Thank you, Pete. Thank you very much. Well, it is a great privilege and honor to be back here at the Council and I want to thank Pete for that kind introduction. It's another small world story; I had no idea he had ever lived in Park Ridge, Illinois. And I want to congratulate you, Pete, on the recent re-naming of the Institute for International Economics in your honor. That is a great tribute to the wonderful service that you have provided to the public over many years at the Council and government and now at what will be known as the Peterson Institute. I last spoke here in December 2003. Richard Haass was just settling into his new job. Saddam Hussein had been captured the weekend before. At that time I advanced the idea espoused by the Council that American internationalism is essential in the service of American interests. Three years later, the Council is flourishing under Richard's leadership. I cannot say the same about our foreign policy. I return today one week before an historic midterm election to argue with even greater urgency that our country desperately needs a foreign policy built on bipartisan consensus and executed with non-partisan competence. When the votes are counted, the White House and the Congress must work together to forge that policy and ensure its execution. You all know the litany of threats and challenges: The metastasizing threat of terrorist networks recruiting troops, setting up training camps, amassing weapons. A regime in North Korea openly testing missiles and nuclear weapons. An activist, expansionist Iran pursuing its own nuclear arsenal. A resurgent Taliban in Afghanistan, and an emerging civil war in Iraq. Russia and China pursuing their own interests often at odds with such global imperatives as nuclear non-proliferation and ending genocide in Darfur. Oil has never been more important in funding unstable anti-American governments and yet we have failed to make the investments necessary to move more rapidly to alternative fuels, a policy that is now as important to our national security and our Mideast strategy as to our economy and environment. The lost opportunities of the years since September 11 are the stuff of tragedy. Remember the people rallying in sympathy on the streets of Teheran, the famous headline -- "We are all Americans now." Five years later much of the world wonders what America is now. As we face this landscape of failure and disorder, nothing is more urgent than for us to begin again to rebuild a bipartisan consensus to ensure our interests, increase our security and advance our values. It could well start with what our founders had in mind when they pledged "a decent respect for the opinions of mankind" in the Declaration of Independence. I think it's fair to say we are now all internationalists and we are all realists. This Administration's choices were false choices. Internationalism versus unilateralism. Realism versus idealism. Is there really any argument that America must remain a preeminent leader for peace and freedom, and yet we must be more willing to work in concert with other nations and international institutions to reach common goals? The American character is both idealistic and realistic: why can't our government reflect both? I want to suggest three principles I believe should underlie a bipartisan consensus on national security, and consider how they apply to some of the most difficult challenges we face. First, and most obviously, we must by word and deed renew internationalism for a new century. We did not face World War II alone. We did not face the Cold War alone. And we cannot face the global terrorist threat or other profound challenges alone either. A terrorist cell may recruit in southeast Asia, train in central Asia, find funds in the Middle East and plan attacks in the US or Europe. We can stop a deadly disease anywhere along the line as it hopscotches from continent to continent -- or we can wait until it arrives at our own doors. We can deal with climate change together now or excuse its calamitous consequences later. We can turn our back on international institutions, or we can modernize and revitalize them, and when needed get about the hard work of creating new ones. Second, we must value diplomacy as well as a strong military. We should not hesitate to engage in the world's most difficult conflicts on the diplomatic front. We cannot leave the Middle East to solve itself or avoid direct talks with North Korea. When faced with an existential challenge to the life of our nation, President Kennedy said, "Let us never negotiate from fear, but let us never fear to negotiate." Direct negotiations are not a sign of weakness. They're a sign of leadership. Third, our foreign policy must blend both idealism and realism in the service of American interests. If there is one idea that has been floated about over the last six years that I would like to see debunked, with all due respect to some of the political scientists in the room, it is this false choice between realism and idealism. Is it "realist" or "idealist" to stop nuclear proliferation? Is it "realist" or "idealist" to come together on global warming? Is it "realist" or "idealist" to help developing nations educate their children, fight diseases, and grow their economies? And is it "realist" or "idealist" to believe we must turn around the ideology underpinning terrorism? Strategies with respect to all of the problems we face require a mix of both and each requires building that consensus approach that we then have to do the hard work of bringing others to our side. We cannot achieve any of the solutions that we need to be pursuing without American leadership, and we cannot achieve any of them alone. American foreign policy exists to maintain our security and serve our national interests. In an increasingly interdependent world, it is in our interest to stand for the human rights to promote religious freedom, democracy, women's rights, social justice and economic empowerment. But reality informs us we cannot force others, nations and people, to accept those values -- we have to support those who embrace them and lead by example. At our best, Americans have always lived in a creative tension between idealism and realism; between our clear-eyed insistence on seeing the world as it actually is and our deeply-held desire to remake the world as it ought to be. This Administration has abandoned that tension for a simplistic division of the world into good and evil. They've refused to talk to anyone on the "evil" side. And some have called that idealistic; I call it dangerously unrealistic. At the end of the day, you have to question whether this administration has led with our values or used our values as a cloak to justify its ideology and unilateralism. Something is wrong when our pursuit of idealistic goals has turned a good portion of the world against us. Earlier this year a progressive and a conservative, Anatol Lieven and John Hulsman, wrote a book together and called it Ethical Realism. You don't have to accept all of their policy proposals to learn something from the common ground they found. They remind us of a time when America's leading Protestant theologian, Reinhold Niebuhr, cautioned us against believing that God was on our side; of a time when President Dwight David Eisenhower rejected rhetoric about a preemptive attack on the Soviet Union by asking, among other things, the practical question of how we would occupy the vast country if we won. Of a time when the editor of Foreign Affairs invited a little-known diplomat named George Kennan to publish an article -- an anonymous article that established the bipartisan foundation of our Cold War foreign policy. In every era we wrestle with how to reconcile the pragmatic with the moral elements of our strength, and what we choose to do with both. We got it right, mostly, during the Cold War when realists and idealists together built institutions and policies serving our interests and our values. We got it drastically wrong when a small group of ideologues decided we didn't need those institutions, or alliances, or diplomacy or even the respect of other nations. These principles would force a sea change from the current Administration's policies. If you look at the dangerous situations we are facing today in Iraq, Afghanistan, Iran, North Korea, the proliferation of deadly weapons, the prosecution of the war on terror -- you will see the same mistakes repeated over and over. The mistaken belief that alliances, international institutions, all of that is irrelevant to American interests. The mistaken belief that diplomacy even if backed by force is synonymous with weakness. The mistaken belief that our military's experience in war planning, our intelligence community's objective analysis, and our diplomats' experience in negotiations could be dismissed and replaced with ideological wishful thinking. And, in Iraq, the mistake of waging a pre-emptive war based on faulty intelligence, fanciful scenarios and bluster has turned out to be a one-time only doctrine with no deterrent effect. We need to return to patient diplomacy, backed by military strength and informed by American values. Let me start with Iraq because in human terms this has been a horrible month, we mourn the loss of American servicemembers and many hundreds more Iraqis. In political terms, we have finally reached a point of complete absurdity. The Administration announces it will propose timetables or benchmarks and the Iraqi Prime Minister denounces them. President Bush says we are adjusting tactics but Secretary Rumsfeld insists we are staying the course. The Administration tells Iran and Syria they're responsible for helping keep the peace but won't talk with them about how to do it. We continue to deny evident reality, proceeding with few or no allies and precious little direct communication with people who matter. No wonder the American people think that we are adrift. We need a fundamental change in course and I believe there are three basic parts to that. First, we need to press consistently, privately and publicly the Iraqis to become serious about achieving an internal reconciliation and political solution, and present real consequences for their failing to do so. Only the Iraqi government can take action to create the conditions for a political settlement. Instead, the government in recent days seems to be going out of its way to rebuff our efforts to move in that direction. American credibility is held hostage by an Iraqi government that will not fulfill its pledge to seek a political resolution of the rights and role of the Sunni minority and to determine how oil revenue is allocated. For several years, actually since the summer of 2003, I have pushed the idea that we should establish in Iraq an oil trust guaranteeing that every individual Iraqi would share part of the country's oil wealth every year. Instead, the oil distribution remains unsettled. Sunnis have no incentive to stop fighting, Kurds have no incentive to operate within Iraq and Shiites have no incentive to stop participating in militias and internecine conflict. Guaranteeing every Iraqi a share of the oil revenues at the individual level is one way to try to begin to move beyond the impasse -- and to give Iraqis some reason to believe number one, we aren't there for oil; we aren't there to support big oil; we aren't there to line the pockets of the new Iraqi elite and fatten their Swiss bank accounts; and to give the Iraqis also some reason to feel positive about their national government. Second, we do need what many of us have been calling for now for months even years at some point -- a public international conference of the parties in the region -- the Turks, the Saudis, the Egyptians, the Emirates, the Jordanians but also the Syrians and Iranians. We need to put everybody on the record to whether they will make public commitments to respect Iraq's sovereignty and to further the task of Iraq's stability. Instead of fearing to negotiate, we should fear what happens if we never attempt to negotiate a regional commitment to a stable, unified Iraq. And also, Iraq's neighbors should fear that as well. They would bear the brunt of an all-out civil war, including millions of fleeing refugees and new bases for regional terrorist operations. And thirdly, we do need to begin, I had hoped by the end of this year, a phased redeployment. I joined Senators Levin and Reed, and the Democratic leadership in the Senate and House, in proposing a phased redeployment of U.S. troops from Iraq during this year, 2006. That would include a change in the mission of US forces to one of training and supporting Iraqi troops and targeting counter-terrorism as well as protection American operations and personnel and facilities. You know, Richard Holbrooke in his recent article was right; we really have three choices. We muddle along not necessarily going forward but, as my Chairman on the Armed Services Committee, John Warner, has said, moving sideways. We begin some kind of sensible, prudent de-escalation, or we escalate. And we can't do any of those in the absence of the full-hearted attempt on the political reconciliation front, the oil allocation front, and the regional parties being involved. But however we proceed, it is time to insist that the Iraqis to take the lead and demonstrate to the Iraqi people that the U.S. will not be in Iraq permanently and that American troops will not be put in the crossfire of a civil war. Phased redeployment will get the attention of the Iraqi leadership. In my meetings with members of that leadership there has been a mixed message at best. We are a sovereign nation, they tell me, we make decisions now, and by the way we're not ready for you to leave. It is time for us to force the Iraqi government to face up to that contradiction and to begin to do more to resolve their own political situation and make it clear that American forces will not be there to prop up their denials and refusal to deal with the problems at hand. Now, we talk a great deal about Iraq and not enough about Afghanistan, where our failures have squandered much of what our military accomplished and limited the reach and positive impact of President Karzai's moderate, democratic government. Three years ago, when I was here, I told the Council about meeting a soldier in Afghanistan who greeted me with these words; "Welcome to the forgotten front line in the war on terror." Well today, we have senior NATO military officials predicting that the country could fall back to the Taliban in six months. Use of suicide bombings and other terror tactics is on the rise. Afghanistan is now responsible for 87 percent of the world's opium production. And a quote making the rounds in Kabul sums the situation up nicely: a Taliban commander supposedly boasted to his captors that "you have watches, but we have time." To prove him wrong, we need to give our Afghan allies time, yet all we seem to do is check our own watches. Convinced first that we had all the answers, and then that we could sub-contract out counterinsurgency to our allies, we seem to have gone on auto-pilot. Inattention and false optimism are not only endangering all that we accomplished there; they are costing lives. It is a great and brave thing that our allies from Canada, Britain, the Netherlands and other NATO countries have done by sending troops to Afghanistan. But Afghanistan and NATO need us as a leading partner, to help with security, to root out corruption, to find alternatives to opium, to improve the situation with Pakistan. We know the general area where the leaders of the Taliban and probably the leaders of Al Qaeda are. It is a failure of our policies on all fronts that five years later they are sending waves of fighters into Afghanistan from their safe havens. The stakes are unbearably high: for Afghanistan, for Pakistan, for the country's northern neighbors in Central Asia; for the reach of Al Qaeda; and for our own credibility and leadership. We should begin by responding to our NATO commander's call for more troops in Afghanistan, where on a per capita basis we have spent 25 times less than we spent in Bosnia, and deployed one-fiftieth as many troops. In Iran as well, this Administration outsourced its policy to the British, the French and the Germans. Meanwhile, the Iranian so-called moderates we ignored were pushed out of power and the extremists went merrily forward; now we are left hoping that those same moderates we wouldn't talk to can regain control. Hope is not a policy. U.S. policy must be unequivocal: Iran must not build or acquire nuclear weapons. Iran's President has made a series of incendiary, outrageous comments, questioning the Holocaust, calling for Israel to be wiped off the map. We know that a nuclear Iran poses a direct threat to its neighbors in the region, with Israel as its chief target. It also poses a significant threat to the United States by combining access to nuclear materials and technology with support for terrorists whose aim is to attack and kill Americans. We have to keep all options on the table, including being ready to talk directly to Iranians should the right opportunity present itself. Direct talks, if they do nothing else, lets you assess who's making the decisions -- what their stated and unstated goals might be. And willingness to talk sends two very important messages. First, to the Iranian people, that our quarrel is with their leaders, not with them; and second, to the international community, that we are pursuing every available peaceful avenue to prevent Iran from becoming a nuclear power. We also need to be willing to use the tools available to us in working with the Israelis and the Palestinians. In part because the Administration chose to disengage at crucial moments, we are now at a very discouraging place. There is no reliable partner on the Palestinian side, and still no willingness to take a clear stand of acceptance toward Israel. In the aftermath of the Palestinian elections that gave rise to Hamas, we need to continue to insist that any Palestinian government recognize Israel's right to exist and cease terrorism. However, there are reports from the region of discussions between the Israeli government and President Abbas -- and of the possible dissolution of the Hamas government by President Abbas. As events unfold, we need to be prepared, in close coordination with our Israeli ally, to resume America's indispensable role in finding a just and lasting resolution. In North Korea, we got potentially good news this morning. This Administration has adopted a narrow and, you know, sort of, self-reinforcing worldview that doesn't look at the facts, and that rules out some of our best tools for defusing threats before they threaten us. We had six years of a policy with no carrots, no sticks, and only bad results. And we basically left negotiations to the Chinese and left Kim Jong Il home alone with no inspectors watching his plutonium. Now we have fewer options and a much more difficult task. We have UN sanctions. Though they are not as tough as I would want, we need to enforce them. We have the Six Party talks -- and apparently based on what we heard this morning after intensive discussions that included direct talks between Ambassador Chris Hill and the North Koreans, we are going to revive the six party process. We cannot take anything off the table: we've had troops in South Korea for fifty years for a reason. But I have thought for a long time we made a mistake not talking directly to North Korea. North Korea's neighbors have long supported direct U.S. --North Korea talks on security matters. In the past, such engagements have prevented the development of plutonium bombs and the testing of long-range missiles. Kim Jong Il needs to hear a single, unified message: choose between nuclear weapons and aid from South Korea, China, and the international community. You cannot have both. Right now, we seem to be relying too much for my taste on China's good will to restrain North Korea. But at the end of the day, Pyongyang will have to hear this message directly from us. The common strand that draws these crises together is the threat that sophisticated terrorists operating out of Afghanistan or Iraq, or somewhere else, will be able to acquire nuclear weapons or materials. For 40 years the US provided bipartisan leadership in building a network of treaties and expectations that kept global nuclear ambitions in check. Countries like Brazil, Argentina, and South Africa, and Kazakhstan, Ukraine and Belarus elected not to develop nuclear weapons or even gave up weapons they had giving terrorists fewer opportunities as a result. Today we face intense extremist efforts to buy or steal either a bomb or the material to make one and it doesn't have to be very big. We are also seeing increased interest in peaceful uses of nuclear power on the part of many legitimate states. In response, we need to modernize the non-proliferation treaties and related agreements. Last year, we had the chance to start talking about what a stronger regime would look like at the Non-Proliferation Treaty review conference. But while other countries sent foreign ministers or senior ambassadors, the Administration sent a mid-level official -- a clear signal it just wasn't interested. Our influence has already been eroded by our abandonment of the Comprehensive Test Ban Treaty and the administration's interest in developing two new small nuclear weapons, including the robust nuclear earth penetrator, the so-called bunker buster. The wholesale abandonment of non-proliferation efforts is a dangerous mistake. The more countries that have fissile material, the more opportunities there are for terrorists to acquire it. American experts, some of them working here at the Council, have made innovative proposals for a 21st-century NPT. When the Senate resumes, I'll be asking my colleagues who chair the Senate Armed Services and Foreign Relations Committees to hold joint hearings on the future of our non-proliferation policy with the aim of creating a new blueprint for our shared security. And we have to increase our efforts on preventing terrorist groups from obtaining nuclear weapons or materials. You know, Sam Nunn and Ted Turner, through the Nuclear Threat Initiative, have said over and over again that we aren't doing enough to get every last bit of weapons-usable material under safeguard. I will be introducing a bill based on their ideas, which would create a senior White House advisor for countering nuclear terrorism, require a yearly report that would specify every site with nuclear material or weapons. And we would do what we have to do, working in concert with other nations, to try to make that material as safe as it can be. Here in New York, nobody needs to tell us that we are in a war against terrorists who seek to do us harm. Strategically, it is also true that the world is watching us, we are unlikely to make headway facing the challenges that I've discussed -- or many others -- if we are seen as losing ground to the terrorists. On September 12, 2001, when the Bush Administration could count on the goodwill of the entire world; they had strong support from both parties; and the determination of the American people to sacrifice for a common cause. That call to sacrifice never came. Five years later, the Administration has failed to transform our national security institutions. The people who promised less government have instead given us the largest and least competent government we have ever had. As a result, our front-line fighters in the war against terrorists often lack the tools they need. The Administration has ordered our military to fulfill missions for which it is not sized, equipped or funded. I have joined other Democrats and Republicans in proposing that we expand the Army by 80,000 troops, that we move faster to expand the Special Forces, and do a better job of training and equipping the National Guard and Reserves. The Administration has failed embarrassingly when it comes to homeland security. Last week, the Council's own Stephen Flynn awarded them three Ds or Fs and four Cs out of nine grades on homeland security. That's not good enough. The Administration has failed to create a culture of prevention within the FBI. Last December, the 9-11 Commission gave Administration efforts at the FBI a "C" and said, "Unless there is improvement within a reasonable period of time, Congress will have to look at alternatives." The FBI still has only 33 Arabic-speaking agents, and none is assigned to counter-terrorism. The agency's top counter-terrorism job has turned over six times in five years. And we have yet to see the completion of reform in the intelligence community and the restoration of morale. The 9/11 Commission reform package envisioned a Director of National Intelligence who actually directed the intelligence community. We don't have that. We are still living in a "need to know" culture instead of a "need to share" one. The Administration's supposed new standards on interrogation and torture have left our CIA personnel and even our military unsure of what is legal to do, what they are authorized to do, what their country wants them to do. Now during the Cuban missile crisis, President Kennedy had at his side Llewellyn Thompson, former Ambassador to Moscow who understood the Soviets and even lived with Soviet Premier Khrushchev. We don't have that expertise any longer inside our government when it comes to the threat we face from Islamic extremism. We need to look beyond our intelligence community, as we did during the Cold War, we challenged a generation of universities and students to serve their country -- we should do the same today. Learn the languages that we need, understand the cultures of the societies where our biggest threats are incubating. Our military commanders make a point of telling us we cannot win the war against terrorism through military means alone. As the new Army and Marine manual on counter-insurgency puts it, "the best weapons for counter-insurgency do not shoot." Pete said when he introduced me that I worked as a member of the U.S. Joint Forces Command Transformation Advisory Group. One of the common themes of our work there is that we don't have enough civilian capacity to manage pre- and post- crisis situations. The world has changed, but our civilian institutions and preparation for public service has not kept up. I recently introduced legislation along with Senator Specter to create a public service academy -- a West Point for public service --that would send a message about the importance of civilian preparedness and response, at home and abroad. It could become a place where we teach critical languages and put a high priority on learning about the cultures we so poorly understand today. You know finally it comes down to whether we can win the war on terror, not just the battles, and that requires we face squarely our longer-term challenge of putting the US on the side of dignity and progress and making it clear we do oppose tyranny and violations of human rights. And in that fight, our only realistic weapons are our values and ideals. We need to start by addressing the troubled conditions terrorists seek out. I have focused on support for global education because I believe it provides an alternative in places where the only schools are also incubators of religiously-fueled extremism. And it returns immediate health and social gains and reinforces our basic value of equality. I introduced legislation for our country to take the lead in Education for All to aim at giving every child in the world access at least to primary education by 2015. We've done a good job talking about democracy but we sure haven't done a comparable good job in promoting the long-term efforts that actually build institutions after the elections are over and the international monitors have gone home. We have to give citizens more tools and we should be talking more about the successes of this administration -- you know, the relief efforts after the tsunami and the earthquake in Pakistan, the global AIDS program, the Millennium Challenge grants. They're seldom emphasized and they often seem to run counter to the basic ideological arguments the administration is making. This month, I was one of 34 members of the United States Senate to vote against President Bush's military commissions act. On the floor of the Senate, I recounted a choice General George Washington made 230 years ago. New York City and Long Island had been captured, and Washington and the Continental Army had retreated across New Jersey to Pennsylvania, suffering tremendous casualties. Here in New York, American prisoners often held in the hulls of boats, anchored in the harbor off of Brooklyn, were suffering unspeakably at the hands of the British. The cause of American independence was in doubt. Then Washington won the Battle of Trenton, capturing nearly 1000 prisoners of war, and he had to decide what to do with them. The order he gave should still speak to us: Treat them with humanity, and Let them have no reason to Complain of our Copying the brutal example of the British army in their Treatment of our unfortunate brethren. America was born out of faith in certain basic principles, and out of an understanding that it matters deeply -- in fact, it matters for our survival -- that we hew to those principles at home and in the eyes of the world. There could be no mercy for those who perpetrated 9/11 and other crimes against humanity. But we have to pursue justice in a way that lifts up our values, the rule of law, and sets an example that we could point to with pride, not shame. That is an utterly realistic brand of idealism that has been with us since our beginnings. The Administration's experiment has failed, we cannot go backwards, we must go forward building that new consensus and risking a new bipartisanship. I cannot speak, of course, for the Administration, but I know my Democratic colleagues are ready to do so. Thank you.
Hillary Rodham Clinton