Interview With the Wall Street Journal

Q. Thanks for doing this. This is really—I appreciate it a lot.

The President. You bet.

Q. It's a big event tomorrow for the Wall Street Journal.

The President. Well, I understand—yes, I understand you're kind of changing your format.

Q. Yes. It will look different, color.

The President. What about the sketches? What happened to the poor sketches?

Q. They'll still be there. You'll still get one.

Counselor Karen Hughes. This is—journal——

Q. Somewhat short.

Q. Subdued color. Champagne, as they call it.

The President. What is your job?

Q. I'm the Washington bureau chief.

The President. What is Al Hunt's job?

Q. He's the executive Washington editor. I can't define that exactly for you; somebody else will have to do that for you.

The President. Somebody upstairs somewhere.

Q. He's the guy you have to worry about.

The President. Good. That's why he's here. [Laughter]

Iraqi Oil Exports/Energy Policy

Q. It's a good day to be here. It's a good day to be talking to a former oil guy, actually.

The President. Yes.

Q. And I thought maybe we would start there. You saw what the Iraqis said today about cutting off oil exports.

The President. Taking production off for a month?

Q. Yes. And the Iranians and the Libyans have said similar things. Do you worry about some form of another Arab oil embargo or some form of oil embargo by some people?

The President. Here's my thoughts on that. One, it means that we need an energy policy that encourages diversification away from places like Iraq. You know, the ANWR debate has been amazing to watch because of the amount of misinformation that has been laid out there. But the reason I bring up ANWR is because it just so happens that once production is up and running on a very small footprint in the middle of this vast country, we can produce as much oil as Iraq produces on the world market.

A good energy policy is one that obviously encourages conservation and new technologies but is also one that helps America diversify away from sources of crude oil in places like Iraq. And I—the first I heard of this, I said this is a—justifies more than ever the call for exploration in areas where technology will allow us to do so in environmentally friendly ways.

I also saw the response of other nations, nations that were willing to step up and increase production, and I appreciate that as well.

My other reaction is that Saddam Hussein is willing to cut off production even though it affects his own people. It helps define the nature of this regime. I've told people as I've made the case for— about my strong feelings about Iraq, that this is a person who is willing to poison his own people. Now it looks like he's willing to cut off revenues so that he can't feed his own people. Anyway, I'm not— I mean, axis of evil.

Q. You mentioned the statements by other countries. Did you—have you heard anything from Saudi Arabia? Did Secretary Powell hear from Saudi Arabia?

The President. I haven't, not yet. He's, as a matter of fact, eating dinner with Crown Prince Abdullah as we speak. No, I just—I thought Ari told me that there had been some movement on the——

Press Secretary Ari Fleischer. They said they're not going to follow a call for an embargo; OPEC has said that.

Q. And in terms of—if you have Iraq, if you have Iran, possibly Libya, you still have a substantial effect on the market, couldn't it?

The President. Well, it could, absolutely. There is excess supply, and we'll just see how it plays out. But to me, it indicates that—well, that's another reason why we've got to be very cautious about making bold predictions about the economy. We're an energy-dependent nation. And as a result, it's—you know, it points up to part of the fragility of our economy. In other words, when you're dependent, a price spike can affect growth, obviously.

So I'm pleased with some of the progress being made, but as I told the folks there in this speech I just gave on terrorism insurance: You know, people can try all the numbers and prognostications and all they want; I'm the kind of fellow who believes that if somebody can't find work or is worried about their job, we've got a problem. And bad energy policy or the failure to have energy policy or the fact that we're dependent upon unstable countries is a reason why I am—do not believe that we're out of the economic woods yet.

Q. Is what Iraq is doing, does it amount to a hostile act against the U.S.?

The President. Well, I wouldn't call it a friendly gesture. It is—you know, this is a man who obviously hates America. And he's not just affecting America, by the way; it's affecting countries—all countries. If, in fact, his action has the—is able to run the price of crude up, it's going to affect Europe; it's going to affect poor nations; it's going to affect poor people around the world. This is a guy who has tried to manipulate the market for short-term gain for the wrong reason, is a person who is unfriendly to all nations, as far as I'm concerned.

Q. You would like a better energy policy; that's fine, and that's understandable. In the shorter term, if you've got a problem, there are some other options you can consider. You could think about SPROs out there.

The President. Could do that.

Q. There are gas taxes that could be reduced. Either of those options appeal to you?

The President. We'll look at all options. If, in fact, his threat—look, we're the kind of people that deal with problems; that's what happens in the White House. You're dealt a problem, and we deal with it. And we'll look at all options. But let's—I think we need to be a little careful about predicting whether or not this man is going to have the effect he wants to have until——

President Saddam Hussein of Iraq

Q. The effort to do something about Saddam Hussein has obviously been kind of put on hold while this Middle East situation gets sorted out. It could take a long time to sort out the Middle East situation. How long does it stay on hold?

The President. Well, not necessarily.

Q. Not necessarily——

The President. I wouldn't—you made— repeat your question. I think you made a pretty strong assumption in your question.

Q. Well, it's only based on the 20 years of history.

The President. No, what did you just say, though—seriously, I'm not being critical. I'm just curious. Again, you just said my plans for Iraq have been placed on hold?

Q. Yes. Is that incorrect?

The President. Iraq is a problem, and again, another reason why it's a problem, we witnessed today. And we are constantly talking with our friends and allies about Iraq. I spent a great deal of time this weekend talking to Tony Blair about Iraq. As I've said, all options are on the table for Iraq, and that's about all I've—pretty much about all I'm going to say. I don't know what you meant by——

Q. It would be wrong to say that your plans are on hold?

The President. You see, I assume from your question that we're not really thinking about Iraq now, that somehow, because the Middle East has flared up, any thought about Iraq or keeping a coalition together on Iraq——

Q. I was thinking more action rather than thought.

The President. Well, I mean, we're looking at all options. And Iraq is an important country. By the way, chasing down the Al Qaida killers is still a priority, even though the Middle East has flared up. I'm in no hurry on a lot of issues. I'm a patient man; I'm a deliberate person. I understand we live in a world where people are constantly saying, "Gosh, after 6 months, how come this isn't over?" Some people say that; most Americans don't feel that. They understand that we're in the long, long pull. So you've got to put everything in context.

And the way I am, I'm a deliberate, patient man when it comes to conducting this war, thorough war, to defend our freedom. And I have said publicly that the idea of an Al Qaida terrorist network hooking up or matching up with or allied with—let me start over—"allied with," I think, is a more understandable word—a nation that has developed a weapon of mass destruction is a scenario that I will not leave our children saddled with, in other words.

And again, my timeframe is longer rather than shorter. In other words, the fact that we haven't proved whether or not Saddam—or bin Laden is alive or dead or— he may be dead, may be alive, that fact just simply doesn't bother me. Because if he is alive, we're going to get him eventually, and if he's dead, that's fine, too.

But we're making progress there, just quietly, steadily making progress. Abu Zubaydah is a very good example; for those of you who follow the Al Qaida network, you understand the significance of an Abu Zubaydah capture. And anyway, I don't know if I answered your question properly. In other words, it almost implied that things have to be immediate on all fronts; otherwise, there's not a focus. And that's just not the case.

Q. Just as a prognostication——

The President. Just as a hypothetical?

Q. See, that's not what I was going to say. You can define it, I guess.

The President. Okay.

Q. Do you think if we're sitting here a year from now talking, Saddam Hussein is still going to be in power in Iraq?

The President. That's one of those hypotheticals. [Laughter] I'm not going to——

Gas Taxes

Q. Let me go back to something I mentioned earlier, gas taxes. Any reason for Republicans to start thinking about rolling back some gas taxes at this point?

The President. I think you're asking me— you're speculating on something that hasn't occurred yet.

Gas Prices

Q. Just to follow up on that, though, how much of a—do you have any sense of how much of an increase in the price of oil or the price of gas we could see as a result of this?

The President. No, I don't yet. I understand you all are trying to make news, but this is—this is a fresh statement by—so we've just got to see how the world reacts.

But one thing is for certain: The fact that people are concerned points up the fact that we had better do something for the good of our country in terms of diversification of supply away from sources of crude oil in places like Iraq.

Israeli Withdrawal From Palestinian Territories

Q. The other part of your Middle East problem today is obviously on the West Bank. You don't seem to have gotten much of a response.

The President. Actually, there is some new news. IDF announced they were withdrawing out of two Israeli cities. What are the names of them, Steve?

Deputy National Security Adviser Hadley. Tulkarm and Qalqilya.

The President. Qalqilya. That's right. And that's a beginning. If responsible leaders want peace, they must—there are clear things that they must do. The Arabs must condemn and fight terrorism. They must cut off funding. They must stop propagandizing about the great heroic martyrdom of suicide killers. They must explain clearly that Israel has a right to exist and they intend, as leaders, to coexist with Israel in a peaceful way.

The Israelis must continue withdrawal. I was very concerned that a point had been reached at which it would be very difficult to achieve peace. We want peace. We have laid out the vision for peace, and Israel has recognized the Palestinian state. Israel has signed on to Tenet and Mitchell, as has the PLO. And my point is that Israel has recognized the framework for peace, and it's time for her to start pulling out in order to allow all of us who care about peace to be able to work to get peace in the region.

Q. Have you been told by the Israelis that this is a response, the beginning of a response to what you asked for in the last few days?

The President. I have not been told that. All I can tell you is they're beginning to withdraw, at least from these two cities, as of an hour ago.

Q. What did you think of the Prime Minister's speech to the Knesset? Have you had a chance to——

The President. Today?

Q. Yes.

The President. I didn't see it. I had a— the only thing I've heard from him was, we had a good conversation on Saturday.

Q. A good conversation?

The President. Yes. I mean, it was good in the sense that he knows where I stand, and he heard my—it was a good, frank discussion, let me put it to you that way. Ari told me that the word was moving around that it was a very hostile conversation. It wasn't. It was just a very frank discussion about two leaders who are concerned about the region.

Q. What he said today was basically— I don't know if I can get you the exact words—but, "We're going to keep going until we're done." It didn't say when that was going to be.

The President. I just can tell you they started pulling out of cities.

Q. When you talked to him, or just in general, are there consequences if that doesn't continue?

The President. It's going to continue.

Q. Sorry?

The President. I think it will continue.

Q. The withdrawal?

The President. I think he heard what I said, and I repeated it again today, prior to this news. And Colin Powell's mission is to continue to work to set the framework for political discussions, and part of that is for Israel to withdraw.

Secretary of State Powell's Visit to the Middle East

Q. And as part of the Powell mission, do you anticipate him meeting with Arafat?

The President. It depends on the circumstances at the time. He's got full latitude to do what he thinks is necessary to get the process headed toward a political settlement.

Chairman Yasser Arafat of the Palestinian Authority

Q. And if Yasser Arafat does what sort of things between now and when Security Powell gets there, is that more likely to happen?

The President. That's up to Powell. But obviously—listen, Yasser Arafat, as I've said—somebody asked me the other day, have I lost trust in him? I said, "Well, he never earned my trust."

The way you earn trust is by leading and by, you know, not squandering missed opportunities—squandering opportunities, creating missed opportunities after missed opportunities, to provide—here you've got a nation, America. I'm the first President, I believe, to have ever gone to the United Nations and laid out a vision for a Palestinian state at peace with Israel. And this is an administration that laid out the Tenet plan, embraced the Mitchell plan that was, I guess, finalized on my watch but started under President Clinton's watch. So you've had two administrations working toward a blueprint for peace. And Mr. Arafat, instead of focusing and seizing and using his energy to achieve this vision, has not led. So he's never earned my trust.

Q. So who leads, if Arafat doesn't?

The President. Arafat is the leader. That's who we're dealing with.

Secretary of State Powell's Visit to the Middle East

Q. Do you have any interest in having Powell see alternative Palestinian leaders while he's there?

The President. I think Colin ought to visit with whomever is necessary to move the peace agenda, and he'll just use his judgment. We've got General Zinni on the ground there. Burns, I believe—Burns is with Powell. So we've got our experts there that understand the area very well. And Powell has got an agenda, which is to move the process toward a political settlement. And obviously, we've laid the conditions out in my speech on Thursday, as to what it will take. And he's got the U.N. resolution standing behind him, a blueprint toward where we need to get, and there are responsibilities on both parties.

Crown Prince Abdullah of Saudi Arabia

Q. Somebody suggested to me that one reason that you dispatched Secretary Powell was that the Saudis were—that you had some frank conversations with the Saudis over the last few days, including one in which they indicated the Crown Prince might not make it to Crawford, Texas, unless the situation——

The President. No.

Q. Can you describe the conversations with the Saudis on this point?

The President. Well, listen, the Saudis are just as concerned as other nations in the region. But the idea of saying, "You must do this, or else I'm not going to come to Crawford," just isn't—that didn't happen. Not only didn't it happen, it wouldn't be a very smart thing for anybody to do. It's just not the way I—it's not the way we do things in this administration.

Energy/National Economy

Q. Let me go back to oil for just a second, and then I think you want to switch to something else. Have you gotten, in any kind of conversations with the Saudis, any assurances that they are not in the oil embargo business anymore and that they'll try to make sure others don't——

The President. I'm sure the subject will come up with Colin and the Crown Prince, but this has been relatively—you know, this is new.

Q. Right.

The President. So it'll be a topic of conversation.

Q. Yes. Yes.

The President. And as Ari said, he felt like that the OPEC, as well as the Saudis— again, tell me the news; I haven't seen it. This is all breaking since I just arrived from Knoxville.

Counselor Hughes. The President has been in Tennessee.

The President. Ari watched the whole speech on C-SPAN in Knoxville, didn't you?

Press Secretary Fleischer. Yes. They said they're not going along with the call.

The President. So we just have to see.

Q. But it's your—the recovery is fragile enough that there are things that can still throw it off track.

The President. Oh, I think so. I don't think the recovery is a given. And that's why we need to have this terrorism bill, terrorism insurance bill. I mean, there are things that Congress can do, and I think there are some signed signals we need to send. We need a trade bill. We need an energy bill—that will help—even though it won't happen immediately. Diversification won't happen immediately. It will help calm nerves. It means that the long term is more optimistic than not.

So there are things we need to do. California, the California energy situation wasn't a year ago. And yet, it seems like it was years ago that California looked like it was running out of energy. And to me, that was a wake-up call. Where are we going to get our gas from to fuel the electricity, the new plants that were built in California?

And you know, the Prime Minister of Canada is thrilled that we're increasing demand, because he's a major supplier of gas, and we're going to have to work with them. That's why I've got this hemispheric energy group, Mexico, Canada, the United States, meeting as to how to increase supplies in our hemisphere, the need for pipelines, and where they ought to go.

In other words, that's important. And Mexico, herself, is grappling with a constitutional issue on energy. We export about 8 percent of our natural gas to Mexico. And obviously, to the extent that Mexico is able to attract capital and explore for more gas, it's good for Mexico in terms of jobs; it's good for their cashflow; and it's good for the energy picture in our hemisphere.

In my judgment, obviously, we've got to go to Alaska. It's a part of a strategy to diversify away from unstable sources of energy. And we need more nuclear power as well. That's why the Yucca Mountain issue is an issue. We need clean coal technology. We need a comprehensive effort. And we need conservation as well. The interesting fact that came out of the California energy crisis was that they increased their conservation by about 10 percent, which is significant and necessary and good.

I believe that some of the—I've got faith that technology will—that we will have new automobiles. But it's not going to be quick enough to deal with immediate issues in the Middle East, for example. In other words, down the road there is going to be some new technology. We'll still be driving, all of us; we'll still be driving, and we'll be driving cars that make us less dependent on foreign sources of crude and are much cleaner burning.

Corporate Management Reform and Responsibility

Q. You wanted to switch to corporate——

Q. Yes. Well, you were talking about things that potentially threaten the recovery. Do you think that the—I don't know if "crisis" in confidence is too strong a word, but the feeling, you know, the concerns about corporate governments is a serious——

The President. I think it's a serious— I think it's an issue that we need to look at and look at very carefully. I think the markets reflect the fact, though, that most investors have still got confidence in our economy and in corporate America. But reforms are necessary, and the CEOs need to be held accountable for full exposure or full detail of assets and liabilities. There needs to be pension review. If officers sell, the employees ought to be able sell. There ought to be better information sharing. There ought to be more diversification.

On the other hand, we've got to make sure that we don't disincent companies for 401(k) compensation. I think it's a vital part of building up savings for our workers.

There are discussions now about options, how we handle options. I think options are important. I think they're a good incentive program. I think once options earn the money, that they ought to be calculated in the dilution of—yes, be part of the— that they ought to be dilutive in their earnings per share calculations. To me, that seems like a reasonable way to handle that issue so that people fully understand the effect of options being granted.

Q. But not as Chairman Greenspan has suggested, expensing?

The President. My personal opinion is that—and I think most of the people in my administration feel like the best way to calculate—you know, earnings are earnings. And earnings per share is the calculation oftentimes used in an investment decision. And so we ought to state the earnings for what they are and affect the earnings per share. Listen, Alan Greenspan is very smart; I hate to get into a debate with him. But my view is, is that it achieves both objectives. One, what are the true earnings of the company? And two, what is the dilutive effect of options in the money? We may perhaps get to the same end that he is trying to achieve, and that is a full accounting of options. To me, that's a reasonable way to do that.

Q. One of the things that's happening right now is that, obviously, Arthur Andersen is teetering on the brink. Are you— is it possible the Justice Department went a little too far and a little too hard after Arthur Andersen? Are you comfortable with the idea that they might go away, as a result of what the Justice Department has done?

The President. Well, I believe people ought to be held responsible for decisions made, and I will refer—I'll ask you to refer your questions to the Justice Department as to their tactics and decisions. Since they filed the suit, they'll be good at explaining it to you.

Q. But there are policy—I mean, there are policy issues involved. And some people say the way the Justice Department went at it is—you know, threatened to put thousands of people on the street who were totally innocent and all of this.

The President. There is a need to hold people responsible. I oftentimes talk about responsibility era—each of us need to be personally—you know, personal responsibility. I also make sure I broaden that to corporate responsibility as well. There is a responsibility for leadership to conduct themselves in a responsible way. I'll leave the details to the Justice Department, but the idea of holding people accountable or entities accountable is a very important part of ushering in the responsible era. And we'll let—there are all kinds of pundits, and I've heard this, that, and other. We'll just let the Justice Department answer those questions about the tactics.

Q. Do you think corporate America had kind of gotten away from that responsibility?

The President. I think—I do think there have been periods where the growth and the apparent creation of wealth gets so kind of easy, in a way, that people forget—not all people but some forget.

I remember the oil business in the early eighties, and people would say, "The price is going to 100." You know? And investment decisions were pretty lax. It just seemed like there was this kind of euphoria that swept up this particular sector. And every IPO hit, and everybody was in the money and options. It just seemed like the sky was the limit. There was never going to be any reality.

And during those periods of time, sometimes, some fail to remember that they have a responsibility to people other than themselves—namely, shareholders. And when we look back at this period, I think we'll find some incidents of that.

You asked me whether or not those incidents would cause lack of confidence in the future. I don't think so at all, and I think the market reflects that. On the other hand, it does call us to action, and that's one of the reasons why we've laid out a series of initiatives to deal with this issue.

I worry about a board of directors that are too acquiescent to a CEO, beholden not to the shareholder but to the CEO. That concerns me. I'm not sure of the law that you can pass necessarily, but I do think there is a culture that can evolve out of this period of time which will remind people they have a responsibility as leaders of a corporation.

Q. Can you do anything to make that evolution happen?

The President. Well, I think it is happening. I can't, as the President, call upon, reform and change and call people to account, in a broad sense. I mean, I'm not going to get involved in every lawsuit that comes down the pike, but I can remind people that we have a responsibility as citizens.

And there is a big responsibility in corporate America amongst the CEOs who treat their workers with respect. I was particularly grateful of the automobile manufacturers to promote product with keeping their workers' livelihoods in mind. I thought that was noble during this period of time. That sometimes stands in contrast to a corporate stereotype where people say, you know, "I don't really care about the livelihood of the workers. For me, I'm going to bottom line, focus immediate bottom line." There is a responsibility that these leaders have.

Situation in the Middle East

Q. Can I just return to the Middle East for a second? I can't get over it. When——

The President. You're writing about it for your whole life.

Q. I know. I'm stuck. I'm in a rut; I admit it. It's pathetic. [Laughter]

The President. No, it's important.

Q. Sometimes.

The President. You know, it's an issue that has consumed enormous amounts of time by this administration and every administration preceding me in modern history.

Q. It's lifetime employment for journalists, too.

The President. It's an important issue. It's an issue in which we've got enormous stake. It is an issue that—there has to be a vision of peace; there has to be a commitment to peace. And my job is to lay out that vision and to lead parties to the steps necessary to achieve the vision. And it's going to take a while.

Step one, in order to get there, is withdrawal of troops, from the Israeli perspective; and for the Arabs, to stand up and be accountable for holding—cutting off financing of terrorists and disrupting terrorist networks. These are people that do not— the terrorists and bombers do not want peace. They want to kill to prevent peace.

Q. Just to finish that thought, though— as you've often said, you're an optimistic person.

The President. Yes.

Q. Doesn't it feel like we're further away from any kind of a resolution than we've been in a long time?

The President. Well, I—listen, I hate the killing. Yes, in one way it seems like we're a long way away from peace, obviously, when you turn on your TV and see death, suicide bombers blowing up Passover celebrations, young Arab girl blowing up a young Israeli girl.

But I also know if the innate goodness of mankind and that there are people who understand that this way is—as I said, enough is enough. I think there is enough good will in the region, inherent goodness of the people on both sides of the issue that we'll ultimately have leadership say, "We're sick of this, and now let's work together."

I don't know if it's going to be a month or a year, however long. But nevertheless, this is a—and you have to look at it that way. You have to believe that peace is possible, and I believe it is. Ask Jerry Seib if peace is possible. He knows this issue better than me.

But I believe it is, and my administration will continue to work as if it is achievable. And one of our jobs is to pick and choose the time when we spend capital, be judicious in how we approach these issues, to not create false expectations, to be realistic about what's possible, and lead.

But in order to lead, you've got to see a better day. And I feel that. This picture right here says—it's a Tom Lea. He wrote the line, "Sarah and I live on the east side of the mountain. It is the sunrise side, not the sunset side. It's the side to see the day that is coming, not to see the day that is gone." And I love that picture, because I love the man and I love Texas; because I also love the quote, because it is a frame of mind necessary—it's a frame of mind that a President must have in order to be a good President.

And I believe that there are a lot of people in the Middle East, average, hard-working mothers and fathers, who want to see a better day. And we've got to lead to that better day.