Sunday 24th July, 2011

Q+A interview with John Key.

PM won’t rule out reform of Pharmac as part of Trans-Pacific Partnership negotiations: will only do deal “in New Zealand’s best interests” but “everybody puts everything on the table”

Trade and TPP “the critical part” of the US-NZ relationship

Israeli spy claims: Key admits he didn’t “get it perfectly right… the impression I left wasn’t sustainable”

Goff was briefed on investigation by SIS chief, but other party leaders on Intelligence Committee not told because they don’t have sufficient security clearance

Spy file now closed: “was just a little odd the way they [Israelis] left the country”, but PM certain they have “absolutely no links” to spying

PM “not sure” if US coastguard vessels falls under Presidential Directive, despite having made visit invitation

National Party PM says nuclear-free law is “part of who we are” and “New Zealand was right to do what it did then”

US hasn’t asked for SAS to be deployed elsewhere after mission in Afghanistan is completed

SAS to come home on time as they need to “re-group and have some time back in New Zealand”

Sending the SAS back to Afghanistan: “Made it with my eyes open… and I’m pleased we made that decision”

New Zealand won’t “abandon ship” in Afghanistan. “We’ve got to see it through”

US invasion done with “the right intention”, but America is in “a very different position” economically than ten years ago

The interviews have all been transcribed below. The full length video interviews and panel discussions from this morning’s Q+A can be watched on tvnz.co.nz at, http://tvnz.co.nz/q-and-a-news

Q+A, 9-10am Sundays on TV ONE. Repeats at 9.10pm Sundays, 10.10am and 2.10pm Mondays on TVNZ 7

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JOHN KEY interviewed by GUYON ESPINER

PAUL This week, you will know, Prime Minister John Key met with Washington’s most powerful people, culminating in half an hour with President Barack Obama himself. He opened doors with a final confirmation that the two countries have got around what’s been called ‘the block in the road’ – New Zealand’s nuclear-free legislation – and committed to a new partnership, which is all well and good, but does it bind us, this friendship, to America’s wars and is it going to cost us Pharmac? In his first interview after the Oval Office meeting, John Key spoke to Guyon Espiner about those issues and the claims this week that Israeli spies were again at work collecting identities in New Zealand.
GUYON You spent considerable time on this visit talking about Afghanistan and, indeed, spoke with President Obama about that issue. Do you categorise his thinking of wanting to get out of there as quickly as possible, or is it more of a slower draw-down, do you think?
JOHN KEY – Prime Minister
Well, I think the way you categorise it is they do think they’re making progress. I mean, that’s one of the things that came through in the Defence Department is that they do think that they are getting e traction, but they don’t underestimate the size of the challenge. And I think everybody ultimately wants to leave Afghanistan, but we want to leave it in a condition where it’s not a safe haven for the likes of Al Qaeda. We’ve all invested far too much time, and a lot of people have lost their lives there, and I think we owe it to those people who have served so gallantly there that we don’t actually abandon ship. And from New Zealand’s point of view, we’ve got to see that through.

GUYON So you didn’t sense an accelerated momentum to get out of there?

JOHN No. I mean, I think there’s a recognition that, you know, it’s a place that’s cost a lot of money and it’s cost an awful lot of lives. But on the other side of the coin, you go back to the very reason why they were there in the first place, and that was Al Qaeda and Osama bin Laden, and I think you can see by the amount of store they put into the fact that they finally killed Osama bin Laden that that’s been a very important part of the story here.

GUYON You mention a lot of money. It’s about US$443 billion from the figures that I’ve got. Has it been worth it?

JOHN Well, I don’t know. I mean, in the end, you know, it’s not for me to sort of second-guess whether they did the right thing or the wrong thing from a financial perspective. I think they did it with the right intention, which was, you know, in the end, 9-11 was, you know, a tragedy for everybody, and the US knew they had to deal with that situation and that they just couldn’t afford to have a failed state like Afghanistan there, and so they’ve gone and taken some leadership there. But, look, what we know is this is the United States – it’s now in a very different position than it was when it first went into Afghanistan.

GUYON You mean economically?

JOHN Oh, economically very different.

GUYON That’s going to curtail it how?

JOHN What I think – if you just read the papers, I mean, and just see the sorts of stories that are coming out, it’s quite clear that they’re bumping up against their debt ceiling. They’ve got 10 days now to meet their target and come with a solution. But, you know, ultimately the United States is going to cut expenditure. That’s been made quite clear, and so one of those areas is defence, which you see talked about in the media constantly now. What that means, I don’t know, but it’s pretty— it’s been a very expensive war for them.

GUYON You have mentioned that you have no expectation that the SAS will stay in Afghanistan any longer than March, which was the departure date. Has there been any suggestion, either in your own administration or from sounding or suggestions raised by government officials here in the United States, that New Zealand could play a military role anywhere else? Look at Libya or somewhere else in the Middle East. Has that been raised at all?

JOHN No, that’s never been raised. I mean, what comes through constantly is they’re really appreciative of the role we’ve played and they see it as a serious commitment. One of the things that’s come through quite clearly is the SAS are seen what they are – an elite and world class fighting forces that’s played a critical role in mentoring the CRU – the Crisis Response Unit – and allowing for the transition. I mean, that’s where the objective here is – it’s to put rule back into the people— the hands of the people of Afghanistan and allow them to be able to manage that.

GUYON I guess if you strip my question down and perhaps ask it provocatively, they’re not guns for hire, though. You’re going to have to be satisfied that New Zealand’s interests are at heart.

JOHN Absolutely. Look, I made that decision to send the SAS back to Afghanistan. I made it with my eyes open, and I made it very clearly and deliberately, and it was because I believed that New Zealand had to demonstrate that it was taking its responsibilities seriously as it came to being global citizens. And I’m pleased we made that decision, because I think we really have made a difference there, but the time for our men to be serving in Afghanistan in terms of the SAS has to come to an end because at one point, they’re only a small unit, and they need to regroup and need to have some time back in New Zealand.

GUYON Perhaps one of the surprises on your visit was this invitation for a US Coastguard vessel to visit New Zealand. That surprised the US, I understand, that you had given them some advance warning of the marines’ invitation, but they didn’t know, did they, about the Coastguard.

JOHN I wouldn’t put directly in those terms.

GUYON Well, did they?

JOHN Oh, well, it depends who you talk to, but, I mean, the way I would look at it—

GUYON You would know, though.

JOHN Yeah, well, you know, I’m not going to categorise each and every meeting. All I can say there is that we put those things on the table for good reasons, and when we come to town as leaders to have discussions with our various counterparts, and, you know, if you don’t put things on the table, then you don’t make progress.

GUYON What were those reasons?

JOHN Oh, look, I think, you know, in this case it’s largely symbolic, but I think in the long term, you know, it’s just another demonstration that the relationship continues to go from strength to strength. I mean, it’s not the critical part of the relationship. That is trade and TPP. It’s the role of the economy—

GUYON Sure, but I just wonder whether you’re testing the waters both literally and figuratively there in that you know that it could cause them some discomfort because they ban certain vessels. Well, they don’t ban certain vessels, but the arrangement that we have both with our legislation in New Zealand and the way that they operate their military under their presidential directive means that certain vessels won’t be coming into New Zealand, so—

JOHN Well, the Coastguard wouldn’t fall in that category. No one’s questioning that the Coastguard would be nuclear-powered.

GUYON Are you sure that the Coastguard doesn’t fall under the presidential directive, though.

JOHN Well, I can’t be sure of that, but all I can say to you is that we didn’t ask for a response in that area. We put it on the table. I’m glad that we have. I mean, progress might not be made in day one or day two, and if it never happens, well, that doesn’t make any real difference, but this is a relationship that’s going from strength to strength, and we do things and we’re making progress. And, you know, in the end, that’s why leaders come to town. I mean, otherwise everything would be debated by officials, and it would operate at glacial speed, with all due respect.

GUYON We’ve seen the greater degree of cooperation, and you talked about those small symbolic steps. Isn’t the anti-nuclear legislation now a bit of a relic? Isn’t it a bit ridiculous?

JOHN I don’t think so. I think for New Zealanders it’s part of who we are and what we are, and, you know, I don’t think we need to spend any time debating that. I think, you know, in the end, this relationship with the United States is a mature relationship. It’s steeped in history and underpinned by shared values and principles. And at the end of the day, we spend our life arguing about something that, you know, we signed off on 25 years ago. I think New Zealand was right to do what it did then, and I’m not going to debate the merits or otherwise on the US side. In the end, that’s not the important point. The important point is that, you know, as two countries, we’re working together on the big issues and the world is becoming a smaller place, not a bigger place. And what the United States know – that in New Zealand not only do they have a good friend, they know they’ve got someone they can rely on and someone that they form a strategic partnership with in a part of the world that they’re very interested in now. I mean, all eyes are turning on Asia and the Pacific. It’s not just New Zealand that’s looking in that direction. The United States is as well. And it’s reciprocal. I mean, we know that we can rely on the United States. We have a relationship with them that is quite different from almost any others than those that you would logically think of, like Australia and the UK and Canada.

GUYON One of the issues that’s come in from the sidelines, I guess, on this trip was the accusations of Israeli spying in Christchurch. One of the things that I don’t think we have asked you is why or if you raised this with the parliamentary select committee which looks at intelligence issues.

JOHN I certainly haven’t raised it with the parliamentary select committee.

GUYON Why was that?

JOHN Well, because that committee hasn’t met for that purpose. That’s not the— We wouldn’t share that level of information. Not all of those members will have that level of security clearance for that sort of thing. I mean, that committee meets and debates legislation. Now, there may be members of that committee that have understanding in that area, but certainly not the committee.

GUYON Did you brief Phil Goff?

JOHN Phil Goff was briefed, yeah, that’s right. I personally didn’t brief him, but my understanding from the director of SIS, Warren Tucker, is that he was briefed and he was shown the same note and report that I saw.

GUYON Is the file closed?

JOHN Yeah. It closed on— I probably won’t tell you the day, but it’s closed.

GUYON How seriously do you regard the leak to the media?

JOHN Well, look, it’s very, very hard to know whether that is genuinely a SIS agent. There were things that were written in that newspaper report that are just factually incorrect. And so, you know, unless somebody is deliberately putting that information there to try and hide their tracks, then we don’t know that it’s really an SIS agent. I mean, at the end of the day, I think that we did the right thing from a New Zealand perspective. We had to take their actions seriously because, you know, it was just a little odd in the way that they left the country and the way that, you know, journalists and others got excited by the issue and said it was worthy of examination. We did the same thing as well. At the end of the day, we found absolutely no links whatsoever that they were anything other than what they portrayed themselves to be. And there’s a lot of sort of misinformation that’s been put into the public debate. People have criticised me for not immediately—

GUYON What I was going to ask you about that – do you accept that you made a mistake then?

JOHN Look, I tell you what the challenge is here, and it comes with the territory, and that is that we have a lot of things that we deal with which are sensitive in nature. And the standard position from pretty much every prime minister has been that we don’t comment on issues of national security. Once we start doing that, we compromise the very people that might undertake that work, we compromise lots of different things. Now, you know, that’s fair enough, and so we’ve had situations where we have talked about things, like Helen Clark talking about the passport scandal that took place with the Israelis. That was a genuine proven case. I mean, this was a scenario where, actually, people did have a look. Our SIS and police did look into the situation and found nothing. So, look, at the end of the day, I mean, I realised by the morning, you know, the impression that I had left wasn’t sustainable. If I replayed the video and did it all again I’d probably start where I ended six hours later, but it comes with the territory. Sometimes you don’t get it perfectly right in the first moment.

GUYON Just a couple of minutes left. Can we finish with the Trans-Pacific Partnership? One of the concerns back home is about Pharmac and about whether the price of pharmaceuticals and medicines will increase. We met with some of the people who are representing some big businesses in this town in Washington and some pharmaceutical companies. They’re pushing those intellectual-property issues pretty hard. Do you expect that those will be finally part of the Trans-Pacific Partnership and that could lead to higher drug prices in New Zealand?

JOHN Well, the starting position I’ve always taken – it’s the same one that the Minister of Trade is taking – is we don’t sign up to agreements unless we think it’s in New Zealand’s best interests. Now, that’s always a component series of parts that come together. You know, the sum of the parts is hopefully greater than the individual pieces. So, yeah, of course we have to go and negotiate different aspects, but when it comes to the TPP, Pharmac hasn’t been the issue that everyone’s been pushing. Intellectual property is an issue of concern, and that’s because this is a knowledge-based economy, not a manufacturing-based economy. It creates knowledge.

GUYON Did you have specific conversations on this, say, with [US Trade Representative] Ron Kirk and other officials, and say, ‘Hey, look, you know, we’re not trading too much away on Pharmac.’

JOHN It wasn’t really like that with Ron Kirk. I mean, we had a really good discussion with him and there genuinely is forward momentum there. They want to make progress. We’re working our way through the issues

GUYON You can’t rule out changes to Pharmac, though, can you?

JOHN Well, look, by definition we’re in the middle of the negotiation and so, you know, I can’t run those negotiations through the media. What I would say is, you know, I’m increasingly confident that we will get a deal done, but it’s not without its challenges. That means everybody puts everything on the table and starts negotiating our way through, but in the end, we’re going to do what’s in the best interests of New Zealand. It’s my view that Pharmac works extremely well. So we didn’t get into the weeds into the particular issues, but we did speak of wanting to complete a deal. And, you know, I think New Zealanders can take a lot of confidence from the fact that we have some incredibly skilled negotiators, they know what they doing and Tim Groser, the Minister of Trade, has had probably the most experience at being the minister of trade we’ve had, so I’m confident we’re going to come out the other end with a deal that’s good for New Zealand.

Q+A interview with US Congressman, Rick Larsen.
US congressman wants resumption of US ship visits to New Zealand
Invited to visit NZ military ship, but would have had to have been taken out to sea as NZ military not allowed to dock in US military installations: “that seems kind of ridiculous”
Pharmac: Better for global economy if high intellectual property rights are set, even if “in New Zealand’s case that might be a detriment”
US dairy have “very strong concern” about trade deal and see Fonterra as a monopoly
TPP supporters need to “change their prism” and demonstrate to US dairy the advantages of new markets, more Asia-Pacific free trade
New Zealand and US “more interconnected” by “common interests” in global economy and through “partnership on national security issues”
New Zealand plays important “soft power role” in Asia-Pacific as “democratic example” and “plays an important role in a lot of national security issues that are important to the US”
Larsen believes US politicians need to separate debt ceiling debate from need to cut spending – avoid default first, then worry about deficit

GUYON ESPINER INTERVIEWS RICK LARSEN

PAUL We already do a lot of trade with the United States. The United States is New Zealand’s third largest trading partner, with trade worth more than $7.5 billion. We send about $7 billion worth of stuff to the United States. Earlier John Key was talking about the Trans-Pacific Partnership agreement, which would include a free-trade agreement with the United States as the critical part of relations between the two countries, so what is the view of the other side of the negotiating table? Rick Larsen is a democrat congressman from Washington State, and he’s co-chair of the Friends of New Zealand Congressional Caucus, and he sat down exclusively with Q+A.
GUYON Well, Congressman, thank you very much for joining us. We appreciate your time.

RICK LARSEN – Congressman (D-WA)
My pleasure. Thanks.

GUYON The relationship between New Zealand and the United States is almost unrecognisable from what it was a couple of decades ago. Things are considerably warmer. What do you believe are the major elements behind that change?

RICK Well, I think when Secretary Clinton signed the Wellington Declaration and we made that happen with our New Zealand partners, I think it was a recognition that things have changed. And we had looked at the relationship over the last two decades. A lot has changed, not just in the world, but between the US and New Zealand. I think a big driver is the economy has become more interconnected globally and the recognition that the US and New Zealand have some common interests there. I think a second is New Zealand’s continued partnership on national security issues, especially, you know, New Zealand’s efforts and defence forces in Afghanistan and partnering with the US and international community. So you look at those two issues, and you kind of begin— we all began to see that things have changed in the last few decades; we need to maybe ensconce that in a document so we can move forward from there.

GUYON Because the thing that we were moving forward was the standoff over the nuclear-powered ships. Was that policy ever really understood, or was it greeted with bemusement in America? Because we’re talking about nuclear-powered ships entering New Zealand waters. I mean, was that actually ever understood?

RICK I think at the time it was maybe more understood, but in 2008, 9, 10, 11, you wouldn’t find most, if any, Americans even recognise that this is a problem.

GUYON Is it a problem for politicians in America?

RICK I think it’s more of an issue for our military. For our military, you know, we certainly believe in freedom of the seas. We certainly believe that as well that regardless of the power that the ship is under that we ought to have an opportunity to be able to visit ports. And having that policy in place from New Zealand’s perspective really sets that side. And I think that’s something that our military continues to be very wary of. But, again, I think what we’re able to do to the Wellington Declaration is just say, ‘There are too many other things we need to work on. Let’s set that one aside and consider it a difference, and let’s put in place the things that we agree on and move forward on those things.’ I think that’s probably where we’re heading.

GUYON Do you think there’ll ever be a time when we do see US ships come back into New Zealand waters?

RICK As a member of Congress representing the Washington State second congressional district, I do believe there will be a time. I would like to see that happen. I had an opportunity – I wasn’t able to take it because I was in Washington DC boating – had an opportunity afforded to me to visit and travel on one of New Zealand’s ships on the last year, but I was in DC, so I wasn’t able to make that trip out to my district and connect with the ship. But my point was I could do that. I’m a member of Congress, a representative of our government, and I’d be allowed to visit on this New Zealand ship. We would not allow it to come into a US military installation, a naval port, to pick me up. I’d have to go out to it. That seems kind of ridiculous, and it just seems that there ought to be a way for everyone to get over this.

GUYON What gives you confidence? Just because it’s a bit absurd?
RICK That’s largely it. That’s largely it.

GUYON And you have greater confidence in our two peoples to work that out?

RICK I do. I do.

GUYON Do you think that, though, really we’re allies in all but name now? You mentioned Afghanistan. New Zealand has had a presence there for a decade or more now. And do you see that military alliance deepening and strengthening?

RICK I do. New Zealand plays an important role. As small of a country as it is, it plays an important role in a lot of national security issues that are important in the United States. It’s not just the role they’ve been playing in Afghanistan, and that’s important to the US and important to the international community, but it’s also the soft power role that New Zealand can play as a democracy in the Asia-Pacific region with other democracies to just be an example to other countries that are moving towards stronger democratic principles, or to countries that have no intention of moving to democratic principles, knowing full well that there are countries in the region who are standing by democracy. And New Zealand plays that soft power role as well. There are other issues in counter-terrorism, counter-proliferation, climate change – they’re all very important to the US-New Zealand relationship.

GUYON There are many issues and commonalities. Can we move to trade, though? You’ve expressed concerns in some of the material that I’ve read about New Zealand access to the dairy market here, I guess, and agricultural goods coming in. You see that as a bit of a threat under a Trans-Pacific Partnership type of arrangement?

RICK Threat’s a real strong word. I wouldn’t call it a threat. But the point I’m trying to make, and I think it’s all pretty clear in the relationship between us and New Zealand is the US dairy industry and the district community has very strong concern about New Zealand dairy access to the US market.

GUYON Why?

RICK I think because of the concerns US dairy has about how New Zealand dairy is supported. There are concerns about that and that would give New Zealand dairy a competitive advantage.

GUYON Because you see Fonterra as a monopoly? Is that what you mean?

RICK The US dairy community sees it that way, and so what I’m trying to do here is reflect what the US dairy community is saying. And as a member of Congress in the United States, I have to try to reflect those concerns, but as well, I think that the flip side is that a successful trans-Pacific partnership opens up markets that are currently not so open to US dairy as well. And I think the US dairy committee could maybe change their prism a little bit and see the numbers of consumers that would become available to them. And, frankly, with, you know, not trying to offend the New Zealand dairy community, I just don’t think the New Zealand dairy committee could supply that market like the US dairy community could.

GUYON No, not at all. So you’ve got a nine-country negotiation on a trans-Pacific partnership. You’ve got massive markets potentially opening up for US dairy producers as well. Do you think you can convince them, or do you think that the argument will go that way that they see that there’s more in it for them to gain than there is for them to lose?

RICK It’s all part of the negotiation, and I tell my sons and I tell my staff, ‘Don’t try to convince anybody of anything. Try to demonstrate the value of something to them.’ Try to explain to them how if you do something that’s going to help them, and I think that’s why we need to work on this negotiation on the dairy issue.

GUYON Just before I leave the Trans-Pacific Partnership, there are concerns in New Zealand also about whether our drug-buying agency, Pharmac, is going to have reduced power under any such agreement, and I know there are concerns on the US side from some of the big pharmaceutical companies that their intellectual-property rights aren’t being respected or given enough strength in some countries. What’s your view on that?

RICK Yeah, I’ve signed a letter along with several other members of the US House of Representatives to the President urging in these negotiations that we set high standards for everything, including intellectual property. We think that everybody benefits if there are high standards in the Trans-Pacific Partnership. When people talk about having a 21st-century agreement, I always push back on folks and say, ‘That’s a nice slogan, but what do we mean by that?’ And I think what we ought to mean by a 21st-century agreement is that this has high standards. High standards means high standards for everything, including intellectual property, and I think that’s where we’re going to find where most members of the US House of Representatives are.

GUYON That’s really tough, though, isn’t it, politically, because it could mean our health system in New Zealand paying higher prices for drugs. Is that just part of the ebb and flow of a trade agreement?

RICK I would never suggest that’s just part of the ebb and flow of any trade agreement in that the New Zealand health system has to take it. I’m not saying that. What I’m saying is that it’s a better deal for the global economy if we set higher standards for intellectual-property rights for a lot of reasons. Now, in New Zealand’s case, that might be a detriment, but there’s a bigger reason to have higher IP standards in place, because of other countries in the Trans-Pacific Partnership and other countries that maybe want to come in later.

GUYON Can I just finish more broadly? I mean, we come at a time when your politics has got quite a high temperature, not just outside, but in the buildings as well as the two sides try to come to some sort of arrangement to raise your debt ceiling. It seems quite staggering from an outside to see a potential default on a debt be subject to such politicking. What’s your response to that?

RICK Yeah, you ought to look at it from my end of things. Again, as a member of Congress—

GUYON What does it look like for you?

RICK Yeah. What it looks like for me is that America pays its bills; we will not default. And for some members of Congress, especially a lot of the new members of Congress right now, are willing to take that debt ceiling to the brink and perhaps have that result in a downgrading of the US bonds. It’s staggering to me. The US— Whether we like it or not, a lot of countries look to the United States for economic leadership in the world, and part of that economic leadership means that we have to take responsible actions, and responsible action in this case means that we have to delink the debt-limit vote, or as I call it the default-avoidance vote, from our long-term budget negotiations. We still need a long term, substantial deficit-reduction package. We have to do that regardless of any debt-limit vote, but we have to do the most important thing first, and the most important thing first is to avoid default. And America will pay its bills and meet its obligations.

Q+A interview with Trade Consultant, Dr Peter Watson.
As far back as 1989, US willing to move relationship with New Zealand in a “positive” fashion; New Zealand reluctance has cost us
Previous Labour government made “quiet” progress on US relationship, with Helen Clark not alerting Labour caucus or New Zealand public; current government’s approach “transparent, businesslike and robust”.
“New Zealand used to enjoy disproportionate influence in Washington. Now it’s starting to get that back again”
We’re seeing a “natural and organic resumption of a robust political, economic, diplomatic and security relationship”
US is politically ready for a TPP including dairy, with politicians using it as an impetus for further global trade growth
Economy will be “critical” in 2012 US presidential race; it will bounce back but it’s “going to continue to be tough sledding”
Tea-Party doesn’t want to play a constructive role in US politics, “they want to spit the dummy”


GUYON ESPINER INTERVIEWS PETER WATSON

PAUL Dr Peter Watson is a New Zealander. He’s lived in the United States for the past 30 years, working hard to improve the relationship between our two countries. He’s been chair of the United States International Trade Commission. He’s had some big jobs. He’s worked in the White House as Director of Asian Affairs of the National Security Council under George Bush I. And these days he’s a business consultant in DC. Guyon Espiner spoke with him on Capitol Hill and began by asking Peter Watson, after a generation at the heart of the US-New Zealand relationship, which country had moved further.
PETER WATSON – Trade Consultant
Actually, I’m really not sure I could say who’s moved the furthest. I think what’s important is the two sides have moved actually quite significantly together, actually. There’s been a lot of push certainly from I think both sides at different times. But I would say, actually, there’s been sort of a joint effort, certainly in the last, I would say, two to three years.

GUYON Do you think the US was perhaps ready to move earlier than New Zealand perhaps believed?

PETER I don’t know about believed, because there was some very open and transparent communications going as far back as 1989 that the United States would like to see New Zealand go a different direction and support a more positive relationship. But I think instead of looking backwards, the better thing to do now is to be pleased about the fact that the relationship has normalised and we’re really moving forward.

GUYON Let’s do that, but do you think New Zealand has paid a price in those interim years if you look, say, compared to Australia, which has had a very different relationship?

PETER I think that’s, in fact, exactly the right parallel because if you look back into 1984, 1985, when these broker took place, New Zealand is about 26 years behind the normal progress that Australia’s been able to make – free-trade agreement, preferred immigration, business visitors. New Zealand used to enjoy a disproportionate influence in Washington, and now it’s starting to get that back again.

GUYON So that’s quite a price, really, isn’t it, in those interim years. I guess the other way that some people would look at it is that New Zealand has been able to have a more independent, non-aligned stance. And if you look at the progress New Zealand has made with a country like China, whether that perhaps would have been possible. Do you think that there is merit in that argument at all?

PETER Well, let’s look at the relationship between the United States and China. That reapproach took place back in the Nixon era, so the United States has enjoyed a very good relationship with China before, during and after the problems with New Zealand. New Zealand has, of course, quite correctly is proud of our ability to speak freely, but that’s always going to be the case.

GUYON So it’s not an either or?

PETER Absolutely not.

GUYON Obviously, one of the theatres and areas that we’re working in quite closely is the defence and security relationship now. Do you think that that is essentially a position now where we’re allies in all but name?

PETER You know, I’m not sure phonetics are really important. I think you look at the substance of the relationship. You’ve got the Pacific cooperation in Tonga, Vanuatu with the navies earlier this year. We’re looking forward to Pac Rim next year. This is just a natural and organic resumption of a robust political, economic, diplomatic and security relationship.

GUYON Obviously, the trade relationship is at the top of the Prime Minister’s agenda and the Trans-Pacific Partnership – wanting progress there. Do you think that the American administration is actually ready for what they call a comprehensive trade agreement which would include agriculture and would include lowering tariffs over time?

PETER I believe so. I mean, obviously, there’s a couple of earlier steps that have to be addressed. We obviously have got to deal with a couple of the pre-existing trade agreements that are in place, but I think the administration here understands that a successful TPP would reignite the stagnant trade talks that have existed in the WTO. I think they see this a little like the North America Free Trade Agreement earlier on as being an impetus to rebuilding broader trade negotiations.

GUYON Is it risky, though for them politically? Because a lot of people, rightly or wrongly, equate these free-trade agreements with job losses and threats and more competition. Is it politically risky for an administration to go into such a big deal like this?

PETER I don’t think risky is the word. Obviously, they have to be sensitive to managing those issues, but this is a very comprehensive set of issues that the President’s working with – President Obama. I think he can manage his way through all this. He can walk and chew gum at the same time.

GUYON Now, John Key has run into this unmistakable issue of the debt crisis. There were a couple of senators that he was going to meet today which couldn’t make it, because they were involved in these discussions. I mean, to an outsider, seeing the two sides deadlocked over such an important issue is quite staggering, really. I mean, is American politics a bit crippled at the moment?

PETER It’s been brittle and very very, I think, partisan for quite some time and very unhelpfully so, both for the United States economy and clearly, I think, for the international economy. It’s very regrettable to see the state of deterioration of bipartisanship in the United States presently.

GUYON Why has that happened? Is it just pure politics, or has that got worse? Have you seen that get worse?

PETER I have seen it get worse, but to a certain extent I think there’s blame enough to go on both sides. We’ve seen, unfortunately, a rump group arise within the Republican Party – the so-called Tea Party. These are folks who really don’t want to play, I think, a very constructive role in American politics. They want to spit the dummy and have it their own way. Certainly on the centre left in the politics here, there’s some that really prefer not to have a meaningful engagement on all of the economic issues. So it’s been polarising for some time, but we’re hopeful that the President and the leadership – sensible leadership – on the Republican side is going to be able to come to some understanding.

GUYON You talk about the Republicans and perhaps some division there. What is the state of play in terms of the contenders? I mean, Mitt Romney seems to be the favourite to get the nomination. How do you see this playing out?

PETER Well, you know, money is the milk of politics in the United States, if not a lot of places. He has got a war chest that is extremely enviable, and everybody else has to make up for all of the, frankly, capital that he’s brought on to the field. There are a number of other contenders happy to chat about a couple of them.

GUYON Yeah, well, I mean, Sarah Palin – will she run?

PETER I hope she runs.

GUYON Do you? Why?

PETER The reason I do is because I think it’s important for America to have the opportunity of really seeing behind some of the fallacies that people like Sarah Palin stand for.

GUYON Like what?

PETER Well, I mean, just close-to-home stuff. You know, this protectionism, the lack of international focus and markets, and just a very narrow parochial perspective.

GUYON Sort of an isolationist—?

PETER I wouldn’t go necessarily that far, but certainly not what I’d call a robust international perspective.

GUYON So you think her running would expose her to—?

PETER I’d like to see it.

GUYON It’d be pretty entertaining.

PETER I’d love to see it.

GUYON What about Bachmann? Do you think that she will?

PETER She’s tried to calibrate herself slightly further away from Palin, but the fact of the matter is she’s appealing to the same core constituency. This is your, you know, again, your Tea Party, your close-to-home, you know, rather protectionist groups.

GUYON There’s support out there, though, politically for that. There’s a constituency there, isn’t there?

PETER There always has been in American politics, and this is where one of the challenges always is to keep United States, you know, forward-looking and engaged internationally. That constituency has always been there, and it’s not going away.

GUYON Given the quite a bit of rivalry and division there to a degree in the Republicans, do you think that it’s Obama— it’s a one-horse race?

PETER No, I don’t necessarily think so. I mean, the employment numbers are not very good right now. His approval rating isn’t necessarily as good as he’d want. You know, if there’s a strong candidate who might come through and might be appealing on the Republican side who could actually speak to the economic issues in a way that also appeals to more of a moderate perspective and, more importantly, captures the independents, that’s the core group. If you catch the independents in this race, you win the general election.

GUYON And you think the economy is key to that?

PETER I think it’s critical to it. I really do.

GUYON And things aren’t looking great. You’ve got, what, 9.2% unemployment and obviously very high levels of indebtedness. I mean, is there light at the end of the tunnel for the US economy? It’s been a couple of years now of pretty dire news.

PETER It’s going to continue to be tough, tough sailing, but the great thing about it is it’s a large economy, it’s still a very robust economy demographically. If you look at the projections economically going up the next 30, 50, the United States is going to continue to have a very robust international engagement. It’s going to remain an important international economy.

GUYON Just finally, what sort of significance is it for John Key, a New Zealand prime minister, to come here, come to Washington, have face time with the president of the United States, meet all the key players?

PETER The Prime Minister is resuming the natural place that New Zealand had in its historical role in Washington, and there are some heroes in this. Certainly, Secretary Clinton, for her part, has been important; Assistant Secretary of State Kurt Campbell has been critical. On the New Zealand side, Prime Minister Key has had a very businesslike, professional relationship with the United States. I think Minister of Foreign Affairs Murray McCully has done a fantastic job in quietly building the undergirding. Ambassador Mike Moore has been fantastic.

GUYON And do you give credit too to the former administration under Helen Clark?

PETER I think the former administration has to be given credit for quiet diplomacy. I use the word quiet deliberately.

GUYON What do you mean by that?

PETER Well, she very carefully nurtured the development between the United States, but without giving it too much prominence, whether it be in the Labour caucus or to the New Zealand public at large. You can’t understate it, though.

GUYON Quiet diplomacy under the former administration. How would you describe the current tack?

PETER I think really businesslike, open, transparent, robust.

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