Sponsors

Moderator:
James Barth, Lowder Eminent Scholar in Finance, Auburn University; Senior Fellow, Milken Institute

Recognizing that diversified channels of capital are crucial to the formation of efficient and healthy financial systems, many Asian countries have made the development of corporate bond markets a high priority. Since 2000, the Asian bond market has grown by 50 percent. Many countries, including China, have utilized this instrument to restructure industries and raise capital to finance growth. Although still relatively small in comparison to bond markets in North America and Europe, the Asian bond market is expected to grow, just as the regional economy continues to grow at high rate. How do these Asian debt markets differ from developed markets in America and Europe? How do they perform compared to other emerging markets? In emerging markets such as China, Thailand and Korea, information on corporation credit and performance is unfamiliar to many western investors. How should we decipher this information and their market measurements? How should we interpret industry performance, regulations and corporate governance and accountability from country to country? Join this roundtable for a lively discussion of these issues.

Moderator:
N. Mark Lam, CEO and Chairman, Executive Committee, Live365

The panel started with an overview of China′s current climate: an increasing urban population, a sharp rise in foreign direct investment and an increase in the number of contracts.

Moderator Mark Lam of Live365 then posed the following question: How do you think the White House handled the recent visit of President Hu Jintao? While the panelists came up with various responses, James McGregor, author of One Billion Customers, stated that he thought the administration had clearly missed its goals with respect to China, as well as its focus of doing business in China or meeting with Chinese business leaders.

"The Chinese have the overall perception that the U.S. is too much trouble to do business with," he said, in response to a question about possible remedies to the trade imbalance.

The trade deficit today is structural, he added, noting that the real issue for China is intellectual property rights, which have "definitely gotten better, but are far from good enough." Lam suggested that that these issues would not go away because of the "inherent economic underpinnings (of each country). In order for industries to develop, they must develop their IP." He gave the examples of Taiwan and Japan, which used to have poorly regulated property rights. McGregor responded that China's neglect of IP rights has been far worse and should not be allowed to continue.

China's trade with Asia has been exponentially increasing, and it was noted that Asia could become a trade bloc that has no need for the United States; since 1990, the number of mergers and acquisitions with publicly traded companies between China and other countries has increased dramatically, from 1,500 a year to more than 9,000.

"When going into an emerging market," said Jonathan Colby of The Carlyle Group, "one of the first things that we look at are banks." Stoyan Tenev of the IMF said that "consumer-oriented sectors are attracting the most investments -- the Chinese consumer is particularly exciting to all of us." Discussing the advantages and disadvantages of diversified state-controlled companies vs. private banks, he said that "investments in state-controlled banks do not always provide the greatest incentives."

Wei Wang of China M&A Management Holdings added that the Chinese banking sector needs fundamental change; the changes being made today are symbolic, he maintained, rather than fundamental. However, the panelists agreed that there has been significant reform recently, with Tenev stating that nobody "expected such fast privatization of state banks, which has been very significant." Colby also noted that health care appears to be a very attractive industry that multinationals will eventually get into.

The panelists then discussed China′s fragmentation of industries, noting that fragmentation is lower in state-owned industries, but still high. Fragmented industries irritate and excite investors at the same time because while there exist poor market designs and pressures from non-regulated business practices, but there is a lot of money to be made, as well as consolidation in specific fragmented areas (such as steel, cement and retail). The panelists agreed that this type of excessive industry diversification offers an abundance of M&A opportunities to Chinese entrepreneurs today.

Wang closed the panel, emphasizing that China is still not a developed country, but indeed one that is growing and learning. He compared China to an adolescent "on a very sharp learning curve, where entrepreneurs are trying to realize their dreams."

Moderator:
Elena Barmakova, Chairman of the Board, Fontvieille Capital Inc.

Investment opportunities in Russia have been fascinating investors since the fall of the Soviet Union in 1989. However, the Russian market has been sensitive to political instabilities of this developing capitalist society. For the past seven years, the Russian economy has enjoyed relative stability under Vladimir Putin′s evenhanded rule. However, with the 2008 election looming, many foreign investors are nervous about another potential political jolt.

The panelists agreed that the Russian market has offered some of the most extreme investment risks and rewards during the past 20 years. For example, in the 1990s, Torstein Hagan of Viking River Cruises bought and sold shares of Gazprom, a Russian natural gas company, at staggering 750 percent profit in just a few months. He then started a Russian river cruise business that is booming today. In contrast, Roland Nash watched his Russian investment banking business soar and shrink again twice in the past five years. Yet both men are still in Russia and feel that the long-term opportunities outweigh the risks.

It is widely known that natural resources have been a great source of investment in Russia. Hagan said he believes that Russian energy companies are still undervalued and hold the promise of continuing future profits, especially given increasing global energy demands. On the other hand, although Russia′s "decaying" infrastructure is in desperate need of investment, foreign participation in these types of projects is limited by local regulations and customs. Instead, Richard Sobel of Alfa Capital proposes to channel foreign investing into consumer goods market. As evidenced by recent success of companies like IKEA in Russia, the growing Russian middle class is increasingly looking to spend its disposable income on good-quality products.

The panelists also remarked on the state of education in Russia. The quality of scientific education in the Soviet Union was extremely high, and Russia has a very well-educated work force that is currently leveraged by high-tech companies, such as Intel. Vladimir Tyurenkov of Hansberger Global Investors noted that Russia needs to maintain its high education standards in order compete in high-tech outsourcing market and transition to a "knowledge-based economy," where India and China currently outpace it. Both Sobel and Nash agreed that development of the professional middle class in Russia is critical in stabilizing its economic and political situation, and improving opportunities for foreign investment.

Audience members asked the panelists to speculate on the outcome of the 2008 elections in Russia. Although the speakers said it would be hard to predict, they each offered a best guess. Tyurenkov did not think that Putin would put himself up for re-election, although he is immensely popular and it is very likely that people would vote him in for a third term. Sobel predicted that we will see someone from the current government replace Putin, very likely, someone like Alexander Medvedyev. Hogan and Nash agreed that they do not foresee anyone from extreme national parties get elected. Generally, their comments conveyed an optimistic outlook on the future of Russian political stability and on the future of investment opportunities there.

Moderator:
Glenn Yago, Director, Capital Studies, Milken Institute

The focus of panel debate was on what Israel needs to do in the next 10 years in order to break through the barrier that keeps it an emerging market country rather than a developed country.

The discussion revolved around three key areas of improvement: 1) a change in Israel's capital markets so that they are more visible internationally and have more domestic investors; 2) retention of the technology knowledge within Israel as more outside venture capital firms invest in local companies; and 3) improved transparency in the system and a decrease in the regulatory restrictions on capital flows. The panel was in agreement that working toward all these goals would help Israel become more financially independent.

Steven Schoenfled of Northern Trust Global Investments suggested that Israeli firms should work on listing in multiple markets, as this might stimulate the amount of capital flow into the country. In addition, Israeli companies need to increase the amount of "float," or share of the company, available to the public. Schoenfled noted that by freeing up float, institutional investors, like the Jewish Federation, would be more likely to invest. Schoenfled said that a latent demand exists for these types of investments, due in part to the fact that there are not enough different types of financial instruments, such as stock index futures.

One of the shining stars in the Israeli economy has been the tech sector, where many companies do list on multiple exchanges. Eitan Ben-Eliahu of East West Capital attributed some of the country′s technological successes to exportation of its military research. Nadine Baudot-Trajtenberg of Bank Hapoalim noted that because of the success in technology, many international venture capital firms support small companies in Israel. However, the VC firms' presence has resulted in local technology knowledge being sold abroad. Thus, Israel is exporting a key asset for its economic growth. In order to continue growing, companies must feel encouraged that there will be local investment. The panel agreed, however, that technology cannot be the only solution. Despite the power of these technology companies, their success was insufficient to pull the economy up from 1998 through 2000. In addition, Ben-Eliahu noted that the security of the country posed a human resource drain on the economy because men are required to serve in the military until age 27 or 28, and only recently were women allowed to decline to serve.

Finally, Mathew Bronfman of ACI Capital noted that in his recent acquisition of the third-largest bank in Israel, one of his key concerns was the amount of regulation in place which deterred investment. He claimed that if the government focused on more transparency in business, as well as reducing the restriction on capital flow, it would help the economy grow.

The session concluded with some audience questions of the panelists. Asked whether Israel needs a Community Reinvestment Act to encourage and support lending to small and medium-sized businesses and underserved communities, both the Bank Hapoalim and Israel Discount Bank (the first- and third-largest banks) responded positively.

The panel concluded with a poignant question about the lag in the real estate market in Israel. Earlier in the session, the panelists noted that Israel was one of the few countries in the emerging market category that has not experienced a real estate boom, which has been a powerful growth mechanism for many countries. Ending on a positive note, Bronfman and Baudot-Trajtenberg noted that the real estate market had shown signs of improvement recently, which might be a further catalyst to the country′s growth.

Moderator:
Maria Bartiromo, Managing Editor, "The Wall Street Journal Report," Anchor, CNBC

Most of the hot-ticket items in current policy were covered in this overview of the U.S. economy. While the panelists generally agreed that the economy is experiencing substantial growth, they also pointed out some key concerns in the areas of social security, wages and health care. They emphasized the importance of tackling these issues and better preparing the U.S. for an increasingly global economy.

The face of the U.S economy is shifting rapidly, and American workers are experiencing its growth pains firsthand. Andrew Stern of the Service Employees International Union remarked that while America′s GDP may be increasing, American wages are not. According to Stern, seven out of 10 Americans currently live paycheck to paycheck and the No. 1 resolution among Americans this year was to get out of debt. He worries that politicians are not recognizing or addressing the American workers' desire for financial stability. He called for the return to citizen action and stressed the need for Americans to get out and show their representatives that change is needed.

Jeffrey Kindler of Pfizer Inc. said he felt that America is losing its innovative edge. He pointed to the decrease in American science and engineering students as a major source of concern for America′s future. Thomas Donohue of the U.S. Chamber of Commerce commented that 30 percent of American students are not graduating, further stressing the concern that America′s youths are not prepared for the future.

Doug Holt-Eakin, former Director of the Congressional Budget Office, asserted that America also needs to worry about older workers. He reminded the audience that the average life span is increasing all over the world, dramatically changing the flow of labor and capital. The market is becoming more global, and international industries are currently the most productive industries. He sees a need to prepare older workers to deal with international competition.

Donohue agreed that workers are living longer and questioned who will support these workers when they retire. He asserted that workers cannot expect the company pensions that were commonplace 50 years ago, and that increased worker productivity means fewer people paying into social security. Holtz-Eakin agreed that the great experiment of social security is over but stressed that the people should understand that the policy process supports them. He contended that people will be paid the benefits owed to them; however, government needs to make changes for the future while honoring its current promises.

From there, the discussion made an easy transition to health care. All panelists agreed on the importance of revamping the current health-care system, but they differed significantly in their solutions. Kindler argued for more action in preventative care. He said that the percentage of undiagnosed illness is way too high in America, and that as a country, we are not doing enough to lower our risk of illness. He stated that the ideal health-care scenario would include cooperation between government, the private sector and unions to put greater emphasis and more money into preventative medicine. He called the current system a "sick-care" system, where the riskiest portions of the population are being treated in the worst possible way: They enter the system only after their illness has progressed to emergency-room status.

Holtz-Eakin spoke up to say that no solid scientific evidence exists yet to demonstrate that preventative care really saves money. At best, it may help extend life expectancy or improve quality of life, and said we need to acknowledge that health-care costs have always outpaced income per capita. This is attributable to rapid changes in technology embraced by Americans, he explained. To reduce costs, he suggested adopting a more selective approach to technology changes. Instead of embracing every new approach, American health care needs to consider the costs of technology and weigh its worth.

The session brought up interesting and important points that need to be addressed in U.S. domestic policy. America appears to be continuing as a strong force in the global economy, but it must address some of these key issues domestically. Policy-makers need to place greater emphasis on improving the situation for the American worker, specifically, to increase wages, redesign retirement plans and ensure health-care access to all citizens.

Moderator:
James Barth, Lowder Eminent Scholar in Finance, Auburn University; Senior Fellow, Milken Institute

The session, led by James Barth from Auburn University and a Senior Fellow at the Milken Institute, contrasted the domestic and foreign policies in China, India and the United States. In particular, the session highlighted the shift from fixed-asset investments toward a more internal consumption led growth in China′s five-year plan.

Maria Boyazny of Siguler Guff & Co., expressed concerns with the levels of non-performing loans in the Chinese banking system going forward. State-controlled banks have financed overinvestment in certain sectors and might be subject to higher default rates as growth shifts to other areas of the economy.

Frank Sixt of Hutchison Whampoa addressed the interactions of domestic and foreign policies. He emphasized that the sheer size of India's and China's domestic policy agendas actually shaped their foreign policies, as exemplified by their growing need of commodities and energy products.

Ramesh Vangal, chairman and founder of the Katra Group, placed India's influence into perspective, suggesting that India offers a counterbalance to China′s emergence in the region. India development has been primarily led by domestic consumption and is mainly focused on the service sector. Even more contrasting is the evolution of India's democracy. With a freer and more pluralistic society, India has been able to show more progress in developing domestic institutions, such as working capital markets and its accounting system, thus balancing China′s central planning and non-democratic system.

The former U.S. ambassador, Steven Green, placed more emphasis on the U.S. political processes. In particular, he argued for the need of the business community to educate the American public on the real effects of a globalized economy, in an effort to counteract the fear being spread out by some political players.

Perry Wong, a senior research economist with the Milken Institute, provided insight into the strong regional and global integration processes. He described China not only as providing resources, such as labor, but also an important re-exporter for the region. Wong discussed the impact of a potential revaluation of the Yuan, not only on the region but also on the global companies present in the Chinese economy.

The panelists approached various aspects of how the different economic and political processes could evolve, with particular emphasis on how their political processes might shape world order.

Moderator:
Joel Kurtzman, Senior Fellow, Milken Institute; Senior Advisor, Knowledge Universe

All the panelists in this session agreed on the answer to the fundamental question posed in the title of the discussion: Yes, the U.S. economy is open. Some, however, placed qualifications on their responses. Lorna Wallace of the Milken Institute suggested that the economy is under threat of closure, and that without government involvement, the benefits of a favorable economic environment will not automatically accrue to society. To describe the level of government involvement she believes is necessary for success, Wallace quoted from Lewis Carroll's Through the Looking Glass: "It takes all the running you can do just to stay in the same place."

According to Doug Wilson of Townhall.com, the most important factor to the success of the U.S. economy is the preservation of the U.S. "social character." This social character, which Wilson said gives America its competitive advantage over the rest of the world, is based on the idea of individual responsibility and on an individual′s power to take risks, be entrepreneurial and innovate. However, Ed Feulner of The Heritage Foundation and Louis Uchitelle of The New York Times agreed that current government and corporation policies toward the economy do not, in fact, encourage this sort of individual initiative.

Uchitelle focused his remarks on the often ignored social costs of layoffs, asserting that the "experience of being laid off is quite severe" and can thus have implications for American economic success and competitiveness through its effect on individual workers. From Uchitelle's perspective, economic success is a social issue and thus needs to be discussed and debated as such. Feulner took a different view, however, suggesting that rather than focusing the debate on social issues, the government must deal with the serious challenges posed by "the big three: Medicare, Medicaid and social security."

Toward the end of the discussion, moderator Joel Kurtzman of the Milken Institute asked the panelists what they believe are the most important policy proposals to ensure U.S. economic success. Wallace named fiscal responsibility and infrastructure investment. Wilson asserted his faith in the importance of the empowerment of the individual and suggested increasing the number of visas available to foreign Ph.D. holders in order to reverse the "brain drain" of educated individuals out of the United States. Uchitelle reiterated the importance of recognizing the true costs of layoffs and proposed requiring corporations to file annual impact statements detailing their firm′s labor force activity. Feulner said the U.S. government should seriously expand free trade, get entitlement programs under control and avoid tax increases that he believes will slow economic growth.

All the panelists did agree, however, on the need for greater public and governmental debate on solutions to problems of American economic success and competitiveness.

Speaker:
Vaclav Klaus, President, Czech Republic

Respondents:
George Argyros, Former U.S. Ambassador to the Kingdom of Spain and Principality of Andorra; President and CEO, Arnel & Affiliates
Nancy Brinker, Former U.S. Ambassador to Hungary; Founder, Susan G. Komen Breast Cancer Foundation; FasterCures Board Member

Moderator:
Maria Livanos Cattaui, Secretary General, International Chamber of Commerce

Maria Livanos Cattaui of the International Chamber of Commerce began her discussion with President Vaclav Klaus of the Czech Republic by reminiscing about their similar backgrounds in economics and first meeting years ago. Klaus pointed out that since then Europe has been in the process of passing through dynamic changes; the current manifestation of this is the evolution of the European Union.

Klaus went on to explain that the European Union has many misunderstood and underestimated economic implications. The structure of the organization, which the he described as being "a social democracy, but far more social than democratic," ironically seems to have set the stage for populism and closure rather than its intended goal of openness. He continued, saying that further European integration and regulation might not satisfy a variety of economic interests, especially those of the United States.

Former U.S. Ambassador to Spain Nancy Brinker turned the conversation to the topic of the Czech Republic's upcoming elections. Klaus suggested that no matter the outcome, the Czech Republic would see at most marginal change with respect to EU policy, due to its political and economic maturity.

George Argyros, former U.S. ambassador to Spain, asked about the expansion of the EU. President Klaus announced his position in support of expansion to any and all countries ready for the move. The conversation turned to Turkey, specifically, and the Czech president reiterated his point, stating that culture and religion are not relevant to entry; the best interests of the EU and the concerned nation are the real issues.

The discussion closed with a dialogue revolving around the Czech Republic's impressive economic growth. Klaus attributed this to the nation's heavily industrial economy and returned to the issue of EU policy standing in the way of business. He stressed the importance of openness as the primary goal, not unified regulation.

Moderator:
Betsy Zeidman, Director, Center for Emerging Domestic Markets, Research Fellow, Milken Institute

Despite rapid advances in the standard of living in much of the world, almost half of the world′s population subsists on less than $2 per day. According to the panelists, this is "everyone′s problem" and will require everyone′s cooperation to address effectively. Financial and business leaders are developing innovative approaches to leverage finance, philanthropy and business development to yield "double-bottom line results" that provide investors with solid returns while also making a meaningful difference in fighting poverty and inequality.

Stewart Paperin of the Open Society Institute identified the primary role of private institutions in promoting financial integration between the microfinance organizations that serve the poorest of the poor and the larger commercial financial institutions that serve the next tier of the population. The current disconnect between these two systems can impede the fight against global inequality, and Paperin argued that "connecting the dots" should be a priority for the private sector.

In addition, he said, the private sector can help inject back-end administrative and processing expertise and discipline into the process. Meanwhile, the government should focus on getting the rules and regulations right and philanthropists on advocating and demonstrating the feasibility of initiatives.

Susan Blaustein of the African Millennium Cities Initiative discussed what such a demonstration can look like. Her innovative work in sub-Saharan Africa is centered on three major initiatives: a green revolution in agriculture, a health revolution in addressing malaria and other illnesses, and an infrastructure revolution to develop the roads needed to sustain a modern economy. As Blaustein passionately noted, "We can′t wait because waiting means lives." The hope is that demonstration projects like the Millennium Cities Initiative will show that there are viable and effective solutions to these seemingly intractable issues, catalyzing investments in these areas.

As Lauren Burnhill from ACCION noted, microfinance models have proved very effective in addressing the subsistence needs of some of the poorest of the poor. The challenge today is on building scale and increasing the revenues of these micro-entrepreneurs to transition to traditional financial products. Commercial banks, such as Citibank, are beginning to show interest in this area, which may facilitate the bridging that Paperin suggested was so critical.

Ann Miles of BlueOrchard Finance was optimistic about the success that microfinance has had, but she pointed out that less than 1 percent of the overall demand has been financed on the capital markets. In addition to microfinance, the focus has turned to alternative means of financing, including bond issuances and structured finance offerings. Miles was hopeful that these recent innovations will pave the way for more robust private investments in efforts to reduce global inequality.

Investors have had a tremendous impact on combating global inequality, but the battle is far from over, and significant challenges remain. First, there is the issue of asset classification. As new financing models emerge, many are unclear on how to treat these new instruments, both from a risk and ratings perspective and as a matter of pure categorization. Second, it is critical to build the capacity of micro-enterprise institutions to bring offerings to market. And as these organizations begin to offer savings and deposit products, regulations may be required to protect these deposits and prevent potential banking collapses in times of crisis.

Liabilities management will be an important capability. Third, it is important to increase the visibility and acceptance of microfinancing to conventional investors, which includes improving the liquidity and attractiveness of these instruments. Finally, it will be critical to iron the role of local vs. international financial markets: Is the solution Wall Street or Main Street?

Financial investors have already made a tremendous impact in fighting poverty and inequality through innovative financial models. Continued, sustainable progress will require ongoing commitment and creativity, and the ability to make investment propositions that make social and economic sense.

Moderator:
Paul Gigot, Editorial Page Editor, The Wall Street Journal

Paul Gigot of the Wall Street Journal kicked off the plenary session with an overview of the global economy, first highlighting the outstanding growth of the United States, China, India and Russia during the past few years, despite increasing interest rates, oil prices and terrorist threats. In contrast, Germany, France and Italy have displayed anemic growth, he said as he introduced the three panelists, who each gave a short speech on their view of current and future states of the global economy.

President Vaclav Klaus of the Czech Republic stated that "we live in a tightly interconnected world" and that globalization has had a net positive effect. Stressing the importance of freedom and openness rather than protectionism, he said, "Communism has gone, but liberty and openness have not become our guiding principles." In particular, he said, Europe has shown a renewal in protectionist policies, with the EU prime minister proposing a fund for the "victims of globalization" in Europe.

David Rubenstein of The Carlyle Group stated that during this decade, "what happens outside the U.S. is just as important as what happens inside." He asserted that the United States would have to change in order to remain one of the world's great global powers, and that one of the fundamental changes would be to invest more heavily in foreign markets, as well as to allow more foreign direct investment. If not, he warned, the country would most certainly "run the risk of not being the economic power we have been for the last 50 years."

Gary Becker outlined the major engines of growth in the past year. He stressed the importance of the great productivity growth that the United States has seen in the past decade, as well as the explosion of growth in developing countries, and in China and India, in particular. One of the main drivers of future growth would be to give private-sector ample opportunities. He also stressed that the real risks lay in too much intervention by the government. For the long term, he noted, the most important thing for growth in the United States would be to keep the government from "messing up too much."

"Are we seeing an incipient re-inflation?" Gigot asked the panelists, and Becker stated that what we are seeing is a rise in relative prices rather than inflation. The other panelists concurred, with Rubenstein adding that there were far bigger problems than inflation today.

Panelists were asked if they were in support of the flat tax and whether such taxes drove the new policy changes in "Old Europe." Klaus was in favor of it but warned against thinking of it as a solution for other problems. Becker agreed, stating that they should "not think it as an 'open sesame' to a global economy." He also cited other problems that came along with the flat tax, such as how to tax the corporate sectors and other special groups. Rubenstein added that the United States has in effect a "back-door flat tax," and Becker concluded by saying more important than a flat tax to economic stimulation was having low taxes. Rubenstein stressed that there is a direct link between tax rates and the stock market.

Gigot then moved the topic to the risks of protectionism, asking the panelists, "Are we seeing a backlash of protectionism?" Klaus responded that he saw resurgence in protectionism, particularly in Europe and United States. Panelists suggested that strong presidential leadership could drive trade liberalization and that the current administration′s low approval ratings might be harmful to the U.S. trade policies. Klaus added on that the U.S. and other Western European countries had the additional burden of non-tariff barriers. Other barriers were external, with the rest of world viewing globalization as the spread of Americanism.

The panel concluded with a short discussion of China, which Rubenstein described as a "huge growth market." He said that despite the risks of Chinese negotiations, investors in China should be prepared to go there for long durations and work with local partners in order to take advantage of the opportunities for profit, concluding that China′s main focus is not to make the United States richer.

Moderator:
Kenneth Morse, Senior Lecturer and Managing Director, MIT Entrepreneurship Center

Tommei Tong of TOM Group explained that finding the right local partner and understanding the unique aspects of doing business in China are crucial to success. For example, she said, one key part of the Chinese business world is the dominance of the government. As the panelists all pointed out, in order to succeed in the Chinese market, entrepreneurs will need to adjust to this dynamic and work with the government, rather than try to avoid interacting with officials.

In response to an audience question, the panelists pointed to the opportunities that the upcoming Beijing Olympics represent, and again emphasized that in order to take advantage of those opportunities, companies will need to adjust their strategies and products to the Chinese market.

The panelists have different backgrounds and histories, but all seemed to find the challenge of entrepreneurship in China′s emerging market "addictive," as Fredy Bush of Xinhua Finance described it. In addition, all seemed energized by the changes they have seen in China in recent years. Edward Tian of China Netcom described China as "hungry to be modernized," and others agreed that China is increasingly governed by a more uniform set of nationwide rules and regulations, which will improve the ability of companies to work in all regions. There was also a consensus that the capital market in China is overheated, and that there is more money available than there are entrepreneurs to take advantage of it.

Moderator Kenneth Morse of MIT brought up the issue of the shortage of professionally trained managers in China, and Tian agreed that he considers this a major challenge. Although there is no lack of opportunity for workers, he said, managers in China need more training in budgetary issues, performance review and management.

An audience member pointed out that a related but opposite issue is not just attracting, but retaining workers, especially since many of them may want to become independent entrepreneurs. The panelists agreed that offering stock options is a good way to tie employees more closely to a company, but they also agreed that people work for more than money. Bush pointed out that employees need to feel that their voices are heard and that the company is going somewhere. At the same time, Morse mentioned that employee spin-offs of new companies is not necessarily a bad thing, since these spin-offs are the drivers of growth and innovation.

The panelists offered advice throughout the session to those interested in entering the Chinese market: Believe in your company and have patience; be willing to take risks; be open to doing business with the government; find the right business partners and/or local managers; and do enough research to understand the local environment.

Moderator:
Mustafa Sagun, Chief Investment Officer, Equities Group, Principal Global Investors

In 2005, foreign direct investment in Turkey totaled $10 billion, up from an average of $1 billion per year in 1990s. The panelists discussed the reasons for this huge increase, as well as other factors that could improve economic opportunities within the country.

Ambassador Engin Ansay, consul general of Turkey in Los Angeles, admitted that, though the traditional job of a diplomat encompasses many sectors, he sees his main task as business development. He characterized Turkey as a "rising star" and said the country is in a unique position in the international community: It is the only secular, democratic nation with a majority Islamic population. He also highlighted a number of statistics that should encourage foreign direct investment: the increase in per capita income and employment, for example, as well as the reduction in inflation rates and the sustained growth of the economy over the past decade.

Selim Uyar of the Permak, Uyar and Remag Group of Companies said that privatization as a driving force is making Turkey more attractive to investors. He also underscored the large pool of human capital available in Turkey and, as a result, a growing need for houses, jobs and other services.

Kaya Tuncer of the ESBAS Company highlighted the importance of "process" and suggested that the government "upgrade the mentality of the bureaucracy" to make structures in Turkey more investor-friendly. Tuncer also recommended the establishment of better laws and regulations for the FDI market.

Turan Itil, a physician and founder of the TMI Alzheimer's Centers Inc., highlighted the huge opportunities for investments in the health sector and predicted that the largest portion of future foreign direct investment in Turkey will be in this area. The basis for this prediction, he said, is the inadequate capacity of the current hospital system, and an insufficient number of hospital beds and doctors. The country′s growing population will only lead to greater demand on the health-care system.

Moderator Mustafa Sagun of Principal Global Investors raised the issue of the country's eastern and southeastern regions, both which have been neglected during Turkey's economic progress. While acknowledging that these areas are certainly lagging behind the rest of Turkey, Ambassador Ansay brought up the GAP Project, which is building 19 dams and/or power stations in these regions, with the aim of increasing agricultural output by 50 percent. Additionally, both the ambassador and Uyar suggested that eastern Turkey has great potential to become a tourist attraction, with its mountains and natural beauty. Political conflict, specifically with neighboring Armenia, was presented as the greatest obstacle to the development of the regions.

The panelists were all optimistic about the potential for investment in Turkey, in every sector described above, as well as other sectors not mentioned. Dr. Itil concluded the discussion in traditional Turkish fashion by bestowing a "gift" upon the audience, advising them to travel to Turkey for any future medical procedures, as he believes that foreign direct investment is increasing and making the level of service comparable to that in the United States, while providing that service at a fraction of the price.

As many as one-third of America's ambassadors are presidential appointees, not career diplomats. They are chosen for their leadership skills in other areas, such as business, and their close relationship with the White House. In today's world, where threats can come from even the smallest or poorest countries, does it make sense to have these citizen ambassadors in charge? Or is their access to the president and their ability to move faster through diplomatic channels more important? In this roundtable, three of America's former non-career ambassadors gather for a unique debate on the role of the citizen diplomat. What is it like for those who've spent a lifetime in other careers to suddenly be in charge of a U.S. post overseas? What is their relationship to the State Department, and to the representatives of the countries where they are stationed? Are the challenges different or more difficult than those faced by career diplomats - or by any ambassador in earlier times? Attendees are invited to join in the discussion and ask questions of these former ambassadors.

Moderator:
José Alberro, Director, Law and Economics Consulting Group

After undergoing a period of economic crisis starting in 1994, Mexico may be poised to begin a major turnaround. In the late 1990s, economic indicators were running rampant, but today Mexico is experiencing low and decreasing inflation, currency stabilization and accumulating reserves (in fact, Mexico now has more reserves than debt).

However, Mexico has only had zero per-capita growth since 2000, with $20 billion in annual remittances coming from the United States. Additionally, every year between 300,000 and 500,000 Mexicans cross the northern border. But with a divided congress and the presidential election 10 weeks away, will the Mexican leadership be able to make reforms necessary to push the economy on a path to growth? With this introduction, moderator José Alberro of the Law and Economic Consulting Group led his panelists into a discussion of Mexico's future.

Carlos Bremer of Value Grupo Financiero thinks that the GDP in Mexico has the potential to grow at 5 percent or more, and mentions that Mexico is currently No. 1 in Latin America on the risk-vs.-return index. "Mexico has a base now for real development," he said, adding that "infrastructure and housing, if done in the right way, could be a big part of this growth." But to enable development, key reforms in energy and fiscal policy are required.

"I think the reforms are critically important," noted Thomas McLarty of Kissinger McLarty Associates, who also noted that a "a primary focus should be on the quality of life of Mexicans."

The current president, Vicente Fox, has a 68 percent approval rating among Mexicans, and Federico Sada Gonzalez of Vitro, S.A. de C.V said that "respect and recognition of the presidency is there." But with the top three presidential candidates each currently commanding nearly a third of the pre-election votes at the polls, it remains to be seen whether the country can mobilize behind the new president to support the necessary reforms. Sada Gonzalez noted that there is a strong division between the northern and southern regions of the country. Reconciling these political divisions after this tough election will be the job of the new president and will take strong leadership.

Mexico's development should also be of concern to its northern neighbor because the Hispanic population in the United States is growing prolifically and is having a significant effect on the political and social landscape. The question is not whether the United States and Mexico will become more integrated, but whether they will do so in a mature and productive way. "Its time to revisit NAFTA, and I think most of us agree on that," said McLarty. Bremer and Sada Gonzalez expressed the hope that Mexico will be able to take advantage of what they see now as a foundation for Mexico′s development.

Moderator:
Graham Earnshaw, Editor-in-Chief, Xinhua Finance News

In 2005, China's GDP continued to grow at above 9 percent for the ninth year in a row. It is the world's growth engine, a major exporter and a big importer of oil, steel, cement and copper. But with this growth comes environmental problems caused by rampant urbanization, over-cultivation, low energy efficiency and the lack of relevant laws and regulations. How China deals with these issues will have a substantial impact on the rest of the planet. What measures can China take to use of energy and other un-renewable resources more efficiently? What can it do to balance out economic growth with environment protection? Is there a way for it to sustain its high growth without incurring high environmental costs?

Moderator:
Jack Leslie, Chairman, Weber Shandwick Worldwide

Africa is made up of 52 countries with 750 million people, and posted a GDP of $793 billion in 2005. Historically, the continent has been used by developed countries for extraction of platinum, gold, zinc, copper, silver and bauxite. Yet more attractive investment opportunities exist and are ripe for development.

Teresa Clarke, a vice president at Goldman, Sachs & CO. said she expects Africa's real growth to continue to compound at 4 percent annually. The growing African economy will continue to provide a positive environment for foreign direct investment, she stated, adding that in the past three years, Africa has attracted $26 billion in total foreign direct investment.

On the whole, foreign direct investment has primarily focused on the financial and cellular technology industries, with England being the largest provider of foreign direct investment, at $12 billion. The dollar-denominated return on these investments has been better than the returns in many developed countries around the world over the same period, Clarke said. African countries that have primarily contributed to above-average returns were Egypt, Nigeria, South Africa, Tunisia, Ghana, Botswana and Morocco.

Still, foreign direct investment in Africa is not without its risks. Harold Doley, an investment banker in Africa, identified the main pitfalls to investment performance as the shortage of good managerial leadership, prevalent corruption and the lack of a well-functioning legal system that enforces property rights.

Of the world's 30 least hospitable countries for investment, 14 are in Africa. Still, Doley said he remained positive on Africa because of its ability to deliver commodity inputs to China and India′s growing economies. China has invested $3.3 billion in Angola in order to secure a future source of oil, he said. And the flow of foreign direct investment into Africa's infrastructure from China and India will enhance Africa′s future growth prospects.

Venture capital activities have also increased in Africa. Rodney MacAlister of the African Development Foundation said he has been able to pool capital from African governments and persuade the U.S. government to make a dollar-for-dollar matching contribution for investment in African businesses. This venture capital pool has been able to grow because African companies have successfully returned capital back to the fund, which can then be used for future African investments. MacAlister said he thinks venture capital opportunities will continue to increase across the African continent as its infrastructure expands.

The United States has not been a large player in foreign direct investment of Africa in recent years. Stephen Hayes of the Corporate Council on Africa suggested that the United States has missed out on many investment opportunities on the continent because U.S. institutional investors are not willing to assume risk exposure of African countries. To remedy this problem he said, an institution such as CalPERS (the California Public Employees' Retirement System) needs to explore investments in Africa, rather than taking a passive role in an emerging market fund that has little exposure to the continent.

Overall, the panel expressed a strong positive outlook on Africa's future prospects and continued growth of 4 percent per annum. The majority of these gains are expected to come from Egypt, Nigeria, South Africa, Tunisia, Ghana, Botswana and Morocco, which are making progress to solve government corruption, low workforce education and undeveloped infrastructures. In the near future, the panel members agreed, Africa will further develop its consumer markets for technology goods and fuel the development of India and China.

Moderator:
John Fishel, President, Jewish Federation Council of Greater Los Angeles

The Milken Institute has been closely involved with several partners over the past year in accelerating a creative interplay between philanthropists and social investors seeking more effective ways to resolve inequities in Israel's social, economic and environmental development. This roundtable will coordinate an exchange between these innovators. We will discuss the progress and challenges in crafting effective programs and policy development to support equitable changes and economic growth in Israel. For information, contact the Events Department at 310-570-4605.

Speaker:
Sayyed Ayad Jamal Aldein, Member, Iraqi National Parliament

Sayyed Ayad Jamal Aldein, a member of the Iraqi National Parliament, discussed the current situation in his country, especially the question of whether secularism can work there.

Moderator:
Edward Luce, Washington Commentator, former South Asia Bureau Chief, Financial Times

India is in a time of great market boost, similar to China. Comparing the differences in types of growth, and the differences in political structures and how they affect their country's development, the question is posed: Is India the next China?

The remarkable growth in India is undeniable, according to Karan Bhatia, the deputy U.S. trade representative. He pointed to the growth in trade markets and the changing attitudes of policy-makers and their approach to domestic markets and policies.

However, while there is liberalization and progress in select areas, change is missing in retail and financial services. Bhatia said that if changes are to happen in these areas, we must wait another five years to see them.

While having a democracy brings about many positive opportunities for India, Bhatia also suggested that a balance between the governments of India and China would be the ideal situation. For example, infrastructure changes occur rapidly in China, while India continues to be littered with poor-quality roads and airports. India also needs to find a way to deal with the bureaucratic processes, which have hindered growth.

Another challenge is that while business is growing, 700 million people are still in the rural sector. Bhatia said he does not see agriculture as India's future, due to its lack of efficiency, compared with the sector in other countries. He said he believes India will instead become a service-sector-based economy.

During the past 16 years, Harpal Randhawa of Sabre Capital Worldwide has seen three periods of growth in India, one of them being now. Domestic demand is up, he said, exports are up, and more private equity money is entering India at the ground level. And he believes things will continue this way for a while.

The best chance for sustainable growth, he argued, will occur if the government removes itself from business. Other roadblocks for growth include the lack of infrastructure and the fact that it is a high-cost economy. Because of these problems, Randhawa predicted, companies are likely to move away, frequently to China.

Growth will be slower in India than in China because of democracy, but growth-rate comparisons should adjust the numbers for value-add to get a truer sense of the changes occurring, said Randhawa. Large businesses that hope to enter India should be willing to tailor their offerings to the market, even though the Indian consumer is changing.

The government has done almost nothing while India has grown, said Joseph Sigelman of OfficeTiger LLC. As soon as things liberalize, money will flow in, he predicted. The population of India is 1.2 billion, and while there is much attrition and wage inflation, he still has 40 people applying for each open position in his company. Thirty-nine of these, he said, are not qualified educationally. Other panelists argued, however, that it was not a case of lack of education, but cultural differences and intimidation during the interview process. While India is likely to grow in the global scene, Sigelman pointed out that foreign direct investment needs to be selective and that companies should not forget that they still need manufacturing companies in order to employ unskilled laborers.

Likening India to the United States at the turn of the century, Ramesh Vangal of the Katra Group said there is great risk, but also great opportunity. While China is driven by FDI, India receives less than 5 percent, so the opportunity for foreign investment is good. Indians are entrepreneurial, and the domestic market is strong. Companies should go after markets and buy brands, move out of the big cities and invest in training and infrastructure.

While most of the panelists pointed out the weaknesses in the Indian infrastructure as a hindrance to growth, they all saw a positive future. Bhatia predicted that as long as the government is willing to adapt, in 15 years we will see the United States, China, and India as the large economic powers. Sigelman claimed that while democracy is slowing some aspects of growth, democracy will also enable India to surpass China.

Speaker:
Zachary Karabell, Senior Vice President, Fred Alger Management Inc.

Given today's headlines, it's easy to believe that the current conflict between Muslims, Christians and Jews represents a giant, historical chasm between the religions. But as Zachary Karabell, author of "Peace Be Upon You: The Forgotten Story of Muslim, Christian and Jewish Coexistance," will explain, the past includes many long periods of cooperation and coexistence between these groups. Remembering this history, he argues, is vital to creating a more stable world today. Participants at this roundtable discussion are invited to offer their thoughts to the question: Can we all get along?

Moderator:
Michael Intriligator, Professor of Economics, Political Science and Public Policy, University of California, Los Angeles; Director, UCLA Center for International Relations; Senior Fellow, Milken Institute

Twenty years ago, the worst nuclear accident in history changed the landscape of not only what was then Western Soviet Union, but the nuclear energy industry as well. The accident at the Chernobyl plant in Ukraine on April 26, 1986, forced the evacuation of hundreds of thousands of people and the direct deaths of more than 50. In this roundtable, the ambassador from Belarus, whose country received more than half of the radioactive fallout, and an America expert on the accident will review the events that prompted this disaster. They'll compare contemporary public health and economic consequence estimates with what we now find 20 years later, and examine the legacy of Chernobyl and its impact on calls for more extensive use of nuclear energy as an alternative to fossil fuels.

Moderator:
Rafael Pastor, Chairman of the Board and CEO, Vistage International

In the past 20 years, the value of goods and services traded worldwide has increased from $2 trillion to $10 trillion. In the past 10 years, cross-border merger-and-acquisition sales have increased from $185 billion to $607 billion in the developed countries, and from $42 billion to $161 billion in emerging markets.

Although it is the larger multinational firms that get a lot of press, "it′s the smaller ones that can benefit and often drive" this growth, said moderator Rafael Pastor of Vistage International. Small to mid-size businesses (SMBs, which are characterized as having 500 or fewer employees) are not only a major force in the domestic economy, but they are rapidly expanding their global reach. Today in the United States, SMBs represent 99 percent of employers, 70 percent of net new jobs, 51 percent of private-sector workers and 50 percent of GDP. And between 1994 and 2004, the number of SMBs exporting from the United States quadrupled. Of the SMBs that are global, 38 percent are involved in exporting, 17 percent are involved in importing, 17 percent are involved in outsourcing, and 29 percent have external offices.

So what are the advantages and disadvantages of SMBs, compared to the large multinationals? SMBs generally have less capital than, and lack the huge marketing muscle that larger firms have, said Oren Harari of the University of San Francisco Graduate School of Business. But they do have "nimbleness, agility, and speed," he added, which allows them to take advantage of lucrative but fleeting opportunities. "The most successful players have their eyes tuned way out there on the horizon," he continued, something that big companies may only be able to give lip-service to.

However, in the beginning stages, SMBs will "have to learn the hard lessons (that big companies already learned)" warned Scott Jarus of Cognition Inc., and if they want to survive, they need to be able to "pick themselves up and continue racing forward."

Another notable advantage of SMBs is their ability to have an intense regional focus. They can begin by developing a deep understanding of a particular region and then use this understanding to expand in intelligent directions. Larger multinationals with overseas headquarters and ties to a strong corporate culture may find it harder to develop the same focus.

According to a Vistage International survey of chief executives of global businesses operating in Canada, Malaysia, the United Kingdom and the United States, staffing was thought to be the No. 1 challenge facing their businesses. Since business operations and strategies are increasingly global, having a staff that is globally aware and multilingual has become critically important. But when it comes to the worldly education of young generations in the United States, said Harari, "we do an atrocious job." The panelists agreed that, especially in SMBs where the number of employees may be small, staffing must be an especially conscious part of company strategy.

In this wave of globalization, there are not only opportunities for U.S. firms to expand abroad, but there are also opportunities for foreign firms to come to the United States.

"Globalization is a two-way street … they′re going to be coming at us too," said Pastor, who asked the panelists what advice they would give U.S. firms who traditionally have not had a global focus. "Don′t be complacent … you cannot afford to be," warned Harari, adding that "you cannot assume a steady-state management." Firms must focus on the value proposition to customers and cannot assume that market positioning and branding will last without innovation and maintenance. Mary O′Hara-Devereaux of Global Foresight said firms must understand "the first-, second-and third-order effects of China, India, Vietnam, the Philippines" on their businesses, as the participation of these nations in the global economy increases.

Why go global? What with expansive and diverse markets of goods, services and labor, any firm may find opportunities for cutting costs and increasing revenues in both the short and long term. According to Dan Barnett of Vistage International, "the strategic reason to go global is growth."

Moderator:
Aaron Bernstein, Senior Writer, BusinessWeek

The World Trade Organization was created in order to reduce tariffs and non-tariff barriers among its member countries that trade services, manufactured goods and agricultural products. Reduced trade barriers should allow free markets to function more efficiently because competitive advantages of WTO member countries are realized. Consumers of each member country realize the benefits of free trade through lower prices of goods and services imported from countries that have competitive advantages in production of those items.

Yet even though the WTO has made progress, the Doha Round faces many obstacles.

The United States has led off the Doha Round by making an ambitious offer to reduce its agricultural export subsidies to other WTO member countries. This offer has been met with great skepticism from European member countries. Deputy U.S. Trade Representative Karan Bahtia said she believes that European skepticism has been caused by political pressure on its leaders, thereby resulting in a protectionist attitude of its agricultural industry.

To reach an agreement by July of 2006 and prevent a potential impasse, Paula Stern of The Stern Group feels the United States must use services as a central negotiating tool. She believes services are a better focal point for negotiation by the United States because that issue contains the bulk dollar value of the potential Doha Round agreement. The primary industry sectors that include services exchanged between WTO member countries are telecommunications and financial services.

Another obstacle facing the Doha agreement has been caused by U.S. unwillingness to reshape its current policy regarding steel dumping. Asian WTO member countries have been unwilling to negotiate serious agricultural reform of their markets until the United States changes its stance on the steel industry. Still, Greg Rushford, editor of The Rushford Report, sees the biggest dilemma to an agreement in the lack of a bipartisan support in the U.S. Congress. Still, in WTO previous rounds of negotiations, differences are not resolved until very late in the negotiating process.

In order to move toward a Doha Round agreement, the panel agreed that substantial political leadership must spark the progress and follow through on promises. In order to do that, WTO member countries must take action that coincides with the basic premise that free trade benefits its consumers more than the resulting costs of it workers.

Furthermore, the group stated, member countries must recognize that when another country with a competitive advantage provides goods or services to them, this also allows them to free up labor from a non-efficient use and apply it toward a sector in which they have a competitive advantage, which ultimately results in more goods and services produced for the world′s consumption.

While some industries related to a country's national defense may not be negotiable, the panel concluded, many opportunities remain for progress in the Doha Round and future WTO negotiations.

Moderator:
Fred McMahon, Director, Centre for Trade and Globalization Studies, The Fraser Institute

The Middle East Capital Markets panel focused on the development of efficient and liquid capital markets in the Middle East. Fred McMahon of the Fraser Institute led off the discussion by noting the importance of economic freedom in a society. He quoted economist Milton Friedman, who once stated that economic freedom in a society would eventually lead to political and personal freedom. Economic freedom is perhaps the major key to a productive society, he noted, because it leads to increased political stability, greater democracy, a reduced likelihood of conflict and greater economic gains. Additionally, economic freedom was identified as one of only two key variables that lead to human happiness (the other is life expectancy.)

Sheika Al Farsi of the Omani Centre stated that Middle Eastern countries need to institute economic reforms and economic freedom in order to generate the millions of jobs necessary to employ the surge of workers they will need to accommodate as their extremely young populations age.

One of the keys to economic freedom is an efficient capital market. Maryam Al-Hashar of the Capital Market Authority in Oman discussed the development of the Omani Stock Market, which today contains 142 companies with a market cap in excess of $15 billion. Hani Sari-El Din from the Capital Market Authority in Egypt discussed the Egyptian Stock Market. This market was one of the best-performing markets in the world last year, rising 160 percent. This was due in large part to a very strong macro-economic environment in Egypt. GDP growth increased to 5.1 percent last year, inflation dropped from 17.3 percent to 5.2 percent, and foreign direct investment increased strongly.

Neveen El-Tahri from ABN Amro then discussed Egypt.s performance from the point of view of a private market investor. She noted that Egypt.s capital markets had been developing since the peace agreement with Israel in 1979. Neveen also complimented Egypt′s Central Bank head for doing an excellent job directing Egypt′s macroeconomic performance. One extremely interesting observation she noted was that many Egyptian nationals living overseas are beginning to return home to work and invest. She noted that this is similar to what is occurring in China, and has been a significant factor in China′s economic success.

Robert Bush of Istithmar discussed his company's mandate to seek attractive investment returns around the globe. Robert noted that a key when investing in emerging markets is to find trustworthy partners. He talked about the difficulties in dealing with opaque or nebulous regulatory environments in some developing nations, and felt that partnering with people one trusts can help mitigate regulatory risk. He also responded to a question about the outcry over DP World′s attempt to manage ports in the United States, noting that while he was surprised over the outcry, it would not stop him or other investors from the Middle East from looking around the globe for investment opportunities.

The panel concluded with a brief discussion of the impact of terrorism on Middle Eastern capital markets. This is an area of primary concern for many investors considering opportunities in the Middle East. The panelists noted that following previous terrorist attacks in Egypt, investment interest among institutional investors actually increased as they sought out potential bargains. In the event of a severe terrorist attack or a sustained outbreak of minor terror attacks, there would probably be a halt in the progress of the development of Middle Eastern capital markets. Absent such attacks though, the group agreed, it is expected that capital market development will continue.

Moderator:
David Pollock, Senior Managing Director, Bear Stearns & Co. Inc.

One of the underlying obstacles to peace in Israel and Palestine is the lack of economic development and opportunity in the Palestinian territories. As James Prince of the Democracy Council pointed out, the Palestinians have received the highest per-capita amount of aid of any group since World War II, yet that aid has not gone toward developing a viable Palestinian economy.

Yet the panelists in this session also noted the complicated calculations the United States and the international community must make in determining how to help the Palestinian people while withholding aid from their Hamas-led government.

The group largely agreed that the recent election of Hamas represented a protest vote against the corruption and lack of development under Fatah. But Hamas, they also noted, will never be a real negotiating partner for Israel. In fact, there was a consensus that Hamas is likely to fail within the next six months, and none of the speakers saw any possibility that Hamas might alter its ideology.

As Steven Spiegel, a professor at UCLA, explained, the real question is whether that failure will lead to civil war or to stability. Hiba Husseini of Husseini & Husseini, however, maintained that the Palestinians do not see many real alternatives to the Hamas government. She described herself as a moderate who believes in a two-state solution and emphasized that the Palestinians need to find a "third way," and will need support to do so.

Israeli Brigadier General Eival Gilady outlined the lessons both sides learned from the unilateral Israeli withdrawal from Gaza, explaining that he believed Israel had to "act unilaterally in order to jump-start the road map." As the panelists revealed during the rest of the session, however, there does not seem to be much hope for the road map in the immediate future. Although many saw President Mahmoud Abbas as a moderate genuinely committed to working with the Israelis, Spiegel pointed out that given Abbas′s failure to deliver while Fatah was in power, it seems unlikely that he will succeed under Hamas.

Spiegel outlined a set of eight options for the United States in dealing with the situation, but added that he did not see much hope of success in any of them. For him, the most viable option seemed to be relying on the Israelis to handle the problem; however, he also noted the dangers of ignoring the Palestinians and the effects of continued poverty and violence on the rest of the region. Gilady expressed support for Israeli unilateralism as a temporary path out of the current situation, and explained that while Israeli public opinion has shifted dramatically in favor of a two-state solution, Palestinian public opinion has not moved in the same direction.

Not all of the panelists agreed that Israeli unilateralism is necessarily the best solution. Husseini observed that her commute to work, which should take 15 minutes, generally lasts an hour and a half because of checkpoints, and that this restricted movement around the country is clearly hurting commerce. Yet Gilady responded that despite his dislike of checkpoints, Israeli guards had stopped a suicide bomber at a checkpoint only the day before.