targeted. It might be critical countries who come together. It might simply be countries that agree. It might simply be, "Look, we can't agree on this part of the problem on climate change, but maybe we can agree on deforestation or dealing with that slice of it." So what you end up with is kind of tailored multilateralism. It could simply be that you consult, you negotiate, but you don't come up with agreements, where everyone then has what you might call consistent or parallel domestic policies. Certainly regulatory issues you deal with that way. You don't try to come up with an international formal agreement.

Sometimes formalism, by forcing things through political systems, can be a real obstacle to progress. But if you can simply have consistent domestic issues—you might see it under Basel III types of arrangements on financial.

So my hunch is that you end up not with one-size-fits-all multilateralism, but in every area of multilateralism, you have to get pragmatic. Imagine you could get the 15 largest emitters on carbon to deal with a lot of the problem. Would you really care if you couldn't get the last 15 percent? The answer is no.

The proliferation of serious regional trade negotiations, both in Asia and Europe—that tells you something. I actually think both of those have a decent chance. The fact that the president has now nominated Mike Froman, who is his chief economic strategist at the White House, to run the Office of the United States Trade Representative is a good sign. That tells me he's much more serious about trade in his second term than he was in the first term. So I think there the prospects are pretty good.

Will you get a Doha-like trade deal? No. Could you get really meaningful regional deals? Yes. Could those one day lead to a global deal? Maybe. But even if not, not bad.

So my hunch is that we will actually have a lot of multilateralism; it's just going to be wildly uneven as you go from challenge to challenge. I just think we're going to have to be pretty creative about how we design it and how we negotiate it.

But I agree with you, it's essential, given the resource questions and just the nature of the problems. There are no solutions that are not multilateral. But in many cases, they are not necessarily going to go through, if you will, the General Assembly-like definition of multilateralism.

QUESTION: Richard Valcourt, International Journal of Intelligence.

Are you in any way concerned about the growth of China in its economic and military sphere at this point?

RICHARD HAASS: Very little. I'm not a member of the "China threat" school, which is not to say that China is not growing economically—it is—not to say it's not getting stronger militarily. It is.

But two things also strike me about China. Then I will talk about the one thing that bothers me.

One is that interdependence is a reality. The Chinese need to export. The Chinese need to import. That argues for maintaining fairly stable relations in the region, as well as with the United States. So I think there are certain constraints on China. They are not unlimited. But the constraints are meaningful.

Second of all, when I look at China—I'm not a China expert, but when I look at China—I'm at least distraught by the challenges they face. What an inbox. If you are Xi Jingping and his comrades, what an inbox.

You look at the gap between the dynamism of the economy and the political system. You look at the corruption, which is profound. You look at the environmental challenges, which are extraordinary. You look at the number of sizable political protests, between 100,000 and 200,000 a year. You have two competing political systems. You have the formal Communist Party. You have 500 million Chinese who are using the Internet.

You have to rebalance your economy away from largely export-oriented to much more domestic consumption- and demand-driven. Easier said than done. You have to change the savings behavior and turn it more into spending behavior on the part of the Chinese. You still have hundreds of millions of Chinese living in rural poverty, who have to be moved out. Wow! And you've got all the ethnic, linguistic, on top of it all, the basic realities, if you will, of modern China.

I think navigating this—I talked before about the challenges to American diplomacy in Asia. I think the challenges to the Chinese leadership are profound, to get this right and to deal with the domestic pressures.

The one thing that concerns me, particularly as economic growth slows—and the days, by the way, of double-digit growth are over. That's the real problem. Double-digit growth gave China a kind of lubricant for the society. That was kind of the bargain, if you will, of modern China: Grow at double digits and we'll have, if you will, top-heavy politics in exchange for ever-rising, significantly rising standards of living.

Those days are over. The low-hanging fruit has been picked. The economy—it's not just slowed now. You're not going to have the next three decades look like the last three decades in terms of Chinese economic growth. So the question is, how do you keep things calm in China? It's going to be tough.

The only thing that really worries me is the rise of nationalism in China. I think that when you look at Asia and look at the rise of nationalism in China and Japan and South Korea and so forth, the management of this is a real challenge. I think that's what is slightly different about now as opposed to two or three years ago.

We have seen a more assertive Chinese foreign policy. We now are seeing the Japanese and Korean reactions to it.

I don't want to exaggerate it, but I think it's significant.

The idea that the people who have been beating the drums about China's rise and all that—sure, it's rising. But you also have to remember one last thing: You have this thing called the denominator.

Every once in a while I think people who write about China's rise cut class. They attended class the day where you learned about the top half of the fraction, but not the bottom half of the fraction. They missed the denominators. They were out smoking somewhere.

There is a denominator of 1.3 billion, and that kind of reduces things significantly. I didn't even talk about demographic issues in China—the unintended consequences of one child, the aging issues.

Again, it's a long, long list. I think the internal constraints are considerable. But there will be real diplomatic challenges, and there will be real challenges for the Chinese leaders, because there will be Chinese leaders who will be tempted—it always happens—to somehow ride that nationalism horse when there is friction in the society, whether it's to come up with a new source of legitimacy or to distract or what have you. That, to me, is something worth watching.

QUESTION: David Hunt.

I take your point on dialing back in the Middle East, but it seems to me, just reading press reports in the last week or so, that we're at a very critical point in terms of Syria and Iran. It seems the Assad regime has a new lease on life. You have Hezbollah and the Revolutionary Guards advising the regime. The Russians are going ahead with a new air defense system, providing communications support to frustrate our own intelligence.

Is this a good thing? We have held back and the Europeans have held back for so long that it seems almost too late that we could provide at this point any assistance that would really make a difference. I'm just wondering what your views are, if we continue to hold back and you have this crescent of Shiite strength throughout the Middle East. It looks pretty unfortunate to me.

RICHARD HAASS: I wouldn't say it's too late. As I said before, there are things that I think we can do. I would be more forthcoming about providing support to elements of the Syrian opposition.

Even imagine we did more and we got rid of the Assad regime. That simply gets you into the next phase. I think that's my larger point. You are not going to like this, I expect, but I actually think we're in the early phases of what could be a prolonged struggle in the Middle East, an era in the Middle East of Sunni-Shia sectarian violence within societies. It's quite possible the Sykes-Picot map of the Middle East, which is the map we know, in part could be either formally or informally redrawn. We could be facing a prolonged period.

Again, the Middle East has not known political legitimacy. What you had was a kind of bargain of authoritarian rulers. That era is over. There's no new era that has taken its place that has real legitimacy. All the energy is on the side of the political Islamists. It's not on the side of the secularists or the liberals.

So I think we could be in for a very rough era in the Middle East. I don't like saying it, but I think there are limits to our influence. I think, again, we need to be disciplined and really ask ourselves hard questions about what our interests warrant. But also, given the limits to our influence, what does it make sense to do?

Again, the Middle East is not in isolation. There are other parts of the world to think about, and there's obviously the domestic. It gets back, I think, to Rita's question. There's going to be a drumbeat, if you will, of bad news coming out of the Middle East, if I'm right, for at least years to come.

So the question then is, how do you operate a national security policy in that context? There are going to be things we want to do, and we're just going to have to have very tough debates with ourselves. We shouldn't kid ourselves. The desire to do good is—I understand that. It's great. But then you really have to think it through. What happens then, if you do get involved? Even if you, quote/unquote, get rid of the king in various countries, as we have seen with what happened in Egypt, what happened in Libya, and so forth, that is simply the end of a phase of the struggle. It's never to be equated with success.

So I just think we have to be somewhat modest about—we have to be realistic about our interests and their limits, realistic about what it is we can accomplish. Again, public policy is about priorities and choice. The Middle East can't somehow be immune from the need to prioritize and choose.

JOANNE MYERS: You mentioned fractions. I would just have to say the common denominator is that we all thought you were fantastic.

Thank you for being with us.