Afternoon Session of a Hearing of the Senate Foreign Relations Committee

AFTERNOON SESSION OF A HEARING OF THE SENATE FOREIGN RELATIONS COMMITTEE
SUBJECT: THE NOMINATION OF HILLARY CLINTON TO BE SECRETARY OF STATE IN THE OBAMA ADMINISTRATION
WITNESS: THE NOMINEE TESTIFIES
CHAIRED BY: SENATOR JOHN KERRY (D-MA)

SEN. KERRY: The hearing will come back into order. And I apologize to everybody, particularly to our colleagues who were here on time. Senator Isakson, I'm sorry about that. We had the president-elect meeting with us at our caucus on the minor topic of the monster of TARP, and also the stimulus. So I'm sure you can all understand it was spirited and important, and that's why we're late. And I apologize for that.

I said that we would pick up -- we're going to complete the first round of 10-minute questions. And I think, for the second round, we'll probably go with seven minutes and see how we proceed.

But Senator Isakson, you're up next, and we appreciate your patience.

SEN. JOHNNY ISAKSON (R-GA): Thank you very much, Mr. Chairman.

And Chelsea -- Chelsea, you should know that your mother and I had a conversation in my office. She's very proud of you and very proud of the support you give to her. And I got to show her all my grandchildren, so she'll have plans for you in the future, I guarantee you. (Laughter.)

SEN. CLINTON: (Laughs.)

SEN. ISAKSON: Senator Clinton, it's a pleasure. I want to commend to you -- this is not really a question, just a statement, but I have the highest regard for Senator Lugar. I think the remarks -- the pre-hearing questions he sent to you with regard to the Clinton Foundation were very important.

And I think his insights are very important, because in your answers to those questions, on a couple of occasions you made the statement the goal was to protect against even the appearance of a conflict of interest between his work, meaning the foundation's, and the duties of secretary of State. And we all know that in this world of politics, perception becomes reality, so appearance is everything. And I commend Senator Lugar's recommendations to you.

Also twice in your opening remarks, which were extensive and really appreciated, because you really covered some very important topics, you referred to what I call the three Ds -- diplomacy, development and defense, on two different occasions, once vis-a-vis al Qaeda, and then another just based on overall policy.

I believe that the better your diplomacy, the better your ability to defend yourself. And a strong military is a great foundation for good diplomacy. And then if you add this development, which I think is soft power or smart power, you have a great trilogy. Do you agree with that?

SEN. CLINTON: Senator Isakson, I couldn't say it any better. I certainly do agree. In order to protect and defend the United States of America, to advance our interests and to further our values, we have to have all three of those elements of our power working in concert.

But clearly, as I said, as you pointed out, in my opening statement, a strong military is essential for the ultimate protection of our country and our interests. It is my hope that through more vigorous and effective diplomacy, we would be able to resolve both problems that we have with individual countries and the transnational problems, like proliferation, that threaten all of us.

And so I think that the State Department has a very big responsibility to improve its capacity with respect to both diplomacy and development, because without those two elements of our power projection and our policy being as effective as they can be, we're not going to have the agile, comprehensive foreign policy we should look forward to.

SEN. ISAKSON: In the presidential debate, I watched both sides, ours and yours. And there was a significant debate over foreign policy and over the issue of preconditions. I really appreciated your responses throughout, and I think you added a great deal of strength to that debate. And now that we're looking at suggestions of talking to Hamas or maybe Hezbollah or maybe Iran, preconditions are absolutely essential, I think, to good, strong diplomacy. I hope you still feel that way.

SEN. CLINTON: Well, I certainly do, as does the president-elect. I think that his commitment to vigorous and effective diplomacy is in the context of his understanding that there are different ways for us to engage. When it comes to non-state actors like Hamas, as I said at the very end of the morning session, there are conditions. Hamas must renounce violence. They must recognize Israel, and they must agree to abide by all previous agreements.

There are conditions that are usually part of the preliminary discussion that would lead to any kind of negotiation. The president- elect believes that he has the right to claim the opportunity to speak with anybody at any time if it's in furtherance of our country's national interest and security. But he fully appreciates the preliminary work that has to be done in order to tee up any such discussion.

So I think we're in vigorous agreement, Senator, that we want to be smart about how we engage in diplomacy. We want to make sure that when the president of the United States or the secretary of State is engaged in any diplomatic effort, that all of the necessary preliminary work, including conditions, if appropriate, have been met before doing so.

SEN. ISAKSON: You quoted George Marshall at the end of your remarks in saying that sometimes our enemies are not the nations or doctrines, but they are, in fact, hunger, poverty, desperation and chaos. I'm ranking member on the Africa Subcommittee, and if you talk about desperation, chaos, hunger and poverty, certainly you can talk about the continent of Africa, and in particular North Africa and the Horn of Africa, where al Qaeda is attempting to do what it did in Afghanistan effectively a decade and a half ago.

And you talked about smart power. I think AFRICOM was a smart move on behalf of our country. And although a lot of people don't realize what AFRICOM is doing, they are military personnel doing a lot of soft power. They're drilling wells. They're building bridges. They're doing the things -- I hate to say this, but Hamas and Hezbollah figured it out. They got political strength by giving people housing and clothing. A lot of times that use of soft power can win over people's attitudes towards you.

So I hope, as a couple of years go by or the next four years ago by, we can work together on the continent of Africa and on those issues, because I think it's the next place we are vulnerable if we aren't proactive in dealing with the governments, the people, the poverty, and obviously also continuing the Bush PEPFAR program, which has been so successful, that and malaria eradication.

SEN. CLINTON: Well, Senator, I appreciated, when I spoke with you, your commitment to Africa and your making it a priority of the service you've performed here on the committee. And I look forward to working with you.

It is a serious concern that we could see safe havens created again, the chaos that flows from failed states like Somalia at this moment, the aftermath of autocratic regimes that have so mistreated their people, like Zimbabwe, the anarchy and terrible violence in eastern Congo.

I mean, those are breeding grounds, not only for the worst abuses of human beings, from mass murders to rapes to indifference toward disease and other terrible calamities, but they are invitations to terrorists to find refugee amidst the chaos. And anyone who thinks that our interest in Africa is only humanitarian, I think, misses the strategic import of the comments you made. And I do look forward to working with you.

SEN. ISAKSON: My last question. If you asked the average Georgian what's the one thing they have the most consternation about, it's how much money we spend in foreign aid. And although, as a percentage of the budget, it's a small number, a lot of the stories that get published raise questions about it.

Talking about preconditions for a second, I am one that feels like foreign aid invested, especially with preconditions for results, is beneficial to the United States of America. And I shared with you the issue on women's education in Muslim countries in Africa who, prior to 2001, we weren't really aware that we had money going to NGOs, then going to education. It was only teaching Muslim men, not Muslim women. And we put a precondition post-9/11 and built schools for women in Egypt and Ethiopia and other places. And the payback has been a renaissance in those countries, at least in raising the education level of all.

But, I'd appreciate your comments on the extent to which preconditions can be used in foreign aid, not preconditions to agree with us but preconditions to see that the result brings about a benefit like, in this case, the education of women.

SEN. CLINTON: Well, I think that has been an important contribution to the foreign aid debate by this administration, most manifest with the Millennium Challenge Corporation. I think we're still finding our way, trying to figure out the best practices to use to encourage governments to act in certain ways, conditioning our aid. But I really believe this holds tremendous promise. And, again, it's an area that I would like to work with this committee on because there's a lot of expertise here.

When you look at foreign aid, we want to be able to justify the investment to the American people, and we want to get measurable results. Those are two goals that really go hand-in-hand. And so I believe strongly that as we try to shore up foreign aid, as we try to make the case for more development assistance, as we try to, you know, get back some of the authority and the resources that have drifted to the Defense Department, that we have to be ready to make that case. And I think the, you know, conditional aid approach, in certain countries and situations, is one we have to look at more closely.

SEN. ISAKSON: Well, I appreciate your willingness to serve and I wish you the best of luck in your tenure. Thank you.

SEN. CLINTON: Thank you.

SEN. KERRY: Thank you very much, Senator Isakson.

Senator Casey.

SEN. CASEY: Mr. Chairman, thank you very much. And I want to commend you on the new leadership position that you take, and we're grateful for your service.

Senator Clinton, thank you very much for putting yourself forward to do a difficult job at a difficult time in our nation's history, and for the time you're spending today. You're getting close to the end here. When you get down to this end of the table it's - we're kind of rounding the corner. And I want to stay within my time limit because my friend here needs his time - Jim Webb.

I wanted to read you a statement that you're - I think you're familiar with, but I think it bears some emphasis today in light of what you said in your statement, and in light of a lot of our concerns about the way foreign policy has been conducted, especially over the last eight years.

The person who made this statement first made reference to our institutions of diplomacy and development being undermanned and underfunded. And then I'll pick up with the quotation, and it starts this way, "When it comes to America's engagement with the rest of the world, it's important that the military is in a supporting role - supporting role to civilian agencies. Our diplomatic leaders must have the resources and political support needed to fully exercise their statutory responsibilities in leading American foreign policy. To truly harness the full strength of America requires having civilian institutions of diplomacy and development that are adequately staffed and properly funded," unquote.

The person who made that statement was Secretary Gates this past July. And I wanted, in light of the discussion here today - and grateful for the time you spent in your statement on this, but also in light of what you and I have talked about in our meeting and in other conversations - tell us how you're going to be working with Secretary Gates to make sure that we can give meaning and integrity to that observation that he made in that speech in July.

SEN. CLINTON: Well, Senator Casey, it's a tremendous honor for me to be working with Secretary Gates. He has a very long history of service in our country and has worked with I don't know how many presidents - six, maybe seven. But, he has a broad, comprehensive view about what works America and what doesn't. And he was in the, you know, real vanguard in the CIA and the National Security Council at the height of the Cold War.

So, his experience is especially valuable. And I know the president-elect believes that, and, as you know, asked him to stay on. I've had several conversations with him already, and what you read is exactly what he believes - that we are going to be stronger if we are better able to promote diplomacy and development, not just rely on our military power. There's a lot of work to be done between that belief - which he, and I and the president-elect share, and actually realizing its promise.

We have work to do at the State Department. You know, part of the reason functions and resources have migrated is because there's just a presumption that the, you know, the military can move much quicker; and, with greater effort, impose development; or negotiate agreements, whatever it might be, than the State Department.

And it's going to be our job to prove that, you know, the State Department is not only substantively strong, which indeed it is; not only experienced in diplomacy and development, which, indeed, it is; but can, in this 21st century, move with dispatch, be results oriented, create an atmosphere of collegiality and cooperation across the State Department, and USAID and across the United States government.

So, I am taking this very seriously. I'm working with Secretary Gates. He's very open to cooperative efforts. But we have to prove that we can shoulder this responsibility, like stabilization, and reconstruction, and the new civilian corps; like, you know, really outcomes-oriented development aid that can be done quickly without enormous bureaucracy.

So, we're going to take that challenge on, because I don't think we have a choice. I think that our foreign policy has gotten way out of balance. Secretary Gates knows it. The president-elect certainly knows it. So, it's going to be up to us to try to get back into more equilibrium, which will be good for our government and for the image of our country around the world.

SEN. CASEY: Well, we want to support you in that objective - in meeting that objective. And I do want to commend you - we had a discussion the other day about the mechanics of running such a massive agency. And I know we don't have a lot of time today, but I wanted to commend you on appointing Jack Lew as deputy secretary for Management. I think it's important that when someone is assuming the responsibilities you are that you've spent the kind of time you have to put together a team that can help you run the department.

I wanted to move to one or two more issues before my time expires. One is on an issue that I've worked with Senator Lugar on, the ranking member - as well as other members of this committee have worked for years; Senator Biden worked hard on this, as well as others - and that's the challenge posed by nuclear terrorism. As great as the challenge and the threat is, we know from our history and from our research that it's a preventable catastrophe if we take the right steps, not just here but around the world.

And I just want to get your thoughts on the steps we need to take, which will involve a number of departments of our federal government, but the State Department under your leadership will play a significant role in working with other countries to identify fissile material and prevent its - prevent it from getting in the hands of the wrong people.

SEN. CLINTON: Well, Senator Casey, I know you expressed to me your deep concern about this and your desire to get very involved in helping us craft an effective approach to protecting our country, and our allies and, indeed, humanity from weapons of mass destruction in the hands of terrorists.

The recent commission on WMD chaired by former Senators Graham and Talent was very sobering. Basically they concluded that the evidence points to our seeing a terrorist attack using nuclear or biological material sometime in the next four years.

You add to that the growing threat of cyber terrorism, which has the potential of disrupting the networks we rely on for all kinds of things like traffic signals and electric grids and the like, which would be incredibly disruptive and dangerous.

I mean, this is the number one threat we face, there's no doubt in my mind. So we're going to start calling it such. We're going to reorganize the department to be better prepared to deal with non- proliferation arms control and these new threats.

I look forward to working closely with this committee to get the best people we can into the State Department, to work with our partners across the United States government, and to send out a message, loudly and clearly, that, you know, United States wants to be a leader once again, to controls arms once again, particularly with Russia. And that's what the start talks will be aimed at doing. And to be much more aggressive in going after non-proliferation.

So this is our very highest priority because the consequences are so devastating.

SEN. CASEY: And I know it. One more question we --- in the time I have. We spoke a little bit the other day about the challenge that Pakistan presents to all of us, to the American people but also to the world, for a lot of reasons, we know. Not only because of the threat in the border region between Pakistan and Afghanistan, the concern about the rivalry, and that's an understatement, with India. And the question of whether this government will really take a --- make it a priority to root out the extremist elements that are throughout different parts of Pakistan and the region.

And finally, the nuclear, the concern about the stability of their nuclear commanding control.

Coming into the office, and I realize you're just starting but, what, how do you think we need to approach it from the State Department's point of view in meeting those, or being focused on those various concerns that I just outlined?

SEN. CLINTON: Well as I stated in my opening remarks, Iraq, Afghanistan, Pakistan, the Middle East, remain on the forefront of the challenges that the new administration will face.

Pakistan has a particular complexity because of its nuclear weapons capacity. But the democratically elected government has been saying a lot of the right things with respect to the threat posed by the extremists and terrorists, particularly along the border and Fatah Region in Pakistan.

So I'm, I'm hopeful that we will have a very active, positive relationship with the new Pakistan government. I know that there's a lot of work being done even by the outgoing administration to deepen ties between our country and various institutions in Pakistan.

But this is a tough problem, Senator. This is a very complicated problem. It has many dimensions to it. As you pointed out the relationship with India, the relationship with Afghanistan, the role that Iran and others are playing in that region.

We have to approach this with the same level of attention and comprehensive understanding that our military is attempting to do as it ramps up our troop commitments in Afghanistan and works more closely with the government of Pakistan to protect them from violent extremists as well as to root out Al Qaeda and other remnants of the terrorist networks so that they don't find save haven in Pakistan to plan attacks against us or any other country.

SEN. CASEY: Thank you very much.

SEN. KERRY: Thank you very much, Senator Casey.

Senator Vitter.

SEN. VITTER: Thank you, Mr. Chairman, and congratulations on your new chairmanship.

SEN. KERRY: Thank you very much.

SEN. VITTER: And thank you, Senator Clinton, for all of your public service including being open to this very challenging position.

Like a lot of folks, I have some concerns about these conflict issues, particularly with regard to the Clinton Foundation. And so I wanted to spend my first round exploring those concerns.

Let me say a couple things first that I think a lot of folks legitimately share these concerns across the spectrum, from the New York Times to Senator Lugar who submitted some questions about it to me. That perhaps defines the entire political spectrum, I'm not sure.

And also they arise because of very extraordinary circumstances. Your husband being a former President, his very unique work in terms of the foundation. And in terms of that work I applaud that. But, they nevertheless arise because of that and I think it really requires an extraordinary response.

Obviously, you all have put forward this memorandum of understanding to suggest at such a response. So I wanted to go into that and some of the details about it and some of my concerns. And these posters just sort of briefly outline the situation before the MOU with the foundation. And all those abbreviations are the ones used in the MOU, and the situation after.

One thing that sort of leaped out at me is with regard to the Clinton Global Initiative, which in many ways is the most public and perhaps significant of these initiatives.

Under the MOU there is no disclosure of contributions, contributors, going forward. And that seems to be a big, a big omission because again, that's one of the most significant activities here, probably the most widely followed and recognized in terms of the annual conference, etcetera.

Would you support and help produce an amended MOU that would bring the same disclosure to future contributions to the Clinton Global Initiative?

SEN. CLINTON: Well Senator, I appreciate your concern and your question. And I recognize that these are unique circumstances, to say the least. I am very proud to be the President-Elect's nominee for Secretary of State and I am very proud of what my husband and the Clinton Foundation and the associated efforts he's undertaken, I have accomplished as well.

It is not unique, however, for spouses of government officials to work. And there are very well established rules for what is expected when that occurs.

In this particular case, the Office of Government Ethics and the career ethics officials at the State Department have looked at the rules and concluded there is not an inherent conflict of interest in any of my husband's work, at all.

However, the foundation and the president-elect decided to go beyond what the law and the ethics rules call for to address even the appearance of conflict. And that is why they signed a memorandum of understanding, which outlined the voluntary steps that the foundation is taking to address potential concerns that might come up down the road.

The memorandum of understanding is, as you know, public. And the president-elect and the foundation and I have all worked to be very transparent.

My team has stayed in close touch with the committee and we've addressed the committee's questions on these issues in a broad range of written answers, which are part of the so-called QFRs, the questions for the record.

But I want to speak for a minute if I can about the work that is done because I think it's important --

SEN. VITTER: Mr. Chairman, I have no objection listening to this, but I'd like it not to come out of my time because I'd like to pursue these questions.

SEN. KERRY: Well, I guess -- I mean it's fair to say that if you ask a question, you deserve an answer, and the answer traditionally comes out of the time of the senator.

SEN. VITTER: Well, I'm still waiting for the answer -- I'd love an answer, but if there's an answer to my --

SEN. KERRY: Well, I think you need to give the Senator an opportunity to give you answer, and if you need additional time --

SEN. VITTER: Well, let me repeat the question which is would you support and help produce a new MOU that requires the same sort of disclosure for contributions for the Clinton Global Initiative? Under this, there's no disclosure moving forward for contributions of the Clinton Global Initiative, so it's a yes or no, would you support expanding that disclosure? Admittedly, this is voluntary, it's not required by law, but it seems to be a big exception to the rule of the MOU in terms of disclosure.

SEN. CLINTON: Well, I think that the MOU and the other undertakings that have been worked out between the president-elect and the transition and the foundation and my husband have looked very broadly at all of the questions that you're raising and there are answers to many of these questions in the collection of answers that we have provided. And I will be happy to provide additional material and answers to you in response to that question.

SEN. VITTER: Okay. Well if you could consider that suggestion, I think that's a big gap in the MOU that moving forward, the Clinton Global Initiative is separated from the foundation, and then there's no disclosure whatsoever about contributors to the Clinton Global Initiative.

The other big gap it seems to me is that the disclosure in the MOU is for new contributors, and so old contributors who regive or who even substantially increase their contributions, if it's to certain initiatives, aren't disclosed. Would you consider amending that so that all contributions, whether from new contributors or old contributors, would be disclosed?

SEN. CLINTON: All contributors will be disclosed, and all contributors to the Clinton Global Initiative are disclosed in public as is now anyway.

SEN. VITTER: Okay. But that changes under the MOU.

SEN. CLINTON: No --

SEN. KERRY: No, I think -- if I could just interrupt, Senator, I think you, if you look at the MOU and you look at the subsequent questions that were answered by the Senator to the committee, because we followed up on this issue, I believe that all -- we asked the question will all future contributions to the foundation be disclosed and --

SEN. VITTER: To the foundation?

SEN. KERRY: That's the foundation. But in addition, it's my understanding that the -- under the MOU the CGI additionally, if there are contributions, they will be disclosed at the end of the year.

SEN. CLINTON: That's right.

SEN. VITTER: Okay. I'm very happy to hear that. That's not what's in the MOU, so if I could simply request before our vote a -- a document or an amendment from the transition and the foundation that clarify that. Because under the MOU, moving forward, the Clinton Global Initiative is separated from the foundation, and then there's disclosure under the foundation heading.

SEN. CLINTON: Well Senator, I believe that all the answers that are relevant to these inquiries are in the record. There is no intention to amend the MOU; it has been worked out between the transition and the foundation. But the Clinton Global Initiative is a pass-through --

SEN. VITTER: All right.

SEN. CLINTON: -- you know, the money of any donors to put on the Clinton Global Initiative are public and there is no ongoing, you know -- foundation is a yearly event, it's unlike the foundation. So we will clarify it, we will definitely clarify that for you.

SEN. VITTER: Well that would be great if you can clarify it. Again, I don't want to beat a dead horse, but under the MOU as it stands, there is no required disclosure going forward for Clinton Global Initiative contributions and there is no necessary required disclosure for new contributions of old contributors, just new contributors.

There's also been the suggestion from a lot of folks to disclose the dates and amount or at least amount within ranges of new contributions, and to do that at least quarterly rather than annually. Would you be open to that?

SEN. CLINTON: Well again, you know, this is an agreement that has been worked out between all of the parties and the fact is that the concerns that were raised in the discussions between the foundation and the president-elect's team were thoroughly discussed and they believe, and I agree, that the transparency and disclosure that is needed which, as you said yourself, it goes beyond any kind of legal or ethical consideration. And not only that, there will be ongoing -- you know, there will be on-going reviews by anything that is brought to the attention of the career professionals.

But I just have to go back, Senator, and try to set the record straight. CGI is not in the memorandum of understanding because they already have a practice of disclosing all of their contributions. There is no need to require it. I will certainly, you know, state here that they're going to continue the practice which they've already done. No president has ever disclosed the contributions to his foundation, so when my husband agreed to disclose the contributions to his foundation, that was a very unprecedented event, which he was happy to do. But the Clinton Global Initiative, which is separate from the foundation, has always disclosed the contributions.

SEN. VITTER: Well again, I'd love for that to be embodied in any agreement that's at issue, so I'll look forward to that.

SEN. KERRY: Well Senator, can I just -- this won't come out of your time but let me make sure the record is clear here. As I understand it, abd I think Senator Lugar has raised a couple of points and we're going to address them perhaps a little bit later, but I don't think this one frankly is on target for the following reason. On page four, paragraph two, it specifically says that CGI, President Clinton personally will not solicit funds, President Clinton will continue to send invitation letters, potential (NT ?) however he will no longer send sponsorship letters which seek contributions. Apart for attendance fees, CGI will not accept contributions from foreign governments. So there's no solicitation and no acceptance of a foreign government.

SEN. VITTER: But for instance, there could be foreign national contributions which, within the four corners of this agreement, are not disclosed, not necessarily disclosed. I mean, my question is in that same paragraph why isn't there a disclosure?

SEN. KERRY: Well I think the Senator has appropriately said that they'll answer that in the addendum.

SEN. VITTER: Well I look forward to that, as well as the old contributor issue because it just talks about new contributors.

Again, let me back up and underscore the central concern, which is, I really do think this poses a lot of real and perceived conflict issues. And you just need to look at some of the contributors from the past, particularly from the Middle East, to get a sense of what I'm talking about. For instance, the Alavi Foundation supports Iranian causes. Just this past December 19th, they made a substantial contribution to the foundation and that same day, the president of the foundation was indicted for obstruction of justice related to terrorist financing. And two days earlier, Treasury had named a partner of the foundation as a quote, "terrorist entity."

Another partner of the foundation, Bank Melli, has long been thought to be a procurement front for the Iranian nuclear program. That's the sort of big issue, conflict issue that I think this poses, which could obviously complicate your job and be an impediment to your effectiveness.

Another similar example -- Issam Fares is former deputy prime minister of Lebanon. He's a big supporter of Hezbollah; says it's not in any way a terrorist organization, doesn't target the U.S. I'm sure the widows and family members of the victims of the 1983 Beirut bombing that killed 241 Americans are comforted by that. Obviously, they are terrorists. They do target the U.S. This poses serious issues.

So I look forward to following up and getting that clarification. And also I think it would round out this agreement immeasurably to include the date and amount of contributions, to include pledges made -- not simply have disclosure as to when a payment is made -- and to at least do quarterly reports versus annual reports.

Thank you, Mr. Chairman.

SEN. KERRY: Thank you very much, Senator Vitter.

Senator Webb?

SEN. JIM WEBB (D-VA): Thank you, Mr. Chairman.

Senator Clinton, I've had the pleasure of having sat through this entire hearing today. I'm not sure you have found it very pleasurable, partly because I'm really interested in these issues and partly because I'm so far down the food chain that I had to wait until 3:00 this afternoon to ask my questions.

SEN. CLINTON: (Laughs.)

SEN. WEBB: It's nice to have Senator Shaheen on my left to, you know, finally have somebody I'm a little --

SEN. JEANNE SHAHEEN (D-NH): (Inaudible.)

SEN. WEBB: -- that's right. (Laughs.)

And I'm very impressed by the range that you have shown here on a wide variety of issues that have been thrown at you. I've had the pleasure of working with you and discussing these issues over the past years, but I think you've done a marvelous job today.

I guess the phrase of the week is "smart power." You know, I've been doing this a long time, in and out of government. People come up with different phrases. I think the most important thing that you have said in your statement -- your opening statement when you mentioned that the goal of this administration is going to be more partners and fewer adversaries, and to do so in a realistic way that still protects the interests of the United States. And I think that will be a major demarcation for our government as we relate to the rest of the world.

You and I have had many conversations over the years. This is a time that the contexts of these conversations are going to be shaped into what I believe will be achievable policies. I would like to list very quickly for the record six or seven areas where I believe that these conversations will need to continue, and in some cases there will probably be debates. But I think that it's important to outline these.

The first is the nature of the residual force in Iraq, or even whether there should be a residual force in Iraq, and how that situation would assist us in increasing stability in the region. You mentioned the SOFA and the Strategic Framework Agreement as national policy. As you know, I had a great deal of heartburn over the way that those agreements were signed here. They were approved by the Iraqi parliament. We in the Congress did not even have an opportunity to vote on whether this was the way to proceed forward. I don't anticipate that situation coming up again.

The second is the need for a clearly articulated strategy with respect to Afghanistan and Pakistan. And we don't have a strategy unless we can articulate the end point. And I look forward to working with you toward not only being able to define that but being able to define some sort of an achievable end point to our presence in Afghanistan.

The third is a reexamination of the way that we have proceeded with NATO expansion. I did a lot of work in NATO when I was assistant secretary of Defense, and quite frankly this isn't the NATO that I was working with. And I'm very concerned about the transition from essentially alliances into a number of protectorates in these newer countries. And that's a situation that makes our country I believe very vulnerable.

The fourth is a need for us to adjust our strategic relationship with China. There have been a lot of comments made today about China that were fairly benign, and it's my hope -- in fact I was meeting with the Chinese ambassador a couple of days ago -- it's my hope that both of our countries can understand how vulnerable we are to each other right now, after this economic downturn. But there are serious points of contention in our relationship that are going to have to be addressed over the next four to eight years.

The next is the need for us to reexamine the failure, quite frankly, of the past administration to reengage not only potential adversaries but also hostile regimes that -- with which we have some disagreement. You had I think a great exchange with the chairman with respect to Iran, and I certainly would identify myself with the chairman's position on that. But also Burma, as you and I discussed earlier -- I think we've made some real mistakes in terms of how we have approached the relationship with Burma, and I hope we can start some new ground there.

The next is an urgent need, in my view, for the United States to focus on reconnecting in East Asia and Southeast Asia, not simply with respect to the China and sometimes the China-Japan relationship, but I would hope that you would lead the charge in terms of a much invigorated relationship with ASEAN and some of these other countries.

The next is our need -- and you addressed it I think in a very clear way in your statement -- to show clear leadership in the complex and difficult situations with respect to the Israeli and Palestinian conundrum. There's no other word for it really at this point. But I think with the right kind of leadership that we can mitigate a lot of the tensions in that area and work toward a different situation.

And the final one is -- and I want to actually spend what little time I have here to get your thoughts on this because it's been talked about a million different ways here -- the need for us to rebalance the tasks being performed by the Department of Defense and the Department of State as they relate to our involvement around the world. And I would like to emphasize here that the implications for this are beyond the notion of turf wars. They're beyond this discussion of simply who can do it better. They really go to how our country is being perceived around the world. It's one of the most graphic things that I have been seeing over the past couple of years since I came to the Senate, versus the time when I was in the Pentagon years ago or even when I was traveling as a journalist very heavily in Asia before 9/11, and that is that we are increasingly being seen as a military guarantor -- and in many cases a desirable military guarantor -- in these other countries, as opposed to being an economic partner, and we -- or a cultural partner or growing our interdependence with these countries, with respect to educational programs and reciprocal trade and these sorts of things. And it's -- I think it's vitally important that the State Department invigorate these policies to put a civilian face on them, and to push these cultural, economic and issues of interdependence. And I would appreciate your thoughts on that.

SEN. CLINTON: Well, Senator Webb, as always, you are not only eloquent but extremely useful in your quick summary of all these issues because every one that you mentioned is one that I think is going to be on our agenda.

With respect to this rebalancing of the tasks being performed by State and Defense, you're absolutely right. I mean, it is a much larger issue than just intergovernmental relations and line items in a budget. It has to do with how we see ourselves, and therefore how others see us. And it is one of my hopes that during my time and my -- if I am so fortunate as to be confirmed that I am secretary of State -- we will begin to get that balance more in the direction of putting a civilian face on our power and sending the message that, you know, yes, we have this huge military that we spend nearly $600 billion dollars on, but we are much more than that. We are a country with all kinds of political, cultural, economic and other assets that we can offer the rest of the world.

It is not going to be easy, because you serve on the two committees, having served with you on Armed Services, where, on one committee, you can get practically anything you want, and on the other committee, you can't keep up with the demands that are being put on diplomacy and development. There are more members in military bands than there are Foreign Service officers serving overseas.

So, I mean, when you think about that, it puts it into perspective. We have so underresourced our diplomacy and our development, and it kind of becomes a self-fulfilling prophecy. You know, the less resourced we are when we're given a task, the harder it is to perform. So the military, understandably, says, "Well, come on, get out of the way; we'll take care of this. But, you know, you guys come along. You know the languages. You've got some expertise. Be our advisers." So that just further enhances the military (face ?).

You know, with the new AFRICOM, which I support, we have to be very careful that it doesn't appear that our only real government engagement throughout Africa is our new military presence. So I could not agree more with you, Senator, and I look to getting your advice, which I know will be unvarnished and candid and well-informed, about how we're going to do this, because that's -- you know, that's one of the biggest items on my agenda.

SEN. WEBB: Well, thank you. Our military does great things, and I think you and I both feel strongly about that. We just want to make sure that it does the right things. And when I look at the NATO situation right now, it's increasingly the United States is viewed as the military guarantor to these new protectorates, essentially, in historical terms, that we've brought into the fold, while the older countries of NATO are re-establishing their traditional historic relationships with Central and Eastern Europe. And there's nothing wrong with that, but it is troublesome when we are simply viewed as the military side of it.

I just came back, as you know, from an extensive trip in Southeast Asia. It's the same thing. If you're talking with the people in Singapore, if you're talking with people in Thailand, they're very happy that the United States is there as a military balance as they invigorate their relationships economically with countries like China. But it's not to our advantage that this occur. And the best way to have sort of a catalyst to bring the United States back in a stronger way culturally and economically is through the State Department.

So I wish you well, and I'm at your disposal. And I think you're going to be a great secretary of State. Thank you.

SEN. CLINTON: Thank you, Senator.

SEN. WEBB: Thank you, Mr. Chairman.

SEN. KERRY: Thank you, Senator Webb.

Senator Lugar.

We're going to start the second round now for Senator Lugar. It'll be the first round for Senator Shaheen. And since the crowd is not clamoring for a second round, we may be able to make some good progress.

SEN. LUGAR: Thank you very much, Mr. Chairman.

Senator Clinton, in my statement this morning, I said the core of the problem that I perceive with regard to the Clinton Foundation is that it may be perceived as a means to gain favor with the secretary of State. And I stated the foundation exists as a temptation to any foreign entity or government that believes it can curry favor through a donation. It sets up potential perception problems.

The bottom line is that even well-intentioned foreign donations carry risks for United States foreign policy. The only certain way to eliminate this risk going forward is for the Clinton Foundation to forswear new foreign contributions when you become secretary of State.

Now, my purpose in stating it this candidly is simply that being secretary of State, foreign policy of our country involving all the countries in the world, is an awesome responsibility, which you perceive and have testified, as we all do.

The foundation is very important to you and to President Clinton and to many recipients who have benefited from it. But this was bound to be a dilemma from the moment that the president-elect asked you to become secretary of State. You have been the first lady. You are married to the former president of the United States. You've established a foundation. It has already received gifts. There have been press accounts, fairly or unfairly, of people who have given gifts in other countries.

And clearly the best solution to this would be, during your tenure as secretary of State, for the foundation, which still exists there and can receive gifts from everywhere else in the world, not to receive gifts from people abroad, even though that would deny it some revenues and the benefits that would come from those revenues.

Now, having said that, I've indicated that I support your nomination and plan to vote for your nomination (in the Senate ?) business meeting and any floor vote we have on this, because your qualifications are remarkable. And that is why, reluctantly, I dwell, however, on this problem that will still follow you.

Now, the staffs have dealt with your people, as well as with perhaps President Clinton or at least officials of the foundation, to try to think through situations. So I've suggested, as a backup to that, four conditions that were in an attachment that was with the press release that I issued along with my statement this morning. And I indicated that the answer you have given as part of responses to questions satisfied item four of those qualifications.

But at the same time, there remain the first three. And essentially we've asked that you have the Clinton Foundation include information in its annual report that we have -- let me see if I can find the release now for a second -- specifically all donations of $50,000 or more should be disclosed immediately upon receipt rather than waiting up to 12 months -- (inaudible) -- disclosure; and secondly, pledges from foreign entities who donate more than $50,000 in the future should be disclosed at the time the pledge is made, and when the donation eventually occurs; and third, gifts of $50,000 or more from any foreign source, including individuals, should be submitted to the State Department -- (inaudible) -- agency for the same ethics review that we apply to donations from foreign governments; in essence, the most timely reporting of gifts of $50,000 or more so that at least this is not something that waits for an annual review or in any way could be accused of being less transparent.

If there is to be a dispute -- somebody makes a gift -- let's have an up-front argument about it presently, as opposed to it lingering and then somebody coming at you and saying clearly something was happening throughout the months, not disclosed, and you would respond, "Well, the agreement is an annual report," and so forth.

That really is less satisfying than the first idea, no gifts; but secondly, the most rapid response on the part of the foundation whenever a gift comes in. So if we're going to have an argument, it happens right then, and therefore, if it's not a good idea, that it's stopped, and a compromise for the State Department, for foreign policy, for you, is prevented as rapidly as possible, within days rather than in months or in years.

So I ask you to comment on this because it appears to me that the press coverage of this hearing will be favorable to the remarkable responses you have made -- very fluent testimony, obviously well prepared in touching the bases with the questions that we had. But it is less likely to be satisfying with regard to the Clinton Foundation, and this is why I ask you to at least give some further comment, assurance, if not pledge to be sensitive to this and to try to respond to the thoughts that I've expressed.

SEN. CLINTON: Well, Senator Lugar, I know that you come at this issue in good faith, as I do, and I agree that these are matters that have to be handled with the greatest of care and transparency. I think it's important to give just a little context if I can. You know, the purpose of the agreement was to avoid even the appearance of a conflict because all of the independent professionals who do this for our government said there was no conflict. So it's a kind of catch-as-catch-can problem. I mean, when it was all submitted to the Office of Government Ethics, they said there was no inherent conflict. My husband doesn't take a salary. He has no financial interest in any of this. I don't take a salary. I have no financial interest. So out of that abundance of caution and a desire to avoid even the appearance, the president-elect's transition team began working with the foundation to try to craft an agreement that would avoid the appearance of a conflict but would also ensure that the foundation can continue its work.

You know, I'm very proud of the work that the foundation did, and when you look at why it received, for example, foreign government money, it's because early on there wasn't the support from our government until, frankly, the leadership of President Bush and members of this Congress created PEPFAR, and there was also a tremendous financial burden on poor states to try to afford the pharmaceuticals, the antiretrovirals. So my husband's foundation worked with generic drug manufacturers to help improve their systems of manufacturing and get the costs down so that it would be affordable. So the governments of countries like Canada and Norway and Ireland and the U.N. said, well, this is the best deal ever.

So this is all pass-through money. None of this goes to or stays in the foundation. This is used for the purchasing contracts in order to buy the drugs to keep, you know, many people alive, and particularly about 1.4 million people, including many children.

So the work of the foundation, the confidence that it has created with donors who know that it has an extremely low percentage that goes to any overhead, it has a very transparent way that it uses the money, were very persuasive to the transition team, that we had to work out something to keep the foundation in business while I did what I needed to do to be as transparent as possible. So the kinds of concerns that were put forth were very carefully considered. And, you know, I do believe that the agreement provides the kind of transparency -- under the Memorandum of Understanding, foreign government pledges will be submitted to the State Department for review.

I don't know who will be giving money. That will not influence; it will not be in the atmosphere. When the disclosure occurs, obviously it will be after the fact, so it will be hard to make an argument that it influenced anybody because we didn't know about it. So I think that in the way the president-elect's transition team saw it, the agreement that has been worked out is actually in the best interests of avoiding the appearance of conflict.

Now, I hasten to say that my career in public service is hardly free of conflict, Senator, so I have no illusions about the fact that no matter what we do, there will be those who will raise conflicts. But I can absolutely guarantee you that I will keep a very close look on how this is being implemented. I will certainly do everything in my power to make sure that the good work of the foundation continues without there being any untoward affects on me and my service, and be very conscious of any questions that are raised. But I think that the way that this has been hammered out is probably as close as we can get to doing something that is so unprecedented that there is no formula for it, and we've tried to do the very best we could.

SEN. LUGAR: Well, my time is concluded. Let me just say that the situation is unprecedented, which is the first lady and her distinguished husband and a foundation come together with a State Department hearing of this sort. I am hopeful that as we go through the history of this, that people will not say, well, Senator Lugar and Senator Kerry and others were prescient; they saw the problems. And we'll get full credit, but that will not be helpful to our foreign policy, to you, your husband and the foundation. And this is why I plea for you really to give even more consideration. It need not be a decision made today, because I appreciate the negotiations have been sizable. And you are a good negotiator. So is your husband. So are those who have worked for you. I admire that. It's a good thing for a State Department official and particularly the secretary of State. But this seems to me to be so important at the outset, and this is why I've dwelled upon it, trying your patience and that of the committee, because I think it is very important and I think you understand that.

SEN. CLINTON: I do, and I respect you so much, Senator, and I can certainly guarantee to you that I will remain very sensitive to this and I will work with you and the chairman as we go forward.

SEN. LUGAR: Thank you. Thank you, Mr. Chairman.

SEN. KERRY: Thank you very much, Senator Lugar. Let me take a moment to welcome Senator Shaheen. This is her first official formal appearance with the committee. We just ratified the assignments at lunch today, and so we're delighted to have you here. I'm personally delighted because you're a great friend and a good neighbor, and we're really happy to have you as a member of this committee.

SEN. SHAHEEN: Thank you very much, Mr. Chairman. I am very honored to be able to serve on this prestigious committee with you and Senator Lugar, and as I'm sure you know, I have been a big fan of your public service to the country for a very long time, as well as your broad knowledge and expertise in this area. And just as this country faces unprecedented economic challenges, we also face the most complicated foreign relations and national security challenges since the end of the Cold War, and I know that under your leadership and the leadership of Senator Lugar that this committee will address these vital issues in a bipartisan way, and I'm delighted to be able to serve with you as we do that.

Senator Clinton, congratulations on your terrific nomination. Your testimony this morning I thought reinforced the fact that you have a breadth of knowledge and experience to be an outstanding secretary of State, and I commend President-elect Obama for choosing you. The two of you working in a partnership will truly have the opportunity to change the world, and I have no doubt that you will do that. On a personal note, I have to say that I am disappointed that I won't be able to serve with you in the Senate but look forward to working with you as a member of this committee.

I have two questions, since you have covered many of the issues that I would have asked. One is a broader question and the other is a little more parochial relative to New Hampshire. The first has to do with the international economy, and I know that you and Senator Dodd discussed this a little bit earlier today, but over one-fifth of manufacturing workers in my state of New Hampshire depend on exports for their jobs. I was interested to see recent reports that you would like to see the State Department take a more active role on questions of international economics, and I thought that would certainly be a change from the Bush administration, which has placed the international economic agenda primarily in the Department of Treasury. So I wondered if you could speak a little bit to the role that you see for the State Department in addressing these international economic issues.

SEN. CLINTON: Well, Senator Shaheen, welcome to the Senate and welcome to this committee. I think your joining this body will be an incredible addition, and I look forward to working with you in this new capacity. I too regret that we won't serve together as senators, but I'm glad you're on this committee so that we can continue our friendship.

I think that's a really timely question, and it is one of the concerns that I have explored since being asked to take this position. How do we get our economic international agenda better integrated into the State Department? Obviously Treasury has a huge role to play, but so does the State Department and, you know, we're going to be responsible for the climate change negotiations. Well, you know, that has economic, environmental and energy related implications. The questions earlier from Senator Lugar about energy security -- huge economic implications. And then the meltdown of the international economic regulatory system means that our foreign policy is impacted in so many ways and so many parts of the world.

So there is a lot that we have to pay attention to, and we have a National Security Council but we also have a National Economic Council, and it will be part of the Obama administration's plans that the State Department will participate in both, not just one; that we will be very much involved in the crafting of international economic efforts. The G-20, which will be coming up in April, hosted by Prime Minister Gordon Brown in London; we're going to be playing a role in helping to design the agenda for that.

So on all of these issues I think it is important to have a broader approach than just, you know, one agency because our economic standing affects everything we're doing. You know, in dealing with Russia on START, you know, some of that will be influenced by the economic situation that we're confronting. Trying to deal with the modernization of the military in China; we've got to have a strategic relationship, as Senator Webb said, but we also have to make sure that they continue buying our debts. I mean, we have a lot of very complicated international economic issues that directly impact our foreign policy, so we're going to be working on those, and I welcome any and all advice that you might have.

SEN. SHAHEEN: Thank you. The second question is related somewhat and it deals with trade. We have a company in New Hampshire -- and forgive me for being parochial, but -- called Goss International that makes large printing presses. They had Japan come in and dump imports into the market. They went to court and sued under our trade laws and got a judgment in U.S. District Court, and Japan retaliated by passing a recovery provision or a clawback that allowed the company that was doing the dumping to actually appropriate Goss's investments in Japan. And the State Department has really done very little to address this issue in a way that -- despite the court judgment on behalf of the American company.

So what role do you see the State Department playing as companies like Goss are dealing with this violation of the U.S. trade laws?

SEN. CLINTON: Well, I don't know anything about that specific case -- we will look into that and educate ourselves about it -- but more generally, I think this has to be part of our broader trade discussions. The president-elect is in favor of free and fair trade. He wants to figure out how trade becomes more of a win-win for our manufacturers, our businesses, you know, our citizens, and that's going to be part of what we look at. What are the rules that we want to enforce in our country and what do we expect through reciprocal relations with other countries?

So I'm well familiar with the general nature of the problem because I faced much of this in New York over the last eight years, but we're going to try to be more creative and substantive in addressing what we can do to create a more favorable, positive atmosphere so that if there are violations they can immediately be taken care of within the global trading framework, and you don't face retaliation and you don't have to worry about unfair competition.

SEN. SHAHEEN: Thank you. Thank you, Mr. Chairman.

SEN. KERRY: Thank you very much, Senator. Senator Barrasso.

SENATOR JOHN BARRASSO (R-WY): Thank you very much, Mr. Chairman, and congratulations, Senator Clinton. We've worked together on the Superfund Committee you chaired, and I was the ranking Republican, and I always found you to be very prepared, very thorough, very thoughtful, and I'm sure you're going to bring all of those same things to the State Department.

SEN. CLINTON: Thank you very much, Senator.

SEN. BARRASSO: Senator Shaheen apologized for being parochial. I'll be a little parochial, because the people of Wyoming, as I travel around, want to make sure that the foreign aid that we spend, especially in light of the U.S. economy today, is being used so that people are really getting value for their money, and that we are safeguarding the U.S. taxpayer dollars. Could you talk a little bit about how to balance allocating foreign aid and making sure that American taxpayers are getting value for their money?

SEN. CLINTON: Well, Senator, I appreciate very much your interest in these issues, and I have enjoyed my relationship with you since you arrived in the Senate, and I look forward to working with you.

I want to be able to go to Wyoming or go to New York or Massachusetts or Indiana or New Hampshire, or anywhere in America, and explain why the relatively small but important amount of money we do spend on foreign aid is in the best interests of the American people, that it promotes our national security and advances our interests and reflects our values. To be able to do that I have to make sure that the State Department, and I in particular, tell the story about what we do and why. I mean, you and other members of this committee often travel and see the results of the work, but it's very difficult to convey that to the rest of our country, and I will look for better ways, through public diplomacy in telling our story overseas, and better ways here at home through my own efforts to explain what we do to our fellow Americans.

But I think it also has to be part of an overall review of how we conduct foreign aid -- how we fund it, who's responsible for it, which is why I decided to have the second deputy, Jack Lew, that will be responsible for resources and management, because I want somebody to be able to come up and talk with you about very specific ideas we have about how to make foreign aid more effective. It's pretty divided and I think we have degraded the capacity of USAID over the last years to be our premier aid development organization, and a lot of what's been drifting toward the Defense Department, as Webb said, is foreign aid, in a traditional way. When a young Army captain gets cash to go build a school, that's foreign aid. That's not warfighting. That's something that we always thought of as development assistance.

So we've just got to do a better job of trying to explain and justify and rationalize and make efficient what we do so that, you know, if I'm fortunate enough to come to Wyoming, and I can go to some town hall or forum with you, you know, in a year or two, I'll be able to explain what we're doing, why we're doing it, and why it makes a difference to the people who are there.

SEN. BARRASSO: Well, consider yourself invited. And the second question they'll ask is -- when you come is about management reform at the United Nations and the money that American taxpayers are spending there, and if you have some thoughts on that.

SEN. CLINTON: Well, this is another priority of the president- elect and I know you'll be speaking with the permanent representative to the U.N. designee in a day or two. The U.N. must reform. It has to be more transparent, more efficient, and we are going to press for those kinds of changes. At the same time, the United States has to be a good partner with the U.N. so that if we use the U.N. as we do for peacekeeping or other actions that we believe are in the best interest of the United States as well as the United Nations we're going to have to bear our burdens.

So this is really a two-track commitment. We've got to work with our partners at the United Nations as well as the permanent bureaucracy there to do everything we can to try to streamline the operations, modernize the system, make them more transparent, and then we have to be sure we do our part so we don't lose credibility as we push that reform agenda.

SEN. BARRASSO: Moving on to Iran -- and I know you've addressed it, reading your article in Foreign Affairs -- you said if Iran is in fact willing to end its nuclear program, renounce sponsorship of terrorism, support Middle East peace, and play a constructive role in stabilizing Iraq the United States should be prepared to offer Iran a carefully calibrated package of incentives. Do you have a clear path in your mind of how to get from where we are today -- where Iran appears to be continuing toward the development of nuclear weapons, continues to spew forth hatred of Israel -- to get to a point where these things would apply. And how do we do that from here?

SEN. CLINTON: Well, Senator, there is a policy review that is being undertaken by the incoming administration. We are still being briefed by the outgoing administration. We don't yet have a full picture of all of the information that the current administration has within its control. So we will be working together across government lines through the national security team to devise a new approach. The president-elect called for such a new approach just over the weekend in some interviews that he did and we are very open to, you know, looking to find a positive effective way of engaging Iran.

However, as I said to the chairman, a nuclear-armed Iran is not acceptable to the United States. It is our job to persuade other countries that it should not be acceptable to them either, to consult with our friends and allies in the Gulf who have as much or more at stake than anyone, and certainly with Israel that views a nuclear- armed Iran as a grave threat so that as we move forward with any new approach or effort at engagement we are bringing our friends and allies along with us.

We're not surprising anybody because Iran with its litany of terrorist sponsorship and interference with other countries' internal affairs and certainly the role that it's played destructively from our view in Iraq and so much else, as you know, is a concern not just for the United States and Israel. It's a deep concern to many other nations and so we want a broad as base as possible as we try to devise a way forward.

SEN. BARRASSO: Thank you. Could I shift a little bit to Cuba? As you know, right now we have strict laws and regulations limiting economic transactions with Cuba, with relatives of folks who are here. Any thought on lifting restrictions on families to visit and send -- and send things to Cuba?

SEN. CLINTON: Senator, the president-elect is committed to lifting the family travel restrictions and the remittance restriction. He believes, and I think it's a very wise insight, that Cuban Americans are the best ambassadors for democracy, freedom, and the free market economy, and as they are able to travel back to see their families that further makes the case as to the failures of the Castro regime -- the repression, the political denial of freedom, the political prisoners, all of the very unfortunate actions that have been taken to hold the Cuban people back.

You know, our policy is first and foremost about the freedom of the Cuban people and the bringing of democracy to the island of Cuba. We hope that the regime in Cuba -- both Fidel and Raul Castro will see this new administration as an opportunity to change some of their typical approaches, let those political prisoners out, be willing to, you know, open up the economy and lift some of the oppressive strictures on the people of Cuba, and I think they would see that there would be an opportunity that could be perhaps exploited. But that's in the future whether or not they decide to make those changes.

SEN. BARRASSO: I appreciate some of the comments you made earlier about the Strategic Arms Reduction Treaty and working with that and I know you're working with Senator Lugar there and others on the committee. You spoke strongly about verification and ongoing monitoring provisions to make sure that that continues. I wonder in these treaties about differentials in terms of what the United States gives up and others give up for us to agree to get signatures on that. Could you talk a little bit about that and what standards we will hold to other countries and how we make sure that their understanding is the same as our understanding?

SEN. CLINTON: Well, I think that's a very good point. You know, the history of arms control with first the Soviet Union and then Russia I think it's fair to say -- and, of course, Senator Lugar is the expert on this -- has been a history of success by and large. Even in the midst of the Cold War there were negotiations that led to arms control agreements and certainly it is our hope that United States can once again be a leader on reducing the number of warheads and the threat of nuclear war, making sure that we have no remnants of Cold War command and control issues and the like.

We are very serious about negotiating and are willing to go lower so long as the Russians are as well and that the deterrent that we have we always believe is adequate. We won't really know, Senator, until we get into these negotiations but they're going to be on a fast track because the START agreement, as you know, expires at the end of this year, so we've got to get serious and get involved and we will have a negotiator named so that we can start almost immediately.

SEN. BARRASSO: Thank you, Senator Clinton. Thank you, Mr. Chairman. My time is expired.

SEN. KERRY: Thank you very much, Senator.

I'll take a round now and then -- I see Senator Feingold is here. I don't know if there are any other folks who are going to look for a second round. If there aren't then maybe I'll let Senator Feingold go and then we'll just stay focused and wrap up on -- with a series of questions.

Senator Feingold.

SEN. FEINGOLD: Thanks so much, Mr. Chairman. Thank you for your patience, Senator Clinton. Just a couple other topics. You and I discussed Somalia and I've been long concerned about the deepening crisis there, particularly its implications for our national security. Just this last month several senior officials including CIA Director Hayden and Joint Chiefs Chairman Mullen said that al Qaeda is extending its reach in Somalia and engaging extremists there to revitalize its operations.

As I told you, I met with many leading figures in Somalia during a recent December trip to Djibouti. Those meetings reinforced my belief that while Somalis are a moderate people the situation is now far worse than it was two years ago and the current administration's approach to Somalia is at least partly to blame.

What's your view on what's gone wrong with that, and how we can fix it? Give me a little sense of what you think some of the key components are, and I understand you haven't had a chance to get into all of this at this point.

SEN. CLINTON: Senator, as you and I discussed, Somalia is strategically located. I think it was you who asked me if I knew how far Yemen was from Somalia -- if it wasn't you, it was other smart person who asked me that.

SEN. FEINGOLD: I didn't know. I'd ask my staff, but --

SEN. CLINTON: (Laughs.)

SEN. FEINGOLD: -- was quite surprised to learn it was 20 miles.

SEN. CLINTON: Twenty miles. And so the idea that Somalia is just failed state, somewhere over there where people are fighting with one another over heaven knows what, is a construct that we adopt at our peril.

I don't know the most effective way forward. I have no -- you know, no wisdom on this, Senator. I know you met in Djibouti, over a period of a couple of days, with a number of the actors. As you know, the Ethiopian troops are leaving. The African Union commitment is questionable, as to whether they will or will not stay, and what their mission description would be.

The internal conflict within the groups in Somalia is just as intense as it's ever been, only now we have the added ingredient of al-Qaeda and terrorists who are looking to take advantage of the chaos and the failure of Somalia. There's a lot of history here, and I think we have to be very thoughtful as we look at Somalia. This is obviously an issue that will have to be worked across the national security apparatus.

And I would welcome your advice. You probably have as much first-hand knowledge of the players -- and what they intend, and who they are, and what they're really looking for -- as anyone, you know, in this body. And so we're going to -- we're going to seek your advice and counsel.

I mean, as the chairman well remembers, at the beginning of the last Democratic administration there was a humanitarian mission in Somalia that was handed off. And the beginning of this Democratic administration, here we are once again with the remnants of a humanitarian mission, and certainly the humanitarian crisis growing that is going to put this problem in the lap of the new president.

SEN. FEINGOLD: Exactly.

SEN. CLINTON: So, I think that this is going to require an enormous amount of thought.

Now, complicating it, as you well know, is the piracy issue. There's been a number of consultations about piracy. The current thinking is that pirates will be intercepted and defended against as a, kind of, joint responsibility between the private shippers -- who have to do more, frankly, for their own, the security of their own vessels -- but also various navies that are, you know, coming together, including China, and India, who are willing to patrol the waters.

There is also some talk about going ashore. This is problem Thomas Jefferson dealt with, "along the Barbary Coast," you know, kind of going to prove that the more things change, the more they stay the same. There are some who are advocating going ashore on Somalia.

We have to give a lot of thought to this. And there's an enormous number of bad options that have to be sorted through. So, I am not at all able to give you the new administration's policy because we're sorting it out ourselves.

SEN. FEINGOLD: I can tell you're eager and very ready to take this on --

SEN. CLINTON: Yes, indeed.

SEN. FEINGOLD: -- but, I look forward to working with you.

Let me switch to something completely different. There's widespread recognition of the need to build a more robust and effective diplomatic and development corps. And as a part of that effort, it of course makes sense to consider ways to address challenges faced by the lesbian, gay, bisexual and transgender employees, particularly relating to domestic partner benefits in State Department policies that make it difficult for the partners of Foreign Service officers to travel and live at overseas posts.

What would you do, as secretary of State, to address these concerns? Will you support changes to existing personnel policies in order to ensure that LGBT staff at State and USAID receive equal benefits and support?

SEN. CLINTON: Well, Senator, this issue was brought to my attention during the transition. I've asked to have more briefing on it because I think that we should take a hard look at the existing policy.

As I understand it -- but, I don't hold me to it because I don't have the full briefing material, but my understanding is other nations have moved to extend that partnership benefit, and we will come back to you to inform you of decisions we make going forward.

SEN. FEINGOLD: Thank you, Senator.

Thank you, Mr. Chairman.

SEN. KERRY: Thank you very much. Thanks, Senator.

We're sort of getting to that point now where I think we can address some loose ends, and maybe even, you know, sort of, have some fun and dig into things a little bit here in ways that we can't otherwise. But we promise not to prolong it, and we'll try and remain focused on those things that are really salient here.

Let me begin with Afghanistan, if I may. I am deeply concerned that, at least thus far, our policy in Afghanistan has kind of been on automatic. And I made a promise to myself a long time ago that I would not see all of our conflicts -- ground operations in the context of Vietnam. I really try hard. I have an automatic check that says, you know, not everything is that.

But, I have to tell you, in the several visits I have now made -- escape it as I might, the parallels just really keep leaping out in so many different ways. We are struggling to fight with, and for, people of a different culture, different language, different custom, different history, different religion, if any, and all of those similarities exist. We don't live there. We don't live in the community, in a hamlet, in a small town, pocket, whatever you want to call it.

And so we're not there often at night. They are. And the night often rules with insurgencies. The complications are profound in both Pakistan and Afghanistan. And I went to both -- and to India, immediately after Mumbai, and was really struck by the extraordinary distance we have to travel in both places, Senator.

That is the center of the war on -- I've got to check myself, I hope this administration, and all of us, will begin to think differently in this terminology of "war on terror," and think in terms of the global counterinsurgency, and the difference between counterinsurgency and counterterrorism, and the challenges that we face in addressing both and understanding them both.

One person made a very interesting comment to me while I was over there, and said, "You know, Pakistan is a government without a country; and Afghanistan is a country without a government." And if you stop and think about the real application -- and no insult meant to anybody, President Karzai is a friend, we've all met with him, we want his success -- but there are inherent contradictions in the structure that we have been trying to impose in Afghanistan.

And more and more, as I travel to that part of the world -- I served most recently as chair of the Subcommittee on Mideast South Asia, so I was frequently there. It leapt -- it kept leaping out at me in ways that over a number of years here I really, frankly, hadn't given enough consideration to. But recently reading a wonderful book, which I commend you, by Rory Stewart, "The Places in Between" and another book, "The Forever War" -- and there are a whole host of them that really give you flavor of this. If you really wanted -- I mean, Gertrude Bell, The Desert Queen is a fascinating study of sort of the region and of tribalism. And that's really what I want to point to.

We have not, I think -- we honored tribalism when we dealt with the Northern Alliance and initially went into Afghanistan. We really haven't adequately since. And it strikes me that if we just put troops -- plunk them down, another 20,000-30,000 in Afghanistan -- without a very limited view of what they can achieve and need to do, and a comprehensive view of other things we need to do to build the successful structures of governance -- the police; the judiciary, which may be a pipe dream; the construction programs; the ability of Hamid Karzai's government, as well intentioned as he may be and as much as we like him; the ability to even get out of Kabul and be able to do anything in the countryside.

I think, Madame Secretary-designate, we're on the wrong track. And I think unless we rethink this very, very carefully, we could raise the stakes, invest America's reputation in a greater way -- as well as our treasure -- and wind up pursuing the policy that is frankly un-pursuable, unachievable.

So I'd like to elicit your thoughts on this. I was in Peshawar a few weeks ago. I learned that -- and some in Pakistan would disagree with this, and I'll probably hear from some of my friends there -- but many people believe that it would not be hard for the Taliban to move in there if that's the decision they decided to make. It was so dangerous that we were not able to move into downtown and other areas. And we just saw, last week, 600 Taliban cross the border from Afghanistan and came in and directly attacked a frontier corps military outpost.

I think anybody who has really traveled on the ground, listened in the right ways and not just accepted the sort of brief in culture, will suggest to you respectfully, Madame Secretary, this really has to be rethought very, very carefully.

Our original goal was to go in there and take on al Qaeda. It was to capture or kill Osama bin Laden. It was not to adopt the 51st state of the United States; it was not to try to impose a form of government -- no matter how much we believe in it and support it. But that is the mission, at least as it is being defined today.

So I'd like to ask for your thoughts on this, as you engage in what will obviously a very hasty and important critical review, of some judgments we need to make about our policy.

SEN. CLINTON: Well, Mr. Chairman, I think that your cautions are extremely well taken.

There is, as you know, a review going on right now under the direction of General Petraeus through CENTCOM. As I understand it, he has approximately 300 people -- some of them detailees from the State Department -- who are crisscrossing Afghanistan trying to determine, as I understand it, what is and isn't feasible.

We are in close communication with General Petraeus. We intend to, when it's appropriate -- on January 20th -- to begin our own immediate review, because I share your concern, as I know the president-elect does.

You know, his approach toward Afghanistan, which has been more for more -- you know, more troops would go in, but there would have to be more from NATO and there would have to be more from Afghanistan -- presupposes that we have a set of discreet goals that we are trying to achieve. And that is in the process of being assessed and analyzed right now.

As you're aware, President Bush had inside the White House, General Lute, who was largely responsible for coordinating policy with respect to both Iraq and Afghanistan. So the Bush administration has put a lot of assets to work on trying to determine what is the best way forward with Afghanistan and how do we affect the future Pakistan -- the decisions that they make.

But I think that asking the hard questions and raising the red flag is exactly what this committee, I know, will do and should do. Sitting here today, when I think about my trips to Afghanistan -- my flying over that terrain; my awareness of the history going back to Alexander the Great and certainly the imperial British military; and Rudyard's Kipling's memorial poems about Afghanistan; the Soviet Union, which put in more troops than we're thinking about putting in -- I mean, it calls for a large dose of humility about what it is we are trying to accomplish. Having said that, I think that we will keep you informed as we move forward.

And on the civilian side, I hope that we will have the opportunity for more in-depth conversations. I mean, I've been on both sides now of the table here. And there is so much to discuss and there is so much expertise on this committee -- people who have traveled deep, traveled widely, thought deeply, know a lot of the players. And I hope that, you know, if I am confirmed that I'll be able to have you and others literally sitting down and talking with the people that we're going to be tasking to come up with the civilian side of this strategy so that we go in with our eyes open -- whatever it is we're trying to achieve.

SEN. KERRY: Well, I really appreciate that. I don't expect you to be able to lay out that strategy now.

I would say that I think it's important, perhaps, for the administration -- the incoming administration -- to not just have the review process that's been put in place be the only standard for a baseline. And I think we need to make certain that there's a subsequent expectation with regard to that. I think it'd be a mistake to just do that. I think you probably agree with that.

Secondly, with respect to the current military operations, I spent a lot of time in a couple of briefings that we're not allowed to discuss in public here, but trying to really get at this question of the targeting with respect to the Pakistan -- the FATA and our efforts to take out terrorists in that area.

There has been a considerable blowback, and I think counter productivity, in the collateral damage that has been occurring there. And I hope that you would also agree to really dig into that and take a look at whether or not all of that targeting is in fact as purported to be and as important as is suggested. Because I think we're creating some terrorists and losing some ground in the effort to win hearts and minds, as they say.

On the situation with Pakistan, they not only face the challenge of the insurgency in the country, they have a dire economic crisis also.

And in many ways the economic crisis may be just as challenging. We -- after I went over with Senator Biden and Senator Hagel last year, we came back and proposed a tripling of the aid to $1.5 billion a year over the course of a number of years, and I wonder, can you say today that the administration is -- remains absolutely committed to that? Because we want to try to move that as rapidly as we can.

SEN. CLINTON: Yes. The president-elect does support the legislation that you were part of and Vice President-elect Biden, and I think Senator Lugar was as well.

SEN. KERRY: Correct.

SEN. CLINTON: And we want to try to begin to some extent to separate our military aid from our nonmilitary aid. The tripling of the nonmilitary aid is intended to provide resources that will both support the Pakistani people, but also give some tools to the democratically elected government to try to start producing results for the people of Pakistan.

The military aid -- we want to really look hard at seeing whether we can condition some of that on the commitment for the counterinsurgency, counterterrorism missions. So we certainly are inclined to support, when appropriate, the legislation that you are referring to.

SEN. KERRY: And this is going to take a very significant hands- on effort, as I think you know. We've been obviously reading about or hearing about the potential of special envoys -- a series of them. Do you want to address that at all today?

SEN. CLINTON: Well, no final decisions have been made. That is a tool that I think you'll see more use of. I believe that special envoys, particularly vis-a-vis military commands, have a lot to recommend in order to make sure that we've got the civilian presence well represented, and in other areas that are hotspots that will demand so much time that we need to put someone well experienced and expert to work on it. So we are working through that. And again, this is an area that we will be coming back to you with.

SEN. KERRY: You know -- I just noticed Senator Vitter is back.

I don't want to -- I've gone over my time a little bit because we were sort of in a wrap up. Did you --

SEN. VITTER: (Off mike.)

SEN KERRY: Okay, fine.

I was stunned in India, Pakistan and Afghanistan to learn that our principal diplomats in that region do not get together to compare notes. I was also shocked to learn that our intel folks likewise don't do the same. That is just to me absolutely mindboggling.

SEN. CLINTON: Right. Right. Well, Mr. Chairman, these are among the challenges that we intend to take on: trying to create more of a regional perspective and a functional approach instead of being caught in the boxes that people unfortunately too often feel imprisoned by, so that there are certain lines preventing you from actually communicating with your fellow American diplomat across that line, or intel, or whatever.

You know, I don't have the experience that you have over the years on this committee and even before, but in my travels, I did see the results of that kind of compartmentalization, and we're going to try to break that down. We're going to try to use the bureaus more effectively --

SEN. KERRY: Wonderful.

SEN. CLINTON: -- so that they can be encouraging that. I've been reading up on George Marshall, who made it clear he didn't ever want a memo longer than two pages, and others who have advised me to begin to break down the kind of paper culture that exists and try to get people more focused on action items. And one of those is more communication back and forth among those who are American representatives in regions of interest and concern to us.

SEN. KERRY: Well, I'm delighted to hear you say that. And I think that's exactly -- doing it through the bureaus is precisely an easy way to do it, and that way you'll know ultimately what is happening, I think.

Senator Isakson raised a question about the Hamas political strategy and compared it to Africa. And I just -- I want to flag something for you because the history of the last years in the Middle East and what's going on in Gaza today and the divisions between Hamas and Fatah -- the division in the West Bank -- my judgment reflects again a stunning consequence as a lack of engagement and a lack of thinking about -- sort of common sense about how things work.

I had the privilege of being in the West Bank the day -- the morning after President Abbas was elected in 2005. And I met with him in Ramallah in that old headquarters and we spent some time together, and he looked at me and he said, "You know, Senator, I know exactly what you expect of me. I have to disarm Hamas. Now you tell me how I'm supposed to do that. I have no radios, I have no cars, I have no police, and Hamas has the ability to walk up to a door and deliver $20,000 value to somebody who has blown up -- you know, the widows or orphans of a family of a suicide bomber." They deliver the services. And we for years have talked about the creation of a legitimate partner for peace, and yet we've done almost nothing to fundamentally help them deliver that capacity.

So my hope is -- I mean, I don't -- I fear -- I mean, Israel has all the right in the world, and we are totally supportive of the patience they've shown, the forbearance over 10,500 rockets, the fact that Hamas broke the ceasefire. We understand the need to deal with Hamas. But we also have to recognize the threat here that Hamas may in fact wind up being more powerful that Fatah as a consequence. And the question is, has this further set back the ability to create that legitimate partner for peace? Would you comment perhaps on -- you did a little bit in your opening, but I think it would be worthwhile getting a better sense of how you see the play there and the endgame, if you will, with respect to Hamas.

SEN. CLINTON: Well, you know, we are at a point where the current administration is working very hard behind the scenes and in front of the scenes. And we don't want to say or do anything that might interrupt or undermine what they are doing.

I think your point, though, is incredibly important. And that's why earlier I mentioned the work that General Jones had done, which -- he was part of a bottoms-up approach, working with Abbas, Fayed and others in the West Bank, and there were results. That's what's so tragic is that more effort earlier, more sustained, more targeted -- it got to the point where the Israeli defense force was willing to turn over security to members of the Palestinian force that had been under the training of this team that General Jones put together.

SEN. KERRY: General Dayton has done a great job.

SEN. CLINTON: Yes, General Dayton was on the ground.

There is so much more we have to do. And obviously we do support Israel's right to defend itself, and we do understand and appreciate what it must be like to be subjected to rocket attacks. And Hamas did break the ceasefire, and they have no intention -- at least so far as we can tell -- of entering into another ceasefire at this moment. And the rockets are still being launched.

So I think that working toward a durable cease-fire is going to be an initial challenge if it's not achieved by the time that the president-elect takes office. But that's not the answer. The answer is, how do we begin to rebuild some sense of cooperation and, dare I say, even trust- and confidence-building measures so that we can get back to this work of the slow but steady building of the capacity of the Palestinian Authority?

So I know that General Jones is very committed to that. I share that commitment. And we intend to, you know, look into that as soon as we are able.

SEN. KERRY: Well, I know that's going to be a high priority. I know you've already been meeting on it, and I don't think we need to belabor it here now, but we wish you well with that and obviously want to try to be as helpful as we can.

Just two quick last issues, again -- now, are there any other questions? Then we'll sort of wrap.

One thing I do want to ask, if I may, and I don't want to belabor it, but it's coming at us enormously, and that is the question of what we're really going to be able to do here with respect to global climate change.

I was in -- (inaudible) -- meeting, and I met with all of the delegations that I'd met with in Kyoto, in Rio, in various years. And it is stunning to see the transformation in those meetings, particularly with the Chinese and with the low islands, the small islands' representatives, and with the Indonesians and others, with the Brazilians with respect to forests and so forth.

They are scared. They are serious. And what struck me is the degree to which everybody is waiting for us to take a lead. Now, I say that in one particular context. Recently a group of our top scientists have run computer models, and it shows that we are well ahead in terms of the effects of global climate change of all of the IPC studies today. Every single study shows that today our rate of increase of emissions is way beyond what is supportable.

In the last 10 years, we are increasing emissions, not decreasing them, four times as fast as we were in the 1990s. More chilling is the computer modeling they did against the current plans of every single country that is planning to do anything, and it's not that big a group.

The European Union has a 2020 date of reductions. The Chinese have a reduction of intensity, not a specific reduction of emissions. Other countries individually have either set some loose 2020 goal. Some, like us, have set a 2050 goal, but -- 80 percent reduction under the Obama plan, but not yet implemented, not yet real.

They took all of these current projections and ran the computer models against what is currently happening in the science, and in every single case it showed that we are not just marginally above a catastrophic tipping point level; we are hugely, significantly above it.

Scientists have now revised the levels of supportable greenhouse gas emissions from 550 parts per million to 450 to now 350. This had emissions at over 600. This had a temperature increase of in the range of three to five, six degrees if we did business as usual over the next few years.

The results -- and I'm not going to go through them all now -- but the results are, on every single level -- of sea ice, species, forests migration, drought, storms, disease, refugees -- when you start adding it up, the consequences, in terms of national security, human condition on this planet, are simply catastrophic. They're devastating.

So our challenge is going to be even greater than it was five months ago, Senator, or two months ago. The perception that we can kind of creep at this and perhaps do something this year, notwithstanding our economy, is foolhardy.

And so I hope -- I'll just flag it for you; I know that the president-elect has said he's going to focus on it. But I'm not sure that everybody coming into the administration is completely aware of what a big list this is going to be and how imperative it is that we make Copenhagen a success. I simply want to ask your undivided focus and leadership on this issue, because it is that critical.

SEN. CLINTON: Well, Mr. Chairman, you will have it, because I share your deep concern. You are eloquent in describing it, and you've been a leader in trying to sound the alarm on it for many years. As I've said, we will have a climate change envoy negotiator, because we want to elevate it and we want to have one person who will lead our international efforts.

But I agree completely that our credibility leading internationally will depend, in large measure, on what we're able to accomplish here at home. And as we heard the president-elect earlier at lunch, he will be putting forth a stimulus package that will have some energy -- renewable energy provisions. So I think that's a good start, and we have a lot of work to do.

SEN. KERRY: Senator Menendez, did you have any additional questions? You did.

SEN. ROBERT MENENDEZ (D-NJ): Thank you, Mr. Chairman.

I was listening to some of the previous questions, and I just want to make sure, since I made a statement earlier today, that I'm right. And if I'm not, I'm happy to be corrected for the record. It is my understanding that participants and contributors to the Clinton Global Initiative have been publicly disclosed since its inception and that that will continue to be disclosed. Is that a factual statement, or am I wrong?

SEN. CLINTON: That is correct, Senator.

SEN. MENENDEZ: And those contributors have been listed -- (inaudible) -- from press releases to event materials to a whole host of other ways in which the public has clearly been informed. Is that correct?

SEN. CLINTON: That is correct.

SEN. MENENDEZ: Now, it's my understanding, too, when I looked at this, which is why I didn't dwell upon it in my first round of questioning, that the determination has been made that there is no conflict of interest, but notwithstanding that, that you and President Clinton have been willing to go above and beyond in voluntary actions, both as it relates to both law and ethics, to make sure that there is no question. Is that a statement of fact?

SEN. CLINTON: That is also correct.

SEN. MENENDEZ: Well, Mr. Chairman, what I would hate to see is some who would put in doubt what I think is an incredibly important opportunity here, and that is to have two extraordinary public servants be able to meet the challenges our country has in this world.

You know, the Clinton Initiative has made a difference for people, millions of people, in this world. One-point-four million people, Mr. Chairman, now are living a safer life and living lives longer and having their lives saved as a result of the HIV/AIDS efforts that that initiative created.

The cost of medicine to treat children with HIV/AIDS has dropped by 89 percent over the last two years. Forty of the world's largest cities are working with the Clinton initiative to eliminate and reduce greenhouse gas emissions -- something that the Chairman is such a powerful advocate of. Nearly 3,000 schools are promoting healthier educational environments.

I would hate for what Nelson Mandela has said is a global movement, where every word spoken, where every partnership discovered, where every promise made can have a direct impact on the lives of millions of people across our planet for generations to come. Something that the President-elect Barack Obama has said that these initiatives help create a model for individual responsibility and collective action to the Clinton Global Initiative, bringing people together to take on tough global challenges.

In four years you have made concrete commitments that have affected over 200 million people in 150 countries.

I would hate for that incredible record and opportunity, not just at what was done in the past moving forward, to be blemished by some simply for purposes that are far less substantive and, in my view, a lot more political.

But I think it's incredibly important. I know that there are legitimate questions and I think that those questions have been very well answered. But I can't sit in my office watching what is going on and feel, with myself, knowing what this initiative has done for millions of people in this country on things that I critically care about and so many members of this committee have, and let it go at that.

So I appreciate your willingness to go above and beyond what is both the law and the ethics. I am sure you will continue to do so. I have expectations as one member of this committee that you will do so. And I certainly hope that President Clinton's works, while obviously conditioned by the agreements that you have all set out, can still be able to move forward in a way that those people will be able, throughout the world, to know that America is great because it is good. And one of its goodnesses is, in fact, what we do through initiatives like President Clinton, like President Carter and others as well.

Thank you, Mr. Chairman.

SEN. KERRY: Thank you very much, Senator Menendez.

Let me just say, I wasn't going to -- wasn't planning to comment on it, but in light of your commentm I'd just close out pointing out. Senator Lugar and I and all of us who have looked at this could not have more respect for the CGI, the Clinton Global Initiative, and what it does and has accomplished. And I couldn't agree with you more with respect to the distinction between that and the questions asked by the senator from Wyoming.

That initiative, I think, we adequately set forward here is not at issue because there will not be fundraising. There will be no foreign donors. And it really doesn't properly fit under the questions asked by Senator Lugar.

In fairness to Senator Lugar and to the thinking of the committee -- and I think Senator Clinton understands this full well and I'm confident from her answers that she has articulated a sensitivity to this which is going to have to be judged by the practice; I mean, we're going to have to go forward and see.

But there is a legitimate question, and I think, Senator, you'd agree that it's hard to distinguish between a donation currently made and -- and acknowledged publicly -- and a donation to be made in the future, a commitment made to but not acknowledged publicly.

And so the effort here is not to cast any aspersion on anybody or to suggest any lack of integrity or anything like that, it is simply to deal with the complicated legal concept of an appearance of a conflict of interest.

If you are traveling to some country and you meet with the foreign leadership and a week later or two weeks later or three weeks later the president travels there and solicits a donation and they pledge to give at some point in the future, but nobody knows, is there an appearance of a conflict? Could there be an appearance of a conflict?

That is what I think Senator Lugar is trying to get at. He is determined that it is simpler simply to adopt one of the options that he's articulated. For reasons you obviously feel are important and we understand it. You feel otherwise. You have gone beyond the law. You have done things to set up a process. And really we're going to have to make the process work. And we're confident that you have put yourself on the line today to make that happen.

So that's really where we are.

SEN. MENENDEZ: Mr. Chairman, if I may, just very briefly. My concerns, since you couched it in the context of Senator Lugar's questions, is not so much what Senator Lugar pointed. I think he did it, as he always does, in a very balanced way. My concern is other questions that were raised by other members here.

SEN. KERRY: That's what I was referring to.

SEN. MENENDEZ: Oh, okay.

SEN. KERRY: Oh, no, no, no. I'm referring to that. But I'm simply, as Chair, I want to share in the perceptions, as I have from the beginning, that those are things that we make judgments about. And we honor that and respect that.

So let me say that I think this has been a very positive and constructive hearing. I think you have acquitted yourself with great distinction today. I think people are impressed by the versatility and the breadth that you have shown, both in the preparation as well as in your own knowledge.

We really do anticipate trying to move this as rapidly as we can. And much more importantly, Senator Clinton, we really -- you know, this is an unbelievably important moment for our country, for the world that's waiting for this leadership. President-elect Obama, you, the administration, all of us, are staring at a magnificent opportunity to be able to make America what we believe it can be and should be and to bring it back, in a sense, in terms of these global efforts. And we are excited about the prospect of working with you to make that happen.

So thank you for your time today and good luck to you. We look forward to working with you in the days ahead.

SEN. CLINTON: Thank you very much, Mr. Chairman. Thank you Senator Lugar.

SEN. LUGAR: Thank you.

SEN. KERRY: We stand adjourned.

END.

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