Ambassador Sommer, Dr. Rueckert,

Thank you for inviting me to participate in the Foreign Office's International Futures program. It is a great honor and also a pleasure to meet the future leaders and diplomats of the countries that are increasingly engaging with both the United States and Europe on some of the major challenges of the 21st century.

In the fall of 1984, when I joined the Foreign Service, the challenges we faced were very different. One of my first posts was East Berlin. The Cold War was then the dominating political reality.

There is no more obvious physical reminder about the enormous changes that have taken place than if you look at the Brandenburg Gate.

In a few months, we will be moving into our new Embassy on Pariser Platz just a few meters away from the Gate and from where President Ronald Reagan called upon the Soviet Union to tear down the infamous wall that divided Berlin, Germany, Europe and the world. The site is also next door to where John Quincy Adams, the first American diplomat posted to Berlin and the sixth President of the United States, resided.

As Ambassador Timken frequently says, our move represents the closing of a cycle that extended back to the time when Germany and the United States were enemies at war, through the long Cold War years of division, the process of reunification to the state where we are today as global partners. Our new Embassy is not just another building. It demonstrates the commitment of the United States to partnership with the nation of Germany and the people of this country.

The grand opening of our new Embassy will be a celebration of that commitment. Chancellor Merkel will join President George H. W. Bush, President Bush Senior or 41, on the stage in front of the Brandenbugr Gate to celebrate with us our national Independence Day celebration on the 4th of July and the opening the new Embassy. It was on President Bush Senior's watch and due to his steadfast commitment to German reunification that the foundation for a new political and security structure for a new Europe was laid.

The end of the Cold War did not, however, usher in the "end of history," as Francis Fukuyama famously said. The old bipolar system was replaced by one dominated by transnational threats including virulent nationalism, terrorism, drug and human trafficking and the proliferation of weapons of mass destruction.

Today the focus of the transatlantic partnership is global. We are addressing global financial imbalances, fighting global poverty; safeguarding the environment; opening world trade. 2007 was a landmark year for the transatlantic relationship – due in large part, to the commitment and leadership of Chancellor Angela Merkel. No one country embodies the goal of a stronger Europe more than Germany. Chancellor Merkel articulated that goal throughout Germany’s twin EU and G8 presidencies.

And so, over the last year, we have seen the transatlantic – and the international – community move forward as partners on a number of concrete initiatives. We have seen more effective cooperation on fighting terrorism, limiting the spread of weapons of mass destruction, fostering development in Africa, combating disease, and addressing climate change and energy security. There has been constructive discussion on strategies in critical regions, including Iran, North Korea, the Middle East, and Afghanistan.

One aspect of the transatlantic partnership that Chancellor Merkel specifically focused on during Germany's EU presidency was the importance of improved cooperation on our economic partnership. The U.S. and the EU represent the world’s two largest economies. More than three billion dollars a day in trade, services and investment cross the Atlantic every single day. Fourteen million jobs depend directly on trans-Atlantic trade. Despite the fact that transatlantic markets are among the most open in the world and are deeply integrated through dense flows of investment, barriers still exist. Recognizing the importance of our economic relationship, Chancellor Merkel initiated the Transatlantic Economic Initiative to reduce and remove these barriers. The German Federation of Industries estimates that by reducing regulatory barriers on both sides of the Atlantic, we could gain up to 3 percent growth in GDP. When you consider that the U.S and the EU account for roughly 60% of global GDP and 40% of global trade, 3 percent growth represents very significant potential gains.

Daniel Price, the co-chair of the Transatlantic Economic Council -- or TEC -- was in Berlin last week. He emphasized how important the TEC is to transatlantic relations from the perspective of the United States government. He and his counterpart on the EU side Commissioner Günter Verheugen have agreed to focus TEC meetings on the contentious issues, on the real impediments to transatlantic trade or investment that are not only important in and of themselves but that are illustrative of broader divergence in approaches. If we can make progress on some of these contentious issues, it can provide direction on how to achieve progress in others. We would also like to use the TEC to develop common approaches to third-country trade issues. Increasingly we are seeing that economic integration is an important means of meeting the global challenges of the 21st century.

For example, we believe that the recognition of the importance of emerging economies goes hand in hand with a balanced Doha Development Agenda agreement. Closing the Doha round successfully is the highest international trade priority of the United States government. We are working effectively with Germany and the EU in the current negotiations in Geneva. But our cooperation is not enough. We need to ensure that all WTO members engage in a positive outcome. Achieving consensus among the 150 World Trade Organization Member States is no easy feat but, beyond the loss of market opportunities, the cost of failure in Doha would be a much weaker international trading system.

Economic relationships, with their enormous benefits not only for the parties directly concerned but also for the wider global economic agenda, illustrate one aspect of the challenges of a world in which the economic and political order is changing very quickly.

I mentioned earlier that my first diplomatic post back in the 1980s was to a divided Berlin. Before returning to Berlin in 2006, I was posted at the U.S. Mission to NATO in Brussels. Both of these assignments illustrate other aspects of the fundamental changes in transatlantic cooperation. In my day-to-day work at the NATO Mission in Brussels, I saw a NATO of 26 members and 31 partners working in eight different operations. I was involved in efforts to expand NATO’s Afghanistan operation from Kabul to the north, west, and south of the country, in launching NATO’s support for the African Union Mission in Sudan, and in activating the newly created NATO Response Force to lead a disaster relief operation after the October 2005 earthquake in Pakistan.

What a change from the NATO of the Cold War – a security alliance of 16 countries that never had to fire a shot in anger. The key security challenges that we face in NATO illustrates the face of transatlantic security cooperation. Consistent with our strong interest in working closely with our Allies and Partners, the U.S. sees four broad challenges that we believe should be addressed at the upcoming NATO summit in Bucharest in early April.

The world has changed since NATO was founded almost 60 years ago. But NATO, as an alliance of free, democratic societies with shared security interests, remains vital to international peace and security, and the United States is committed to its continued success. The Alliance has stayed relevant by transforming and adapting itself over the last several years to meet the security threats of the 21st century, many of which originate outside the Euro-Atlantic Area.

In terms of making NATO more effective in current operations, there is still much work to be done in transforming old, immobile Cold War structures and equipment into expeditionary forces that can be deployed and sustained for long periods of time in distant places like Afghanistan. Transformation is expensive, which is why it is vital that Allies increase their percentage of defense spending to the NATO target of at least 2% of gross domestic product. It undermines Allied interoperability and solidarity when one Ally -- the U.S. -- is spending more than twice as much on defense as the other 25 Allies combined.

Another key to ensuring success is that we take a comprehensive approach. This is an area in which much more work needs to done, and we can learn from our successes and mistakes.

In Afghanistan, this means fully integrating military operations with civilian support for reconstruction and economic development, good governance and training of the Afghan national police. Building Afghanistan's capacity to help provide for its own security is critical. We have learned that armed conflict in the 21st century does not permit stark divisions between civilian and military components. It is a continuous scale that slides from combat operations to economic development, governance and reconstruction – frequently all at the same time. And while it is true that military means alone cannot ensure success in a counterinsurgency environment, the converse is also true. A comprehensive approach also means being willing to use military force when necessary against hard-core, irreconcilable insurgents. Winning hearts and minds is not just about digging wells and building schools and clinics, but it is also about military effectiveness and giving the local populace confidence that you will stand up to the insurgents.

Ballistic missile threat is another 21st century challenge that NATO must be equipped to address. The ballistic missile threat from the Middle East, especially Iran, is serious and growing.

Many people have wrongly concluded from the recent U.S. National Intelligence Estimate (NIE) that Iran no longer poses a threat. This is wrong. Iran still poses a significant threat because of its unabated program of uranium enrichment -- in violation of UN Security Council Resolutions and the demands of the IAEA. Iran continues to develop ballistic missile technology. So even if one gives Iran the benefit of the doubt and assumes that it has not re-started its nuclear weapons program, it is a challenge from which the international community cannot shrink.

Iran already possesses ballistic missiles capable of reaching some parts of NATO territory and is expected to attain the capability to strike U.S. territory with long-range missiles by as early as 2015. Therefore, the need to deploy MD in Europe to provide redundant protection of the U.S., as well as to European-based U.S. troops and the territory and population of NATO Allies, is more urgent than ever. The U.S. therefore continues to pursue agreements with Poland and Czech Republic for the deployment of a U.S. MD system, which we hope to finalize in the coming months.

Russia claims that U.S. MD plans threaten to upset the strategic balance between Russia and the United States. We have tried to reassure the Russians by offering extensive cooperation with them, including development of a joint regional missile defense architecture that could incorporate both U.S. and Russian MD assets. We have also proposed a comprehensive set of transparency and information sharing proposals.

The planned U.S. system will not be capable of providing protection to all European Allies. There will be gaps in MD coverage, especially in southeastern Europe. In the interest of maintaining Alliance solidarity, the U.S. believes it is critical that leaders at Bucharest task NATO authorities to develop options for how a NATO system could be developed to complement the U.S. system and cover the remaining gaps.

The processes of both EU and NATO enlargement have played an extremely important role in the political transformation of Europe. There are three NATO candidates up for possible invitation at Bucharest -- Albania, Macedonia and Croatia. It is no secret that the U.S. is predisposed to a bigger rather than a smaller enlargement. We believe that that a bold step forward at the summit will take us a step further toward our common goal of a Europe whole, free and at peace.

Also at Bucharest, applications from Georgia and Ukraine for the membership application plan, or MAP, are likely to be discussed. Many Allies believe that MAP for both these countries is premature, but we believe that nothing should be ruled out at this stage. We strongly support the Euro-Atlantic aspirations of both countries and do not accept that Russia should be allowed to exercise a veto over their admission to MAP or, eventually, to the alliance. As one of the Senators - I believe it was Lindsey Graham - said in Munich last month, countries undertaking the democratic and security reforms required for NATO membership are the kind of neighbors Russia should want. MAP does not mean guaranteed membership. An applicant country can stay in MAP indefinitely; the last couple of iterations of new NATO members were in MAP for years. While a strong willingness to undertake the necessary reforms should be a criterion for MAP, we should not raise the bar too high. MAP was designed to help applicant countries make the necessary reforms; completing the reforms should not be a prerequisite for gaining admission to MAP.

Finally, we hope for agreement at Bucharest on achieving greater interoperability with other international organizations, including the UN and EU, as well as with key non-European partners like Australia.

We think this makes good sense, especially given the significant role that Australia plays in ISAF and the already close relationship among NATO, UN and EU in Afghanistan and Kosovo. Some have expressed concerns that these "global partnerships" could lead to the re-emergence of competing blocs, as we had during the Cold War. Others worry that these partnerships could be a slippery slope to eventual NATO membership. This is false. What we aim to achieve with "global partnerships" is nothing more than improving the cooperation that NATO already has with these countries and organizations. I was deeply involved in the initial concept development of global partnership, both within the U.S. policy community and at NATO. This has always been our approach.

In conclusion, I just want to address one last point. Some of you may be wondering what impact the upcoming presidential election will have on U.S. national security policy. There will be a new president in the White House in less than a year, and there is a possibility that the new president will be somebody from the opposite party, a Democrat. It might seem reasonable to assume that with a new president, there could be a significant change in U.S. policy, including in national security.

While not prejudging what the new president may do, I would caution against assuming that there will be big changes in U.S. national security policy. There is likely to be more continuity than change in many areas, especially on issues like Afghanistan and NATO enlargement, where there is already a great deal of bipartisan agreement on the way ahead. The main point is that while U.S. election campaigns always highlight the differences between the candidates and parties, there is usually a significant amount of continuity in foreign policy between administrations, even when there is a change in party.

Thank you very much for your attention. I look forward to your questions.