Chuck Hagel on U.S. Challenges in Today's "Complicated, Interconnected World"

Carnegie's Roundtable Series consists of invitation-only events featuring some of the world’s leading policymakers, academic experts, and activists. These private sessions are a rare opportunity for frank discussion about the most pressing issues facing the global community today. The Roundtables, which include a catered meal, are held in the Council’s historic Executive Board Room. The 2016-2017 Roundtable series will focus on American diplomacy.

DAVID SPEEDIE: It's a great pleasure and privilege to welcome back someone who has become a good friend of the Council. The oldest expression is that "our speaker needs no introduction." I will give the most brief of introductions.

Chuck Hagel was the 24th secretary of defense for our country, serving from February 2013 through February 2015. He is the only Vietnam veteran and the first enlisted combat veteran to serve in that capacity, as secretary of defense. He also, of course, served two terms in the U.S. Senate, representing the great state of Nebraska. Prior to this, he was a successful businessman, president of McCarthy & Company, an investment banking firm in Omaha, and in the mid-1980s he founded Vanguard Cellular Systems, a publicly traded corporation. He was also deputy administrator of the Veterans Administration under President Reagan and deputy commissioner-general of the 1982 World's Fair.

Since leaving the Pentagon just over a year ago, he has not—I repeat, not—been at all inactive. His current commitments include serving on the board of trustees at RAND Corporation, advisory boards of Deutsche Bank America and Corsair Capital, senior advisor to Gallup and the McCarthy Group, distinguished executive in residence at Georgetown University, a distinguished statesman at the Atlantic Council, and board of directors of the American Security Project.

Secretary Hagel wants to offer a brief few remarks. I know that you have just been to the Gulf, Mr. Secretary. Your travels are of immense interest to this group. Please take the floor for a few minutes for your reflections, and then we will open up to this distinguished and curious audience.

CHUCK HAGEL: Curious? You mean intellectually. [Laughter]

DAVID SPEEDIE: I'm just making sure everyone is awake. Intellectually probing audience.

CHUCK HAGEL: It's important that there be clarification, as we all know, especially when you are being recorded.

DAVID SPEEDIE: This is true.

CHUCK HAGEL: David, thank you. Joel, thank you for having me back. I am an admirer of what you are doing here and what this institution has represented over many, many years. If there was ever a time when we needed some emphasis and focus on ethics, it sure as hell is now. I think what we are seeing in American politics today reflects that desire.

I was on a program this morning, Squawk Box, and one of the points that we were talking about—we were talking about a number of things—was politics. I said, regardless of where you come down politically, what your philosophy is—conservative, progressive, communist, socialist, wherever you land—what the American people are saying to our leaders, in particular our political leaders, is that we expect two things: we expect leaders that are competent and that we can trust and that we can have some confidence in—not agree with all the time; and second, we expect a government that is fair and functions, a government that actually works. Like all institutions, governments are imperfect. We're all imperfect. But the American people are pretty smart about this. I suppose it was reaffirmed how smart they were in electing me and re-electing me. [Laughter]

But that more parochial comment aside, never bet against the American people, because the American people do sort it out. It may take a while, but they get it.

I think in this particular case, what we have been seeing in the last six months, with the certainly unanticipated forecasts and results of the rise of Donald Trump, is that what that really represents is Mr. Trump giving rise to the occasion I have talked about but, more to the point, giving a voice to people of this country who feel disaffected, let down, angry, disappointed, frustrated.

In the other party, the Democratic Party, I think you are seeing some of the exact same dimensions. It's not the same, for obvious reasons. But if you take Bernie Sanders' votes and Donald Trump's votes and you add those votes, it is a clear majority of the votes cast so far in this country in primaries and caucuses. And I do think it's not just about Donald Trump or Bernie Sanders. I think it's bigger than that. I think this will play out over the next six months.

The reason I made the comment I did about ethics is because—we were talking earlier—every metric applied and measurement used over the last few years about confidence and trust in institutions and leaders shows—and Gallup does this annually—that the American people have lost faith, confidence, and trust in all of its institutions—except one, and that's the military. The military constantly rates very highly on the scale of confidence and trust. All the other 15 institutions rate below 50 percent—organized religion, organized education, big business, small business, unions. Certainly I think we all know that Washington—politics, government—is at the bottom; I think they are surging now, moving into the seventh or eighth percentile. Then Wall Street/New York bankers are right next to them.

So there has been a real breakdown in our institutional confidence. When a society experiences that, there is going to be some manifestation of that. Fortunately, we have a country—we're not the only country like this, but ours works pretty well this way. This is why I go back to confidence in the people. We have this unique ability to self-correct. That is certainly due to a Constitution. We are a nation of laws. We have a three-part, co-equal branch of government—so it's virtually impossible for a dictator to take over—and all the other precautions that were put into place by these brilliant, brilliant men who wrote this Constitution, who couldn't have understood the complications and the kind of world that eventually would come that we are living in today. But somehow they did, and it protects us.

So our institutions are okay. Our people are okay. Our society is okay. It's just that we need a rather dramatic self-correction. And we'll get there. We go through these periods—not unlike, as you all know, markets. Markets are volatile. They will continue to be volatile. They are unpredictable. We are living at such a time.

This political order in the United States that we are living through really just reflects what's going on in the world. I said—we talked about this earlier—that I have always believed—and I believe it more today than I ever have—that politics just reflects society. Politics never leads. It responds. That's how you get elected. You had better listen to constituents and you had better respond or you won't be elected.

What is happening here is, in the larger scope of things, this 7-billion-citizen global community, underpinned by a global economy, is in a constant state of volatility and uncertainty and turmoil. You go to every major democracy in the world today, it's going through some of the exact same things we are going through. The Brexit question—for the first time in the history of London, a Muslim is elected mayor. Huge shifts and changes are occurring. Chancellor Merkel is in deep political trouble. You are seeing authoritarian nationalistic streaks rise in certain countries in Europe—the new Polish government, Hungary. Certainly the impetus of that has been the Syrian refugee/Middle East war refugee crisis that has been the "jarring gong," in Churchill's words, to do that. But nonetheless this is happening everywhere.

This is partly, I think, a world that is now moving in complicated ways that no one could have predicted. I just came back, as David said, from the Middle East. That is about as complicated a part of the world as there is. They are still dealing with cultural, historical, sectarian, tribal, ethnic problems that are a long way from being resolved. And I think there is still a hangover of European colonialism, non-functioning, unproductive economies.

What you are seeing in Saudi Arabia is, I think, some testament to, some recognition by the younger leaders of the Middle East, as to having some sense of what is coming, even in Saudi Arabia. Saudi Arabia is not going to be able to hold those forces back that you see playing out in the Middle East. It is impossible, because there is not just a military issue here. It is bigger than that.

So it's all of these dynamics now coming together in this combustible, toxic brew that has given rise to groups like ISIS (Islamic State of Iraq and Syria), the sophistication of social media, the sophistication of the recruitment process of the disaffected—and, as we were talking about earlier today, not just the jobless 18- and 19-year-old males in the Middle East that don't have prospects or hope or education or opportunities, but these people are recruiting a lot of sophisticated, highly educated, well-to-do young people, who somehow have been adrift with no purpose in their lives.

Now, we can't fix all of that. I get that. But as clear evidence of what's going on in the world, we had better pay attention to this. We are not immune from it. We all know that. How we adapt, how we adjust, how we come at this as we prepare for the next few years in this complicated, interconnected world will fall, like it does, to the next set of leaders that we elect. This is what the American people intuitively understand, the world understands, as to who is best prepared to deal with this. Regardless of who is elected in this country or who the next set of leaders are anywhere else in the world, they are all going to be dealing with, I think, the most complicated set of challenges and threats we have ever seen, certainly in our lifetimes.

America is also going through this adjustment period that is difficult. Most Americans alive today were born during World War II or after World War II. I was born right at the front end of the baby boom generation. My father came back from World War II in September 1945. My parents were married on Valentine's Day 1946. I was born nine months later. As a politician, you check the record and you leave nothing to chance. It was nine months.

The point is that our lives have known an America completely dominant in the world. There has been no nation on earth that has been even in the same universe. The Soviets had nuclear parity, but their military was a joke, their economy was a joke. You know all the rest. There was no nation near us. So we have essentially imposed, where we have made our biggest mistakes, dictated, instructed to the rest of the world. It's interesting. When you really analyze what has happened in the world—this great diffusion, historic, unprecedented diffusion, of economic power, more centers of economic power, of success—that should be some measurement of how well we have done, how well the post-World War II order has worked—not for everybody.

The problem areas of the world are the world's problem areas because they were the areas left behind after World War II—the Middle East, North Africa. They didn't benefit from these great coalitions of common interests that our leaders built, based on the progressiveness of markets and trade and rights and dignity, all countries having opportunities to rise and get educations. I think there is some logic that follows. If you have a stable world, that means, most likely—not always—more security, more possibilities, more prosperity for more people. If you have an unstable world, it goes just the opposite. So we have had some particularly important successes.

But now this post-World War II order is unwinding, for the reasons I have mentioned and others. Our politics follows that. For Americans to try to adjust to this, they are, I think, often misled by politicians and others who say America is a second-rate country today; it's just not a great country anymore. That's complete buffoonery. There is no country on earth that is close to the United States in any measurement.

I am always particularly struck by Gallup's annual survey of the thousands of people who plan on emigrating from their countries or want to emigrate, and still America is, about 76, 70 percent, the country that people want to come to. It sure as hell is not China or Russia or Indonesia or Brazil. It's the United States. That doesn't mean we don't have a lot of work to do inside. We do. We are a long way from perfect. We are going to have to make some tough choices. But we can get there, and we will get there, because of what I mentioned earlier, this self-correction mechanism that allows us to self-correct.

The last point I would make on this is that the danger today, as much as anything else, is the fact that we are now living in a world where there are really no margins of time. I think back to, when I was in high school, the Cuban Missile Crisis. Everybody knows the whole story. There was about a 10-day period that Kennedy had to work through a lot of this, by sending his brother to the Soviet ambassador in a quiet back channel. Khrushchev had sent two pretty hostile telexes. Didn't know how to handle it. Our friend Ted Sorensen, a former Nebraskan, as you know, tells that story magnificently well in his books. The White House decided to answer one telex from Khrushchev and not respond to the other one—all that period of time. An American president or leader doesn't have anything like that today, and so the margins of error are not there, which makes the world far more dangerous. We are dealing with hair-triggered issues now.

We were talking earlier about the long interview that President Obama gave not too long ago, in the last couple of weeks. One of the points that Joel and David were making on the last sentence in that interview [in an earlier conversation], what the president was most proud of—essentially saying all the things that could have happened but didn't happen, or something like that. I paraphrase it.

Well, on the face of it, that might look a little strange. But what that reminded me of was we had a president for eight years by the name of Eisenhower. Many of you remember that very well. I recall vividly, as you all do, that after he left office, he was a bit pooh-poohed as kind of a doddering old man who really wasn't there at the switch all the time, playing golf, had had a couple heart attacks, and wasn't paying attention. Now we know just the opposite, the things he didn't let happen: the Suez Canal, how he handled the Suez Canal, that was an expert job in managing as difficult, unpredictable, combustible, and dangerous a situation as we have seen since World War II; not siding with the French at Dien Bien Phu in 1954.

So managing through things that don't get a country in trouble is many times more important than the things that you can chalk up and say, "I opened Cuba," or whatever. I think that was Obama's point.

We are going to need a lot more of the Eisenhower-style management and leadership in this next president. That is just the reality of it. Now the calibration is just hair-triggered of everything, and you can quickly drag a country into a problem if you are not thoughtful.

Now, I learned all these wise words from people like Bob James, a Nebraskan. Nick Fuller is another Nebraskan. We're everywhere, I know. So be careful.

Well, if I have not thoroughly confused you—I was a senator for 12 years, so that was part of our deal—let me stop there and open it up and see wherever you want to go.

[Editor's note: Due to poor sound quality, the question and answer session is not included in the audio podcast.]

QUESTION: Your optimism about the system as it is giving solutions or eventually adjusting—I read a lot of commentary recently. There was an article in The Economist about how the Constitution is—Americans revere it; they take it in with their mother's milk, like they used to in England with the Royal Family. But, in fact, it is an 18th-century model that is not suitable for the needs of the day. We see it with the terrible gridlock that we have on all sorts of important initiatives. There is a broad consensus among people that there are all sorts of things that need to be fixed, like the tax code needs to be rationalized, the need for investment in infrastructure—all sorts of things on which there is a large consensus, but which, from a legislative point of view, we just can't seem to be able to tackle. It's partly because of this division of powers and the ability of overrides to deal with vetoes and all these sorts of things.

It's a huge problem. People say—not that this is something that we can't achieve—that a more parliamentary system would be a much more efficient way to go about running the country. I don't think that it is realistic ever to expect that to happen in the foreseeable future.

But I wonder whether your optimism about the system being able to adapt and face challenges is really well placed, given what we have seen in the last eight years.

CHUCK HAGEL: Are you suggesting what I have said is not well placed? No, I'm just kidding. I get it. [Laughter]

Well, I read that article. Let me just answer some of the specifics that you mentioned from that article.

I think if there was ever a case of a constitution that, in fact, is capable of adapting, it's the American Constitution. Why do I say that? We have 27 amendments to the Constitution. When our Constitution was written and this great republic was formed in 1776, unless you were a white male landowner, you didn't have all the full rights that were so articulately and beautifully expressed in the Preamble of the Constitution. It took us 27 amendments—27 times we had to change the Constitution. But my point about self-correction—that living, breathing document allows us to do that. We can do that, and we have done it 27 times. We will do it some more, I'm sure.

Second, I think, my perspective here—it doesn't mean I'm right—comes from 12 years as a United States senator who strongly believes in the power of the Congress and the oversight responsibilities, serving three administrations in major jobs, a businessperson. I was a journalist once—didn't have any talent, so I had to do something else. So I have done a lot of different things.

I think this system for us—everybody has to pick their own system—works quite well. I mentioned earlier that the founders of the Constitution and those who wrote it were brilliant in how they saw creeping power and protecting against that.

One last point on this. This country should be on its hands and knees every day thanking the Constitution for allowing a difficult, complicated process to work because of what it stopped. I have seen in my lifetime, and then up close in some of the committee rooms in conference committees, when very bad legislation was stopped because of threats of veto, because of the United States Senate being an institution that is unique in the world. It's a minority representative body. You all know the history of how the Senate was formed. The small states thought they were being left out, because we would have one house and it would be representational based on population. So the little guys said, "Wait a minute. We're going to get screwed." So they made the Senate. No matter how big the state, two senators, same weight, same deal. And it's minority rights, protect the rights of the minority. That has saved this country so many times.

I don't think any human document ever written is perfect. But I think this is the most workable document. I don't know of one that has been more workable in the history of man than the Constitution of the United States, because you can change. We are changing. We have changed. We will have to continue to adapt.

Tax codes—there's nothing in the Constitution that says anything about tax codes, except that it gives the Congress the power to levy taxes. It doesn't give the president the power to levy taxes, which I always find interesting from all our presidential candidates. Mr. Trump is going to do all these things. Well, he probably should take some cursory reading of the Constitution. It is the power of the Congress. The president of the United States doesn't even have gas for his fancy cars and airplanes unless the Congress appropriates the money. So no one gets out of balance here. That was the whole intent of the Constitution.

So I just fundamentally disagree, in all due respect, with The Economist. I'm a great admirer of The Economist. I read it every week.

QUESTION: Mr. Secretary, I would like to ask you a question about Mr. Putin. We have seen in recent weeks very provocative behavior from his aircraft buzzing naval ships in the Baltic on maneuvers. I read in the New York Post yesterday—I don't know how reliable that is—that they are practicing bombing runs against the United States.

How do you think we should be dealing with him? Should we worry about his going into Latvia, for example, as the Latvians are? He seems to be provocative, unpredictable. I don't know that we have any particular policy—I don't know whether your successor was calling the Russian defense minister on the phone and saying, "These maneuvers are really terribly dangerous. Someone's likely to get hurt." I would just like your general views.

CHUCK HAGEL: When I was secretary of defense, it was during the time of the invasion of Crimea and Eastern Ukraine, other provocative acts the Russians were engaged in.

General Marty Dempsey, then the chairman of the Joint Chiefs of Staff, who was my partner and who was a tremendous leader—the country was very fortunate to have him—and I on many occasions talked to President Obama about a lot of things the Russians were doing. [Editor's note: For more from General Dempsey, check out his 2014 Carnegie Council conversation.] We were seeing that the Russians were probing and testing and doing more—whether it was submarines, overflights, different overt acts, conducting exercises challenging us—that we hadn't seen since the Cold War days. This was aside from what they were doing in Ukraine and then, later on, and after I left office—I wasn't there then—the Russian military intervention in Syria.

But back to your questions on how you handle this. Well, first, an awareness and the reality that these provocative acts are taking place. You have to start with a national security enterprise and a military that is second to none in the world in our capability and capacity. That's one piece of it.

What we are doing—and I started this when I was secretary of defense and, after the Russians had invaded Ukraine and Crimea, I went to all those Eastern frontline countries—the Baltic countries, Poland, Romania, Bulgaria—and we started accelerating rotational deployments and stockpiling more and more equipment along those borders to show the Russians very clearly that this is very serious business. Now, I think we have to be a little careful with that, too, because I think we can slip back into kind of a mindless Cold War here if we are not smart. That is another part of it, NATO.

The third part, which is probably the most critical—and I actually mentioned this to the president—I think especially the next president is going to have to spend some time with Putin, to deal with him one on one, to—as I used to say to President Obama—get him off-ramped, because the highway he is on and the direction he is taking is very dangerous, and it's going to lead to a confrontation that is not going to be good for anybody. What happens in these high-stakes games is that even the leaders themselves lose control of the situation and you get your countries into corners they can't get out of. That is very dangerous. You want to head that off. You want to avert that while you can. The only way I think you have any possibility to do it is leader-to-leader conversations.

Engagement is hugely important here. Engagement is not appeasement, whether it's Iran or Russia or China. Engagement is not surrender. Engagement is smart. The most powerful nation on earth engages. We are the leaders. I think the diplomatic piece of this—but it has to be leader to leader, it can't be secretary of state or secretary of defense.

I called my counterpart often, Defense Minister Shoigu. Had a good relationship with him. Marty Dempsey had a very good military-to-military relationship, which was a separate thing, which I always told the White House, the president: "You have to keep the military-to-military relationship open." That is critically important. Accidents will happen. Some hot-shot pilot does something stupid—and we're capable of that, too—and then, boom, that's the spark and then we're off and running. So the military-to-military relationship, aside from the diplomatic, aside from all the rest—you have to run on many tracks. It isn't just one strategy.

When you talk about strategies, it's like doctrines and so on. I am always a little leery of intellectual doctrines—"This is the doctrine." Well, the Monroe Doctrine was a different time, pretty easy. When you lay down doctrines—boy, that is kind of a definitive line. You had better understand what you are doing there, because then there is no adjustment to that. You have to be very careful on this. Leaders come and go. National interests do not.

I think the other reality is that we have to recognize, too, in kind of the Eisenhower model—and I use the term "manage" because I think "manage" is really critical here—manage through these combustible, difficult problems, and don't make them worse, because they can get worse.

The reality is—and many of you in this room know this because it's your business—what is happening in Russia is not good. There is civil unrest throughout that country right now—what has happened to their economy, investments, the ruble, pulling down on their reserves. They can't sustain this. They are deeply into Syria and the Middle East. Obviously they have brought an expectation to Eastern Ukraine and Crimea that they can't possibly fulfill, because that's billions of dollars in development and they don't have that. As we are seeing, the price of oil is going up. It will probably continue to go up. But it has to go up a hell of a lot to get the Russians and a lot of these countries up to where they need to be. So I think you have to be wise in how you handle this.

Also—and I hesitate to use the term "red line" because that hasn't worked out very well for this administration—if you lay down a red line, you had better mean it, and the world had better know you mean it. I think that was a huge mistake that the president made. I was there at the time that decision was made. The National Security Council had made another decision, but the president, in the last few hours, arbitrarily changed that. The lack of confidence and trust that occurs from our allies especially—but our adversaries watch this, too.

So I think it's all those things together. It's a long answer. I know I'm kind of meandering. But I think we have to be careful how we handle this.

The next president is going to have to grab hold of this one. I think there is no other way. But it has to be the next president and Putin sitting down and having some very direct conversations: "Where do you think this is taking your country? Where do we want to go? You have to lay it out. What are your national interests?" It has to be that clear, and only leaders can do that. The rest of us are agents. The secretary of defense doesn't make policy. The secretary of state doesn't make policy. That is all done at the White House. We are agents. Putin knows that. Leaders know that. They want to deal with the leader.

QUESTION: Thank you, Mr. Secretary. Just building on that comment, some of us are puzzled by the Iranian deal in the sense of, why does the administration sort of decouple Iran the state from Iran being the major state sponsor of terrorism? I just would very much appreciate your thoughts on that.

CHUCK HAGEL: It's a good question. It was a question we dealt with a lot. I was secretary of defense at the time we constructed the deal, and I support the deal. In my answer to you I will explain why I support it.

But focusing more on your bigger question, why was it decoupled from, clearly, Iran being the major state sponsor of terrorism in the world? We were not going to get a comprehensive deal with the Iranians on all of that. First of all, they won't acknowledge it, and they take a whole different approach to it. So you can go ahead and break your lance on that and get nothing, and they continue to develop the capability for nuclear weapons and keep the IAEA (International Atomic Energy Agency) out, and the world gets more dangerous, and they continue to do what they are doing with their behavior and their conduct elsewhere. I'm not sure that was a winning strategy.

So what we did was we focused on, first, what we thought we could accomplish, if we could do it, and that is the nuclear because, in a way, it was the most dangerous, but also it was the easiest to deal with. I'm not an expert on Iran or the Middle East. I have never been to Iran. I have been to the Middle East many, many, many times over the years. I know all the leaders. I have known them, dealt with them, worked with them. What they are doing in their sponsorship of terrorism, as I said, is a whole different dynamic. It is very, very difficult to pin them down. They will never acknowledge it.

But the nuclear piece we could get hold of—we thought, we hoped. I think the agreement that was made—it's imperfect, I get it. I don't know of an agreement that has ever been made by anybody that is a perfect agreement. I have done a lot of business agreements and deals, and I don't think I would ever say that any of them were perfect. Everybody has to get something out of the deal or there is no agreement.

But here is my test, always, on deals, on agreements: Does it move your objective closer to where you want to be at a minimum of risk? There is always a downside, there is always a risk, so you have to address the risk. That is a verification regime. It's a process, for example, that we got in—we now are inside their facilities like we have never been. Now, will they try to cheat? Will they try to hide things? Yes. Ronald Reagan said it: Trust but verify. We would never have done any kind of deal with the Soviets if we said, "We trust you, Vladimir. It's okay." We never trusted the Soviets, don't trust the Russians to this day. No, you go in assuming they will try to cheat and they will try to hide something. And by the way, it isn't just our enemies who do that, too.

But a strong verification regime, if you think that it's strong enough—and here is the fallback. We have always got a military option. But isn't it smarter to not lead with that? If that is what eventually happens—we've always got that—you start bombing Iran? Well, you talk about a landscape that will blow up totally. Can we win? All this conversation I hear from many members of Congress, who know nothing about war, of course—what does that mean, at what cost? You achieve a victory at what cost? What are you prepared to consider a win? How many millions of people may die and the economy going to hell, parts of the world destroyed? Will you win? Yes, I suppose. You will be standing, yes, but Iran won't. That's right. So you won. So you have to factor all that in. It's always complicated.

But I think overall we have enough protections. It moves us closer to Iran not developing the capability to produce nuclear weapons.

Now, the question that came up often was, "Yeah, but what about 15 years from now?" Come on. You tell me what the hell is going to happen in a year. Yes, you play for out-years, too. But we are playing right now for right now. You had better get hold of this thing pretty quickly and you had better head it off as best you can right now. We don't even worry about 15 years from now. I don't know. There is a generational change going on in Iran. A lot is shifting in Iran. Now, you can't bet on that. You can't bet on that, but there is a lot that is going to happen in the world in 15 years, as we know.

Just look at our last 15 years in the world. Who would have predicted? How many of you people have been to parties with Donald Trump and ever saw a president there? Maybe some of you did. Donald Trump could be president. Anybody who thinks that he won't be president is not tracking what the hell is going on in this country.

So that's why we did it. I think it was the right thing to do. I think we made a deal that was defensible and I think gets us to where we want to be.

We are still dealing with the second part of your question. It is a real part. But the way I would address that—and I have said this before, and I said it when I was in the Senate, and I was always vilified for this—"How dare you even talk about the Iranians"—there is not going to be any stability or any hope for stability in the Middle East without the Iranians, without the Russians, and certainly without the Saudis and all the players. It ain't going to happen. Look at Syria. The entire Middle East is blowing up. You have non-functioning governments. In some cases you have no governments in countries. And it's not getting better.

So until you have built a platform of some stability to start sorting out how you move it to the next stage of figuring out how maybe we get to some solutions and resolutions—but without stability, it won't happen. You just keep pouring in more armaments and more proxy wars. And we are getting ourselves deeper back into that, which I think is a mistake. What are you going to have at the end of it here? You will have destroyed completely most of the Middle East, and you have built internal hatred forever that will assure global terrorism forever, or certainly in our lifetimes. Whoever the youngest person is around this table, you will be dealing with it.

So I think presidents have to look ahead. And it is an imperfect world. I used to say to the president, "Mr. President, we're not going to get everything right. It's just the way it is. But we've got to get the big things right."

QUESTION: Thank you, Mr. Secretary. Climate change is an issue that the left cares a lot about, the right not so much where's there's climate skepticism, including from Donald Trump. But it seems to me that the military, in its quiet, non-ideological way, is doing a lot of good thinking. The report on the Arctic came out on your tenure. I think it would be useful to the public to hear what exactly is the U.S. military, the different service branches, doing to think about a world that is changing politically, but it is also changing, in a way, its physical contours. The melting of ice in the Arctic is creating a new vulnerability for the United States and that part of the world. Can you shed some light on where you think that's going to go?

CHUCK HAGEL: I think your question is a damn important one that we are giving very little thought to.

You are right. In November of 2013, I gave a major speech in Halifax at a big conference there. I was the first secretary of defense to really lay out a strategy, an Arctic strategy, in our defense posture. It was something that I started working on when I got over there. I had been working on this a little bit in the Senate as well.

You just noted what is happening up there. Everybody does. You can have your own opinion on why or so on and so on. But the fact is, glaciers are melting and there is a new passageway now that is being developed that is going to allow for the exploration—and, unfortunately, the militarization—of that new part of the world.

We are so damn far behind the other four Arctic nations. Hell, the Chinese have modern, cutting-edge icebreakers. We have two icebreakers. They are both 40 years old. One doesn't work. We can't get the Congress to appropriate money to the Coast Guard to build a new icebreaker. Now, some of this is not under the purview of the Defense Department. A lot of this is Coast Guard.

But this administration has given no priority to it. It's interesting, because this administration is the first administration that has really focused on climate change. The president gives a lot of speeches, and everybody does, but as far as the actual strategy of how we are going to deal with this—the Russians are reactivating bases in the Arctic that they built years ago. The Chinese are going to start playing up there. Our allies are very concerned about our inability to deal in that part of the world.

Anybody who doesn't think that people are not only going to try to commercialize it, but militarize it, they are in rehab or comatose or something. It ain't going to happen. This game is already under way. This is the great game of the North. It isn't the great game of Afghanistan and the Silk Road. This is the great game of the North.

I think I would put it up there, if I was president of the United States, as high on the priority list of economic security, stability, geopolitical security. Since I left, I don't think the Pentagon has done as much to push it. It isn't just a Pentagon issue, but it certainly has to be one that we—it has to be bigger than the Pentagon.

QUESTION: I would ask you to comment briefly on China and the reclamation of the islands in the South China Sea, and whether or not you think Secretary Carter and the Obama administration are being forceful enough with the Chinese.

CHUCK HAGEL: I think showing our military hand, as we have been, and making it very clear to the Chinese that the freedom of navigation in those waterways is absolutely critical—and, if there was a red line, that sure as hell is a red line. We cannot allow the Chinese to militarize those zones and inhibit the free passage of commercial traffic.

When I was secretary, I took four major Asia-Pacific trips. Each lasted about 15 days. You all know when you go that far, you stay there. I spent five days in China. The Chinese were very upset with me because I was the first one that really said, "No. The United States has responsibilities here, with our allies," and I reminded them that the United States has seven treaty obligations. Five of those seven are in the Asia-Pacific. It's clearly in our interest. America has always been a Pacific power. Our entire Western border borders the Pacific—our relationships, our friendships, our partnerships.

So I think a show of some military force, which we have been doing, is the right thing to do. The president has been talking, I know, directly to Xi about this.

Where I put a particular emphasis as secretary was helping strengthen and build the alliances we have, but also what I refer to as partnerships, not necessarily military alliances, with the ASEAN (Association of Southeast Asian Nations) nations. We are doing more and more with them. They are not militarily aligned with us. And that's okay. They shouldn't be, by the way. It's better for them and better for us. But they are clearly concerned about what is happening there. So we are helping them.

I was the first secretary of state or defense to invite all the ASEAN defense ministers to the United States for a conference. They all came to Hawaii. I don't think it was necessarily my charm. Hawaii may have something to do with that. It was attractive for their wives and others. Nonetheless they all came. What I did in those three days was not only—we did all the military piece with the PACOM (United States Pacific Command) commanders. But I had the director of the USAID (United States Agency for International Development) come, I had assistant secretaries of commerce come on weather patterns, where we could help these ASEAN nations and partner with them on people-to-people relationships, things that help their people, enhance their people, not just military, not just security.

We're not putting them in a position where you have to choose between China and us. As I have often said to the president and others, you don't ever want to put that question to those countries, because you may not like the answer. China is right there on the border of most of them. We are 5,000 miles away. So who in the hell are you going to go with? There are a lot of games that get played in this. So you have to be careful and very adept and agile in how you handle this.

But we'll see. What the next event will be, will be the international court [Permanent Court of Arbitration] will hand down a ruling on the islands dispute. I think it is with the Philippines first. Let's see what the International Court says. That has been our formal position, that we don't take sides in this. That's why we have international courts. That's why the civilized world built these coalitions of common interests and international courts, to give everybody a fair shot at everything. But we also have responsibilities, treaty obligations, in freedom of navigation. We don't take that lightly either. Whatever that ruling is going to be, that will precipitate something here. We'll see what happens.

But I think what we are doing—and I started this—is a strong military presence, not threatening, but making it very clear to the Chinese that this just cannot happen, will not stand. If we don't do that also, we will lose Japan and we will lose South Korea, because they are already questioning our commitment to a lot of things.

I was just with a number of former ministers of defense, foreign ministers from Japan, Friday in Washington at the Sasakawa Foundation's global security conference. I talk with these leaders all the time, former ambassadors I know. There is a real question whether America is going to continue to be a reliable partner. The South Koreans are nervous about it. We have this kid in North Korea doing crazy things, saying crazy things. This is no time to be putting in doubt America's commitment.

There are times when you do have to lead with a certain militarization part of your diplomacy. Again, I think this—I don't blame it all on the president's decision not to go forward with the red line on Syria—but there are ramifications, consequences for that when people doubt your word. Boy, if there is one coin of the realm in everything in life, that's trust. If you lose that, you debase your currency; you lose everything. If you can't be counted on, then that makes the world a lot more dangerous.

QUESTION: I listened to Zbigniew Brzezinski talk a couple of years ago, and he said, "Look, you're looking at global relations. China and America, they just have to figure out how to balance it, because they don't really have territorial competition." He said, "In my view, the greatest threat to America's stability and to world peace is Central Asia and the Middle East."

I guess my question to you is, what is the U.S. military's posture now? Given that that is an unstable and a really risky area, how do you position the military? What is the strategy now for allocation of force, insertion of force, to the extent the instability pops up now?

CHUCK HAGEL: I think you start with what President Obama announced a few years ago in his rebalance to Asia-Pacific. By the way, I think that got off course, partly because the administration didn't explain it well, meaning to a lot of people that it was a retreat of the United States from other parts of the world.

So now we're going to—the term that is used is "pivot." Well, the administration never used that term, "pivot." If you analyze, what does "pivot" mean, that means "pivot" can go the other way. That's retreat from wherever. It is a rebalance of assets, is what it is, to reflect our interests—commercial interests, economic interests, geopolitical interests, treaty interests. The president was right on this. That means more ships, more planes, more people.

It isn't just a military buildup. This is why I think TPP (Trans-Pacific Partnership), the trade deal, is so important. It has to be more than just more ships and more planes and the rest. It has to be everything. Unfortunately, I think the TPP is probably not going to get through, because now all the presidential candidates are opposed to it—Clinton flipped on it—and the Republican Congress is not going to give Obama anything. So I would be shocked if the thing goes through. It's the right thing to do, and I hope the next president will put it back. I hope the Congress does it.

But in any event, I think what we are doing, to answer your question, is exactly the right thing. Some of the conversation we just had on China, assets—we have a tremendous amount of platforms there, working with those governments of that area, not just our allies, but the ASEAN nations. We are doing more than we have ever done there, in every way. I think that's right.

I don't agree with Zbig's point about it's not in our interests. It sure as hell is in our interests. If the Chinese started controlling waterways in East and South Asia—we have Japan dependent on oil; 99 percent of their oil comes from those waterways through the Strait of Malacca down on the southern tip of Indonesia. You start having the Chinese controlling those zones, boy, we've got a problem. It's definitely in our interest.

QUESTIONER: His point was, simply, that over time a balance will be found. China is not going to tip over the economic cart just to mess up global trade. His point was that Pakistan, Afghanistan, and Iran are all deeply troublesome, and that's where he saw instability really erupting.

CHUCK HAGEL: Well, I agree with that.

QUESTIONER: What is America to do to be ready for that? Is America doing anything?

CHUCK HAGEL: But that also reflects on my point. Every part of the world is important to us. I think that's right.

If you look at the border with Pakistan, Iran, and China, all three nuclear powers, all three a bit unstable, any way you want to cut it; then you have Iran right there and Afghanistan right there—no, Zbig's right, that is. But you have to manage all of these.

I don't think you can necessarily count on that "we'll figure it out with the Chinese." China has some big trouble inside. You guys know this. It is far worse than anybody understands, the instability. You can't stay on that rocket ship forever and continue those kind of increments in growth. You could get away with it, for the obvious reasons. I'm not sure how big a growth they actually were having. Nobody is. Nothing is transparent there. So we kind of lap up, "Oh, they're 10 percent"—well, who in the hell says 10 percent? The Chinese? The World Bank gets their numbers from the Chinese. Maybe it is 10 percent. But the problems that China has internally are significant. If that country would start to destabilize, that would be a huge problem.

I think Xi is a pretty smart guy. He is probably as brutal as any dictator they have had. But he started a couple of things here that he can't get out of. One is the anti-corruption campaign. He is touching every family that has a Mercedes anywhere. This is dangerous stuff. He is jacking around with the military on this, too. Boy, this is a very difficult situation. So I don't think you can think, "Well, the Chinese are always—5,000 years of history and civilization, they are wise, they are smart, they always go back to Confucius, what would Confucius do." Yeah, maybe.

But anyway, we have interests everywhere, and we have to pay attention to all of them.

QUESTION: Do you have any thoughts on the Eastern Mediterranean and the recent developments in Turkey's political scene?

CHUCK HAGEL: Well, that's another problem, a big problem. Davutoğlu's resignation this weekend was a huge problem. I have known Davutoğlu for years. I have known Erdoğan for years. In fact, Joe Biden and I were the first two to meet Erdoğan, two weeks after his Justice and Development Party swept into office in November of [2002]. Joe and I spent three hours with him. So I have known him for years and I have a good relationship with him.

But Turkey—we have to pay attention to that. They are in a lot of trouble, for a lot of reasons, too. The way Erdoğan is consolidating almost dictatorial power—press, military, which has been ongoing—I think he has done a lot of good things. I think he has been the right leader at the right time. He stayed way too long. Building this presidential palace and all these—I mean he's now kind of seeing himself as bigger than Atatürk.

We have to pay attention to this. Turkey is a member of NATO. It's a hugely important country right there on the border of Asia, the Middle East, the Muslim world, Europe on the other side. We don't want to lose that. We can't control that. But this is something that bothers me an awful lot. I have been to Turkey many times. It's as big a concern I have as about any of those places—the Mediterranean, obviously. Libya is—who knows what happens in Libya? But also those other countries are in some trouble. Little Tunisia is trying to struggle, Algeria, Morocco, with the king. Then sub-Saharan Africa is nothing but trouble, nothing. Bob Gates and I were just over in Lagos about two months ago and did a deal over there together. There's no good news coming from any of those countries.

DAVID SPEEDIE: Well, on that—

CHUCK HAGEL: There must be something good here.

DAVID SPEEDIE: I would just like to say, I think that for the Council it's entirely appropriate that all the questions from this intellectually curious audience were of the long haul, over the hill, big horizon, whether it be climate change or the Asia-Pacific or U.S.-Russia relations, so on and so forth. We haven't focused on the front page above the fold. We are not really that kind of organization. We think big and long.

However, I will just finish with a quote from our speaker from NPR (National Public Radio) back in February. You said that "the next president of the United States is going to be confronted with immense challenges, and most will be international." I think that clearly emerged from today. You also said that the presidential campaign debates on foreign policy and national security were "dangerously simplistic."

I can only hope, sir, that as time goes on, these six months, either of the two presumptive candidates will bring the same intellectual depth and probing to these issues that you have today. Once again we thank you.

CHUCK HAGEL: My pleasure. Thank you, David.

Now, all of you go back to work and make a lot of money for America and pay your taxes.