Russell C. Leffingwell Lecture: The Diplomacy of Climate Change

Monday, September 27, 2010

Speaker

William Hague

Secretary of State for Foreign and Commonwealth Affairs and Member of Parliament for Richmond, United Kingdom

Presider

Christine Todd Whitman

President, Whitman Strategy Group LLC; Former Administrator, U.S. Environmental Protection Agency

The Russell C. Leffingwell Lecture Series

CHRISTINE TODD WHITMAN: Good morning, everyone. In the interest of keeping to the council's usual discipline, we will start now in order to get everybody out by 9:00. I'd like to remind everybody and ask you: Please turn off totally your BlackBerries and cell phones, just because they might interfere with the -- with the microphone.

And for this breakfast we are on the record, so one of the things that the mikes do obviously is for recording.

I want to start it, though, by saying this is the Russell C. Leffingwell Lecture, and I want to thank the Leffingwell Pulling family, several of whom are here today -- not the whole, by any means; I know the family well enough to be able to say that with some certainty. But I do want to thank Tom Leffingwell Pulling and his son Edward Leffingwell Pulling for ensuring that this series can continue in the way that it has. So thank you, Tommy, and thank you to all Pullings and Leffingwells. We really appreciate it.

This is the -- this is an -- a -- an on-the-record session. I am not going to spend a lot of time introducing our guest, because you all have a copy of his resume, but we are extremely pleased and lucky to have the honorable -- Right Honorable William Hague, who's the secretary of State for Foreign and Commonwealth Affairs for the United Kingdom and a member of Parliament, someone who has -- he's been here for the week, or longer than a week. He's done a series of meetings.

We are very fortunate to have him here towards the end of his stay to talk about, today, a subject specifically in his talk, one that is of interest to the United States, and we may be seen as being a little bit behind the times on it, which is the issue of climate change.

But I would welcome the minister to come forward, the secretary, and to give his remarks, and then he will take -- as is usual council practice, we will have a little bit of dialogue between the two of us and then we will open it up to questions. But I assure you we will get everyone out on time at 9.

Mr. Hague? (Applause.)

SECRETARY OF STATE FOR FOREIGN AND COMMONWEALTH AFFAIRS WILLIAM HAGUE: Well, thank you very much, Governor Whitman. Good morning, ladies and gentlemen.

I'm delighted to be here at the Council on Foreign Relations. Thank you very much for the invitation and for the punctuality with which you run all these things.

It reminds me of when I first went to speak to the farming community in my own district. And they had quite a long meeting: They did a lot of business; they looked at all their accounts; they had reports on what they'd done all year. And then they said, Mr. Hague, do you want to speak to us now? And I said, well, how long do you want me to speak for? And they said, you can speak for as long as you'd like, but in four minutes' time we're leaving. (Laughter.) And that was a good discipline on how to give a short speech.

I'm -- I want to talk today about why I believe that we as foreign-policy practitioners need to up our game in building a credible and effective response to climate change. But let me also (set ?) that when we come to the question-and-answer, I'm happy to answer questions about any other aspect of foreign policy.

We've been dealing a lot over the last week in all the discussions here with Yemen, on which we as the United Kingdom have been particularly focused; with Pakistan; Middle East peace process, of course, with which we're preoccupied somewhat today; with Iran -- I had my first meeting with the Iranian foreign minister a few days ago, which was interesting; and with the western Balkans -- in recent times they've been very, very active. And we are engaged in intensifying our relations with the emerging economies around the world. So there's a lot of other -- of other subjects to discuss on foreign policy, and I'm happy to answer questions about those subjects as well.

But I particularly wanted to make the point to this audience and to circulate to a wider audience certain points about climate change this morning, which is perhaps the 21st century's biggest foreign- policy challenge, along with preventing the spread of nuclear weapons. I believe those two threats over the longer term are the biggest threats to the peace and security of the world.

A world that is failing to respond to climate change is one in which the values embodied in the United Nations will not be met, and it's a world in which competition and conflict would win out over collaboration.

We're at a very crucial point in the global debate on this subject. Many people are questioning, in the wake of Copenhagen, whether we should continue to seek a response to climate change through the U.N. and whether we can ever hope to deal with this enormous challenge.

And I will first argue today that an effective response to climate change underpins our security and prosperity; second, that our response should be to strive for a binding global deal, whatever the setbacks; and third, I will set out why effective deployment of foreign policy assets is crucial to mobilizing the political will needed if we're going to shape an effective response.

Now, Ban Ki-moon is right to have made climate change his top priority. Two weeks ago, I was talking about Britain's values in a networked world. I said then that a successful response to climate change must be a central objective of British foreign policy. And I said this not only because I believe action against climate change is in line with a values-based foreign policy, but because it underpins our prosperity and security.

You can't have food, water or energy security without climate security; they are interconnected and inseparable. They form four resource pillars on which global security, prosperity and equity stand. Each depends on the other. Plentiful, affordable food requires reliable and affordable access to water and energy. Increasing dependence on coal, oil and gas threatens climate security, increasing the severity of floods and droughts, damaging food production, exacerbating the loss of biodiversity, and in countries that rely on hydropower, undermining energy security through the impact on the availability of water.

As the world becomes more networked, the impact of climate change in one country or region will affect the prosperity and security of others around the world.

No one can have failed to be appalled by the devastating floods in Pakistan. They overwhelmed the capacity of government to respond and opened political space for extremists. While Pakistan has borne the brunt of the human impact, China too has been hit on a vast scale by a seemingly endless sequence of droughts, floods and deadly mudslides. The Russian drought last month damaged the wheat harvest, leading to an export ban. World prices surged, hitting the poorest hardest, and sparking riots over bread prices in far away Mozambique.

While no one weather event can ever be linked with certainty to climate change, the broad patterns of abnormality seen this year are consistent with climate-change models. They provide an illustration of the events we will be encountering increasingly in the future.

So the clock is ticking, and the time to act is now. We must all take responsibility for this threat and take robust action. But we must also be clear-headed about the difficulties of reaching agreement and not lose heart when the going gets tough.

The post-war leaders set up the United Nations in the aftermath of conflagration. They saw the pressing need for global solutions to global problems: cooperation not conflict, through frameworks and institutions embedded in the rule of law, and an international system that is fair and offers everyone a realistic prospect of security and prosperity.

Failure to respond to climate change is inimical to all these values, undermining trust between nations, intensifying competition for resources, and shrinking the political space available for cooperation. It is an affront to fairness, since it puts the greatest burden on those who have done least to cause the problem and are least able to deal with its consequences.

It is incompatible with the values and aspirations that the U.N. embodies. And it's incompatible with the values and aspirations of British foreign policy.

For more than 20 years, we've been striving to build an effective international response to climate change. But we have lacked the collective ambition required. We need to shift investment urgently from high-carbon "business as usual" to the low-carbon economy. This means building an essentially decarbonized global economy by mid- century.

At the same time, we must ensure development is climate resilient; otherwise, the changes in climate that are already unavoidable will block the path for hundreds of millions of people from poverty to prosperity. These changes also threaten to sweep away the investments in development we have made, and just as the bridges and schools in Pakistan were swept away.

To drive that shift in investment from low to high carbon, we need a global climate change deal under the United Nations.

Now, some have argued that we should abandon hope of doing so. They say Copenhagen proved it's all too difficult; we should focus instead on less inclusive and less demanding responses, such as coalitions of the willing. But we believe this would be a strategic error. It mistakes the nature of the task, which is to expand the realm of the possible, not to lower our ambition by accepting its current limits.

And we must recognize this at Cancun. One thing Copenhagen did give us was a set of political commitments, captured in the Copenhagen Accord, on which we can build. More than 120 countries have now associated themselves with that accord, and that represents a broad and growing consensus. We now need to ensure that we live up to the commitments we made to each other in the accord, and reach out even more widely.

Copenhagen, despite those accords, was a strategic setback, but it was not by any means the end of the road. We need to be clear why it failed to live up to high expectations and why it did not deliver a legally binding deal.

Many people say that it failed because of process: The diplomats and the politicians had created a negotiation that was too difficult and too complex. But this misses the point. International treaties are an outcome, not an input, of political bargains. If you've made the political commitment to deliver, you can make the process work to deliver.

The real reason Copenhagen did not deliver on high expectations was a lack of political will. Many in developing countries saw a gap between the words and the deeds of the industrialized economies. They questioned whether we really believed our own rhetoric. And to answer those questions, we each need to start at home.

That is why the coalition government to which I belong has committed itself to being the greenest government ever in the United Kingdom, and why, with others in Europe, we are calling on the European Union to commit to a 30-percent cut in emissions by 2020 without waiting for the rest of the world to act.

The UK is already the world leader in offshore wind, with more projects installed, in planning and in construction than any other country in the world. We're undertaking the most radical transformation of our electricity sector ever. We aim to provide over 30 percent of our domestic electricity from renewables by 2020. We have committed to build no new coal-fired power stations without carbon capture and storage technology, and we've announced our intention to continue the demonstration projects of that.

And because it's imperative that foreign and domestic policies are mutually reinforcing, we must ensure that our approach is coherent. Now, that's one reason we have established the new British National Security Council: to ensure this happens across the full range of issues, including climate change.

And that's why I work hand in glove with Chris Huhne, the British Energy and Climate Change secretary, and Andrew Mitchell, the International Development secretary, to ensure that our domestic action reflects our level of international ambition.

But we won't succeed, of course, if we act alone. We must aim for a framework that is global and binding. It needs to be global because climate change affects everyone. Only a response that allows everyone a voice will generate a sense of common purpose and legitimacy. Only a response that is binding will convince investors that we intend to keep the promises we make to each other. Businesses need clear political signals, so let's show them an unequivocal green light.

We are now a few weeks away from the 16th Conference of Parties on Climate Change in Cancun. And I commend the consultative and collaborative approach Mexico has taken ahead of this meeting. Thanks to their determination and foresight, we have a chance in Cancun to regain momentum and make progress on key issues such as forests, technology, finance and transparency of commitments. Cancun will -- may not get us all the way to a full agreement, but it can put us back on track to one.

That said, the negotiations can't succeed inside a bubble. The negotiators in the U.N. process can't themselves build political will. They have to operate on the basis of current political realities in the countries they represent. And it's those realities that limit the ambition that we can set in the -- in such negotiations, and it's those realities that we now need to shift.

There is no global consensus on what climate change puts at risk, geopolitically and for the global economy, and thus on the scale and urgency of the response we need. We must build a global consensus if we are to guarantee our citizens security and prosperity. That is a job for foreign policy.

A fundamental purpose here for foreign policy is to shift the political debate, to create the political space for leaders and negotiators to reach agreement. We didn't get that right before Copenhagen, and we must get it right now.

So we urgently need to mobilize foreign ministers and the diplomats they lead, as well as institutions such as the Council on Foreign Relations, to put climate change at the heart of foreign- policy thinking.

When I became foreign secretary in May, I said the core goals of our foreign policy were to guarantee Britain's security and prosperity. Robust global action on climate change is essential to that agenda. That is why the British Foreign and Commonwealth Office, under my leadership, is a vocal advocate for climate diplomacy. All British ambassadors carry the argument for a global low-carbon transition in their breast pocket or in their handbag. Climate change is part of their daily vocabulary, alongside the traditional themes of foreign policy. And they're supported by our unique network of climate attaches throughout the world.

The core assets of foreign policy are its networks and its convening power. Foreign policy can build political impulses to overcome barriers between sectors and cultures. In a networked world, diplomacy builds partnerships beyond government. And nowhere are those partnerships more vital than on climate.

So we must mobilize all our networks, not just across government but between governments, using organizations such as the Commonwealth as well. We must reach out, beyond, to NGOs, faith groups and businesses. And of all these, perhaps business engagement is the key to making a difference. It's business that will lead low-carbon transition. It's business that best understands the incentives needed to help us all prosper.

We must also harness scientific expertise in cutting-edge low- carbon technologies. The scientific community will develop the goods which will power the low-carbon economy and drive global ambition on climate change. And that's why the British government has a science and innovation network, which fosters collaborative research in the U.K. and other countries.

Now, what can the U.K. and the European Union do to make that fundamental shift and shape a global consensus on climate change? The most serious problem at Copenhagen, and the strongest brake on political will, was and is a lack of confidence in the low-carbon economy. Too few people in too few countries are yet convinced that a rapid move to low carbon is compatible with economic recovery and growth. They see the short-term economic and domestic stability risks before the opportunities and the longer-term risks of inaction.

There should be only one European response to that confidence gap. The EU, in my view, must accelerate its own progress and demonstrate that a low-carbon growth path makes us more competitive. I am convinced this is in the long-term interests of Europe's economy. We have learned painful lessons from the oil price shocks. We must modernize our infrastructure. The opportunities are out there. The global industry in low-carbon and environmental goods and services is already estimated to be worth up to 3.2 trillion pounds a year. Nearly a million British people are now employed in this sector, and that's why we are creating a green investment bank to ensure that we can properly support and develop low-carbon industry.

But we need to redouble our efforts, both in the EU (itself ?) and in our engagement with partners. Each of us as member states will be better able to accelerate if we're doing so together as the world's largest single market. And by opening up this effort through partnership with others, we can make it easier for them to accelerate, too.

So we'll be at the forefront of pushing for low-carbon modernization of Europe's infrastructure and energy policy. The European Union's budget until 2013 is set out in the current "financial perspective".

We will argue -- we will need to agree the financial perspective for the seven years after that, the period including our 2020 climate goals. And it's -- as ever, it's right that the EU budget should reflect the prevailing economic circumstances. It's also right that we direct the budget to today's challenges, not those of yesterday. And that means one that supports the transition to a low-carbon economy.

Action in Europe alone will not be enough. We need both the developed and developing world to take action. And this week Guido Westerwelle, the German foreign minister, and I have tasked our teams to come together to shape a coordinated, diplomacy-led effort on climate change, combining the strengths of our respective foreign services.

I've just put the case for bringing a new urgency for low-carbon transition within the EU. But together we should carry that urgency in external dialogues, whether they are with the United States, China or India.

The transition to low carbon will happen faster and maximize the benefit for all if the United States -- historically the world's largest emitter -- is at the leading edge. I recognize the political challenges that the U.S. administration faces and welcome President Obama's commitment to combat climate change. As he said in his State of the Union speech, "the nation that leads the clean-energy economy will be the nation that leads the global economy."

Whatever the outcome of the upcoming midterm elections in the U.S., there is scope for political unity around an economic agenda that targets new energy opportunities and new jobs. American business understands this new market and should want to lead it. But to make these new clean-energy investments at the required pace and on a sufficient scale, they need the right incentives.

On climate, as in so many areas, the world looks to the US for leadership, because it has the economic clout and diplomatic leverage to shift the global debate.

And I look forward to working with the U.S. administration and indeed with the Council on Foreign Relations to raise global ambitions and put us back on the path to sustainable growth.

A key challenge for Europe is to build an economic partnership with China that reinforces the steps China is taking towards a low- carbon economy. These steps include its recent announcement of the five provinces and eight cities that have been designated as China's low-carbon pilots. Together these pilots cover 350 million people, so an ambitious approach to these schemes, tenaciously implemented, could provide a critical boost to global confidence in the concept of low- carbon development and help put China on the path to sustainable prosperity.

It could also produce huge two-way investment and partnership opportunities. Europe should place itself at the heart of these, working with China to maximize the ambition and the opportunities and to build the shared technology standards that will shape a global low- carbon market.

In China's case, low-carbon opportunity is matched by urgent low- carbon need. The pace of growth in China means average Chinese per- capita emissions could soon eclipse those of Europe. So while China has taken some very welcome steps, without a commitment from China to further decisive action, the efforts of others will be in vain.

The emerging economies face a dilemma. Often they are the most vulnerable to the direct effects of climate change. But they are concerned that action against climate change will adversely affect their development. The challenge to all countries is to have a high- growth, low-carbon economy. Some, like Brazil, which derives nearly half its energy from clean and renewable resources, are rising to that challenge.

India is another, embodying in microcosm the challenge that climate change poses to us all. Threatened by food, water and energy insecurity, India has responded with ambitious plans to generate 20 gigawatts of solar power by 2022.

South Africa, a coal-dependent economy, the success of which is so important to growth and prosperity within the continent, has made a significant offer to deviate their emissions from the business-as- usual pathway.

The opportunity is for the emerging economies -- for the emerging economies is to make a direct leap to low carbon, avoiding the high- carbon lock-in that we see in the developed world: a new, sustainable pathway for prosperity and security. A global low-carbon economy is not an idealist's pipe dream but a 21st-century realist's imperative. Countries that adapt quickly to a carbon-constrained world will be better able to deliver lasting prosperity for their citizens. As a Permanent Security Council member, I'm determined that the U.K. will play its full part in that, not least by supporting climate finance for the poorest.

Collectively, we share a responsibility to those most vulnerable to the impact of climate change. Bangladesh, with its densely populated coastal region, is particularly susceptible to rising sea levels. Glacial melt, sea-level rises and El Nino-type events threaten the lives of millions across South America. And the very existence of many small island states is under threat.

We have a shared vision to meet the Millennium Development Goals. But in a world without action on climate change, that vision will remain a dream, and the efforts of the last 10 years would

So climate change is one of the gravest threats to our security and prosperity. Unless we take robust and timely action to deal with it, no country will be immune to its effects. However difficult it might seem now, a global deal under the U.N. is the only response to this threat which will create the necessary confidence to drive a low- carbon transition.

We must be undaunted by the scale of the challenge.

We must continue to strive for agreement. We must not accept that because there is no consensus on a way forward now, that there never will be one. And to change the debate, we must imaginatively deploy all of the foreign policy assets in our armory until we've shaped that global consensus.

A successful response to climate change will not only stabilize the climate, but open the way to a future in which we can meet our needs through cooperation, in accordance with the ideals of the United Nations. Failure to do so will enhance competitive tendencies and make the world more dangerous, so this is not actually a hard choice.

We have to get this right. If we do, we can still shape our world. And if we don't, the world will determine our destiny for us.

Thank you very much indeed for listening. (Applause.)

WHITMAN: Well, thank you very much for a really very compelling discussion and for laying out a comprehensive case.

I do want to ask you, you mentioned the challenges of meeting actually the current budgets under Kyoto for the countries that have signed the protocol. Looking at the European Union -- and you touched on the fiscal and financial challenges -- how are you going to find, and where -- how are these countries moving toward finding the money necessary to invest in the infrastructure, particularly energy as you touched on, that will really make the most comprehensive difference in the climate change?

HAGUE: Well, I think we have to make sure we find the money. And there is scope to leverage an enormous private-sector involvement here. And that is where most of the involvement in our -- most of the investment in our own renewable-energy infrastructure is taking place. You have to create the right incentives for them to do so.

The -- but we're used to doing that and tackling such issues.

You know, some years ago in Britain, and I think in many other countries, we created a tax differential on unleaded fuel that led to everybody switching over to it, giving people incentives to invest in the right infrastructure, the necessary access to the markets. And sometimes the -- sometimes some level of subsidy and tax concessions and so on helps to bring that about.

And so I think that is a very important part of budgetary considerations. And, of course, it can lead over time to substantial savings in many economies, when they have more renewable-energy infrastructure. So looked at in the perspective of 20, 30 years, it's very sensible to make such investments.

WHITMAN: I've recognized that. It's not -- we don't always look in 20-, 30-year segments.

HAGUE: No, that's very true.

WHITMAN: This is the challenge. How do you see -- again, you touched on -- very diplomatically and briefly -- on the United States's role here. But given that there's likely to be a change in the construct of Congress after this election -- and I doubt it is going to be one that is going to have an -- a renewed appetite in climate change, given what I know of some of the races that are out there -- what's that going to do to the impetus in the European Union, in the United Kingdom, to continuing to be at the forefront and making these kinds of very, very substantial investments?

HAGUE: Well, it won't change the impetus in the United Kingdom and the European Union. We are determined to go ahead whatever is happening in the rest of the world. Actually, we have passed a climate-change act designed to reduce our emissions in the U.K. by 34 percent by the end of this decade, by 80 percent by the year 2050. We will do that, and we will press our EU colleagues to do the other things I have described -- unilaterally; we will do that irrespective of global deals.

And I believe that will give us enormous economic opportunities.

And I think that countries that aren't getting in on that will miss out on some of those economic opportunities. So as time goes on, the economic case will be getting more and more compelling -- that each country needs a thriving low-carbon business sector; that there will be billions and tens of billions and potentially hundreds of billions of dollars of exports in this sector. With -- nations that do not get in on that are going to miss out on it. When you look at China doing its low-carbon cities and you look at developments in the Gulf now and Abu Dhabi working on a zero-carbon city, countries that don't get in on this are going to miss out on a lot.

And so the (politics ?), as well as the altruistic case, will mount over the coming years for driving a low-carbon economy. But I think there is a strong political case as well. And perhaps in the British Conservative Party, we are maybe -- well, maybe we're not listened to by American politicians. I don't know, but I hope we are. Perhaps we are in one of the strongest positions to influence those on the right in American politics.

I know the first time I talked to a Republican audience about climate change, they looked at me as if I'd gone very strange indeed. But there are -- there are leading Republicans who agree with this, who have promoted climate change legislation. And so -- and all parties have to develop their views in the face of the facts and the evidence of the times. So I hope that will happen across American politics.

WHITMAN: I'm sure there are a lot of questions out there, but I'd like to ask just one more before I turn it over. You talked about addressing the energy sector and energy issues through the renewables, particularly wind for Great Britain.

We know, though, to date -- and we'll solve this problem, but we haven't yet -- renewables are still peak shaving, not base power. Is there an appetite that you see developing for other forms of base power that are cleaner, beyond carbon sequestration with coal -- i.e., nuclear?

HAGUE: Yes. We have decided in Britain to build a new generation of nuclear power stations, and really see no option for that other than excessive dependence on oil and gas, and particularly on imports of liquefied gas. And so we see that actually as strategically necessary, as well as necessary from a climate-change point of view. Otherwise, we would -- our energy sector would become so heavily dependent on imports.

So after quite a long gap in which we haven't built any new nuclear power stations, we are now opening the door to doing so again. They have to justify themselves economically --

WHITMAN: (Sure ?).

HAGUE: -- but if they do so -- and the sites are now being identified, mainly the sites of the old ones -- then we will have, from the 2020s onwards, an expanding nuclear-power sector.

Again -- and, of course, some European countries -- European countries vary a lot. Some don't allow any nuclear power at all. A country like France, I think, meets about 70 percent of its energy needs --

WHITMAN: A little more than that.

HAGUE: -- from nuclear power.

WHITMAN: Yeah. And Germany buys their power from France, even though they don't like nuclear. Yeah.

HAGUE: Exactly.

WHITMAN: You know about that. (Chuckles.)

I'd like to open it up now to questions. And the secretary's been generous enough to say that he would answer questions on a whole host of issues, not just on climate change. But I'd ask you to please stand and to identify yourselves. Why don't we start over there, and then I'll work my way across. There should be microphones.

QUESTIONER: Secretary, thank you very much for your remarks. Todd Johnson from Ferrari Consultancy. I'm hoping -- again, thank you for your remarks on an often-neglected part of foreign-policy debate.

But I'm wondering if I can shift it to a -- certainly, not a neglected topic; that being the Strategic Defense Review -- which I know falls outside of your purview, but, of course, military force being part and parcel of foreign policy.

I'm wondering how you can respond to some of the criticisms of it being a rushed process. Particularly in the British press, you often hear: Is this the right time to be doing it, or are they taking it at a pace that is perhaps a bit too fast? But I'm curious just to hear your response to that remark, and particularly in its effect upon the British armed forces.

HAGUE: Well, it isn't a -- I don't see it as a rushed process. It's taking place now. It will be concluded by next month. And indeed, one of the key meetings on this will be tomorrow morning. I'll be going back during the night to London to take part in that in our National Security Council.

We've been -- we've been engaged in it since May, and we really feel that senior members of our government ought to be able to make some important decisions in a -- in a five-month period. The reason why sometimes defense reviews take a lot longer than that is that endless arguments go on inside a defense ministry about what advice to give to the minister, and they spend a good year going around in circles and having different committees and arguments of their own, and then the ministers still only have a few months, or a few weeks, to make the decisions. And so -- yes, so we've driven it along in a way that we get the information quickly.

And the other reason we have to do this is because decisions need to be made quite quickly. As an incoming government, we have inherited a very, very difficult financial position. Our country has borrowed as much money in four years as in the previous 1,000 years. That's not a sustainable situation.

And we've inherited a defense budget which is 38 billion pounds -- might not seem a lot, compared to the Pentagon's budget -- but 38 billion pounds over-committed over the next 10 years. We're over- committed by that much compared to even a budget continuing at the current level.

So we need to make some urgent decisions. There are ships and aircraft about to be built or bought and -- for which the money does not exist, and never existed actually. So somebody has to sort it out quite quickly.

So for all of those reasons, we're doing it at the same pace as our comprehensive spending review for the whole of the government. And therefore, our spending priorities and our defense needs will be in alignment -- a novel idea in government, but it's what we are determined to bring about.

And of course, it's a difficult process, the strategic defense (procedure ?), given the financial climate. But whatever we do in it, Britain will retain a global role. It will be a key ally of the United States. Whatever we do, the United States will find, that since we will continue to have an independent nuclear deterrent, we will continue to have intelligence services of extraordinary reach and capability which do a great deal of work with the United States, we will continue to have armed forces that can be deployed elsewhere to the world -- and of course, we're now the second-largest contributing nation in Afghanistan -- and so although we will have to make some adjustments and changes -- and no doubt, reductions -- I think Americans can be assured that we will still remain a very important ally and still pack a very important punch.

WHITMAN: Yes.

QUESTIONER: Thank you for being here. My name is Joseph Carey (sp).

You touched on the significance of developing countries skipping, in a sense, having a carbon footprint.

What can the developed countries do to encourage that, given the social demands that the developing countries have to solve in a rather immediate fashion?

HAGUE: Provide finance. And there was a commitment at Copenhagen to provide $100 billion of early finance to help developing countries develop in the right way. And the United Kingdom is playing its part in that. We've already made 1-1/2 billion pounds available ourselves. So this is a very important part of our overseas development aid efforts.

And in our case, we have also committed ourselves to reach, three years from now, the target of .7 percent of gross national income devoted to overseas development aid, which helps us to meet these climate finance commitments. So I think it's very important to do that. And indeed (a lot of ?) meeting the target -- developing countries meeting commitments on stopping deforestation, or in some cases on reforestation, particularly relies on that.

So the provision of early finance in line with Copenhagen is of critical importance. And I think if we don't do that, people will say, well, even what was agreed at Copenhagen isn't being implemented, so the whole process will lack credibility. So we have to do that.

And the other thing is sharing technology with them so that they are technologically in a position. And that -- as I say, well, there's a huge economic opportunity. Really it's very instructive to look at what the Gulf states, for instance, are doing in the development -- rapid development of low-carbon technologies.

And unless the U.K., the United States and other Western nations really get into that ourselves, we will find that that whole market is taken by other people. So this is the importance of addressing this from a business point of view as well as a political point of view.

WHITMAN: Could I just jump in quickly, as -- prerogative of the chair, to follow up on something that you said? Because you mentioned deforestation. I don't know if you're familiar with -- there was a NASA-funded study some 10, 11 years older -- old now that said that in the previous 300 years we would have had to double the amount of carbon emitted into the atmosphere to have the same impact as -- on climate change as we have seen from land use, from deforestation, development, and from farming practices.

To what extent is Great Britain or any of the EU countries looking at that, not just air emissions but what we do for land planning, what's happening to the land not just within the developing world but also the developed world?

HAGUE: Yes, we are looking at that. Certainly we're planting a lot of trees in Britain -- (chuckles) -- there is no doubt about it. The biggest impact and the biggest space comes -- of course, comes in the developed world. And we've (seen ?) some good stories, by the way. You know, India now has more forest than it had 10 or 20 years ago -- although it's not the -- you know, the rich rainforest that is so crucial to the planet.

So we are looking at that. But perhaps we should look at it a bit more, in line with your question.

WHITMAN: Question here. There's a microphone.

QUESTIONER: Thank you, Mr. Secretary, for coming. My name is Roland Paul (sp). You mentioned in one of your earlier answers Afghanistan. As one of the major members of the NATO coalition in Afghanistan, could you give us a snapshot of how the war is going out there?

HAGUE: Right, well, that may take the rest of the morning.

WHITMAN: (Laughs.)

HAGUE: Well, we are -- we're certainly making progress in a military sense.

And I think we have to remember that it's really only in the last few months that the military forces that the -- that the generals believe are necessary have been assembled and have all been available.

We are making progress. I've seen that for myself in Helmand. I've visited Afghanistan, I think, three times this year so far, and have found myself walking around in towns in Helmand, which you certainly couldn't have -- a visiting foreign minister would not have been able to walk around at this time last year, such as Nad e-Ali in the middle of Helmand. So we are making progress. But we have to be clear that there won't be a -- this is not a problem that can be solved purely by military means, while the military effort is absolutely crucial to making sure we can provide security in large parts of the country and (pushing/putting ?) the Taliban and the necessary pressure to encourage some of them to desist from fighting and to look for a political settlement.

Now, the political process is vital, too, and that is what now -- the opportunity exists to take that forward. President Karzai now has the legitimacy, given by the peace jirga in June, to take that forward. He's formed his high-level peace council.

So political process is important; so is the economic capacity of Afghanistan. We have increased by 40 percent this year our development aid to Afghanistan. A key question is whether the Afghan government will effectively implement all the commitments they made at the Kabul conference in July -- which are good commitments, which are very good detailed plans for the building up of a(n) economic, financial capacity of the Afghan state. We really have to hold them to that.

This is a major role for the United States, United Kingdom and allied countries over the next year to try to make sure those commitments are implemented.

And that, of course, includes the building up of the Afghan national security forces to the point where they can lead and sustain all their own operations by 2014. And they are on track in building -- the good news is, as of now, they are slightly ahead of track in building up the Afghan army, and now it's more than 130,000 strong.

So we are making progress. But it remains -- I don't want to kid anybody about this. This remains a phenomenal challenge. This remains one of the most difficult challenges anywhere in the world. The people from the United States, United Kingdom, who are working out there, not only in the armed forces but development workers and other people working there, are doing a phenomenal job in the most difficult circumstances. And we will only succeed if all of these things -- the military progress, the economic capacity-building and the political process -- are successful. So we have to do all of those things in order to succeed. But I think we are going forward, not back, at the moment.

WHITMAN: A question there.

QUESTIONER: I'm Alexandra Starr with the Center on Law and Security. I actually wanted to move a little bit to domestic politics, if you're okay with that. Obviously, there was an election over the weekend and Ed Miliband became Labour leader, with significant union support that was pivotal. And I was wondering if you could comment on how that might shape the opposition, when they're out of power and, I guess, potentially if they do go back into power in the years ahead.

HAGUE: Mm-hmm. (Laughter.) Well. Disastrous for them, of course. (Laughs.) (Laughter.)

No, well, I congratulate Ed Miliband on his election. It's been an extraordinary thing, really, an election between two brothers for the leadership of a political party.

Now, it's a difficult job, as I well know, because after our own election defeat in 1997, I became leader of the opposition. In fact, I have an exchange of e-mails that I can tell you about with David Miliband -- I don't think he'll mind. After the election, he sent me a note saying "Congratulations on being foreign secretary; you've now got the best job in the government." And I sent one back saying, "Yes, thank you very much; you are applying for the worst job in the world" -- (laughter) -- which is the job of leader of the opposition in the British Parliament.

So I'm sure it will be difficult in many ways. He will find it as a disadvantage that he was elected with trade union -- that the trade unions gave the decisive margin of support, because we're seeing in the British Labour Party a reassertion, really, of trade union activity and dominance. The vast majority of the Labour Party's funding in recent years has come from trade unions. Tony Blair had tried to move the Labour Party away from that, but it has moved back.

I think the Labour Party is in danger of moving back, therefore, in many respects. I believe Ed Miliband has said in the last 24 hours that new Labour is dead. And that is -- that may be a problem for the Labour Party going forward, because it was new Labour that was elected, not old Labour, in the Blair period. So it remains to be seen how he will develop the Labour Party.

The immediate debates will be about the spending. I've mentioned the need to reduce spending in the U.K.

This is a fiscally conservative government in the U.K. In fact, it has been made possible, our coalition, because over time the Conservatives have become more socially liberal and the Liberals have become more fiscally conservative. And together, we have formed a socially liberal, fiscally conservative administration -- an interesting concept for the United States maybe. (Laughter.)

QUESTIONER: Yes.

HAGUE: And the -- but we are determined, therefore, to get the national finances in shape. We are reducing our spending by 83 billion pounds over the next few years. And we now want to know from the new leader of the Labor Party where he would cut the spending, in detail, since he did say when he was running for the leadership he would provide that information before the government publishes its information. So he's got three weeks now to provide his version of where we reduce government spending in Britain, given the shocking state that his party left the country in.

But I think really, on an international platform, I won't go any further in a partisan way. (Laughter.)

WHITMAN: We have a question here at the center.

QUESTIONER: Ross Boutros (sp), New York University.

Mr. Secretary, you have generously agreed to answer questions beyond the scope of your talk this morning. We would all be interested in your view on Middle East peace process, in which you have participated, particularly in the context of what has happened in the past 24 hours.

HAGUE: Well, this is indeed a crucial area, and one on which some encouraging meetings have taken place. Everyone who has taken part in or witnessed the early meetings in Washington, in Sharm el-Sheikh, in Jerusalem over the last month, has said they went very well, and that the sincerity of both sides is very apparent. So there is some encouragement there.

Clearly, we now have a problem in the expiring, without renewal so far, of the settlement moratorium last night. But we urge -- in the U.K., we urge very strongly the government of Israel to extend the settlement moratorium. And we have put that very strongly through the ministers. Our prime minister has communicated that to the Israeli prime minister. I will meet Mr. Lieberman, the Israeli foreign minister, in a few hours time here in New York and will strongly argue for this again. And I'll also meet Secretary Clinton at lunchtime to discuss where we are on this.

But I think there is -- there's no new information I can give you about that at the moment. The moratorium has expired. The Arab League has an important meeting coming up on October 9th in Libya, which I think will be a crucial moment in this since the Palestinians are in the talks with the blessing of the Arab League. So I continue to believe that Israel should extend the settlement moratorium.

In any case, in our view, all settlements in occupied territory are illegal, and should not be taking place at all. But even from a pragmatic point of view, I think it's in Israel's own best interests to extend the freeze. And their ministers generally say to us it is impossible to do so, but I will say it's entirely possible if they wanted to do so, and I still hope they will do so. I will put that case strongly to the Israeli foreign minister this afternoon.

WHITMAN: A question in the back, please.

QUESTIONER: Elizabeth Bramwell, Bramwell Capital.

I wanted to ask a question about unilateral climate change or control.

And if we do it unilaterally, you know, I think it has an impact on driving manufacturers to increasingly manufacture in China. And so, you know, here we are at 10 percent unemployment, and we have a billion -- whatever, trillion-six (dollars) deficit. And I just wonder how we should prioritize this.

And if we were to unilaterally go forward, you know, how do you see manufacturing, as a percentage of the economy in the U.K. and England, going forward as, you know, part of the total?

And ultimately, if we keep driving manufacturing out of this country, doesn't it have an impact on national security?

HAGUE: Yes. If you lose your manufacturing sector, I think it does, and we strongly have that view in Britain as well. But we are very much of the view that embracing this low-carbon future is the way forward for manufacturing, and that (any ?) manufacturing that does not do so will rapidly be left out. This is the way to keep your manufacturing sector, because the market will move.

You know, a few years ago, I and many British people unilaterally decided, "I was only going to buy a hybrid car." And we were then all buying Lexus cars, because that was the only one, from Japan. But that has now meant that British manufacturers are racing to develop their own hybrid cars and are about to bring them out in wide -- in a wide variety of models (in/and ?) Land Rover, Range Rover, whatever.

So, actually you have to get in on the low-carbon technology if your manufacturing is going to succeed. Because if most of the rest of the world is going that direction and the United States isn't, well, then that will really hit U.S. manufacturing.

So this is the future. This is the -- this is the way to go for successful manufacturing, not just (to be stoking the ?) manufacturing of the 20th century.

WHITMAN: A question here.

QUESTIONER: Hello. I'm Kassia Yanosek from Hudson Clean Energy Partners. My question actually is about process. You talked a lot about the need for political will in getting to a global deal, or something of that nature. But if you look at the process -- the U.N. process, in particular -- clearly there may be other fora that may be better negotiating bodies that can actually get closer to a solution.

Could you speak to your view on the Major Economies Forum or some bilateral discussions that are going on, as to forum that are actually moving the ball forward? Thank you.

HAGUE: Well, I think those things are all very, very useful. I've described the situation with the European Union, for one, is taking action together, and we wanted to take more action together. So there you have already the world's largest single market -- trading market, and 27 industrialized nations acting together.

So, yeah, of course there is a strong role for other fora. But in the end, to have a binding global deal, which, as I said, then gives everybody the confidence to do this together, I think it has to be through the U.N. process.

And yes, that may seem a little chaotic and unsatisfactory after the events of the last year, but I think we're now going about it in a different way. I have a lot of confidence in how Mexico has conducted this through this year, aiming for certain agreements, hopefully certain agreements at Cancun, on (funds ?), on adaptation, on technology, on forestation.

So if we do that -- if the U.N. process can now add certain viable agreement and show that the Copenhagen Accords are being implemented, well, that then ultimately underpins a later global deal.

So we're having to do it at a different pace, but I think it is very important to still do it -- for all the reasons I've set out in my speech earlier -- to do it on that U.N. basis and not to lose heart just because there was -- there were important setbacks at Copenhagen.

But is there a big role for other -- for what we do bilaterally and in other multilateral fora? Absolutely there is. We should -- really, what I'm arguing here is we should use every channel of foreign policy to promote these objectives.

WHITMAN: Well, in the interests of time, I think we have one more question, and I haven't been to this side of the room, so -- we'll go right here and then we need to wrap up, get everybody up on time.

QUESTIONER: David Nachman from DLA Piper. Mr. Secretary, why do you suppose that the Senate and public opinion in this country generally do not share your sense of urgency or your sense of the opportunity in a low-carbon economy? And if you were to give advice to us here in the States, what two or three steps would you suggest could most rapidly and effectively turn that situation around?

HAGUE: Hmm. I don't know. You can probably tell me better than I can tell you. I would say opinion is very mixed, from what I've seen in the United States. You know, it's -- I think it would be wrong to characterize the United States as full of people who deny all of this. But I think there is -- I imagine there is quite a lot of skepticism about whether other countries will meet their commitments. And maybe there is more skepticism here about whether climate change is taking place or is man-made. Perhaps that debate -- that -- there may not be as much acceptance of the science as there is in European countries. And there will -- has to be a rational debate.

I don't think we should ever be dismissive, by the way, of that debate. I mean tolerance of people who have a different point of view, there's a proper argument to be had, but certainly from everything I've seen, it's very, very convincing. So we should always have that debate. So those may be among the obstacles.

And I think it's -- I think the connection between economic opportunity and climate change has not been sufficiently well made. And it's really up to business and political leaders to make that connection for people, I think. Otherwise, people will see it as why should we lose out and make sacrifices, when China is, you know, emitting more and more per capita. And we have to explain that there's an opportunity here and that even China is doing certain things about it.

So that is up to leaders to address that, also leaders across politics. I think one of the things that's worked in Britain is that leaders across the political spectrum have embraced this argument, and that it was a bit of a shock to people when the Conservative Party embraced it so strongly.

But what is conservatism? It has to do with preserving the best and finest in the world, whether they be habits or institutions or environment. That should be an essential part of a conservative approach to life. And so we see it as a natural part of our conservative philosophy, and I hope American conservatives can (come to ?) view it in the same light. And I'm sure that would help a lot, as well.

WHITMAN: Well, Minister, thank you very much for your time, given your incredible schedule. Thank you.

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