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And thank you all for coming here this evening. I am Bill Drozdiak, the President of the American Council on Germany and delighted to share this stage with my good friend Joschka Fischer. We got to know each other when I was correspondent for The Washington Post based in Germany when he first gained some prominence as a Green politician in the early 80s and we have sort of forward our careers together ever since then. We will be speaking about the future of the Middle East. I will start by posing some questions in generating the discussion about some of the multifaceted issues and challenges that face both the United States, Europe and the rest of the World in this small little region and then we will open it up to questions that will be coming from the audience. Joschka, I thought we would take a look tour de horizon and if you look at the area from the Mediterranean to the Hindu Kush there is instability everywhere, starting in Southern Lebanon after the conflict last summer, the Israel Palestine question of a two state solution seems more troubled than ever. Syria, we have seen represented Nancy Pelosi there last few days, trying to generate a dialogue between Washington and Damascus and possibly to separate Syria from the Iranian alliance. We also have of course the continuing debacle in Iraq, the fragmented uncertain leadership that we see in Iran and of course Afghanistan which is also in very perilous times particularly for the NATO alliance. I thought we would start by hearing what you think are the main challenges that lay ahead, particularly the last 22 months now of President Bush's administration and what you see the next will be the most important policy initiatives that will be required at the next American Presidency? Well first of all I want to say hello to everybody in this wonderful room and say thank you very much for the invitation and the possibility to address some relevant very relevant issues in the international politics tonight to this audience here in San Francisco. If we look to the region from a European point of view never run for an office in the United States, I don't have the intention to do that so and allow me to analyze as a friend of the United States but mostly from a European perspective. For Europe, during the Cold War, the Center theatre was Germany, divided Germany, divided capital of Germany, Berlin. I think in the 21 Century from a European perspective the major theatre which might threaten our security will be the Eastern Mediterranean, the Middle East, definitely between the Mediterranean Coast and the Indus Valley. And therefore I think it would be very wise to consider whether a common perspective to engage in this region would not be better than to stay separated between the two sides of the Atlantic. I would be in favor of a common strategy because we have a lot of common interest there. Take for example, Israel. The security of Israel is especially from a German perspective a key factor because our historical and moral responsibility for the Shoah defines our relationship between democratic Germany and Israel and the security of Israel is one of the core elements of our Foreign Policy based on bipartisanship. But even Israel must now start to define its future not only based on the present conflict but how will Israel define its own role in a globalized world where China and India will play a very different role. Terrorism the United States and also some European countries not to speak about Arab or Muslim countries experienced terrible attacks of terrorist groups. What are the causes the root causes of this terrorism? Regional conflicts, some of them very old regional conflicts, not only the Israeli Palestinian conflict, there are some other conflicts in that region as we see now the Shiite Sunni conflict. The question who will dominate and I think this will be one of the major conflicts in the coming years, who will dominate the Persian Gulf? The difference or say the confrontation between Saudi Arabia and Iran, it's behind the screen of the Shiite Sunni conflict. But we shouldn't under estimate the religious and ideological impact of this conflict. So, and what will be the future of Pakistan, what about the Pakistan and Indian relationship? When we talk about Afghanistan and that the situation is deteriorating, the Taliban are coming back, there is only one answer. The Taliban is the creation of the ISI. The Taliban without the ISI won't exist. Toyotas picks up beautiful nice Toyota pick up are not coming by our sense door. They are delivered. The training, the command and control if you talk to American Generals or NATO Generals, they will tell you its command and control is completely on Pakistani side and if you talk to the Pakistanis you will understand, yes they fight against Al Qaeda but Taliban are different. Pakistan has reconsidered its political posture in Afghanistan. Why is that so? It all is connected with the Pakistani India relationship. And is I understand very well that Washington readjusted the relationship between Delhi and the United States, but in Pakistan the perception was a very different one. So I think, if you look through the region you will see that it's very troublesome. You have a combination of religious hate, nationalist confrontation, terrorism and at the top you have now also the threat of the nuclear arms race. I never believed in the reasons which were brought forward to wage war in Iraq, never. We had more or less the same level of information. The information was very I mean I can define it in a very, very simple nuclear, nobody believed that there was a serious nuclear threat any longer in Iran in Iraq. The question of chemical, yes may be, we don't know, odd stuff. Biological, might be, we don't know. So the work of the inspectors was very important. And I think, if you don't know, then and you have people on the ground, continue and let them work and the results was very convincing. But this is the past. For the present and we said the 9/11 quite clear to our American counterparts, there are two consequences and we agreed to that, weapons of mass destruction and terrorism. But if we look to the passports of those who committed this terrible crimes in Arlington and New York City on 9/11th there was not even one Iraqi passport, but the lot of Saudi passports, and some others. And the question of weapons of mass destruction, yes, very big threat, but the Iranian nuclear problem was much more elaborated than all these ideas about what Saddam could have. So Iran is a serious challenge with its nuclear program. And even if we we cannot do, but if we put aside the existential concerns of Israel, but not only of Israel there are some others in the region. The consequence and I said that many times to the Iranian side, the consequence will be that if Iran will go nuclear and I think this is the intension of the program because if you look to the structure of the program they will tell you okay, we want to buy an automobile but there is too much steel, there are steel tubes, there are chains, so it looks like a tank. Of course you can also drive with a tank, so they are not lying. But what the hell do you need a tank if you want to go with your family by a car to the holidays. And that's exactly what the Iranians are doing. Their program is weapon oriented. It makes no sense. If they want to produce electricity they must ask for the nicest, the best Framatome or Westinghouse light water reactor. This would make sense, then I would believe them. But enrichment means that you have the technology I mean to enrich and once you can enrich you and you don't stop it then you go from three to four to 30 to 40 up to 90 percent and with 90 percent you have weapon graded uranium, so then you are there. Why do you need a heavy water reactor research reactor once it will be build in Iraq? You have 46 warheads; year by year, weapon graded plutonium as a result of the research reactor and so what we know that North Korea, Pakistan, so I am really think this is weapons oriented. From my point of view the consequence will be that all the the whole region will react and we will have many smaller Pakistans. The Turks will not stay aside and of course neither the Saudis nor the Egyptians, so we will have our nuclear arms race in a very instable region and this is inacceptable. So from my point of view we have there a lot in common. But the underlying challenge is that this region is fighting with a crisis of modernization. Neither the nationalist forces and by the way Saddam's regime was a completely insisting regime, no Madrasas. It was completely law insisting, a terrible dictator, do not misunderstand me, but completely law insisting. Nor the religions based Wahhabi approach of the Saudis. All of them produced a favor. And if you look ladies and gentlemen to the basic fact in the Middle East you will see an extremely young population but with a very huge gap, really to meet the needs, the desires of this young population. There is the UN, the peer reports I think in the mean while we had three done by Arabs mostly Arabs scientists and businessmen who clearly define the problems. The Netherlands which is a wonderful country in Europe but not a very big one is publishing it's publishing more books per year then the whole of the Arab world. There is lack of innovation. There is a lack of inter regional trade. There is a lack of education. There is a lack of also basic rights. If you exclude, for example the half of their population, because you don't get women the same rights of the men. Then I mean you start in a race with nations where equal rights are the reality, and you have lost before you make this first step because the options for a nation where you have equal rights in a knowledge based global society are bigger. So the real cause is that this region is struggling with the crisis of modernization and if you look to the root causes of the terrorists, yes you have to fight them down, you cannot negotiate with them. Or whether this is a war this is a good question because if you look how successes and who ever was successful altogether were achieved, it was the good old police work and intelligent cooperation. That's it. And therefore all these guys are now in custody. But from my assessment these modernization challenge is the key element and many Arab leaders misuse Israel since it's beginning has exist as as a state to excuse their own I mean, the mistakes and incapability or even unwillingness really to develop their country. But if this continues the half of the population under 18, with this lack of competitiveness in the Arab world, this is a recipe for disaster and therefore I think modernization is key. Democratization might be an element of modernization. But it's a question of timing. I don't know whether it was wise to have democratic election in this situation of Iraq because the consequences are seen. This has fueled, the civil war and with consequences everywhere in the region. So from my point of view we will have to deal with these modernization crisis in the Arab and Muslim world in a positive way or we will pay a very high price for that. If you think well, that there is room there is scope for much more assertive American leadership or given the the nature of these problems it seems that events are so hopeless that an American role would not be helpful and may be this is the moment for Europe to step forward. Oh my experience says that I would be proud if I could say to the American audience here in this wonderful city of San Francisco, "Yes, we do it." But to be honest I can't tell you that. Well I am ashamed about that. There is no leadership if there is no American leadership. This is a good and a bad message. Without I experienced that during my seven years as Foreign Minster, even in remote conflicts in Africa, at the end without American leadership or even in issues like climate change, without American leadership its not American leadership is not everything but without American leadership everything is nothing. This is the reality. And therefore I highly appreciated the initiative of Speaker at because it I think engagement if you want to if you want to stabilize Iraq, it's impossible without a regional consensus. And the regional consensus is impossible without relevant regional players; whether you like it or not. So, in Afghanistan, it was quite clear, you didn't need the consensus of Egypt. Why did you because that meant there was no sense. Saudi Arabia was a player indirectly via Pakistan. But Pakistan was a key player. Uzbekistan and Tajikistan were very important; who are not important in Iraq. But Iran and Syria are important. And if you want grade a framework of stability and that the territorial integrity of Iraq could be preserved and I strongly recommend that because the Balkanization of the Middle East nobody knows where this will end. You have to engage them. Secondly if Tehran will watch very, very carefully what's going on Damascus during the visit of the Speaker because if Damascus will say farewell to Tehran, that's the last alley in the region. I think this will have tremendous positive consequences. Therefore I am strongly in favor to do everything to bring Syria over not regime change, but change of coalition. And if there could be one day a peace achieved between the Syrians and Israel. But not for the price that we trade off Lebanon. This is not an option. The territorial integrity and self definition self determination of Lebanon is key. But if such a peace, could be one day achieved, this will be a very bad message for Tehran and a very good message for the Israelian people and for the region. So, I think a more rational policy, a leadership which is determined, which is keen, which is based on interest, but also back on the moral high ground would be the best for all of us which could happen, so, I am strongly in favor of a more rational American Foreign Policy which really could lead I mean, lead. And as a leader you are always questioned and people will not only applaud you because also criticize you. Madeleine Albright once told me that last year when you know, we have in Europe these summits and by and then we must discuss about money. And one day I came back to a meeting with Madeleine Albright from such a European conference where we had to discuss about the European budget. And I said to Madeleine, this is a crazy organization. I mean if we if we act they criticize us; if we don't act they criticize us. What shall we do? Madeleine smiled and looked at me and said well Joschka that's the price of leadership. Yeah. Let me pose one more question before starting to group the queries from the audience. Israel-Palestine, we have a situation now where there is weak leadership all around, not just in Washington with President Bush entering a Lame Duck phase in the twilight of his Presidency, but Prime Minister Olmert is under siege at home. Mahmoud Abbas, the Palestinian authority is also challenged by the Hamas. In this situation how do you see the way out of this impasse? You you have a unique perspective because during your days as Foreign Minister and I my friends in Israel told me that you were one of the most respected European Statesmen that the Israelis had dealt with. And you also were respected on the other side. Is there a way, given the weakness of on of all the leading players, to somehow break the deadlock? Well, whether it's possible to break the deadlock may be we should reduce our our goals to have realistic goals. Whether we can break the deadlock in a way that peace I mean, will flourish in the Middle East, I don't know. But to break the deadlock with all realistic goals I think there is a great opportunity just now. The relevant Arab's players are more concerned about the Iranian threat or the Shiite threat or the threat of the Shiite present going from the Gulf States down to Lebanon, than about Israel. This is the moment which I think wise statesmanship would use because it brings you in a in a positive position. Secondly, I mean the Lebanon War the last Lebanon War had some lessons. If you analyze the Lebanon War based on the security interests of the state of Israel, this was a war based on terrorism on the one hand and missiles on the other hand. And these missiles did not threaten the fringes they threatened directly the second biggest city of Israel, Haifa, wonderful city and many other cities and villages in the Israeli heartland. It was not any longer a war at the fringes, in the Palestinian territories or far away on the borders. So and certainly it was a proxy war, first time between Israel and Iranian proxies. So if you put this all together I think it's in the Israeli interest to settle the territorial conflicts with the Arabs as soon as possible. And fourthly, and this shouldn't be underestimated, the world is changing. What will it mean in 20 years when China is one of the key players in the world for the Israeli position? What will it mean when India is one of the biggest players in say 30 years? So the globalized world and it's fascinating if you look to the Israeli society, it's one of the most post modern societies in a very successful way. But the self definition is still based on the pioneer period of the founding of Israel. There is a contradiction you can also sense in the political system today and I think that it's in the interest of the state of Israel to settle the territorial conflicts, to have a free hand in a globalized world for new coalition. It's strange because Israeli security of security of Foreign Policy is based on two pillars, Own Strength and American Security Guarantee. But the world is changing and it would be wise to have a third pillar; not as an alternative but as as a surplus, as in addition now that's what I was looking for, sorry for that, in addition a more multinational multilateral one which can secure the country. I think therefore Israel should use this opportunity. The question with the big strong governments and the weak governments in once you have a strong government it's not possible then you'll have a weaker government, it's not possible. I mean, I think sometimes weak governments might emerge as strong governments when they have the right timing and the courage. And result of a little bit also of luck to act and I see there is a moment this could be used, once again the parties on the ground won't do it without without strong, strong backing or even pushing from outside. The Europeans by themselves can't do that. You know, give you a very short hint, everything from the European interest would I think would would drive the Europeans in a positive policy towards Turkey because Turkey is the key factor. And Turkey is the the Muslim community society, if we can modernize together with the Turkey and European's Turkey, this would be the best answer to all these terrorists because it would demonstrate that Islam, a democracy Islam in modern society, women rights, a strong civil society, independent judiciary will work. And this would be I think the the most important contribution to the European Security. But the Europeans at the moment behave in a very different way. So unfortunately, I mean, we have we have shortcomings on both sides of the Atlantic. But I think the present moment to move forward with an agreement and with international recognized borders for Israel, with the founding of a Palestinian state there is really an opportunity which which would be a pity, if this opportunity would be not used and the window of opportunity would be closed.