We are going to have tread thoughtfully to bring about a resolution to this problem.  There is a very real problem; what is the point of trying to reach a new agreement with North Korea if they have already violated the previous one?  Nonetheless, I think that we will eventually need direct talks with the north.  Kim Il-jong appears to want economic aid and firm guarantees that the United States is not going to start a war with North Korea.  We certainly don't want war; the first one was bad enough.  I was there; I can vouch for that.  I am confident that in time we can reach a solution.  We do need to be thoughtful, careful in our choice of words to describe the situation.  We need to understand the culture and the sensitivities of the Koreans.  This goes a long way to creating conditions for a resolution of the problem.  After all, the entire region wants this problem solved; the United States is not alone in this. 

Q:  Korea is one area where it appears that China and the United States can work together.  Could you comment further on the future of the Sino-American relationship?

 A:  China has been very supportive of the United States in the war on terrorism.  They have been very cooperative on North Korea.  We are seeing the transition to a new regime, a process that will be completed in March, although I do believe that Jiang Zemin will continue to be the supreme power.  The trade relationship is vitally important, both to the United States and to China.  We can have a constructive relationship with Beijing.  We won't agree on everything.  China will not be a Jeffersonian democracy, even though political change is occurring.  Neither side wants to be the other's enemy.  China is going to be the leading power in Asia by virtue of its population and territorial position--I don't believe that the Chinese are seeking to control any new territory.  Certainly, Taiwan remains a flashpoint, but you have to look at the amount of Taiwanese investment in China, and the fact that 500,000 Taiwanese now live and work in China.  We have made our position clear: there is one China, but we do not support the use of force to resolve the issue.  Time, I think, will take care of that problem.

 Q:  In his State of the Union address, the President said nothing about free trade or the U.S. relationship to Latin America.  Does this signal any change in attitude on the part of the administration?

 A:  I was disappointed that free trade was not mentioned in the State of the Union, but the president remains committed to promoting free trade throughout the Western Hemisphere.  There have been some setbacks.  Argentina imploded.  In Brazil, Lula has to convince the world he is not going to jeopardize foreign investment or return to policies that promote an inflationary spiral that would make it unwise to invest in Brazil.  We have in Venezuela a leader with whom it is difficult to deal.  I think all of this makes it difficult to go ahead with creating a broad Free Trade Area for the entire region.  Thus, we have scaled back; we are trying to promote free trade agreements with Chile, with Central America and the Caribbean.  It is a good thing that the president received fast-track authority from Congress, to be able to negotiate free trade agreements without having to go back to Congress. 

I would like to see more attention paid to Latin America.  I am troubled by the trend to move to governments that are less democratic; there is also a tendency now to move leftward.  Latin America is and should be very important to the United States. 

Q:  Perhaps we could close with a short overview of the transatlantic relationship. 

A:  We need to recognize that Germany is a social democracy, not a market economy, and France is not far behind.  We have always had tensions with France on questions of trade.  We are not going to agree with the Europeans on everything.  We will act on our national interests, and the Europeans will do the same.  We have seen this in the World Trade Organization, where the Europeans have sought to undermine us, because it was in their national interests to do so. 

I do not think that Iraq will seriously affect our relations with Europe.  At the end of the day, I believe that even the French will sign on, although I don't really know about Germany.  NATO remains very important, and we should not let the alliance deteriorate.  We do need to work on our relationship with the Europeans, perhaps a bit more conscientiously than we have in the past.  In the final analysis, there is no reason we shouldn't have a trans-Atlantic relationship that is civil.

 Maurice R. Greenberg is chairman and CEO of American International Group, Inc., and the chairman of The Nixon Center.