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Secretary of State Condoleezza Rice at The Post

Friday, March 25, 2005; 10:00 PM

The following is a transcript of an interview with Secretary of State Condoleezza Rice's by Post editors and reporters in the Post newsroom on Friday, March 25, 2005.

Q:Let me just start by asking you in your first few weeks, your first couple of trips to Europe and Asia, how you think you're doing on the job of refurbishing U.S. alliances and refurbishing those relations that were strained a bit in the first term. How well are we doing with repairing the damage from Iraq and how much of a consensus do you think there is either with the Europeans or with our Asian allies about where we go from here in both those regions?

SECRETARY RICE: It seems to me that after the Iraqi elections there has been a new kind of coming together about what the next chapter looks like and a really strong desire to put the past behind us. Whatever one's view of the past, favorable in some places, unfavorable in others, I didn't find much dwelling on the past – in fact, almost no dwelling on the past.

And a number of us started to talk about, and I'm not talking about Europe, the fact that it was time to stop talking about transatlantic alliance, putting it on the [inaudible] analyzing it, how's the transatlantic alliance today and time to start putting it to work in this great common cause which is coming into fuller view for people. And that is that this desire to see the spread of liberty and freedom as essential to the securing of a better future, not just for those people who get to live in liberty and freedom but for those of us who experienced what happens when you have a freedom deficit and you have the rise of extremism. I think that you're beginning to see a kind of focusing and coming together around that project .

And it obviously helped by the Iraqi elections, it was helped by the fact that you had Palestinian elections that seemed to give a new breath of fresh air to the Israeli-Palestinian issue and really in a different framework and on different grounds, that is the development of Palestinian institutions that would themselves be democratic and transparent and would therefore make the possibility of two states living side by side in peace, one that could be a democratic peace not just an enforced peace.

So I really found that everybody was in a very constructive mood and very much ready to move on. And that's continued and we've been able to work on resolving issues as a result.

In Asia, of course, Japan and South Korea were part of a coalition but there obviously the future of Asia is very dynamic, a lot is going on there and everybody is trying to figure out how they're going to cooperate this huge new factor, which is this rising China.

And I believe that people are beginning to focus even there on the kind of values that unite us and have made these alliances work in Japan and South Korea.

And then if you to go South Asia, the remarkable thing is to see that kind of ark that is Afghanistan, Pakistan, India has a new energy to it and a positive energy so that you have -– I hate to sound like a Californian, but positive energy it is -- Pakistan and Afghanistan with a better relations than they have ever had. Pakistan and India with better relations than they have ever had and kind of a sense that that region could actually be quite powerful in and of itself.

So it's a long way of saying that I do think that the past in which a lot of the pieces on the international board, were shaken loose since September 11 has begun to consolidate around a set of values that may well start to structure how we deal with a whole host of issues.

And that's a good thing because if you're just dealing with issues seriatim – this issue has this solution, that issue has that solution – without some core to it, it's much more difficult.

Q: Can I follow that question and ask you for some specifics. Four years down the road when you finish your stint at the State Department, what do you want to see in very specific terms – not just principles – in three countries, Egypt, Saudi Arabia and Syria?

SECRETARY RICE: Well, it's a little difficult to predict because the one thing that is extraordinary about this period is that things are happening in places that I don't think they anticipated them happening. So I'm a little bit reluctant to try and predict. If we talk about what we'd like to see, I think you would like to see that there is greater political participation in all of those places.

Q: But not principle, I'm talking about real specifics.

SECRETARY RICE: No, but greater participation is a specific matter. It means that people now have a voice, one way or another, in the decisions that affect their lives. I think it's going to very different in those places. The hardest one in many ways is to predict in Syria because I don't think the process has really begun in Syria. I do think that the process is beginning, however tentatively, in Egypt, however tentatively in Saudi Arabia and those processes will take on a life of their own.

There was a picture that was very striking to me in Saudi in the elections, in which women did not participate, there was a man who took his daughter to the ballot box and she put the ballot in the box. That said something about his hopes about what would be possible for his daughter.

Q: All right let me ask you then, In these two countries do you hope that women are voting in any form of elections in Saudi Arabia within four years? Do you hope that Assad is out of power within four years? And Egypt, do you see want to see an election in which Mubarak has legitimate kind of competition as we do or as happens in any western country?

SECRETARY RICE: We've been very clear that we think that competitive presidential elections are to be desired. So yes, on competitive presidential elections. They will not look like American competitive presidential elections. I assume that American presidential elections are sui generis to this long history that we have. But that competitiveness is important, an important element of the democratic enterprise, in terms of women I hope they're voting everywhere.

In terms of who's in power and who's not in power, the issue isn't who's in power and who's not in power, it's are these places that are making steps towards reform and I just haven't seen anything in Syria yet that suggests that political reforms, as opposed to economic reforms where there's been some minor steps, is on the agenda in Syria,

Q: Is there any country in the region in which you worry about things progressing too rapidly, or what could happen if the lid came off too fast?

SECRETARY RICE: I really believe that once these things are in motion it is not possible to try and almost thermostat-like dial them up and back. They take on a life of their own.

Because I have a lot of faith in democratic institutions and their moderating effect, I'm probably less concerned that things will go too fast than that they there may be places where the institutional change cannot keep up with the demand for institutional change. Because once you have populations that are demanding change, once you have populations that are looking around – and one of the really remarkable impacts out there has been satellite TV where people watch Afghans vote or they watch Iraqis vote or they watch the Lebanese in the streets or they watch as far away as Ukraine or Georgia, today Kyrgyzstan – and they say "well, why not us?"

And I don't know how to judge the particular impact that that will have on individual societies but it will clearly have an impact on individual societies.

Q: So you're not concerned about a rapid rise of Islamic fundamentatalism in many of these countries, particularly Saudi Arabia or even as Iraq that started out?

SECRETARY RICE: Oh sure. Nobody wants to see the rise of greater fundamentalism or greater – let me use extremism. But it is really as opposed to what at this point? It isn't as if the status quo was stable the way that it was. What we really learned on September 11 as you really started to look underneath what was going on there, is that the Middle East is a place that's badly in need of change, that some of these malignancies that are represented by the rise of extremism have their roots in the absence of other channels for political activity or social activity or the desire for change, and when you recognize that – and there are some who recognized it well before we did – but when you recognize that you can say, all right well now I'll try and design the perfect counter to that. Or you can say, the United States is not going to be able to design the perfect counter to that; the only thing the United States can do is to speak out for the values that have been absent, liberty and freedom there, and it will have to take its own course.

And then you have to have some confidence that democratic institutions and people's desire not to live in violence and not to be kind of constantly sending their children off to be suicide bombers, is going to have a moderating effect on the region.

Can we be certain of that? No. But do I think there's a strong certainty that the Middle East was not going to stay stable anyway? Yes. And when you know that the status quo is no longer defensible, then you have to be willing to move in another direction.

I also think there's some argument to be made that America's association with the freedom deficit was a problem for the United States in the region. There are now all kinds of studies of this that people said well, you talk about democracy in Latin America, you talk about democracy in Europe, you talk about democracy in Asia and Africa but you never talk about democracy in the Middle East.

And, of course, they were right because this was the decision that stability trumped everything, and what we were getting was neither stability nor democracy.

Q: I want to follow up on that. We had an interview this week with Vice President Cheney where he said that he thought the greatest weakness or failing of the first four years in international policy was spreading a more positive image of the whole public diplomacy act of the State Department. And he was very optimistic with you there and Karen Hughes and Dina Powell that that would change, but how do you implement that change and will you have the budget and the money to push that forward?

SECRETARY RICE: Well, let me just step back for a second and say I see public diplomacy as having three parts, two of which the United States government is the lead and one which actually I think others have to take a major role.

The first is obviously it's a matter of being able to get a message out about what the United States is trying to do. And I really don't mean spin because the way that we were most effective with Radio Free Europe and Voice of America was it was a reliable source of the truth in places where the truth was suppressed. And so obviously we'd like our message to be positively received. But you have to be able to communicate a message, and it has to be a unified message and a coherent message and there has to be a coherent effort to do that over a long period of time, because you don't change people's minds with one radio broadcast. It just doesn't happen.

I think we have some outstanding message that can be communicated, whether it is, I was saying this on Arab TV the other day, when the United States has used force in recent years it has been for the sake of Muslims who were oppressed, whether it was in the Balkans or in Kuwait or in Afghanistan or in Iraq. It wasn't because the United States wanted somehow to impose its will. It was really going into places where Muslim populations were oppressed. I thing it's a message that doesn't get out very often, just an example. So the first is message.

The second is just exchange between peoples and there we have actually put some extra money into the request for educational exchanges. We frankly have to do something to repair a perception that we have been less welcoming of students and less welcoming of foreigners because our visa policies rightly after 9/11 had to tighten. But in tightening, I think we also sent, people now have a message that we are not as welcoming, foreign students coming down, the number of foreign students coming into the United States coming down. And whenever we go to a foreign country, one thing that I think the president finds really impressive is the foreign government is seeing that side of the table, and at least half of them have been to Texas A&M or the University of North Carolina or Harvard or some place, because that student exchange and foreign exchange and visitor exchange is just an extremely important part of getting our people there and people back. So I think you'll see a big emphasis on that.

The third is that we don't actually understand people's cultures and languages very well. When I was in China I met with a group of students and one of them said, so why is it that Americans know so little about China? And she gave several examples why she thought we knew so little about China – which was a pretty good argument.

And we don't learn other people's languages, we don't spend as much time with others. Part is it's a big continental country that doesn't interact that much but we at one time universities spent a lot on, the federal government and universities, on training like people like me to speak Russian or East European languages or to know those cultures, and when it comes to Islam and the languages of the Arab and Persian and other worlds, we are very far behind. And so all of those will be elements of public diplomacy.

How do to it? The first thing to do was to get somebody and to designate somebody who I think is just very, very strong, a strong personality, strong organizer, close to the president and to me, and then I want Karen to be very aggressive in making sure that those three things get done.

And we have allies on this in Congress. We do. When I testified for my confirmation hearings, this was by far the thing that unified both sides of the aisle. People would say, what are we doing with our public diplomacy? And so I think we'll have support to do it. And we'll take a look at what resources are needed but we're actually spending a lot on public diplomacy. I don't know how effectively we're doing it.

Q: How do you assess where we are in a region where we do know something, and where we know the language and we know the people? Here in our own hemisphere, where do you see things with Venezuela, with Haiti, Colombia?

SECRETARY RICE: Well the region has its challenges. It also has its successes. If you just look in fact 15 or 20 years ago look where the region is and it's come an awful long way. And it is true that even with the challenges, some of the Americas when it meets and the OAS when it meets, only has one empty chair, and that's Cuba. And that says something because Cuba can't meet the terms of the democracy charter. So that's good.

I think part of the problem is that we need a new focus in the hemisphere on how democratic governments deliver better for their people. And in Monterrey, the so-called Monterrey consensus, really was about when you talk about development assistance, is how do you use development assistance to encourage good governance, to get people to deal with corruption.

Corruption is basically a tax on the poor, that's what corruption is. And how to deal with the education gap, the health gap, and to build stronger systems which, in a democratic society, can then actually be held accountable. The leaders can be held accountable.

And in the hemisphere there's a gap, there's a gap between economies that are growing and the status of people and it's leading to fertile ground for populism. That's really what happens. Populism of the old-fashioned, not desirable kind.

I was saying in Mexico it's not an issue where the governments come on the left or right; as long as they're democratically elected we're going to deal with them and some of our best relations really are with governments that come from the left. We have a very good relationship with Brazil and with President Lula for instance.

But the problem is it becomes fertile ground for a kind of demagoguery about class differences and the like and that's more dangerous in this region because there's some history of it.

As to Colombia, I think Colombia's doing really rather well. Uribe is a very strong president, they are making a lot of progress in terms of the terrorism threat to them and it's a very popular war against the FARC in Colombia,

When it comes to Venezuela we have our differences. Nobody want to be an enemy of Venezuela or of its leadership. The United States and Venezuela have traditionally very strong ties and very strong relations.

In general, you want to believe that elected leaders are governing democratically and that they are not interfering in the affairs of their neighbors. And those are the issues. But we can have good relations with Venezuela at any time.

Q: Do you think Venezuela is interfering with the affairs of its neighbors?

SECRETARY RICE: Well, I think there are very strong signs that there have been problems with Colombia and there have been problems with others and, of course, Venezuela has a very close relationship with Castro which I suppose is Venezuela's business if that is the case. But I just remind again there is only one empty seat in the OAS and that's Cuba.

Q: How many peacekeepers do you think it would take to stop the genocide in Darfur?

SECRETARY RICE: I can't give a number. The problem right now is that we've got to find a way to leverage the north-south agreement for both a stronger government that is unified and able to address Darfur, and a government that has something at stake and where we have leverage.

So we've focused on trying to get the north-south agreement complete, well supported internationally which means that it's a good thing that the peacekeeping resolution went through yesterday because now you can get the ten thousand peacekeepers in the south and you can solidify the north-south agreement.

The next issue is what we do about sanctions. If [inaudible] act.

The third is to fill out the AU monitoring mechanism because in fact the AU monitoring mechanism has done relatively well where it is. I mean it has diminished the violence considerably where it is but it's a very small number at this point, 1,700 or 1,800. And it meets, you know, the ceiling, I'm sorry maybe a little bit more than that now, 2,300 now, but the ceiling is 3,400 and the AU has said they'd like to go to five or six thousand. I think we ought to try to fully realize that,

Q: But hence my question. I mean if you go to six thousand would that be enough?

SECRETARY RICE: Well it's a monitoring mechanism that has a chance of making a big difference as even a small monitoring mechanism has made.

One of the problems right now is I'm not sure what kind of peace you would be keeping. You've got rebels, you've got the Janjaweed, you need their supporters to rein them in, and that's been a lot of the conversation with Khartoum. It's also the conversation with John Garang now about his responsibilities in Darfur.

The other piece of this is to try to reestablish on the humanitarian side some of the progress that we've made over the last several months, it's worsened over the last month, the access has, and so we're trying to reestablish that,

And then the final piece is to try to get the AU peace process moving a little bit more rapidly.

So those are the steps that we've been taking, and the other thing that the United States has done is that we've been kind of constantly trying to shine the light on Darfur to remind people that this is a responsibility and that we should not be hung up about issues that get in the way of our trying to deal with this. So that for instance getting the Chinese and the Russians to deal with sanctions would be very, very useful.

Q: [Inaudible] said in December to the Financial Times that if the deterioration of humanitarian access continued, he could imagine 100,000 people dying a month, which would put the number at about six times the death toll in 2004. Does that sound like a plausible -- --

SECRETARY RICE: I just can't judge. We spend every day trying to avoid the problem, trying to solve the problem, and on the humanitarian side the disappointing thing is that we had(n't)? made a lot of progress, largely, you know, opening the third route through Libya and the like. When I met with NGOs, it must now have been several months ago, it was certainly before November, I think it was around September/October of last year, they felt they were getting pretty good access. The security situation was still difficult but they were getting pretty good access.

We've got to immediately reestablish that. Immediately.

Q: President Bush met with President Putin about a month ago. Since then President Putin also was invited to Paris for a meeting with European leaders where the tone seemed to be quite different, at least in public. Also in recent days you've had the events of Kyrgyzstan that you referred to. I wonder what you think the cumulative impact of these events in on President Putin and the sense of self isolation that seems to have been building up around him?

SECRETARY RICE: Well it's very important that Russia not get isolated. We don't need a new dividing line on the other side of the Ukraine. And so the meeting between President Bush and President Putin was in part aimed at just making certain that we maintain as close an engagement with Russia as possible, and we have a lot of things that we're doing with Russia that are actually very positive so it's not hard to do.

But the fundamental fact is that the space around Russia is changing and changing pretty dramatically, and I've been heartened by the fact that after great difficulties around Ukraine, the relationship seems still to be in very good shape and indeed around Kyrgyzstan we've had very little problem whatsoever.

Nobody is trying to encircle Russia. It's a sort of 19th century concept, encirclement. And in fact that we're trying to promote, we and others, is the democratization and therefore the liberalization and ultimately greater prosperity in the whole space that is the former Soviet Union. And, based on that, you would have greater opportunities for trade and greater opportunities for economic development of the whole region, and in many ways nobody would have a greater interest in a more prosperous, forward-looking space around Russia than Russia would.

So part of this is conceptual, is to start to get Russia to see that, and I think you've seen some movement. It's not going to be a matter of controlling these countries. It's going to be a matter of transparent and healthy relations between them. And you're starting to see some progress on that.

I don't know precisely what happened in Paris.

Q: Well that's what I was going to come back to, as you correctly anticipated. But do you see a different approach developing? Does the United States need to have what some Europeans are proposing now, a strategic dialogue with the EU on Russia?

SECRETARY RICE: Well, we have a strategic dialogue with the EU and we talk about all kinds of things and I think that's just fine. There's a certain degree to which we would be going backwards from the creation of the NATO-Russia council and of EU-Russia summits that take place and the US-EU summits that took place and the U.S.-Russia summits that take place, if Russia somehow seemed to be a target of strategic conversation. There's something about that that also seems slightly 19th century.

And, rather, a way to pull Russia into the institutions that are forming the structures through which a lot of this liberalization and prosperity are being built I think is probably a better message. It's not that we can't talk about it. Of course we can talk about it. But I do think that it would be a very useful thing if Putin is getting the same message from everybody, which is that Russia's democratic past matters to the West, matters to the United States, matters to the members of the EU, because that can't be a mixed message.

Russia is only going to realize its full potential if it begins to liberalize even further its politics and if you get all of the kind of creativity that that unleashes, because Russia is a great society. It has extremely capable and brilliant people. Russia should not be a raw materials and energy supplier for the international economy. That shouldn't be Russia's fate. It should be a place that is as active and as competent and as successful at the high end of the international economy, that is for instance the high technology end, as any country in the world.

When you go down to the Silicon Valley where I live or out to the Silicon Valley, out of the Silicon Valley, there are an awful lot of Russian software engineers and programmers and mathematicians who could certainly be doing that in Russia if the business conditions and legal framework and support for creativity were--

Q: Is it your impression that Putin interprets what's happened in Ukraine and what's happened in Krygyzstan, what happened in Georgia as something aimed against him by the West?

SECRETARY RICE: There was some reporting to that, you know, I mean in the press you would hear that. The Russians would say it in fact you know. I think initially, I don't know about President Putin himself, he's never said that, in fact he went out of his way in an interview to say that he did not see it that way as a deliberate policy choice. I do think in Russia there was a sense in which there is a belief that the effect was that Russia was being pushed out of this region and, again, it's just not the way that international politics is developing.

Q: North Korea. One of the things that's been striking about the last few years is that it hasn't always seemed that the bottom line for the United States is the same as the other parties in the six-party talks. After your trip to China, what do you think that the Chinese value more, stability on the Korean peninsula or a non-nuclear peninsula?

SECRETARY RICE: Well, my discussion with the Chinese was to suggest to them that those two are indivisible.

Q: And what was their reaction?

SECRETARY RICE: I think they understand that a nuclear North Korea on the Korean peninsula has unpredictable, potentially unpredictable effects that will not make the Korean peninsula very stable, will not make the region very stable. And so I didn't find much pushback on that.

Q: Because the sense is that one of the reasons why it would be difficult to, you know, if say the six party process doesn't continue to work and he wanted to try to move this to a higher level and refer it to the Security Council, it would be difficult to get China's cooperation on that because they have a fear that if you start pushing too hard on the North Korean government, it could potentially collapse, you've got millions of refugees in the Korean border and that's the thing that's holding them back.

SECRETARY RICE: Well but eventually if we have to cross the bridge where we come to anything other than six party talks, people will have to take a look at the up sides and down sides of the choices before them. We're not there yet because we're spending as much time and energy and effort right now as possible in making the six party talks work. We still think it is a really great framework in which to do this because it brings different parties with different incentives and different points of leverage to bear on the problem. So it's a really good design. So at that point I suppose people would have to make their choices.

But I do not think that it is, I'm not saying that you're saying this, but stability on the Korean peninsula and a North Korean nuclear weapon I think are not compatible.

Q: And you think the Chinese agree with--

SECRETARY RICE: I think people understand that.

Q: Can I go to Lebanon for a minute. What are you hearing from our regional allies about the temporary accommodation that the Lebanese opposition seems to have made with Hezbollah and that Washington seems to be going along with for now? Has there been any major objection by the Israelis or the Jordanians?

SECRETARY RICE: Well we've gone to great pains to make clear to people that our policies towards Lebanon or towards Hezbollah, our view of Hezbolllah has not changed, Our policy towards Hezbollah has not changed, they're still on our terrorist list, we still have them listed, their assets are still frozen. All of those things.

There is, it seems to me in the region, a lot of understanding that this is a process that's just getting underway and that it has to be first and foremost a Lebanese process and that as long as you have the kind of artificial factor of the Syrian military and the security presence, it's going to be very difficult to actually know what the balance of forces really looks like in Lebanon.

Q: What specifically is the United States---

SECRETARY RICE: So therefore I think there's been in the region considerable willingness to let this unfold.

Q: Now that the UN report is out on the assassination of Hariri, where does this lead to?

SECRETARY RICE: Well, this fact-finding report has a lot of very disturbing, they don't call them allegations because it's in fact not an investigative report, but a lot of disturbing points are made there. And I think the best thing we can do is to get a full scale investigation that is an international investigation. That's what Kofi Annan would like to do. We support it. I think everybody supports it.

The only slightly different tone I heard was the Syrians and they've said they don't see why one is needed. Well, I think one is clearly needed.

Q: What specifically does the United States want to do to maintain the momentum that's been created in Lebanon in terms of ensuring that the elections come off, that there are monitors, there is an international movement? I gather we're considering a joint conference in Paris with the French.

SECRETARY RICE: But we're not yet considering a modality for it, Robin, there are several different ideas about how to do this. But what is going to have to happen right now is that I think Larsen will try to arrange to understand better what the opposition needs. He would then come back to the Security Council with a recommendation on how to support the elections. He really does have the lead on this. We've met with him but he is very experienced, he knows everybody in the region, he goes out there, he gets a very clear read on what the opposition is doing, on what the Syrians are doing, and I think he'll put together a kind of electoral program that would include monitoring and all of that. And we're prepared to be supportive.

Q: But a couple of us in this room were told by a senior official at the State Department recently that there was a brainstorming session involving people from the Pentagon and the State Department talking about what ways they could support, what kind of ideas are you considering?

SECRETARY RICE: People have brainstorming sessions all the time – and you would want us to have brainstorming sessions. But until they actually become policy and until somebody's ready to pursue them, you know, they're not policy.

I think the main thing is just to help the Lebanese opposition and others, the entire Lebanese political space people to get organized so that they can have a competitive free and fair election.

I would suspect that if the UN comes back and says monitoring, people will be very supportive of that. Perhaps if there's need for non-governmental organizations to do training or the kind of things that have been done in other places, I'm quite sure that people would be prepared to do that.

I suspect that that's where this is going, that it's really going along the lines of how do you get the Lebanese organized and trained and do they need non-governmental institutions, of which there are many, who can help them do that.

Q: One last question and that is on Syria. I gather President Chirac told President Bush that the French believed that if Syrian troops do withdraw that it would begin the unraveling of the Assad regime in fairly short order. Do you share that assessment and is the United States, I know that senior U.S. officials talked to a Syrian opposition party yesterday, are we taking any steps to try to reach out and look to what the alternatives are?

SECRETARY RICE: What we're trying to do is to assess the situation so that nobody is blindsided, because events are moving so fast and in such unpredictable directions that it is only prudent at this point to know what's going on in the whole-- The possibility for what I often call discontinuous events, meaning that you were expecting them to go along like this and all of a sudden they go off in this direction, in periods of change like this. So we're going to look at all the possibilities and talk to as many people as we possibly can.

Q: If the security committees don't come up with a timetable for withdrawal of all the Syrian troops from Lebanese soil, as you have asked them to do, what would your reaction be?

SECRETARY RICE: I don't want to try to speculate. One of the things that I think is very important to understand about what we do on a day to day basis. What we do on a day to day basis is try to make the policies that we're pursuing work. If you spend too much time trying to figure out what you'll do if they don't, then you will spend no time trying to make them work.

Whenever I taught courses on policy making there's always the point that I make, which is that as an academic I analyze to know it could go this way, it could go that way, you really have to be awfully focused on trying to make it work. And right now we think we've got very good cards because there's such great international consensus around what ought to happen and so we're going to try to play them well.

In part, that means that the United States does not always need to be, in fact maybe should not be the kind of lead here. So that what the UN and Larsen is doing is extremely important. What we're doing with the French is also important but equally important is what the Arab states are doing.

You know, I did find it interesting that the Arab League essentially did not come up with anything on this issue. That's interesting given the history of the Arab League.

Q: Since we're in the region I just wanted to get a clarification on the United States' views towards settlements in Israel. The Israelis say that they have reached some sort of unspoken agreement with the United States that allows them to build within settlements, within construction lines, going up rather than out. And in fact they suggested it somehow contained in an exchange of letters with [inaudible] Was that the way the policy---

SECRETARY RICE: What we asked the Israelis some time ago was can you explain to us what it is you're really doing. There is so much information, misinformation, who said this, who said that, no, it's just a tender, that the picture was just too confusing. And so the only commitment or assurance that is there between the United States and Israel at this time is the one the president made to Prime Minister Sharon on April 14th of last year, which is that there is an understanding on the part of the United States that there has been a chance in circumstances on the ground, large population centers have grown up, and that that will need to be taken into account in a final status agreement, but that that final status agreement has to be negotiated. In other words, how that is taken into account has to be negotiated. That's it.

Q: So this idea of allowing the growth, just this kind of this natural growth--

SECRETARY RICE: Understanding what this is all about, because what does a settlement freeze mean because we're trying to figure out when we get to that [inaudible] road map what does it mean. But there is no agreement that you can build some, it's one way or another. There is at this point a desire to understand that better so that we can understand better what a settlement freeze might really mean.

Q: And you mentioned those commitments that the president made to Sharon. What do you think of the idea of having a balancing set of commitments to the Palestinians such as noting that if they give up the right of return there might be some payment of some sort?

SECRETARY RICE: The only thing that the president was doing on April 14th was recognizing certain realities, not trying to negotiate the final status. And so--

Q: But wouldn't that be recognizing a reality that they'd get some sort of compensation for giving up the right of return?

SECRETARY RICE: Well there are the realities of what the president recognized on April 14th and there's the reality now that the Israelis and Palestinians are in a considerably different place than they were a year ago. And our focus at this point is to try to help everybody get through the next stages here. That means the Palestinian parliamentary elections, that means the Israeli withdrawal from the Gaza and the West Bank. That needs to go smoothly so that this can continue to move. And then I think that you're going to find that we're very far along on the road map so when we talk about something like discussions that might go on with Israelis about [inaudible] we figure that at some point in time this is going to be a major, you know, we're getting down the road on the road map once we're through this period.

But I will say this, they're actually going to dismantle settlements in the Gaza and the West Bank, so that was not anticipated that it would be fully ready and actually that it would be all the way through the Israeli government and ready to go. When we met last April, it was Sharon's proposal at that time; it's now the policy of the Israeli government.

Q: You mentioned the Monterrey consensus and I think some people would credit you and your staff -- - the Treasury for creating the millennium challenge account idea. We now have a new incoming president of the World Bank, what do you expect or hope from the World Bank in the next five years?

SECRETARY RICE: First let me say we've had really excellent relations with Jim Wolfensohn, He's done a really great job at the World Bank. He has been really stalwart on, for instance, Palestinian issues, knows them well. I hope he'll stay involved with them.

When we needed to move on Iraq after the interim government was formed, the World Bank was early to do that so that we were able to get a short term financing facility for the Iraqis. And he's been very forward leaning on the Middle East and has done things that have mattered.

He also was a very big proponent of this kind of performance-based assistance, and that was very helpful in developing the Monterrey consensus.

I would just hope that that continues with the World Bank, that the idea that donor-recipient relationship is a two way street not a one way street is extremely important. And, secondly, that the loans versus grants debate, you remember we made a proposal for 50 percent of all World Bank disbursement to the poorest countries be in grants not loans because basically poor countries just keep piling up the debt. I would hope that wewould really hold countries accountable on the corruption side. I know that it's a sometimes controversial issue as to how hard you press and who gets hurt if you withhold from a country that's terribly corrupt because sometimes it's the people who get hurt with that, and they aren't responsible for the fact that they have a corrupt government. But it's a real dilemma because if the money goes in it's not going to help them anyway. And so at some point you have to get the corruption side of this down.

So those are some of the things I would hope you would see from the World Bank.

Q: The Center for Global Development just published a study suggesting that loans should be conditioned upon things like term limits on the president or the existence of real democratic elections. Would conditioning World Bank loans on those kinds of political things be a good idea?

SECRETARY RICE: I would –-- be a little bit more open about how to talk about good governance, but obviously from our point of view, democratic elections are an accountability mechanism. The fact that you sometimes have governments that simply stay in power and are not accountable to people, makes it hard to know whether or not financial aid dollars are really being well spent. So there's clearly a relationship between governance criteria, the structure of governance and the ability for financial assistance to be used wisely.

How tight you want to make that link in all cases, I think again you've presented with a dilemma. I think with something like the Millennium Challenge, you can do it and do it quite straightforwardly but, for instance, certain aspects of humanitarian assistance you're never going to want to do that. For a while we were the largest food donor to the North Koreans. We were at one point the largest food donor to the Taliban or to Afghanistan,

So there's certain humanitarian aspects I think you want to be careful about doing that, but in terms of development assistance it's pretty critical. Unaccountable governments don't spend this money well, that's really the point.

Q: On China on avoiding a misunderstanding on the consequences of unilateral action on Taiwan, what did you achieve during your visit and what steps need to be done now?

SECRETARY RICE: Well everywhere that I went I talked about the fact that the anti-secession law had increased tension from the Taiwan Straits not diminished it. And I said to the Chinese leadership, you know, you do an anti-secession law, then they react, then you react to that and they react to that and pretty soon we're all up here, and I actually did that.

Q: You actually did that---

SECRETARY RICE: Yes I did. It gets across the language barrier. And I had a sense that perhaps they understood that the an anti-secession law had had consequences internationally that were a problem, and they talked a good deal about what they were going to try to do to reduce tensions in the Taiwan Straits. And we'll see. That would be a good next step.

Q: Excuse me. My editors reminded me I would be remiss if I didn't ask about the F-16 sale to Pakistan. I was there last week when you didn't announce that.

SECRETARY RICE: I told you I wasn't going to announce anything.

Q: You were right about that. And the Indian government was not happy about it last week and has now put out a statement. How does this sale fit into the idea of reducing tensions between the two and what are you trying to accomplish there?

SECRETARY RICE: Well first of all it shouldn't be understood in isolation. What we're trying to do is to solidify and extend relations with both India and Pakistan at a time when we have good relations with both of them, something that most people didn't think could be done, and when they have improving relationships with one another. And in order to do that, what I talked about when I was in India was broadening and deepening our relationship for instance in defense cooperation, broadening and deepening our relationship in energy cooperation.

Q: Nuclear power plants?

SECRETARY RICE: Well, we're a step from that certainly but looking at their energy needs and trying to understand how they can be met. The prime minister's going to come here, I think the president will probably go to India, we've had this NSSP, we're going to have phase 2 of that, it should be [inaudible] we have a lot going on with India.

Similarly in Pakistan there is the war on terrorism but it's not the only thing. We've been active with Pakistan, $3 billion in assistance to Pakistan, including for education and President Musharraf's attempts to reform the madrases and all of that. And economic assistance to Pakistan at a time when Pakistan's economy is actually performing much better. So we think our economic assistance has helped Pakistan's economy to perform much better.

So we have broad and deepening relationship to both. In that context, the F-16 issue with Pakistan which has been around for a while, we decided it was time to do that in the context of this relationship with Pakistan. And that it was time in the context of India to demonstrate to India that we would be a reliable defense supplier if they chose to have us do that. Therefore, we are going to respond to their requests for information, which means that on high performance they have a tender, they will have a tender for high performance aircraft and by responding to the requests for information we intend to let our companies bid.

They are already acquiring American defense equipment, for instance, the P-3 Orion is pretty far along. So if you look at it in terms of the region, what we're trying to do is break out of the notion that this is a hyphenated relationship somehow, that anything that happens that's good for Pakistan has to be bad for India and vice versa. I am quite certain that there will be some concern, probably on both sides, about what we're ding because with India perhaps the F-16 sale and on the Pakistani side the fact that we're going to bid on the Indian high performance aircraft contracts.

But this is a broad policy in South Asia and it's not just India and Pakistan, it's also that whole arc that includes Afghanistan, where relations are better between Afghanistan and Pakistan than they've been maybe ever but certainly in a very, very long time. We have very good relations with the central Asian states, which are obviously changing as we speak as things change in the central Asian space. So that if you look at it, there is an entire arc there that is very important to American interests in the future, and we're going to pursue all of those relationships on their own terms, and in this context the F-16 issue with Pakistan makes sense, the tender, participating in the tender with India makes sense, and I think people will begin to understand all--

Q: Tiny follow up. What message does that send when you're giving F-16s to a military government that ousted a democratic regime at a time you're trying to promote democracy?

SECRETARY RICE: Robin, Pakistan is worlds away from where it was three and a half years ago. One has to look not at fixed points in time, you know, international politics is not like a satellite that comes over and takes a snapshot, takes a snapshot, it's a process.

Q: That's newspapers.

SECRETARY RICE: That's newspapers right, well yes that's newspapers because you have a daily headline. But it's a process. And look at the prospects for Pakistan three and a half years ago before September 11th. Rife with extremism, rife with it. Relations with one of only three countries in the world that actually had relations with the Taliban, terrible relations with Afghanistan, madrases growing like, growing all over the place, some of the most extremist madrases in the world, by the way in large part beginning all the way back with the effects of the Soviet invasion of Afganistan so this took a while to get there and it had become quite deep.

If you look now at where President Musharraf is trying to take the country, it is away from that. You know that I made a very big deal of the elections in 2007, that we expect Pakistan to be on a democratic path and we expect those elections to take place in 2007. But Pakistan has come a long way, it's on a better trajectory than it's ever been, or that it's been in many, many years, and our job is to support that trajectory and to help bring that along.

I was really struck by what the 9/11 Commission said about Pakistan, which is basically invest in the relationship with Pakistan because if you don't, you're going to create the same situation we created in the 90s. In the 90s we decided we couldn't deal with Pakistan and look what happened. After having strategically allied with it to overthrown Soviet power in Afghanistan, we decided that we didn't want to have anything to do with Pakistan and, as a result, or one of the results of that, was that Pakistan had no anchor in the democratic world and you've got the Pakistan that you've got of 1998-199-2000 and 2001. I don't think we're going to make that mistake again. And so we will work with the Pakistanis on their defense needs at the same time that we work with them on the road to democracy.

It is not even/or. There is no contradiction between working with states and having a principled stand on democracy and insisting that they also be on a democratic path.

Q: Can we just squeeze in Gene [Robinson]?

Q: I was just going to ask about Cuba now that Cuba has a steady supply of Venezuelan oil, maybe there's some Cuban oil out there and any sort of change internally looks less likely, at least to me, than in many years. Are you conducting any review of policy?

SECRETARY RICE: We had a major review to the policy which result was this commission on a free Cuba that Colin chaired last, about 18 months ago. And it stands as a pretty good document about how to think about this.

The problem with Cuba is that there isn't much room for the engagement really of whatever may be bubbling in Cuba. There just isn't much room. And what room there is, like the couple of projects that have come up over the last couple of years, Castro has managed to cut off.

One of the most interesting aspects of this is about two years ago the president basically made a proposal, which was that we would start trying to improve, we would not wait, we would start to try to improve U.S.-Cuban relations if they would just start to move along the democratic path, have parliamentary elections that are free and fair.

And Castro responded to that by cracking down again on dissidents. So our view has been, given the facts of the case, the idea that somehow engaging Cuba is going to have an impact on that domestic structure is just, there's no evidence that that is going to be the case. And so, you know, they continue to be isolated from the OAS. It's true that they have better relations with Venezuela, but other than the personal relationship between Fidel Castro and Hugo Chavez, I'm not really sure what Cuba has to give to the Venezuelan people. We'll see.

Q: Thank you very much.

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