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Hearing Of The State, Foreign Operations And Related Programs Subcommittee Of The Senate Appropriations Committee - The State Department's Budget

Statement

By:
Date:
Location: Washington, DC

Hearing Of The State, Foreign Operations And Related Programs Subcommittee Of The Senate Appropriations Committee

Subject: The State Department's Budget

Chaired By: Senator Patrick Leahy (D-Vt)

Witness: Secretary Of State Hillary Rodham Clinton

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SEN. LEAHY: (Off mike) -- Madame Secretary, for being here. And it's a little bit late, which is mine and Senator Gregg's fault. We were chatting with the secretary in the holding room to -- about the problems facing the world. I think, Madame Secretary, if we wanted to do from A to Z all the problems facing the world, all the areas of problems, we would probably have been there for hours and hours, if not days.

We know how busy you are. We're going to hear your testimony and place your written statement in the record, leave time for questions. We have amendments to the supplemental appropriations bill on the Senate floor.

SEN. JUDD GREGG (R-NH): (Off mike.)

SEN. LEAHY: (All right ?).

SEN. GREGG: There's a vote at 11:40.

SEN. LEAHY: And Senator Gregg just told me there's a vote at 11:40.

I do want to say how pleased and proud I am to have you represent the United States as our secretary of State. It's reassuring to have someone of your stature and your intellect and your experience, which is extraordinarily important. As the top American diplomat, you can hold your own with any foreign head of state. You're instantly recognized. And you are a wonderful person to reintroduce America to the rest of the world.

The -- it's also an opportunity in the State Department itself. It's had problems in leadership and managerial know-how. I think in many times political ideology and bullying have replaced common sense and the judgment of career Foreign Service officers. We've wasted valuable time and resources. Our image has suffered badly. We've got other countries, particularly China, filling the vacuum. You, with your experience both on the Hill, obviously, and your experience at the White House, and now your experience there, will help.

And we've also learned, as many of our military leaders have said, that military force is usually not the best option. It's certainly far more costly than many instances really using diplomacy, and what the United States could do with its ideals and its resources could avoid, in many instances -- not every, but in many instances -- wars.

So I'd like to see the State Department return to its dominant role, its rightful role, as it was under former great secretaries like George Marshall and Dean Acheson. Think what they did. And I think the manner in which we conduct diplomacy over the next five to 10 years will determine whether the United States remains a world leader, as it has been for the past century. I'm one American who wants us to remain that leader because of our commitment to democracy, to the ideals of this country.

The president's set a new course. He's replaced arrogance with vision, courage to take risks, including by searching for common ground with those we disagree with. We're powerful enough, our values are resilient enough to do that. We've had presidents who have done this in both parties in the past. I think the obvious example President Nixon, going to China.

In this time of great fiscal difficulties, your budget request is ambitious, but I think it reflects the magnitude of the challenges we face. And I hope you devote as much time as possible to fighting for it. I know I intend to. And so that -- I'll put my full statement in the record, yield to my colleague and my neighbor from New Hampshire, Senator Gregg.

SEN. GREGG: Thank you, Mr. Chairman. I also wish to welcome the secretary and appreciate her excellent representation of the United States. You obviously, as the chairman said, bring talent and ability and tremendous international respect to the office, and it's good for the nation that you're doing this job.

There are so many issues before us as a country in our international concerns; it's hard to know where to start. But I think the starting point has to be the continued threat to our nation of international terrorists, specifically Islamic fundamentalists, obtaining weapons of mass destruction, and the logical sources for those weapons being Iran, potentially Pakistan and obviously North Korea.

So I hope that we can get your thoughts, on how we make sure that those folks don't get their hands on those types of weapons, and of course any other thoughts that you have, on so many issues which are before us in this very complex world.

We thank you for your leadership.

SEN. LEAHY: Secretary Clinton, please go ahead.

SEC. CLINTON: Thank you very much, Mr. Chairman, Senator Gregg, Senator Specter, Senator Bond. I'm very pleased to be here with you and to have this opportunity to discuss, in some detail, both the threats and the opportunities facing our country.

When I appeared before the Senate Appropriations Committee a few weeks ago, with Secretary Gates, we both emphasized the need for a comprehensive approach to the challenges we face.

We know we are confronting instability in Afghanistan, Pakistan, Iraq and the Middle East. We have transnational threats like terrorism, nuclear proliferation, climate change. And we have urgent development needs, ranging from extreme poverty to pandemic disease, all of which have a direct impact on our own security and prosperity.

Now, these are tough challenges. And we would be foolish to minimize the magnitude of the task ahead. But we also have new opportunities. By using all the tools of American power, the talent of our people, well-reasoned policies, strategic partnerships and the strength of our principles, we can make great strides against the problems we've faced for generations and address the new threats of the 21st century.

This comprehensive approach to solving global problems and seizing opportunities is at the heart of smart power. And the president's 2010 budget is a blueprint for how we intend to put smart power into action.

The president's fiscal year 2010 budget request for the State Department and USAID is $48.6 billion, a 7 percent increase over fiscal year 2009's funding levels.

We know this request comes at a time when other agencies are experiencing cutbacks and the American people are experiencing economic recession. But it is an indication of the critical role the State Department and USAID must play to help advance our nation's interest, safeguard our security and make us a positive force for progress worldwide.

Our success requires a robust State Department and USAID, working side by side with a strong military. To exercise our global leadership effectively, we do need to harness all three Ds: diplomacy, development and defense.

And this budget supports the State Department and USAID in three critical ways. First, it allows us to invest in our people. Second, implement sound policies. And third, strengthen our partnerships. We know it represents a major investment. And we pledge to uphold principles of good stewardship and accountability.

Let me begin with people. The men and women of the State Department and USAID may have the world in their hands. But too many are trying to balance all the balls they have in the air.

Many key positions at posts overseas are vacant for the simple reason: We don't have enough personnel.

In Beijing, 18 percent of our embassy positions are open; in Mumbai, 20 percent; in Jeddah, 29 percent.

And we face similar staffing shortages here at the department in Washington, as well as USAID. We need good people, and we need enough of them. That's why the president's 2010 budget includes $283 million to facilitate the hiring of over 740 new Foreign Service personnel. This is part of a broader effort to expand the Foreign Service by 25 percent.

The staffing situation at USAID is even more severe. In 1990, USAID employed nearly 3,500 direct-hire personnel to administer an annual assistance budget of $5 billion. Today, the agency staff has shrunk by roughly a third, but they are tasked with overseeing $13.2 billion. To provide the oversight the taxpayers deserve and to stay on target of doubling our foreign assistance by 2015, we simply need more people, good people, to do the jobs we're asking them to do.

We need personnel with the right skills, to respond to the complex emergencies of the 21st century. And that's why we're requesting $323 million for the Civilian Stabilization Initiative, and that includes expansion of the Civilian Response Corps. This group of professionals will help the United States stabilize and reconstruct societies in transition from conflict and civil strife.

Now, with the right people in the right numbers, we'll be able to implement the policies that we think are right for our country. And we're focusing on three priorities: first, urgent challenges and regions of concern, including Afghanistan and Pakistan, Iraq and Iran, and the Middle East; second, trans-national challenges, such as the one that Senator Gregg just referred to; and development assistance.

Now, in Afghanistan and Pakistan, our efforts center on the president's goal to dismantle, disrupt and defeat al Qaeda. And we know this requires a balanced approach that takes more than military might alone, so we're expanding civilian efforts and we're ensuring that our strategy is fully integrated and adequately resourced.

We're helping Afghans revitalize their country's agricultural sector. In study after study, what we have found is that agriculture is still the mainstay for a country that is largely rural. It was once a major source of jobs and, in fact, of export revenue. Afghanistan was considered the garden of Central Asia. Unfortunately, that has been devastated by years of war and civil strife.

We're supporting the Pakistani military as they take on the extremists who confront their country's stability. We're making long- term investments in Pakistan's people and the democratically-elected government, through targeted humanitarian assistance.

And in both of these countries, we are holding these governments and ourselves accountable for progress toward defined objectives.

Finally, we're seeking resources to deploy a new strategic communications strategy. I would love to get into more detail with you on this, but just suffice it to say we are being out-communicated by the Taliban and al Qaeda. That is absolutely unacceptable. It is not only true in Afghanistan and Pakistan, but as Senator Bond, who is focused on Southeast Asia, knows, it's there, as well.

We have to do a better job of getting the story of the values, ideals, the results of democracy, out to people who are now being fed a steady diet of the worst kind of disinformation, and even more than that, seeing the media used by these extremists to threaten and intimidate every single night, just as it used to be used in Iraq until we put a stop to it.

As we move forward with the responsible redeployment of our combat forces from Iraq, this budget provides the tools we need to facilitate the transition to a stable, sovereign and self-reliant Iraq. I was recently in Iraq, and we are very focused on implementing the strategic framework that went along with the Status of Forces Agreement so that we do what we can to help increase the capacity of the Iraqi government. And as you know, we're working with Israel and the Palestinian Authority to advance our goal of a two-state solution, a future in which Israel and its Arab neighbors can live in peace and security.

In addition to these urgent challenges -- and there are others that I haven't had time to mention -- we face a new array of transnational threats, none more important than the one Senator Gregg highlighted. But we have others as well -- energy security, climate change, disease. The United States is not immune from any of these transnational threats, and we've got to develop new forms of diplomatic engagement.

We cannot send a special envoy to negotiate with a pandemic or call a summit with carbon dioxide or sever relations with the global financial crisis. But what we can do is, you know, use our ability to convene, to create pragmatic and principled partnership. We're working through the Major Economies Forum in preparation for the climate conference in Copenhagen. We're deploying new approaches to prevent Iran from obtaining nuclear weapons. We're now a full partner in the P-5 plus one talks. And, as you know, the president and I have launched a six-year, $63 billion global health initiative to help combat the spread of disease.

Development will play a critical role in what we try to do. And I think we have underplayed the importance of development in creating both goodwill among people and stronger partnerships with governments. We're going to be asking for $525 million for maternal and child health, nearly 1 billion (dollars) for education, 1.36 billion (dollars) for addressing the root causes of food insecurity, and 4.1 billion (dollars) for humanitarian assistance, including care for refugees, displaced persons, and emergency food aid.

We really believe this will advance our values, and I know, Mr. Chairman, you agree with us on that.

Our smart-power approach will rely on partnerships, and that begins with our own government. We are seeking an unprecedented level of cooperation between our agencies. Secretary Gates highlighted this cooperation when he testified before you last month. These partnerships are critical. And if we're going to be successful in addressing food security, then we've got to get everybody who deals with food aid and sustainable agriculture in the same room, around the same table, hammering out the American approach -- not the State Department or the USAID or the USDA or some other approach. It's got to be a team, and we're trying to forge those teams. We think it will make us more efficient and cost-effective at the same time.

We're also looking to revitalize our historic alliances in Europe, Latin America, Africa and Asia, strengthen and deepen our bilateral ties with emerging regional leaders like Indonesia, Brazil, Turkey, Mexico and India. And we are working to establish more constructive and candid relationships with China and Russia.

We're asking for $4.1 billion for contributions to multilateral organizations and peacekeeping efforts. This is a good down payment for us, because for every peacekeeper that the United Nations puts in the field, like the ones I saw in Haiti a few weeks ago, it saves us money: We don't have to intervene -- or walk away, turn our back and live with the consequences.

We're also expanding our partnerships beyond traditional government-to-government efforts. We're working with women's groups and civil society, human-rights activists around the world. And we're encouraging more people-to-people cooperation. I believe this may be one of the great new tools that we have in our diplomacy. Last week I announced the creation of a virtual student foreign service that will bring together college students in the United States and our embassies abroad to work on digital- and citizen-diplomacy initiatives.

But finally, we must rely on sound principles to guide our actions, and we are committed to practicing what we preach. And that includes having an accountable government here at home. We're working to make the State Department more efficient, transparent and effective. For the first time, we have filled the position of deputy secretary for Resources and Management. And we're going to be reforming our processes in both the State Department and USAID.

Mr. Chairman, we're pursuing these policies because we think it's in America's interests. No country benefits more than the United States when there is greater security, democracy and opportunity in the world, and no country carries a heavier burden when things go badly. Every year, we spend hundreds of billions of dollars dealing with the consequences of war, disease, violent ideologies and vile dictatorships.

Since last testifying before this committee, I've traveled around the globe, covering many miles and many continents. And I can assure you there is a genuine eagerness to partner with the United States again in finding solutions. Our investment in diplomacy and development is a fraction -- a tiny fraction -- of our total national- security budget, but I really believe our country will make very few investments that do more, dollar for dollar, to create the kind of world we want for our children.

By relying on the right people, the right policies, strong partnerships and sound principles, we can have a century of progress and prosperity, led by the United States of America.

Mr. Chairman, thank you for this opportunity to present the president's budget request, and I look forward to answering your questions.

SEN. LEAHY: Well, thank you, Madame Secretary.

And you mentioned Secretary Gates's testimony before us. And you also said we need an American approach, not USDA or AID or -- fragmented. And I've talked with Secretary Gates about this.

I've looked at some of the speeches he's given. In some ways, they're becoming our -- the Defense Department is becoming our largest foreign aid agency. They -- and there are things they can do very well and very quickly. You need to build a bridge, nobody's better equipped to do it than DOD.

But if development means giving the people in the area the tools, the training and whatnot to build their own bridges, then they're not the -- and he'd be the first to say they're not the ones who do that.

Can we start shifting what has become more and more of basically a State Department effort into the Department of Defense back to the State Department? And I'd -- others in the military have told me they'd like to see this, and we've seen it in Africa and elsewhere -- they'd like to get back to having diplomats do the work of diplomacy.

SEC. CLINTON: Well, Mr. Chairman, this is a goal that both Secretary Gates and I agree on. And we are supported by the president in working toward that goal. We've already started high-level discussions between the State Department and the Defense Department about how we will begin to move back a lot of the authorities and the resources that go with them. We are engaged in a careful analysis of what we are prepared to do immediately, what we will be able to do, once we build up our capacity and focus on the tactics that will enable us to be effective in the field.

And I think that over time, starting with 2010 budget, you will begin to see a clearer delineation of the responsibilities of the State Department and USAID.

SEN. LEAHY: Well, and I hope you continue to work with this committee, because I think most of us, both sides of the aisle, would like to see that.

And when speaking of the money, I looked at this article by David Sanger and Thom Shanker in The New York Times of -- saying Pakistan's increasing its nuclear arsenal, an impoverished country increasing their nuclear arsenal, at the same time they're asking for a lot more money from us in both military and economic aid. They're being threatened by an insurgency. The nuclear weapons will do nothing to fight Taliban or al Qaeda.

Are we just giving them money, which is, after all, fungible and is going into not fighting the Taliban and al Qaeda, which are groups that are destabilizing that country more and more all the time, but rather is that money just going into their nuclear program?

SEC. CLINTON: Mr. Chairman, I think that there is no basis for believing that any of the money that we are providing will be diverted into the nuclear program.

But let's put this into a broader context.

I think that for the first time we are developing the kind of relationships with the government and military of Pakistan that enable us to provide support and advice about the threats that they face. And when I testified a few weeks ago, I was very concerned, because there seemed to be a -- an inability, or an unwillingness on the part of the democratically-elected government to take on the very real threat that the Taliban posed to major population centers, and indeed the security and stability of the entire state of Pakistan.

That has turned around, and I give a great deal of credit to the -- to our military leadership, to Secretary Gates and particularly Admiral Mullen, who have worked to develop very good relationships with their counterparts. And so what we see now is an all-out effort by the Pakistani military to take that territory that had been seized by the Taliban.

There is a lot more work to be done, as we move forward in this relationship. Obviously, we believe that India and Pakistan can take more steps to build confidence between the two of them that will lessen the need for a nuclear deterrent in the eyes of the Pakistanis or the Indians. But we think we're on the right path, Mr. Chairman.

SEN. LEAHY: There are some other aspects of that that we won't discuss in an open hearing that I'd like --

SEC. CLINTON: That's right.

SEN. LEAHY: And maybe you and I and Senator Gregg could talk about it another time in a closed area, but -- and I realize we're kind of bouncing around here, but I look at -- you must wonder, every morning when you wake up and see what your brief has, what else is a problem and how do you ever get a quiet day. Iran fires another missile yesterday -- made sure they got the film of it out to everybody around the world -- capable of traveling 1,200 miles. Obviously, preventing them from obtaining a nuclear weapon is a key foreign policy goal. But it seems that that's a multilateral goal: We have to have moderate Arabs; we have to have Russia and China.

And in doing that, it keeps coming back: What are we doing about the Israel-Palestinian question, at least what I hear back from some of these same countries. We've seen the settlement construction not only continue, after Israel had said they wouldn't -- they continue -- it accelerates, over U.S. objections. The rocket attacks, which were going to stop, continue against Israel. And then, of course, there was the Gaza catastrophe. The Israelis and Palestinians don't seem to be able to do this -- work this out on their own. We provide tens of millions of dollars to resettle Russian immigrants to Israel.

Now we're told that some of that money is going to build the settlements that we asked them not to build.

I mean, where are we?

SEC. CLINTON: (Laughs.)

SEN. LEAHY: I went to a small town on the West Bank a couple years ago named Abud. There was an article in The Washington Post about that town recently.

This is a town where Muslims and Christians lived there harmoniously. They had generations of all the trees they've grown. All of a sudden, the Israelis come and build their security barrier. It went four miles into the Palestinian territory, cut off a third of their land. Hundreds of all the trees were cut down.

They were told that the water they'd always had will now be -- they'll be allowed to have it on some days. And sometimes they're not told when they'll have it. And they can see sprinkler systems going on the Israeli settlements.

It's almost -- well, anyway, are we any closer? And will this administration get actively involved, before it is too late? Because frankly if it's not too late, it's very much in the 11th hour.

SEC. CLINTON: Well, Mr. Chairman, the litany of challenges that you have listed are daunting. There is no getting around how much work lies ahead. But I want to assure you that, in the short period of time that the Obama administration and I have been honored to have these positions, we have been working extraordinarily diligently to try to set up the groundwork, for facing all of these difficult challenges, specifically with respect to the Middle East.

As you know, on the second day of his presidency, President Obama accepted my recommendation to appoint George Mitchell to be our special envoy. Senator Mitchell has been tireless in not only consulting with all of the parties, multiple times, but in working through what would be our approach, as we try to engage the Israelis and the Palestinians in such an effort.

We made it very clear to Prime Minister Netanyahu, as you know, when he was here, that our government favors a two-state solution. That is the goal of our efforts, what we are working toward. And the president was explicit in calling for a stop to the settlements.

It is a very difficult set of circumstances that both the Palestinians and the Israelis confront. But we are operating on the basis of bedrock principles. The United States is committed to the safety and security of the state of Israel and the people of Israel.

We believe in a two-state solution. And we do not want to see either party, the Israelis or the Palestinian Authority, do anything that would prejudice or undermine the ability to achieve a two-state solution.

We are starting early. We are engaging. The president will be going to the Middle East, as you know, in two weeks, to make a major address in Cairo.

Senator Mitchell will be working in accordance with a work plan that we are setting up with the Israelis and the Palestinians. And I can promise you our very best efforts and our absolute commitment to the realization of a two-state solution, which we believe is in the interest of both the Israelis and the Palestinians.

SEN. LEAHY: I do, too. And I have further questions about Hamas and the rockets. But my time's run out.

Senator Gregg.

SEN. GREGG: Thank you, Mr. Chairman. Let me pick up where you left off.

Mr. Netanyahu's been here in Washington for the last few days, and his position seems to be pretty clear that you can't settle the situation of his immediate neighbors -- the Palestinian issue and southern Lebanon issue -- unless you settle the issue of Iran. First, do you agree with that? Is a precondition of resolving the Palestinian question and the issue of southern Lebanon tied to resolving the issue of a nuclear Iran?

SEC. CLINTON: Senator Gregg, I don't think that they are actually dependent upon one another, but I do believe that the alliance which has come together of Israel and many of her Arab neighbors against Iran obtaining nuclear weapons is an opportunity that will enable us both to move forward with our engagement regarding Iran and our commitment to pursue diplomacy and to build a multilateral coalition, including not only the countries in the region but beyond, European nations, Russia and china and others, to recognize the extraordinary threat that is posed by the potential of Iran obtaining nuclear weapons.

But we think that this coalition against Iran is a great opportunity to assist in achieving the two-state solution. We're not linking them. We're not saying they're dependent. We made it very clear to Prime Minister Netanyahu our commitment to pursue what we hope will be an effective strategy against Iran. The president made clear that he is committed to preventing Iran from obtaining a nuclear weapon, with all of the consequences that that would entail. But at the same time, we cannot wait on the Palestinian-Israeli efforts regarding peace. So we think they have to proceed simultaneously.

SEN. GREGG: As I look at where we as a nation see our threat, it is obviously a terrorist organization like al Qaeda or other fundamentalist Islamic organizations obtaining a nuclear weapon. And right now you have a terrorist state developing nuclear weapons -- or a terrorist government -- and -- Iraq -- in Iran -- and you have a group of terrorists trying to capture nuclear weapons from a nation state, Pakistan.

So those appear to be the two most significant threats to us also, that -- either one of those situations should arise.

So I would like to get the specifics of how we keep -- if there -- if you have ideas, what the specific ideas are for how you keep Iran from obtaining a nuclear weapon when they clearly are committed to doing that -- and the time frame seems to be shorter rather than longer now -- and how you -- and what we do in Pakistan to keep terrorists from taking control of nuclear weapons, specifically.

SEC. CLINTON: Well, not to complicate the threats that you're posing, which are very real, there is a third, which is the acquisition of nuclear material outside of either of those two scenarios, which we are equally --

SEN. GREGG: I accept that, but I'm -- want to focus on the --

SEC. CLINTON: Yeah -- which we are equally worried about.

Well, first, let me just say with respect to Pakistan, part of the reason why we are encouraged by the military's strong response against the Taliban in Buner and Swat is because we do not want to see the Pakistani state threatened with the advance of the Taliban. We are assured by the Pakistani military and the government that they have control over their nuclear weapons at this time, and we have offered and continued to work with them in any way that they deem appropriate to help them assure the safety and security of those weapons. I do not see that as an immediate threat, but it is certainly one that we take very seriously.

With respect to Iran, our goal is to persuade the Iranian regime that they will actually be less secure if they proceed with their nuclear-weapons program. There is a lot of debate about the timetable. Recent analyses have suggested the timetable may be longer than what had originally been thought.

But whatever the timetable might be, the goal is the same. A nuclear-armed Iran with a deliverable weapons system is going to spark an arms race in the Middle East and the greater region. That is not going to be in the interests of Iranian security. And we believe that we have a very strong case to make for that.

At the same time, we see a growing recognition among a number of countries that they do not want this eventuality to take place. So we're having serious conversations with many beyond the immediate region. I don't want to go into details, because obviously this is a very difficult undertaking and we don't want to be telegraphing everything we're doing.

But the strategy which we are laying out does have a time frame, as the president said during his meeting with Prime Minister Netanyahu, where we either see some openness and some willingness to engage on this very important issue with us, or we don't. But we are going to pursue our diplomatic efforts.

SEN. GREGG: Well, I appreciate that. And I appreciate you can't be specific, but this is such a huge issue.

SEC. CLINTON: Yes.

SEN. GREGG: It's as if we were looking at Germany in 1930, in my opinion.

But may I turn to another topic, which I'd just like to get your quick thought on, and that's what we do in Burma, with Aung San Suu Kyi now being tried. And we have this dictatorship, which is incredibly oppressive, of Than Shwe. And isn't it time for us to take some more affirmative action than what we've been doing in this area?

SEC. CLINTON: Senator, that's exactly what we are looking at through a strategic review. I know there has been consultation with some of the members and staff on the Hill, looking for the best ideas we would have going forward. We are absolutely committed to trying to come up with an approach that might influence the regime. We reject their baseless charges against Aung San Suu Kyi, their continuing resistance to a free and open electoral process. If they stay on the track they're on, their elections in 2010 will be totally illegitimate and without any -- any meaning in the international community.

I've been heartened by the response that we've received. I've spoken to a number of the foreign secretaries of the ASEAN countries, who've issued strong statements. We're working to get more support in the United Nations.

We share your both frustration and distress at the repressive regime. There are several countries that have influence on the Burmese junta, and we are going to try to do our best to influence them to see that this repressive regime is not one that we should continue to support, and hopefully get a greater international base to take action against them.

SEN. GREGG: Thank you.

SEN. LEAHY: Thank you.

Senator Specter.

SEN. ARLEN SPECTER (D-PA): Thank you, Mr. Chairman.

Madame Secretary, thank you for taking on this tough job, and thank you for the excellent job you are doing at it.

I noted in The Washington Post yesterday the statement that the administration indicated an interest in talking to Hamas -- obviously, a very, very touchy subject. Very hard to deal with a political organization which has articulated an intent to destroy Israel, hard to bring them into the dialogue on discussion.

Right now, the conventional wisdom, which I share, is not to talk to Hamas. Those who take a little -- different point of view argue that without dialogue problems can't be solved. And I've long believed in dialogue with Syria and Iran, and have spoken about it and written about it. The dialogue with North Korea, when it moved to the bilateral stage with President Bush's administration, plus multilateral, produced results, although it's very difficult to deal with the North Koreans and make anything stick.

The experience with Qadhafi in Libya is heartening. It shows that if you deal with someone who is arguably the worst terrorist in the history of the world -- what was it -- Pan Am 103, the Berlin discotheque, et cetera -- then comes back -- makes reparations and comes back. So you have the issue of dialogue.

There are recent pronouncements by the leadership of Hamas of easing off on their threat to destroy Israel. Some comment in a five- hour interview was reported by the New York Times recently -- a 10- year truce. Well, a lot can happen in 10 years. You don't need reciprocity to have a truce. You can declare a truce.

What do you see in our dealings with Hamas from the point of view of A, development, which you talked about earlier and I agree with you, to try to bring the people under Hamas's jurisdiction to reject an election which would solve the problem? Or how do you see engaging Hamas, if at all?

SEC. CLINTON: Well, Senator Specter, it is not the administration's policy to engage with Hamas. There are no efforts on the part of any official within the administration to do so. We have made very clear what our ground rules were that in order for us or, we hope, others to deal with Hamas, Hamas had to renounce violence, had to accept the right of Israel to exist and had to agree to adhere to the previous agreements entered into by the PLO and the PA. So there is not any policy whatsoever, nor any authorized outreach, to Hamas.

And what we have been stressing is not only our strong conviction but the principles embodied in the Quartet, which consists of the United States, the United Nations, the European Union and Russia, all of whom have signed on to the same formulation regarding Hamas -- but equally, the implicit expectation in the Arab Peace Initiative that there had to be a willingness by Hamas, were it to ever come to any table that any of us would be a part of, to meet those requirements.

Now, I agree with you that at points in history there come opportunities for us to take advantage of, such as the Qadhafi example that you provided. We see nothing at this moment that suggests that Hamas is anything other than a terrorist organization, a resistance organization unwilling to really stake its future on a future of peace and security in a Palestinian state living next to Israel, and so we are dealing with the Palestinian Authority.

SEN. SPECTER: Thank you.

Madame Secretary, turning now to other dialogue potentials, it is my hope that the administration will pursue dialogue with Syria. Only Israel can decide for itself whether it wishes to give up the Golan. And anything done will have to be not with trust but with verification. But the negotiations which Turkey has brokered appear to have -- appear to have some promise. And Foreign Minister Walid al-Mualem, I think, has established a record of credibility and I would suggest is a good negotiating partner.

Let me come to a question with respect to Iran. Prime Minister Netanyahu was very pleased with the meeting with President Obama, and the timetable which the president has set, looking to the Iranian elections as the potential for dialogue and holding out the possibility of bilateral dialogue, and I hope you will pursue that, and putting a timetable for the first time on not waiting indefinitely with all the options on the table. And I speak in generalities not to beat a tom-tom unnecessarily.

The offer that the Russians made some time ago to enrich the uranium, I think, has never been pursued or publicized. Perhaps it has been pursued, but not known and not publicized. But that seems to me to be a perfect (line ?). When Iran insists that they're developing -- enriching uranium for peaceful purposes and the Russians can provide for them, what conceivable excuse? When they resist something so obvious as that, it seems that that would be a good wedge to get more cooperation from China, Russia and other countries. What can be done to pursue Russian enrichment of their uranium?

SEC. CLINTON: Well, Senator Specter, that is an option that is being considered within the P-5 plus one as well as within our own deliberations.

We have a broad range of issues to discuss with the Iranians if they respond affirmatively to the president's invitation to do so. And obviously they are in the midst of election season. We know what that means. So it's unlikely that we'll get a response or a dialogue going until there is some settling of the political scene.

But your reference to the enrichment potential is one that we are exploring.

SEN. SPECTER: (Off mike) -- thank you, Mr. Chairman.

SEN. LEAHY: Thank you.

Senator Bond.

SEN. CHRISTOPHER BOND (R-MO): Thank you very much, Mr. Chairman.

Madame Secretary, welcome. I'm pleased to support your request for the additional resources that you badly need. I also congratulate you on the enunciation and implementation of smart power that's backing up our kinetic power with economic development, capacity building, educational exchanges, which I think is a way that we have to go in dealing with potential insurgencies.

And speaking of those, I congratulate you for having made your first official visit to Indonesia, the largest Muslim nation in the world, headed by an American-educated president who's working hard to bring Indonesia into a position where it and Southeast Asia will not be threatened with terrorists.

I think we've all heard now that the second attack, the follow-on after 9/11, was to be an attack on the West Cost by Hambali and his associates from Jemaah Islamiah in Indonesia.

I have a much longer statement that I will put in the record, to everybody's great relief, and ask --

SEN. LEAHY: We'll all read it.

SEN. BOND: I'm sure you will. I'll have a book coming out that will -- that you can read at even greater length.

But you mentioned communication, which is very important. Public diplomacy has really fallen down. We have -- we used to have a Voice of America; we used to have broadcast bureaus that reached out with news and information that reached the elites, that reached the leaders, reached the average citizens. Now they're playing dance music for teenagers.

And I guess the greatest comment on that, when my son and his Marine scout snipers recaptured Fallujah in May of '07, they did so with no civilian injuries, tremendous success. And the al Qaeda news media reached out and put totally different stories, lies that not only were in the BBC, but Yahoo, ABC and other American news organizations. His report to me was we're winning the war on the ground and we're absolutely losing it in the media.

SEC. CLINTON: Right.

SEN. BOND: We found that to be true last December in Kabul, where we talked to our fine Ambassador Wood, who was saying, when we do something good, it never gets publicized. When something happens, the Taliban or al Qaeda will phrase it their way. And it took the ISAF two weeks to acknowledge what happened. So he set up a government media information center and to allow Afghan journalists to come in -- tremendous success. And then when I read about, 95 percent of it had to be funded by donations.

Now, if there is one area where the State Department really needs to focus some efforts, we need to tell our story. If something goes wrong, admit it, tell it, apologize for it, tell what we're doing to solve it. But right now we're getting killed. What are you doing in the communication area?

SEC. CLINTON: I could not agree more with you, Senator. And I really appreciate your emphasis both on Southeast Asia, which we have got to get reengaged in, and on this really important issue of strategic communications. We are revamping what's called Public Diplomacy from top to bottom.

SEN. BOND: I hope so.

SEC. CLINTON: I am bringing in people who know how to tell a story. Our new undersecretary will be one of the founders and executives from Discovery, you know, a channel that has swept the world and understands what it is people want to hear about and how they can best be engaged. But we're not stopping there. We've got to get into the so-called nontraditional media, which is becoming more and more traditional. So for example, when I announced yesterday that we were sending money for humanitarian relief in Pakistan, part of what we're going to be doing is buying time on cell phones to communicate directly with the refugees and to have them be able to ask questions but to get information to them.

In both Afghanistan and Pakistan, we realized, as you saw in Kabul, that the Taliban, with their little FM radio stations on the backs of motorcycles and pick-up trucks were spreading this propaganda. And, in fact, they were jamming our cell phones that our young military, our soldiers and our Marines had. They were very effectively preventing communication out even on a personal basis. We are addressing that. We have a civilian-military team. We're going to be going at that with a great deal of effort, because we cannot lose the information war.

SEN. BOND: Just to interrupt very briefly, I hope if you need additional powers to expand beyond that, there has to be greater coordination among our agencies. Lack of coordination -- Defense Department, State Department and all the others is critical.

Another quick comment on USAID. It's been understaffed, underperformed. Afghanistan needed the agriculture development about which you spoke. For two straight years, we put in $5 million in this committee for USAID to send ag extensions, agents over there. How many went? Zero. That's why we got the -- we involved the National Guard to start the Agricultural Development Teams. You need to have the security before you have the crops planted, the trees planted, the facilities set up. And I hope that you will get a reinvigorated USAID which can work with the Department of Defense where security is needed to bring agricultural development to Afghanistan and the other kinds of development needed elsewhere in the world.

SEC. CLINTON: That is our intention. We are -- we've put together, for the first time, a multi-agency, multi-talented team on Afghanistan and Pakistan. And we brought into the State Department representatives from the CIA, from the USDA, from the Department of Defense, from across the government, because what we have found is that, as you point out, there was just a disconnect.

You know, many of us said -- when I was in the Senate I agreed with you that we should have been investing in agriculture. We just could never kind of get the team together. Well, it's together now. And we are committed to doing it. We've got relationships with some of our great land-grant colleges. We're going to be using agricultural experts. We really believe we do have a plan.

Now, obviously, security is an issue. It's kind of a chicken- and-an-egg issue. If you start to help people, they will provide security on their own. They will be the eyes and ears you need. But until we get to that point, we're going to have to have our own PRTs beefed up so that we can get our people out into the field.

But we do have a specific plan with actually names next to provincial assignments, Senator. We're really going to go after this.

SEN. BOND: Be interested to see it. Thank you, Mr. Chairman.

Thank you, Madame Secretary.

SEN. LEAHY: Thank you. Thank you.

Senator Mikulski?

SEN. BARBARA MIKULSKI (D-MD): Madame Secretary, it's just wonderful to welcome you once again back to the Senate and to welcome you now as America's top diplomat but also the CEO of the State Department. And that's really where my questions will lie. Many of my colleagues have asked the policy questions about the issues facing this country, but policies without people, as you said, in implementing -- in your testimony -- we can't do the job.

Going to the triad that you said we'll stand on for foreign policy -- defense, diplomacy and development -- I'd like to go to the diplomacy and development issues, wearing both my "Maryland" hat and the "dean of the women" hat. I'd like to go to the diplomacy hat first of all.

In your testimony, you talk about the need for more Foreign Service officers. And I would confirm that. Many of them live in Maryland, and they speak to me not only about the great joy they have in serving America, but about the great stress they have in trying to serve America. Could you share with us how you hope to be able to retain people? The family stresses and particularly the issue of on- locality pay, where many of our wonderful diplomats and up-and-coming diplomats-in-study face as much as a 20 percent pay cut. And if we're for Lilly Ledbetter, we're also going to be for the wonderful people who work at the State Department.

SEC. CLINTON: Well, I'm very grateful that you raised this, Senator, because there is an urgent need for pay comparability between Foreign Service employees assigned overseas and those assigned in the United States.

A typical Foreign Service employee, as you know, spends as much as 70 percent of his or her career outside of our country. Because they do not earn locality pay while serving outside, they essentially take a pay cut of over 20 percent every time they are assigned to represent our country abroad. And for senior employees, this problem was corrected with the introduction of pay-for-performance in 2004, but the problem remains uncorrected for the entry-level and mid-level people, the very people that we're trying to make sure stay in the Foreign Service. In fact, the base pay of an entry or mid-level Foreign Service employee serving overseas is 23 percent less than what it would be if they stayed here in Washington. And the --

SEN. MIKULSKI: So somebody trying to rebuild Afghanistan makes somebody -- less than somebody working at HUD trying to rebuild the cities of America --

SEC. CLINTON: That's --

SEN. MIKULSKI: -- both serving America with duty and dedication.

SEC. CLINTON: That's exactly right. And the disparity grows each year because as locality pay increases as a proportion of pay in Washington, D.C., the difference between overseas and domestic pay continues to widen. Now, we believe that this needs to be addressed urgently, but that's just a piece of the puzzle. I mean, that's something that is such a glaring inequity that it needs to be corrected.

But we're also trying to make sure that we have enough training and supporting services, not only for our Foreign Service employee but for their families. Because of the confluence of greater and greater stresses on individual families that come from these deployments that our diplomats are undergoing and the increasing threat matrix that we see around the world, the job is just harder and harder. And that goes also for our USAID personnel.

SEN. MIKULSKI: Well, Madame Secretary, I want to move on to development. But -- so do you think you need more new authorizing legislation? Do you think you need -- has the president got the money in this appropriations request to deal with this? In other words, you and I are people who like to work on things that are specific, immediate and realizable.

SEC. CLINTON: Right.

SEN. MIKULSKI: And what can we do to both retain the very best that we have in that farm team that you have all over the world working under great stress and at times great danger? And yet -- so is it authorizing? Is it in the budget?

SEC. CLINTON: Well, I -- there's several things that are in the budget that we need to do that will help us on this, Senator.

One is to increase the numbers. That is something that we desperately need. As I said in my testimony, we didn't -- we haven't filled positions in some of our most important postings because we don't have the people.

We are also looking to have a different rotation, because as we move people up the ranks, we've got to get them trained for their next assignment. If we've got a great, brilliant young Foreign Service officer in development and we want to send that young person to Afghanistan, they're going to need language training to be effective. So the Foreign Service Institute needs resources. They're -- we have a lot of this in our budget.

SEN. MIKULSKI: Okay. I want to come back and perhaps then your staff can get to me specifically, essentially the revitalization of the Foreign Service.

SEC. CLINTON: And let me just add one point, Senator, and that is --

SEN. MIKULSKI: I have to go the NGOs.

SEC. CLINTON: -- pay comparability is in the Senate version of the supplemental.

SEN. LEAHY: If I -- if the senator would yield, Senator Gregg and I put that in specifically.

SEC. CLINTON: Yes.

SEN. LEAHY: That's a bill we're going to be voting on today --

SEC. CLINTON: Well, thank you. That's --

SEN. LEAHY: -- and then we'll take it over to the other body, where we hope that they will do it. But that's something both Judd and I have really worked hard on to make sure is in this bill.

SEC. CLINTON: Right.

SEN. MIKULSKI: Well, now if I could come to the development part -- and I really would like to thank Senator Leahy and Senator Gregg for the job that they've done over the years trying to deal with this. But in Maryland, we are the home now to many of the international relief organizations. We're the home to Catholic Relief, World Relief, Lutheran Refugees. And they're asking about where are we heading with AID -- one, that it is a contracting agency. They have worked with those contracts. But they're so energized over the election of this new president and they want to be out there in the world, but they need an AID to be working with, number one, in terms of the resources that they can count on in a steady stream and, number two, leadership that they could count on.

Could you share with us where -- how you see taking AID from a contracting office to this collaborative thing where you have a strong AID working with very strong NGOs that are both American and international?

SEC. CLINTON: That's exactly the model. And we are determined to move away from the contracting pipeline model. We do not think it has worked and, frankly, we think it has squandered very scarce American taxpayer dollars. There are just too many contractors who are in the Beltway, as they say, who take 50 to 60 percent of the money before it ever even gets out into the field and then it just kind of trickles down. We cannot afford doing that, and that has been unfortunately the trend.

So we are looking at a revitalized, reinvigorated and restaffed USAID. We've asked for a significant increase in our USAID Foreign Service numbers that you'll see in this budget, because as we move tasks inside, we've got to have the people to do them. Right now, there are only four agricultural specialists left in USAID. That's just unacceptable, and it's one of the reasons why we've had trouble, you know, pushing the agricultural agenda for Afghanistan.

But your description of what the best NGOs want is exactly what we're going to try to produce.

SEN. MIKULSKI: And they want a strong AID.

SEC. CLINTON: Yes. It has to be.

SEN. MIKULSKI: They don't it as competition with them --

SEC. CLINTON: That's right.

SEN. MIKULSKI: -- for resources. So they're looking at both -- but a steady stream, both in the Millennium accounts.

Well, I know that my time is up. I just want to compliment you.

You know, we, the women of the Senate, worked on a bipartisan basis, concerned about women of the world. And you know, you were part of that, and we still count you as one of our own. We want to compliment you on establishing an ambassadorial level for women's global initiatives -- a great choice, the Judith McHale choice, in public diplomacy.

We really want to -- we -- and I want to extend again a hand that you know you have always, with us. But we, the women of the Senate -- speaking for Kay Bailey and all of the Republican women, and your Democratic colleagues -- we want to work with you and your team at the State Department, to really make a difference in the world. And we look forward to working with you on these global women's initiatives.

SEC. CLINTON: Thank you so much, Senator.

SEN. LEAHY: I appreciate Senator Mikulski saying that, because on these humanitarian things we do, it's good foreign policy, it's good for our security in this country. But there's also a moral issue involved, when you're the wealthiest, most powerful nation on earth. We have a moral responsibility to help in these areas, and I think most people realize that.

Now, Senator Bennett from his state of Utah have done their best to help. They're giving us their governor to serve in what I think is one of the most difficult and one of the most important posts. And I'm glad to see we're sending someone who actually speaks the language, which is wonderful.

Senator Bennett.

SEN. ROBERT BENNETT (R-UT): (Laughs.) You -- you took my opening comment, Mr. Chairman.

SEN. LEAHY: Go ahead and do it again. (Laughter.)

SEN. BENNETT: Madame Secretary, welcome here. And I wanted to congratulate you and the president in your choice of Governor Huntsman as ambassador to China. I recommended him to Colin Powell eight years ago, for exactly that position. He's superbly well qualified. Not only does he speak the language, he understands the culture.

I will share with you a conversation I had with the president of the University of Utah, as we were talking about our governor. And you don't normally have this kind of conversation, discussing a governor with a college president who is dependent upon the state legislature for support. And he said, "Jon Huntsman could teach a class in Chinese culture. He speaks all the dialects. He understands all of the background, by virtue of his experience there as a young Mormon missionary. He has fallen in love with China." And he said, "I think he's more interested in China than he is in Utah."

SEC. CLINTON: (Laughs.)

SEN. BENNETT: Now, I don't say that in any place that would hurt his career in Utah, because he was -- he was a very, very popular governor in the state. But I think he is where his heart is, and I think you've made a very wise decision. Look forward to great things coming out of his service there.

He also made a comment to me once that I think summarizes the Foreign Service, at least at the ambassadorial level.

He said, being an ambassador is death by reception.

SEC. CLINTON: (Laughs.)

SEN. BENNETT: Now, my colleagues have covered, as Senator Mikulski said, most of the policy issues. And I don't want to rerake those leaves. But I have two enthusiasms that I'd like to share with you and get your comments on.

The first is the Millennium Challenge Corporation. And I'm delighted to see this administration asking for $1.425 billion, a significant increase over the '09 appropriated level, and simply want to register formally, on the record and in this opportunity, while we're focusing on it, to let you know that at least on this subcommittee, this senator is very much committed to the approach of the Millennium Challenge Corporation.

Too much foreign aid has been to build monuments that have an American plaque on them and then don't really do very much later on, aren't properly maintained, don't have the impact.

Having it done in a way that is a working activity that goes on forever and ever and produces results, over the long term, rather than just something nice to look at, is I think the core of what the Millennium Challenge Corporation was formed for.

There were some who were afraid that, well, since it happened in the Bush administration, it's doomed here. And I'm delighted that that does not appear to be the case.

My other enthusiasm is microenterprise. And I've been pushing for more and more of that, the whole time I've been in the Senate. I'm delighted that every year, the budget goes up a little. But I'm concerned that 50 percent of the microenterprise funding benefits are not benefitting the very poor.

And Muhammad Yunus, the Nobel Prize winner which stated the Grameen Bank, has stayed focused on the very, very poor. And the point with Senator Mikulski, 90-plus percent of the borrowers there are women. And they've created entrepreneurs and capitalists out of the very poorest women in the world. And I'm for all three: entrepreneurs, capitalists and women.

SEC. CLINTON: (Laughs.)

SEN. BENNETT: So could you talk about what might be done, with respect to the microenterprise activities, whether through AID or maybe even Millennium Challenge Account. They don't really work in that area but cooperative activities here.

Let's talk about the whole aid thing with the focus on making it work and making it work for the poor and making it work long-term, rather than what has been unfortunately too much a part of American history, in this area, of building something big and grandiose and then not seeing a long-term benefit from it.

SEC. CLINTON: Well, thank you very much, Senator Bennett. And thanks too for the very positive remarks about Governor Huntsman.

We're extremely excited that he will represent the United States in China and assist us in this very important relationship.

I also just want to echo your support for two initiatives from the Bush administration, both the Millennium Challenge grant program and PEPFAR. And we are, you know, very supportive of these approaches. We think that we can actually make them even better, and better integrate what they're doing and the lessons we've learned from them. But we were -- you know, we were very committed to continuing what we see as successful efforts.

On microenterprise, this is very near and dear to my heart. I started working with Muhammad Yunus in 1983 in Arkansas, when we brought some of the lessons of the Grameen Bank to some of the poorest people in our state at that time, and I have stayed very much involved through my time and as first lady and certainly as senator. And I couldn't agree more with you.

The challenge is to make sure that the money we put into microenterprise gets into the hands of the people who need it the most. And we've got to make some changes in order for that to occur, and we intend to do so.

We also want to look at the best models. A lot of people got into microenterprise in the last 10 years and they weren't always as focused on the poor as Muhammad Yunus has been. And we're doing a real scrub of that, as well.

We also believe that the sustainable model that Grameen represents, where people eventually have created their own revolving loan fund, is the better way to go than to constantly be putting new money out to borrowers. It's not the model we'll use everywhere, but we think for the poorest of the poor, it is the best model because it changes behaviors and mindsets while it provides money. And you have seen that and I have seen that. So we are very committed to microenterprise. It's going to be a big element of our revamped USAID approach.

We do think there is a role and room for slightly more upscale, if you will -- they're still poor, but they're on the brink of breaking into the middle class. They may already have a business that with our help can expand. So we don't want to eliminate that category of borrowers who can create more jobs for other people while we concentrate our efforts on the poorest of the poor.

So we -- I've consulted already with Muhammad Yunus. He came in and we had a long discussion. We want to bring microenterprise as part of our efforts to some of the countries that we think would benefit most from it. Haiti is an example, and we've talked to Grameen about providing assistance there. Liberia; I met with President Ellen Johnson Sirleaf. She's been heroic and deserves more help to create her economy from the ground up. There's just a lot of opportunity for us with microenterprise, and I look to you to provide advice and counsel and support as we move forward.

SEN. BENNETT: If I could very quickly, Mr. Chairman, I would suggest that you also talk to the folks at the World Bank.

SEC. CLINTON: Yes.

SEN. BENNETT: I've tried that with not too much success.

SEC. CLINTON: Yes.

SEN. BENNETT: And I'm going to keep trying it. And if you're there too, maybe we can dent that -- it's a huge bureaucracy -- on the subject.

SEC. CLINTON: Yes, sir.

SEN. LEAHY: Thank you.

SEN. BENNETT: Thank you.

SEN. LEAHY: Senator Brownback.

SEN. SAM BROWNBACK (R-KS): Thank you, Mr. Chairman.

And thank you, Madame Secretary. Welcome.

SEC. CLINTON: Hello.

SEN. BROWNBACK: Good to see you.

SEC. CLINTON: Thank you, Senator.

SEN. BROWNBACK: A common area of interest with you we're working on right now -- and this is on another subcommittee, on the Agriculture Subcommittee -- is the food aid budget. And I just was coming across the numbers on this -- that we spend 65 percent of that budget on administration and transportation.

SEC. CLINTON: Yeah.

SEN. BROWNBACK: I think that's a touch high.

SEC. CLINTON: Yes.

SEN. BROWNBACK: And consequently, we keep putting more money in food aid, and we get less of it out the door.

SEC. CLINTON: Yes.

SEN. BROWNBACK: So we're researching two bills, and I just want to put them on your radar screen, because I know this is something you've been interested in. They're just a blunt-instrument approach, saying no more than 50 percent of food aid money can go for administration and transportation -- I think 50 percent's pretty generous on this -- and just to really try to push the system to find ways to be able to get food aid to locations more cost-effective than what we're doing right now.

So I'm all for the food aid budget, very supportive of that. But it looks like -- to me, it's a little bit like what we've done with the malaria program earlier, when -- first started looking in this -- 90 percent of the money was going for conferences and consultants. And the countries in Africa and other places were saying, "Look, we know what to do. We just don't have the bed nets; we don't have the sprays, don't have the medicine."

SEC. CLINTON: Right.

SEN. BROWNBACK: So let's put the money in that, because you know what to do, and that -- kind of the same on food aid.

And I think also there's a key area here on micronutrients, on food aid, that's probably the best, cheapest way to improve lives around the world that we've got left in front of us -- real cheap, simple, cost-effective. And we're looking at how that can be built into our food aid budget better, because if we're going to help people with AIDS or malaria, the best thing we can probably do for them is give them clean water and decent food.

SEC. CLINTON: Right.

SEN. BROWNBACK: And these are ways that are simple and pretty cost-effective within our current budget.

SEC. CLINTON: Senator, you -- that is music to my ears. And your leadership in this area is extraordinarily important to us, because we do think we can do a better job with the dollars we spend on food aid, but we also think we've got to begin to shift toward helping with sustainable agriculture again.

You know, the United States led the way with the Green Revolution in the '60s. It made a huge difference.

Starting in the '80s, we began to shift away from helping farmers in poor countries continue to deal with depleted soil and other needs in modern agriculture. So we really did shift to emergency food aid.

SEN. BROWNBACK: Yeah.

SEC. CLINTON: And we've got to do that. That's part of our mission.

But it's that -- like that old saying. You know, you can give a person a fish or teach them to fish. And we want to begin to help local farmers become more productive again.

So we're looking at both of these, and I could not agree more with your emphasis on get the cost of the administration and the transportation down. One of the things that I did in the refugee assistance for Pakistan is to say we're going to spend some of this money to buy wheat in Pakistan. They happen to have had a bumper crop. Actually, it's one of President Zardari's accomplishments. He made some very tough decisions last summer, and now there's a bumper crop of wheat. Let's buy it from the farmers, instead of, you know, shipping the wheat all the way across the world, which takes forever -- in fact, months -- on our containers.

So we need to do both. And I think that we have a plan on food security that I would love to brief -- have your -- you and your staff briefed on, so that we can get the benefit of your advice.

And finally, on micronutrients, a huge opportunity for us: iodized salt, vitamin A, vitamin K. There's just a lot of --

SEN. BROWNBACK: Pretty simple.

SEC. CLINTON: Very simple. And we have to get a delivery system. We can partner with UNICEF, which has done some of this work elsewhere. But I think this holds out great opportunity for us.

SEN. BROWNBACK: On a tougher subjects -- is North Korea. This one -- you've got in that budget 98 million (dollars) for economic- support funds for North Korea. I -- you -- well, I'd asked you this at a prior hearing, but I just don't see any reason, by what North Korea has done, that we would want to use this to bribe them.

They are not at the six-party talks. They are -- continue to have probably the worst -- that's pretty tough, but they're in the top -- they're in the bottom five human-rights persecution countries in the world. I just -- I would urge you not to use those funds to bribe them to come back to the table, and I would hope the chairman would look at this as well.

And before I get your comment on it -- because I want to hear on that -- one other issue that -- we've just put forward a bill on conflict commodities. This is dealing with the region in the Congo, and it's a bipartisan bill. Worked with Dick Durbin, Russ Feingold and myself on this, trying to do -- an issue there, to get the commodities coming out of eastern Congo to come out of licensed mines and not ones that are run by militias that then fund the militias that then do gang rapes and child soldiers.

And if we can -- if we can ratchet down the money into the system -- that worked in west Africa in blood diamonds; little simpler to do. This one's going to be, I think, more difficult. But nonetheless, I think the theory works, and that if we can do that in eastern Congo, I think it would go a long ways for -- towards de-funding the money into the militias that are multiple, that are doing heinous things; just -- it's a really ugly situation that -- it doesn't get as much visibility on it.

And I hope you can look at that bill, and I hope you can reassure me on North Korea we're not going to use these funds for bribery to get them back at the table.

SEC. CLINTON: I can reassure you completely on that, Senator. We are not going to expend one penny of those funds in the absence of their voluntary return to the six-party talks and their resumption of the obligations that they've already agreed to.

This money is, you know, there as a backstop in the event we see the kind of changes in actions that we're looking for from the North Koreans. We also are very committed to the idea you just outlined on conflict commodities. We think that this has a tremendous amount of promise, and I'd like to both look at the bill, but also to consult with you and Senators Durbin and Feingold about how we could even now try to set it up to begin the -- such a process. There is such a rich economic zone in eastern Congo.

SEN. BROWNBACK: (There really is ?).

SEC. CLINTON: This could be the catalyst for enormous job creation and prosperity for the people of that region. You know, we face so many difficulties there.

But if we could, through our efforts, convince the government of the DRC -- of Uganda, of Rwanda -- to join in an economic zone and to utilize the security that they have, to protect these mines, to license them, to get the money out, to get it into a designated fund, to help the people in the region, similarly to what Botswana did with their diamonds, many years ago, we think, we could make a huge difference.

So I think this is a very important idea.

SEN. BROWNBACK: Thank you.

Thanks, Chairman.

SEN. LEAHY: Before we finish, Senator Gregg, you had something else you wanted to say.

SEN. GREGG: I just had a quick question.

My view is that you don't have enough flexibility with the funds you have, certainly nowhere near the flexibility the Department of Defense has.

SEC. CLINTON: Right.

SEN. GREGG: And so I have an amendment that I'm proposing, on the supplemental, which would raise the 451 authority from 25 million to 100 million, including access to the embassy's C fund, if that's where you decided to go. And I was just hopeful you'd be supportive of that approach.

SEC. CLINTON: Well, I will certainly look at it, Senator, because I agree with you. We do not have the flexibility. And it is one of the reasons, to go back to the chairman's earlier comments, why so much authority is ceded to the Defense Department, because they've got the flexibility.

And they not only have the flexibility in Washington; they have the flexibility on the ground. You know, they have empowered their young captains, majors, lieutenant colonels with money to solve problems. And we come along with diplomats and development experts.

We don't have anything like that kind of authority and flexibility all the way up the chain.

So I will certainly look at this. And I appreciate your zeroing in on it.

SEN. GREGG: And specifically related to Pakistan, I've introduced a bill to give you up to $500 million of flexibility. It was actually a suggestion, I think, that came from Ambassador Holbrooke. But I would hope that you could take a look at that and see if you're supportive of that.

SEC. CLINTON: Thank you.

SEN. LEAHY: Thank you.

Madame Secretary, thank you for being here. And I am heartened by the meeting we also had with you, at the full committee, with you and Secretary Gates. And I -- there are so many things the military can do so very, very well; so many things the State Department does so very, very well. And I want to be in a position where you don't have to do each other's jobs.

And Senator Gregg and I will get that comparability pay that Senator Mikulski talked about. We'll get it through the Senate. And then we've just got to get it through the other body. But I think we will.

SEC. CLINTON: Good.

SEN. LEAHY: Thank you very, very much.

SEC. CLINTON: Thank you very much.

END.


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