Let me say one other thing. I've been in your country often, I don't know how many dozens of times over the years. But, this is the first time I've been here since March 11th. And, it's quite extraordinary, as an American, to have virtually every conversation or meeting begun by the Japanese official or friend thanking us, thanking Americans, for what they did.
And, my reaction is twofold. One is we don't need to be thanked, we appreciate it, it's very generous of you, but this is what friends do. And, this is a long and deep friendship between two countries and two peoples, and I believe that, again, this was the natural response of one friend for another.
The second thing I say is that when Americans watch what happened here, the initial reaction was obviously one of tremendous sympathy and tremendous concern. But, over time, while that continued, it also -- what got added to it was a tremendous sense of respect for the bravery, for the solidarity, for the perseverance of the Japanese people, and the way your society and your nation came together. It was truly impressive. It was truly admirable.
So, it's good, in a sense, to be back here now, to see, in many ways, Japan being so normal. And, again, it's a real tribute to this society, that it was able to bounce back as quickly as it has.
And I say this understanding fairly well the challenges that still remain, those related to the events of March 11th and those more fundamental to your country. But, again, the resilience and the ability to come together is something we all admire and is something we can all learn from.
Let me say a few things about what's going on in the world, as I see it.
We know quite a lot about what is taking place in the world, on one level. We know the fundamental importance of globalization, that in this era of history the movement of all sorts of things, whether they're emails or viruses or carbon or people or guns or dollars, what have you, across borders, enormous volumes and enormous speed, is one of the fundamental shapers of international relations.
We know that power, in various forms, military, political, economic, cultural, what have you, is spreading. Power is diffusing into more and more hands, and not all of those are the hands of states. Yes, there are more than 190 states, but what's so interesting now is that power is increasingly, in many cases, coming into the hands of actors other than states. That's just the reality.
We know there are some positive things. We have so much to worry about, but one of them, for the foreseeable future, is not the possibility of a great war. One of the things that distinguishes the 21st century, for the foreseeable future, from the 20th century, is that major power conflict is not on the agenda. Major power conflict was two world wars and a Cold War defined the 20th century.
It is not and will not necessarily define the 21st century. This is a big departure from history. Yet, the fact that we know these things and other things, what we don't know is also great.
I'm in the business of thinking about international relations, and the fact that we still call this, we still term this, something like the post-Cold War period, tells me something. Here it is, we're meeting here in Tokyo -- what? -- more than two decades since the Berlin Wall came down, more than two decades since the end of the Cold War, and we still don't have a term for this period of history. And that tells me that it hasn't yet defined itself. It's, in many ways, still being decided.
And, what I thought about what I'd talk about today, let me just throw out five things, five sets of questions that, more than anything else, I believe, will help determine what this period of history turns out to be. And, I won't talk at great length because I know, again, it's a packed agenda.
One is what is going on in Europe over the next -- and that'll have a tremendous impact, not just in the next couple of weeks and months, but beyond that. And everyone is focusing on the financial crisis and what it could mean for the degree of European unity and all that, and I understand all that, and we can talk about that.
But, I would also say that, even if Europe manages to get through this financial crisis without a collapse, even if it manages that, you still have the underlying reality of Europe's economic condition, which is extraordinary low growth, for all sorts of reasons dealing with structural rigidities, large public sectors, demographic challenges and the like.
So, one of the real questions, it seems to me, is what happens to Europe in the 21st century. The good news is that Europe looks stable, it's at peace with itself, and the big debates in Europe are about budgets, which is an awful lot better than having debates and differences over bombs. In that sense, 21st century is far superior to 20th century Europe.
But, I still believe there are fundamental questions about whether the European experiment will succeed. If so, what will that mean, not just for Europe but for the rest of the world, and not just economically? Will Europeans, essentially, be content with the Europe that is whole and free and at peace with itself and fairly prosperous, or will Europe and Europeans play a larger role outside their continent? If so, what kind of a role?
Big questions, the answers to which will have repercussions, obviously, way beyond Europe. And then the question is, if they don't succeed in Europe, if we begin to see something of the unraveling of the European experiment, what then? What then does that mean, not just for Europe's role beyond Europe, but what does that mean for Europe itself? Will Europe, in a sense, continue to be whole, free, at peace with itself and prosperous, without the glue of European integration?
A second set of questions which has also dominated the last year but will dominate for years to come is what is going on in the Middle East. People always refer to "the Arab spring." I do not. "Spring" has two meanings, in a sense. One is spring as a season. It lasts three months. I don't know a lot about the Middle East, but one thing I know; what's going on there will not become clear in three months. It will not become clear in three years. Probably three decades is closer to it.
Second of all, I don't know if it's going to be spring-like in a positive sense. That's possible, but I wouldn't assume it. It's also quite possible that what comes out of the Middle East, and the events that I and others describe as "the Arab awakening" could be quite unattractive, could be quite bad, for the people of the region, could be quite bad for the region, could be quite bad for the world.
This has been, the Middle East has been, the least successful region of the world, now, for decades, compared to Asia, which has been extraordinarily dynamic and peaceful, obviously compared to Europe, which has been prosperous and peaceful, but also compared to Latin America, which in some ways represents the "most improved" region of the world, in terms of stability and prosperity, and also compared to, even, large parts of Africa.
And the question is, "What kind of a Middle East will emerge?" We know that it's one thing to get rid, to oust, authoritarian, repressive, regimes. It's something very different and it's something much more difficult to put something in its place that will endure and be better. And that challenge, I would say, is out there, and we do not yet know if the people and governments of the Middle East are up to that challenge.
And, whether they are or not will have tremendous consequences in terms of the price and availability of energy, tremendous consequences for terrorism, tremendous consequences for Israel and its relationship with the Arabs, and tremendous consequences for the 300-plus million people of the Arab world, what kind of life will they have.
A third set of questions that is much closer to home here, is China. China is, obviously, amassing significant wealth. It's translating some of that wealth into other forms of power, including military power, diplomatic power. But, I think there are two fundamental, at least two fundamental, questions about China. One is whether this process will continue.
I've just come from several days there, and what I am struck by are the challenges that China faces. A leadership transition. But an entire reorientation of their economy. China has grown at a tremendous rate, double figures, 10 percent or better, largely on an export-led model. That is unsustainable. China's economic growth is, clearly, slowing. And its dependence on exports is, clearly, waning. China is going to have to make the transition not just to living with slower economic growth but also to economic growth that's largely going to be fed by domestic demand.
Can it do this? Can it do this amidst the inequality it has? Can it do this amidst the hundreds of millions of people who are still poor? Can it do it given the demographic challenges it will increasingly face? Can it do given the environmental and water challenges it faces? Can it do it given that it has a political structure, shall we say, that is less dynamic and less flexible than its economic structures?
The questions are enormous. And then it leads to what are the foreign policy implications of this? What is, ultimately, the character or personality of China beyond its borders? What sort of a role does China play in the region and the world? How will the Chinese come to define success, in their foreign policy? What will be, if you will, the Chinese national security strategy? And what will China try to achieve and how will it go about achieving those goals?
And I would simply say that these and other questions will have fundamental repercussions.
It's a very different region, it's a very different world, if China, essentially, is integrated in the region and the world and partners with the United States, Japan and others, to deal with our challenges, as opposed to a China that sits outside and simply observes and focuses on its own development, as opposed to a China, even worse, that would work against us. And, the character of Chinese foreign policy, I would think, is one of the biggest questions for the evolution, if you will, of the 21st century.
A fourth set of challenges deal with globalization. I mentioned it. It's obviously one of the basics out there. But, right now, there's a tremendous gap, if you will, between the scale of the challenges of globalization and the ability of the arrangements in place to deal with it. Choose any aspect of globalization. Trade policy, monetary policy -- which you referred to -- climate change, the spread of nuclear materials and nuclear weapons.
In each one of these areas, as well as others, the challenges are far greater than the ability of the international system to cope with them. In every one of these areas, there's a gap. There are not arrangements in place, largely because there is not consensus among the major states of the international system about what needs to be done.
In many cases, countries are putting narrow national interests ahead of collective interests even though, in the long run, they, themselves, will suffer. Because, one of the realities of globalization is no one can insulate himself from its effects.
But, one of the questions then becomes, "Can we close this gap?" In some areas, I would actually say we're going to have tests in the next few months, perhaps in the nuclear non-proliferation area, when it comes to Iran. In the area of trade or environmental issues, we'll have tests in the coming years. And I would simply say the recent evidence is not positive.
Whether it's our failures when it comes to climate change or on global trade talks, there are reasons to be extraordinarily concerned about the will and the ability of the world to close this gap in dealing with the challenges of globalization.
A fifth set of questions concerns my own country, the United States. I would simply say there are basic political questions in the United States that raise, as a result, an even bigger question about whether we will be able to put our house in order. We have an enormous deficit every year, running on the order of $1 trillion to $1-1/2 trillion. We've accumulated a debt that is, essentially, equal in size to our GDP. We've had several failed attempts, over the last year or two, to deal with these challenges, to come up with a mixture of spending cuts and taxes that would -- and policies that would -- promote economic growth, that would close these -- either the deficit or begin to reduce the debt.
And, if we continue to fail, we will have shortages of resources available for foreign policy, we will no longer be able to constitute a positive model for others to follow and, at some point, I fear the international markets would, potentially, move against the United States, in the same way that we're seeing them move against selected European countries.
And, if that were to be the case, it would further diminish the ability of the United States to be an effective force in the world, and I would simply say that I think that would be bad, not only for the United States, but would be bad for the world. The gap I've just described, in terms of global issues, would grow. I don't see any other country or group of countries willing and able to take the place of the sort of leadership position that the United States has played over recent years and decades.
So, I really think that one of the big issues out there is whether the United States will be able to address the needs, domestically. I work for a place called the Council on Foreign Relations. But, I've actually concluded that the biggest foreign policy challenge facing the United States is not China, it's not climate change, it's not North Korea, it's not Pakistan, it's not Iran, as significant as all these challenges are.
The biggest national security challenge facing the United States right now is what is going on inside the United States. It's whether we can put our domestic house in order, deal with our economic challenges, deal with the weaknesses of American education, deal with the aging infrastructure that we have -- because, unless we restore the foundations of American -- particularly the economic and human foundations -- of American power, we will not be able to continue to be an effective world leader, and without that, I think, conditions of order in the world will deteriorate. And that, to me, is one of the fundamental questions out there.
What does this all mean for the United States and Japan? And, I will stop there. I will simply say that, even though we've had, as I said when I began my remarks, a powerful demonstration of the closeness of our two countries, both at the official level and at the person-to-person level, I continue to think that this relationship has not adapted or modernized nearly sufficiently. This is a relationship, in many ways, that was born in the early stages of the Cold War and it has not evolved significantly.
We are now 20, more than 20, years into the post-Cold War world and this relationship, in many ways, has not kept up. And the danger, I would think, is not that there is a crisis in U.S.-Japanese relations but rather, again, that this relationship simply is not as relevant for the era as it should be or needs to be.
If I am right and there are all these deep and serious challenges out there, what worries me is that the ability of the United States and Japan to partner effectively to help meet them won't be there. And that would be bad for both our countries.
I don't think, by the way, that the principal problem is in the mechanics of the relationship. This is not something that can be solved by better consultations or can be negotiated away.
I just mentioned some of the challenges facing the United States that potentially stand in the way of our being as effective an international actor as need to be. I think there is a considerable list facing Japan. And to me, as an observer of this country, as a sympathetic observer, the question is less one of capability than of will, and of collective political action.
Whether Japan can build the consensus to, essentially, take the resources it has, economic resources, military resources, diplomatic resources, what have you, and to be an effective partner of the United States and others in meeting regional and global challenges -- and right now, I think, the reality of Japan is that it is something of an under-achiever, that Japan's ability to play a helpful role in the region and the world is not nearly as large as it could or should be.
So, again, it won't lead to a crisis in U.S.-Japan relations, but it will lead to their diminished importance and their diminished centrality, and I think that would be bad for Japan, it would be bad for the United States, it would be bad for the world.
So, yes, there are things the United States needs to do to put its own house in order, as I talked about, but I think there's an equally demanding list of things that Japan needs to do, politically and otherwise, to put its own house in order so it can be the partner that the United States wants and that the United States needs, and that I think, essentially, the world needs.
I said before that the world's a very different place, depending upon how China defines success. I also think the region and the world are very different, depending upon how Japan, essentially, comes to terms with its modern self and, above all, whether its politics will allow it to play the sort of role that I believe has the potential to make such a positive contribution in the region and the world.
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