Sydney, Australia
March 16, 2006

FOREIGN MINISTER DOWNER: Ladies and gentlemen, let me begin by saying
how delighted I am to host this visit to Australia by Secretary Rice.
It's her first visit as the Secretary of State though she was here not
that long ago with President Bush when he was last in Australia. We had
this morning, the first part of the visit, which is our bilateral
meeting, I suppose it’s been an hour or an hour and ten minutes, and we
have a series of other functions and meetings over the next couple of
days, culminating on Saturday in the Trilateral Security Dialogue with
Japanese Foreign Minister Taro Aso.

We've this morning talked about the Secretary's visit to Indonesia.
We've talked, of course, about the Trilateral Security Dialogue and
relations with other countries in the region. We talked about regional
architecture. We talked about India and, of course, the nuclear deal
between President Bush and Prime Minister Singh. And we've had a
discussion about Iraq, the situation in Iraq, and about Iran. So I
would just say in a overall sense it won't surprise any of you to hear
me say that the relationship between the Howard and Bush
administrations is a very close relationship. We work together as, of
course, allies. We work together as a bit more than that. We work
together as friends and people who share many common perspectives both
in the region and beyond the region around the world and we work
together very hard on trying to achieve an agenda that both of us very
passionately believe in and that it's an agenda to see greater not just
peace but greater freedom and democracy in many different parts of the
world.

So, Secretary, welcome to you.

SECRETARY RICE: Thank you very much, Minister. Thank you, Alexander.
We've had a very extensive discussion this morning and I want to thank
the Foreign Minister for hosting me here. It's great to be in
Australia, this beautiful country. I have a lovely view from my window
of Sydney and, of course, of the Opera House, which I might have
thought I might have played in at some point in another lifetime. But
it's a really wonderful place.

We do indeed have this very unique and deep relationship that's based
on common values, that's based on our determination to defend freedom
when it is under attack and wherever it is under attack, and not just
to defend it but to promote it and to support those who are still
seeking it.

In that regard, we have had a broad discussion of a number of issues:
Iraq, Iran. We discussed my trip to Indonesia and the remarkable course
that Indonesia is taking as that young democracy which is a place that
is as diverse as yet as inclusive as anyplace on the globe, the course
that Indonesia is taking and our desire to support Indonesia in that
course and Indonesia's role here in the broader region and on the globe.

We will indeed look forward to our Trilateral Strategic Dialogue with
our colleague from Japan later in the week and to further discussions
of our common agenda as this next couple of days goes on. So thank you
very much for welcoming me here and we look forward to your questions.

FOREIGN MINISTER DOWNER: And we're looking forward to attending the Commonwealth Games.

SECRETARY RICE: Oh, yes. That's --

FOREIGN MINISTER DOWNER: Even though the United States is not in the
Commonwealth for all sorts of obvious historic reasons. (Laughter.)

SECRETARY RICE: That's all right.

FOREIGN MINISTER DOWNER: Could have been. Could have been. (Laughter.)

All right, now we're going to do four questions, I'm told, two from the
Americans who at a glance are over here and two from the Australians.
So we'll start off with the Australians since that's the home team.

QUESTION: Secretary Rice, what chance has the U.S. of leaving a relatively secure Iraq behind when they turn over (inaudible)?

SECRETARY RICE: Well, I think that there is a very good chance that the
Iraqi people, with the support of their coalition partners, will build
the foundation -- will have built the foundation for a stable and
secure Iraq over the next couple of years.

This is a difficult process that they're involved in. I was saying to
the Foreign Minister that it is sometimes very difficult when all of
the pictures are about the violence and when you have terrorists and
old (inaudible) that wish to literally blow up the process of the
political reconciliation of the Iraqi people, it's difficult to focus
on what is quite a remarkable political process that is going on.

They've had three elections, including one to ratify a constitution.
They're now engaged in coalition building for a national unity
government -- something that most countries in the world recognize as
quite familiar. The Shia parties did not gain enough votes in the
election and so they have to bring in partners in order to form a
national unity government. That is a process that is well underway. The
difficulty for the Iraqis is that they do it in the face of violence
perpetrated by those who don't want a political process to go forward.

But I believe that like many peoples who've gone through the trials of
trying to build a democracy that they're going to succeed. And we
should express confidence in them because every time they have been
confronted with a challenge, going all the way back to the transfer of
sovereignty in 2004, the Iraqis have faced up to that challenge and
they have been able to move the next step ahead in the political
process. And we are supporting them. We're supporting them in the
training and equipping of Iraqi security forces that can defend their
young democracy. But I believe that they've been remarkable in what
they've achieved thus far and I really do believe that we're going to
look one day at a stable and secure Iraq and be very grateful to those,
like Australia and the United States, who were determined to see the
Iraqi people have this chance.

QUESTION: Madame Secretary, the Israeli Prime Minister Ehud Olmert
yesterday that the U.S. and UK supported his raid on Jericho prison.
President Abbas, whom you say you support, thinks it was a crime. What
does it make for the credibility of the Quartet, which is now accused
of taking sides?

SECRETARY RICE: Sylvie, let me explain what happened. Let's just
establish the facts of what happened here. In 2002, the United States
and Great Britain agreed with the Palestinians and with the Israelis
that we would monitor a prison in Jericho in which several very, very
dangerous figures, including people accused of the murder of the
Israeli Tourism Minister, were housed. This was in order to break at
the time the so-called siege of Ramallah that was taking place. We
agreed to monitor this prison but security for the prison was the
responsibility of the Palestinian security forces.

Over the last year, it has been increasingly difficult for the monitors
to play their role and we and the British have become increasingly
concerned for the safety of these monitors -- again, who are not to
secure the prison but are there to monitor the goings-on in the prison.

More than a year ago, we started to say to the Palestinians that this
was a problem. Those concerns have mounted over the last months and on
March 8th there was a letter delivered to the Palestinian Authority
saying that we could no longer tolerate the situation, our people were
in danger, and the monitors would have to pull out if things did not
improve immediately -- or we would have to pull out immediately if
things did not improve.

That happened when the monitors then pulled out. That has been the role
of the United States and Great Britain -- nothing more and nothing
less. Now, we have in the face of the recent actions and difficulties
in Jericho been in touch with all the parties to urge calm and
restraint. But I want to be very clear that the role of the United
States and the role of Great Britain, because we did it in
coordination, was to inform the parties, as was required by the
agreement in 2002, that the monitors could no longer maintain their
monitoring mission in the prison and that they would be leaving. That
was what was done and that is the extent of the role of the United
States and Great Britain.

QUESTION: Dr. Rice, you said that Iran may pose the biggest challenge
of any state (inaudible) United States. The Security Council this week
seems to be unable to agree on this issue. If that remains the case,
what would be the next step for the U.S. and what role would you like
to see Australia play in dealing with challenge from Iran?

And I want to also ask you a question about another subject you say you
discussed, which was India and the nuclear cooperation agreement. Would
you like to see Australia supplying uranium to India under that
agreement?

SECRETARY RICE: Thank you. Well, on Iran, Iran is a challenge because
it is seeking to have a nuclear program that would allow it to develop
a nuclear weapon and it's doing that, we believe, under cover of the
NPT and it's lied about its activities and therefore is in
contradiction to its requirements or to its obligations under the NPT.
It also, of course, is involved as a central banker of terrorism and so
Iran is to be -- we have many reasons to be concerned about Iran. It
also, by the way, has an unelected few who repress the desires of its
population. So it is a troublesome state.

The Security Council has now taken up the issue. I'm quite certain that
the Security Council will find an appropriate vehicle for expressing
again to the Iranians the desire and indeed the demand of the
international community that Iran return to negotiations, having
suspended the activities that it began in contradiction of its
requirements under the Paris Agreement, and that it's time for Iran to
heed the international community's call.

I'm sure we'll find the right vehicle for that. The negotiations are
underway. I would caution that we not try early to determine how those
negotiations are going to come out. That's what negotiations are like.
And I've been in contact with my counterparts.

I really do appreciate the fact that Australia has been stalwart in
also calling on Iran to find an arrangement that would be acceptable to
the international community in terms of its proliferation risk and I'm
sure that Australia will continue to play that very active role.

As to the India agreement, it is obvious that the agreement strengthens
security by expanding the reach of the IAEA to be able now, when there
is a safeguards agreement with the Indians, to have access to Indian
civil nuclear facilities which it currently does not have. And I would
just note that Mohamed El Baradei himself has noted that this is an
important -- would be an important achievement for the nonproliferation
regime.

Secondly, everyone understands that a growing economy like India, this
great democracy -- India -- that's growing rapidly, needs energy
supply. And civil nuclear energy is clean. It protects the environment.
It can be plentiful. And currently India is not capable of pursuing
civil nuclear power to the degree that it will need to.

And finally, the United States -- and I know the Prime Minister was in
India just a couple of days after the President. India is a rising
power in Asia and a democratic power that is rising, and it is a
multiethnic, vibrant place that is finding its place in the
international economy and in international politics. And we need a
broad and deep relationship with this rising democracy.

And so on all those grounds, we believe that this is an important deal.
I appreciate that the Australian Government, and the Minister can speak
for himself, has said that they think the deal itself is a good deal. I
think the issue of whether or not one decides to participate in fuel
supply is a quite separable issue and it's one for the Australians to
determine but not one that is at issue with the United States by any
means.

FOREIGN MINISTER DOWNER: And I just want to reinforce the view that I
put to the Secretary that Australia absolutely supports the
arrangements that have been made between President Bush and Prime
Minister Singh. We think that's an important step forward. It's been a
difficult negotiation and they're very difficult issues, but we
certainly support the logic of what the United States Administration
has done there and believe that the broader arguments about the growing
importance of India, particularly as the world's largest democracy, a
country that from Australia's point of view we have a lot of standing
links with -- we share the Indian Ocean together -- and so we're
delighted to see the not only growing relationship between ourselves
and the Indians but the growing strength of the relationship between
the United States and India, which is pretty unprecedented, really.

QUESTION: Madame Secretary, as you know, there are concerns here given
China's importance to the region and the Australian economy about a
potential hardening of the Administration's view towards China. Could
you tell us what assurances, if any, you offered Minister Downer on
that front today and the status of those talks?

And Minister, if you could be a little more specific with us about is
Australia considering finding a way to bend its policies on the fuel
cycle to assist in the Indian deal. Thank you.

SECRETARY RICE: Well, U.S. policy on China has been consistent for the
extent of this Administration and it is to try and create an
environment in which China will be encouraged to be, as it grows and as
it grows in importance and influence, responsible in international
affairs, more open both towards its own people and toward the
international system; to encourage Chinese participation and
integration into important international institutions like the World
Trade Organization, where the United States supported Chinese
accession; to recognize that China is going to be and is influential in
international politics and to have every desire to see that influence
be positive.

There is no doubt that as with any complex relationship there are
difficult issues as well as positive elements. I think we believe that
the growth of the Chinese economy, if it's done in a rules-based way in
which China is fully obeying the rules of the global economy, is a very
positive development for international growth and for the United States.

We've said that we have concerns about the Chinese military buildup.
We've told the Chinese that they need to be transparent about what
their military buildup means. I don't know, I used to follow Soviet
defense statistics and so I'm always a little bit uncertain about
statistics on these things, but I heard that there's going to be a 14
percent increase in the Chinese defense budget. That's a lot. And China
should undertake to be transparent about what that means.

But China is a country that's very much in transition. Its economy
needs to continue to open. It needs to pay attention to intellectual
property rights. It needs to pay attention to the effect of not having
at this point a currency that is market-based and flexible. It needs to
pay attention to concerns about the fact that much of the economy is
still government-owned. And when there are certain rules about what can
be sold in financial services or in software to the government sector
of the economy, there are reasons to be concerned about whether that
really reflects an open trading policy.

So to say that there are concerns about this changing and transitioning
China, I think is still to say so within the context of every hope and
every intention of trying to encourage positive trends in China's
development and working very closely with China on all kinds of global
issues. We are, after all, partners with China in the six-party talks
on North Korea. We are working with China in the Security Council on
the Iranian issue as we speak. So we have a lot of work to do with
China, but to the degree that we have concerns we're going to raise
them. We're going to raise them about human rights and religious
freedom. But I think this policy has been consistent from the day the
President came to Washington.

FOREIGN MINISTER DOWNER: And just from our point of view, we've never
had a concern that the United States was pursuing a policy of
containment of China or something like that of a, if you like,
commensurate with a once upon a time Cold War strategy and I think we
feel comfortable with where the United States is at in terms of its
relationship with China.

Our relationship has its own dynamics, we have our own issues, but we
have a very good and constructive relationship with China. We have
President Wen coming here very soon in the next couple of weeks and I'm
sure that visit will be successful. But you know, China, as it's a
growing power, it's an emerging power in the region, is a country that
needs to understand that brings with it a lot of responsibilities. It
has a responsibility to make sure that it works comfortably and
constructively with other countries in the region and it makes a
positive contribution to regional as well as to global issues, and we
hope that they'll continue to do that.

In relation to nuclear policies in India, look, we don't have any plans
to change our current policy and we've explained that. I explained that
to the Secretary but she knew that anyway and we’ve said that, the
Prime Minister and I, on a number of occasions over the last couple of
weeks.

But having said that, you know, we have some legal issues there, of
course, in relation to obligations we have, but we think that the
United States deal that they have done with India is a good deal and it
takes forward this whole process of openness and transparency about at
least many aspects of India's nuclear program. Is it perfect? I don't
know that you could put together a perfect deal. Maybe the answer is
that a perfect deal would be for India to give up its nuclear weapons
program and sign up to the NPT, and that, no matter how idealistic and
passionate we may be about that, that's a dream; that's actually not
going to happen anytime soon, if ever