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Remarks by Secretary Clinton and Secretary Panetta at National Defense University

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Location: Washington, DC

ADMIRAL ANN RONDEAU: Good morning!

AUDIENCE MEMBERS: Good morning.

ADM. RONDEAU: We need a live audience today.

Welcome to NDU. This is the apex and the vortex for interagency and whole-of-government education, knowledge, conversation, dialogue and discussion. We are indeed extraordinarily privileged and honored to have the inaugural distinguished leader of program speakers be our secretaries of defense and state, and the very distinguished Frank Sesno.

Please, let's give a very warm NDU welcome to these great leaders. (Extended applause.)

FRANK SESNO: Well, good morning, everybody, and good morning to both of you.

SECRETARY HILLARY RODHAM CLINTON: Good morning.

SECRETARY LEON PANETTA: Good morning.

MR. SESNO: It is a great pleasure and privilege to be here with the secretary of state and secretary of defense, and I cannot think of a more propitious time for this conversation, with the world watching this country going through the budget gyrations, I think, is the right word, with a world so uneasy, with our wars ongoing.

So some of what perhaps we can talk about here today -- and we will incorporate your questions into this conversation -- will be, you know, is America a wounded colossus? Are these wars winnable? Where and how do these two big departments, this extension of American foreign policy, diplomacy and military strength, work together?

I want to thank National Defense University and Admiral Rondeau for your gracious welcome today.

So welcome to both of you.

SEC. CLINTON: Thank you, Frank. Thanks for doing this.

SEC. PANETTA: Thank you, Frank.

MR. SESNO: Let's start with the budget, which is, I know, your idea of a good time. (Laughter.)

SEC. CLINTON: (Laughs.)

SEC. PANETTA: (Laughs.)

MR. SESNO: The world has watched with bated breath as to whether we were going to default, whether American troops were not going to get their paychecks, which is an incredible thing. As you face the prospects of budget cuts and the reality of this -- and Secretary Panetta, go first -- what's really at stake here? What's really at stake for foreign policy, as well?

SEC. PANETTA: I think this is about the national security of the country. You know, our national security is our military power, our Defense Department, but it's also our diplomatic power and the State Department. And both of us, I think, are concerned that, you know, as we go through these budget tests that we're going to go through, that the country recognize how important it is that we maintain our national security and that we be strong.

We recognize that we're in a resource limitation here and that we got to deal we've those challenges, but I don't think you have to choose between our national security and fiscal responsibility. And I want the country to know that we can get this done but we have to do it in a way that protects our national defense and protects our national security.

MR. SESNO: You've already agreed to -- not agreed, but you're going to have 350 billion (dollars) or so in cuts.

SEC. PANETTA: No, that's right. That's right.

MR. SESNO: If the trigger takes place, if there's an inability for the Congress to decide where to go from here, it could be 500 billion (dollars) more. Then what?

SEC. PANETTA: Well, I've made the point that, you know, with the numbers we're dealing with now, that the president and Bob Gates before me basically decided pretty much the parameters that we would have to be looking at, and we're within that ballpark with what the Congress just did.

If they go beyond that, if they do the sequester, this kind of massive cut across the board which would literally double the number of cuts that we're confronting, that would have devastating effects on our national defense; it would have devastating effects on certainly the State Department.

But more importantly, you know, when we think about national security, I think we also have to think about the domestic discretionary budget as well, because education plays a role. Other elements of the discretionary budget in terms of the quality of life in this country play a role in terms of our national security. More importantly -- and I made the point based on my own budget experience -- that if you're serious about dealing with budget deficits, you can't just keep going back to the -- to the discretionary part of the budget.

MR. SESNO: What would be the most damaging part? And Secretary Clinton, come to you in just a moment. But what would be the most damaging part to the Department of Defense and to the national security if you had to face hundreds of billions (dollars) or move above the 350? Examples?

SEC. PANETTA: Well, very simple -- very simply, it would result in hollowing out the force. It would terribly weaken our ability to respond to the threats in the world. But more importantly, it would break faith with the troops and with their families. And a volunteer army is absolutely essential to our national defense. Any kind of cut like that would literally undercut our ability to put together the kind of strong national defense we have today.

MR. SESNO: Secretary Clinton, you have a harder case to make given the public skepticism about development aid, foreign aid, where America's spending its money.

SEC. CLINTON: Well, Frank, I know it's a harder case, because I think there's a lot of both misunderstanding and rejection of the work that is done by the State Department and USAID.

We comprise, you know, if you round it off, 1 percent of the discretionary budget. And what we have done over the last two-and-a- half years I think was long overdue, because basically, we said, you know, we are a national security team. We're all on the American team. And by that, I mean that we have civilians who are in the field with our military forces in areas of conflict; we have civilians who are in the field on their own in other very dangerous settings, without our military with boots on the ground. But we are trying to enhance the coordination to achieve our national security objective.

So one of the goals that Secretary Gates and now Secretary Panetta and I have is to make the case as to what national security in the 21st century actually is. It is, of course, the strongest military in the world, that has to be given the tools to do the jobs we send it out to do. It is our diplomatic corps which is out there on the front lines all the time, trying to deal with very difficult situations, to the betterment of America's national interests and security. And it is our development experts, who put another face on American power, who are, you know, trying to deliver as we speak aid to 12 million people in the Horn of Africa who are facing famine and starvation in some measure because of al-Shabab, which makes our challenge even more difficult.

I want to go back, though, to underscore something that Leon said because, you know, between the two of us, we have many years -- probably more than either of us care to admit -- of experience in dealing with a lot of these issues. And Leon, as the chair of the Budget Committee, as the director of OMB, as the chief of staff in the White House in the '90s, was part of a process that got us to a balanced budget.

This is not ancient history. We're not talking about sometime so far back we can't remember it. But tough decisions were made in the '90s to, yes, cut spending, yes, deal with some entitlement issues, and yes, increase revenues, so that we --

MR. SESNO: Raise taxes.

SEC. CLINTON: -- yes, absolutely, so that we had the kind of approach that got us on a trajectory -- had we stayed on it -- where we would not be facing a lot of these issues.

And I will end where you started, Frank. You know, I know how difficult this was for our country domestically over the last month. It's always hard seeing the sausage being made. I happened to be in Hong Kong a few weeks ago, and I said confidently that we were going to resolve this. We were not going to default. We would make some kind of political compromise.

But I have to tell you, it does cast a pall over our ability to project the kind of security interests that are in America's interests. This is not about the Defense Department or the State Department or USAID. This is about the United States of America. And we need to have a responsible conversation about how we are going to prepare ourselves for the future.

And there are a lot of issues that are not in the headlines but are in the trend lines. You know, we are reasserting our presence in the Pacific. We are a Pacific power. That means all elements of our national security team have to be present. And we can't be abruptly pulling back or pulling out when we know we face some long-term challenges about how we're going to cope with what the rise of China means.

We have so many issues that Leon and I deal with every day that are not going to be getting the screaming headline coverage, but which we know, looking over the horizon, are going to affect the economic well-being of our country and the security of American citizens.

MR. SESNO: A couple of things, and then we'll go to our -- to the audience for our first question. Secretary Panetta, talk about the headlines, though, there was one and it really bears directly on the budget and some of the very tough choices and big changes that may be in store. And that is a report on CBS yesterday that the Pentagon is considering a very substantial revamp of the retirement program for those in the military: 401(k)s, and ending the eligibility after 20 years and making it normal retirement age. Is that true? Is that the kind of change and the depth of change that's out there?

SEC. PANETTA: Well, that report came as a result of a -- an advisory group that was asked by my predecessor, Bob Gates, to look at the retirement issue. And they have put together some thoughts. They're supposed to issue, actually, a more complete report at the latter part of this month. No decisions have been made with regards to that issue.

MR. SESNO: But that's the kind of thing that you have to think about?

SEC. PANETTA: But, look, it's the kind of thing you have to consider, in terms of retirement reforms in the broad form, but --

MR. SESNO: So when did the decision --

SEC. PANETTA: -- but you have to do it, Frank, in a way that doesn't break faith, again, with our troops and with their families. If you're going to do something like this, you've got to think very seriously about grandfathering, in order to protect the benefits that are there.

MR. SESNO: So it wouldn't affect the people in this room.

SEC. PANETTA: Exactly. So at the same time -- (laughter, applause).

MR. SESNO: You know -- you know what they say about "know your audience"?

SEC. PANETTA: I know -- I know my audience. (Laughs, laughter.)

No, but, well, you do have to do that. You have to protect the benefits that are there. But at the same time, you know, you've got to look at everything on the table. I mean, my view, when I was on the Budget Committee, when I was director of OMB, was that you have to look at everything; you've got to put everything on the table.

You can't -- you can't approach a deficit the size we're dealing with and expect that you're only going to be dealing with it at the margins. You've got to look at everything, and we should.

MR. SESNO: Secretary Clinton, back on the budget and then to the audience -- and perhaps, Secretary Panetta, you'll want to respond to this. Your -- and your predecessor talked a lot -- Secretary Panetta's predecessor talked a lot about your budget and the need for the development budget and how development is cheaper than war. We had that conversation at George Washington University.

What do you say to Secretary Panetta about your budget and your needs, and your needs -- and you're lobbying for more -- in terms of what he's got and what you need to accomplish?

SEC. CLINTON: Well, I mean, obviously the DOD budget far outweighs the combined budget of the State Department/USAID, 10 to 12 to 1. We understand that.

And we know we're going to also have to put everything on the table. We've -- we're going through a very difficult budget process, and we have --

MR. SESNO: And that includes development, which you hope to grow. You've been -- you've been wanting to grow that.

SEC. CLINTON: Well, it includes -- it includes everything, because, you know, I'm not saying we should be exempt and education or health care here at home should bear all the costs. I'm just saying that as we look at everything that is on the table, we have to try to do a reasonable analysis of what our real needs and interests are.

And it's easy, in a political climate, which I know something about, as Leon does, to say: Oh, well, look, I mean, foreign aid -- if you -- if you go out to the -- you know, the American public and you say, what's the easiest thing to cut in the American budget, it's always foreign aid.

Well, how much do you think foreign aid represents in the American budget? And people honestly say something like 15, 20 percent.

And then you say, well, how much should it represent? And they say, oh, maybe 10 percent -- (soft laughter) -- you know. Well, we understand that we have a case to make, and it is a case that we've been making. And there is a new way of looking at it, which Bob Gates and I and now Leon and I are working on.

You know, the military's always had, in the defense budget, something called overseas contingency operations, that go to the kind of conflicts and investments that have to be made in places like Afghanistan and Iraq. For the first time, we have now the Congress accepting that we too need what's called an OCO, because we have a lot of costs that will begin to go down over time because they're not part of our base. So we're doing things to try to get smarter about explaining what we do and what it's going to cost for us to do it.

But the bottom line, Frank, is we want national security to be looked at wholistically and we want people to understand that a lot of what we're going to have to be doing in the future is not sending our young men and women into harm's way, but trying to avoid that in the first place.

MR. SESNO: In a word, what's your view of her budget?

SEC. PANETTA: It's absolutely essential to our national security.

MR. SESNO: But should it grow or is it going to need to be cut? Are you saying that in this environment --

SEC. PANETTA: No, listen, we all know we're going to have to be able to exercise some fiscal restraint as we go through our budgets.

But the bottom line is that, you know -- what I hope the Congress doesn't do, what I hope this committee doesn't do is to walk away from their responsibility to look at the entire federal budget. I mean, the entire federal budget now, annual budget, is close to $4 trillion. In the discretionary side, which is around a trillion (dollars) plus, it's already been cut a trillion dollars by virtue of this deal that was made in the Congress. So we're already taking a trillion-dollar hit over these next 10 years,

Two-thirds of that budget has not been touched. Two-thirds of the federal budget has not been touched. If you want to deal with the deficit, you've got to deal with mandatory spending programs. You've got to deal with revenues. Every budget summit that I've been a part of going back to Ronald Reagan -- was the first budget summit I participated in -- it was a balanced package that dealt with cuts and revenues. It was true for Ronald Reagan, it was true for George Bush, it was true for Bill Clinton, and it has to be true today if you're serious about dealing with the -- (inaudible).

MR. SESNO: Let's take our first audience question. Anybody got a question on the budget? The gentleman right here. We got a mike over there. I'd ask you to identify yourself and ask your question briefly, and we'll get a response.

Q: Colonel (Rick ?) Johnson. I'm an Army foreign area officer and a student at the Industrial College of the Armed Forces. Welcome to both of you.

Like many of my peers here, I've spent about five years out of the last 10 in the Middle East and Afghanistan. One of the things that concerns me as we see the budget tsunami approaching is problems with the teaching of foreign language and culture. It's an incapacity we've had in the force that persists now.

How will we deal with that as we lose the hundreds of millions dollars to throw at contracting solutions? Have we looked at ways that maybe State and Department of Defense can synergize efforts to teach? Have we looked at working with academia? Is that sort of restructuring and re-engineering how we approach these missions that are budget sensitive going on?

MR. SESNO: Secretary Panetta, why don't you start.

SEC. PANETTA: Well, I certainly think we've got to look at creative ways to be able to deal with it. I'm a believer in foreign language training. I think unfortunately this country hasn't devoted enough resources, really, to foreign language training. You know, we've looked at the 3Rs, reading, writing and arithmetic, but we haven't looked at reality of the world that we deal with.

And in order for -- I mean, when I was CIA director, I did not think you could be a good intelligence analyst or operations guy without knowing languages, and I believe that for the Defense Department and, I think, for the State Department. There's a recognition that you need to have language in order to be able to relate to the world that we live in. So, you know, my goal would be, as we go through the budget, as we develop the restraints that we have to develop, that we are creative and not undermine the kind of teaching and language training that I think is essential to our ability not only to protect our security but, frankly, to be a nation that is well educated.

MR. SESNO: You have similar issues at State?

SEC. CLINTON: Well, I certainly say amen to that. And I think your suggestion that we look for ways that we can better coordinate our language and culture education programs is a -- is a very good one. I have begun to do that in the State Department USAID, because they had different platforms. They had different IT platforms, different language instruction platforms. And when I came in, you know, I didn't think it was the most sensible way for us to train our development experts and our diplomats.

But I think we are going to have to be more creative. I mean, NDU is a perfect example of whole-of-government education. We have Admiral Rondeau, who leads the NDU team, and Ambassador Nancy McEldowney from the State Department, who is the number two.

That is what we have to get in our minds is more likely to be the pattern of cooperation both before deployment -- whether it's as a military or civilian personnel -- and then after deployment, because we cannot, number one, afford to do it any other way; but secondly, I think it gives us a better result.

You know, you may have seen the article in The Washington Post over the weekend about one of the civilian employees in Afghanistan; I think it was in Garmsir District. And because of his Pashto facility, you know, the military really looked to him, because he was able to communicate not just in a formalistic way, but informally, colloquially, in a way that really captured the attention, and eventually the cooperation, of a lot of the Afghans.

That's what we need across the board. So any way we can work together, it will save us money, but it also will begin from the beginning to put together this whole-of-government national security team.

MR. SESNO: Let's move around the world a little bit. Let's start with Afghanistan. Terrible, costly week last week; 35 Americans lost their lives there. And there are a lot of Americans who say, with this loss, is this worth it? Are we prevailing? Should we stay?

What is your response to that? How do you view what is happening in Afghanistan, and the trajectory?

SEC. PANETTA: You know, it was tragic what happened last week, but we've lost 4,500 in Afghanistan -- but we've lost 4,500 in Afghanistan (sic) [actual number is 1,626, inadvertently used the Iraq number]. You know, we've lost many more -- we've seen a lot more that have been wounded. There are a lot of our men and women that have put their lives on the line on the mission that we're involved with there.

And we can't forget the mission. The mission, as the president said, is that we have to disrupt, dismantle and defeat al-Qaida and make sure that it never again finds a safe haven in Afghanistan from which to launch attacks to this country. I think we've made good progress on that.

I think -- you know, I just talked with General Allen this morning. We are making very good progress in terms of security, particularly in the south and southwest. Those are -- those are difficult areas. We've now got to try to improve the situation in the east.

But overall, the situation is doing much better. We have weakened the Taliban significantly, and we're continuing to work on that. We are continuing to build the Afghan army and police. They are right on -- right on target in terms of the numbers that we needed to develop.

So we are working in the right direction. We're going through transition. We're beginning to transition areas. There are others we're going to have to do. We've got to make sure that the Afghan government is prepared to not only govern but to help secure that country in the long run.

But I really do believe that if we stick with this mission, that we can achieve the goals that we're after, which is to create a stable Afghanistan that can make sure we never again establish a safe haven for the Taliban or for al-Qaida.

MR. SESNO: Secretary Clinton, what is the conversation the two of you have about the reliability and stability of the Karzai government and whether you should be negotiating with the Taliban?

SEC. CLINTON: Well, Frank, we have, as Leon just stated, a strategy for transition that we are following. And it is based on frankly the decision that President Obama made upon taking office that we had lost momentum to the Taliban. When he came into office, the situation that we found was not very promising, and so he did order additional troops. I ordered and fulfilled the more than tripling of the civilians on the ground, from 320 to more than 1,125. We put in a lot of effort to try to stabilize and then reverse what we saw as a deteriorating situation. I think we both believe that we are now at a place where we can begin the transition and do so in a responsible way.

Part of that transition is supporting Afghan reconciliation. We have said that for, you know, a very long time. I gave a comprehensive speech about our approach in February at the Asia Society in New York. Ambassador Marc Grossman, who is leading our efforts to build a diplomatic framework for this kind of reconciliation effort, is proceeding very vigorously, because we know that there has to be a political resolution alongside the military gains and sacrifice that we have put in, alongside the sacrifice and suffering of the Afghan people.

But we want this to be, as we say often, Afghan-led and Afghan-owned.

MR. SESNO: But can it be, with the Afghan team, regime, that you're working with?

SEC. CLINTON: Yes. Yes. And --

MR. SESNO: You trust Karzai?

SEC. CLINTON: Yes. I mean, look, I mean, I deal with leaders all over the world who have their own political dynamics that they're trying to cope which, which are not always ones that, you know, we experience or that we think are necessarily the most important. But they get to call the shots. They're the ones who are coming out of their culture. They're trying to implement democracy, often in places where that's a very foreign concept. It can be a difficult and challenging partnership. There's no doubt about it.

But there is certainly a commitment on the part of the Karzai government to this transition process. Remember, when we adopted this process that will go through 2014 at the NATO Lisbon summit, it was in concert with the Karzai government making the same commitment. Now, we're also discussing what kind of ongoing partnership -- diplomatic, development, military -- that we will have with Afghanistan. President Karzai made a very important statement just this past week. He is not seeking a third term, which is a very strong signal that there has to be an active, dynamic political process to choose his successor.

So, you know, look, I -- I mean, I've dealt with President Karzai now for nearly 10 years.

I'm looking at my old chairman of the Senate Armed Services Committee, down there, John Warner. You know, I dealt with him as a senator, and I have dealt with him as a secretary of state. And you have to listen to him, because all too often, we come in with our preconceptions about how things are supposed to be, and he says over and over again, you know, I don't like this or I'm not sure about this.

You know, take the private contractor issue. That went on for a long time because we didn't quite get what his concerns were. So it's not all a one-sided critique here. I think there is -- there's got to be a recognition that, you know, we have a dialogue and a partnership and that we both have to work at it.

MR. SESNO: Question on Afghanistan from the -- from the floor. The gentleman right here. Sir.

Q: Tom Nicholson, international college -- Industrial District College of the Armed Forces. We've mentioned a lot about Iraq and Afghanistan. And it comes to mind our allies and partners in Pakistan are also critical in what's going on with our efforts there. And as a strategic partner going forward, what are your thoughts on how we continue to enhance that relationship, especially given the difficulties we had recently?

SEC. CLINTON: Well, let me start by saying we consider our relationship with Pakistan to be of paramount importance. We think it is very much in America's interest. We think it is in the long-term interest of Pakistan for us to work through what are very difficult problems in that relationship.

And this is not anything new. We've had a challenging relationship with Pakistan going back decades, and we've been -- we've kind of been deeply involved with Pakistan as we were during the '80s with the support for the mujahadeen, the old "Charlie Wilson's War" issue.

And if you remember the end of "Charlie Wilson's War," you know, the Soviet Union is defeated and Charlie Wilson and others are saying, well, now let's build schools, let's work in Afghanistan, let's support Pakistan; and our political decision was, we're exhausted, we're done, we accomplished our mission, which was to break the backs of the Soviet Union, we're out of there.

So I think the Pakistanis have a viewpoint that has to be shown some respect; you know, are you going to be with us or not, because you keep in, you go out, and it is --

MR. SESNO: Well, are they a partner or adversary?

SEC. CLINTON: Well, they are partners, but they don't always see the world the way we see the world, and they don't always cooperate with us on what we think -- and I'll be very blunt about this -- is in their interests. You know, I mean, it's not like we are coming to Pakistan and encouraging them to do things that will be bad for Pakistan. But they often don't follow what our logic is as we make those cases to them, so it takes a lot of dialogue.

MR. SESNO: Secretary Panetta, let's talk about Pakistan for a minute. I mean, there was a story that the Pakistanis, our adversary -- our allies here, handed over parts of the helicopter that went down in bin Laden's compound, or gave access to it, to the Chinese. Is that true? And is that what an ally does?

SEC. PANETTA: As the secretary has said, it's -- this is a very complicated relationship with Pakistan. (Laughter.)

MR. SESNO: Is that a yes?

SEC. PANETTA: (Laughs/laughter.) I've got to protect my old hat. (Laughs/laughter.) You know, I --

MR. SESNO: It's not a no, though.

SEC. PANETTA: Well, I'm not going to comment, because it does relate to -- to classified intelligence. But, you know, clearly we're --

MR. SESNO: But are you concerned about it? Are you concerned?

SEC. PANETTA: We're concerned with -- you know, the relationships that Pakistan has, what makes this complicated is that they have relationships with the Haqqanis, and the Haqqani tribes are going across the border and attacking our forces in Afghanistan, and it's pretty clear that there's a relationship there.

There's a relationship with LeT and -- you know, this is a group that goes into India and threatens attacks there. It has conducted attacks there.

In addition to that, you know, they don't provide visas. They -- you know, they -- in the relationship there are bumps and grinds to try to work it through.

And yet there is no choice but to maintain a relationship with Pakistan. Why? Because we're fighting a war there. Because we are fighting al-Qaida there, and they do give us, you know, some cooperation in that effort, because they do represent an important force in that region, because they do happen to be a nuclear power that has nuclear weapons, and we have to be concerned about what happens with those nuclear weapons.

So for all of those reasons, we have got to maintain a relationship with Pakistan. And it's going to be -- it is not -- you know, as I said, it is complicated. It's going to be ups and downs. I mean, the secretary and I have spent countless hours going to Pakistan, talking with their leaders, trying to get their cooperation.

MR. SESNO: Well, take us into a -- let me ask the two of you to take us into a conversation that you might have together in the privacy of several hundred people and cameras. (Laughter.)

SEC. CLINTON: (Laughs.)

SEC. PANETTA: (Laughs.)

MR. SESNO: This war that you talk about is largely conducted with drones. Those drones are deeply resented and complicate your efforts on the diplomatic front. How do you balance that? Isn't your best asset your worst nightmare?

SEC. CLINTON: No.

SEC. PANETTA: I don't think so.

SEC. CLINTON: No. Let me take you back to conversations that are not maybe so current but, I think, relevant.

Shortly after I became secretary of state, we were quite concerned to see the Pakistani Taliban basically taking advantage of what had been an effort by the government in Pakistan to try to create some kind of peace agreement with the Pakistani Taliban and to in effect say to them, look, you stay in Swat -- which is one of the territories -- you stay there, and don't bother us; we won't bother you.

And I was very blunt, both publicly and privately, with my Pakistani interlocutors, in saying you can't make deals with terrorists. I mean, the very people that you think you can either predict or control are, at the end of the day, neither predictable nor controllable. And I was very pleased when the Pakistanis moved into Swat and, you know, cleaned out a lot of what had become a kind of Pakistani Taliban stronghold. And then they began to take some troops off their border with India, to put more resources into the fight against the Pakistani Taliban.

Now, you know, as Leon says, we have some other targets that we discuss with them: the Haqqanis, for example. And yet, it's been a relatively short period of time -- two-and-a-half years -- when they have begun to reorient themselves militarily against what is, in our view, an internal threat to them. You know, we were -- we were saying this because we think it will undermine the control that the Pakistani government is able to exercise.

So we have conversations like this all the time, Frank. And I do think that there are certain -- there are certain attitudes or beliefs that the Pakistanis have which are rooted in their own experience, just like we have our own set of such convictions. But I also think that there is a debate going on inside Pakistan about the best way to deal with what is an increasing internal threat.

MR. SESNO: On a --

SEC. PANETTA: Let me -- let me just add to that. I mean, the reason we're there is we're protecting our national security. I mean, we're defending our country. The fact was, al-Qaida, which attacked this country on 9/11, it -- the leadership of al-Qaida was there. And so we are going after those who continue to plan to attack this country. They're terrorists. And the operations that we've conducted there have been very effective at undermining al-Qaida and their ability to plan those kinds of attacks.

MR. SESNO: What's left of --

SEC. PANETTA: But let -- but let me make this point. Those terrorists that are there are also a threat to Pakistani national security, as well. They attack Pakistanis. They go into Karachi, they go into Islamabad and conduct attacks there that kill Pakistanis. So it is in their interests -- it's in their interests -- to go after these terrorists, as well. They can't just pick and choose among terrorists.

MR. SESNO: What's left of the al-Qaida network?

SEC. PANETTA: The al-Qaida network has seriously been weakened. We know that. But they're still there, and we still have to keep the pressure on. Those that are suggesting somehow that this is a good time to pull back are wrong. This is a good time to keep putting the pressure on, to make sure that we really do undermine their ability to conduct any kind of attacks on this country.

MR. SESNO: Will they ever be defeated, or was Donald Rumsfeld right, and this is just a long war?

SEC. PANETTA: You know, we have -- we can go after the key leadership of al-Qaida that I think has largely led this effort. And we have seriously weakened them. We certainly took out bin Laden, which I think seriously weakened their leadership as well. And I think there are -- you know, there are additional leaders that we can go after.

And by weakening their leadership, we will undermine al-Qaida's ability to ultimately put together that universal jihad that they've always tried to put together in order to conduct attacks on this country.

So the answer to your question is, you know, that we have made serious inroads in weakening al-Qaida. There's more to be done. There are these nodes now in Yemen, in Somalia and other areas that we have to continue to go after. But I think we are on the path to being -- seriously weakening al-Qaida as a threat to this country.

MR. SESNO: Let's talk to -- about Iraq for a few minutes and then we'll take a question on that topic from the audience.

We've seen a terrible string of attacks over the last 24 hours that have claimed, at last count, nearly 90 lives, hundreds injured, leading to grave concerns about the ability of the Iraqi government to look after its own security. What is happening in that country now? What do you read from this wave of violence?

SEC. CLINTON: Well, what I -- what I see happening is that there continues to be a terrorist capacity inside Iraq. I don't know as -- well, at the time I left my office, no one had claimed credit, but we believe that it could very well be al-Qaida in Iraq trying to assert itself.

MR. SESNO: The Sunni extremists.

SEC. CLINTON: The Sunni extremists. At the same time, we know that there are Shia extremists who have been also conducting attacks, not quite to the extent of what we saw yesterday, but attacks that have killed Americans and killed Iraqis.

Now there -- I'm of two minds about this, Frank. I mean, I deplore the loss of life and the ability of these terrorists to continue to operate inside Iraq.

I also know that until recently the trajectory of violence had been going in the right direction -- namely, down. And we saw that. And we were, you know, feeling that it was headed in the right direction.

The Iraqis themselves have more capacity than they did have, but they've got to exercise it. And we spend a lot of time pushing our friends in the Iraqi government to make decisions, like naming a defense minister and an interior minister, so that they can be better organized to deal with what are the ongoing threats.

And certainly we're in discussions with them now because, you know, they do want to be sure that they have sufficient intelligence and surveillance and reconnaissance capacity, ISR. They want to be sure that they can defend themselves both internally and externally. And, you know, that's a conversation that our ambassador and our (command/commander ?) are having in Baghdad.

MR. SESNO: Has it been worth it? And should we stay?

SEC. PANETTA: Well, the bottom line is that we are going to maintain a long-term relationship with Iraq to ensure that they maintain stable.

MR. SESNO: Militarily?

SEC. PANETTA: I think, you know, we'll --

MR. SESNO: That's a discussion they're having internally themselves.

SEC. PANETTA: That's a discussion that we'll have with them as to, you know, what kind of assistance we'll continue to provide. But the bottom line is, whether it's diplomatic or whether it's military, we've got a long-term relationship with Iraq. We've invested --

MR. SESNO: So if asked to stay, we --

SEC. PANETTA: -- we've invested a lot of lives there.

MR. SESNO: If asked to stay militarily, we stay?

SEC. PANETTA: We've invested a lot of blood in that country. And regardless of whether you agree or disagree as to how we got into it, the bottom line is that we now have, through a lot of sacrifice, established a, you know, relatively stable democracy that's trying to work together to lead that country.

And it happens to be a country that is in a very important region of the world at a time when there's a lot of other turmoil going on. And it is -- it is very important for us to make sure that we get this right.

SEC. CLINTON: But, Frank, I just want to just append to what Leon said, you know, the president made a commitment that we would be withdrawing our forces from Iraq and that he would follow the timetable that was set in the Bush administration, which is for our troops to be out at the end of this year.

MR. SESNO: Right.

SEC. CLINTON: So that is -- that's a period. That's the -- that's the end of that commitment.

There is, however a discussion that the Iraqis are having internally, and beginning to have with us, about what we would do following that. So I don't want there to be any confusion about that. I mean, you know, our combat mission in Iraq ends at the end of this year. Our support and training mission, if there is to be such a one, is what the subject of this discussion would be.

MR. SESNO: But don't these -- don't these attacks demonstrate that the security situation is still precarious; that if the Iraqi government were to ask for an ongoing American military presence, it might well be more than mere training; that there is combat that is still taking place?

SEC. CLINTON: Well, I -- but we don't believe that the Iraqis have that on their list of asks, I mean.

MR. SESNO: Do you agree?

SEC. PANETTA: You know, well, I think what they want to do is to, obviously, be able to confront counterterrorism within their own country. And, you know, we've given them help, we've given them training, we've given them assistance in that effort. And obviously, that's something as a country they're going to have to confront.

But their main goal right now is to get the kind of training that will allow them to improve their defense capability.

MR. SESNO: Well, let's turn to the audience and for a question on Iraq. Anybody have a question on Iraq? In the aisle right here, if we can bring the mic over here. Do we have the microphone? Right down here. Yes, sir. Stand and tell us who you are, and ask your question briefly.

Q: Keith Crane, the RAND Corporation. I've been -- I was in the CPA in 2003, and followed Iraq ever since. I just wanted to ask you, don't you see it in the U.S. national security interest to actually have all the troops leave by the end of the year, I think in terms of both the Middle East, Afghanistan and for the Iraqis themselves? I understand what the -- Secretary Clinton had said in terms of we are leaving, but even to have troops that are training there afterwards, don't you think it'd send a really strong signal that we're not interested in bases and that we would -- are going to leave, if we do not have a training mission there as well?

SEC. PANETTA: Well, I think, I mean, as the -- as the secretary said and as the president's made clear, we are leaving by the end of the year. Our combat mission is over. The discussions now are what kind of assistance can we continue to provide with regards to training, with regards to other assistance that is provided. We do this with other countries. We've done it, you know, with other countries in that region. And I think this would be what I would call a normal relationship with Iraq, if we could establish that kind of approach for the future.

SEC. CLINTON: Well, that's why I wanted to be very clear that the combat mission is over and our troops are leaving. And they are, you know, in the process of, you know, literally, packing up. And that was what we agreed to. And I agree with you that that is very much in America's interests to keep that commitment.

But what Leon is saying is also important. You know, if a country comes to us, within what we would view as a normal diplomatic relationship, and says, you know, my troops need training, they're not yet what they need to be; I'm going to need continuing help on collecting intelligence, learning how to do it for counterterrorism purposes -- I think it would be irresponsible of us not to listen to what they're requesting.

And indeed the Iraqis have not made a formal request, but we have reason to believe that they are certainly discussing it internally.

You know, we do that in Kuwait. We do that in Bahrain. We do that in Qatar. We do that in U.A.E. We do that in Saudi Arabia.

So it would be a little bit, I think, unusual for us to say no, we will not respond to a responsible request. What it is we don't know yet, and that's the -- you know, that's the next stage --

MR. SESNO: But I think the bottom line here is very interesting, and it's something that the country will respond to, which is that if there is a responsible request, as you put it, a military relationship of some form going forward, not unlike these other countries in the region, in Europe, in much of the world, after other conflicts, will be part of the military/diplomatic landscape.

SEC. PANETTA: What -- Frank, just for the record, this is going to be a process of negotiation, and there's going to be discussion, and I think what -- the good thing is that the Iraqis indicated a willingness to have that discussion. We will have that discussion and try to deal with it. But as to what ultimately turns out, we'll have to leave to them.

MR. SESNO: Couple other issues in the time remaining. Syria: Is it time for the United States to clearly, emphatically, unequivocally state that President Assad has to go, should step down? There's been talk that that is going to be forthcoming from the administration. It has not been yet. Is today the day?

SEC. CLINTON: Well, Frank, you know, I'm not a big believer in arbitrary deadlines when you're trying to manage difficult situations. And what we see happening in Syria is galvanizing international opinion against the Assad regime. And that is a far better landscape for us to be operating in than if it were just the United States, if it were just maybe a few European countries.

Just think of what's happened in the last two weeks. You've had the Arab League reverse position. You've had King Abdullah of Saudi Arabia make a very strong statement and the Gulf Coordinating Council also making a strong statement. You have Turkey desperately trying to use its influence, which is considerable, within Syria to convince the Assad regime to quit shelling its own people, withdraw its troops from the cities, return them to barracks, begin a process of real transition. And yesterday the foreign minister made it clear that the Assad regime is not following through on that.

So I happen to think where we are is where we need to be, where it is a growing international chorus of condemnation. The United States has between instrumental in orchestrating that. And we are pushing for stronger sanctions that we hope will be joined by other countries that have far bigger stakes economically than we do.

MR. SESNO: I get all of that. But you know that your critics are saying leading means being out in front, that you condemn from the White House the heinous acts of the Assad regime, but --

SEC. CLINTON: Well, look, we have condemned it and we will continue to condemn it.

MR. SESNO: So tell him to leave.

SEC. CLINTON: Well, you know, I have to say I am a big believer in results over rhetoric. And I think what we're doing is putting together a very careful set of actions and statements that will make our views very clear; and to have other voices, particularly from the region, as part of that is essential for there to be any impact within Syria.

I mean, it's not news that the United States is, you know, not a friend of Syria's. That is not news to anybody. But it is, I think, important that we sent an ambassador back there. I'm very proud of what Ambassador Ford has done, representing the best values of our country.

So, you know, I think we have done what we needed to do to establish the credibility and, frankly, the universality of the condemnation that may actually make a difference.

MR. SESNO: Secretary Panetta, another place to go to -- since the world is such a cheery place these days --

SEC. PANETTA: (Laughs.)

MR. SESNO: -- Libya. So, we find these very interesting developments, where we hear of another defection, potentially, from the senior ranks of the Gadhafi government. And yet, we also hear that the rebel forces may be having some very serious internal pressures, tensions and disputes, themselves. What is your read on the military campaign in Libya, and whether Gadhafi is any closer to being driven out?

SEC. PANETTA: Well, I talked with our commanders in the area just within the last few days. And the indication is that -- you know, that, yes, there are -- there are these concerns about the opposition, but we've had concerns about the opposition for a period now. But the fact is that the opposition is moving. They're moving in the west towards Tripoli, towards the coastline, and moving in that direction; the opposition in the east is moving to Brega and moving in the direction of Tripoli, as well; that that pressure is having an impact; that the regime forces are weakened, Gadhafi's forces are weakened. And this latest defection is another example of how weak they've gotten.

So I think -- I think, you know, considering how difficult the situation has been, the fact is the combination of NATO forces there, the combination of what the opposition is doing, the sanctions, the international pressure, the work of the Arab League -- all of that has been very helpful in moving this in the right direction. And I think the sense is that Gadhafi's days are numbered.

MR. SESNO: We're moving into our final few minutes of the conversation. I'd like to take one last question from the audience, if someone's got one. If I see a hand -- this gentleman here.

Q: Randy Crabtree (sp), Defense Intelligence Agency and a student at Industrial College of the Armed Forces. My question is, are the messages we're sending in Libya and Syria really sending a message that the U.S. isn't prepared to underwrite stability in the world anymore and that we just simply can't afford it?

SEC. CLINTON: No, I don't think so. I see it somewhat differently. I think it -- it's a message the United States stands for our values, our interests and our security, but that we have a very clear view that others need to be taking the same steps to enforce a universal set of values and interests.

So I view this somewhat differently than I know some of the perhaps commentary has evidenced. You know, if you look at Libya, this is a case for strategic patience, and it's easy to get impatient.

But I think when you realize that this started in March, there was no opposition. There were no institutions. There was nothing that -- there was no address, even, for trying to figure out how to help people who were attempting to cast off this brutal dictatorship of 42-plus years.

The distance they have traveled in this relatively short period of time, the fact that for the first time we have a NATO-Arab alliance taking action -- you've got Arab countries who are running strike actions. You've got Arab countries who are supporting with advisers the opposition. This is a -- this is exactly the kind of world that I want to see, where it's not just the United States and everybody is standing on the sidelines while we bear the costs; while we bear the sacrifice; while our men and women, you know, lay down their lives for universal values; where we're finally beginning to say, look, we are, by all measurements, the strongest leader in the world, and we are leading.

But part of leading is making sure that you get other people on the field. And that's what I think we're doing.

And similarly, as I told Frank, in Syria, it's not -- you know, it's not going to be any news if the United States says Assad needs to go. OK, fine, what's next? If Turkey says it, if King Abdullah says it, if other people say it, there is no way the Assad regime can ignore it. We don't have, you know, very much going on with Syria, because of a long history of challenging problems with them.

So I think this is smart power, and I talk a lot about smart power, where it's not just brute force, it's not just unilateralism; it's being smart enough to say: You know what? We want a bunch of people singing out of the same hymn book. And we want them singing a song of universal freedom, human rights, democracy -- everything that we have stood for and pioneered over 235 years. That's what I'm looking for us to be able to achieve.

MR. SESNO: Before we close today, I want to ask you about one other place, and I want to ask you specifically about the kind of coordinated assistance that your two gigantic departments --

SEC. CLINTON: Well, he's gigantic. (Laughter.)

SEC. PANETTA: (Laughs.)

MR. SESNO: Well, some might look at your department as gigantic, too. But what you see depends upon where you stand, right?

SEC. CLINTON: Right. We may be small, but there are those of us who love us. (Laughter.)

MR. SESNO: I'm talking about Somalia here -- a gut-wrenching, horrible famine; images and suffering that's brought to American and global homes every night. And some might say this can and should be a model for how these departments respond: how much is humanitarian; how much is military; what the integration and coordination is.

Would you talk about that for just --

SEC. PANETTA: Actually, that's a very good example of the kind of close coordination between the two departments in dealing with a real crisis in that area. I mean, the reality is that it's a very difficult situation in Somalia. You know, you've got al-Shabab, which is a real threat to that area. We've got, you know, literally thousands upon thousands who are starving right now as well.

And so what we've been doing -- and I'll just -- I mean, on the military side is we have been working very closely through AFRICOM with the State Department, with the diplomatic sources that are there, with the NGOs to try to make sure that we're providing whatever assistance we can provide to help in that region. And so --

MR. SESNO: Logistical assistance and other such things?

SEC. PANETTA: That's correct. And so we are working. We're doing that on a daily basis. And we've made clear that any additional assistance, you know, we're prepared to provide. So it's a very good team approach to dealing with a crisis in that part of the world.

SEC. CLINTON: I would just add a few points. You know, the United States was the principal funder of something called FEWS NET, the Famine Early Warning System Network. And when we began seeing signs of a potential famine, we began to pre-position food and material. That gave us the chance to be able to get our equipment and our food into these areas quickly. We're talking about 12 million people in the Horn of Africa, in an area twice the size of Texas. Ethiopia and Kenya have been responding, you know, very generously given their own situation.

And we've made progress. You know, I remember the last time Ethiopia had a famine. I remember those terrible pictures. That affected about 12 million people in Ethiopia, and now it's down to about 5 million, which is still an unacceptable, but shows that we're trending in the right direction.

So the United States has now spent about $580 million in helping these people who are starving, and particularly trying to help women and children, who are the most at risk.

As the same time, the United States has supported the African Union Mission in Somalia, the so-called AMISOM. And we have been making progress in driving back al-Shabab out of Mogadishu. Very brave troops from Uganda, Burundi and other places are working with the Transitional Federal Government in Mogadishu. And as you know, al-Shabab left Mogadishu. Unfortunately, they are still posing a very real threat and obstacle in south central Somalia to our getting food into that area, but we're making some progress.

I say all that because as you look just at the Horn of Africa, you can see the complexity of what we're dealing with and to try to sort but what is the defense role, the diplomatic role, the development role; how do we work with the U.N., how do we work with NGOs, how do we work with governments? And what I have said, Frank, is that, you know, stability in Somalia is so much in the interest -- first and foremost, in the Somali people's interest, but also in the region and beyond, and yet the United States is not going to put boots on the ground. We remember what happened with what started as a humanitarian mission that morphed into a military mission that was, unfortunately, you know, resulting in the loss of American lives.

But what we are going to do is empower Africans themselves, provide all kinds of support to them and enable them to stand up for themselves. And, you know, this is the kind of multilayered approach that we're taking in a lot of complex situations now.

MR. SESNO: We're virtually out of time. I know that each of you would like to have a moment to kind of pull your thoughts together. The appearance of the two of you here is a commentary in and of itself, perhaps Secretary Panetta to talk to those in uniform here and around the world who are watching, Secretary Clinton to talk to American diplomats and those who are serving in this country and around the world who are watching through our embassies, and the public through C-SPAN and other media.

Secretary Panetta?

SEC. PANETTA: Well, you know, we -- these are challenging times, as we've just seen through this discussion alone. We're involved in two wars; we're in a NATO mission in Libya; we're confronting other threats from Iran and North Korea; we continue to be in a war on terrorism; we're fighting a concern about cyberattacks, increasing cyberattacks here. And we have rising powers -- nations like China and India and Brazil, not to mention Russia -- that we have to continue to look at in terms of their role in providing stability in the world. And we're facing resource constrictions, budget constrictions now.

As I said, I don't think we have to choose between our national security and fiscal responsibility, but we are a nation that has a special role in the world -- a special role because of our military power, a special role because of our diplomatic power, but more importantly, a special role because of our values and our freedoms.

The key thing that goes to the heart of our strength is the willingness of men and women to put their lives on the line to help defend this country. And I think we need to learn a lesson from what they do, that the leadership of this country needs to be inspired by the sacrifice that's being made by men and women on the front lines and, hopefully, exercise the kind of leadership that will ensure that this country remains free and strong.

SEC. CLINTON: And I think both Leon and I carry that responsibility very seriously, because we understand what this country means. We're both beneficiaries of the generations that came before that gave us our freedom, that gave us the opportunities that we've been able to enjoy.

And I want to see that continue. I'm very proud to be the secretary of state of the United States of the United States of America, even during a period that is quite challenging and there is no guidebook written for it.

And in looking back at history, I've tried to take some lessons from other points when these challenges also presented themselves. And you know, one of my favorite predecessors is George Marshall, who held both Leon's position and my position, most uniquely in our history. And at the end of World War II, President Truman and George Marshall, you know, looked around the world and said: You know what's in America's long-term interest? Rebuilding our enemies; you know, creating stable democracies, creating free market economies.

And what did they do? Well, they said to people like my father, who had spent five years in the Navy -- they said: Look, we know all you want to do is go home, raise a family, start your business, make some money, have a normal life. Guess what. We're going to continue to tax you to rebuild places like Germany.

And it was a hard sell. It didn't happen automatically. You know, Truman, Marshall and others went across this country making that case. And we invested, in those dollars, $13 billion in four years, which would be about $150 billion in our own currency right now. And we helped to make the world stable and safe and open for all the postwar decades.

We have a -- an opportunity right now in the Middle East and North Africa that I'm not sure we're going to be able to meet, because we don't have the resources to invest in the new democracies in Egypt and Tunisia, to help the transition in Libya, to see what happens in Syria, and so much else.

And the problems that Leon mentioned -- the rising powers we hope are peaceful and successful, but we've got to be competitive. You know, we can't just hope. We have to work, and we have to make a strong case for the continuing leadership of the United States.

So it's my hope that as we deal with these very real and pressing budget problems, we don't know the cost of everything and the value of nothing. Budget documents are value statements -- who we are as a people, what we stand for, what investments we're making in the future. Whether we will continue to be strong and be able to project American power is up for grabs.

And we're going to make the best case we can that American power is a -- is a power for the good, that it has helped to liberate, you know, hundreds of millions of people around the world, that it has helped to enhance the opportunities for people and to give young girls and boys the chance to live up to their own God-given potential. And we need to make sure we continue to do that. And I think you'll be hearing, you know, Leon and I making that case, and we hope that it will find a ready audience in the Congress as these negotiations resume.

MR. SESNO: A ready audience in the Congress and, I hope, a receptive and listening audience in the public, because the public needs to be part of this conversation, needs to understand what's at stake, needs to have an opportunity to ask the tough questions and get straight answers from you and others. So as this dialogue unfolds, this is of immense importance to the country.

Admiral Rondeau, thank you very much. Senator Warner, Congresswoman Harman, for the men and women in uniform and who are serving the country here and around the world, to those in our Foreign Service and diplomatic corps, and most importantly, to Secretary Panetta and Secretary Clinton, thank you so much for a fascinating and insightful conversation today.

SEC. CLINTON: Thank you, Frank.

SEC. PANETTA: Thank you, Frank.


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