MR. KAGAN: Welcome to our last session of this conference, which has been full of, I think, a lot of wisdom, but never more so than the wisdom we're about to have.

My name is Bob Kagan, I'm a Senior Associate at the Carnegie Endowment, and a Director of the Foreign Policy Initiative. And the man to my right I don't think needs any introduction, Senator John McCain, probably the leading expert on American foreign policy and security policy that we have. And there's plenty to talk about, especially with all the things that are breaking in the news.

Senator, the Washington Post editorial this morning looks at some of the things that President Obama said in some of the interviews that he gave over the weekend, and compared it with some of the things that he said in March, earlier this year.

In March, it says, he outlined a -- what he called a -- comprehensive new strategy for Afghanistan that marks the conclusion of a careful policy review, and they spell out what he said about that policy. And then the editorial goes on. So it was a little startling to hear Mr. Obama suggest in several televised interviews on Sunday that he had second thoughts. And they quote him saying, "We're in the process of working through that strategy. The first question is, are we pursuing the right strategy."

He says, "If supporting the Afghan national government and building capacity for their army and securing certain provinces advances that strategy then we'll move forward, but if it doesn't, then I'm not interested in just being in Afghanistan for the sake of being in Afghanistan."

Senator, how do you read these remarks coming out of the administration right now?

SENATOR McCAIN: Frankly, Bob, I do not understand or perhaps I have never seen a disconnect like this between the military leadership and the White House on an issue.

Adm. Mullen, Chairman of the Joint Chiefs of Staff, in his hearings for reconfirmation for another -- confirmation for another -- term as Chairman of the Joint Chiefs, made it very clear in his testimony -- and as you know the testimony was really all about this issue -- that one, that the strategy had been decided last March; that this was a reaffirmation of the strategy. Two, that time was not on our side, that time was critical; that we were not winning, so therefore the sooner we acted to try to reverse, and we can reverse in his view and in mind the trend that's going on in Afghanistan, that the sooner the better.

And what I really don't understand, and I'm sure we'll have more time to talk about this, is why you would tell your general in the field not to send his recommendations for the troop levels that are needed in order to implement a strategy which, according to the Chairman of the Joint Chiefs of Staff, was formulated last March and in the President's public statements last March were made I thought clear to most of us.

So, look, we could go back to the campaign when the President spoke in the strongest possible terms about the conflict in Afghanistan being the good war and articulating his opposition to the surge in Iraq and the strategy there, but this is a remarkable situation.

And again, any leader, I think, would want to get the maximum amount of information from your -- the people you have given positions of responsibility and the lives of our young American troops there, and apparently the administration does not want Gen. McChrystal's recommendations on the troop strengths that are necessary to implement a strategy that was articulated, at least in the words of Adm. Mullen, was decided on last March.

MR. KAGAN: Well, this disconnect that you talk about, do you think that -- is the White House sort of deliberately holding Gen. McChrystal and asking them not to send up a specific troop request?

SENATOR McCAIN: Well, it's well known that the White House has told Gen. McChrystal not to send his recommendations on troop levels. If you don't have a recommendation on the troop levels that will be necessary to implement a strategy, then how do you decide on the strategy? I know I sound a little frustrated, and I apologize for doing so, but any leader, to make the best decisions needs a maximum amount of information. The worst decisions, we find out in history, is when leaders are not well informed and don't understand the situation.

And here we are telling the leader that the President fired the general in order to put Gen. McChrystal in charge, which is not a normal procedure, as we know, and yet he's telling that general not to send those troop estimates. Now we all know from -- thanks to the Washington Post that you quoted -- that these estimates will be around 30,000 to 40,000 troops. Everybody knows that, why not get it from Gen. McChrystal?

MR. KAGAN: Well, how do you --

SENATOR McCAIN: When I was over there recently with Senator Liebermann, Senator Graham and Senator Collins, one of many trips that I've made to Afghanistan -- we are not winning, my friends. But -- and the exact strategy, the surge as implemented in Iraq does not fit exactly with the situation in Afghanistan -- but the principles certainly apply. And Gen. Petraeus, as well as Gen. McChrystal have been major elements in the formulation of this strategy.

MR. KAGAN: Well, I think probably administration officials would argue that the President should certainly have a chance to deliberate on this very important decision, wouldn't -- you'd probably agree with that.

SENATOR McCAIN: Well, I think he should. But according to Adm. Mullen, that strategy was arrived upon back -- last March, some six months ago. And every day that goes by, if you are not pursuing a strategy for success and implementing it as quickly as possible, it puts young Americans' lives in more danger.

And, you know, it takes -- you make a decision to do something -- for example, deploy troops -- it takes a period of time before you get them over there. It's not a matter of just putting them on a plane and flying them over. There's all the equipment, all the preparations, all of the things necessary for a deployment of troops.

So even if the President made the decision tomorrow, there would be a period of time where we still don't have sufficient troops to do what's necessary there.

MR. KAGAN: Do you get the sense from what you've learned that the generals involved in this decision-making process and the military leaders feel that there's a sense of urgency at this point?

SENATOR McCAIN: Oh, there's no doubt about it. In public testimony Adm. Mullen, the Chairman of the Joint Chiefs, as I mentioned, said time is not on our side. I don't know how you can -- that's a pure military assessment. Time is not on our side. And he repeated that in questioning before the United States Senate Armed Services Committee.

MR. KAGAN: There have been other proposals put forward by colleagues of yours, Senator Levin, for instance, that there have been proposals put forward by other congressmen, congresspeople, and suggestions out there that maybe we don't need to send a lot of troops right away, we need to train up the Afghan government, we need to work on corruption in Afghanistan. What's your sense about those kinds of recommendations?

SENATOR McCAIN: I think we need to do all those things. I also think we should not and cannot ignore the lessons of history. There's one strategy that will succeed, and the resources necessary to implement that strategy.

In Iraq we -- under the Bush administration and with -- under -- Secretary of Defense then Rumsfeld -- we were going to build up the Iraqi army, and we would get out, and the Iraqi military and police would take over.

I'll never forget the chart displayed before the Armed Services Committee, and it showed the -- a line going up, pretty steep incline of numbers of Iraqi soldiers trained. And that was around 2006. Then there's a gap, and then you go back down to the bottom again. I mean, it's one of the most interesting charts I've ever seen.

What happened? The Iraqi military could not stand up, could not stand up to the Shia and Sunni extremists and insurgency, and they basically collapsed. So what did Petraeus do?

Petraeus really had a strategy that for a long period of times American soldiers and Marines lived, fought and worked and patrolled with -- hand and glove as partners with the Iraqi military and later police -- and police as well, but especially military -- so that the Iraqi military got trained up enough to have the confidence to -- and become basically what's a pretty professional military.

There are problems and there always will be, but the performance of the Iraqi military was only made possible to be an efficient military because of that long experience of working -- integral working -- with the United States Army and Marine Corps.

I've heard stories time after time of how more and more of the Iraqi military unit became proud, unit pride, being motivated, inspired by our young men and women who served with them.

MR. KAGAN: Let's talk about the politics of this. There is some probably -- there are politics involved in all these decisions --

SENATOR McCAIN: Could I just say again, in response to my friend, Senator Levin, and response to an op-ed by Les Gelb this morning, by all of these half measures -- in my view are half measures, we've seen the movie before. We tried all this before in Iraq, and they were wrong about Iraq, they were wrong.

And if they had had their way, if we had followed their advice in Iraq, we would be facing a terribly crucial situation in the Mideast today, in my view.

MR. KAGAN: Just talking about the politics of the situation, and there are obviously a lot of political issues, how do you see the -- what's your perception of the administration's reading of the politics of this situation? And after suggesting what you think it might be, perhaps you might have a different view of what the politics of the situation are, if you do.

SENATOR McCAIN: Well, first of all, I have some sympathy for the President, because his political base -- a lot of his political base, the left of the Democratic Party or the left of the American political spectrum is obviously opposed to further engagement in Afghanistan.

And we are seeing American public opinion, as is understandable as casualties go up, that they are becoming more and more disenchanted. And they may have -- at least some Americans may have forgotten that it was Afghanistan where al Qaeda really received the training in order to orchestrate the attacks on the United States of America on 9/11.

So I have some sympathy for the President. But it's a tough job, and throughout history, we have had leaders who have sometimes gone against the majority of public opinion, either in their party or the country because they were in times of crisis and they knew they had to take certain actions, whether it be -- range from Abraham Lincoln to Franklin Delano Roosevelt to Harry Truman.

Harry Truman had enormous pressures to get out of Korea and the Korean War. He knew that it would make it so that he couldn't run for reelection. And so I have sympathy for the President, but I think the President was right during the campaign and I think he was right last March when he said we have to do what's necessary to prevent Afghanistan from returning to being a base for terrorist attacks on the United States of America and our allies.

MR. KAGAN: In some of the stories discussing the politics of this issue, one picks up the sense that there's a perception of a part of some people in the administration, some people who are very close to the Obama administration on the outside, that the support that many senators like yourself, Senator Lieberman and others have given for President Obama making the sort of -- going along with Gen. McChrystal's recommendations is kind of a set up; that, you know, then if he doesn't -- then if Obama doesn't do it, people can -- people on this side can accuse him of being weak, so it's a kind of set up to say you're either all in or we're going to abandon you. What's your response to that suggestion?

SENATOR McCAIN: Well, I know that Senator Graham and Senator Liebermann, who I have worked very, very closely and traveled with a lot of individuals of great integrity and they love this country. I would remind you, there was a time when my efforts to secure the nomination in my party were viewed as doomed because of my support for the surge. It was unpopular within my own party.

And so I think the record of all three of us is pretty clear that we've put our country's interest first. And I think history also shows us, if you try to win a conflict on the cheap, if you don't develop a winning strategy and devote the resources that are necessary to that strategy, including the personnel aspect of it, then you're most likely to fail.

And it's not a question of abandoning the President, it's a question, I think, of knowing what's best for this country and standing up for it and telling the President that we understand you'll have some rocky times if he implements the strategy which he agreed to back last March. But at the same time, to do less than that wouldn't be fair to the 68,000 young men and women who are already there. We don't want to implement a strategy that wouldn't do anything but maximize their security.

MR. KAGAN: Does that mean you think that other senators, and perhaps yourself, as well, if the President chose a lesser option, I guess what Gen. McChrystal calls the high-risk options, that you would not support that?

SENATOR McCAIN: I'd have to see the option, number one. But why adopt a high-risk option if it increases the risk of failure and increases the danger to the men and women that are serving in the military? I don't think that's logical. But, again, I will be glad to listen to the President and listen to the arguments.

But I think it's pretty clear that Gen. Petraeus was a key element in this whole planning exercise and this whole development of this strategy, and I have great confidence in him as well as Gen. McChrystal.

And I did see a change over there, in all due respect to Gen. McChrystal's predecessor, and Ambassador Eikenberry's predecessor, I saw a more optimistic attitude there amongst -- from privates to generals, that they think they can succeed there.

MR. KAGAN: Well, that's where I was going next. I think it's fair to say the American public has grown very skeptical that we can possibly have anything resembling a success in Afghanistan. And not just the public, but sort of the elite foreign policy community, most people seem to write that it's impossible.

Why do you feel that it is possible, and do you think you could make a case and that the President can make a case to the American people that if they do follow Gen. McChrystal's recommendations that this has a very high probability of success?

SENATOR McCAIN: You know, after Operation Iraqi Freedom, Gen. Petraeus went back to Fort Leavenworth and rewrote the army -- the military's -- counter-insurgency doctrine. The surge was based on that doctrine. This new strategy is based on that doctrine.

I have great confidence that it can succeed. So it's, again -- I think that within a year to 18 months we could see this thing turn around. There's a lot of variables.

There's information today that the Iranians are becoming more involved in Afghanistan with supplying some arms and equipment. There is the continued instability of the Karzai government. There is the situation in Pakistan where Zardari, his popularity is very low, mainly because of the economy more than anything else.

There's also the fact that the Taliban are not popular with the Afghan people. In a poll I saw, only 18 percent of the people of Afghanistan want a return to the days of the Taliban. So all I can say is that I believe that every politician and every party looks to the next elections.

I think within a year to 18 months we could see some progress, but that progress, I'm sorry to say, is going to be purchased with an increasing amount of American blood and treasure.

MR. KAGAN: Getting back to something you said very early on, which is that the tension between the political part of the White House and the military or tension between the civilian and the military -- there's a wire report from McClatchy Washington bureau saying that people who know McChrystal well say that if he doesn't get the full -- what he thinks he needs in order to succeed in Iraq that he may well -- he might well resign.

Do you have an opinion about what a person in Gen. McChrystal's situation should do under these kinds of circumstances?

SENATOR McCAIN: You know, one thing about the military in our democracy is that they really have two choices: carry out orders or resign. Not undermine from within; not speak out. That's the nature of our government that must be preserved at all costs, civilian leadership of the military.

And it's been tested a couple of times. Gen. MacArthur was one that tested that. In history we -- I mean, with perspective of history, we see that President Truman's firing of MacArthur was an act of great courage, which maybe even we fail to appreciate today.

I don't think that right now Gen. McChrystal is contemplating resignation or non-resignation. He's got his hands full: he's working 20 hours a day, literally 20 hours a day. He's all over that country. He's working to inspire and to lead the men and women who are serving there.

So I don't think he's considering whether to resign or not. I think he's trying to implement the strategy which was formulated in March, and I think he needs additional resources, including troop levels, to achieve it.

MR. KAGAN: When the Iraq surge was just beginning, and there was still a lot of uncertainty about whether to support it in Congress in 2007, Gen. Petraeus made a trip to Congress and did some testifying which by most accounts had a lot to do with persuading Congress.

We haven't seen Gen. McChrystal or Gen. Petraeus, who is his commander, talk about their plan that we've now read about in the Washington Post, or at least read the assessment. Do you think it would be appropriate for them to get a chance to testify before your committee?

SENATOR McCAIN: If there was any reluctance to have them testify, that should have been removed by now, the widespread depiction of the strategy throughout the media. So I think it's very important that Gen. Petraeus and Gen. McChrystal come back and testify. I thought Adm. Mullen's testimony the week before last was excellent and very helpful.

So I hope they'll be brought back. Senator Levin's first reaction has been negative to do so, but we'll see if we can't -- do what we can to see that that will happen.

MR. KAGAN: Do you perceive that the administration is resistant to having Gen. McChrystal testify about his proposals?

SENATOR MCCAIN: I don't know what their position is on that. The Congress has a role to play, and it's a very well-established role, and one that I think requires us to be informed on the strategies -- not only with the strategies but also the overall situation there.

By the way, could I just say, I don't think that Gen. Petraeus is perfect, but I don't think I've met quite as an impressive a military leader, and I have had the honor -- I don't think I've met a more impressive military leader than Gen. Petraeus, and I've had the opportunity to meet some great leaders. It's a combination of charisma and intellect that is very rare anywhere, much less in the military.

MR. KAGAN: One final question on the Afghanistan subject, and we can move on to something else. In the Politico today, I think it was a Ben Smith article, said the great game in Washington right now is trying to figure out who leaked that assessment to Bob Woodward. Do you care to speculate for us as to how something like that winds-up in the press, big report by the general?

SENATOR McCAIN: And it's a wonderful town, and it's a great place to live. (Laughter.) You know, Harry Truman, if you want a friend, go out and buy a dog.

MR. KAGAN: Okay.

SENATOR McCAIN: But I think -- I think it's very clear that Mr. Woodward was allowed into at least one meeting which he reported on, where Gen. Jones, the National Security Advisor, was meeting with military leadership in Afghanistan, and it was reported that one of the generals -- I believe it was Gen. Nicholson, said we're light on troops, and he reported the exchange verbatim. So it's not astonishing to me that Mr. Woodward would have gotten a hold of additional information.

MR. KAGAN: Okay. There was another big decision -- well, there was a decision that was actually made this past week about the missile defense deployment in Eastern -- in Poland and the Czech Republic. There's been a lot of back and forth about what's the better system, but as I'm sure you know, at least in Poland and Czech Republic, the headlines in the newspapers generally say we're sold out to the Russians.

Do you have a view on this decision and the general policy that the administration took on this issue?

SENATOR McCAIN: I think the decision was maybe technically correct. Although Eric Edelman, who was in charge of this aspect – responsibility-- in the Defense Department, said something must have drastically changed. But suppose that intelligence information tells us that their intercontinental ballistic missiles -- the Iranian intercontinental ballistic missile is not what we had supposed that or predicted that it might be.

Still, the handling of this issue is very harmful. It's very harmful to our relations with our Eastern European friends. It sends a signal at least to them, either rightly or wrongly, that we are attempting to get concessions from the Russians that regard the Iranian whole nuclear issue. It, I think, makes it pretty clear that the consultation process between our countries -- Czech Republic and Poland and the United States -- is more of one of one-way rather than -- I mean, when you call the Polish -- I guess it was the Polish foreign minister at midnight to tell him of a story that's already broken, I'm not sure -- I don't think is the right way to do it.

I also wonder what effect in the long term this has on the Russians. Of course they're pleased that we will now be acceding to their strongly-expressed desires to not proceed with this defensive missile system, but then does this encourage the Russians or does it make them more cooperative on the issue of Iran?

History shows us that unless there is some explicit quid pro quo in these things, generally speaking, it only encourages further demands. We will find out in the coming weeks and months. I am very skeptical.

MR. KAGAN: Yesterday at lunch, Governor Romney -- you had the privilege of competing with last year and know well -- raised a question as to whether it was becoming more dangerous to be an ally than a friend of the United States., And he pointed to this Eastern European decision, he pointed to relations with Israel right now, he pointed to relations with Colombia vis a vis Venezuela, Honduras and a number of other issues.

I wonder whether you have any thoughts on that subject?

SENATOR McCAIN: Let me just talk about Russia for a second. Both Prime Minister Putin and President Medvedev have made very strong statements about the near abroad. Russia clearly, whether it was provoked or not, invaded Georgia and has not agreed -- not been compliant with the cease fire that was brokered by Sarkozy. And they have even been more threatening recently about ships off of Abkhazia.

The Georgian leadership is very worried about further aggression on the part of the Russians into Georgia, particularly since they seem to have been able to get away with noncompliance with the cease-fire agreement.

The Russians continue to make aggressive statements about Ukraine and attempts to meddle in their politics. And, of course, that's been enabled by a chaotic political situation within Ukraine as well. The Poles -- and by the way, this announcement was made -- it's almost like misspelling the reset button -- it was made on the 70th anniversary of the Russian invasion of Poland in 1939. I'm not making it up.

So I worry about the Russian -- not restoration of the Cold War or reigniting of it -- but I worry about continued Russian behavior in the region in their efforts to restore their "near abroad," what they keep propounding as their legitimate position in that part of the world.

As far as our hemisphere is concerned, Mr. Chavez becomes more and more belligerent and now is supposedly going to buy a lot of stuff from the Russians, military equipment from the Russians.

The Honduras situation is now still unresolved, obviously, with the former President -- or President -- in the Brazilian embassy in the Honduran capital. There is rising populism throughout our hemisphere.

And frankly, if I could just -- because this is -- we could talk about this for a long period of time, I worry about trade as much as anything else, because we have pending trade agreements between Colombia and Peru -- Panama, and we seem to be punishing the Colombians for their cooperation. And I believe Uribe has fought a heroic fight against the drug cartels. Look at where Colombia was when he became the President and look at the significant gains that have been made.

So I worry about a rise in protectionism, I worry about alienating our friends, and I worry about this populist movement, some of which is justified in countries in our own hemisphere, which are probably not in the long-run in the United States' national security interests.

We live in most interesting times, Bob. I cannot recall a time in our history where I think we were faced with as many challenges. The Cold War was obviously a consuming challenge, but there was a certain simplicity associated with it.

These challenges, ranging from the rise of China to the areas that we have touched upon, make it probably more difficult and complex then at most any time certainly in modern history.

MR. KAGAN: Well, people look at those challenges and they say, look, America is -- just the reality, America is in decline. I once had a conversation with a supporter of President Obama who said, you know, one of the things he liked about Obama was that he would do a better job of managing decline than you would have, for instance. This was during the campaign.

And I know that there are those in the administration -- President Obama was reading the Post-American World during the campaign, and there were those in the administration who think that it is the job of the United States to manage decline right now. Do you have a view on that whole issue?

SENATOR McCAIN: I have a strong view that there have been times in our history where we have faced enormous challenges, and there are those who believe that we were in decline, probably the Great Depression was one period. When former President Jimmy Carter told the country that we suffer from a national “malaise” was another time where the pessimists about our future seemed to have at least a significant voice in America.

I don't believe that. I believe that we will, we will maintain our position as a predominate power in the world. I think it's reality that China is becoming an economic power in the world, a superpower, and the direction which they are headed is impossible in many respects -- certainly opaque.

Very quickly, in China -- a recent visit I made to China, I had a meeting with the Chinese defense minister and then breakfast with the Chinese foreign minister. There couldn't have been two more starkly different views of China's role in the world and most every other issue. I think that's symptomatic of the debate that's going on within the Chinese ruling elite.

So I think that there's no doubt that China is a rising superpower. I think that one of the historic facts is that there's a significant shift of the world's economy from the West to Asia. I think that there are new and unique challenges.

Certainly if we'd been having this conversation in 1991, we wouldn't have predicted the threat of radical Islamic extremism to the degree that it is there today. But we're the most resilient, we're the most productive, the most professional military, the most innovative nation, and frankly I still believe that we have a moral standing -- despite what others may say -- for a long, long period of time that naturally over time attracts people to the principles that we share and value.

MR. KAGAN: Okay, one final question on Iran, which you brought up earlier. There are apparently going to be some talks on October 1st, there's going to be meetings perhaps on the side of the U.N. General Assembly. How do you evaluate where the administration is on its Iran policy right now?

SENATOR McCAIN: I think the administration is doing what President Obama said he would do during the campaign, and certainly I think he deserves credit for that. I think it really upset a lot of their plans when the people rose up and were beaten and oppressed in the streets of Tehran and other cities in Iran as a result of a flawed and corrupted election. And I am convinced that the day that millions and millions of people in the world saw this young woman named Neda bleed to death in the street in Tehran that that was the end of this regime. Now, I don't know how soon that will be, but I do not believe that the Iranian people will sit still for this kind of radical Islamic leadership of their country. I would be very curious how the conversation goes when the President or our Secretary of State and/or our Secretary of State says, we want to talk about nuclear weapons, and Ahmadinejad says: I'm not going to talk about them; I told you I wasn't going to talk about them. What's the next subject? I'll be very interested.

I hope we achieve progress. I hope they will change. I hope they will agree to comply with their commitments and solemn treaties. But, Bob, I'm not sure, because I think that this latest news about their activities in Afghanistan, Maliki is convinced that they continue to try to disrupt the situation in Iraq, and I think they are trying to restore their position of Persian hegemony in the region as they believe is their thousands-year old ambitions.

MR. KAGAN: And since you raised the issue of the elections and the aftermath of the elections, how do you feel that the Obama administration has handled the internal aspect of Iran?

SENATOR McCAIN: You know, the thing we've stood for -- America has stood for -- and I know it sounds idealistic, and I freely confess to being an idealist -- but we stood for democracy and freedom at times when skeptics and "realists" and others said, no, no, you want to have better relations with these countries, you want to have -- at one time it was called detente, and I'm sure that there is great validity.

And human rights and democracy and freedom are not our only value that we treasure, but human rights and democracy has got to be a fundamental pillar of America. We are -- we continue this tension between real politic and Wilsonian principles, and some times it swings one way and swings sometimes to the other, but our Wilsonian principles are always there. They were always there. It's articulated in our most noble document about all of us being endowed with certain inalienable rights. We said "all."

So I know that I'm an idealist, but I think as long as we stand up for human rights with the understanding that that's not our only principle and guiding philosophy but it is one of them, then I think we will succeed in the world in bringing democracy and freedom over time. (Applause.) If we abandon those principles, then I think we betray what has guided us for our long and wonderful history.

MR. KAGAN: So in your view, is the Obama administration standing up for human rights?

SENATOR McCAIN: I'd like to see it more. I don't think that the Secretary of State on her first visit to China said we're not going to talk about human rights. We should talk about human rights. I think that there is sometimes the perception out there that we're not doing enough. This is early in this administration, and so I'd like to give them the benefit of the doubt, because I know that President Obama is a highly principled man who believes in these freedoms with a passion that is remarkable.

MR. KAGAN: Okay, well, I'm sure we have an audience eager to ask questions, and we could start taking them right now.

A PARTICIPANT: I note your point about trade policy and its significance for foreign policy. Do you think it's politically feasible in the current environment to pursue these sorts of trade agreements with Colombia and Panama and whatnot?

SENATOR McCAIN: To do what?

MR. KAGAN: Is it possible in the present environment to proceed with the free trade agreements with Colombia and Panama?

SENATOR McCAIN: I think we -- it would be vital that we do so, but also I understand in hard economic times you see a rise in protectionism, and that's natural and understandable. I strongly disagree with these latest tariffs on the inexpensive tires.

But I also disagreed with President Bush's decision on steel. And I also understand that there are times where there are abuses of trade. That's why we have the WTO mechanism, and it's fine with me if we do that from time to time. But if we don't ratify these agreements -- and by the way, I count the South Korea free trade agreement along with that -- then we are going to probably move backwards. You either move forward or backward. Nothing is ever static in these kinds of issues. And I think it's a serious mistake for us not to move forward with these free trade agreements.

And in the case of the Colombian one -- and I'm sorry I'm over-answering your question -- thanks to the Andean trade preferences and other agreements negotiated by former President Clinton, we now -- our goods -- have tariffs laid on them that go into Colombia to the tune of over a billion dollars now, is my information, but Colombian goods that come into the United States are free of tariff. So we have an unlevel playing field there.

It would argue that at least we would level the playing field. And again, that more importantly than that, the signal we send about whether we will reward the Colombians for their efforts to stem the flow of drugs, whose -- most of which destination is in the United States of America, I think is also a compelling argument.

And by the way, the Panamanians have cleaned up. They're not perfect, but they have reduced dramatically a lot of the money laundering and a lot of other activities that used to take place in a more common way than it does today.

A PARTICIPANT: Senator McCain, if you look at the sanctions we imposed in Iraq in the 1990s, without a doubt they weakened Saddam's ability to project his power and diminished his military capacity. But some would also argue that they had some perverse effects, most notably in endangering Iraqi civilian lives and increasing American -- anti-American -- sentiment in the country, and even increasing Saddam's internal hold on the regime.

Moving forward to Iran, how do we make sure -- if we have to use sanctions or stronger sanctions -- how are they smart sanctions that weaken the regime alone but don't damage and divide the current democratic movement that we have in Iran right now? Thank you.

SENATOR McCAIN: This is a very tough issue, how to treat Iran. And if -- and I emphasize if -- the President's efforts fail at convincing the Iranians to reverse the course they're on towards the acquisition of nuclear weapons, then it seems to me that sanctions are the next step. And one of those sanctions is the ban of refined gasoline into Iran.

And there's -- I don't mean to insult your intelligence by reminding you that there's great urgency to this issue. I don't know what the Israelis will do. I do not -- I have had many conversations with the Israeli leadership on many occasions, but I cannot predict what the Israelis will do.

But I think if we put ourselves in the position of the Israelis, then the military option is one, as was said as recently as yesterday by one of the Israeli leaders, that would be on the table. An Israeli attack on Iranian nuclear facilities would lead to a degree of chaos in the region which I can't predict the outcome.

But I can predict that it would arouse the entire Middle Eastern population. It would also probably motivate other countries in the region to acquire nuclear weapons as well. In other words, I see no good scenario resulting from an Israeli attack. So it lends some urgency to our effort to dissuade the Iranians, which right now is extremely difficult proposition.

MR. KAGAN: We have time, I'm afraid, for just one more question. This lady right here.

SENATOR McCAIN: Last week's cancellation of the third site, The New York Times reported, was just part of the administration's larger strategy to disarm the United States. Looking forward to START negotiations, what is your position -- and CTBT -- what are your positions on those, and will you support or defend further cuts to the missile defense budget in the future?

SENATOR McCAIN: I would. I think it has to be reciprocal, and obviously any effort that we can make to reduce and eventually eliminate nuclear weapons obviously I'm in favor of. If there's ever an example of the devil is in the details, it is this issue. It's mind numbing some of the details of this. I invariably dose off after an hour or two of listening to the complexities of the. I'm obviously joking, but it's incredibly complex.

But I also would argue that the proliferation of nuclear weapons and weapons of mass destruction is probably the most compelling issue that we face today. I think it's pretty clear that A.Q. Khan and network with North Korea, even Syria, Iran and other countries, has led to rapid advances in the technology made available to some of these countries. That is disturbing.

I can't see a scenario where there would be a nuclear exchange for -- between the United States and Russia. There may be one, but I don't know of one. But I can certainly see a scenario where the Iranians might provide a terrorist organization with a nuclear weapon which would then be used to attack Israel.

I can see a scenario where some of these rogue nations, if they had the capability, would orchestrate attacks -- would commit attacks on their neighbors or actually on the United States of America if they were capable of doing so.

And now that we have stateless terrorist organizations, our options are much different and much more limited than they were in the days when we saw the enemy as a state that had nuclear weapons. So the complexities of the entire nuclear issue, in all due respect to START, is a -- are very, very difficult and one that I think will absorb a great deal of our attention in the future as this technology continues to spread throughout the world. And obviously it's a great concern to all of us.

MR. KAGAN: Well, thank you, Senator McCain, for sharing your time with us. We really are grateful for you.

SENATOR McCAIN: Thank you.

(Applause.)