“We know precisely where the virus emanated from”, says Secretary Michael R. Pompeo in a teleconference with Matt Murray of The Wall Street Journal CEO Council.

QUESTION:  Secretary of State Mike Pompeo, thanks for joining us today.  It’s good to see you.  Let’s start with China, which has been a big focus for you.  I think it’s fair to say the U.S.-China relationship has grown a little bit chillier in the last few years for many reasons.  How do you assess the relationship right now?  Where do we stand?

SECRETARY POMPEO:  Well, Matt, thanks for having me with you.  It’s great to be with your group as well.

In the end, the decision about the relationship between our two countries is largely going to hinge on the direction of travel of General Secretary Xi Jinping and the leadership of the Chinese Communist Party.  In these past years, they have chosen a direction of travel which has been increasingly aggressive, whether that’s at home with their own people and what’s happening in Xinjiang, or whether it’s abroad in the South China Sea, or issues of trade and economics.  There is a different China than 10 or 15 or 20 years ago as a direct result of decisions that the Chinese Communist Party has made, and that forces the United States to take real action, serious actions, the one that the Trump administration has taken to protect the American people and indeed to build alliances around the world so that the West can continue winning.

QUESTION:  Well, it’s interesting that you put it that way.  I mean, you’ve been fairly tough on China for a while, going back to when you were in Congress.  But when you say China’s changed, do you think something really changed in China?  Did Xi Jinping change?  Or do you think this was always the direction of travel, and when you look back, do you think the U.S. in hindsight was too naive in some ways?

SECRETARY POMPEO:  Yeah, that’s a really important question.  I think the answer to this was always that it was the direction of travel, but I think China finally got to the point where Xi Jinping believed he could unveil this, he could unsheathe it.  Before, they had talked about “bide your time” and “hide your power.”  They no longer do that.  They believe that they are now in a place where they can make clear their intentions, whether it’s China 2025, or the Belt and Road Initiative, or whatever actions they may take, putting weapons on the islands in the South China Sea.  They now very clearly have demonstrated what I think we have known for a long time.  They were intent on it; we were naive.

Fifty years of U.S. policy – it’s not Republican or Democrat – 50 years of U.S. policy firmly believed that more engagement, more commerce, more interaction would lead the Chinese Communist Party to behave like a normal nation or leaders of a normal nation.  It’s clearly the case that they have chosen not to do that.  I think that’s abundantly apparent to just about everyone in the world today, and now the world’s duty is to respond to this in a way that protects the things that we most value.

QUESTION:  When you say it’s important to everyone, thinking on the domestic scene, do you think the United States and the political – both political parties, have they turned a corner?  Is this sort of an irreversible kind of bipartisanship and perception, do you think?

SECRETARY POMPEO:  I think it is.  The whole world can see what the Chinese Communist Party has wrought.  Look, we’re living through the Wuhan virus itself today.  Even CNN and The New York Times have finally acknowledged that the Chinese Communist Party covered up what they knew.  We’ve known this.  I’ve been speaking about this for, goodness, since February of this past year.  Now the whole world can see that the Chinese Communist Party unleashed a virus that destroyed global economies, right, and has now killed a million and a half people.  It didn’t have to be that way.  We could have been in a better place.

This is one example of what authoritarian regimes do.  It’s how they behave in the face of crisis or challenge.  They focus internally, they protect, they disappear people.  They do the kinds of things that democracies simply don’t do.  And that requires a comprehensive response, and it’s why I’ve spent these last two and a half years as Secretary of State working to build on the quadrilateral relationship with Japan and Australia and South Korea, to go to ASEAN and be part of making sure that every country in the region knew that if they were threatened that the United States would be there to continue to provide assistance and support to them, and to work with our European partners against the risks associated with Chinese telecommunications infrastructure.

This work, these alliances that we’ve built out, are now firmly rooted.  I am confident that the whole world can see this.  It’s bipartisan here in the United States, and I’m counting on the fact that the efforts that we’ve put in place will continue to be developed, because the work has only just begun.

QUESTION:  I want to follow up on the virus, because the administration has talked about the Chinese responsibility, and I want to be clear.  Can you elaborate a little bit on how you think they’re responsible?  I mean, you’re not suggesting that the virus was deliberate or deliberately released in some way, are you?  You’re talking more about the response of the Chinese or the information they’ve shared?  What’s the specific nature of the problem on the virus in your view?

SECRETARY POMPEO:  Well, the first answer to that is that we don’t know.  The first answer to that is, to this day, they continue to deny the world – whether it’s the United States or the World Health Organization or the committee that’s been set up by them – access to the information that one would need to know the answer to the very question that you posed.

What we do know – what we do know is that when given the opportunity to tell the world what was really taking place – human-to-human transmission, about gain-of-function activities that were taking place in these research laboratories, about the capacity for travel to be stopped not only inside of Hubei Province but around the world; when the Chinese Communist Party had a chance to address those things, they chose to behave in the way authoritarian regimes are destined to behave by the nature of their regime.

QUESTION:  We’re a year – we’re almost a year out, really, almost to the day that the virus really first turned up in China.  And I have to ask, from a purely cold calculus, they are reporting very few cases, their economy is really coming back and is going along a lot of other parts of the world.  Our economy has come back quite a bit from the spring; it still has ground to make up.  And of course, we’re in the thick here in the West still of virus cases.  Is China really in a stronger position today than they were a year ago, realistically?

SECRETARY POMPEO:  Absolutely not.

QUESTION:  Elaborate a little bit.  Not because —

SECRETARY POMPEO:  Well, first, we should – yeah.

QUESTION:  — the world – because of the messaging in the world.

SECRETARY POMPEO:  Yeah.  It’s a massive disinformation game emanating from China.  You saw it even over the weekend, them trying now a third story.  The first story was American soldiers brought it over, the second story was they think that it began in Italy, now the story is food packaging and processing.  This is a massive disinformation campaign.  We know precisely where the virus emanated from.

But they’re trying to do that for the singular purpose of denying culpability connected to the activities they undertook.  And so where we find themselves is they had the first-mover advantage.  There’s no doubt about that.  And they, because they’re an authoritarian regime, can do things to lock down places that are infected, and they can in fact use those lockdowns to destroy fundamental rights, things that would never happen in the West – appropriately so.

The global economy is going to come back.  You can see.  You can see what happens.  You can see they try to steal a vaccine while we invest to go build them.  And we’re now on the cusp of having these vaccines.  I don’t know if it’ll happen this week or next we’ll have approval here in the U.S.  I read this morning that the Brits are about to begin vaccinating yet this week.  It will be the West that ultimately delivers a safe, efficacious vaccine because of the nature of what we do.  We innovate, we create, we invest, we build.  The Chinese steal and thieve and try their best to deny the world the information they need to keep their people safe.

This is the fundamental difference.  This isn’t about the United States versus China.  This is about a model that every one of the CEOs on this conference is going to have to think about.  Do you want to operate in an environment that is an environment of the rule of law, property rights, and freedom, or do we want to take the eastern model, the eastern model which says we’re going to have a state-centralized, subsidized, authoritarian regime dictate the global order for the next 50 years?  I think I know the answer from everyone that’s going to be on this call.  I hope that I know the answer from everyone that’s on this call, and we all have a responsibility to do our part to make sure that it’s the case that we don’t suffer from this type of global regime for our kids and for our grandkids.

QUESTION:  I want to come back in a minute on the CEO company aspect, but just a couple more.  You mentioned the WHO, and the administration has been tough and critical on some of the international institutions, the WHO being one, the WTO being another.  Do you think these international institutions are reformable?  Do they have a role to play in the world going forward, or are they kind of beyond repair?  Do we need new institutions?  Is that kind of institutional approach that the world undertook decades ago just outmoded?  How do you view the role and the opportunity or the lack of it for those kind of institutions?

SECRETARY POMPEO:  Matt, it’s a good question, and you’d have to walk through each of them individually because they all have – they have different timing and different methodologies of approach.

But I’ll take the one that you described first, the World Health Organization.  We came to believe that it was irreformable.  We have three pieces of evidence to support that.  One, there have been three major reforms led by the United States of America.  They’ve all failed.  Second, we watched the deep politization of what was taking place in the World Health Organization going forward – going forward with – related this virus.  And third, we went and talked to them.  We said, “Here are the things we think would need to happen to have a true capability for both pandemic response and delivery of global health safety,” and there was no appetite amongst the leadership of the World Health Organization.

So President Trump took that data set that we provided him and made the conclusion that we were going to go invest even more money in pandemic response, global pandemic response – there’s no country in the world that will spend as much in 2020 or 2021 as the United States on this issue – but doing it through this highly politicized organization is destined to leave the world sicker and less safe.

So we evaluate every single international organization along that lines.  Does it work?  Is it fit for purpose?  This is just like any good CEO who’s trying to decide whether to keep a line of business.  Does it work?  Does it fit our model?  Can we get the ROI we need?  Is there too much cost associated with making it work?  Can I fix it?  And if not, you shed it.  And we have been making the same decision, the decisions that the American taxpayers ought to be demanding the U.S. Government make with respect to our continued participation in these organizations.

QUESTION:  Okay.  I want to ask one more kind of multilateralism question, which is – I’ve heard a number of times from world leaders in the last couple of years – I’ve heard an argument that runs something like the following:  “I don’t like Donald Trump,” they might say, “but I did think Donald Trump was kind of a disruptor, a businessperson with a fresh perspective, and that he might have been the guy early in his term” – you were not in office early in his term as Secretary of State, I should say – “to really unite the West, to really have a multilateral approach on China right from the beginning and really change the paradigm, and instead, early in the administration, he was focused on NAFTA or other trade battles or NATO and we missed an opportunity there.”

What’s your response to that?  I’m sure you’ve heard that same kind of critique?  What’s your response to it?

SECRETARY POMPEO:  Yeah, Matt, I don’t agree with that analysis.  In the end, the nations of Europe – and I think of that more broadly than just the EU – the nations of Europe have decisions to make, just like the United States has a set of decisions to make.  And we all slept on China for decades and decades, and it took American leadership to go wake the world up to this.  I remember my first time in Europe talking about Huawei and the risk to networks associated with having Chinese hardware and software inside – I mean, it’s crazy – to have inside your telecommunications infrastructure.  I remember that first conversation.  It was painful.  They thought I was crazy.

It is the case now that we have dozens and dozens of countries that have adopted Clean Networks.  We have dozens and dozens of telephone companies that have sworn off Chinese telecommunications infrastructure.  You can see Ericsson and Nokia doing much better.  That’s a market indicator of the fact that we were right and we told this story right.  I wish the Europeans had come along sooner.  We now have a ongoing EU dialogue with the United States on China.  That has never happened before.  They were reluctant to do it, but about a year and a half ago they concluded that they should come, and they asked us if we would engage in this.

These are the tasks that the world must undertake.  And do I wish it had happened 50 years ago or 20 years ago or two months earlier?  I certainly do.  But this would not be happening without the leadership that came from this administration and our president.

QUESTION:  And you mentioned it earlier, but let’s come back to it.  What should the role of American business, multinational corporations be at this moment?

SECRETARY POMPEO:  When I hear the business roundtable talk, they are very concerned about issues that are beyond simply shareholder returns, so – so be it.  These issues, if we’re going to be serious about that, have to be about long-term value creation; that is, the understanding that without the capacity to trade globally around the world under a set of fair and equitable rules that the system will not work, that it can’t be the case that whether it’s at the WTO or elsewhere that there’s one set of rules for just about every nation and another set for China.

And so business leaders ought to be actively engaged in making sure that the rules apply equally, whether that’s investment rules applying reciprocally between foreign direct investment here in the U.S. and American companies that want to invest in China, or whether it’s the massive human rights violations that are taking place in China.  I’ve watched our businesses.  They care deeply about their employees.  They care deeply about their customers.  They want to make sure that they’re not doing anything to harm them, to be working with companies that are operating in Xinjiang province, that are connected to the massive human rights violations taking place there, or what’s happening in Mongolia, Tibet, and these other places in the world.

Look, every – one of the great things about America is that every one of these business leaders will have their own choices to make, and they’ll make different choices, I am sure.  But I think every business leader who is operating internationally understands that it is important (a) to make sure that you’re not contributing to massive human rights violations, and (b) to make sure that you are operating in a way, even if it has a short-term cost to your own business, that you’re operating in a way that fundamentally works towards making sure that the opportunities for freedom-loving nations, for rules-abiding nations, for the liberal international order to continue to exist, and you’re not helping to underwrite authoritarian regimes that want to take away the very freedoms that have led you and your company to be successful.

QUESTION:  All right.  If I hear you right, it sounds like you’re kind of saying you have no excuse now for not knowing what’s happening, and there’s no larger sort of multinational shareholder view alone that can satisfy your mission.  You know what’s happening.  Is that basically what you’re telling them?

SECRETARY POMPEO:  Yeah, I think that’s right.  And frankly, some of what we know we have learned from them.  I can’t tell you how many CEOs have come into my office and quietly – because they do business there – told me that they’re just getting ripped off, that the Chinese Communist Party is stealing from them.  And it’s difficult because they’ve all got Sarbanes-Oxley statements to sign.  And so it is – I concede that it is incredibly complicated and there is not a straight-line answer in every instance, but we have certainly shed light on some of these issues.

But I think most significant companies that are operating in China understand the risk.  They understand the game that’s being played.  What I hope is they now understand that the U.S. administration, that this administration will support them, will do everything we can, whether that’s with getting trade deals that are fair, equitable, and reciprocal; we’ll protect our country’s own intellectual property; we’ll take actions when we see Chinese companies trying to come into our universities in America; we’re going to throw those folks out when they’re stealing these companies’ technology and research and development.

I hope that they’ll see that the United States Government’s here to make sure that we’re getting this right and that we will stand alongside of them in a way that only America can do, and only rules-based constitutional republics can actually deliver.

I am proud of what we’ve done.  I hope that these businesses will see that this is the right direction for them, for their shareholders, for their employees and every one of their stakeholders.  If we get this right, we will continue to be the world’s fastest-growing economy, the world’s most capable, innovative, technologically advanced nation in the world for the decades that follow.  If we don’t, there is risk that that won’t be the case.

QUESTION:  I’ve got to ask you one more China, and then I promise I’ll move on to a couple of others.  But many people think that the most worrisome situation is the one in the South China Seas and the risk for Taiwan.  And of course, this last year we’ve even seen the Hong Kong situation happen a lot, which in many ways is a warning sign to Taiwan.  Realistically, what can we do about Taiwan, and how worried are you about that coming to a boil?

SECRETARY POMPEO:  So it’s something that’s been on every secretary of state’s mind for an awfully long time now, since Dr. Kissinger for sure.  Our responsibility is to live up to the commitments that we’ve made to the people there.  We have legislation.  We should make sure that we follow that expressly.  We have a long-standing “one China” policy and a bunch of communiques that came out from Reagan onward.  This administration has honored those.  We have provided assistance to the country in terms of weapon systems.  Those are the things that we can do.

But most importantly, I think what the whole world can demand of the Chinese Communist Party is that it lives up to the promises that it made.  You mentioned Hong Kong.  They made a commitment, a 50-year commitment.  They welched on it about halfway through.  When the world sees that, there has to be a cost.  There has to be an associated —

QUESTION:  But what costs?  What cost —

SECRETARY POMPEO:  So you – so it should be – so China should be treated like a single country.  Today, we don’t do that.  We’ve treated Hong Kong as this special place because it, in fact, was a special place.  It is no more.  It is very clear that the judicial system there is now going to be undermined.  We can see that the last fair legislative election happened some number of months ago.  This is no longer anything but another Chinese communist-run city.  And the world, the business community should treat it as such.

And the United States Government is very close to being in a place where it’s doing precisely that.  We hope the entire world will come to understand that China welched on a deal and we no longer need to live up to the commitments that were made because of the special nature of Hong Kong.  Taiwan will prove to be the same way with respect to the demands that we should place, and I hope that the Chinese Communist Party will make a different decision with respect to Taiwan.

QUESTION:  Okay.  I’ve got to ask about the Middle East quickly, even though we’re running short on time.  There’s noise about the U.S. returning to the table with the Iranians.  You, of course, opposed the Iranian deal a few years ago.  Meanwhile, things have moved on the ground.  The sanctions have exacted a greater toll on Iran.  They concede they’ve been enriching uranium again.  Is returning to the table even possible?  Where do you think the Iranians are on their willingness to do a deal or not do a deal?  I know the European allies continue to want some kind of return.  What’s the situation like on the ground right now in terms of where Iran stands and the prospects for any kind of return to the table, whether you support it or not?

SECRETARY POMPEO:  Yeah.  So 2021 is very different in the Middle East than 2015.  In 2021, you have Gulf states and the Israelis working together, we have the Abraham Accords, we have a greatly weakened Islamic Republic of Iran regime.  We’ve denied them hundreds of billions of dollars of wealth that they would have used to foment terror.  Their leadership’s control is weaker than it was today in terms of their capacity to impact proxy forces in Syria, in Iraq, and Lebanon.  All of those things present an enormous opportunity, an enormous opportunity for the Iranian leadership to do what it needs to do.

And so whether there’s a deal or no deal, I’ll leave to others.  But the conditions on the ground in the Middle East are much different.  We’ve built out real coalitions to destroy the caliphate.  We now have Arab countries working alongside the Israelis.  We have a coalition working the Strait of Hormuz to keep it open and safe, to keep energy flowing across the world.  All of those things have been built out over these last four years and put Iran in a place that they have never been more isolated.

To tell you what decision they’ll make, that will be for them to choose.  But until such time as they make the decision to behave like a normal nation, it ought to be the case that the entire world, whether that’s the United States and Europe or others, we all have an obligation to make sure that the terror that they have foisted upon the world for these last years, since at least 1979, is no longer rewarded with billions of dollars from the United States and Europe.  That would be the wrong direction to take, and I hope that the world will see that and continue to put pressure on Iran to do the simple thing of behaving like a normal nation.

QUESTION:  And you mentioned the Arab countries and Israel.  And there was a meeting, of course, just a few weeks ago between the Saudis and the Israelis.  And I know you’re not going to talk about a confidential meeting, but in the in the broadest sense looking ahead, how substantive are the hurdles for the Saudis – home of Mecca, among other things – and the Israelis, do you think, to really achieve some kind of a durable peace one day?  Is that really achievable?

SECRETARY POMPEO:  Matt, I hope it is, and indeed I pray that it is.  I firmly believe that it is.  They have a set of shared understandings about what creates peace and stability in the Middle East.  That’s what’s driven the Emiratis and the Bahrainis and the Sudanese to normalize their relationship with Israel, just as the Jordanians and Egyptians did before them.

Ultimately, I think every nation in the region will come to recognize that recognizing Israel as the rightful homeland of the Jewish people is the right thing to do for their own people.  There will be lots of obstacles, there will be lots of hurdles, the timing is obviously unpredictable.  But I think the direction of travel towards this recognition and towards an Israel-Arab peace concordant that will lead them to a place where they jointly recognize the risk to the region, which is indeed Iran, will lead them to a closer, deeper set of relationships.

QUESTION:  Okay, we’ll leave it there.  Secretary of State Mike Pompeo, thank you very much for your time.

SECRETARY POMPEO:  Thank you, Matt.  Have a good day.

QUESTION:  You too.  Bye. Bye.

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