SECTION: CAPITOL HILL HEARING TESTIMONY

LENGTH: 10189 words

COMMITTEE: SENATE FOREIGN RELATIONS

HEADLINE: FISCAL 2003 BUDGET: FOREIGN AFFAIRS

TESTIMONY-BY: COLIN L. POWELL, SECRETARY OF STATE

BODY:
Statement for the Record Secretary of State Colin L. Powell

Senate Foreign Relations Committee

February 5, 2002

Mr. Chairman, members of the committee, I am pleased to appear before you to testify in support of President Bush's budget request for FY 2003.

Before beginning, I want to thank you for confirming almost all of the nominees for the State Department. They are now hard at work.

Of those who remain to be confirmed, our ambassador-designate to the Philippines is of particular concern to me. We need Frank Ricciardone in Manila and we need him there as soon as possible. Not only have we not had an ambassador there in over eighteen months, it is now an even more crucial requirement as we scale up our assistance in helping President Arroyo combat the terrorists in her country. So, Mr. Chairman, I ask for your help in getting Frank confirmed, and in getting the remainder of our people to work as well. I also ask that you help me get the FY 2002/2003 State Department Authorization Bill passed as quickly as possible and that it include full authorization of our budget request for FY 2003, that it lift the cap on UN Peacekeeping dues, allow us to pay the third tranche of UN arrears with no additional strings attached, and include the management authorities we have requested. Moreover, I would also be grateful for your help in removing from the final bill the foreign policy restrictions, earmarks, and reporting requirements that tie the Department's hands.

And let me say here at the outset, Mr. Chairman, before I go into the details of the budget and our foreign policy, that President Bush has two overriding objectives that our foreign policy must serve before all else. These two objectives are to win the war on terrorism and to protect Americans at home and abroad. This Administration will not be deterred from accomplishing these objectives. I have no doubt that this committee and the Congress feel the same way.

As many of you will recall, at my first budget testimony last March I said I was going to break the mold and instead of talking exclusively about foreign affairs, I was going to focus on the financial condition of the department - both in terms of State Department operations and in terms of foreign operations. I did that because the resources challenge for the Department of State had become a serious impediment to the conduct of the nation's foreign policy. And you heard my testimony and you responded, and we are grateful.

Because of your understanding and generosity, we have already made significant progress and in the remainder of FY 2002 we will make more. In new hires for the Foreign Service, we have made great strides. For example, we doubled the number of candidates for the Foreign Service Written Examination - and this year we will give the exam twice instead of just once. Moreover, our new recruits better reflect the diversity of our country with nearly 17% of those who passed last September's written exam being members of minority groups. We have also improved Civil Service recruitment by creating new web-based recruiting tools. And once we identify the best people we bring them on more quickly. For Foreign Service recruits, for instance, we have reduced the time from written exam to entry into service from 27 months to less than a year. We are also working with OMB to create extensive new performance measures to ensure that we are hiring the very best people.

We are also well underway in bringing state-of-the-art information technology to the Department. We have an aggressive deployment schedule for our OpenNet Plus system which will provide desktop Internet access to our unclassified system for over 30,000 State users worldwide. We are deploying our classified connectivity program over the next two years. Our goal is to put the Internet in the service of diplomacy and we are well on the way to accomplishing it.

In right-sizing our facilities and in shaping up and bringing smarter management practices to our overseas buildings program, we are moving forward briskly as well -- as many of you are aware because General Chuck Williams has been keeping you informed about our progress. In fact, that is the first change we made, putting General Williams in charge and giving him assistant secretary equivalent rank. His Overseas Building Operations (OBO) has developed the Department's first long-range plan, which covers our major facility requirements through Fiscal Year 2007.

The OBO has also developed a standard embassy design concept for small, medium, and large embassies. This concept will reduce cost while speeding up construction and enhancing quality. And in making all of our facilities, overseas and stateside, more secure, we are also making good headway. By the end of FY 2002, over two-thirds of our overseas posts should reach minimal security standards, meaning secure doors, windows, and perimeters. And we are making progress in efforts to provide new facilities that are fully secure, with 13 major capital projects in design or construction, another eight expected to begin this fiscal year, and nine more in FY 2003.

I am also pleased that we have been able to improve the morale of our State Department families. We are especially proud of our interim childcare center at the National Foreign Affairs Training Center. It opened on September 4 and can handle a full complement of 30 infants and toddlers.

The idea of family and the quality of life that must always nourish that idea even in the remotest station, is uppermost in our minds at the Department. While we concentrate on the nation's foreign affairs we must also focus on caring about those Americans who conduct it, as well as the many thousands of Foreign Service Nationals who help us across the globe. For example, our sixty Afghan employees in Kabul worked diligently to maintain and protect our facilities throughout the 13 years the Embassy was closed. They worked at considerable personal risk and often went months without getting paid. They even repaired the chancery roof when it was damaged by a rocket attack. This is the sort of diligence and loyalty that is typical of our outstanding Foreign Service Nationals.

With regard to our budget, last year I told you that the out years were a source of concern to me - and they still are. In fact, given the costs of the war on terrorism, the downturn in the economy and accompanying shrinkage of revenues, I am even more concerned this year than last. But I was confident last year that I could make the case for State and I am confident this year that I can do so. We have a solid case to make, and it is the case of how we best pursue America's interests and there is no doubt in this old soldier's mind that foreign policy stands foremost among the answers to that "how." And Mr. Chairman, I am excited about the changes we've made and the momentum we've developed.

We need to keep that momentum going. That is why for FY 2003 you will get no break from me. I am going to focus on resources again this year in my testimony, because it is so critical that we continue to push the organization and conduct of America's foreign policy into the 21st Century.

Since that heart-rending day in September when the terrorists struck in New York, Virginia, and Pennsylvania, we have seen why our foreign policy is so important.

We have had great success over the past five months in the war on terrorism, especially in Afghanistan. And behind the courageous men and women of our armed forces has been the quiet, steady course of diplomacy, assisting our military's efforts to unseat the Taliban government and defeat the al-Qaida terrorists in Afghanistan.

We've reshaped that whole region - a new U.S.-Pakistan relationship, a reinvigorated U.S.-India relationship, a new Interim Authority in Kabul, the Taliban gone, and the terrorists dead, in jail, or on the run. We are also forming important new relationships with the nations of Central Asia.

In his second visit to the Department last year, President Bush told us that despite the great tragedy of September 11, we could see opportunities through our tears - and at his direction, the Department of State has been at flank speed ever since, making as much as possible of those opportunities.

And we need to continue to do so and for many years to come. We will need resources to do it, so first let me focus on my "CEO dollars", and then I will turn to foreign policy.

The Budget Priorities for FY 2003: Department of State and Related Agencies

The President's request for the Department of State and Related Agencies for FY 2003 is $8.1 billion. These dollars will allow us to:

- Continue initiatives to recruit, hire, train, and deploy the right work force. The budget request includes $100 million for the next step in the hiring process we began last year. With these dollars, we will be able to bring on board 399 more foreign affairs professionals and be well on our way to repairing the large gap created in our personnel structure and, thus, the strain put on our people by almost a decade of too few hires, an inability to train properly, and hundreds of unfilled positions. In FY 2004, if we are able to hire the final 399 personnel, we will have completed our three-year effort with respect to overseas staffing - to include establishing the training pool I described to you last year that is so important if we are to allow our people to complete the training we feel is needed for them to do their jobs. Soon, I will be back up here briefing you on the results of our domestic staffing review.

- Continue to upgrade and enhance our worldwide security readiness - even more important in light of our success in disrupting and damaging the al-Qaida terrorist network. The budget request includes $553 million that builds on the funding provided from the Emergency Response Fund for the increased hiring of security agents and for counterterrorism programs.

- Continue to upgrade the security of our overseas facilities. The budget request includes over $1.3 billion to improve physical security, correct serious deficiencies that still exist, and provide for security-driven construction of new facilities at high-risk posts around the world.

- Continue our program to provide state-of-the-art information technology to our people everywhere. Just as I promised you last year, the budget request will continue projects aimed at extending classified connectivity to every post that requires it and to expanding desktop access to the Internet for Department employees. We have included $177 million for this purpose. Over the past decade, we let the Department's essential connectivity ebb to very low levels and we need to correct that situation.

- Continue and enhance our educational and cultural exchange programs. The budget request includes $247 million for strategic activities that build mutual understanding and develop friendly relations between America and the peoples of the world. These activities help build the trust, confidence, and international cooperation necessary to sustain and advance the full range of our interests. Such activities have gained a new sense of urgency and importance since the brutal attacks of September. We need to teach more about America to the world. We need to show people who we are and what we stand for, and these programs do just that.

- Continue to meet our obligations to international organizations - also important as we pursue the war on terrorism to its end. The budget request includes $891.4 million to fund U.S. assessments to 43 international organizations, active membership of which furthers U.S. economic, political, security, social, and cultural interests.

- Continue to try to meet our obligations to international peacekeeping activities. The budget request includes $726 million to pay our projected United Nations peacekeeping assessments - all the more important as we seek to avoid increasing even further our UN arrearages. UN peacekeeping activities allow us to leverage our political, military, and financial assets through the authority of the United Nations Security Council and the participation of other countries in providing funds and peacekeepers for conflicts worldwide. As we have seen in Afghanistan, it is often best to use American GIs for the heavy- lifting of combat and leave the peacekeeping to others.

- Continue and also enhance an aggressive public diplomacy effort to eliminate support for terrorists and thus deny them safe haven. The budget includes almost $518 million for International Broadcasting, of which $60 million is for the war on terrorism. This funding will enable the Voice of America and Radio Free Europe/Radio Liberty to continue increased media broadcasts to Afghanistan and the surrounding countries and throughout the Middle East. These international broadcasts help inform local public opinion about the true nature of al-Qaida and the purposes of the war on terrorism, building support for the coalition's global campaign.

Mr. Chairman, on this last subject let me expand my remarks.

The terrorist attacks of 9/11 underscore the urgency of implementing an effective public diplomacy campaign. Those who abet terror by spreading distortion and hate and inciting others, take full advantage of the global news cycle. We must do the same. Since 9/11, there have been over 2,000 media appearances by State Department individuals. Our continuous presence in Arabic and regional media by officials with language and media skills, has been unprecedented. Our international information website on terror is now online in seven languages. Internet search engines show it is the hottest page on the topic. Our 25-page color publication, "The Network of Terrorism", is now available in 30 languages with many different adaptations, including a full insert in the Arabic edition of Newsweek. "Right content, right format, right audience, right now" describes our strategic aim in seeing that U.S. policies are explained and placed in the proper context in the minds of foreign audiences.

I also serve, ex officio, as a member of the Broadcasting Board of Governors, the agency that oversees the efforts of Voice of America and Radio Free Europe/Radio Liberty to broadcast our message into South Central Asia and the Middle East. With the support of the Congress, our broadcasting has increased dramatically since September 11. We have almost doubled the number of broadcast hours to areas that have been the breeding grounds of terrorists. The dollars we have requested for international broadcasting will help sustain these key efforts through the next fiscal year.

In addition, Under Secretary Charlotte Beers leads an aggressive effort to create and implement new programs to reach new audiences. She is working with private sector companies, government agencies, and with our embassies to create avenues to broader, younger audiences in critical regions. One of our new initiatives will focus on Muslim life in America. It will include television documentaries and radio programs co-produced with Muslim-Americans, speaker exchanges, and op-ed pieces. We know that this must be a long-term effort that will bear fruit only over time. But we must do it. Two of America's greatest strengths during the Cold War were our vigorous information and exchange programs. I believe that we can and must build a comparable capability today if we are to confront successfully the new threat to our security.

Mr. Chairman, all of these State Department and Related Agencies programs and initiatives are critical to the conduct of America's foreign policy. Some of you know my feelings about the importance to the success of any enterprise of having the right people in the right places. If I had to put one of these priorities at the very pinnacle of our efforts, it would be our people. We must sustain the strong recruiting program we began last year. At the same time, we will continue measuring our progress not simply on numbers hired but on how our new hire's enhance the Department's mission. We want to get to a point where our people can undergo training without seriously jeopardizing their missions or offices; where our men and women don't have to fill two or three positions at once; and where people have a chance to breathe occasionally. Morale at the Department has taken a definite swing upward and we want it to continue to rise and to stay as high as possible. As a soldier, I can tell you that such high morale, combined with superb training and adequate resources, is the key to a first-class offense - and that is what our men and women are, the first line of offense for America.

So, before I turn to foreign policy, let me say once again how strongly I feel as the CEO of the State Department about this part of our budget. It is essential that we have the funds necessary to pay for our operations worldwide.

Foreign Policy: Successes, Challenges, and Opportunities

In addition to the successes of the war on terrorism and the regional developments its skillful pursuit has made possible, we have been busy elsewhere as well.

With regard to Russia, President Bush has defied some of our critics and structured a very strong relationship. The meetings that he had with President Putin and the dialogue that has taken place between Russian Foreign Minister Ivanov and me and between Secretary of Defense Rumsfeld and his counterpart, and at a variety of other levels, have positioned the United States for a strengthened relationship with the land of eleven time zones.

The way that Russia responded to the events of September 11 was reflective of this positive relationship. Russia has been a key member of the antiterrorist coalition. It has played a crucial role in our success in Afghanistan, by providing intelligence, bolstering the Northern Alliance, and assisting our entry into Central Asia. As a result, we have seriously eroded the capabilities of a terrorist network that posed a direct threat to both of our countries

Similarly, the way we agreed to disagree on the ABM Treaty reflects the intense dialogue we had over eleven months, a dialogue in which we told the Russians where we were headed and we made clear to them that we were serious and that nothing would deter us. And we asked them if there was a way that we could do what we had to do together, or a way that they could accept what we had to do in light of the threat to both of our countries from ballistic missiles.

At the end of the day, we agreed to disagree and we notified Russia that we were going to withdraw from the ABM Treaty. I notified FM Ivanov - we talked about our plans for two days. President Bush called President Putin. Then the two presidents arranged the way we would make our different announcements. And the world did not end. An arms race did not break out. There is no crisis in Russia-U.S. relations. In fact, our relations are very good. Both presidents pledged to reduce further the number of their nuclear weapons and we are hard at work on an agreement to record these mutual commitments. This is all part of the new strategic framework with Russia.

We even managed to come to an agreement on how we are going to work through NATO. We are now developing mechanisms for pursuing joint Russia-NATO consultations and actions "at 20" on a number of concrete issues. Our aim is to have these mechanisms in place for the Reykjavik ministerial in May. And as we head for the NATO Summit in Prague in November, I believe we will find the environment for the continued expansion of NATO a great deal calmer than we might have expected.

I believe the way we handled the war on terrorism, the ABM Treaty, nuclear reductions, and NATO is reflective of the way we will be working together with Russia in the future. Building on the progress we have already made will require energy, good will, and creativity on both sides as we seek to resolve some of the tough issues on our agenda. We have not forgotten about Russian abuse of human rights in Chechnya, Moscow's nuclear proliferation to Iran, or Russian intransigence with respect to revision of Iraq sanctions. Neither have we neglected to consider what the situation in Afghanistan has made plain for all to see: how do we achieve a more stable security situation in Central Asia? We know that this is something we cannot do without the Russians and something that increasingly they realize can't be done without us, and without the full participation of the countries in the region. We are working these issues as well.

In fact, the way we are approaching Central Asia is symbolic of the way we are approaching the relationship as a whole and of the growing trust between our two countries. We are taking issues that used to be problems between us and turning them into opportunities for more cooperation. Such an approach does not mean that differences have vanished or that tough negotiations are a thing of the past. What it means is that we believe there are no insurmountable obstacles to building on the improved relationship we have already constructed.

It will take time. But we are on the road to a vastly changed relationship with Russia. That can only be for the good - for America and the world.

We have also made significant progress in our relationship with China.

We moved from what was a potentially volatile situation in April involving our EP-3 aircraft which was forced to land on China's Hainan Island after a PLA fighter aircraft collided with it, to a very successful meeting in Shanghai in October between President Jiang Zemin and President Bush and an APEC Conference, hosted by China, that was equally successful.

There are certain shared interests that we have with China and we have emphasized those interests. They are regional and global interests, such as China's accession to WTO, stability on the Korean Peninsula, and combating the scourge of HIV/AIDs. On such issues we can talk and we can produce constructive outcomes.

There are other interests where we decidedly do not see eye-to- eye, such as Taiwan, human rights, religious freedom, and missile proliferation. On such issues we can have a dialogue and try to make measurable progress.

But we do not want the interests where we differ to constrain us from pursuing those where we share common goals. And that is the basis upon which our relations are going rather smoothly at present. That, and counterterrorism.

President Jiang Zemin was one of the first world leaders to call President Bush and offer his sorrow and condolences for the tragic events of September 11. And in the almost five months since that day, China has helped in the war against terrorism. Beijing has also helped in the reconstruction of Afghanistan and we hope will help even more in the future.

Moreover, China has played a constructive role in helping us manage over these past few weeks the very dangerous situation in South Asia between India and Pakistan. When I could call China's Foreign Minster Tang and have a good discussion, making sure our policies were known and understood, it made for a more reasoned approach to what was a volatile situation. As a result, China supported the approach that the rest of the international community had taken. Beijing was not trying to be a spoiler but instead was trying to help us alleviate tensions and convince the two parties to scale down their dangerous confrontation - which now it appears they are beginning to do.

All of this cooperation came as a result of our careful efforts to build the relationship over the months since the EP-3 incident. We never walked away from our commitment to human rights, non-proliferation, or religious freedom; and we never walked away from the position that we don't think the Chinese political system is the right one for the 21st century. And we continued to tell the Chinese that if their economic development continues apace and the Chinese people see the benefits of being part of a world that rests on the rule of law, we can continue to work together constructively.

A candid, constructive, and cooperative relationship is what we are building with China. Candid where we disagree; constructive where we can see some daylight; and cooperative where we have common regional or global interests. These are the principles President Bush will take with him to Beijing later this month. After meeting with Prime Minister Koizumi in Tokyo and with President Kim in Seoul, the President will spend a day and a half in Beijing and meet with President Jiang Zemin, as well as Premier Zhu Rongji. He will have ample opportunity to put these principles to work.

As we improved our relationship with China, we also reinvigorated our bilateral alliances with Japan, Korea, and Australia. Nowhere has this been more visible than in the war on terrorism - where cooperation has been solid and helpful.

Prime Minister Koizumi immediately offered Japan's strong support, within the confines of its constitution. And he is working to enhance Japan's ability to contribute to such global and regional actions in the future. President Bush's dialogue with this charismatic and popular Japanese leader has been warm, engaging, and productive. Always the linchpin of our security strategy in East Asia, the U.S.-Japan Security Alliance is now as strong a bond between our two countries as it has been in the half-century of its existence. Our shared interests, values, and concerns, plus the dictates of regional security, make it imperative that we sustain this renewed vigor in our key Pacific alliance. And we will.

With respect to the Peninsula, our alliance with the Republic of Korea (ROK) has also been strengthened by Korea's strong response to the war on terrorism and by our careful analysis of and consultations on where we needed to take the dialogue with the North. President Bush has made it very clear that we are dissatisfied with the actions of North Korea, that they continue to develop and sell missiles that could carry weapons of mass destruction. But we have also made clear that both we and the ROK are ready to resume dialogue with Pyongyang, on this or any other matter, at any time the North Koreans decide to come back to the table. The ball is in Kim Jong-il's court.

The Australians have been clearly forward-leaning in their efforts to support the war on terrorism. Heavily committed in East Timor already, Canberra nonetheless offered its help immediately and we have been grateful for that help. The people of Australia are indeed some of America's truest friends.

As I look across the Pacific to East Asia I see a much-improved security scene and I believe that President Bush deserves the lion's share of the credit for this success.

Another foreign policy success is the improvement we have achieved in our relations with Europe. In waging war together on terrorism, our cooperation has grown stronger. NATO invoked Article 5 for the first time ever on September 12. Since then, the European Union has moved swiftly to round up terrorists, close down terrorist financing networks, and improve law enforcement and aviation security cooperation.

Moreover, President Bush has made clear that even as we fight the war on terrorism, we will not be deterred from achieving the goal we share with Europeans of a Europe whole, free, and at peace. We continue to work toward this goal with our Allies and Partners in Europe. While in the Balkans there remain several challenges to our achieving this goal, we believe we are meeting those challenges. We have seized war criminals, helped bring about significant changes in governments in Croatia and Yugoslavia, and our military forces are partnered with European forces in Kosovo and Bosnia to help bring stability and self-governance, while European-led action fosters a settlement in Macedonia. We need to finish the job in the Balkans - and we will.

I also believe we have been successful in bringing the Europeans to a calmer level of concern with respect to what was being labeled by many in Europe "unbridled U.S. unilateralism".

There was significant concern among the Europeans earlier last year that because we took some unilateral positions of principle for us that somehow the U.S. was going off on its own without a care for the rest of the world. This was particularly true with respect to the Kyoto Protocol. So we set out immediately to correct this misperception. Beginning with President Bush's speech in Warsaw, his participation in the G-8 meetings and the European Union summit, our extensive consultations with respect to the new strategic framework with Russia, and culminating in the brilliant way in which the President pulled together the coalition against terrorism, I believe that we demonstrated to the world that we can be decisively cooperative when it serves our interests and the interests of the world.

But we have also demonstrated that when it is a matter of principle, we will stand on that principle. In his first year in office President Bush has shown the international community who he is and what his administration is all about. That is an important accomplishment - and one that is appreciated now everywhere I go. People know where America is coming from and do not have to doubt our resolve or our purpose. They may not always agree with us, but they have no doubt about our policy or our position. We want to ensure that this policy clarity and this firmness of purpose continue to characterize our foreign policy, and not just with the Europeans but with all nations.

Let me just note that this sort of principled approach characterizes our determined effort to reduce the threat from weapons of mass destruction - an effort well underway before the tragic events of September 11 added even greater urgency. We and the Russians will reduce our own deployed nuclear weapons substantially. In the meantime, we are using a comprehensive approach, along with our friends and allies, to tackle WMD elsewhere, an approach that includes export controls, non- proliferation, arms control, missile defenses, and counter- proliferation. As you heard President Bush say last Tuesday night in the chambers of this Congress, "the price of indifference [to WMD] would be catastrophic."

There are terrorists in the world who would like nothing better than to get their hands on and use nuclear, chemical, or biological weapons. So there is a definite link between terrorism and WMD. Not to recognize that link would be foolhardy to the extreme.

Principled approach does not equate to no cooperation. We know that cooperation is often essential to get things done. On our efforts to lift countries out of poverty, for example, and to create conditions in which trade and investment flourish, we need to cooperate. This summer in Johannesburg, we will participate in the World Summit on Sustainable Development. There we will have an opportunity to address such issues as good governance; protection of our oceans, fisheries, and forests; and how best to narrow the gap between the rich countries and the poor countries of the world. And that brings me to my next high mark in our foreign policy for the past year, Africa.

Mr. Chairman, we have crafted a new and more successful approach to Africa - the success of which was most dramatically demonstrated in the WTO deliberations in Doha last November that led to the launching of a new trade round. The United States found its positions in those deliberations being strongly supported by the developing countries, most notably those from Africa. You may have some idea of how proud that makes your Secretary - proud of his country, and proud of this Congress for its deliberate work to make this possible. The Congress laid the foundation for our efforts with the African Growth and Opportunity Act - an historic piece of legislation with respect to the struggling economies in Africa. In the first year of implementation of this Act, we have seen substantial increases in trade with several countries - South Africa by 11 %, Kenya by 21%, Lesotho by 51%, and Madagascar by a whopping 117%, all based on the first three quarters of 2001 compared to the same period in 2000. Likewise, we are very pleased with the excellent success of the first U.S.-SubSaharan Africa Trade and Economic Cooperation Forum which was held last October.

A large part of our approach to Africa and to other developing regions and countries as well, will be a renewed and strengthened concern with progress toward good governance as a prerequisite for development assistance. Where conditions are favorable, our development assistance in Africa will emphasize the vigorous promotion of agriculture. Agriculture is the backbone of Africa's economies and must be revitalized to reduce hunger and to lift the rural majority out of poverty. In addition, we will emphasize fighting corruption and President Bush's new initiative on basic education. Moreover, we want to emphasize methods that directly empower individuals - methods such as micro-lending, a superb vehicle for increasing the economic participation and security of the working poor. The people of Africa in particular know that in many cases their governments do not deliver the health care, transportation and communication networks, education and training, and financial investment needed to create 21st century economies. They know that this must change if there is to be hope of economic success -- of job creation, private investment, stable currencies, and economic growth.

We also know and more and more of Africa's people are coming to know that none of this economic success is possible if we do not meet the challenge of HIV/AIDS. That is why I am pleased to report that pledges to the Global Fund to Fight AIDS, Tuberculosis, and Malaria now exceed $1.7 billion and continue to grow. Soon, the Fund is expected to accept proposals and provide grants to partnerships in those countries with the greatest disease burden and the least resources with which to alleviate that burden.

We want the Global Fund to complement national, bilateral, and other international efforts to fight these dreaded diseases. Strong congressional support will ensure that the United States remains the leader in this global humanitarian and national security effort.

I have not exhausted the list of our foreign policy successes either. In our own hemisphere we have met with considerable success, from the President's warm relationship with Mexico's President Fox, to the Summit of the Americas in Quebec, to the signing of the Inter-American Democratic Charter in Lima, Peru, to our ongoing efforts to create a Free Trade Area of the Americas - including, as President Bush described three weeks ago, not only our current negotiations with Chile but also a new effort to explore the concept of a free trade agreement with Central America.

Moreover, we have every expectation that the Financing for Development Conference in Mexico later this month will be successful. There, the importance of good governance, trade, and private investment will be the focus. We need to keep democracy and market economics on the march in Latin America. And to be sure, there are some dark clouds moving in now, and one of the darkest looms over Colombia where a combination of narco- terrorism and festering insurgency threatens to derail the progress the Colombians have made in solidifying their democracy.

Our Andean Regional Initiative is aimed at fighting the illicit drugs problem while promoting economic development, human rights, and democratic institutions in Colombia and its Andean neighbors. Intense U.S. support and engagement has been the critical element in our counterdrug successes in Bolivia and Peru and will continue to be critical as we help our regional partners strengthen their societies to confront and eradicate this threat to their own democracies and to America's national security interests.

There is another element to this challenge caused by our intense focus right now and for the foreseeable future on the war on terrorism. U.S. military and law enforcement forces previously assigned to interdict the flow of drugs between South America and the United States have been reduced by more than fifty per cent. Because of this reduction we have less capability to stem the flow of drugs from south to north, thus we will be even more dependent on friendly countries in source and transit zones to help us deal with the drug threat.

For our Caribbean neighbors, making the situation worse are the end results of September 11 -- lower growth, decreased tourism, increased unemployment, decreased tax revenue, and decreased external financial flows. This economic decline is compounded by high rates of HIV/AIDS infection and financial crime, as well as the traffic in illicit drugs.

President Bush's Third Border Initiative (TBI) seeks to broaden our engagement with our Caribbean neighbors based on recommendations by the region's leaders on the areas most critical to their economic and social development. The TBI is centered on economic capacity building and on leveraging public/private partnerships to help meet the region's pressing needs.

In addition to its economic provisions, the Third Border Initiative includes 20 million dollars for HIV/AIDS education and prevention efforts. This represents a two-fold increase in U.S. HIV/AIDS assistance to the region in just two years.

As you are aware, Mr. Chairman, our ties to the Caribbean region are as much cultural and human as they are economic and political. The countries of the Caribbean attract millions of American visitors every year and the region is our sixth largest export market. Large numbers of Caribbean immigrants have found their way to America, including, I am proud to say, my Jamaican forebearers. Here people from the region have found freedom and opportunity and have added something wonderful to the great American cultural mix. But our primarygoal must be to help ensure that the peoples of the Caribbean find new opportunities for work, prosperity and a better life at home.

At the end of the day, it is difficult to exaggerate what we have at stake in our own hemisphere. Political and economic stability in our own neighborhood reduces the scale of illegal immigration, drug trafficking, terrorism, and economic turmoil. It also promotes the expansion of trade and investment. Today, we sell more to Latin America and the Caribbean than to the European Union. Our trade within NAFTA is greater than that with the EU and Japan combined. We sell more to MERCOSUR than to China. And Latin America and the Caribbean is our fastest growing export market. Clearly, the President is right to focus attention on this hemisphere and we will be working hard in the days ahead to make that focus productive, both economically and politically.

Mr. Chairman, in addition to the dark clouds I have described within our hemisphere, there are vexing problems that persist elsewhere, the most prominent of which are in the Middle East. The situation between Israel and the Palestinians, Iraq, and Iran are among our concerns.

With respect to the tragic confrontation between Israel and the Palestinians, we will continue to try and focus the parties on the need to walk back from violence to a political process. Our priorities have been and will remain clear: ending the violence and terror through establishment of an enduring cease-fire and then movement forward along the path outlined in the Tenet Security Workplan and the Mitchell Report recommendations, agreed to by both sides and supported by the international community. This forward movement would lead ultimately to negotiations on all the issues that must be resolved.

Israelis and Palestinians share a common dream: to live side-by- side in genuine, lasting security and peace in two states, Israel and Palestine, with internationally recognized borders. We share that hope for a better tomorrow for both peoples. President Bush expressed this positive vision in his speech to the United Nations last November, and I described it in my speech later that month in Louisville. And I thank one of your Senate colleagues, Senator Mitch McConnell, for inviting me on that occasion.

We must not become frustrated, or yield to those who would have us turn away from this conflict - or from this critical region. As the President has said, the United States has too many vital interests at stake to take such a step, and one of those vital interests is the security of Israel. We must not lose sight of what we have achieved through our hard work and diplomacy in the region and beyond. There is a path out of the darkness, accepted by both Israel and the Palestinians - the Tenet Workplan and the Mitchell Report. We have mobilized our friends and allies, including the UN, the European Union, Russia and others throughout the region and the world, to speak with one voice in supporting this road back to peace.

But first things first. Our positive vision will never be realized so long as violence and terror continue. The President and I, and General Zinni, have been unequivocal with Chairman Arafat. The Palestinian people will never see their aspirations achieved through violence. Chairman Arafat must act decisively to confront the sources of terror and choose once and for all the option of peace over violence. He cannot have it both ways. He cannot engage with us and others in pursuit of peace and at the same time permit or tolerate continued violence and terror. In that regard, I have made clear to Chairman Arafat that the smuggling of arms to the Palestinian Authority by Iran and Hizballah aboard the Karine A is absolutely unacceptable. Chairman Arafat must ensure that no further activities of this kind ever take place and he must take swift action against all Palestinian officials who were involved.

Chairman Arafat knows what he must do. Actions are required, not just words, if we are to be in the position of working effectively again with him to help restore calm and forward movement. Israel too must act. Prime Minister Sharon has spoken of his desire to improve the situation of Palestinian civilians, confronted with a disastrous economic crisis and suffering daily. We have urged the Israeli government to act in ways that help ease these hardships and avoid further escalation or complicate efforts to reduce violence. Difficult as the present circumstances are, the United States will remain involved. But, in the end, Israel and the Palestinians must make the hard decisions necessary to resume progress toward peace.

With regard to Iraq, that country remains a significant threat to the region's stability. We are working at the UN and elsewhere to strengthen international controls on Iraq. In the last year, we successfully stopped the free fall of sanctions and began to rebuild United Nations Security Council consensus on Iraq. The UNSC unanimously adopted resolution 1382 in November, committing itself to implement the central element of "smart sanctions" by May 30 of this year. This central element, or Goods Review List (GRL), identifies materials UNSC members must approve for export to Iraq and ensures continued supervision and control over dual- use goods. Its implementation will effectively lift economic sanctions on purely civilian trade and focus controls on arms, especially WMD. This will further strengthen support for UN controls by showing the international community that Saddam Hussein, not the UN and not the U.S., is responsible for the humanitarian plight of the Iraqi people. We are working with the Russians to get final agreement on the GRL.

At the end of the day, we have not ruled out other options with respect to Iraq. We still believe strongly in regime change in Iraq and we look forward to the day when a democratic, representative government at peace with its neighbors leads Iraq to rejoin the family of nations.

With regard to Iran, we have a long-standing list of grievances, from concerns about proliferation to Iran's continued sponsorship of terrorism. We have been clear in communicating to Teheran that its support for terrorism remains a serious unaddressed concern - and this includes the case of the Karine A transporting arms.

Teheran's latest provocation, besides the arms aboard the Karine A, has been its apparent unhelpful activities in the post-Taliban environment of western Afghanistan. This, after being quite helpful as we prosecuted the war against terrorism in Afghanistan and, at the Bonn Conference, being helpful with the setup of the Interim Authority in Kabul.

After citing the list of our grievances with Iran, however, I am still convinced that we may be able to talk to Iran, that we may be able to have a reasonable conversation with Iranian leaders. With respect to the situation in Afghanistan, for example, I believe we can demonstrate to them that it is not in their interest to destabilize the government that they helped to create in Bonn. The other issues will be more difficult; but I do believe constructive talks with Iran on Afghanistan are possible.

Mr. Chairman, I have not yet spoken at length about the crisis in South Asia or the war against terrorism, both of which I know are on all of the committee members' minds. Let me turn to those two very important matters now.

The Crisis in South Asia

The standoff between India and Pakistan is a very dangerous situation. Any situation where you have forces that are mobilized and are in proximity to one another and are at something of a war footing with nearly a million soldiers deployed, is a dangerous situation. One where both sides have nuclear and missile capability is dramatically more so. As President Bush and I worked this issue over the past few weeks, we noted however that there was an opportunity for a political and diplomatic solution - a solution that would avoid what could be a very disastrous conflict if it came to war.

Prime Minister Blair visited the region in early January. Chinese premier, Zhu Rongji, visited New Delhi the week of January 14. As you know, I visited New Delhi and Islamabad three weeks ago. I talked frequently by phone with General Musharraf and with my counterpart in India, Foreign Minister Singh. We talked at length about how to reach a point where the two sides could say "All right, let's start to deescalate."

President Musharraf's speech on January 12 was a seminal event. It not only dealt with terrorism and extremism in a way that I believe New Delhi found constructive, it sent a clear message to Pakistanis that terrorism must end if Pakistan is to enter the 21st century with expectations of progress and a decent life for its people. President Musharraf showed great courage and foresight in sending such a decisive message to his country and, by extension, to the Islamic world at large. Now he must show equal courage in implementing his concepts in Pakistan.

From the start of this crisis, both New Delhi and Islamabad have indicated that they want to avoid war, that they are desirous of solving the standoff through political and diplomatic means. Now, as we are seeing and as we are hoping, events seem to be progressing toward that end. We will continue monitoring the situation, urging restraint and dialogue, and helping where and when we can. We will encourage both India and Pakistan to refrain from provocative rhetoric and to move toward redeployment of their military forces. We need to continue carefully walking down from the very precarious position each country has created with respect to the other.

Mr. Chairman, let me now turn to the war on terrorism.

The War On Terrorism

A little over two weeks ago, I was in Tokyo to join the European Union, Saudi Arabia, and Japan in hosting the Afghan Donor Conference. Representatives from over 60 countries attended, as well as experts from the Multilateral Development Banks, and a number of UN agencies. The conference helped to ensure that a wide range of countries will help the Afghans rebuild their country. The United States pledged $296 million at the conference and others pitched in accordingly. The total pledged at this point is around $4.5 billion with more than $1.8 billion for the first year. I am pleased with the first-year funds, but we must do much better for the long haul.

The heavy-lifting with respect to Afghanistan is only just beginning. We have helped the Afghans remove the oppressive Taliban regime from their country. We have destroyed the al-Qaida network in Afghanistan, with our troops mopping up some of the remnants as we speak. We have made possible the delivery of humanitarian aid, including massive amounts of food. We have avoided the wholesale starvation that many predicted. Moreover, we have helped the people of Afghanistan establish a multi-ethnic Interim Authority in Kabul, led by Chairman Karzai. One of its ultimate goals is to oversee an agreed process that will lead to a broad-based Afghan government - one that represents all the people of the country, people of every background and region, women as well as men.

We also have a rare chance to disrupt seriously the flow of opium in the world, as Afghanistan has been the world's largest source of this drug which is the base for heroin. A government that is headed toward reconstruction, toward building a new and better life for its citizens, and a government that is concerned with feeding its population and giving them adequate education, good roads, clean water, and other needed services, will not be a government that permits the selling of opium to the world. And such a government needs to be secure as well.

Many of our key allies and partners are contributing to the International Security Assistance Force in Kabul to help ensure a secure environment for Mr. Karzai to build a new Afghanistan. We are reviewing whether or not more forces might be needed for this force and we will continue to look closely at the security needs as we move forward. We want to do everything possible to prevent the rise of any alternative power to the Interim Authority, until a permanent government can be established and begin to take care of that challenge on its own.

Much remains to be done and admittedly a lot of what remains will be difficult to accomplish. But we believe that at long last Afghanistan is on a positive track. There is no question that this is a time of great challenge for the Afghan people, but it is equally unquestionable that this is also a time of great hope. And, as President Bush pledged last week during Chairman Karzai's visit to Washington: "The United States is committed to playing a leading role in the reconstruction of Afghanistan."

Mr. Chairman, you and several other Senators have been to Afghanistan. You have seen at first hand the desperate need but also the hope for the future. You know from your visit how important it is to provide the needed funds for reconstruction. We must have a long-term commitment, from America and from the other countries dedicated to this process. If we can ensure such a commitment, and if we can achieve proper accountability and use of these funds, then I believe there is a good chance of making significant progress in bringing a new future to Afghanistan - and ending the days of warlordism and political chaos that bred the Taliban and made a fertile ground for terrorists.

And as reconstruction begins in Afghanistan, the war against terrorism continues. As President Bush said last week in his State of the Union Address, "What we have found in Afghanistan confirms that, far from ending there, our war against terror is only beginning." The administration is working together in new ways never before envisioned. And that's what this effort is going to require. FBI, CIA, INS, Treasury, State, NSC, the Attorney General and Justice Department, and others, are all coming together. This campaign is transnational, cross-border, even global in a way we have never contemplated.

What we are trying to do on the foreign policy side is to help analyze where al-Qaida cells might seek refuge. A country that immediately comes to mind is Somalia because it is quite a lawless place without much of a government and because it has been this sort of terrorist haven in the past, providing training camps, communications links, and financial cover.

We are watching Somalia very closely. Terrorism might find fertile ground there and we do not want that to happen. No plans have been made - yet. But if we find al-Qaida there, you can rest assured we will take the appropriate action.

We have also had a good dialogue with President Ali Abdallah Salih of Yemen and we believe that actions he is taking are a good first step toward the goal of uprooting the al-Qaida network there.

There are other countries we are working with as well, some of whom have their own sort of terrorist problem that has spillover into our own problem. The Philippines has the Abu Sayyaf, who in the past have had connections with al-Qaida. But this is not just a campaign against al-Qaida - it is a campaign against terrorism throughout the world.

So we are working with President Arroyo in the Philippines to assist that country in combating its terrorists - who as you know right now hold two American citizens as hostages.

We are also working with the Sudan, a country with whom we have had major difficulties in the past few years. Even before September 11 we had been working with the Sudanese, asking them "What do you get for this? What do you get for letting people like these terrorists have safe haven in the Sudan? What does it do for you except bring down the condemnation of the world?" And they have been somewhat responsive. The problems in the Sudan are not solved by any means. But some new opportunities have opened up.

As you can see, then, part of our approach to this extended campaign against terrorism is to work with countries such as the Sudan. We are not being naive, not being unmindful of the challenges that exist, but using diplomacy, using good people like Senator Danforth and others, and at the same time cooperating together on intelligence and law enforcement activities to put a stop to easy passage or safe haven for terrorists.

We have not made any recommendation to the President about the major use of military force and the President has made no decision as yet with respect to such use of force. But there are many other actions that are taking place - actions of a law enforcement, political, diplomatic, financial, and intelligence- sharing nature.

A sizable portion of the President's budget request is dedicated to these counterterrorism efforts, as you will see as I turn to the specific priorities of our budget request for Foreign Operations.

The Budget Priorities for FY 2003: Foreign Operations

The President's FY 2003 request for Foreign Operations is a little over $16.1 billion. These dollars will support the continuing war on terrorism, the work we are doing in Colombia and the Andean region at large, our efforts to combat HIV/AIDS and other infectious diseases, the important work of the Peace Corps and the scaling up of that work, and our plan to clear arrearages at the Multilateral Development Banks.

War on Terrorism

As the war on terrorism expands, it will remain the top U.S. foreign policy priority. To fight terrorism as well as alleviate the conditions that fuel violent extremism, we are requesting an estimated $5 billion. In addition to the initiatives outlined previously under the budget for the State Department and Related Agencies, this funding includes:

- Foreign assistance - $3.5 billion for economic and security assistance, military equipment, and training for front-line states and our other partners in the war on terrorism.

- $3.4 billion from Foreign Operations accounts such as the Economic Support Fund, International Military Education and Training, Foreign Military Financing, and Freedom Support Act.

- $88 million for programs in Russia and other states of the former Soviet Union to reduce the availability to terrorists of weapons of mass destruction. Ongoing programs engage former weapons scientists in peaceful research and help prevent the spread of the materials expertise required to build such weapons.

- $69 million for counterterrorism engagement programs, training, and equipment to help other countries fight global terror, thereby strengthening our own national security.

- $4 million for the Treasury Department's Office of Technical Assistance to provide training and other necessary expertise to foreign finance offices to halt terrorist financing.

And Mr. Chairman, while in the FY 2003 budget request there is no money identified at the moment for Afghanistan reconstruction, I know that President Bush, the Congress, and the American people recognize that rebuilding that war-torn country must be and will be a multi-year effort. The Administration will be working closely with this committee and with the Congress to sustain our contribution in future years.

Andean Counterdrug Initiative

We are requesting $731 million in FY 2003 for the multi-year counter-drug initiative in Colombia and other Andean countries that are the source of the cocaine sold on America's streets. ACI assistance to Andean governments will support drug eradication, interdiction, economic development, and development of government institutions. Assisting efforts to destroy local coca crops and processing labs there increases the effectiveness of U.S. law enforcement here.

Global Health and HIV/AIDS

In FY 2003, we are requesting $1.4 billion for USAID global health programs. Of this amount, we are requesting $540 million for bilateral HIV/AIDS prevention, care, and treatment activities, and $100 million for the Global Fund to Fight AIDS, Tuberculosis, and Malaria, to which I referred earlier. All of this funding will increase the already significant U.S. contribution to combating the AIDS pandemic and make us the single largest bilateral donor to the effort. I should add that the overall U.S. Government request for international HIV/AIDS programs exceeds one billion dollars, including $200 million for the Global Fund.

The Peace Corps

All of you heard the President's remarks last Tuesday evening with respect to the USA Freedom Corps and his objective to renew the promise of the Peace Corps and to double the number of volunteers in the Corps in the next five years. We have put $320 million for the Peace Corps in the FY 2003 budget request. This is an increase of over $42 million over our FY 2002 level. This increase will allow us to begin the scaling up that the President has directed. In addition to re-opening currently suspended posts, the Peace Corps will establish new programs in eight countries and place over 1,200 additional volunteers worldwide. By the end of FY 2003 the Peace Corps will have more than 8,000 volunteers on the ground.

MDB Arrears

The FY 2003 request includes an initiative to pay one third of the amount the United States owes the Multilateral Development Banks (MDBs) for our scheduled annual commitments. With U.S. arrears currently now totaling $533 million, the request would provide $178 million to pay one third of our total arrears during the fiscal year. The banks lend to and invest in developing economies, promoting growth and poverty reduction. We need to support them.

Summing Up

Mr. Chairman, you have heard from me as CEO of the State Department and as principal foreign policy advisor to the President. I hold both responsibilities dear. Taking care of the great men and women who carry out America's foreign policy is as vital a mission in my view as helping to construct and shape that foreign policy.

As I told this committee last year and as I have already reminded it again this year, the conduct of the nation's foreign policy suffered significantly from a lack of resources over the past decade. I have set both my CEO hat and my foreign policy hat to correct that situation. But I cannot do it without your help and the help of your colleagues in the Senate and across the capitol in the House. I believe we have demonstrated in the past year that we are worth the money. I believe we have demonstrated that we can be wise stewards of the people's money and put it to good use in the pursuit of America's interests abroad. I also believe that we have demonstrated conclusively that we are essential to that process of pursuing the nation's interests. With your able assistance, we will continue to do so in the months ahead.

Thank you, and I will be pleased to take your questions.



LOAD-DATE: February 6, 2002