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Editor’s note: This speech, as prepared for delivery, was given byJames A. Baker, III, at the Association of International PetroleumNegotiators International Petroleum Summit in The Woodlands.Published here with permission.

efore I get started today, I have a confession to make.Ladies and gentlemen, I have been asked to speak to

you today about “negotiations.” And to begin at thebeginning, let me say a word or two about what I think it takesto be a good negotiator.

Over the decades, I have learned that successful negotia-tions come to those who are well-honed through years of hardwork at developing this special talent. That is importantbecause, as you would expect, bad negotiators produce badnegotiations.

As I moved from the world of law and business to the worldof politics and public service, I was struck, not so much by theirdifferences as by their similarities. Success in the boardroom

and the courtroom, and success in elections and in government,may not be exactly the same. But the art of “politics” is requiredin both. What I learned in one I was able to apply in the other.

My old friend, George Bush, No. 41, taught me that thereare two kinds of politicians. One, he said, is like the Dalmatianwho grows up in the fire house. From the time he’s a puppy,every time the bell rings, he runs.

The other achieves success in the private sector first andonly then enters politics and public service.

President Bush and I were that other kind. Both of us servedin the military, then worked for a living. He founded a success-ful oil company before he ran for Congress in the 1960s. Iworked as a lawyer before joining the executive branch of gov-ernment in 1975.

Today, when I speak to young people who are interested inpolitics, I encourage them to do what 41 and I did: First, get alife! Get a job. Start a family.

One reason for this advice is personal. I think you’ll be a

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closing the dealSix methods of negotiations.

BY JAMES A. BAKER, III

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Former U.S. Secretary of State James A. Baker, III,speaks at the Association of International PetroleumNegotiators International Petroleum Summit in TheWoodlands on May 10.

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happier and more productive human being if you put familyand profession ahead of politics.

But another reason—with many, many honorable excep-tions—is that our country is better governed, I think, by peoplewho have earned a paycheck in the private sector.

In my case, almost everything I did in public life was basedat least in part on the experiences I got while serving for 18years as a business lawyer in my hometown of Houston. In allmy government posts—whether dealing with my fellow execu-tive branch officers, with members of Congress, or with foreigndiplomats and heads of government—I always enjoyed negoti-ating ... maybe because I had spent so many years doing just thatfor my law firm’s clients.

Along the way, I have found that there are a half-dozenapproaches that, when properly applied through solid prepara-tion and hard work, can be used to develop good skills as anegotiator—whether you’re negotiating for a client in the pri-vate sector or for your country; whether you’re negotiating amerger of two companies; or whether you’re negotiating a peaceagreement.

And so, I would like to discuss those six approaches for amoment.

First and foremost, you need to understand your opponent’sposition. If there was one key to whatever success I’ve enjoyedin negotiating in the public and private sectors, it has been thatI was able to develop an ability to crawl into the other guy’sshoes.

When you understand your opponent, you have a betterchance of reaching a successful conclusion. That means payingattention to how they view issues and appreciating the politicalconstraints they face.

This approach was important when I was secretary of stateto President Bush and our administration confronted the unex-pected collapse of the Soviet Empire. No great power wants torelinquish its status. No leaders like to see themselves humil-iated on the world stage. We therefore did all we could to avoid“triumphalism”—public crowing over the defeat of commu-nism and the implosion of the Soviet Union.

I believe that our attention to Moscow’s sensitivities was amajor reason the Cold War ended with a whimper and not witha bang.

That period in American diplomacy also illustrates a secondapproach—building trust through personal relationships.

I am referring to trust that transcends written documents. Ofcourse, you never sacrifice your principles or your country’snational interest in order to acquire a relationship of trust withyour interlocutor. But building trust at the personal level greatlyenhances the chances of success in negotiations.

Over the years, I developed a close relationship with theMinister of Foreign Affairs of the Soviet Union, Eduard She-vardnadze. During moments together in foreign capitals—or inWashington or Wyoming—we nurtured a unique relationshipthat helped us steer the Cold War to a peaceful conclusion.

Though he started out as an adversary, he became a close col-league and even a friend. Through mutual trust, we were able toachieve things that benefited both our countries.

When both sides trust each other, even the most difficulttalks can succeed. When there is trust, the negotiators can relaxand explore the territory outside their formal negotiating posi-tions. They can talk about their assumptions, strategies, andeven fears. This doesn’t guarantee success, but it improves theodds. And it leaves both parties in a better position to try againlater if they are not initially successful.

But sometimes, building trust needs a little help, or a kick-start.

And this is the third approach. I call it “parallel reciprocalconfidence building.” It is the method of confidence buildingthat keeps the parties talking.

As a business lawyer, I learned that the best way to thinkabout a big negotiation was as a series of small negotiations. Itwas always important to start with an issue that could beresolved quickly, reasonably, and amicably.

Finding a common point of agreement—even a minor one,like the shape of the negotiating table—can help set the tone ofthe relationship. It also helps develop a dialogue, which is oneof the most important aspects of negotiations.

Ambassador Max Kampelman, one of our arms-controlnegotiators, had it right when he said that: “A dialogue is morethan two monologues.” The longer you can keep the sides talk-ing with one another—instead of delivering sermons to oneanother—the better are the chances that a middle ground canbe reached.

In 1991, when I was trying to get Israel and all of her Arabneighbors to meet in Madrid for peace talks, I asked both sidesto consider modest confidence-building measures. At the time,direct talks between the two sides were taboo. Building trustwas a difficult challenge. But once the two sides were able totake small steps in unison, they moved to larger and larger ones.That confidence building led to the ending of that taboo and tothose historic face-to-face negotiations in Madrid betweenthose long-time adversaries.

I call the fourth approach: “principled pragmatism”—theart of the possible without the sacrifice of principle.

Negotiation, almost by definition, is the art of compromise.But no compromise should be taken to the extreme of sacrific-ing core principles. In fact, I would argue that success in politicsrequires “principled pragmatism.”

From 1981 to 1985, I served as President Reagan’s WhiteHouse chief of staff. These were the years of tax reduction andreform, economic deregulation, rebuilding our defense capabil-ities, and Social Security reform.

Working with Congress to achieve these goals was part ofmy job description. In this regard, compromises were neededand compromises were made, often over the objections of someof the president’s more ideological supporters. But those com-promises were made by the Gipper himself, who told me many

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times: “Jim, I’d rather get 80 percent of what I want than to goover the cliff with my flag flying.”

It is a lesson I applied again and again in my public career:“Don’t let the perfect become the enemy of the good.”

The fifth approach is timing—the ability to recognize whento press a point and when to withdraw. Like a good poker player,you have to know when to hold them and know when to foldthem.

In 1991, international developments provided good timingfor creating better relationships between Jews and Arabs.Remember, the collapse of communism was proceeding aroundthe world. That phenomenon, coupled with the defeat of Iraqiradicalism in the first Gulf War, created a new geostrategicdynamic. The timing was right to try to bring Israel and herArab neighbors to the bargaining table for the first time ever,and so we were able to succeed.

On the other hand, bad timing can undermine successfulnegotiations.

The sixth and final approach is to maintain a deep appreci-ation of, and respect for, politics.

We probably all know that the Prussian military philosopherClausewitz said war is the continuation of politics by othermeans. I would argue—and in fact, I did in the book I wroteabout my years as Secretary of State—that diplomacy is also thecontinuation of “politics.”

In a broader sense, governance is also a continuation ofpolitics.

By “politics” here, I refer to two things. One is the noble artand science of winning election to public office. It’s hard toargue with J. William Fulbright, who stated the obvious: “To bea statesman, you must first get elected.”

“Politics” in the second sense is what occurs between elec-tions, the process of turning ideas into policies. In other words,“governing.”

It is only through politics (in this second sense) that we cantransform political philosophy into public policy.

However, an elected official can transform his ideas into pol-icy only to the extent that he has power. And power in our sys-tem ultimately derives from public support—as expressedthrough elections and as reflected in the meantime by shifts inpublic opinion.

A public official who loses public confidence also losespower. A public official who husbands that resource and uses itwisely can change the direction of history.

My point is that “politics”—not in the electoral sense but inthe broader sense of that term—enters into every policy deci-sion that a president or other public official makes and that isboth necessary and good.

In building my team at the State Department, I looked forcertain characteristics—loyalty, leadership, and a willingness towork as a team. I also looked for people with good politicalsense. Why? Because, quite simply, politics drives diplomacy,not vice versa.

The difference between success and failure is often measuredby the ability to understand how political constraints shape theoutcome of any negotiation.

When negotiating on behalf of the United States, I tried tonever forget that most foreign leaders are themselves politi-cians. They view their problems, and their opportunities,through political eyes.

To persuade them, as I mentioned earlier, it is often helpfulto put oneself in their shoes—to determine how to help themexplain, justify, or even rationalize positions back home. Also,foreign political leaders respect American diplomats who canwork the domestic side of U.S. politics in order to deliver oninternational commitments.

This approach helped us build the Gulf War coalition thatejected Saddam Hussein from Kuwait in 1991. Effective U.S.leadership depended on our ability to persuade others to joinwith us. That required us to appreciate what objectives, argu-ments, and trade-offs were important to our would-be partners.

The six approaches that I have just discussed can helpsharpen negotiating skills but only if they are combined withthe hard work and attention to detail required of a successfulnegotiation.

Of course, how one considers these six approaches willchange from situation to situation. For example, an approach totiming that proved effective in one negotiation might not workin another. And so, one should always remain flexible in regardsto utilizing these approaches.

There are three other things, however, that I think shouldbe absolute, and one should remain inflexible with them. Let’scall them maxims. Ignoring one of these three maxims can seri-ously jeopardize a successful negotiation.

First, and this is the Golden Rule of negotiating: Never lie.Misunderstandings and miscommunications are inevitable. Butthey can be corrected with solid dialogue. Lies, however, breaktrust between the sides, and trust is vital to negotiations.

The second maxim is a simple negotiating rule: “Nothingshould be deemed to have been agreed to until everything isagreed to.” This prevents both sides from claiming that one ormore disputed items were resolved and trying to pocket them,even though the entire problem was not resolved. This rule isessential to avoid misunderstandings.

And the third maxim is: Keep a written record of all discus-sions. This prevents the parties from having to rely on theirmemories, which can fail after long hours of talks.

Ladies and gentlemen, finally let me say in conclusion thatsuccessful negotiations play a vital role in helping create, main-tain, and preserve peace, prosperity, and liberty—whether inthe public sector or in the private sector. TBJ

JAMES A. BAKER, III,is a senior partner in the law firm Baker Botts and honorary chairman of Rice University’s JamesA. Baker III Institute for Public Policy. He was secretary of state under President George H.W.Bush, secretary of the treasury under President Ronald Reagan, and White House chief of staffunder Bush and Reagan.