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Hearing of the House Foreign Affairs Committee - Building Capacity to Protect U.S. National Security: the Fiscal Year 2010 International Affairs Budget

Chaired by: Rep. Howard Berman (D-CA)

Witness: Jacob Lew, Deputy Secretary of State for Management and Resources

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REP. GARY ACKERMAN (D-NY) (?): I apologize for being a little late. I'm in the middle of a mark up in Judiciary on an issue of high interest to me.

It is a pleasure to welcome Deputy Secretary of State Jack Lew to the committee this afternoon.

For members that have come here in the last eight years and haven't worked with Mr. Lew, I think I can safely say that you won't find a fairer, more accessible, and more straight talking public servant.

Jack, your former position as OMB director makes you uniquely qualified to serve as Secretary Clinton's deputy for Management and Resources.

Your familiarity with this institution as Speaker Tip O'Neill's counsel in the 1980's assures our members that you will be uniquely attuned to their concerns.

The purpose of today's hearing is to give you an opportunity to present and to justify the Obama administration's fiscal year 2010 International Affairs budget.

At the outset, I want to commend you and your talented team for putting together this impressive and ambitious budget document. There are many important proposals in the budget request but in the interest of time let me highlight just three.

First, the budget proposes significant funding increases to rebuild capacity at the State department and USAID. Our national security stands on three pillars; defense, diplomacy, and development. Yet, for far too long we have failed to provide our civilian foreign affairs agencies with the resources they desperately need to fill critical overseas posts, provide adequate training, and ensure effective oversight of programs they manage.

This has greatly limited the effectiveness of American diplomacy and development. It has also resulted in the migration of traditional State department and USAID responsibilities to other government agencies that lack the requisite expertise, including the department of Defense.

This budget is an important first step in addressing these debilitating capacity problems. And we await the appointment of a USAID administrator to assist you in those efforts, which we hope will take place in the very near future.

Anything you can tell us about that? Anyway ---

Secondly, the budget request proposes to pay our current dues in full and much of the debt we have accumulated is in recent years in our accounts with international organizations, including the United Nations.

The UN system is far from perfect and it often doesn't live up to our expectations. But it should be clear to everyone that we are simply not capable of solving every foreign policy challenge on our own. And in so doing we should set the example of a member in good standing by paying what we owe. On a wide range of issues, from Iran's nuclear weapons program to Darfur to climate change we need to cooperate closely with the international community.

Third, I'm pleased to see that the budget request puts the United States on track to double foreign assistance by the year 2015. Providing assistance to those in need reflects the values and generosity of the American people.

Foreign aid also supports our national security interests by promoting stability, economic growth, and respect for democracy and human rights. And from a financial perspective, preventing a failed state today is much more cost effective than paying for the negative consequences resulting from that failed state in the future.

Secretary Lew, tomorrow I plan to introduce a State department authorization bill for fiscal years 2010 and 2011. This legislation will authorize State department operations and related accounts, in most cases at the level requested in your budget submission.

It will also include a number of authorities requested by the department, including a provision to end the 20 percent pay cut that junior foreign service officers suffer when they are assigned to overseas posts.

Finally, it will incorporate a variety of congressional initiatives from both sides of the aisle.

I'm very hopeful that we can move this bill forward on a bipartisan and bicameral basis and look forward to working closely with you and your staff.

To conclude, many of my colleagues and I are committed to getting you and Secretary Clinton the resources you need to conduct skillful diplomacy and effective development. At the same time, we are also committed to upholding our responsibility to conduct oversight of the executive branch and to ensure that tax dollars and spent wisely. This will be reflected in the State department bill as well as legislation we hope to introduce later this year on foreign assistance reform.

I'd now like to turn to my good friend, the ranking member, Ileana Ros-Lehtinen, for any opening remarks she would like to make.

REP. ROS-LEHTINEN: Thank you, Mr. Chairman, as always.

And Secretary Lew, a welcome to our Foreign Affairs committee. We appreciate having the benefit of your insight on the proposed fiscal year 2010 International Affairs budget and on the prospects for comprehensive reform of our foreign assistance program.

With respect to the budget request, Mr. Secretary, it is ambitious in its magnitude, particularly at a time when we as a nation face great uncertainty about our economic prospects, particularly regarding our ability to take on further debt and pay it back with interest.

In line with the stated goal of doubling our foreign aid over five years, the request is almost exclusively composed of program increases. We have not received any details nor justifications on how these increases are linked to specific criteria, premised on certain rationales, or resulting from any sort of review or evaluation.

Mr. Secretary, could you please elaborate upon how the budget increases were derived?

Also, how did you determine the amounts, the accounts, the programs?

I have supported a great many assistance programs, including PEPFAR, Food Aid, Aid for Haiti, Sudan, microfinance, child survival efforts to name a few. But, we need a much better understanding as to why the International Affairs budget for the next fiscal year would be set for an increase of almost nine percent over the 2009 level, which has already been increased by enacted and proposed supplemental funding. The proposed increases would also be 25 percent over the fiscal year 2008 funding levels.

Our 150 International Affairs budget account has already grown from 25.4 billion (dollars) in fiscal year 2002 to 43 billion (dollars) in fiscal year 2008, an increase of almost 70 percent.

The Congress is now working its way through the fiscal year 2009 supplemental request, which already contains a significant amount of foreign aid funding.

Secretary Clinton testified before our committee a few weeks ago saying that she has challenged the department to reform and innovate and save taxpayer dollars, indicating a review was underway of State department and foreign aid programs and operations.

However, the proposed funding increases appear to presuppose the conclusions of such a review and the budget submissions do not appear to reflect nor mention reforms or innovations that are going to result in savings.

The chairman has urged all of us to consider ways in which we might reform our programs and structure and make them more efficient. Answering that challenge I would note for you, Mr. Secretary, three pieces of legislation that I have introduced with some of our colleagues on the committee.

The first would create a joint House/Senate temporary committee to be truly bipartisan in structure and operation that would bring together the leadership of both houses and the various committees of jurisdiction over foreign aid programs and processes with the goal of reporting truly comprehensive reform legislation.

It's my belief that we cannot achieve sustainable reform without involving our Appropriations committees, for example, and without doing it in a truly bipartisan manner.

I've also introduced the Foreign Assistance Partner Vetting System Act, which would give the secretary the authority to establish an organized system to vet our aid programs around the world to ensure that our funds do not inadvertently benefit supporters of terrorist organizations.

Finally, Mr. Secretary, I've introduced a bill that seeks to build on efforts already underway to ensure that the use of performance based management in our foreign aid planning and funding is implemented. That bill would also require the president to submit a national security strategy for our diplomacy and assistance at the same time that he submits the national security strategy that is already required under law.

I believe this approach is in keeping with Secretary Clinton's statement before our committee where she reiterated the commitment she made during her Senate confirmation hearing to pursue a policy that would enhance our nation's security, advance her interests, and uphold our values. My bill, The Strategy and Effectiveness of Foreign Policy and Assistance Act, calls for the diplomacy and assistance strategy to describe how the organization structures of our foreign affairs agencies and U.S. foreign aid programs, budget plans, personnel decisions, and public diplomacy fit into the overall national security strategy to advance the national security objectives and interests of the United States.

I welcome you and the secretary's review in consideration of these proposals.

And just commenting on our esteemed chairman's belief and hope and desire to have a bipartisan bill, I'd just like to get the message to the chairman that every day we get a few more items added to his must pass list and I believe that dream of getting that bill in such a manner that can be loved in a bipartisan way is slowly slipping away from our fingers. If that message to Garcia could be delivered --- I wanted to deliver it to Mr. Berman myself but he's not here.

Thank you. Thank you, Mr. Chair.

REP. ACKERMAN: Thank you, Ms. Ros-Lehtinen. And you know I always deliver your messages, you know that.

We'll entertain then an opening statement of one minute by anyone who might want to make one.

Mr. Sherman.

REP. SHERMAN: Limited to one minute, I want to focus on the defense trade controls. You've cut the budget. This is a poke in the eye to working American's who want these export jobs. When we make the wrong decision as to where our military good will be exported we either send good stuff to bad people, or worse yet, we have an unwarranted delay in sending necessary military goods to loyal allies. And in doing so, if you're too slow somebody else gets the contract. And in the middle of the greatest recession of our lifetimes to cut to save $3 million DDTC seems absurd and, to fly in the face of the hearings held in our subcommittee, we showed that we need a quicker decisions and better staffing for this agency that decides which military goods produced in the United States can be exported.

I yield back.

REP. ACKERMAN: Okay. Mr. Burton.

REP. BURTON: Thank you, Mr. Chairman.

I'd just like to make one request; we're going to get into the foreign aid issue for several hearings and I'm very concerned that we have a clean bill. I know there's going to be questions about how much money we're spending but there's a number of us who are very concerned about the problems in the Middle East. We want to make sure that our friend Israel over there is supported so they can adequately protect themselves. And yet, in the last foreign aid bill they put language in there that dealt with the Mexico City policy and other things which were really not germane to the foreign aid bill. And it made it --- it was actually, many of us thought, was politically motivated.

So I'd just like to urge the chairman and the committee to make sure that we have a clean foreign aid bill that deals with foreign aid, deals with international problems and doesn't get into these economic and social issues that are not relevant to the discussion. It just causes political problems that are not necessary.

And with that I yield back the balance of my time.

REP. ACKERMAN: Thank you.

Mr. Connolly.

REP. CONNOLLY: Thank you, Mr. Chairman.

I can't resist. While I respect my colleague I must say the Mexico City policy most certainly is relevant. I'm delighted that the administration moved to overturn it. It was ill-conceived, if you forgive the expression.

I want to welcome Deputy Secretary Lew to the committee and I just want to praise Secretary Clinton, Secretary Gates, and the president for providing a better understanding of the relationship between our foreign assistance diplomacy and our military. And it was Secretary Gates last year, while still in the Bush administration, who pointed out that you can't fight your way out of every problem, that you've got to have a vigorous diplomacy. And a key part of that diplomacy is, I think, a restored and renewed U.S. agency for international development or its successor.

And so having a vigorous development assistance program is going to be a key adjunct of whatever we do moving forward.

It's an agency that sadly has been hollowed out over the last decade and we need to rebuild it and restore it.

So I look forward to working with Secretary Lew and his colleagues and with the chairman, of course, and his legislation in trying to make that happen.

Thank you.

REP. ACKERMAN: Thank you, Mr. Connolly.

Mr. Smith.

REP. SMITH: Thank you very much, Mr. Chairman.

As I think many of my colleagues know, since I've been in Congress I've worked very hard on child survival, immunizations, oral rehydration therapy, actually authored the legislation in the early 80's to put it at $50 million to effectuate those kinds of programs. But I think as every parent knows, birth is an event that happens to each and every one of us at some time but it's only an event in the life of a child. Healthy unborn babies are more likely to be healthy newborns and in turn healthy newborns are more likely to be healthy children and adults.

I would argue that abortion is infant mortality. The unborn patient needs special care and interventions that will contribute to his or her long term health. Low birth weight is the leading risk for peri-natal death and is associated with the maternal under nutrition and ill health.

Similarly, iodine deficiency during pregnancy is associated with a higher incidence of still birth, miscarriage, and congenital abnormalities.

Pesticide exposure also puts an unborn child at risk.

All of these risks to the unborn patient can be reduced by proper prenatal care that respects the needs of both patients, mother and child. For example, risk can be mitigated through proper nutrition, vitamin, iodine treatments, education and even access to clean water.

I believe we must expand essential obstetrical services, including access to safe blood and skilled birth attendants and improve transportation capabilities for emergency care to significantly reduce maternal mortality and morbidity.

As we do that, we should not simultaneously be promoting abortion, which again, is by definition, infant mortality.

REP. ACKERMAN: Thank you, Mr. Smith.

Mr. Scott.

REP. SCOTT: Thank you very much, Mr. Chairman.

I'd like to just add my remarks to address food security and development assistance and higher education in Africa. I appreciate the increase of about 30 percent of the funding for those countries who have committed to improving their public sector governance. But given President Obama's new initiatives on food security and hunger, I wonder, can any of this money be used for improvement at public higher education institutions in these developing countries in Africa, particularly those that focus on improving agriculture productivity? That is the core of the problem.

I've just returned from Africa and the great struggle in Africa is food, getting enough food for folks to eat, being able to develop that. They're also stressed, not only with the end to warring and the conflicts that are there in abundance, but there are droughts, there are famines. And so it's clear that economic development, food security and ultimately government stability cannot be achieved without stronger higher education systems in these developing African countries. And there is a great interest in the United States and African higher education communities in building African capacity to solve their own development challenges, especially in securing food.

To that end, the FY '09 omnibus appropriations bill appropriated $133 million for higher education in developing countries.

So my question is can any of this increase in development assistance in FY10 be used for improving higher education and augmenting what was provided in FY09?

And hopefully the emphasis as we go in for our discussions and my follow-up questions will be on this subject and how we can improve food security in allowing those nations to develop ---

REP. ACKERMAN: Thank you, Mr. Scott.

Mr. Rohrabacher.

REP. ROHRABACHER: Thank you very much, Mr. Chairman.

I am concerned and have been since becoming a member of this committee many years ago that we quite often do not associate the philosophy of a certain government with the fact that we would give them aid. I certainly think that we should be helping people throughout the world but if we do so with totalitarian governments we are doing nothing but subsidizing tyranny.

I associate myself with Mr. Smith's remarks that he just made and point out that the budget that you're proposing is $7 million to give to China for child survival at a time when China's beliefs enforced abortions for Pete sakes. They murdered children. We're giving $11 million of developmental assistance to China. Five million in economic support funds to China. This is the world's worst human rights abuser.

In Ethiopia we give, again, $78 million for child survival but this is a government that steals all of its money from its own people. Ethiopia arrested the people who won the last election and put them in jail.

We need to know that when we're giving this type of money, or giving any type of assistance to countries that are run by gangsters, the money's likely to be stolen, surprise, surprise. And I would suggest that we put that into the mix as we're discussing this issue.

REP. ACKERMAN: Thank you, Mr. Rohrabacher.

Is there anyone on the Democratic side that wishes to give an opening statement?

Any other people on the Republican side? Mr. Royce.

REP. ROYCE: Yes, Mr. Secretary, you know, we have your prepared statement about promoting American values. I just share the ranking member's concern, with her dismay, over our embassy in Buenos Aires sponsoring an event celebrating the life of Che Guevara. He was a murderer. He was a tyrant, a terrorist, an advocate of mass killing. He despised the United States. I think it was a mistake and I hope the State department recognizes is. But, you know, this is an individual that said, if the missiles remained in Cuba we would've used them all and directed them at the very heart of the United States, including New York. And as Che said, to send men to the firing squad, judicial proof in unnecessary. These procedures are an archaic, Buzau detail. A revolutionary must become a cold killing machine, motivated by pure hate.

I just think, in terms of outreach, that's not a strategy.

Thank you, Mr. Chairman.

REP. ACKERMAN: The gentleman from New York, Mr. Engel, is recognized for one minute.

REP. ENGEL: Well thank you, thank you, Mr. Chairman.

I wanted --- I want to duly note the fact that Mr. Lew is my constituent. So if it were nothing else I would admire him just for that. But he has a long and distinguished record and I'm just delighted that the administration has tapped him to do this very important job.

So that's really what I want to say. I look forward to hearing his testimony and the administration couldn't have picked a better person for this very important job.

Thank you, Mr. Chairman.

REP. ACKERMAN: The time of the gentleman has expired.

Would you, Mr. Lew, Secretary Lew, would you like to testify?

SEC. LEW: Thank you very much, Mr. Chairman, ranking member Ros- Lehtinen. It's a pleasure to be here to appear before the committee today.

I would ask that my statement be submitted in the record ---

REP. ACKERMAN: Without objection it will be.

SEC. LEW: Try to keep my opening remarks relatively brief to leave as much time as possible for questions.

Mr. Chairman, it's particularly a pleasure to appear before your committee. We've had the pleasure of working together for over 30 years if I count correctly, and I hope that this is yet another productive chapter in working on important issues and getting things done for the country.

Thank you, Mr. Engel, for welcoming me and making me feel so at home here at the committee.

The committee has been a strong ally in strengthen our foreign policy tools and we appreciate your support. We appreciate the effort that many of you made, chairman leading the effort, to make the case for resources for international affairs funding in the Budget committee and in the proceedings following.

I will take a few minutes to describe the major principles and priorities in our budget and, as I said, leave most of the time so we can have questions.

At a top line level of $53.9 billion the request represents a nine percent increase over 2009 funding levels. This budget provides the details of what we mean when we talk about smart power. And it provides the resources to pursue the administration's foreign policy agenda.

The United States faces diffuse and complex threats, including terrorism, climate change, pandemic disease, extreme poverty, and global criminal networks.

Key to our security and prosperity is a stable and secure world and we cannot achieve that through military means alone. It requires American leadership that promotes our values, build strong partnership, and improves the lives of others. That is what President Obama and Secretary Clinton call smart power, harnessing the tools of diplomacy, development, and defense to help build a more peaceful and prosperous world by reducing the risk that global poverty and instability will ultimately lead to conflict. Smart power will save us both dollars and lives in the long run.

We understand that economic conditions at home make this a difficult moment to ask the American people to support even a modest increase in spending overseas. At the same time, the American people understand that our future security depends on resolving current conflicts and avoiding future ones.

When Secretaries Gates and Clinton testified together recently, they made a powerful case that investments in diplomacy and development, two of the pillars of our smart power strategy, are as vital to our national security as investments in defense, the third pillar.

Smart power starts with people. That's why our budget puts an emphasis on increasing the size of the foreign service, ultimately achieving a 25 percent increase in state foreign service officers over the next four years.

I want to draw special attention, however, to the urgent need to rebuild the U.S. agency for International Development. We are looking to USAID to take on some of the most difficult tasks in some of the world's most challenging environments. But with its ranks thin to just over 1,000 foreign service officers worldwide, USAID does not have the manpower it needs, which is why this budget includes a 45 percent increase in USAID operations and puts USAID on a path to doubling its foreign service officers by 2012.

All of our goals, conflict prevention, poverty reduction, food security, global health, climate change, all come back to having the right people with the right training and the skills to get the job done.

This budget also provides the resources to pursue critical missions in conflict areas that occupy much of our attention these days; Afghanistan, Pakistan, and Iraq.

Our FY2010 budget seeks $2.79 billion in non-military assistance for Afghanistan and $1.3 billion in non-military assistance for Pakistan, substantial resources that must be coordinated and deployed effectively.

Following the administration's strategic review, State and USAID are implementing a comprehensive civilian program, which is coordinated fully with our military and with other key agencies such as the department of Agriculture and the department of Justice to bolster both security and development.

At the same time it's important to step back from these conflict areas to seek clearly our broader objectives. We make investments to promote long term development and human security, both from the top down and the bottom up, strengthening the ability of governments to meet the basic needs of their populations and at the same time partnering with citizens a civic groups to build human capacity and reduce extreme poverty.

Children need a basic education that provides skills to pursue opportunities rather than hatred. Parents need jobs to reject the appeal of extremists who too often offer the only way to support a family. And for many, survival requires minimal access to basic healthcare.

Overall, 56 percent of our assistance request is targeted to development programs, with special emphasis on economic development and good governance, global health, food security, education, and global climate change. For example, our budget requests include $7.6 billion for a global health initiative, which continues the fight against HIV/AIDS, malaria, and tuberculosis but expands it to address maternal and child health, neglected diseases, family planning, and some basic health infrastructure.

It commits $3.4 billion to a food security initiative aimed at addressing the root causes of food shortages by more than doubling the resources devoted to agricultural production and productivity.

And on the global climate front, it seeks $581 million to help developing countries most vulnerable to the impacts of climate change adapt by becoming more climate resilient and developing clean energy alternatives.

Our budget also invests in strategic bilateral and multilateral partnerships critical to global security, stability, and prosperity. We focus on states that can or must be partners in regional peace and prosperity. And on tipping point states, who's potential for conflict and instability present regional and global threats. And we leverage our multilateral partners who represent both a force multiplier and a cost effective means for addressing global challenges.

We are strengthening global security capabilities knowing that when our allies and partners can defend their territory and borders against external and internal threats we are more secure. Our strategy seeks to forge partnerships among states to help build global security capacity in a number of areas, including peacekeeping, police training, counternarcotics, nonproliferation, and combating nuclear terrorism.

Finally, we provide the resources, over $4.1 billion to respond to humanitarian needs. Our humanitarian assistance programs that provide relief where we see human suffering are a fundamental expression of our values.

At the same time, leading with our values often strengthens our ties with other people. Our humanitarian relief efforts in the aftermath of the earthquake in Pakistan began to turn sentiments of many Pakistani citizens away from extremists and to see the United States as a political force for good in their lives.

At this very moment we are taking steps to make sure that the United States is in the forefront of efforts to address the needs of people who are seeking safe haven as the government of Pakistan takes military action against extremists. There is a real possibility that in addition to the 500,000 already internally displaced another one million persons could need assistance.

The challenge, in part, is providing funding and we are taking steps to make certain that we are able to help there.

Even more challenging will be gaining access and our very capable ambassador in Islamabad is coordinating with international organizations, NGO's and the government of Pakistan to determine how we can most effectively assist in this effort.

Securing the resources to promote our goals is an important first step toward restoring American global leadership. But resources alone are not enough. We know that we have to be better managers of our resources as well, especially in these difficult economic times.

I hope my appearance before you signals the secretary's seriousness and determination that the department be a responsible steward of taxpayer dollars. It is the first time the position of Deputy Secretary of State for Management and Resources has been filled and in only a few short months, the reform agenda is already robust. Even as we undertake the reviews and seek the necessary input to define our new approach, you've already seen signs of how we're going to work differently.

In Afghanistan and Pakistan we are bringing all agencies together under a set of shared objectives allowing us to benefit from the range of expertise available across the U.S. government, maximizing resources through greater coordination and integration and recruiting rapidly to meet a critical and time sensitive mission. In food security and global health, the State Department is leading whole of government efforts creating inventories of programs, identifying gaps in our current programming and coordinating among agencies to develop a shared strategy. All of these examples highlight the need to develop broader mechanisms to manage by country and by function all foreign assistance programs so that the resources can be allocated best to achieve objectives most effectively and so programs can be operated most efficiently.

Accountability for results is another principle that will guide our reform efforts. We're keenly aware that with increased resources comes the obligation to demonstrate that we are making an important difference. Finally, we know we need to be more effective as a donor. Our people in the field must have the means to leverage opportunities, to build strong partnerships with responsible governments, and support development progress by empowering partners that have more of a say of how resources are targeted in their country.

The president and secretary's agenda is an ambitious one. Yet with the right resources and your good counsel, we are confident that we can meet these challenges. We look forward to working closely with you and other stakeholders in the coming weeks and months ahead, and I look forward to this afternoon, to answering any questions that you may have. Thank you very much.

REP. ACKERMAN: Well, thank you very much and I'll, I'm going to be very quick. I have, really, one question, and then we'll let the committee go from there. The administration is requesting increases for the State Department's Office of the Coordinator for Reconstruction and Stabilization in at least three different places. First there's a $40 million request for a new stabilization bridge fund, which I'm told would provide program money for the coordinator for reconstruction and stabilization. Secondly, the Civilian Stabilization Initiative is increased from $40 million to $323 million and this is reportedly to be used to hire and deploy additional staff or SCRS. And third, there's a large increase in Section 1207 of the National Defense Authorization Act, under which DOD transfers money, program money to SCRS. Why all these different names and spigots? And how is what SCRS does different from what USAID's Office of Transition Initiatives does, given that large increases have also been requested for that account?

Now I should I acknowledge I was very interested in this Civilian Stabilization Initiative and worked closely with other members to make sure it passed, so, maybe I'm not the right person to be asking this question, but, but, we're just trying to get a little sense of where you're, what you're thinking about here.

SEC. LEW: Mister Chairman, the civilian stabilization and reconstruction capability that we're seeking to build, we think is essential to having the State Department return to the role that I think we and you agree, the State Department should have in terms of projecting civilian presence in situations where in recent years the Defense Department has moved in because no one else has been there to step in and do the job. It's not something that the Defense Department originally wanted to do. I know in the years I was at OMB it was quite difficult to get the Defense Department to jump in on situations like that.

Over the course of the last eight years, it's become more common practice. But then what we see quite clearly is the fact that there simply are not enough resources in the State Department and USAID today for us to have the kind of nimble, quick response capability that we really need to have to respond when there are crisis situations, when there are stabilization efforts that need to be undertaken. The size of SCRS that we started out with is in the dozens of people. It's not a force size large enough to deploy in multiple locations with serious presence.

So, the first point is, it needs to be a substantially larger capability. And the capability needs to come in multiple forms. We need to have full time FTE's who are deployed constantly in that function. We need to have the ability to call on government employees who are, in a sense, internal ready reserves, who can be brought into an effort when they're needed, and we also need to have the capacity to reach outside of government, much the way the military reserves are able to reach outside of government when they need to deploy.

At the moment, it's an idea. Much of this reserve capacity, most of it remains to be built. We want to go from dozens to a size in the thousands in just a short period of time. So I think that we're in a building stage. I can't explain the thought process that went in originally to creating SCRS in the place it was created. That was done before I got to the State Department. I have many questions about the coordination between State and USAID, and my own view is that we need to bring together our management of the expeditionary capacity of the State Department, so wherever FTE's are housed, we manage them in a coordinated way.

I tend to be less theological about which label they come under and much more concerned about how they're managed. In fact, the SCRS staff is divided between USAID and State. I think we need to think of it as a whole and something that can be managed both strategically and tactically. We look forward to working with this committee as we think through how to go from this very initial stage we're at now to very rapidly ramping up a fulsome capacity, because I think this is going to be essential for the State Department to have the civilian capacity. And part of the reason for the 1207 being held over is that until we have the capacity, needs arise that we need to be able to meet on a real time basis. And the 1207 authority is something that helps fill that gap. I would hope that it's not needed in the long term.

REP. ACKERMAN: Alright, well, that, I, is what I was hoping to elicit is what I elicited. That there is an overall notion here of creating this institution. You have different pots, but the intention is that they act as a whole unit. I now recognize my ranking member, Ms. Ros-Lehtinen, for five minutes.

REP. ILEANA ROS-LEHTINEN (R-FL): Thank you so much, Mister Chairman. And thank you, Mister Secretary. You said that you wanted to be, and your goal is to be "responsible stewards of taxpayer dollars", end quote. And I agree. We all should aim for that. Let me give you three quick examples of, some minor, some a little bit major, where I don't believe that we've been those careful stewards of taxpayer dollars. Congressman Royce was kind to point out the, the actions of our U.S. embassy in Buenos Aires, Argentina, where they highlighted a book that explored the marketing of the iconic image of Che Guevara.

I don't know what's so iconic about him. I know people think he looks sexy in a beret, but he's a murderer and a thug and I sure hope that our U.S. embassies are not in the business of promoting somebody's book that would have that as its thesis. And let me give you a letter that many of us have signed on that, if you could give that to the secretary. On the DA funds for Nicaragua and Bolivia, the budget request explains that development assistance, DA funds, will be focused on countries that demonstrate commitment to improving transparency, accountability and responsible governance. And that's where the U.S. assistance is most likely to produce significant, sustainable development results.

Ironically, though, two of the three largest recipients of DA assistance under the Fiscal Year '10 request are Nicaragua and Bolivia with over $55 million requested for each. I don't know how the behavior of either Daniel Ortega or Evo Morales over the past year has demonstrated a commitment to responsible governance or a willingness to work with the U.S. And lastly, on the U.N., your proposed budget increases, increases contributions to international organizations, particularly the United Nations by over 12 percent, including a whopping 32 percent increase in our contribution to the U.N.'s regular budget.

Since we pay an assessed percentage of that budget, your request would indicate that the U.N.'s budget has gone up by about one third in the past year. At this time of growing economic challenges here at home, why should we spend hundreds of millions more of taxpayer dollars on a U.N. that refuses to practice fiscal responsibility, accountability and transparency, that singles out our democratic ally in the Middle East, Israel, for condemnation, while empowering rogue regimes that pay the legal fees of its corrupt U.N. officials. And just yesterday, the likes of Saudi Arabia, Cuba and China were elected to the so-called U.N. Human Right Council. Last week the Council issued a report placing the blame primarily on Israel for this past winter's Gaza conflict.

Is this what taxpayers' dollars should go for, and our U.S. Secretary to the U.N. in a question and answer format said, yes, some of these countries don't have a great human rights record, but we're not a perfect country either. I sure hope that we're not in the moral equivalency game where we equate ourselves in the categories of Saudi Arabia, Cuba or China and become apologists for our U.S. national policy. Thank you.

SEC. LEW: If I can quickly try and respond to each of those points. As far as Nicaragua and Bolivia are concerned, in Bolivia the assistance is not going to the government. You know, we have programs that are aimed towards eradicating drug production and the like, but there's no government assistance. In Nicaragua the assistance is a food security effort and it's really an effort to build civil society and build alternatives. Nicaragua was once a regional breadbasket and if there's going to be an effective resurgence of democracy there, the economic development objective will still be important.

In terms of the U.N., I think that the funding levels of the, both the supplemental budget and the 2010 budget need to be seen in context and our first priority was to get even in terms of what our commitments were. The president and the secretary have made a very concerted effort to reassert the leadership role of the United States in the world and in the world community, and paying our bills is something that is part of that. In terms of the increase in the U.N. budget, the vast majority of it, $175 million out of $192 million is a continuing effort to try to synchronize our payments because of the difference in the Fiscal Year between the United States and the international organizations. There's a --

REP. ROS-LEHTINEN: Thank you, Mister Secretary, sorry, my time is up, but I'm sure someone will pick up on it. Thank you, Mister Chairman.

REP. ACKERMAN: And I, unfortunately I, I did not tell you, Secretary Lew, that our interpretation of five minutes is the members gets as much of that five minutes as they want and at the end of five minutes, if they don't want to really hear your answer -- (laughter) -- they, they, that's their right.

SEC. LEW: I will talk faster, Mister Chairman. (Laughter.)

REP. ACKERMAN: The gentleman from New Jersey, Mister Payne, is recognized for five minutes.

REP. DONALD M. PAYNE (D-NJ): Thank you very much. I look forward to working with you and it might be a breath of fresh air that we have someone up at the United Nations that doesn't want to see it end and destroyed, but that might be honest enough to mention that, you know, the United States might have made a mistake. Let me ask you about Kenya, one of our top allies in Africa. We know that Kenya's been asked to do many things. We have an agreement where U.S. military can land just by saying that we're coming, the only country in the world that there's such an agreement. We know that there are radical organizations, Al-Qaeda trying to penetrate.

We've asked Kenya to hold trials for hijackers and therefore these, some of the Kenyan civil society people feel, well, these people being imprisoned in with Kenyan prisoners, by, after a while you'd be having transfer of skills and they're concerned that, that kind of thing, kidnapping and all that could happen in Kenya by Kenyan prisoners learning from these guys. But, however, they are willing to try to be supportive. But then when we turn around, we find that the development assistance for Kenya is cut by nearly $10 million. Economic support funds have been zeroed out. And I know this might be a particular area that, you know, you can't know everything in the budget, but I would, would hope that there'd be some, some rationale that would show that it might be kind of productive to cut a country that's so critical.

Kenya is, matter of fact, facing a lot of problems, underlying problems that, as we saw in the last election, and we can see in the future. So, do you, if you could look into that, I'd appreciate it, or if you have any, any rationale for it now, I wouldn't be surprised if you didn't, because it is such a small item, but --

SEC. LEW: Congressman Payne, I think I can offer at least an initial response and I'd be happy to go into it in more detail with you separately. We share the, your concern that we need to be supportive of the government of Kenya for the reasons that you've stated. I think that I would characterize the budget as not being one that reduces the program level. There were some, in the 2009 supplemental appropriation, there were, funding was provided to provide assistance with post election stabilization and if you look at the trend of support from before that to after, we view this as actually being, maintaining it, possibly even increasing the level of effort in some areas.

We can go through the different line items with you, you know, and see whether you agree with that when we, as we break it apart, but, there are many categories in the budget where the 2009 sup created a kind of bump and where there's, if you look at '09, you know, with the supplemental and without it, it gives you a different impression. But we'd be delighted to go through that with you in detail.

REP. PAYNE: Alright. Thank you very much. The, we can look into that further. We, there is some question about Zimbabwe and we've had meetings and had several meetings we had a hearing last week. Of course, the State Department was unable to participate. I guess you're still getting your house in order, but we have a, we have to move on it, anyway. Just quickly, is there any thought about trying to be supportive of the, of the government of, not the government, but civil society in Zimbabwe by circumventing the government and the central bank and things of that nature. There is concern that we try to have MDC, that's in charge of financing certain things, successful. My time is running out so maybe, I do want to hear your answer, so I'll stop. (Laughter.)

SEC. LEW: Let me, if I can, in less than half a minute, the, you know, the assistance we have for Zimbabwe that's in the budget is to provide support for reform minded parts of the, of the transitional government to support efforts aimed towards just governance and investing in people and skills and economic growth. We'd be happy to go through it in more detail, but I'm now out of time.

REP. PAYNE: Alright, thank you.

REP. ACKERMAN: The time of this gentleman has expired. The gentleman from New Jersey, Mister Smith.

REP. CHRISTOPHER H. SMITH (R-NJ): Thank you very much, Mister Chairman and welcome to the committee, Mister Lew. Someday, Mister Chairman, I believe future generations of Americans will look back on us and wonder how and why such a rich and seemingly enlightened society, so blessed and endowed as we are, with a capacity to promote and protect and enhance vulnerable human life, could have insisted so aggressively on promoting death to children by abortion both here, in the United States and overseas. They will note that we prided ourselves on our commitment to human rights, while precluding virtually all protection to the most persecuted minority in the world today, unborn children.

They will wonder why dismembering a child with sharp knives, pulverizing a child with powerful suction devices, or chemically poisoning or starving a baby with any number of toxic chemicals or pills failed to elicit so much as a scintilla of empathy, mercy or compassion for the victims. Abortion is violence against children, Mister Deputy Secretary, it's extreme child abuse. It is cruelty to children. Abortion treats pregnancy as a sexually transmitted disease, a parasite to be destroyed, and I would respectfully submit that the whole notion of wanted-ness or unwanted-ness turns a child into an object. I believe the only truly humane way forward is to devise and implement policies that respect, protect, assist and defend both women and their babies from all threats, including abortion.

As I said in my opening, I believe abortion, by definition, is infant mortality and should have no place in any global health initiative. Mister Lew, at a May 5th press conference on the new Global Health Initiative, you were asked by a reporter if there are any restrictions on abortion. You replied by saying quote, "you're asking me a question that I honestly can't answer". You were also asked if the Obama administration would object to a restriction on abortion funding. You replied stating, "I think we will have more details on that in the budget on Thursday".

So my question is, can you answer those questions now? Under the new Global Health Initiative, could money go to abortion either directly, and/or by funding organizations that promote and perform abortion? Is it U.S. policy to export abortion around the world? If so, will this program be used as a vehicle for that agenda? I yield.

SEC. LEW: Congressman Smith, as I said at that press conference on May 5th, the Global Health Initiative is not about abortion. It is about saving the lives of mothers and children. It is about making sure that infants don't die from preventable causes like, like diarrheal disease. It's all about saving lives. I must say that I should have prepared on the question of abortion before that even, but, frankly, nothing about the Global Health Initiative was about abortion, and it was just something that I wasn't going forward to speak about at that day, and that's what my response indicated.

I have subsequently gone back and reviewed it and I stand by my answer. It's not about abortion. These funds would be covered by the Kemp-Kasten provisions, as are other funds, and it would not be, these funds would not be used for abortion.

REP. SMITH: With all due respect, Kemp-Kasten deals with coerced population control. Does the lifting of the Mexico City Policy provide, allow this money to be used to promote abortion by the NGO's that we fund?

SEC. LEW: Well, as you know, the Mexico City Policy has to do with permitting the government of the United States to provide assistance to organizations, not for the purpose of funding abortion, but for the purpose of family planning activities. We continue to believe, as the president indicated when he reversed the Mexico City Policy that family planning is an important part of our global health program.

REP. SMITH: Let me just ask you again with regards to the unborn child as patient. Do you envision that the global health initiative will finally, at long last, as the president, President Bush tried to do with the SCHIP program, treat the baby, himself or herself as a patient who may need specific interventions, some of them low cost, but, nevertheless, help so that they had the best possible shot at a healthy and productive life.

SEC. LEW: I think that, you know, at the level that we've been thinking about the global health program, we're talking about providing the most basic forms of care. You know, we're not, we're talking about providing basic maternal and child healthcare. We'll be happy to work with you as we get beyond that, but, given the resources available, providing sophisticated interventions in many areas will not be possible.

REP. SMITH: Thank you.

REP. ACKERMAN: The time of this gentleman has expired. The gentleman from New York, Mister Engel is recognized for five minutes.

REP. ELIOT L. ENGEL (D-NY): Thank you, Mister Chairman, and again, Mister Lew, I want to mention again how happy I am that you have this job and how capable you are and now I can ask you these questions. I'm going to see if I can get it all done in about two and a half minutes to give you two and a half minutes to, to answer. I want to talk to you about the Western hemisphere which I chair and also about the Middle East. So, I want to first state that as chairman of the Western hemisphere subcommittee, I'm very happy by the major increases in assistance to the Western hemisphere in the president's 2010 budget.

That hadn't been the case for previous years and I'm happy to see that $533 million more in developmental assistance being requested for Latin America and it's more than 100 percent increase in the $247 million provided in FY '08. So that is terrific. I was also pleased, I was at the Summit of the Americas in Trinidad, that President Obama announced a commitment of $30 million in security assistance for the Caribbean which is included in the FY 2010 budget and I want to ask you about the $30 million, how does this tie into the Merida initiative? Is it a onetime appropriation, or part of a larger commitment to enhance security assistance to the Caribbean and bring the CARICOM countries into the Merida Initiative? I also want to say that Congress has so far provided $10 million in Merida Initiative funding for Haiti and The Dominican Republic. Is Merida or related funding provided for Haiti and The Dominican Republic in the FY 2010 budget, or through this $30 million in security assistance?

In terms of the Middle East, I'm very concerned and Ms. Berkley and I wrote a letter to the president. Very concerned about the assistance the U.S. is providing to the Palestinians. I'm glad that Secretary Clinton clearly indicated that the U.S. would not deal with or fund the Palestinian government that includes Hamas, unless the Palestinians and Hamas meet the three international conditions of recognizing Israel's right to exist, renouncing terror and agreeing to abide by the agreements previously signed by Israel and the Palestinians. But I'm concerned about our aid to Gaza. I'm not sure that we should be sending aid to Gaza before Hamas, the terrorist group, which rules Gaza, announces that it will comply with those three conditions.

So, could you tell me whether we have conditions on U.S. aid to Gaza, and what those conditions are? I don't want the money to land in the hands of Hamas or benefit Hamas or let the people in Gaza think that somehow Hamas is providing this money, so I'd like to know what safeguards are in place. And, finally, I want to ask you how much, specifically, have the Arab states contributed to help the PA over the past few years? How much has actually been contributed for Gaza and, as opposed to how much was pledged at the Sharm el-Sheikh Conference and why are the Arabs so reluctant to help?

And I want to also, I know I said finally, but this is really finally, talk about UNRA. I'm very unhappy about UNRA. I want to make sure that UNRA funding doesn't go to terrorists and shouldn't we be doing more within the U.N. to reform UNRA and to guarantee a serious oversight? For instance, Palestinian citizens of other countries still qualify as refugees under UNRA's role, so, why should UNRA still exist in a place like Jordan, where most Palestinians are Jordanian citizens? It's two minutes. Thank you.

SEC. LEW: Congressman, let me try to quickly run through and give at least a brief response on each of those. As far as the Caribbean Security Initiative goes, it's obviously similar to Merida in its focus but we didn't envision it as being part of Merida. That's something, as we implemented, that's something I think we'll need to be thinking through. I think, I think that the administration generally wants to take a look at our relations in the Caribbean, as we've indicated in our, in the meetings that we've had and the statements we've made about Haiti. Haiti is going to get special attention. We're looking at what we can do to structure a meaningful, long term assistance program to try to move the situation forward in Haiti.

The, the question that you asked on assistance to Palestinians, as far as the Gaza assistance goes, the, the lion's share of the package that we proposed in the supplemental appropriation and the ongoing piece, is actually to stabilize and support the PA in the West Bank. So, just in terms of dollars, most of the, of the resources that we requested, were to promote a stable and, and constructive Palestinian authority. As far as the Gaza money goes, what was in the supplemental, was, for the most part, emergency assistance and it was going to, it is subject to the same restrictions that we have in 2010 and that we will very much adhere to, which is that money cannot be provided to organizations that are connected to terrorists and we will have a careful review process. If we find out that there is a problem of that sort, we will take action immediately.

As far as UNRA goes, the, the challenge of providing assistance, humanitarian assistance in the West Bank, in Gaza, excuse me, is that UNRA is the, is one of the principal outlets. If one is going to provide humanitarian assistance in the, in Gaza, UNRA is the entity that is there and we can work with. We have the highest level of scrutiny of, in terms of UNRA, and have gone through, even in the brief time that I've been at the State Department, a number of rounds of inquiries over issues that arise. We, we investigate everything that comes up as a possible reason to think that there's something that's happening through UNRA that we should be concerned about and we've pledged to have that level of effort ongoing.

REP. ACKERMAN: The time of this gentleman has expired. We have three votes pending. I'm going to recognize the gentleman from Indiana and then we will recess and come back if -- (cross talk).

REP. DAN BURTON (R-IN): Mister Chairman, first of all I want to congratulate you and Ms. Lehtinen for co-sponsoring along with the 75 other people H.R. 2194, the Iran Sanctions Act of 1996, the expansion of that. The question I have of you, Mister Chairman, is, I thought we were going to move that bill pretty fast and now I've heard it's going to be postponed until September. You know, with the problems we're having in the Middle East with Iran, could you tell me real quickly, Mister Chairman, why we're holding up on that, not moving it more quickly?

REP. BERMAN: Alright. I'm limited to five minutes, four minutes and 25 seconds, but I, yes, the understanding, my understanding was, I want to accomplish two things. One, I want that bill, to me, gets at the heart of the critical economic pressure to try and get the Iranian regime to change its behavior on the nuclear web, on the nuclear program issue. I also believe that in, given the fact that the policy for six years has produced nothing in terms of deterring or stopping that program, that we should give this administration as strategy of, both of diplomacy, both vis a vis Iran and with other countries that are critical to the most effective sanctions, a chance to work --

(Cross talk.)

REP. BURTON: Did the administration ask for the postponement on this?

REP. BERMAN: No. That was, that was actually, once in a rare while, I -- (laughter) -- make a decision on my own and this was that case. I thought the bill made tremendous sense. I want Iran and others in the community to know, where we are headed if there is not either an effective direct diplomatic strategy, or a multilateral sanctions strategy that comes into place. And so, as I said at the time that I introduced the bill in my statement at the time of introduction, I will not be moving this in the near term. But I wanted to lay out where I thought we should head if these other --

The one thing I can assure you is I have no intention of letting an effort at trying to establish an engagement or carry on to the point where it's a fait accompli and Iran has a nuclear weapons program. That is key in my mind. And that's my first objective. But, but I'm also aware of the fact that our isolation efforts vis a vis Iran did not stop uranium enrichment.

REP. BURTON: But you anticipate moving it in September --

REP. ACKERMAN I anticipate the whole issue being settled by July. But --

REP. BURTON: That would be good. That would be good. Well, let me just say to --

REP. ACKERMAN: That's my hope.

REP. BURTON: -- just say to Mister Lew with what time I have remaining, first of all, you indicated where Bolivia was concerned that the money was not going to go to the government. It was going to go to somebody else for eradication. You know, I don't know how you get money for those purposes and go around the government like that of Bolivia or Nicaragua. And, at some point, you don't have to explain right now, I'd sure like to know how you, how you anticipate doing that. The other thing I'd like to just comment on real briefly, is, we're giving money in this bill to China. China owes (sic), owns over $700 billion to $800 billion of our debt. They're buying our debt. They're making tons of money off trade with the United States, buying Chinese products at Walmart and everyplace else. Why are we giving money to China for anything?

SEC. LEW: Mr. Burton, first, the total amount that we're talking about for China is $13 million --

(Cross talk.)

REP. BURTON: I know, but I don't care about the dollar, why are we giving them any money?

SEC. LEW: -- of which $5 million is for Tibet and the balance is to support U.S. educational institutions that manage partnerships with China and $3 million is for HIV.

REP. BURTON: Why can't China do that on their own? They're buying our debt. And they've said that they don't want to buy anymore of our debt because we're inflating the money here and devaluing the Yen. So, why are we giving them any money? I just don't understand it. You know I am for helping Israel. I'm for helping countries that are allies and friends and people that really need the help, but giving it to China. It makes no sense to me. And also this Bolivia issue, going around the government, I just, I just don't see it. But, anyhow, you can, you can go ahead and answer if you want. You've got 21 seconds.

SEC. LEW: Well, I think with regard to China, we obviously don't see China as a recipient of U.S. aid in any general sense. The, the fact that we're supporting Tibet, I think is something that there'd be broad agreement with. The fact that we're supporting educational institutions that are promoting the kinds of civil society and positive change that we're driving for, are very different from normal development programs. I think this fits into the very complicated relationship we have with China, where we're not supporting the government of China directly, but we are supporting activities in China that are in our interest.

REP. ACKERMAN: The time of the gentleman has expired. The committee is in recess. We will be coming back here right after the third vote. If no one's here, we'll adjourn the hearing. (Laughter.) And, and Secretary Lew, if you need, if you need office arrangements for this could be half an hour.


REP. CONNOLLY: The committee will come back into order. I will yield myself five minutes. Welcome again Deputy Secretary Lew.

One of the concerns that's been raised by a number of foreign service officers is the proliferation of overseas positions that are sort of solo, that is to say family's can't go. Understandable in terms of safety issues, but huge impact on families. I wonder if you could address how the department is and ought to be addressing that legitimate concern. The last thing in the world we want to do is break up families while people are serving their country.

SEC. LEW: Congressman, that's a very big issue in terms of many of the missions that are currently growing in size and the number of postings that are unaccompanied posts where foreign service and civil service officers go without their families is much larger than it used to be. First, let me just start by saying how much respect I have for the dedication of the foreign service and civil service staff who take these assignments enthusiastically.

They go into it knowing that it's very difficult with very much the same state of mind that military take when they're assigned to posts where they go without their family. It's a dedication of patriotism that is probably not well enough understood around the country. It is understood around the world.

You know, we do have a number of things that we try to do to make it easier. There are arrangements for leave that make it possible for families to get together for periods of time. There are some things that we're looking at doing that might make it easier but frankly have their own logistical challenges and cost challenges. One suggestion that has been made, I don't know if this is a route we'll end up taking is that families might be able to be living in the same region so that frequent visits were possible as opposed to, you know, once or twice, three times a year.

You know, I think the reality is that the shape of a foreign service career is different than it was 25 years ago or 30 years ago when somebody came in. It is very likely that in the course of somebody's career and I've just recently spoken with a new class of foreign service officers and had this conversation with them, it's very likely that they're going to have an unaccompanied post at least once if not more in their career. I think that the foreign service officers who are entering are entering with the knowledge of that. There is a certain extent to which people who've been in the foreign service for a long time may have thought they didn't sign up for that. You're not forced to take one of these posts, we do have the authority do that kind of assignment, we haven't needed to, at least not in recent times, and I hope we don't need to. I hope that we're able to be flexible enough to fill the posts with voluntary arrangements.

The encouraging thing is that we're not having a hard time right now getting people to volunteer for posts in Afghanistan say, I think it's viewed as an important mission, it's viewed as a place where if you're in the foreign service, you want to be able to make a contribution. But that doesn't at all diminish how difficult it is and how grateful we should be for the families that make the sacrifice.

REP. CONNOLLY: Thank you. You know, we obviously want to make sure we have the support network in place to help families in that kind of adjustment.

Question, when I was in Afghanistan and Iraq one of the interesting things that struck me was the huge growth in the use of CERP funds. And we have gone from sort of a relatively modest program to augment what we're trying to do in the battlefield to hopefully win hearts and minds at the village level to what is now a very substantial program that if it were a bilateral aid program would be one of the biggest in the world.

I am deeply concerned that military commanders with the best of intentions are not experts in international development. And we're now talking about some so large that there's a management challenge here. I wonder if you could address that issue.

SEC. LEW: There's no doubt that the amount of resources that are going into the CERP funds are very substantial and the flexibility on the use of those funds is equally substantial. I think that there is an increasing level of cooperation between civilian and military staff on the use of CERP funds. That will I think make it much more likely that CERP funds are put into endeavors that fit into longer term development strategies. I think there is an inherent conflict at one level that CERP funds are first and foremost seen as force protection resources and secondarily as development resources. They don't have to be inconsistent. And this act of consultation and collaboration is I think what's required. And we have obviously asked as well for some flexibility to use civilian funds for purposes that would enable us to be more active in that.

REP. CONNOLLY: Thank you our time has expired but hopefully I will have a chance to --

SEC. LEW: Be happy to that.

REP. CONNOLLY: The gentleman from Arkansas Mr. Boozman.

REP. BOOZMAN: Thank you Mr. Chairman.

You mentioned earlier you referred to your R&D background and things today, the president had asked the different agencies to identify areas that they could cut back and I think the State Department came up with $9 million. And it seems like that perhaps there's more than $9 million. I just know in traveling a lot and being around and about just duplication of motor pools with this and that, can you tell me what the $9 million were that you identified and if there is a prospect to perhaps identify a little bit more than that?

SEC. LEW: In addition to the budget that we're proposing, we're undertaking a pretty substantial review of management procedures at the State Department. Obviously we've only been there for a short period of time and the agenda that we have is an evolving one but we have every intention of putting serious senior attention into illuminating duplication that isn't necessary for the conduct of programs. That duplication comes in the form of overlapping facilities, it comes in the form of overlapping technology platforms. These are not simple issues to address. It's not that you can just say stop doing it. If you're going to migrate two technology platforms together, that's a fair amount of work and it takes more than a few weeks to think through.

But we have an ambitious agenda internally to try to drive a reform agenda. And I think that you can take some comfort that that is being driven quite forcefully from you know from the White House from the Office of Management and Budget to all agencies. I think that what's a little bit different about state than some other agencies is that you know, first of all there's a need to build back capacity because there's been such a diminution of capacity. So there's going to be a bit of contract between you know growing core capacity at state versus other places.

Second of all the dispersed nature of our activities. The fact that we're in hundreds of different locations and countries makes it different than agency that have just a U.S. footprint and a headquarters that's in most cases in a fairly constrained space.

With that said, we're not different from other agency in that we have to look at how we do everything from procurement to transportation to buildings and we are undertaking a review of that and it would be very much a part of the work that I'm responsible for.

REP. BOOZMAN: Good, very good. The $9 million didn't seem like very much. And I see what you're saying, and I applaud that, you know, that's a good answer and I really do appreciate it, it sounds like you've got a plan.

Tell me about the $97 million cut from the migration and refugee assistance, that really stands out you know as being a cut. The world's a very dangerous place with all that's going on in the Middle East with Sudan you know being a place that could explode at any minute, do you feel like that we'll need less in that regard in the next year?

SEC. LEW: The request reflects our best assessment of what a full year's requirement would be. As you know in this area and in all areas we've tried to anticipate what can be foreseen so that we won't need a supplemental for things that could be foreseen. Obviously in the disaster area it's one of the cases where you can't foresee everything. There could well be some kind of an emergency that we would not be able to foresee and I can't sit here today and say that we've anticipated everything that might occur.

What I can say is we've look at a normal run rate for these programs and we've also looked at what happened in 2009 that it was out of the ordinary and the level of funding that we proposed is a kind of normalized run rate of what the base plus supplemental would normally look like. Last year there were fairly intense efforts in Gaza, in Georgia, in Lebanon, those levels are going to go down. We've anticipated that there will be other areas that go up, so as with any other effort to estimate contingencies, we'll only know after the fact if we were right but we do believe that it was an attempt to reflect what the needs are likely to be.

REP. BOOZMAN: Thank you Mr. Chairman.

REP. CONNOLLY: Thank you. The gentleman from North Carolina Mr. Miller is recognized for five minutes.

REP. MILLER: Thank you. I applaud the Obama Administration and Secretary Clinton's emphasis on smart power, on recognizing the need to address extreme poverty and deprivation in the world, both for its own sake it's the right thing to do, and in recognition that we will never be secure in a world in which such extreme hopeless poverty is so prevalent. General Anthony Zinni said that ungoverned areas and extreme poverty were Petri dishes for extremism and for terrorism. I have a couple of questions on the proposed budget based upon that.

One is the peace keeping appropriations request both for through the United Nations and our bilateral peace keeping in Africa including Liberia and Democratic Republic of the Congo both post conflict societies although it's probably a little optimistic to call DRC a post conflict society. I understand that there have also been some supplemental requests, what is the explanation for the fairly significant reduction in peace keeping appropriations? Are they covered in supplemental requests or?

SEC. LEW: There's not intended to be a supplemental request, you know, there were a number of areas where there are decreases that are anticipated just because of the missions changing shape. In DRC, the Congo, Somalia, and Liberia are areas where you know, we think there are likely to be decreases. So the intent was to be funding the missions that we understand to be there. There's a little bit of a movement in Somalia with the Amazon mission as we notified the Congress at the end of last week, there's a portion of that mission that has been voluntary that will become an assessed activity. The logistics and support for Amazon will move from the voluntary to the assessed. So that's another change.

We also had arrears that had built up over the years that were paid down in the sup, so there's you know, what we looked to do was to get ourselves back to kind of being even and then fund the missions that we anticipate to be there, and that's the level that was included.

REP. MILLER: Okay. I do encourage the department not to take the eye off the ball in those societies. Post conflict societies are very vulnerable --

SEC. LEW: Yes.

REP. MILLER: -- to renewed conflict. You have the same conflict starting back or another conflict and those societies are, the economies are a wreck as I'm sure you know.

SEC. LEW: And security is a constant issue.

REP. MILLER: Security's a constant issue and there's no way to build an economy where there's not security.

SEC. LEW: Absolutely.

REP. MILLER: A second issue is that in many parts of the world, the most deprived parts of the world the bottom billion, there's increasing urbanization and millions, perhaps a billion people -- well many people are living in extreme poverty in urban slums, migrating from the country side into urban areas, they become the urban workforce, the industrial workforce, but they are living in stunning poverty and in very densely populated slums, Cabrera and Kenya perhaps the most famous. No water or sewer, public health consequences for that, and on and on, and it does not appear that we have really developed a policy to deal with the specific concerns or problems, challenges that such urbanization presents. How are we adapting, how are we addressing those problems? The tenure security or lack of tenure security that makes any kind of improvements almost impossible, water and sewer on and on?

SEC. LEW: Well we have many, many efforts that address the needs that you're describing, though I'm not sure they've been brought together as a program to deal with the problem of urbanization and poverty resulting from urbanization. But we do have efforts underway in the area of food security, in the area of global health, even in the area of climate change where providing for the needs of the people you're describing will be a natural part of those undertakings. I think it's an interesting way to think about our assistance from a different perspective that frankly I'd like to go back and think about a little bit and there's only so many organizing principles that you can have around the assistance programs that come out in urban areas and in rural areas and I don't think we'd want to take an initiative like either a food security initiative or a water initiative and make it exclusively a better of an areas.

REP. CONNOLLY: Gentleman's time has expired. The gentleman from Texas Mr. Poe is recognized for five minutes.

REP. POE: Thank you Mr. Chairman, thank you for being here. I have several questions so try to make your answer real short if you would. I want to commend the foreign service for their work. I've seen a lot of officials and just recently got back from Kosovo and I can't tell you how impressed I am with the folks in Kosovo, they're highly impressive in an area that doesn't get a whole lot of attention. When we're sort of in where we are in tough economic times, I'm concerned about the 35 percent increase, a lot of that going to salaries, can you address briefly? Is that justified when so many people are losing their jobs and taking pay cuts and how do you justify that?

SEC. LEW: Well we're highly sensitive to the fact these are difficult economic times. The entire budget, ours included, is being put together in the context of being very focused on the economic crisis here in the United States. As the same time, the needs we have to provide for the national security of the United States don't go away because of the economic crisis so our need to be able to project U.S. civilian presence in parts of the world that we just don't have the resources to have the presence that we need to have to get the job done expose us to risk if we don't act now to build the proper resources. We can't hire somebody today and assign them tomorrow with a set of language skills that it takes a year to learn. In a lot of cases, it takes a year to get someone up to the point where they're ready to go out into a part of the world and speak the language and operate fully effectively. Other people are going to be trying to hire on a midcareer basis where they come in with more skills and can get out faster. I think the urgency of moving quickly is great. If you look at our USAID programs all the hopes we have to do reform in those programs, to run them better, to reform contracting, it all comes down to having people with the right skills in place and I think if we were to wait until a year or two from now to begin, it would be really at the peril of putting together an effective civilian presence for diplomacy and development.

REP. POE: From my own observation I think that the department is to be commended for hiring folks that are in their second or third career. They seem to be doing quite a good job.

What is the number one language problem that you're concerned with? Number one language that you want, you need?

SEC. LEW: Well right now as we try to assign hundreds of people to Afghanistan, you know, obviously we wish we had more people who spoke Dari and Pushtu but I think in the longer term the difficult languages for us as the ones the non-romance languages where we, you know, it's harder to learn them quickly and there are fewer people who come out of you know basic education with the language skills. We have the foreign service institute that's fully staffed up training people in the languages that we need. And I mean in addition to the languages I mentioned you know Chinese, Urdu and Arabic are high on the list.

REP. POE: Observation. I notice there's a request in the budget to send, give more money to the United Nations, I think the United States has already spending too much money on the U.N. and they don't balance their books any better than the federal government does. But why should we continue to support an increase in money to an organization that continues to vilify our ally Israel and blames them really for all of the world's problems? How can we justify that?

SEC. LEW: Well we are looking to play a more active role in the international organizations for a number of reasons. First, we do not accept the actions that are sometimes taken that we disagree sharply with. We are going to participate to try to change the direction of actions like the ones you've described, but we're going to try to change it from inside, pushing hard to present the arguments and apply the pressure to prevail.

In terms of our own interests, the participation in international forces gives us the ability to leverage our contributions. When we participate in an international peace keeping operation, the U.S. tax payer pays roughly 26, 27 percent of it. When we go in on our own, we pay 100 percent of it. The only way we can get that multiplier effect is by participating with international partners.

REP. POE: Excuse me for interrupting I'm about out of time and I have one more question. It seems to me that this, the new budget proposes that the State Department be more active in countries in promoting social and even changes in legislation. Is that a role of the State Department? For example, go to Saudi Arabia, do you advocate that they change their laws so that women can be treated equally and that they're not abused as they are in some countries, or is that not a role of the State Department?

SEC. LEW: May I respond?

REP. CONNOLLY: Briefly because the gentleman's time has expired. Yes, Mr. Lew.

SEC. LEW: Okay. I think we've made clear through actions we've taken and statements we've made that when we have an active relationship, particularly a relationship of support, we make our views known on legislative matters that we think go beyond the pale and require our stating a view. I think developing institutions where there's respect of law and governance institutions, it's a balance. I mean, we're not going to be in a place where every government that we have relationships with does everything the way we would do it. And the question is where is it beyond the line and where does it require that we engage? And I think if you look at some of the issues related to the rights of women where we have spoken up in the past few weeks, you know, we make our views known and I think we make our views known with some effect.

REP. CONNOLLY: The gentleman from California Mr. Sherman is recognized for five minutes.

REP. SHERMAN: Thank you, I've got so many questions I'll just state them and I'll ask you to respond for the record, so relax. As to DDTC which I mentioned in my opening statement you requesting $3 million less of appropriated funds. Now you are going to get more fees, I would want you to increase that agency, hopefully without relying only on fee income first because an exporter's tax strikes me as a bad thing to do if you're a country with a big trade deficit. And second because you can't use the fee income to hire more licensing staff. Now worst comes to worst, you can't provide the appropriated funds and you want Congressional authority to use the fees to hire licensing staff, come talk, maybe we'll do it because what's most important here is the speed of the decision, not whether it's a yes or a no.

Second, it's, those with great academic prestige at the State Department want to do things like public diplomacy, but for every advantage we have of public diplomacy, we have ten times the harm because of the terrible counselor system that you go through to visit the United States. Every one of us here hears complaint after complaint from the very people who should be advocates for America in their home countries. The system is slow, it's capricious, it's unaccountable. You have no system of keeping track of who leaves the country on time and so you can never evaluate the counselor officers to see what their batting average is, are they giving these visas to people who will leave on time. And the bureaucracy likes it that way. They like capricious unaccountable power frankly, so many of us do. And the bureaucracy has rejected the idea of a performance bond whereby a private bonding agency could assure that somebody will leave the country on time or the State Department gets a substantial bond fee. Now I'm talking only about the process of determining whether somebody is an economic risk that is to say an overstay economic migrant to the United States and they're seeking a tourist visa. Obviously you want to do everything necessary to keep terrorist out of the country, but and my focus here on those who might be economic migrants.

You're going to be seeking like $100 billion for the IMF. This will make the IMF bailout capable. This is a bad thing to do if Iran remains bailout eligible and the fact that the IMF has the capacity to bail out a country the size of Iran and that Iran remains bailout eligible under the rules of the IMF is completely unacceptable because it will increase Iran's credit rating even if they don't actually get any money from it.

The GA reports titled strengthening oversight needed to address proliferation and management challenges points out that we're contributing to a fund that is then providing assistance to such countries as Iran and Syria and that perhaps we should be withholding from this fund the portion that is going to those two countries and other terrorist states.

As to Armenia you're cutting in this budget I'm told and this is not something that you've published yet but I'm hearing that you might cut from 48 which was the appropriated amount down to 30. This would be a mistake as would it be to not include the $8 million that we appropriated last year on a continuing basis for the people of Nagorno Karabakh.

Finally as to North Korea, you propose using $98 million from the ESF funds and denuclearization funds of $75 million. How do you plan to use this money if there's no progress in negotiations with North Korea? They do not seem bent on using our money or any other money for denuclearization.

Well why don't I give you a minute to respond.

SEC. LEW: With that --

REP. CONNOLLY: 26 seconds.

REP. SHERMAN: To whichever portion you choose and I know that you'll want to respond in writing to these 50 questions.

SEC. LEW: Well let me just say in the area of consular affairs we're taking a look at where there are issues. The ones that have come to my attention most regularly have frankly been security not economic issues. The process of this time it's taken, those are issues that --

REP. : Not the many cases pending in my office.

SEC. LEW: So you know, I'm sure that there are economic cases as well but we're actively engaged in looking at the issues there. In terms of the IMF funding --

REP. CONNOLLY: I think --

SEC. LEW: All right.

REP. CONNOLLY: I think that my friend from California anticipated there would be a follow up written dialogue on these questions.

SEC. LEW: I'd be happy to respond.

REP. SHERMAN: I look forward to it.

SEC. LEW: I'd be happy to respond for the record.

REP. CONNOLLY: Okay. The gentleman from American Samoa Mr. Faleomavaega.

REP. FALEOMAVAEGA: Thank you Mr. Chairman. Thank you Secretary Lew for appearing before the committee. I do have some questions.

Recently we had Secretary Clinton appear before this Committee. She made an oral commitment at least to this member that we are going to finally at least a commitment on the part of the State Department to come up with a more comprehensive foreign policy towards Oceania or towards the Pacific Region and I don't know how the budget process went through the administration but I know there's not one penny, not one penny has been committed in any way to deal with the needs of some 16 Island nations in the Pacific Region. There's no indication whether or not we're going to have USAID presence in the Pacific Region. I just want to say that I'm very, very disappointed to see that the Pacific is not even on the map. If you want to put it, there's no U.S. footprint, I will say this is a classic example of no U.S. footprint, the fact that we've depended entirely on New Zealand and Australia in determining what our foreign policy should be on this region.

I also Mr. Secretary that your plan to cut the funding from the East West Center from $21 million to $11 million, that's a very drastic cut and I would like to know from your position what is the reason for this. I want to just start with those two issues.

SEC. LEW: Congressman, the question of the Pacific Islands is one that secretary's raised with me and which people are working on, looking at a number of issues to see where we have some opportunity to be helpful.

You know, the, while the numbers are small I understand they are quite important in those small countries and rather than answer the question now what I would hope to be able to do is follow up with you after and go through some of the issues maybe in some detail. We have a number of programs which are not country specific programs, where we do have the opportunity in the course of developing implementation for them --

REP. FALEOMAVAEGA: Mr. Secretary, I know my time is limited.

Does the State Department intend to have presence of USAID in Oceania, in the Pacific region?

Let me just tell you the difference here, Mr. Secretary. No footprints whatsoever of what we've done for all these years and given the fact that -- I remember one time one of your secretaries said that the very concern about checkbook diplomacy that China and Taiwan are doing to influence these 16 island countries for which we absolutely have not done anything to help them.

I wanted to ask you -- I'm a little frustrated because this is not the first time that I've raised this issue -- can you tell me if these island countries are really that important in our foreign policy or not? It seems to me that this is the way we've been going now for all these years.

SEC. LEW: The island countries are important and I don't mean for the answer that I'm going to provide to suggest otherwise.

You've asked if there are plans to open and have a presence -- there are no plans right now, but we are looking at what we can do in this area to play a more active role and we will look at a number of options and I would be happy to get back to you.

REP. FALEOMAVAEGA: Well, let me just tell you this, Mr. Secretary.

Not only is there not smart diplomacy in existence in the Pacific region, to me, it's a "don't care" and indifferent attitude that our country has always taken towards these island countries.

Now, if it's possible for China and Japan and other countries that have poured in hundreds of millions of dollars in giving assistance to these island countries, we have not even given the time of day to pay attention to their problems. That alone -- I haven't even touched the issue of North Korea and Myanmar and Southeast Asia and -- but, if you could just address why the cuts at the East-West Center are so drastic.

SEC. LEW: The East-West Center proposed budget is very similar to the levels that have been proposed in past budgets and while I know it's not going to be a comforting answer, that this budget does the same thing.

Over the course of the last number of years, going back sometime that I can recall actually, there has been a pattern of administration requests being somewhat lower than appropriated amounts.

REP. FALEOMAVAEGA: I'm sorry, my time is up.

I will follow up with a list of questions that I'm -- thank you Mr. Chairman.

REP. CONNOLLY: This is almost a time honored practice and who's chairman -- never mind.

The gentleman from Florida, Mr. Wexler, is recognized for five minutes.

REP. WEXLER: Thank you, Mr. Chairman.

I want to begin by acknowledging what I think are the extraordinary set of skills that Secretary Lew brings to the endeavor that he has recently begun. I want to focus, if I could on, the Palestinian authority and throughout our appropriations process, it is often controversial or not without controversy to fund various elements of the Palestinian authority, to fund various either humanitarian or security endeavors connected with the Palestinian authority.

I want very much and in the most sincere of fashions to applaud both yourself and the secretary in the manner in which they have directed the money that is provided both in the supplemental and in the regular appropriations process, especially with regard to the great care that has been provided in terms of ensuring that the money provided does not in fact fund Hamas and that in fact gives Prime Minister Fayyad and President Abbas the ability to control, to a degree, their own destiny.

I was in Israel over the past weekend and while the concerns expressed by members are entirely legitimate, the good news is that President Abbas and Prime Minister Fayyad say that while they appreciate the conditions and respect the conditions that we put on the money, the good news is that they're not just our conditions, they're their conditions. That's the critical point.

Prime Minister Fayyad and President Abbas will not have anyone in their government that does not personally, publicly and in every substantive way support the Quartet position with respect to the recognition of Israel, the renouncing of violence and the adhering to past agreements.

I also spent some time in Jericho. I think it's critically important to both applaud and acknowledge the administration's efforts both in Jericho and in Jordan, with respect to the training of the Palestinian Presidential Guard and the Palestinian Security Forces. If there is to be any hope whatsoever of a two state solution where Israel can have the ability to have assurances that they can relax the IDF's role in the West Bank, the answer is what this administration is funding in Jericho and in Jordan.

To witness the several hundred Palestinian men, ages 23, 24, 26, going through routine military army type training run by the United States under General Dayton's direction; this is the future of a peace effort and for anyone who cares deeply about the security of the state of Israel, I would respectfully suggest that it is what the administration is doing in Jericho and in Jordan that will ensure for years to come, at least the potential for a successful process.

One last thing I just would like observe. The finest aspect of what I saw in Jericho was that these young men are literally walking ambassadors for the peace effort and what I learned from these young men, is that their brothers want to emulate what they are doing and they credit the United States for giving them the opportunity to learn, to become part of an elite professional security program and 20 years from now if there's any possibility of a two state solution, undoubtedly the leaders of the Palestinian state will come from these forces.

Just from a parochial point of you -- an American point of view -- the notion that there will be on the ground 5,500 6,000 Palestinian elite forces who owe their career to the United States of America and the fact that they will rise within Palestinian society; that in and of itself is worth the money that you have put forth in this regard.

If there's anything else you wish to say with respect to those funding projects in Jericho and in Jordan, I'd like, Secretary Lew, to give you that opportunity.

SEC. LEW: Thanks, but I maybe should stop right there.


The -- we've put a great deal of effort into working with the Congress on these provisions and are very pleased with the way things are developing in the supplemental appropriation process. I think that you really made the point that we've been making quite consistently, which is our effort is all about strengthening forces of moderation, strengthening forces of security, creating an environment in which there can be a meaningful engagement, doing nothing to support terrorist organizations and being very careful about who we give assistance to and how we monitor the assistance to make sure that the conditions that we impose are actually complied with.

I think that those are the conditions that need to be in place for Senator Mitchell to have the ability to move forward and for the President, when he meets with the leaders from the region who are coming in the next few weeks, to make progress and the progress couldn't come at a more important time.

REP. CONNOLLY: The time of the gentleman has expired.

If I could just use the prerogative of the chair just to insert -- I want to echo the gentleman from Florida's comments. He didn't even have time to go into all aspects of the positive fallout in terms of Israeli-Palestinian cooperation, the recognition among the Israelis whose job is security of how well this is working, the ability to open up area within the West Bank for commerce and transportation as a result of the success of these security forces; it has a tremendous ripple effect.

My time is expired.

The Gentle Lady from California, (Ambassador ?) Watson.

REP. WATSON: Thank you so much, Mr. Chairman.

I want to say among those extraordinary skills Mr. Lew, is your patience and your tone of voice and I quite admire you.

I'm going to make a statement and then you can spend the rest of my time responding and when the chair (tacks ?) that gavel, I probably know before I ask my question, your response. But anyway --

In a recent article appearing in Foreign Affairs entitled "Arrested Development", the authors, three former USAID administrators, write the following: "the problems with current U.S. development efforts cannot be fixed without major organization reforms and the time has come to recognize that the semi-merger of USAID and the State Department has not worked. The missions and personnel requirements of the two organizations are indeed different."

Last month I held a hearing and as chairperson of the Government Management Subcommittee on USAID, I had the hearing on USAID entitled, "USAID Management Challenges and Strategic Objectives." all the witnesses, including a former USAID Deputy Director and Director of Procurement, emphasized that the establishment of a comprehensive set of strategic goals for the U.S. foreign aid program is management challenge number one and should be the centerpiece of any effort to reform our foreign aid process.

So, if you can give us your opinions -- and I think I've already heard many of them -- and what you're already doing -- is it working and can it work and should the administrator look to revamp the F Bureau and should the AID administrator wear two hats and director of the F Bureau and head of the USAID.

I know that under the last administration both Secretary of State Collin Powell and Condoleezza Rice viewed the Department of State as being severely understaffed, both sought an increase in hiring levels, Collin Powell was granted an additional 1,069 staff, and Secretary Rice's request for additional personnel was rejected. In order to fully staff the efforts in Iraq and Afghanistan, if you were granted additional staff, how would you maximized these efforts and utilize new diplomats and (in these countries ?)?

You have 2 minutes and 15 seconds.


REP. : For the questions, or question, by the way.


SEC. LEW: I couldn't agree more that it has to begin with policy; it has to begin with what our goal for our development program is, what our strategy is.

I think that we've been very clear that we think that the development strategy and the foreign policy need to come together. They can't -- one has to inform the other; they have to become an organic whole. We can't have a foreign policy that goes in direction and a development policy unrelated to it.

On the other hand, our foreign policy does have to be informed by our development objectives. A lot of what we've been discussing today comes down to how you can describe the same objective in two different ways. I can describe an objective as being a purely humanitarian objective to relieve suffering and end poverty, or I can describe it as the critical step we have to take to prevent instability that will present the next source of danger to the United States.

They're not inconsistent; they're both true ways of stating the challenge. I think we have to be careful as we engage in high conflict areas, like Afghanistan, not to think of all development through that lens. Our goal has to be to have development programs that prevent us from having situations like Afghanistan in more places and we have to think differently about how we do development work in a counter-insurgency environment than we think about how we do development work in most of the rest of the world.

As far as the organizational issue go, I have been trying in my first months at the State Department to be open minded on questions; not coming in with conclusions, but coming in and learning and asking questions. I see an enormous need for coordination.

I am not certain of the extent to which it makes sense to force different programs together into a single place. I tend to be of the view, personally, that coordination can solve an awful lot of the problems that we see. But, I do think that the fundamental notion of the development program has to be guided by the Secretary of State is an important one and that in no way diminishes the important of the USAID administrator and we're hoping very soon to have a USAID administrator who will be a forceful leader, a dynamic thinker and organizer to help drive a program.

But, if you want the foreign policy and the development policy to be connected, the role that the Secretary of State has is quite central and I don't have time to go on and discuss the F process, but I would be happy to do it at a later date.

REP. CONNOLLY: Time for the gentlelady has expired.

Very interesting. I would add some of that same logic applies in the context of security assistance, but, never mind.

The gentlelady from Texas, Ms. Sheila Jackson-Lee.

REP. JACKSON-LEE: Thank very much, Mr. Chairman.

Let me welcome the distinguished Secretary for an important time such as these. Obviously, the budgeting process is extremely important and I would like to add my commendation for the team that is being put together at the State Department. Frankly, I believe that there is keenly a focus on diplomacy and that is what I would like to emphasize in my questions.

I have a long litany of questions that will probably take another three days, but I understand that you are only here for another day and a half; so I will not oppose these questions to you.

Pakistan, in its present state of affairs and whether or not we are prepared through the supplemental, but also as we look going forward and the key that I want to focus on is of course the reports that we expect about a million refugees; that is not military, that is typically the work of the State Department to refugee resettlement and other issues -- when I say that, obviously refugees within the context of the boundaries of Pakistan.

My question is, what kind of preparations -- I'd like to give a series of questions and then I'll just yield as --

What preparation is being made? Do you think the present supplemental, which obviously is an appropriations question, but I know you reviewed it, is sufficient? What preparation do we have going forward?

As an editorial comment, I think if there will be any Achilles Heel for us in our efforts in Pakistan, it will be the visuals of a million refugees fleeing or a million persons being internally displaced. We all know what the visuals were of Kosovo and those refugees fleeing and this is a question I have great concern about.

The other issue is overall personnel and whether or not going forward we have all of our embassies fully staffed up. I think that is key when it comes to this new attitude about diplomacy; how long will it take and what do we think we have to invest in personnel to do so?

Third, I wish to just -- I don't know whether someone else has asked about it -- a personnel question as to whether there will be any review on how we're treating the partners of gays and lesbians and whether or not we have reached that decision.

Lastly, I have an interest in decentralizing or (musing ?) anti- trust laws to bust the large contractors, if you will, that do business with our agencies. What efforts will be made to work with small, medium and woman owned businesses in contractual relationships with the State Department? They can provide a lot of services and particularly, I'd like to emphasize USAID. So many non-profits, so many talented single owned businesses can be so helpful to USAID and the question is how can they do that?

I guess I'm going to have 1.30.

My last question is monies for Sri Lanka and the displaced persons dealing with the Tamil area there and the plight of those people who also are internally displaced.

REP. CONNOLLY: If you promise not to tell anyone, I'll give you a little longer time because I am interested in the answer to a few of these questions myself.

REP. JACKSON-LEE: Mr. Chairman, I thank you and I yield to the gentleman.

SEC. LEW: I appreciate that because I didn't know how I was going to get through that list in a minute and 30 seconds.

REP. JACKSON-LEE: Thank you for your service.

SEC. LEW: Thank you.

Starting with Pakistan, we share your concern deeply about the number of internally displaced persons. Before the current counter- insurgency effort of the Governor of Pakistan, there were already roughly half a million internally displaced persons. All estimates that I have seen, suggest that there could be as many as a million more.

There is already a situation where many people have taken family members and friends into their homes so the capacity to absorb easily displaced persons, is already quite taxed.

I think I would divide the response in two ways. First -- one is money and the other is capacity.

On the money side, we think that there is -- there are sufficient resources for the United States to play a leadership role in responding; should we find out otherwise, we would bring that to the Congress' attention immediately.

In terms of the capacity, that's a bit of a greater challenge, because it's not an easy area to get into right now and its not clear who will have access readily. Our ambassador in Islamabad is an extremely experienced diplomat; he's taken the lead for us on the ground working with NGO's and international organizations and the government of Pakistan. In fact, there are meetings going on while I am here with people working on this.

We share very strongly the view that we need to play a leadership role in responding and making sure that steps are taken; not just this month and next month, but as we head into the fall and the difficult winter period when its more likely to become an emergency. All reports I've seen are that for the next several months, there's food and other provisions that are likely to be available, but the problem is likely to come farther down the road.

So, we're actively engaged in this in many parts of the federal government.

REP. JACKSON-LEE: And I think Congress should be involved with you on that.

SEC. LEW: Yes, we will consult with the Congress on that.

In terms if overall personnel, we don't have enough overall personnel. That's why we need to increase the Foreign Service in the State Department by 25 percent, why we propose doubling the personnel in USAID. In order to staff the missions in Iraq and Afghanistan, we thinned out resources in many other parts of the world. We need to begin as quickly as possible to bring new people in, to train them, to hire people with the right skills, so that they can be deployed as quickly as possible.

That's kind of why I've started in my oral testimony with people; I wouldn't have normally chosen to testify on people before program, but it's a critical, critical need.

In terms of the contracts that you asked about, we're taking a look at contracts across the foreign policy area and I think you correctly noted that the larger contracts in many cases are in USAID. There are a lot of large security contracts in the State Department, but the service contracts, the large ones, are in USAID.

This is not unrelated to the question of personnel. The practice of these large contracts arose out of, in part, pressure to reduce the number of foreign service officers. The number of contract dollars supervised by USAID foreign service officers has just grown so dramatically that you couldn't expect them to have meaningful oversight over the contracts that they're supervising.

We have to get more people in there and reduce the number and amount of contracts and we also have to move away from these big contracts which may be easier to issue because it takes less work and with the strained work force, that is an understandable step that would be taken, and break them up into parts where the objectives are clearly defined and more opportunities are available on a broad basis.

I think that the -- it comes back in some ways to what we were talking about a few moments ago. It's all about policy; we have to make the policy behind these contracts at the level of full time government employees. We have legitimate reasons to have partners who we contract with (for ?) implementation purposes, but we shouldn't contract out policy. I think that we've crossed -- historically, there's been some crossing of that line.

Do I have another minute to answer the other two?

In terms of the members of household issue, we've been working on that and are hoping that we're in a position to, very soon, make some policy determinations public.

Finally, on the question of Sri Lanka, we have been very concerned about the actions of the government of Sri Lanka; the fact that innocent civilians have been caught in between the government and the Tamil Tigers, that the actions taken have been as we've said many times, not appropriate in terms of the way that civilians should be treated. There will be a need for some assistance I think on a humanitarian basis.

I think the first thing that has to happen is the situation has to stop making it worse, which hour to hour, day to day, its hard to know exactly where we stand. But, we have talked with and worked with the international community on this and are prepared to be of assistance.

REP. JACKSON-LEE: Thank you very much.

REP. CONNOLLY: The benefits of being the last questioner is you're not on the clock.

I have a question, which I'll submit for the record, and if it's okay with everyone, -- I mean, I know you hate to leave, but we'll recess; we'll adjourn the hearing.

Thank you very much.

SEC. LEW: Thank you, Mr. Chairman.


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